[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Proposed Rules]
[Pages 63552-63607]
From the Federal Register Online via the Government Publishing 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

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decompose in a ``reasonably short period of time'' -- no more than one 
year. Moreover, if a solid product is destined for a landfill, an 
incinerator, or a recycling facility, the marketer should not make 
unqualified degradable claims because the product will not degrade 
within a year. Similarly, when making an unqualified ``compostable'' 
claim, a marketer should be able to show that the product will break 
down into usable compost in a safe and timely manner -- approximately 
the same time as the materials with which it is composted. The proposed 
Guides also clarify and expand guidance about claims that products are 
``free of'' particular materials. Finally, the proposed Guides 
highlight advice in the current guides that the use of ``recyclable'' 
depends on how many consumers and communities have access to recycling 
facilities for the advertised product.
    The proposed revised Guides also include new sections for claims 
not addressed by the current Guides, such as claims about the use of 
``renewable materials'' and ``renewable energy'' The FTC's consumer 
perception research suggests that these claims may be misleading 
because consumers interpret them differently than marketers intend. The 
proposed new sections advise marketers to provide context for these 
claims, in the form of specific information about the materials and 
energy used. Because the FTC's study did not test the effect of 
qualifying these claims, however, the FTC specifically seeks comment on 
whether providing this, or other information, would reduce consumer 
confusion. The proposed revised Guides also provide advice about 
``carbon offset'' claims: marketers should disclose if the offset 
purchase funds emission reductions that will not occur within 2 years, 
should make sure that they do not double count offsets, and should not 
advertise an offset if the activity that produces the offset is already 
required by law.
    Environmental marketing presents complex, challenging issues. 
Despite the voluminous record established by this review, the FTC would 
benefit from additional input in many areas, including for the claims 
discussed above and also for ``organic'' and ``made with recycled 
content'' claims. Therefore, the FTC invites comment on all aspects of 
the proposed revised Guides, as well as on the specific questions it 
poses in this Notice. The FTC will take all suggestions into account as 
it works to finalize the revised Guides.

II. Background

A. The Green Guides

    The Commission issued the Green Guides, 16 CFR Part 260, to help 
marketers avoid making environmental claims that are unfair or 
deceptive under Section 5 of the Federal Trade Commission Act (FTC 
Act), 15 U.S.C. 45.\1\ Industry guides, such as these, are 
administrative interpretations of the law. Therefore, they do not have 
the force and effect of law and are not independently enforceable. The 
Commission, however, can take action under the FTC Act if a marketer 
makes an environmental claim inconsistent with the Guides. In any such 
enforcement action, the Commission must prove that the challenged act 
or practice is unfair or deceptive.
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    \1\ The Commission issued the Green Guides in 1992 (57 FR 36363 
(Aug. 13, 1992)), and subsequently revised them in 1996 (61 FR 53311 
(Oct. 11, 1996)) and 1998 (63 FR 24240 (May 1, 1998)). The FTC 
administers several other environmental and energy-related rules and 
guides. See Guide Concerning Fuel Economy Advertising for New 
Automobiles (16 CFR Part 259), Appliance Labeling Rule (16 CFR Part 
305), Fuel Rating Rule (16 CFR Part 306), Alternative Fuels and 
Alternative Fueled Vehicles Rule (16 CFR Part 309), Recycled Oil 
Rule (16 CFR Part 311), and Labeling and Advertising of Home 
Insulation Rule (16 CFR Part 460).
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    The Green Guides outline general principles that apply to all 
environmental marketing claims and provide specific guidance regarding 
many environmental benefit claims. For each such claim, the Green 
Guides explain how reasonable consumers are likely to interpret the 
claim, describe the basic elements necessary to substantiate the claim, 
and present options for qualifying the claim to avoid deception.\2\ The 
illustrative qualifications provide guidance for marketers who want 
assurance about how to make nondeceptive environmental claims, but do 
not represent the only permissible approaches to qualifying a claim. 
This guidance assists marketers in making truthful and substantiated 
statements about the environmental attributes of their products and 
services.
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    \2\ The Guides, however, do not establish standards for 
environmental performance or prescribe testing protocols.
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    In order to adequately substantiate environmental marketing claims, 
the Guides advise marketers that they will often need ``competent and 
reliable scientific evidence.''\3\ The Guides currently define 
competent and reliable scientific evidence as ``tests, analyses, 
research, studies or other evidence based on the expertise of 
professionals in the relevant area, conducted and evaluated in an 
objective manner by persons qualified to do so, using procedures 
generally accepted in the profession to yield accurate and reliable 
results.\4\ Since the last Green Guides review, the Commission has 
clarified this standard, stating that such evidence ``should be 
sufficient in quality and quantity based on standards generally 
accepted in the relevant scientific fields, when considered in light of 
the entire body of relevant and reliable scientific evidence, to 
substantiate that [a] representation is true.''\5\
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    \3\ 16 CFR 260.5.
    \4\ Id.
    \5\ See, e.g., Indoor Tanning Ass'n, Docket No. C-4290 (May 13, 
2010) (consent order); see also Dietary Supplements: An Advertising 
Guide for Industry FTC, Dietary Supplements: An Advertising Guide 
for Industry (2001), available at (http://www.ftc.gov/bcp/edu/pubs/business/adv/bus09.pdf) (stating that ``the studies relied on by an 
advertiser would be largely consistent with the surrounding body of 
evidence'').
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B. The Green Guides Review

1. First Request for Public Comment\6\
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    \6\ Citations to comments identify the commenter, the particular 
Federal Register Notice to which the commenter responded (533431- 
Green Guides Review; 533254 - Carbon Offsets and Renewable Energy 
Certificates Workshop; 534743 - Green Packaging Workshop; or 536013 
- Green Building and Textiles Workshop), and the assigned comment 
number.
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    Since the Commission last revised the Green Guides in 1998, both 
anecdotal evidence and empirical research indicate that consumers have 
a heightened awareness of environmental concerns and, therefore, place 
increased importance on buying products and services that will cause 
less harm to the environment.\7\ Marketers, in turn, have responded by 
touting the environmental attributes of their products and services. 
Because of the proliferation of these environmental claims, the 
Commission began its decennial Guides review on November 26, 2007, one 
year before scheduled. The Commission's

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November 2007 Federal Register Notice sought comment on a number of 
general issues, including the continuing need for and economic impact 
of the Guides, the effect of the Guides on the accuracy of 
environmental claims, and whether the Commission should provide 
guidance on certain environmental claims - such as carbon neutral, 
sustainable, and renewable - not currently addressed in the Guides.\8\ 
The Commission received 75 written comments in response.
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    \7\ See, e.g., American Chemistry Council (``ACC''), Comment 
533431-00023 at 3 (citing a 2005 nationwide survey finding that 90 
percent of consumers base their buying decisions, in part, on the 
effect their choices will have on the environment); Environmental 
Packaging International (``EPI''), Comment 533431-00063 at 8 (citing 
studies by the Natural Marketing Institute, Landor Associates, 
Datamonitor, Organic Consumers Association, and Global Marketing 
Insite); Saint-Gobain Corporation (``Saint-Gobain''), Comment 
533431-00037 at 5-6 (citing studies by Consumers International, 
American Environics, EcoPinion); Seventh Generation, Comment 533431-
00033 at 2 (citing 2007 Cone Consumer Environmental Survey); 
American Beverage Association (``ABA''), Comment 533431-00066 at 2-
3; Dow Chemical Company (``Dow''), Comment 533431-00010 at 1; North 
American Insulation Manufacturers Association (``NAIMA''), Comment 
536013-00017 at 5-6; Procter & Gamble Company (``P&G''), Comment 
533431-00070 at 1; The Advertising Trade Associations (``ATA''), 
Comment 533431-00041 at 7.
    \8\ 72 FR 66091 (Nov. 27, 2007). This review has taken some time 
because, in order to provide as useful advice as possible, the 
Commission conducted a consumer perception study of certain 
environmental marketing claims. The Commission discusses this study 
in detail below.
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2. Workshops and Corresponding Requests for Public Comment
    To establish a more robust record, the Commission also held three 
public workshops to explore emerging environmental marketing claims. 
Specifically, the workshops addressed carbon offsets and renewable 
energy certificates;\9\ green packaging claims;\10\ and green building 
and textiles.\11\ The workshops brought together over 450 people 
representing industry, government, consumer groups, the academic 
community, and non-profit environmental organizations.\12\ The 
Commission requested comment in connection with each workshop\13\ and 
received an additional 125 written comments.\14\
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    \9\ See 72 FR 66094 (Nov. 27, 2007).
    \10\ See 73 FR 11371 (Mar. 3, 2008).
    \11\ See 73 FR 32662 (June 10, 2008).
    \12\ Citations to workshop transcripts or presentations identify 
the speaker's name and organization, the relevant workshop, and 
either the transcript page or the hyperlink to the speaker's 
presentation.
    \13\ Documents relating to the Green Guides review, including 
the public comments; workshop agendas, presentations, and 
transcripts; and the Commission's consumer perception study are 
available at (http://www.ftc.gov/green).
    \14\ The Union of Concerned Scientists submitted a comment 
containing letters from over 16,000 individuals. Although 
approximately 1,300 of those letters vary in form, the substance of 
all the letters is the same. They urged the FTC to review the 
environmental marketing of corn-based ethanol as a ``green'' 
alternative to gasoline. The comments suggested that such marketing 
is not based on ``sound science'' because corn ethanol production 
could cause an increase in the production of global warming 
pollution over regular gasoline.
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3. Consumer Perception Evidence
    Because the Guides are based on consumer understanding of 
environmental claims, consumer perception research can provide the 
Commission with the best evidence upon which to formulate guidance. The 
following discusses commenters' submissions of consumer research and 
the Commission's 2009 consumer perception study.
a. Commenters' Submissions
    Although the Notices solicited consumer perception evidence, few 
commenters submitted such research.\15\ Rather, commenters submitted 
research concerning: (1) consumers' attitudes and beliefs about 
environmental claims;\16\ (2) consumers' environmental concerns and 
interests;\17\ and (3) consumers' behavior regarding environmental 
claims.\18\ These surveys do not provide a basis upon which the 
Commission can formulate guidance on how to make truthful and 
nondeceptive environmental marketing claims. Accordingly, the 
Commission conducted its own consumer perception study in July and 
August of 2009.
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    \15\ The Commission discusses the consumer perception research 
that commenters submitted in the substantive parts of this Notice.
    \16\ ACC, Comment 536013-00030 at 2 (citing a survey of consumer 
descriptions of a ``green company''); Rick L. Cantrell, Sustainable 
Forestry Initiative, Inc. (``SFI''), Green Building and Textiles 
Workshop Presentation at (http://www.ftc.gov/bcp/workshops/buildingandtextiles/presentations/3rcantrell.pdf) (citing a survey 
regarding consumer concerns about ``sustainable forestry''); P&G, 
Comment 533431-00070 at 1 (citing a study of consumer consideration 
of ``sustainability factors'' in purchasing decisions); Kelly 
Tullier, Grocery Manufacturers Association (``GMA''), Green 
Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf) (same); U.S. Green 
Building Council (``USGBC''), Comment 536013-00029 at 2 (citing a 
study regarding consumer knowledge of green homebuilding).
    \17\ John Kalkowski, Packaging Digest (``Packaging Digest''), 
Green Packaging Workshop Tr. at 22-23 (citing a study concerning 
consumers' lack of interest in environmental activities); Patricia 
F. O'Leary, Cotton Incorporated (``Cotton Incorporated''), Green 
Building and Textiles Workshop Tr. at 28 (citing a study regarding 
consumers' reaction to apparel items that are not ``environmentally 
friendly''); NAIMA, Comment 536013-00027 at 4-5 (citing a study 
regarding consumers' concern about global warming); Saint-Gobain, 
Comment 533431-00037 at 4-5 (same); Seventh Generation, Comment 
533431-00033 at 2 (citing studies of consumers' interest in the 
environment).
    \18\ GMA, Green Packaging Workshop Tr. at 111 (citing a survey 
concerning consumer Internet use to get information about 
environmental initiatives and products); National Recycling 
Coalition (``NRC''), Comment 533431-00078 at 2 (discussing its 
research concerning consumers' recycling behavior); Sam Rashkin, 
Environmental Protection Agency, Green Building and Textiles 
Workshop Tr. at 178-179 (citing a survey concerning consumer 
awareness of the Energy Star name and logo); Kirsten Ritchie, 
Gensler (``Gensler''), Green Building and Textiles Workshop Tr. at 
109 (same); Timothy Smith, University of Minnesota (``Univ. of 
Minnesota''), Comment 536013-00004 at 1 (citing a study examining 
life cycle information in advertising).
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b. The Commission's Consumer Perception Study
    To conduct the study, the FTC contracted with Harris Interactive, a 
consumer research firm with substantial experience surveying consumer 
communications.\19\ The study sampled members of the contractor's 
Internet panel, which consists of more than four million individuals 
recruited through a variety of convenience sampling procedures.\20\ 
From this sample, Harris selected individuals who were invited to 
complete the survey. Participants were selected to correspond, as much 
as possible, with the known distribution of U.S. adults aged 18 and 
over in terms of age, gender, race and ethnicity, and geographic 
region. A total of 3,777 individuals completed the survey.\21\
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    \19\ The Commission's consumer perception study is available at 
(http://www.ftc.gov/green).
    \20\ The sample for this research, therefore, does not 
necessarily constitute a true, random sample of the adult U.S. 
population. However, because the study focused primarily on 
comparing responses across randomly assigned treatment groups, the 
Internet panel provided an appropriate sample frame.
    \21\ Additional detail on sample selection is available in the 
methodology report prepared by Harris which is available at (http://www.ftc.gov/green).
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    Harris presented participants with several questions aimed at 
determining how they understand certain environmental claims. The first 
portion of the study tested the following claims: ``green,'' ``eco-
friendly,'' ``sustainable,'' ``made with renewable materials,'' ``made 
with renewable energy,'' and ``made with recycled materials.'' The 
questionnaire asked about both unqualified and qualified general 
environmental benefit claims (e.g., ``green'' vs. ``green - made with 
recycled materials''), as well as specific-attribute claims alone 
(e.g., ``made with recycled materials''). The study tested these claims 
against a non-environmental control claim (e.g., ``new and improved''). 
Moreover, to examine whether consumers' understanding of the claims 
differed depending on the product being advertised, the study tested 
the claims as they appeared on three different products - wrapping 
paper, a laundry basket, and kitchen flooring.\22\ Harris tested 16 
different claims with each of the three different products, resulting 
in a total of 48 product-claim pairs. To avoid skewing an individual's 
answers by asking the same person essentially the same set of questions 
multiple times, and to limit the length of the survey presented to any 
individual, each participant was

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asked questions regarding only two randomly-selected product-claim 
pairs.
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    \22\ The study results support the current Guides' approach of 
providing general, rather than product-specific, guidance because 
consumers generally viewed the tested claims similarly for the three 
tested products. Moreover, the results were comparable for 
respondents who indicated concern and interest in environmental 
issues and those who did not.
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    The second portion of the study tested carbon offset and carbon 
neutral claims. The questionnaire asked half of the participants about 
carbon offsets and half about carbon neutral claims. An initial 
screening question gauged whether respondents understood these concepts 
by asking them to identify what a carbon offset was or what carbon 
neutral meant. Only those participants who demonstrated a general 
understanding of these terms continued with the remainder of the study.
    Both portions of the study used a combination of open- and closed-
ended questions exploring the same topic. The study questionnaire 
described the claims to participants, rather than presenting an actual 
advertisement. For example, a participant was asked: ``Suppose you see 
some wrapping paper advertised or labeled as `green - made with 
recycled materials.'''
    After the study's completion, Harris provided FTC staff with data 
summaries. The results of this study are discussed below in Parts IV.F, 
V, and VI of this Notice.\23\
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    \23\ The methodology used for this study may not be appropriate 
for testing consumer perception of a particular advertising claim. 
Among other differences, marketers must test the claim in the 
context of a specific advertisement, which was impossible here.
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C. Outline of This Notice

    After reviewing the public comments, the workshop proceedings, and 
the consumer perception evidence, the Commission proposes retaining the 
Green Guides and making several revisions. Part III of this Notice 
proposes three non-substantive changes to make the Guides easier to 
read and use. Part IV discusses comments on general issues, such as the 
continuing need for the Guides and general comments on life cycle 
analysis. Part V discusses issues relating to specific claims that 
already are addressed by the Guides. Part VI addresses environmental 
marketing claims not currently covered by the Guides. Part VII requests 
public comment on the issues raised in this Notice, including the 
proposed, revised Green Guides. Finally, Part VIII sets out the 
proposed, revised Guides.

III. Proposed Non-substantive Changes to the Current Green Guides

    The Commission proposes three changes to make the Guides easier to 
read and use. First, wherever possible, the Commission has simplified 
the Guides' language to make it clearer and easier to understand. For 
example, the FTC has replaced its formal, legal description of the 
Guides in Section 260.1 with a more reader-friendly version. Similarly, 
the Commission has removed unnecessary language and redundant examples 
from all sections of the Guides.\24\
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    \24\ Among other things, the Commission proposes deleting from 
Section 260.5 a reference to the FTC's law enforcement actions in 
the green area and the telephone number to call to obtain copies of 
those cases. Case information may be found on the Commission's 
website, (http://www.ftc.gov). In addition, in Section 260.2, the 
Commission proposes deleting the explicit statement that the Guides 
apply to ``marketing through digital or electronic means.'' The 
Commission added this reference in 1998, when Internet marketing was 
emerging and online advertisers were uncertain about the Guides' 
applicability. Because Internet marketing is now ubiquitous, the 
Commission proposes revising the Guides to state that they apply to 
marketing in any medium.
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    Second, the Commission proposes reorganizing the Guides. 
Specifically, the proposed, revised Guides combine the first three 
sections into one section, which discusses the Guides' purpose, scope, 
and structure. In addition, the Commission proposes splitting existing 
Section 260.7 (titled ``Environmental Marketing Claims'') into multiple 
sections. Currently, Section 260.7 provides advice on eight different 
environmental claims, containing the bulk of the Commission's guidance. 
To make the information easier to find, the Commission proposes moving 
each environmental claim into its own section, organized 
alphabetically, and dividing the guidance within each section into 
subparts (e.g., section 260.9(a), 260.9(b), etc.). Because of these 
organizational changes, the Commission has renumbered each Guide 
section.
    Third, the Commission proposes deleting Sections 260.4 and 260.8. 
Section 260.4 states that the Commission reviews the Green Guides as 
part of its ongoing, periodic review program, and explains that parties 
may petition the Commission to amend the Guides in light of new 
evidence. This information is common to all of the Commission's guides, 
and it is unnecessary to repeat it in each one.\25\ Section 260.8 
contains the FTC's environmental assessment of the Guides pursuant to 
the National Environmental Policy Act. Because this information is 
contained in the Federal Register Notice that enacted the Guides and is 
not needed by marketers using the Guides, the Commission proposes 
deleting it from the Guides' text.\26\ These deletions will streamline 
the Guides, making them a more user-friendly document.
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    \25\ Information about petitioning the FTC may be found in the 
Commission's rules. See, e.g., 16 CFR 1.6.
    \26\ As we did when issuing the Guides in 1992 and revising them 
in 1996 and 1998, the Commission concludes that the proposed 
revisions to the Guides would not have a significant impact on the 
environment and any such impact ``would be so uncertain that 
environmental analysis would be based on speculation.'' 16 C.F.R. 
1.83(a).
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IV. General Issues

    The Commission sought comment on several general issues, including: 
(1) whether there is a continuing need for the Guides; (2) whether, and 
to what degree, industry is complying with the Guides; (3) whether the 
Commission should modify the Guides due to changes in technology or 
economic conditions; (4) whether there are international laws or 
standards the FTC should consider as part of its review; and (5) 
whether the Guides overlap or conflict with other federal, state, or 
local laws or regulations. This section discusses the commenters' 
responses to these questions, as well as their views on life cycle 
analysis, and provides the Commission's analysis of the issues.

A. Continuing Need for the Guides

1. Comments
    Several commenters affirmed that the Guides have benefitted 
consumers by stemming the tide of spurious environmental claims; 
bolstering consumer confidence; imposing clarity and consistency in 
environmental marketing claims; and increasing the flow of specific and 
accurate environmental information to consumers, enabling them to make 
informed purchasing decisions.\27\ No

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commenters suggested the Guides were no longer needed.
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    \27\ See, e.g., ACC, Comment 533431-00023 at 3-4; ATA, Comment 
533431-00041 at 3, 9; American Forest & Paper Association 
(``AF&PA''), Comment 533431-00019 at 2; American Reusable Textile 
Association, Comment 534743-00038 at 4; Business for Social 
Responsibility (``BSR''), Comment 533431-00016 at 1; Carbonfund.org, 
Comment 533431-00056 at 2; Carpet and Rug Institute (``CRI''), 
Comment 533431-00026 at 3; Consumer Specialty Products Association 
(``CSPA''), Comment 533431-00049 at 1-2; Dow, Comment 533431-00010 
at 3; EHS Strategies, Inc. (``EHS''), Comment 534743-00011 at 1; 
Fibre Box Association (``FBA''), Comment 533431-00015 at 1; Georgia-
Pacific LLC (``Georgia-Pacific''), Comment 533431-00007 at 1-3; 
Graphic Arts Coalition, Comment 533431-00060 at 1; GreenBlue, 
Comment 533431-00058 at 1; Rebecca Hammer (``Hammer''), Comment 
533431-00017 at 1-2; Alison C. Healey, et al. (``Healey''), Comment 
533431-00048 at 1; International Paper, Comment 533431-00055 at 1; 
MeadWestvaco Corporation (``MeadWestvaco''), Comment 533431-00013 at 
2; NAIMA, Comment 536013-00042 at 2-3; New York City Department of 
Consumer Affairs, Comment 533431-00018 at 2; P&G, Comment 533431-
00070 at 1; Pratt Industries, Comment 533431-00081 at 1; Lynn 
Preston (``Preston''), Comment 533431-00021 at 2; Saint-Gobain, 
Comment 533431-00037 at 2-4; Seventh Generation, Comment 533431-
00033 at 7; The Soap and Detergent Association (``SDA''), Comment 
533431-00020 at 1, 5; The Society of the Plastics Industry, Inc. 
(``SPI''), Comment 533431-00036 at 13; U.S. Council for 
International Business, Comment 533431-00052 at 2; Weyerhaeuser, 
Comment 533431-00084 at 1.
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    Several commenters stated that the Guides help those seeking to 
make truthful and accurate environmental marketing claims, while 
providing a level playing field that benefits both consumers and 
compliant companies.\28\ Moreover, many agreed that the Guides 
accomplish their goals without imposing an undue burden on 
industry.\29\
---------------------------------------------------------------------------

    \28\ See, e.g., International Paper, Comment 533431-00055 at 2 
(noting that the Guides level the playing field by standardizing 
terms and requiring factual bases for claims); AF&PA, Comment 
533431-00083 at 2; CSPA, Comment 533431-00049 at 1-2; EPI, 533431-
00063 at 2; MeadWestvaco, Comment 533431-00013 at 1; NAIMA, Comment 
536013-00017 at 2.
    \29\ See, e.g., GreenBlue, Comment 533431-00058 at 3 (stating 
that the Guides' assurance of accuracy and specificity actually 
reduces costs ``by providing a more common, consistent framework for 
communicating product attributes''); AF&PA, Comment 533431-00083 at 
2; ATA, Comment 533431-00041 at 7-9; Saint-Gobain, Comment 533431-
00037 at 6-7.
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2. Analysis
    Based on the consensus that the Guides benefit both consumers and 
businesses, the Commission proposes to retain them. As discussed below, 
however, the Commission proposes several revisions to ensure that the 
Guides reflect consumer perception and new claims in the marketplace.

B. Industry Compliance

1. Comments
    In response to questions about industry compliance with the Guides, 
some commenters asserted that deceptive marketing claims have increased 
in the environmental area.\30\ For example, TerraChoice Environmental 
Marketing, Inc. reported the results of its 2007 review of over 1,000 
products and expressed concern that many marketers are using vague 
claims, such as ``environmentally friendly'' and ``green,'' without 
defining terms or providing evidence to support their claims.\31\ It 
also noted that many marketers ``highlight relatively insignificant 
environmental benefits of a product while distracting consumers from 
much more significant impacts.''\32\ Another commenter observed that 
companies are marketing the ``environmentally friendly'' nature of 
their products ``through words or pictures while only minimally (if at 
all) qualifying such claims.''\33\ In addition, other commenters noted 
increased instances of ``greenwashing'' by marketers using a ``plethora 
of buzzwords like sustainable, environmentally friendly, carbon 
offsets, [and] green.''\34\ Some commenters suggested that bringing 
more enforcement actions could help address this issue.\35\
---------------------------------------------------------------------------

    \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.
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2. Analysis
    The Guides' purpose is to help marketers avoid making unfair or 
deceptive environmental claims. For marketers who nevertheless violate 
the law, the Commission will continue its enforcement efforts. The 
Commission brought several recent actions involving false or 
unsubstantiated environmental claims. For example, last year, the 
Commission announced three actions charging marketers with making false 
and unsubstantiated claims that their products were biodegradable.\42\ 
In addition, the Commission charged four sellers of clothing and other 
textile products with deceptively labeling and advertising these items 
as made of bamboo fiber, manufactured using an environmentally friendly 
process, and/or biodegradable.\43\
---------------------------------------------------------------------------

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

    \50\ SDA, Comment 534743-00028 at 4. SDA, however, did not set 
forth these circumstances.
    \51\ NatureWorks, Green Packaging Workshop Tr. at 230; see also 
AF&PA, Comment 534743-00031 at 2 (stating that specific sectors 
should be able to develop focused definitions of sustainability that 
meet the needs of that sector and that references to websites should 
be sufficient to provide the necessary explanation).
    \52\ SPI, Comment 534743-00034 at 3; see also Brenda Platt, 
Institute for Local Self-Reliance (``ILSR''), Green Packaging 
Workshop Tr. at 148 (suggesting that consumers could search a 
website to identify composting facilities).
    \53\ SPI, Comment 534743-00034 at 4 (emphasis in original).
---------------------------------------------------------------------------

    Along these lines, EHS Strategies, Inc., noting the pervasiveness 
of general environmental benefit terms such as ``eco'' and ``green'' in 
marketing, suggested that the Guides recommend that package labeling 
include a website, telephone number, or address so that consumers can 
obtain a detailed explanation of a product's environmental 
attributes.\54\ However, this commenter cautioned that ``[w]hile 
reference to third-party standards and websites are useful, they are 
likely not . . . investigated by the consumer at point of purchase. 
Insofar as possible, sufficient point of sale information should be 
made available to the consumer as to what the environmentally preferred 
attributes are.''\55\
---------------------------------------------------------------------------

    \54\ EHS, Comment 534743-00011 at 2; see also EnviroMedia Social 
Marketing, Comment 534743-00032 at 1 (stating that companies making 
claims about their carbon footprint should be required to list a 
website to substantiate those claims); TerraChoice, Green Packaging 
Workshop Tr. at 207 (noting that marketers should make claim 
substantiation available to consumers via websites and toll-free 
numbers).
    \55\ EHS, Comment 533431-00057 at 2.
---------------------------------------------------------------------------

2. Analysis
    Using the Internet, marketers can provide consumers with useful 
environmental information about products, packages, and services. 
However, websites cannot be used to qualify otherwise misleading claims 
that appear on labels or in other advertisements because consumers 
likely would not see that information before their purchase. Any 
disclosures needed to prevent an advertisement from being misleading 
must be clear and prominent and in close proximity to the claim the 
marketer is qualifying.\56\ These requirements help ensure that 
consumers notice, read, and understand disclosures to prevent 
deception.
---------------------------------------------------------------------------

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

D. International Laws

1. Comments
    The Commission also sought comment on whether it should consider 
international laws, regulations, or standards with respect to 
environmental marketing claims in its Guides review. In response, many 
commenters recommended that the Commission harmonize the Green Guides 
with the International Organization for Standardization (``ISO'') 14021 
environmental marketing standards\57\ or at least incorporate some of 
its provisions.\58\
---------------------------------------------------------------------------

    \57\ ISO is a non-governmental organization which develops 
voluntary manufacturing and trade standards, including standards for 
self-declared environmental marketing claims. ISO 14021:1999(E) 
Environmental labels and declarations - Self-declared environmental 
claims (Type II environmental labeling).
    \58\ Dow, Comment 533431-00010 at 4 (noting, however, that the 
Commission should not follow 14021's ``outdated'' prohibition on 
sustainability); AF&PA, Comment 533431-00019 at 3; CSPA, Comment 
533431-00049 at 2; EPI, Comment 533431-00063 at 4; EPA Environmental 
Preferable Purchasing Program (``EPA-EPPP''), Comment 533431-00038 
at 6; FBA, 533431-00015 at 2; Foodservice Packaging Institute 
(``FPI''), Comment 533431-00074 at 3; Georgia-Pacific, Comment 
533431-00007 at 6; GreenBlue, Comment 533431-00058 at 6; 
MeadWestvaco, Comment 533431-00013 at 2; SDA, Comment 533431-00020 
at 2-3.
---------------------------------------------------------------------------

    For example, one commenter observed that because several countries 
are in the process of adopting ISO 14021, the FTC should either align 
the Guides with ISO standards or clarify whether products labeled 
according to

[[Page 63558]]

ISO 14021 comply with the Guides when there is a discrepancy.\59\ 
Another commenter stressed the importance of ``close alignment with 
global standards,'' noting that the discrepancy in how the Green Guides 
and ISO treat recyclable claims\60\ causes problems with transnational 
packaging.\61\
---------------------------------------------------------------------------

    \59\ AF&PA, Comment 533431-00019 at 3; see also Georgia-Pacific, 
Comment 533431-00007 at 6.
    \60\ ISO states that marketers must qualify recyclable claims if 
recycling facilities are not conveniently available to a 
``reasonable proportion'' of purchasers where the product is sold. 
ISO 14021 7.7.2:1999(E). In contrast, the Guides provide that 
marketers should qualify recyclable claims if recycling facilities 
are not available to a ``substantial majority'' of consumers or 
communities where the product is sold. See 16 CFR 260.7(d), Example 
4.
    \61\ MeadWestvaco, Comment 533431-00013 at 3; see also Georgia-
Pacific, Comment 533431-00007 at 6 (suggesting that the Commission 
address discrepancies such as the definition of ``post-consumer'' 
fiber, the references to access to recycling and composting 
facilities, and the treatment of the M[ouml]bius Loop); Paper 
Recycling Coalition (``PRC''), Comment 533431-00035 at 1 (noting 
that the Guides should incorporate ISO definitions of recycling and 
post-consumer recycled content because competing definitions 
currently cause consumer confusion).
---------------------------------------------------------------------------

    In addition, several commenters suggested that the FTC look to ISO 
for guidance on how to conduct a life cycle analysis to ensure 
consistency in the increasing number of claims using life cycle 
assessments for substantiation.\62\ Two commenters, however, urged the 
FTC not to fully harmonize the Green Guides with international 
standards because ``the obstacles and barriers to maintaining, changing 
or modifying, updating, and revising the system may be enormous'' and 
could cause ``tremendous effort and delay.''\63\
---------------------------------------------------------------------------

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

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).
---------------------------------------------------------------------------

E. Overlap with Other Federal, State, or Local Laws

1. Comments
    The Commission sought comment on whether the Guides overlap or 
conflict with other federal, state, or local laws or regulations, and 
if so, how. Most commenters did not identify any specific overlap or 
conflict. Two commenters, however, Saint-Gobain and the North American 
Insulation Manufacturers Association, expressed concern about the array 
of guidelines and standards emerging from local, state, and federal 
government agencies, noting that conflicting and competing guidelines 
vary in quality and, therefore, consumer utility.\65\ Both commenters 
urged the FTC to ``consider preempting state and local laws and 
regulations that are inconsistent with or frustrate the purposes of the 
Guides.''\66\ Neither commenter, however, cited a specific law or 
regulation.
---------------------------------------------------------------------------

    \65\ NAIMA, Comment 533431-00042 at 2, 11; Saint-Gobain, Comment 
533431-00031 at 3,11.
    \66\ NAIMA, Comment 533431-00042 at 11; Saint-Gobain, Comment 
533431-00031 at 11.
---------------------------------------------------------------------------

    Commenter Environmental Packaging International noted that the 
state of California has ``more specific requirements than the Guides 
regarding the use of environmental marketing claims related to plastic 
packaging.''\67\ For example, EPI stated that California requires that 
plastic bags and food and beverage containers labeled as 
``compostable,'' ``biodegradable,'' or ``degradable'' or marketed using 
similar terms comply with the applicable ASTM International standard 
for the term used.\68\ In contrast, the Green Guides do not refer to a 
particular industry standard.
---------------------------------------------------------------------------

    \67\ EPI, Comment 533431-00063 at 4.
    \68\ Id., citing Cal. Pub. Res. Code Sec. Sec.  42355-42357, 
42359-42359.6. ASTM International (``ASTM'') is an international 
standards organization that develops and publishes voluntary 
consensus technical standards for a wide range of materials, 
products, systems, and services.
---------------------------------------------------------------------------

    International Paper observed that, although it is not aware of any 
specific conflicts with federal, state, and local laws, the Green 
Guides may conflict with nongovernmental and international voluntary 
standards, such as ASTM's compostability standard.\69\ It recommended 
that the FTC monitor these standards to try to eliminate any such 
issues. It also suggested that the FTC coordinate with other federal 
agencies. For example, it suggested that the FTC coordinate with the 
Environmental Protection Agency (``EPA'') in the recycling area to make 
policy and product labeling consistent with current marketplace 
reality.
---------------------------------------------------------------------------

    \69\ International Paper, Comment 533431-00055 at 3.
---------------------------------------------------------------------------

    Similarly, EPA's Environmentally Preferable Purchasing Program 
suggested that the Guides specifically state that ``environmentally 
preferable'' claims ``should follow established guidance in this area, 
such as EPA's Guidance on Environmentally Preferable Purchasing, which 
emphasizes that such determinations should take into account multiple 
environmental attributes throughout the product's life cycle.''\70\
---------------------------------------------------------------------------

    \70\ EPA-EPPP, Comment 533431-00038 at 7.
---------------------------------------------------------------------------

2. Analysis
    Based on a review of the comments, the Green Guides do not appear 
to significantly overlap or conflict with other federal, state, or 
local laws. Although some commenters discussed the potential for 
conflict, none cited any particular conflicting laws. State law may be 
different from the Green Guides, but such differences do not 
necessarily present a conflict. For example, a company may follow the 
Green Guides' provisions on biodegradability and compostability and 
still comply with California's specific requirements that plastic bags 
and containers labeled as ``biodegradable'' and ``compostable'' meet 
ASTM standards.\71\ Additionally, although some commenters sought FTC 
preemption of state and local laws, the Green Guides are not 
enforceable regulations and, therefore, cannot be legally 
preemptive.\72\
---------------------------------------------------------------------------

    \71\ Indeed, since 1996, California has required marketers to 
follow the Green Guides. See Cal. Bus. & Prof. Code Sec.  17580-81.
    \72\ 16 CFR 260.2.

    One commenter recommended that the Commission coordinate with other 
federal agencies. The Commission actively consults with other agencies,

[[Page 63559]]

such as the EPA, the Department of Energy (``DOE''), and the Department 
of Agriculture (``USDA''), regarding their areas of expertise to ensure 
that the Commission does not issue guidance that duplicates or possibly 
conflicts with their regulations and programs. For example, as 
discussed below, the Commission does not propose specific guidance for 
organic claims about agricultural products that already are covered by 
the USDA's regulations.\73\
---------------------------------------------------------------------------

    \73\ See Part VI.B, infra.
---------------------------------------------------------------------------

F. Life Cycle Analysis

    Life cycle analysis (``LCA'') refers to the assessment of a 
product's environmental impact through all the stages of its ``life.'' 
The EPA defines the term ``life cycle'' as ``the major activities in 
the course of the product's life-span from its manufacture, use, and 
maintenance, to its final disposal, including the raw material 
acquisition required to manufacture the product.''\74\ As the EPA notes 
in its Final Guidance on Environmentally Preferable Purchasing, in the 
context of making purchasing decisions, the term ``life cycle'' has 
several interpretations: ``[t]o some, it connotes an exhaustive, 
extremely time-consuming, and very expensive analysis. To others, a 
life cycle perspective is possible in an abbreviated process, in which 
a long list of potential environmental attributes and/or impacts is 
narrowed to a few, allowing for comparison across a particular product 
category.''\75\ Accordingly, in its Final Guidance on Environmentally 
Preferable Purchasing, EPA states that it ``promotes the use of a range 
of practices, from life cycle considerations to a more rigorous, 
scientifically defensible life cycle assessment methodology.''\76\
---------------------------------------------------------------------------

    \74\ See (http://www.epa.gov/nrmrl/lcaccess/pdfs/600r06060.pdf).
    \75\ See (http://www.epa.gov/epp/pubs/guidance/finalguidance.htm).
    \76\ Id.
---------------------------------------------------------------------------

    The current Green Guides do not provide guidance on life cycle 
claims. Instead, the Guides include a footnote indicating that the 
Guides do not address such claims because the Commission ``lacks 
sufficient information on which to base guidance.''\77\
---------------------------------------------------------------------------

    \77\ 16 CFR 260.7 n.2.
---------------------------------------------------------------------------

1. Comments
    Several commenters discussed whether and how the FTC should provide 
LCA guidance. Many noted that, since the last Guides review, LCA has 
become both a more accepted and better defined process,\78\ and 
marketers increasingly utilize LCA to assess the environmental effect 
of their products.\79\ For example, Georgia-Pacific observed that the 
international expert community in life cycle assessment has developed 
and agreed on requirements for making environmental comparisons or 
assertions to the public, which the series of ISO 14040 and 14044 
standards reflect.\80\ Other panelists, however, asserted that LCA is 
still an emerging concept.\81\
---------------------------------------------------------------------------

    \78\ SDA, Comment 534743-00028 at 3 (noting that procedures for 
a life cycle analysis are now part of ISO environmental management 
standards found under ISO 14000); Susan Selke, Michigan State 
University (``Michigan State Univ.''), Green Packaging Workshop Tr. 
at 163 (stating that in addition to ISO, there are numerous LCA 
standards, including certain Canadian standards and standards 
collected on EPA's website).
    \79\ See, e.g., GMA, Comment 533431-00083 at 10; PCPC, Comment 
533431-00075 at 4; SDA, Comment 533431-00020 at 2; SPI, Comment 
533431-00036 at 11.
    \80\ Georgia-Pacific, Comment 533431-00007 at 7.
    \81\ See, e.g., Michigan State Univ., Green Packaging Workshop 
Tr. at 188 (observing that LCA is not yet well understood by 
industry, academics, or consumers); Thomas R. Reardon, The Business 
and Institutional Furniture Manufacturer's Association (``BIFMA''), 
Green Building and Textiles Workshop Tr. at 246-247.
---------------------------------------------------------------------------

    In particular, commenters discussed: (1) whether marketers should 
refer directly to LCAs in marketing materials; and (2) whether 
marketers should substantiate certain claims with an LCA and, if so, 
whether the Guides should address LCA substantiation methodologies.
a. LCAs as Marketing Claims
    Because of the complexity of LCAs, several commenters asserted that 
life cycle analysis should be regarded as a decision-making tool to 
help improve environmental outcomes, rather than as a marketing 
claim.\82\ A participant in the Green Packaging Workshop, Susan Selke, 
for example, viewed life cycle analysis as ``the right philosophical 
approach'' for making decisions, but discouraged its use for 
communicating information or making claims to consumers, on the grounds 
that one must ``interpret LCA in context for it to be meaningful.''\83\ 
Similarly, EHS Strategies, Inc., commented that terms such as ``cradle 
to cradle'' and ``life cycle'' are ill-defined, comprised of multiple 
factors, and not amenable to understanding on a package label.\84\
---------------------------------------------------------------------------

    \82\ John Delfausse, Est[eacute]e Lauder Companies 
(``Est[eacute]e Lauder''), Green Packaging Workshop Tr. at 186; 
Michigan State Univ., Green Packaging Workshop Tr. at 186; see also 
ACC, Comment 533431-00023 at 5 (suggesting that LCA can be a useful 
tool in identifying marketing claims and what type of substantiation 
or qualification is necessary).
    \83\ Michigan State Univ., Green Packaging Workshop Tr. at 163 
(asserting she would ``never advocate trying to summarize LCA 
results on a package'').
    \84\ EHS, Comment 534743-000211 at 1; see also Est[eacute]e 
Lauder, Green Packaging Workshop Tr. at 186 (noting that although 
consumers are interested in information pertaining to the life cycle 
and sustainability aspects of packaging, Est[eacute]e Lauder does 
not recommend encouraging such claims in the Guides).
---------------------------------------------------------------------------

    In contrast, one commenter reported the results of a study finding 
that LCA information showing quantitative and specific environmental 
impact information in an advertisement positively influences consumers' 
attitudes toward an advertisement, brand, company, and intention to 
purchase a product.\85\ The commenter concluded that ``LCA-based 
metrics'' may be the best method for effective communication of 
environmental attributes.\86\ Another commenter stated it would support 
the use of a standardized label conveying the results of an LCA to 
consumers, such as an approach akin to the Food and Drug 
Administration's (``FDA'') Nutrition Facts Label.\87\
---------------------------------------------------------------------------

    \85\ Univ. of Minnesota, Comment 536013-00004 at 1.
    \86\ Id.
    \87\ Est[eacute]e Lauder, Green Packaging Workshop Tr. at 189 
(noting that the Sustainable Packaging Coalition is working on a 
label concept, and stating that it is important to the industry to 
have some type of ``nutritional'' label that will be globally 
acceptable).
---------------------------------------------------------------------------

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

    \88\ See Part V.A, infra.
---------------------------------------------------------------------------

    Moreover, some commenters suggested that the Guides could help 
ensure that companies conducting LCAs do so in a manner that meets the 
FTC's substantiation standards.\89\ In particular, the Glass Packaging 
Institute suggested that the Guides expressly state that LCAs must meet 
the FTC's substantiation standard for environmental claims, which 
requires that marketers have ``competent and reliable scientific 
evidence, defined as tests, analyses, research, studies or other 
evidence based on the expertise of professionals in the relevant area, 
conducted and evaluated in an objective manner by persons qualified to 
do so,

[[Page 63560]]

using procedures generally accepted in the profession to yield accurate 
and reliable results.''\90\ Other commenters went further, noting that 
because life cycle analyses can vary in requirements and robustness, 
the Guides should indicate the LCA standards or methodologies that the 
Commission considers adequate.\91\
---------------------------------------------------------------------------

    \89\ See, e.g., Est[eacute]e Lauder, Green Packaging Workshop 
Tr. at 176; GPI, Comment 534743-00026 at 10; SDA, Comment 534734-
00026 at 3; Michigan State Univ., Green Packaging Workshop Tr. at 
161.
    \90\ See, e.g., GPI, Comment 534743-00026 at 10 (citing 16 CFR 
260.5).
    \91\ ACC, Comment 536013-00030 at 4; NatureWorks, Green 
Packaging Workshop Tr. at 217-18; see also Georgia-Pacific, Comment 
533431-00007 at 7 (noting that the Guides should provide that claims 
based on LCA studies be conducted with the full analysis required by 
ISO 14044); P&G, Comment 533431-00070 at 2 (``While not all claims 
require a full LCA, recognizing acceptable international standards 
for LCA will help ensure consistency in claims that do rely upon 
LCAs for substantiation.''); SPI, Comment 533431-00036 at 12 
(stating that the scope of the LCA may differ from advertiser to 
advertiser); USGBC, Comment 536013-00029 at 10-11 (suggesting that 
if the FTC addresses LCA, it should adopt a particular LCA approach, 
such as the National Renewable Energy Laboratory's Life Cycle 
Inventory Database Project, or set forth specific LCA parameters 
that standardize the relevant impact categories, life cycle stages, 
and service periods that are the basis of these assessments).
---------------------------------------------------------------------------

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

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

3. Analysis
    After reviewing the comments and the results of its consumer 
perception study, the Commission has decided not to propose guidance 
about the use of life cycle information either in marketing or as 
substantiation for environmental claims.\94\ First, the Commission 
lacks information about how consumers interpret life cycle claims in 
marketing. Moreover, due to the complexity and variability of these 
claims, general advice is unlikely to be useful in any particular case. 
Therefore, the Commission will continue to analyze these claims on a 
case-by-case basis.
---------------------------------------------------------------------------

    \94\ Footnote 2 of the Guides currently states that the Guides 
do not address LCA claims. 16 CFR 260.7 n.2. The Guides also do not 
address other environmental claims, but they do not specifically 
identify these claims. For consistency, the Commission proposes 
deleting this footnote.
---------------------------------------------------------------------------

    Second, the Commission declines to propose advising marketers 
either to conduct an LCA to substantiate environmental claims or to 
follow a particular LCA methodology. Relatively few respondents viewing 
broad environmental claims (approximately 15 percent) considered each 
of the life cycle stages. Therefore, the results of the study do not 
provide a basis for advising marketers to conduct an LCA to 
substantiate environmental claims. Marketers may rely on the results of 
an LCA as all, or part of, their substantiation, as long as they ensure 
that the LCA results constitute competent and reliable scientific 
evidence to support their claims. The Commission has no basis for 
choosing one LCA methodology over another. Accordingly, the Commission 
will continue to apply its substantiation analysis to claims relying on 
an LCA to determine whether the assessment: (1) has been conducted and 
evaluated in an objective manner by qualified persons and is generally 
accepted in the profession to yield accurate and reliable results; and 
(2) the LCA is sufficient in quality and quantity based on standards 
generally accepted in the relevant scientific fields, when considered 
in light of the entire body of relevant and reliable scientific 
evidence, to substantiate that each of the marketer's claims is true.

V. Claims Addressed by the Current Green Guides

    The Commission requested comment on what changes, if any, it should 
make to its existing guidance on specific claims (currently, in Section 
260.7). This part of the Notice summarizes the comments and relevant 
workshop discussions, reviews the consumer perception evidence, and 
provides the Commission's analysis of: (1) general environmental 
benefit claims; (2) certifications and seals of approval; (3) 
degradable claims; (4) compostable claims; (5) recyclable claims; (6) 
recycled content claims; (7) ozone-safe and ozone-friendly claims; (8) 
free-of and non-toxic claims; (9) source reduction claims; and (10) 
refillable claims.

A. General Environmental Benefit Claims

1. The Current Guides
    The current Guides section on general environmental benefit claims 
( e.g ., ``environmentally friendly'') states: ``[u]nqualified general 
claims of environmental benefit are difficult to interpret, and 
depending on their context, may convey a wide range of meanings to 
consumers. In many cases, such claims may convey that the product, 
package, or service has specific and far-reaching environmental 
benefits.''\95\ The Guides remind marketers that they have a duty to 
substantiate ``every express and material implied claim that the 
general assertion conveys to reasonable consumers about an objective 
quality, feature or attribute of a product.'' Unless marketers can meet 
this ``substantiation duty,'' they should avoid, or qualify, these 
claims ``as necessary, to prevent deception about the specific nature 
of the environmental benefit being asserted.''\96\ The following 
addresses the comments discussing general environmental benefit claims, 
the Commission's relevant consumer perception study findings, and the 
Commission's proposed, revised guidance for such claims.
---------------------------------------------------------------------------

    \95\ 16 CFR 260.7(a).
    \96\ Id.
---------------------------------------------------------------------------

2. Comments
    As discussed below, many commenters asserted that general 
environmental benefit claims may confuse consumers and that the 
Commission should provide additional guidance on use of these claims, 
including what type of substantiation supports them and how marketers 
can effectively qualify them. Other commenters asserted that the Green 
Guides should prohibit general environmental claims altogether.
a. Substantiating General Environmental Benefit Claims - Life Cycle 
Considerations
    Several commenters recommended that the Guides state that marketers 
making a general environmental claim have substantiation about the 
environmental impact of a product throughout its entire life cycle (see 
Part IV.F, supra, for a general discussion of comments regarding life 
cycle

[[Page 63561]]

analysis).\97\ For example, Unilever United States, Inc. asserted that 
marketers should review all aspects of the product's life cycle to 
substantiate ``eco-friendly'' claims because consumers reasonably 
interpret those claims to mean that the product as a whole offers a 
material environmental benefit and presents no significant 
environmental risk.\98\ Similarly, EPA's Sustainable Products Network 
(``EPA-SPN'') asserted that ``general claims that imply overall 
superiority in environmental performance must be substantiated by 
information that addresses multiple environmental attributes over the 
product's life cycle.''\99\
---------------------------------------------------------------------------

    \97\ See, e.g., Michigan State Univ., Green Packaging Workshop 
Tr. at 187 (``[I]t is precisely those broad claims that should never 
be made unless you can back them up and the only way you could back 
them up would be with a full blown life cycle analysis.''); Keith 
Christman, American Chemistry Council (``ACC''), Green Packaging 
Workshop Tr. at 210; GPI, Comment 534743-00026 at 9-10.
    \98\ Unilever United States, Inc. (``Unilever''), Comment 
534743-00030 at 1.
    \99\ EPA-SPN, Comment 536013-00062 at 4; see also P&G, Comment 
533431-00070 at 3 (stating that in the absence of a life cycle 
analysis, comparative environmental claims should be limited to 
specific and verifiable parameters regarding the sourcing of raw 
materials, manufacturing, transportation, or packaging); Georgia-
Pacific, Comment 533431-00007 at 3.
---------------------------------------------------------------------------

    Although these commenters agreed about the importance of 
considering a product over its life cycle, they advocated different 
types and levels of substantiation. Unilever, for example, suggested 
that the FTC develop criteria under which marketers would have to 
address the major stages of a product's life cycle - its production, 
packaging, formula/ingredients, and disposability.\100\ Under 
Unilever's framework, if a company can meet eligibility standards for 
three out of these four criteria, it could still make a general 
environmental benefit claim as long as that unmet criterion is clearly 
and accurately disclosed (e.g., ``environmentally friendly, but not 
recyclable'').
---------------------------------------------------------------------------

    \100\ Unilever, Comment 534743-00030 at 1-2.
---------------------------------------------------------------------------

    EPA-SPN stated that a full quantitative life cycle assessment, 
``while highly desirable,'' is not necessary. Instead, marketers should 
demonstrate that they have addressed ``key attributes'' from a life 
cycle perspective.\101\ Georgia-Pacific also suggested that the FTC 
``recognize the use of the ISO 14040 series standards when comparing 
products and, in particular, the need to include the life cycle impact 
assessment phase of the LCA as one essential requirement in . . . 
comparing products.''\102\
---------------------------------------------------------------------------

    \101\ Specifically, EPA-SPN recommended that the following types 
of information provide ``adequate substantiation'' for general 
environmental benefit claims: ``1) certification under voluntary 
consensus standards that include multiple environmental attributes 
based on consideration of the product's life cycle; 2) certification 
under multi-attribute, life cycle-based eco-labeling programs, such 
as labeling programs that follow the requirements of the ISO 14024 
standard for Type 1 environmental labels; or 3) life cycle analyses 
that follow the requirements of the ISO 14040-series of standards 
for life cycle assessment.'' EPA-SPN, Comment 536013-00062 at 11; 
see also EPA-EPPP, Comment 533431-00038 at 6.
    \102\ Georgia-Pacific, Comment 533431-00007 at 3.
---------------------------------------------------------------------------

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

    \103\ BIFMA, Green Building and Textiles Workshop Tr. at 246; 
Sophia Greenbaum, Sustainable Buildings Industry Council (``SBIC''), 
Green Building and Textiles Workshop Tr. at 246 (suggesting that 
there is no single methodology for establishing life cycle 
analysis); see also Green Seal, Green Building and Textiles Workshop 
Tr. at 247.
    \104\ Formaldehyde Council, Inc., Comment 533431-00047 at 3.
    \105\ SDA, Comment 534734-00028 at 3 (stating the FTC should not 
require an LCA as substantiation for ``properly qualified, well-
supported claims'' due to the cost such a requirement would impose 
on small businesses, but that the Guides, nevertheless, should 
encourage marketers to conduct a ``sufficient inquiry to avoid the 
use of claims . . . that do not acknowledge other significant 
environmental impacts associated with a product's formulation 
process or its use''); The Clorox Company (``Clorox''), Comment 
534743-00017 at 1 (asserting that even when marketers are making 
general claims, they should not be required to conduct a life cycle 
assessment); see also ACC, Comment 533431-00023 at 5 (stating that 
LCA studies should not be a necessary precondition to making an 
environmental claim).
    \106\ Est[eacute]e Lauder, Green Packaging Workshop Tr. at 176; 
Michigan State Univ., Green Packaging Workshop Tr. at 161.
---------------------------------------------------------------------------

b. Qualifying General Environmental Benefit Claims
    Some commenters recommended that the Guides provide additional 
advice on how marketers can effectively qualify general environmental 
benefits. For example, one commenter suggested that the Guides should 
advise marketers on how to use more effective qualifiers. This 
commenter specifically advised the Commission to require that 
qualifications be ``clear, understandable, prominently displayed, and 
indicate an actual environmental benefit.''\107\ This commenter also 
emphasized that a consumer evaluating an advertisement should be able 
to ``quickly and easily tell that the environmental benefit that the 
product has is the specific environmental benefit indicated, not the 
wider general benefit included in the ad's message - i.e., by such 
phrases as `environmentally friendly.'''\108\ Another commenter 
asserted that the FTC should provide examples of accompanying language 
that would be specific enough to allow the use of these types of 
claims.\109\
---------------------------------------------------------------------------

    \107\ Krenn, Comment 533431-00014 at 5.
    \108\ Id.
    \109\ 3M Company, Comment 533431-00027 at 3; see also EHS, 
Comment 533431-00057 at 2 (suggesting that general claims should 
never appear without a clear statement of the product's specific 
attributes and that ``sufficient point of sale information should be 
made available to the consumer as to what the environmentally 
preferred attributes are'').
---------------------------------------------------------------------------

c. Prohibiting All General Environmental Benefit Claims
    Some commenters argued that by allowing general environmental 
benefit claims, even when qualified, the Guides facilitate 
deception.\110\ These commenters, therefore, recommended that the Green 
Guides prohibit all general environmental claims. For example, 
GreenBlue argued that there is no single definition of general 
environmental benefit terms such as ``green'' or ``environmentally 
friendly.'' Therefore, their use only confuses consumers even if the 
terms are qualified with text that describes the specific attribute 
that contributes to their ``green'' status.\111\ GreenBlue noted that 
``environmental excellence'' in one attribute can result in trade-offs 
in another. For example, the increased use of recycled content may 
require less energy for material production, but may result in greater 
weight and, therefore, higher energy costs for transportation.

[[Page 63562]]

According to GreenBlue, because such trade-offs are sufficiently 
common, the Guides should discourage general environmental benefit 
claims, even when accompanied by a specific-attribute qualifier, unless 
a company is willing to include a full explanation of environmental 
trade-offs.
---------------------------------------------------------------------------

    \110\ Banning general environmental benefit claims would be 
consistent with ISO 14021, which prohibits general environmental 
claims. Specifically, ISO 14021 provides that ``[a]n environmental 
claim that is vague or non-specific or which broadly implies that a 
product is environmentally beneficial or environmentally benign 
shall not be used. Therefore, environmental claims such as 
`environmentally safe,' `environmentally friendly,' `earth 
friendly,' `non-polluting,' `green,' `nature's friend,' and `ozone 
friendly' shall not be used.'' ISO 14021 5.3:1999(E).
    \111\ GreenBlue, Comment 533431-00058 at 4-5.
---------------------------------------------------------------------------

    Similarly, EPA-SPN provided an example of a potentially deceptive 
qualified claim. It noted that a product advertised as ``Eco-safe 
because of low-VOC content'' implies that VOC content is the most 
important factor in determining ``overall environmental performance.'' 
EPA-SPN cautioned that it is not possible to know if this is actually 
the case without information on other product attributes. EPA-SPN, 
therefore, suggested that marketers ``state the claim in terms of the 
relevant attribute without implying broader environmental benefit, 
e.g., ``100% post-consumer content'' or ``low VOC.'' EPA-SPN also 
recommended that any further description be limited to a statement of 
environmental benefit directly related to the attribute. Thus, 
according to EPA-SPN, a claim such as ``Low VOC - promotes cleaner 
air'' would be proper because ``VOC emissions have a clear relationship 
to air quality.''\112\
---------------------------------------------------------------------------

    \112\ EPA-SPN, Comment 536013-00062 at 4-5; see also EPI, 
Comment 533431-00063 at 4 (suggesting that the Commission revise the 
Guides to make clear that information about specific product 
attributes will not necessarily qualify general environmental 
claims); Rebekah Lacey (``Lacey''), Comment 533431-00062 at 2 
(``Manufacturers . . . should not be able to pick and choose the 
criteria they use to make general environmental benefit claims. Even 
if they disclose the criteria, they are still implying that the 
criteria are appropriate, which is inherently misleading if the 
criteria focus on a narrow aspect of the product's life cycle 
environmental impact.''); USGBC, Comment 536013-00029 at 9 (noting 
that qualifying broad environmental claims based on a single product 
attribute may be misleading because it ignores the full impact of 
the product on the environment).
---------------------------------------------------------------------------

3. Consumer Perception Evidence
    Only a few commenters submitted consumer perception evidence 
addressing general environmental benefit claims.\113\ Thus, the 
Commission's study focused on this issue. The study examined whether 
both unqualified and qualified general green claims suggested that the 
product has particular environmental benefits. Specifically, the study 
asked respondents whether these types of claims conveyed that the 
product had any of the following seven environmental attributes: made 
from recycled materials, made with renewable materials, recyclable, 
made with renewable energy, biodegradable, non-toxic, and compostable. 
Thus, for example, would consumers viewing a ``green'' or an ``eco-
friendly'' claim think that the advertised product had specific green 
attributes, such as being made with recycled materials or being 
recyclable? Additionally, if the general green claim were qualified 
with a specific environmental attribute, such as ``green - made with 
renewable materials,'' would consumers think the product had 
environmental benefits beyond the specific attribute mentioned?\114\
---------------------------------------------------------------------------

    \113\ See, e.g., Cone LLC, Comment 534743-00007 at 2 (describing 
its February 2008 online survey of over 1,000 consumers and noting 
that 48 percent of respondents believed a product marketed as 
``green'' or ``environmentally friendly'' has a ``positive, (i.e., 
beneficial) impact'' on the environment).
    \114\ The Commission tested the following qualified-general 
claims: ``green - made with renewable materials''; ``green - made 
with renewable energy''; ``green - made with recycled materials''; 
``eco-friendly - made with renewable materials''; ``eco-friendly - 
made with renewable energy''; and ``eco-friendly - made with 
recycled materials.''
---------------------------------------------------------------------------

    Averaging across the seven attributes, 52 percent of respondents 
viewing an unqualified ``green'' claim indicated that they believed 
that the product had a specific attribute about which the survey asked. 
In particular, responses for individual attributes ranged from 61 
percent (product is made from recycled materials) to 40 percent 
(product is compostable). The responses concerning an unqualified 
``eco-friendly'' claim were similar. Averaging across the seven 
attributes, 49 percent indicated that the claim suggested that the 
product had a particular attribute. Specifically, responses for 
individual attributes ranged from 56 percent (product is made from 
recycled materials) to 36 percent (product is made with renewable 
energy). When the general environmental claims were qualified, however, 
on average, 31 percent of consumers indicated that the claim implied 
specific environmental benefits in addition to the attribute 
stated.\115\
---------------------------------------------------------------------------

    \115\ This figure was derived by calculating an average of 
responses regarding six qualified-general claims (three of which 
qualified ``green''; three of which qualified ``eco-friendly''). 
When participants were asked to evaluate a claim that included one 
of the specific-attribute claims, such as ``green - made with 
renewable materials,'' we did not include responses regarding that 
attribute (``made with renewable materials'') in that calculation.
---------------------------------------------------------------------------

    In addition to asking consumers about unqualified and qualified-
general environmental benefit claims, the study asked consumers how 
they perceive certain specific-attribute claims alone (i.e., claims 
that a product is ``made with recycled materials,'' ``made with 
renewable materials,'' or ``made with renewable energy''). This allowed 
the Commission to compare qualified-general claims to specific-
attribute claims to determine the extent to which the general 
environmental claim (e.g., ``green,'' ``eco-friendly'') contributed to 
consumer perceptions. On average, 23 percent of respondents viewing 
specific-attribute claims indicated that the claim implied specific 
benefits in addition to the attribute stated.
    The study further examined whether consumers believe that 
environmental claims suggest anything about any negative environmental 
impact that may come from the product. Twenty-seven percent of 
respondents interpreted the unqualified claims ``green'' and ``eco-
friendly'' as suggesting the product has no negative environmental 
impact.\116\ Sixteen percent of respondents viewing a qualified 
``green'' claim and 17 percent of those viewing a qualified ``eco-
friendly'' claim made the same inference, while only ten percent of 
respondents viewing a specific-attribute claim made this inference.
---------------------------------------------------------------------------

    \116\ This figure is based on the responses to a closed-ended 
question on what ``green'' or ``eco-friendly'' claims suggest or 
imply about any negative environmental impact resulting from the 
tested products. Responses to subsequent questions suggest that 
respondents were not all thinking about negative environmental 
impact in exactly the same way in answering this question.
---------------------------------------------------------------------------

4. Analysis and Guidance
    Both the comments\117\ and FTC staff's Internet surf\118\ indicate 
that general environmental claims are pervasive. Such general claims 
appear both alone\119\ and accompanied by specific claims.\120\ To 
address their potential for consumer deception, and based on the 
comments and the Commission's consumer perception study, the Commission 
proposes advising marketers not to make unqualified general 
environmental benefit claims.\121\ The proposed, revised Guides also 
provide more prominent guidance on how to effectively qualify general 
environmental benefit claims.
---------------------------------------------------------------------------

    \117\ See, e.g., ACC, Comment 533431-00023 at 6; Clorox, Comment 
534743-00017 at 1; 3M Company, Comment 533431-00027 at 3; Krenn, 
Comment 533431-00014 at 2; TerraChoice, Comment 533431-00040 at 3.
    \118\ In December 2008, FTC staff conducted a review of Internet 
sites to investigate the nature and incidence of certain 
environmental marketing claims. See Green Marketing Internet Surf, A 
Report by the FTC's Division of Enforcement (``FTC Staff Internet 
Surf'').
    \119\ In the FTC Staff Internet Surf, an express ``green'' claim 
occurred in 49 percent of the 799 web pages containing general 
environmental claims, and eco-/earth-/environmentally ``friendly'' 
occurred in 41 percent of them.
    \120\ For example, in the FTC Staff Internet Surf, on the 799 
web pages with general environmental claims, renewability claims co-
occurred on 36 percent of the pages; carbon claims co-occurred on 35 
percent of them; recycled content claims co-occurred on 18 percent; 
and biodegradability claims co-occurred on 12 percent.
    \121\ This proposed guidance can be found in 16 CFR 260.4.

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[[Page 63563]]

a. Unqualified General Environmental Benefit Claims
    The consumer perception evidence and some comments reaffirm the 
current Guides' advice that unqualified general environmental benefit 
claims convey a range of meanings. For example, the Commission's 
consumer perception study found that 61 percent of respondents viewing 
an unqualified ``green'' claim believed the product is made from 
recycled materials; 59 percent believed the product is recyclable; 54 
percent believed the product is made with renewable materials; 53 
percent believed the product is biodegradable; 48 percent believed the 
product is made with renewable energy; 45 percent believed the product 
is non-toxic; and 40 percent believed the product is compostable.\122\ 
Averaging across these seven attributes, 52 percent of respondents 
viewing an unqualified ``green'' claim stated that the claim definitely 
or probably suggested that the product had these specific green 
attributes. The percentages are similar for respondents viewing an 
``eco-friendly'' claim.\123\ Moreover, 27 percent of respondents 
interpreted the unqualified claims ``green'' and ``eco-friendly'' as 
suggesting the product has no negative environmental impact.
---------------------------------------------------------------------------

    \122\ As discussed above, the Commission tested the claims as 
they appeared on laundry baskets, kitchen flooring, and wrapping 
paper. The response rates for laundry baskets and kitchen flooring 
were very similar. A slightly larger percentage of respondents 
perceived wrapping paper to possess unstated environmental 
attributes. However, because the responses were interpreted net of a 
non-environmental control claim, the analysis largely eliminated 
this difference from the results.
    \123\ Of respondents viewing an ``eco-friendly'' claim, 57 
percent believed the product is recyclable; 56 percent believed the 
product is made from recycled materials; 55 percent believed it is 
biodegradable; 51 percent believed it is made with renewable 
materials; 47 percent believed it is non-toxic; 43 percent believed 
it is compostable; and 36 percent believed it is made with renewable 
energy. The average value was 49 percent.
---------------------------------------------------------------------------

    Given these findings, and because FTC law requires marketers to 
substantiate every express and implied environmental benefit that 
consumers reasonably could take from such a claim,\124\ unqualified 
general environmental marketing claims remain very difficult, if not 
impossible, to substantiate. Very few products, if any, have all of the 
attributes consumers appear to perceive from general environmental 
benefit claims. In addition, given that all products have some 
environmental impact, it is doubtful that a marketer could substantiate 
that a product has no or negligible negative environmental impact. The 
Commission, therefore, proposes revising the Guides to more directly 
caution marketers not to make unqualified general environmental benefit 
claims.
---------------------------------------------------------------------------

    \124\ FTC Policy Statement Regarding Advertising Substantiation 
(``Substantiation Policy Statement''), appended to Thompson Medical 
Co., 104 F.T.C. 648, 839 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 
1986), cert. denied, 479 U.S. 1086 (1987).
---------------------------------------------------------------------------

    Because marketers should not make unqualified general environmental 
benefit claims, the Commission declines to adopt commenters' 
suggestions that the Guides delineate the particular substantiation 
needed to support such claims. Moreover, unlike the approach taken by 
ISO 14021, which prohibits general environmental claims, the Commission 
does not propose advising marketers to never use a general 
environmental benefit claim. As discussed below, marketers may be able 
to effectively qualify these claims to focus consumers on the specific 
environmental benefits that marketers could substantiate.
b. Qualified General Environmental Benefit Claims
    The current Guides state that marketers may make broad 
environmental claims if they are ``qualified, as necessary, to prevent 
deception about the specific nature of the environmental benefit being 
asserted.''\125\ Through examples, the Guides also advise marketers 
that qualifications should be sufficiently ``clear and prominent'' to 
convey the idea that the claim refers only to limited environmental 
benefits and that ``no other deceptive implications are created by the 
context.'' The Commission's consumer perception study supports this 
advice by demonstrating that qualifying a general green claim reduces 
the number of respondents believing: (1) that a product has specific, 
unstated benefits; and (2) that a product has no negative environmental 
impact.
---------------------------------------------------------------------------

    \125\ 16 CFR 260.7(a).
---------------------------------------------------------------------------

    First, as discussed above, on average, approximately half of the 
respondents viewing a general, unqualified ``green'' claim believed 
that the claim suggested specific, unstated environmental benefits. 
When viewing a qualified ``green'' claim, on average, substantially 
fewer consumers (30 percent) believed that the claim suggested 
specific, unstated benefits.\126\ For example, when a ``green'' claim 
was qualified with the statement ``made with recycled materials,'' 26 
percent of respondents took away implied claims, a decrease of 26 
percentage points. Similarly, when a ``green'' claim was qualified with 
the statement ``made with renewable energy,'' 29 percent of respondents 
took away implied claims, a decrease of 22 percentage points.
---------------------------------------------------------------------------

    \126\ To calculate this number, the Commission took an average 
across all three qualified- ``green'' claims: ``green - made with 
renewable materials''; ``green - made with renewable energy''; and 
``green - made with recycled materials.'' The results are similar 
for qualified ``eco-friendly'' claims, where, on average, 32 percent 
of participants took away the specific, unstated attributes, 
compared to the 49 percent who took away specific, unstated 
attributes when presented with the unqualified ``eco-friendly'' 
claim.
---------------------------------------------------------------------------

    Second, the survey results indicate that the qualification of a 
general claim reduces consumer misperception of a product's overall 
environmental impact. While 27 percent of respondents stated that a 
product advertised with an unqualified ``green'' or ``eco-friendly'' 
claim had no environmental impact, only 16 percent of respondents 
viewing a qualified ``green'' claim, and 17 percent of those viewing a 
qualified ``eco-friendly'' claim, made the same inference.
    Although the percentage of respondents believing that a product had 
specific, unstated benefits and had no negative impact significantly 
decreased, some respondents still saw implied claims. Specifically, 31 
percent of respondents saw implied claims, and 17 percent believed a 
product had no negative impact. To determine the extent to which the 
general environmental claim (e.g., ``green,'' ``eco-friendly'') 
contributed to these continuing perceptions, the Commission compared 
qualified-general claims to specific-attribute claims alone (e.g., 
``made with recycled materials''). Respondents viewing qualified-
general claims were only eight percent more likely to see implied 
claims than those viewing the specific-attribute only claims.\127\ 
Moreover, respondents viewing qualified-general claims were only 
approximately six percent more likely to state that the product had no 
negative environmental impact than those viewing specific-attribute 
claims alone.\128\ Thus, when qualified, the use of a general green 
claim did not appear to significantly contribute to consumers' 
propensity to see implied claims or to believe a product had no 
negative environmental impact.
---------------------------------------------------------------------------

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

    The results, therefore, suggest that qualifying a general 
environmental claim can focus consumers on the specific advertised 
benefit and significantly reduce misperceptions

[[Page 63564]]

about negative environmental impact. Based on these findings, the 
Commission proposes to emphasize the current Guides' advice on 
qualifying general environmental benefit claims. The proposed, revised 
section states that marketers must use clear and prominent qualifying 
language to convey to consumers that a general environmental claim 
refers only to a specific and limited environmental benefit. The 
section also cautions marketers that explanations of specific 
attributes, even when true and substantiated, will not adequately 
qualify a general environmental marketing claim if the advertisement's 
context implies other deceptive claims. Therefore, the proposed Guides 
remind marketers they should ensure that the advertising's context 
creates no deceptive implications.
    Marketers also should use caution with qualifications to ensure 
that they are not making additional claims they cannot substantiate. 
The Commission's study demonstrates that even some specific-attribute 
claims caused consumers to believe the advertised product had other, 
unstated environmental attributes. For example, 30 percent of 
respondents viewing a ``made with renewable materials'' claim believed 
the advertised product had environmental attributes not expressly 
mentioned in the claims. Therefore, marketers must substantiate 
additional claims conveyed by the qualification itself.
    Determining whether a general environmental claim is adequately 
qualified depends heavily on the claim's context.\129\ To provide 
additional guidance on this point, the Commission proposes adding a new 
example to the Guides. In proposed Example 3, the marketer's claim that 
its packaging is now ``Greener than our previous packaging'' is likely 
deceptive even though the marketer reduced the weight of its packaging, 
compared to previous packaging, by 15 percent. The example notes that 
consumers likely interpret ``Greener'' in this context to mean that 
other significant environmental aspects of the packaging have been 
improved. Proposed Example 3 suggests that the marketer qualify the 
claim by clearly stating that it reduced the weight of its packaging, 
compared to previous packaging, by 15 percent. If the advertisement's 
context does not imply other deceptive claims, this claim likely would 
not be deceptive.
---------------------------------------------------------------------------

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

    The Commission is concerned that a general environmental benefit 
claim, in combination with a particular attribute, may imply that the 
particular attribute provides the product with a net environmental 
benefit. If a particular attribute represents an environmental 
improvement in one area, but causes a negative impact elsewhere that 
makes the product less environmentally beneficial than the product 
otherwise would be, consumers may be misled. For example, a marketer 
that claims its product is ``Green - Now contains 70 percent recycled 
content,'' needs to import more materials from a distant source, 
resulting in increased energy use which more than offsets the 
environmental benefit achieved by using recycled content. If consumers 
interpret the claim ``Green - Now contains 70 percent recycled 
content'' to mean that the product has a net environmental benefit, the 
claim would be deceptive. The Commission, therefore, requests comment 
on consumer interpretation of qualified-general environmental benefit 
claims and on whether to include guidance concerning this issue.
    The following part on certifications and seals further discusses 
the issue of broad, unqualified green claims and includes additional 
examples of effective qualifications.

B. Certifications and Seals of Approval

1. The Current Guides
    Currently, the Guides do not contain a section devoted to 
certifications and seals of approval. However, one example notes that 
an environmental seal of approval (``seal'') may imply that a product 
is environmentally superior to other products. Specifically, Example 5 
in the general environmental benefit claims section provides: ``A 
product label contains an environmental seal, either in the form of a 
globe icon, or a globe icon with only the text `Earth Smart' around it. 
Either label is likely to convey to consumers that the product is 
environmentally superior to other products. If the manufacturer cannot 
substantiate this broad claim, the claim would be deceptive.''\130\ 
Accordingly, the Guides instruct marketers who use environmental seals 
to accompany such claims with clear and prominent language limiting any 
environmental superiority representation to the particular product 
attribute or attributes it can substantiate.\131\
---------------------------------------------------------------------------

    \130\ 16 CFR 260.7(a), Example 5.
    \131\ Id. FTC staff's brochure for businesses, ``Complying with 
the Environmental Marketing Guides,'' (``FTC Staff's Business 
Brochure'') reiterates this guidance and states that third-party 
certification does not insulate an advertiser from Commission 
scrutiny or eliminate an advertiser's obligation to ensure that it 
has substantiation for the claims communicated by the certification. 
In addition, the FTC Staff's Business Brochure advises that if a 
seal of approval ``implies that a third party has certified the 
product, the certifying party must be truly independent from the 
advertiser and must have professional expertise in the area that is 
being certified.'' FTC Staff's Business Brochure, Complying with the 
Environmental Marketing Guides at 6, available at (http://www.ftc.gov/bcp/edu/pubs/business/energy/bus42.pdf).
---------------------------------------------------------------------------

2. Comments
    Several commenters and panelists identified the use of third-party 
certifications as a significant green marketing trend\132\ and 
highlighted the benefits of such certifications to businesses and 
consumers.\133\ For example, Green Seal, Inc. asserted that third-party 
certification provides marketers with independent and credible 
substantiation.\134\ Weyerhaeuser stated that third-party 
certifications are ``useful in technical areas, where consumers face 
difficulty in understanding or directly measuring benefits.''\135\ 
Similarly, the U.S. Green Building Council observed that ``when 
properly administered by certifying organizations truly independent of 
the product manufacturer and appropriately represented by marketers, . 
. . third-party certification takes the guesswork out of consumer 
purchases, providing an independent and expert assessment of

[[Page 63565]]

technical product claims that may be difficult for consumers to 
interpret or verify on their own.''\136\ Cone LLC affirmed that 
consumers rely on certifications when evaluating environmental claims. 
Its opinion survey found that 80 percent of respondents believed that 
certification by third-party organizations is ``important in providing 
oversight to ensure environmental messaging by companies is 
accurate.''\137\
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    \132\ See, e.g., Weyerhaeuser, Comment 534743-00033 at 2 (``The 
emergence of environmental seals and third-party certifications is 
one of the most important trends the FTC identified as posing 
potential problems for consumers.''); AF&PA, Comment 534743-00031 at 
2; David Mallen, National Advertising Division, CBBB (``NAD''), 
Green Packaging Workshop Tr. at 46; USGBC, Comment 534743-00027 at 
3.
    \133\ See, e.g., USGBC, Comment 536013-00029 at 3-4 (noting that 
rating systems provide a consistent and quantifiable definition of 
``green building'' for consumers and an expert, third-party 
assurance that technical claims are true); Clorox, Comment 534743-
00017 at 1.
    \134\ Green Seal, Green Packaging Workshop Presentation at 
(http://www.ftc.gov/bcp/workshops/packaging/presentations/baldwin.pdf).
    \135\ Weyerhaeuser, Comment 534743-00033 at 2; see also Clorox, 
Comment 534743-00017 at 1; Formaldehyde Council, Comment 533431-
00047 at 6.
    \136\ USGBC, Comment 534753-00027 at 3.
    \137\ Cone LLC, Comment 534743-00007 at 9; see also Tandus, 
Comment 536013-00037 at 1 (``[I]ndependent, third party verification 
and certification provides extra credibility and assurance that the 
manufacturers' claims are truthful and accurate.'').
---------------------------------------------------------------------------

    One commenter, however, noted that consumers typically cannot 
verify third-party certifications. Therefore, there is a ``heightened 
degree of trust involved, and there is a heightened degree of 
credibility that is at stake.''\138\ Other commenters cautioned that 
seals and logos may communicate a general claim of environmental 
preferability with no means for the consumer to determine which 
environmental benefits form the basis for the claim.\139\
---------------------------------------------------------------------------

    \138\ NAD, Green Packaging Workshop Tr. at 46.
    \139\ CSPA, Comment 533431-00049 at 2-3; P&G, Comment 533431-
00070 at 2; SDA, Comment 536013-00018 at 2; USGBC, Comment 536013-
00029 at 6; Saint-Gobain, Comment 533431-00037 at 7-8.
---------------------------------------------------------------------------

    Notwithstanding the benefits of third-party certifications, several 
panelists and commenters highlighted areas of potential consumer 
confusion and made various suggestions regarding how to address that 
confusion. The following discusses commenters' suggestions addressing 
the use of certifications and seals in marketing and when third-party 
certifications adequately substantiate environmental claims.
a. Use of Certifications and Seals in Marketing
    Several panelists and commenters suggested that the FTC provide 
additional guidance on when the display of certifications and seals is 
likely to mislead consumers.\140\ For example, one commenter asserted 
that seals of approval and ``eco-labels'' ``that communicate a general 
`environmentally friendly' message to consumers should be treated as 
environmental claims within the scope of the guides and be subject to 
applicable principles and criteria.''\141\ This commenter suggested 
that the FTC more prominently feature its advice on the need to qualify 
certain types of seals that could connote general environmental 
benefits.\142\ Another commenter suggested that marketers generally 
should not use ``vague, undefined'' environmental terms but should be 
able to incorporate such terms into certifications, as long as the 
marketer makes the method and terms of the certification publicly 
available and easily accessible.\143\
---------------------------------------------------------------------------

    \140\ See, e.g., ACC, Comment 536013-00030 at 3-4; CSPA, Comment 
533431-00049 at 2-3; Johns Manville, Comment 536013-00034 at 6; 
Michelle Moore, USGBC, Green Building and Textiles Workshop Tr. at 
197; SBIC, Green Building and Textiles Workshop Tr. at 224; SPI, 
Comment 533431-00036 at 11; USGBC, Comment 536013-00029 at 3.
    \141\ P&G, Comment 533431-00070 at 2; see also USGBC, Comment 
536013-00029 at 6 (stating that marketers should specify the 
attributes to which a seal refers in order to help consumers 
interpret their meaning); CSPA, Comment 533431-00049 at 3; Saint-
Gobain, Comment 533431-00037 at 3.
    \142\ P&G, Comment 533431-00070 at 2; see 16 CFR 260.7(a), 
Example 5.
    \143\ Greenpeace USA, Comment 536013-00020 at 3.
---------------------------------------------------------------------------

    Several commenters recommended that the Guides include examples 
illustrating ways in which marketers could effectively qualify third-
party certifications and seals of approval.\144\ In the building 
context, for example, commenters suggested the Guides include examples 
illustrating how marketers can qualify certifications to distinguish 
between building design features and performance and to clarify whether 
a certification applies to a product or whole building.\145\
---------------------------------------------------------------------------

    \144\ See, e.g., GMA, Comment 533431-00045 at 4; SPI, Comment 
533431-00036 at 8-9.
    \145\ See, e.g., ACC, Comment 536013-00030 at 1; Johns Manville, 
Comment 536013-00034 at 6; USGBC, Comment 536013-00029 at 4-5.
---------------------------------------------------------------------------

    Commenters also recommended that the Guides address how marketers 
can avoid misleading consumers about the certifier's independence.\146\ 
For example, one commenter opined that self-certifications ``can be 
misleading to consumers unless the company expressly discloses that the 
certification has not been conducted by an independent third-
party.''\147\ Another asserted that the Guides should address the 
financial relationship between the certifying organization and the 
company being certified.\148\
---------------------------------------------------------------------------

    \146\ ACC, Comment 536013-00030 at 3 (noting that marketers 
should distinguish seals based on voluntary consensus standards from 
other certifications and that the FTC should aid consumers in 
distinguishing among certification programs, including those that 
use life cycle assessment as the basis for certification); Frank 
Hurd, CRI (``CRI''), Green Building and Textile Workshop Tr. at 153; 
Johns Manville, Comment 536013-00034 at 7-8; NAIMA, Comment 536013-
00017 at 9; USGBC, Comment 536013-00029 at 2-3.
    \147\ CRS, Comment 534743-00009 at 4-5; see also Gensler, Green 
Building and Textiles Workshop Tr. at 109 (highlighting the 
differences between self-certification; certification where there is 
a relationship between the certifying organization and marketer - 
e.g., marketer is a member of the certifying trade association; and 
certification by an independent third-party).
    \148\ Skye Con, Comment 536013-00036 at 3.
---------------------------------------------------------------------------

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

    \149\ SBIC, Green Building and Textile Workshop Tr. at 224; see 
also Gensler, Green Building and Textile Workshop Tr. at 135 
(stating that marketers need to make sure that graphics do not imply 
more than is actually being delivered); OMI, Comment 536013-00022 at 
3 (noting that advertisements must clearly state whether a logo 
refers to membership only or a ``verifiable claim of 
certification'').
    \150\ ACC, Comment 536013-00030 at 4; NAIMA, Comment 536013-
00017 at 8.
    \151\ USGBC, Comment 534743-00027 at 4; see also SDA, Comment 
534743-00028 at 3.
    \152\ USGBC, Comment 534743-00027 at 4.
---------------------------------------------------------------------------

b. Third-Party Certifications as Substantiation
    Commenters also advised the FTC to address the use of third-party 
certifications to substantiate claims. Several urged the Commission not 
to require third-party certification as substantiation for an 
environmental claim.\153\ Others recommended that the FTC revise the 
Guides to set forth the parameters of a third-party certification that 
would constitute adequate substantiation.\154\ Some commenters

[[Page 63566]]

and panelists stated that marketers relying on a third-party 
certification as substantiation must be able to show that the 
certifying party is truly independent from the advertiser and that the 
certifying party has professional expertise in the area that is being 
certified.\155\ Thus, for example, some commenters proposed that the 
Guides reiterate, or at least cross-reference, the principles outlined 
in the Guides Concerning the Use of Endorsements and Testimonials in 
Advertising (``Endorsement Guides''),\156\ including that endorsements 
may not contain factual representations that would be deceptive or 
could not be substantiated if made directly by the advertiser\157\ and 
that marketers should not rely on endorsements by entities that have a 
monetary or other relationship with the marketer.\158\
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    \153\ ATA, Comment 533431-00041 at 8 (stating that requiring 
third-party certification to substantiate claims ``would impose 
unnecessary and impractical burdens on advertisers'' and that those 
claims may already be adequately substantiated under the FTC Act); 
AF&PA, Comment 533431-00019 at 2; Sappi Fine Paper North America 
(``Sappi''), Comment 534743-00023 at 2; Skye Con, Comment 536013-
00036 at 3; The Vinyl Institute (``Vinyl Institute''), Comment 
533431-00046 at 4. But see Healey, Comment 533431-00048 at 7 
(stating that FTC could prohibit broad claims unless they are 
certified by an independent party); Patagonia, Inc. (``Patagonia''), 
Comment 536013-00011 at 1 (noting that marketers making ``safer'' 
chemical use or water/energy conservation claims in textiles should 
substantiate claims with third-party certifications).
    \154\ See, e.g., ACC, Comment 536013-00030 at 3-4; AF&PA, 
Comment 536013-00021 at 2-3; AZS Consulting, Inc., Comment 536013-
00024 at 1-2; Healey, Comment 533431-00048 at 2; Johns Manville, 
Comment 536013-00034 at 6; SDA, Comment 536013-00018 at 2; Skye Con, 
Comment 536013-00036 at 3; SPI, Comment 533431-00036 at 12; USGBC, 
Comment 536013-00029 at 4; Vinyl Institute, Comment 536013-00019 at 
2-3; Weyerhaeuser, Comment 536013-00035 at 2.
    \155\ See, e.g., GMA, Comment 533431-00045 at 6; see also Todd 
Copeland, Patagonia, Inc. (``Patagonia''), Green Building and 
Textiles Workshop Tr. at 81-82; ECOnscious, Comment 536013-00023 at 
1-2; Grace Gershuny, Organic Trade Association (``OTA''), Green 
Building and Textiles Workshop Tr. at 62; Oeko-Tex Certification 
Body (USA) (``Oeko-Tex''), Comment 536013-00013 at 4; Skye Con, 
Comment 536013-00036 at 3.
    \156\ 16 CFR Part 255.
    \157\ GMA, Comment 533431-00045 at 6; Johns Manville, Comment 
536013-00034 at 6; Cassie Phillips, Weyerhaeuser (``Weyerhaeuser''), 
Green Packaging Workshop Tr. at 220-221; Weyerhaeuser, Comment 
534743-00033 at 2.
    \158\ AF&PA, Comment 534743-00031 at 2; see also CRS, Comment 
534743-00009 at 4 (stating that because consumers assume 
certifications have been conducted by independent third-parties, 
companies should expressly disclose when they have not); AF&PA, 
Comment 534743-00031 at 2; Green Seal, Green Packaging Workshop Tr. 
at 199-200; Healey, Comment 533431-00048 at 8.
---------------------------------------------------------------------------

    Panelists and commenters also suggested the Guides provide that 
third-party certification programs be developed through an open, 
transparent and balanced process, such as programs accredited through 
the American National Standards Institute (``ANSI'').\159\ Other 
commenters, however, observed that achieving openness and balance is 
difficult because not all parties may be given a voice in the 
proceedings, and those making the decisions on the standard may possess 
ideological views adverse to certain interests.\160\
---------------------------------------------------------------------------

    \159\ USGBC, Green Building and Textile Workshop Tr. at 134,160-
61; USGBC, Comment 536013-00029 at 5; see also Oeko-Tex, Comment 
536013-00013 at 6.
    \160\ Vinyl Institute, Comment 536013-00019 at 2; see also ECM 
Biofilms, Inc. (``ECM Biofilms''), Comment 534743-00025 at 2 
(commenting that to be an active member of ASTM and to author 
standards takes resources that are not available to many 
organizations, and ``[a]s a result, standards are written to be 
beneficial to certain organizations'').
---------------------------------------------------------------------------

    In lieu of delineating general parameters, some panelists and 
commenters urged the FTC to establish particular standards that, for 
example, would establish a certification system.\161\ Others, however, 
asserted this should not be the FTC's role.\162\
---------------------------------------------------------------------------

    \161\ See, e.g., Builders Association of South Florida, Comment 
536013-00010 at 1; Stephen Richard Sides, National Paint and 
Coatings Association, Inc. (``NPCA''), Green Building and Textiles 
Workshop Tr. at 128.
    \162\ See John Girman, EPA, Green Building and Textiles Workshop 
Tr. at 200-201; Carlos Martin, National Association of Home Builders 
(``NAHB''), Green Building and Textiles Workshop Tr. at 198-200.
---------------------------------------------------------------------------

3. Analysis and Guidance
    Marketers across industry sectors increasingly use certifications 
and seals of approval to communicate environmental claims. These 
certifications vary from seals of approval issued by third-parties to 
logos developed internally pursuant to company-specific standards. 
Third-party certification programs include certification for single 
attributes (e.g., ``recycled content'') and multiple attributes, which 
may incorporate environmental considerations throughout the life cycle 
of the product.
    Given the widespread use of certifications and seals and their 
potential for consumer confusion, the Commission proposes providing 
additional guidance, specifically in a new Guide section devoted to 
this subject.\163\ This section emphasizes that third-party 
certifications and seals constitute endorsements covered by the 
Endorsement Guides.\164\ This section also states that the use of a 
certification or seal by itself may imply a general environmental 
benefit claim. Because, as discussed above, such claims are so 
difficult to substantiate, this section further advises marketers not 
to use unqualified seals or certifications. Marketers should accompany 
seals or certifications with clear and prominent language limiting the 
general environmental benefit claim to the particular attribute or 
attributes for which they have substantiation. Finally, the section 
addresses the use of certifications as substantiation.
---------------------------------------------------------------------------

    \163\ This proposed guidance can be found in 16 CFR 260.6.
    \164\ 16 CFR Part 255. The Endorsement Guides provide guidance 
on the non-deceptive use of endorsements in marketing and outline 
the parameters of endorsements that would be considered adequate 
substantiation for marketing claims.
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a. Certifications and Seals as Endorsements
    The proposed new section advises marketers that it is deceptive to 
misrepresent, directly or by implication, that a product, package, or 
service has been endorsed or certified by an independent, third-party 
organization. The proposed section states that third-party 
certifications are endorsements,\165\ which should meet the criteria 
for endorsements set forth in the FTC's Endorsement Guides. In 
particular, the proposed section advises marketers to review the 
following Endorsement Guides sections: Definitions,\166\ General 
Considerations,\167\ Expert Endorsements,\168\ Disclosure of Material 
Connections,\169\ and Endorsements by Organizations.\170\
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    \165\ The Endorsement Guides define an endorsement as ``any 
advertising message . . . that consumers are likely to believe 
reflects the opinions, beliefs, findings, or experiences of a party 
other than the sponsoring advertiser, even if the views expressed by 
that party are identical to those of the sponsoring advertiser.'' 16 
CFR 255.0.
    \166\ Id.
    \167\ 16 CFR 255.1. This section provides, among other things, 
that ``[e]ndorsements must reflect the honest opinions, findings, 
beliefs, or experience of the endorser,'' and that the endorsement 
``may not convey any express or implied representation that would be 
deceptive if made directly by the advertiser.''
    \168\ 16 CFR 255.3. An expert endorser is someone who, as a 
result of experience, study, or training, possesses knowledge of a 
particular subject that is superior to that generally acquired by 
ordinary individuals. 16 CFR 255.0(e). An expert endorser's 
qualification must, in fact, give him or her the expertise that he 
or she is represented as possessing with respect to the endorsement. 
16 CFR 255.3(a). An expert endorsement must be supported by an 
actual exercise of expertise, and the expert's evaluation of the 
product must have been at least as extensive as someone with the 
same degree of expertise would normally need to conduct in order to 
support the conclusions presented. 16 CFR 255.3(b).
    \169\ 16 CFR 255.5. When there is a connection between the 
endorser and the seller of the advertised product that might 
materially affect the weight or credibility of the endorsement 
(i.e., the connection is not reasonably expected by the audience), 
such connection must be fully disclosed. 16 CFR 255.5.
    \170\ 16 CFR 255.4.
---------------------------------------------------------------------------

    Rather than simply repeating the Endorsement Guides' text, the 
proposed Green Guides section provides several examples of how the 
Endorsement Guides apply in the context of environmental claims. 
Proposed Example 1 addresses the use of a seal of approval created by 
the marketer itself, rather than bestowed by a third-party. In this 
example, the advertisement implies that an independent third-party 
certifier with appropriate expertise awarded the seal. The example 
notes that this unqualified claim would be deceptive because consumers 
would assume that an independent, third-party certifier

[[Page 63567]]

evaluated the product.\171\ The marketer could avoid deception by using 
clear and prominent qualifying language to alert consumers that it 
created the certifying program.
---------------------------------------------------------------------------

    \171\ See 16 CFR 255.0 (defining ``endorsement'' as a message 
which ``consumers are likely to believe reflects the opinion . . . 
of a party other than the sponsoring advertiser'') (emphasis added); 
16 CFR 255.5 (stating that when there is a connection between the 
endorser and the seller of the advertised product that might 
materially affect the weight or credibility of the endorsement, such 
connection must be fully disclosed); see also Trade Advertising 
Assocs., Inc., 65 F.T.C. 650 (1964) (finding a newspaper's statement 
about ``awards'' it won, which were, in fact, created by the 
publisher, deceptive because consumers were misled into believing 
that an objective third-party had evaluated the newspaper); Revco 
D.S., Inc., 67 F.T.C. 1158 (1965) (finding an advertiser's creation 
and use of a ``Consumer Protective Institute'' seal on products was 
deceptive because the seal created the false impression that ``an 
independent and disinterested organization . . . had approved these 
products'').
---------------------------------------------------------------------------

    Proposed Example 2 involves a marketer who displays a seal of 
approval bestowed by a trade association in which the marketer is a 
member. In this case, the trade association evaluated the environmental 
attributes of the marketer's product. Because the seal of approval 
implies that a third-party evaluated and certified the product, 
consumers likely expect that the endorsing party is truly independent 
from the marketer. In this case, however, the certifier is not a truly 
independent entity because the marketer pays membership dues to the 
association. Under Section 5 of the FTC Act, as explained by the 
Endorsement Guides, marketers are required to disclose a ``material 
connection,'' or a ``connection between the endorser and the seller of 
the advertised product that might materially affect the weight or 
credibility of the endorsement.''\172\ Accordingly, this example makes 
clear that the marketer's failure to disclose its material connection 
with the endorsing association, i.e., that it is a dues-paying member 
of the endorsing association, is deceptive.
---------------------------------------------------------------------------

    \172\ 16 CFR 255.5.
---------------------------------------------------------------------------

    Proposed Example 3 similarly illustrates a failure to disclose a 
material connection and shows how the name of a certifying organization 
can be misleading. In this example, the marketer is a member of an 
industry trade association, the American Institute of Degradable 
Materials, that evaluates the biodegradability of its members' 
products. The association's name may lead consumers to believe that the 
association is an independent certifying organization. Consumers likely 
place different weight on a certification from an industry association 
than from an independent, third-party. Because this advertisement does 
not disclose that the certifier is an industry trade association, the 
advertisement is likely to be deceptive. As shown in the example, the 
marketer could avoid this deception by disclosing that the American 
Institute of Degradable Materials is an industry trade association.
    Unlike the examples above, proposed Example 4 addresses a situation 
in which a marketer touts its relationship with a third party that has 
neither evaluated nor endorsed the environmental attributes of its 
products. In this example, the marketer displays a seal to show that it 
is a member of the ``U.S. EcoFriendly Building Association.'' The 
proposed example makes clear that, in this circumstance, displaying the 
organization's seal may cause consumers to mistakenly believe that the 
organization has evaluated and endorsed the product. In this example, 
the marketer could avoid deception by stating that the seal refers to 
the company's membership only and that the association did not evaluate 
the product's environmental attributes.
b. Certifications and Seals as General Environmental Benefit Claims
    The current Green Guides state that unqualified certifications and 
seals of approval likely convey general environmental benefit claims. 
Specifically, Example 5 of the current general environmental benefit 
section states that a marketer using an unqualified seal of approval 
should be able to substantiate the broad claim that the product is 
environmentally superior to others.\173\ If the marketer cannot, it 
should accompany the seal with ``clear and prominent qualifying 
language limiting the environmental superiority representation to the 
particular product attribute or attributes for which they could be 
substantiated . . . .''\174\ No commenters challenged this approach. 
Therefore, the Commission continues to believe that consumers likely 
interpret unqualified seals and certifications similarly to general 
environmental benefit claims.\175\
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    \173\ 16 CFR 260.7(a).
    \174\ Id.
    \175\ The Commission's study did not test consumer 
interpretation of seals of approval or certifications. Given the 
wide diversity of seal and certification designs, it would have been 
difficult to draw general consumer perception conclusions from 
testing a particular seal design. No commenter submitted relevant 
consumer perception evidence.
---------------------------------------------------------------------------

    As discussed in Part V.A, above, the Commission's consumer 
perception study shows that broad, general environmental benefit claims 
suggest that a product has specific, unstated green attributes, such as 
recyclability and biodegradability, and that the product has no 
negative environmental impact. The study results also reinforce the 
Guides' advice that marketers may be able to avoid making deceptive 
general environmental claims by qualifying those claims.
    The Commission proposes transferring a modified Example 5 into the 
new certification section\176\ and moving the guidance from this 
example into this section. Specifically, the guidance cautions 
marketers that unqualified seals of approval and certifications likely 
constitute general environmental benefit claims and, because marketers 
are unlikely to be able to substantiate such claims, they should not 
use unqualified certifications or seals of approval. The guidance 
further states that marketers should qualify seals of approval or 
certifications to prevent deception. Qualifying language should be 
clear and prominent and should convey that the seal of approval or 
certification applies only to a specific and limited benefit.\177\ The 
Commission will consider whether the qualifying language successfully 
limits the general environmental benefit claim on a case-by-case basis.
---------------------------------------------------------------------------

    \176\ This example is now Example 5 in the proposed new Section 
260.6. The example now states that the environmental seal is likely 
to convey that the product has far-reaching environmental benefits 
and may also convey that it causes no negative environmental impact.
    \177\ It is possible for this qualifying language to be part of 
the certification or seal itself. For example, the name of a seal 
may constitute all or part of the qualification. See proposed 
Examples 2 and 6.
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    In contrast, proposed Example 6 illustrates how a marketer can 
properly use a third-party certification for a single-attribute claim, 
e.g., ``chlorine-free.'' In this example, the name of the certifier 
(``No Chlorine Products Association'') conveys that the certification 
applies only to one environmental attribute, rather than to the overall 
environmental benefit of the product.
c. Third-Party Certifications as Substantiation
    Third-party certification may constitute adequate substantiation. 
Therefore, the following describes the Commission's proposed guidance 
on the use of certifications to substantiate environmental claims, as 
well as the topics the Commission declines to address.
    A marketer may rely on a third-party certification as all or part 
of its substantiation if the marketer ensures that the certification 
constitutes competent and reliable scientific evidence to support its 
claims. In other

[[Page 63568]]

words, a marketer relying on a certification as substantiation must 
ensure that the certification supports each of the marketer's claims 
with tests, analyses, research, or studies that have been conducted and 
evaluated in an objective manner by qualified persons and are generally 
accepted in the profession to yield accurate and reliable results.\178\ 
This evidence should be sufficient in quality and quantity based on 
standards generally accepted in the relevant scientific fields, when 
considered in light of the entire body of relevant and reliable 
scientific evidence, to substantiate that each of the claims is true. 
It is the marketer's responsibility to ensure that the certification 
adequately substantiates its claims. The proposed Guides, therefore, 
remind marketers that simply possessing a third-party certification 
does not eliminate their obligation to ensure that they have 
substantiation for their claims, including all claims communicated by 
the certification.
---------------------------------------------------------------------------

    \178\ 16 CFR 260.5.
---------------------------------------------------------------------------

    The Commission does not propose incorporating four suggestions 
raised by commenters. First, the Commission does not propose requiring 
marketers to obtain a third-party certification to substantiate their 
claims. Rather, Section 5 of the FTC Act gives marketers the 
flexibility to substantiate their claims with any competent and 
reliable scientific evidence.\179\ Because the Guides interpret Section 
5 as applied to environmental claims, requiring a third-party 
certification to substantiate claims is beyond the Guides' purview.
---------------------------------------------------------------------------

    \179\ See Substantiation Policy Statement, 104 FTC at 840 
(explaining that what constitutes a reasonable basis for claims 
depends on a number of factors); see also FTC, Dietary Supplements: 
An Advertising Guide for Industry (2001), available at (http://www.ftc.gov/bcp/edu/pubs/business/adv/bus09.pdf) (stating that 
``[t]he FTC will consider all forms of competent and reliable 
scientific research when evaluating substantiation'').
---------------------------------------------------------------------------

    Second, the Commission does not propose establishing a particular 
certification system. The Green Guides do not establish environmental 
performance standards or identify environmentally preferable industry 
practices. Instead, the Guides' purpose is to provide advice regarding 
consumer interpretation of environmental marketing claims so that 
marketers can avoid making false or misleading claims.
    Third, the Commission declines to propose guidance on the 
development of third-party certification programs. Experts in the field 
are in the best position in a dynamic marketplace to determine how to 
establish certification programs to assess the environmental attributes 
of products. There may be multiple ways to develop standards that would 
constitute adequate substantiation, i.e., substantiation that 
constitutes competent and reliable scientific evidence. Accordingly, 
the Commission will continue to evaluate the adequacy of a third-party 
certification as substantiation on a case-by-case basis.
    Finally, the proposed, revised Guides do not provide that 
certifiers make their standards or any other criteria used to support 
their certifications public. Although Section 5 requires that marketers 
possess substantiation for their claims prior to making them, it does 
not require that marketers make their substantiation publicly 
available.

C. Degradable Claims

1. The Current Guides
    The Guides state that an unqualified degradable claim should be 
substantiated with competent and reliable scientific evidence that the 
entire product or package will completely break down and return to 
nature within a reasonably short period of time after customary 
disposal.\180\ The Guides also provide that degradable claims should be 
qualified to avoid consumer deception about: (1) the product or 
package's ability to degrade in the environment where it is customarily 
disposed; and (2) the rate and extent of degradation. For example, the 
Guides discuss a trash bag labeled ``degradable,'' without 
qualification. The marketer relies on tests showing that the bag will 
degrade in the presence of water and oxygen. Because trash bags are 
customarily incinerated or buried in landfills that inhibit degradation 
by minimizing moisture and oxygen, the marketer lacks substantiation 
that the bags will degrade in a reasonably short period of time. Thus, 
the claim is deceptive.\181\
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    \180\ 16 CFR 260.7(b).
    \181\ Id., Example 1. The FTC Staff's Business Brochure provides 
additional guidance, noting that a ``reasonably short period of 
time'' depends on where the product is disposed. The brochure 
explains that in landfills, where most trash is taken, materials 
degrade very slowly and certain materials take decades to decompose. 
FTC Staff's Business Brochure at 7.
---------------------------------------------------------------------------

    The Commission has challenged degradability claims more than any 
other specific claim addressed by the Green Guides.\182\ These cases 
were not based on products' inability to degrade under any conditions, 
but rather on their inability to degrade in the manner consumers 
expect.
---------------------------------------------------------------------------

    \182\ See, e.g., Dyna-E Int'l, Inc., et al., FTC Docket No. D-
9336 (Dec. 15, 2009) (viscose towels); Kmart Corp., FTC Docket No. 
C-4263 (July 15, 2009) (paper plates); Tender Corp., FTC Docket No. 
C-4261 (July 13, 2009) (moist wipes and plastic packaging).
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2. Comments
    Most commenters supported the Commission's degradable claims 
guidance.\183\ For example, the Soap and Detergent Association 
supported the Guides' provision that ``degradability claims should be 
qualified to the extent necessary to avoid consumer deception about the 
product's ability to degrade in the environment where, or in the manner 
in which, it is customarily disposed.''\184\
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    \183\ See, e.g., Biodegradable Products Institute (``BPI''), 
Comment 533431-00087 at 2 (supporting guidance, but proposing 
changes); EPA-EPPP, Comment 533431-00038 at 7; EPA-SPN, Comment 
536013-00062 at 12; P&G, Comment 533431-00070 at 2.
    \184\ SDA, Comment 533431-00020 at 3; see also ACC, Comment 
533431-00023 at 12.
---------------------------------------------------------------------------

    Although supporting the current guidance, commenters suggested four 
modifications. First, many stressed that typical solid waste disposal 
treatments inhibit degradation.\185\ Procter & Gamble summed up these 
views, stating ``[i]n the United States, solid waste is predominantly 
disposed of by incineration or in a landfill, where little or no 
degradation occurs.''\186\ Consequently, these commenters argued that 
unqualified biodegradable claims are inappropriate for items destined 
for landfills and incinerators.\187\ Second, several commenters 
recommended that the Commission provide guidance on the ``reasonably 
short'' time period for complete decomposition. For example, the 
Biodegradable Products Institute (``BPI'') urged that ``[t]he FTC . . . 
cite a specific timeframe for the process.''\188\ Third, several 
commenters suggested that the Commission reference technical protocols 
that marketers could follow to adequately substantiate degradable 
claims. These commenters did not form

[[Page 63569]]

a consensus, however, regarding which specific protocol(s) the 
Commission should consider.\189\ Finally, the EPA's Sustainable 
Products Network urged that the revised Guides address emerging ``oxo-
degradable'' claims.\190\
---------------------------------------------------------------------------

    \185\ See CSPA, Comment 533431-00049 at 3 (``Very little, if 
any, degradationoccurs when the product is incinerated or disposed 
of in a landfill.''); Georgia-Pacific, Comment 533431-00007 at 9 
(``[M]odern landfills are in fact entombment facilities where air, 
light and water are excluded by strict design. In those conditions, 
degradability time far exceeds `the reasonable [sic] short period of 
time' of the Guides.''); Tracy Artley, Comment 534743-00019 at 1; 
EHS, Comment 534743-00011 at 1; EPI, Comment 533431-00063 at 5; NAD, 
Comment 534743-00029 at 7; Tandus, Comment 533431-00021 at 1.
    \186\ P&G, Comment 533431-00070 at 2.
    \187\ No commenters specifically addressed disposal of liquid 
waste into wastewater treatment systems or aquatic environments.
    \188\ BPI, Comment 533431-00087 at 3; see also GPI, Comment 
534743-00026 at 7 (``[I]t is important that the Commission provide 
additional clarification regarding what constitutes a `reasonably 
short period of time.'''); Graphic Arts Coalition, Comment 533431-
00060 at 1 (``The business community is now asking for a clearer 
definition of `short period of time.''').
    \189\ The following commenters favor some degree of reference to 
technical standards or testing protocols: ECM BioFilms, Comment 
534743-00011 at 3 (ASTM D 5526 (plastics under accelerated landfill 
conditions)); EPA-SPN, Comment 536013-00062 at 12 (various 
harmonized tests accessible online from the EPA); EPI, Comment 
533431-00063 at 4 (``the applicable [unspecified] ASTM or ISO 
standard''); Georgia-Pacific, Comment 533431-0007 at 9-10 (the 
British Standards Institution's EN 14327:2000 (requirements for 
packaging and packaging waste) and ISO 14855:1999 (aerobic 
biodegradability of plastics)); SPI, Comment 533431-00036 at 8 
(``existing [unspecified] ASTM standards''); see also Graphic Arts 
Coalition, Comment 533431-00060 at 1 (``The business community . . . 
oftentimes seeks a specific test method to verify the claims. 
Inclusion in the guides of acceptable test methods might be an 
appropriate step.''); Tandus, Comment 533431-00021 at 1 (``If a test 
method could be specified, it might help qualification of such 
claims.'').
    \190\ EPA-SPN, Comment 536013-00062 at 12 (discussing 
degradable, biodegradable, oxo-degradable, and photodegradable 
claims).
---------------------------------------------------------------------------

3. Consumer Perception Evidence
    The Commission solicited from commenters evidence of consumer 
understanding of degradable claims. Only BPI referenced detailed 
research findings, which arose from a September 2006 survey conducted 
by the opinion research firm APCO Insight for the American Chemistry 
Council (``APCO survey'').
    FTC staff has subsequently reviewed the underlying questionnaire 
and data from the APCO survey.\191\ Using a widely-accepted 
methodology, the survey asked 1,000 Americans about unqualified 
biodegradable and compostable claims.\192\ It found that 60 percent of 
consumers believed that a biodegradable package will disappear in one 
year or less.\193\ Additionally, 83 percent of consumers believed a 
biodegradable item will decompose even when disposed in a 
landfill.\194\ The Commission is unaware of additional consumer 
perception data on degradable claims.\195\
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    \191\ The Commission has placed this information on the public 
record.
    \192\ The study did not explore other types of degradable 
claims, such as photodegradable.
    \193\ See APCO, Biodegradable and Compostable Survey Topline at 
2.
    \194\ Id. at 1.
    \195\ The Commission's consumer perception study did not 
specifically ask consumers about unqualified biodegradable claims.
---------------------------------------------------------------------------

4. Analysis and Guidance
    In light of the comments and the APCO survey, as well as our own 
enforcement experience, the Commission proposes retaining its guidance 
on degradable claims but adding clarity regarding degradable claims for 
solid waste.\196\ Given the lack of information on the record about 
liquid waste, the Commission seeks comment on whether it should provide 
additional specificity concerning claims for such materials. The 
Commission declines to advise marketers that a particular test 
constitutes adequate substantiation for degradability claims. Finally, 
the Commission proposes addressing oxo-degradable claims in the Guides.
---------------------------------------------------------------------------

    \196\ This proposed guidance can be found in 16 CFR 260.8.
---------------------------------------------------------------------------

a. Solid Waste - Time Period for Degradation
    The Commission proposes revising the Guides to clarify that 
unqualified degradable claims are deceptive for products or packages 
destined for landfills, incinerators, or recycling facilities. Federal 
environmental regulations require landfills to minimize interaction 
with water, oxygen, and light.\197\ Absent a robust supply of these 
elements, decomposition is severely retarded.\198\ Moreover, 
incinerators combust materials at extreme temperatures, thereby 
completely preventing decomposition.\199\ Together, landfills and 
incinerators received 66 percent of municipal solid waste in 2008.\200\ 
In addition, in 2008, another 24 percent of consumers' trash went to 
recycling facilities to be processed for reuse.\201\ Thus, these 
materials also will not decompose. Accordingly, unqualified degradable 
claims for a vast majority of disposable solid items are likely to be 
deceptive because the customary methods of disposal do not present 
conditions for decomposition in a reasonably short period of time.
---------------------------------------------------------------------------

    \197\ See 40 CFR Part 258.
    \198\ EPA, The Consumer's Handbook for Reducing Solid Waste, EPA 
Pub. 530-K-96-003, at 17 (1996); William Rathje and Cullen Murphy, 
Rubbish! The Archaeology of Garbage 112 (2001).
    \199\ See National Research Council of the National Academy of 
Sciences, Waste Incineration & Public Health 37 (2000).
    \200\ EPA, Municipal Solid Waste Generation, Recycling, and 
Disposal in the United States: Facts and Figures for 2008 at 2-3, 
available at (http://www.epa.gov/waste/nonhaz/municipal/ pubs/
msw2008rpt.pdf).
    \201\ Id.
---------------------------------------------------------------------------

    For those solid waste products that are not disposed of in these 
traditional ways, some marketers seek more definite guidance regarding 
what constitutes a ``reasonably short period of time.'' The Commission, 
therefore, proposes the following two modifications to the Guides.
    First, because the Guides do not currently illustrate a non-
deceptive unqualified degradable claim for a solid item, the Commission 
proposes adding an example. Specifically, proposed new Example 5 
describes a plant pot that, when buried in soil, quickly decomposes. 
This example illustrates that an unqualified degradable claim can be 
made non-deceptively about a solid item if the item is customarily 
disposed of in a manner that promotes total and rapid decomposition.
    Second, the APCO survey found that 60 percent of consumers expect 
biodegradable solid waste to decompose in one year or less. 
Accordingly, the Commission proposes adopting a maximum period of one 
year for complete decomposition of solid materials marketed as 
degradable without time qualification. The Commission requests comment 
on whether this one-year period may lead to deceptive claims where 
consumers would expect a material to degrade in a much shorter time 
frame - e.g., a plant pot decomposing fully in a single growing season.
b. Solid Waste - Substantiation
    As discussed above, several commenters suggested that the 
Commission reference technical standards that marketers could follow to 
substantiate degradability claims.\202\ Any technical protocol (or 
combination of protocols) must assure complete decomposition within one 
year and must replicate the physical conditions found in the relevant 
disposal environment (e.g., in landfills, where most trash is 
disposed). Commission staff has not identified testing protocols that 
satisfy these needs.\203\ Accordingly, the Commission does not propose 
creating a safe harbor for any particular technical standard.
---------------------------------------------------------------------------

    \202\ The comments discussed numerous different standards. While 
no single protocol attracted wide support, the standards published 
by ASTM garnered the most mention.
    \203\ Most trash is disposed in landfills, which have varied, 
highly compressed, heterogeneous zones. The moisture, temperature, 
and contact conditions in landfills differ from the laboratory 
protocols. ASTM D 5511, for example, mimics a rare disposal 
environment - a highly controlled anaerobic digester, such as may be 
found on farms or in sewage treatment systems - with consistent 
moisture, heat, and exposure to degradation catalysts.
---------------------------------------------------------------------------

c. Liquid Waste
    The Commission received no comments concerning decomposition of 
liquids (or dissolvable solids) in wastewater or aquatic environments, 
and is unaware of consumer perception evidence relating to such 
degradable claims. Therefore, the Commission lacks sufficient 
information to give more

[[Page 63570]]

definitive guidance on the ``reasonably short period of time'' for 
degradability claims for liquids.\204\ Accordingly, the Commission 
seeks consumer perception evidence regarding these degradable claims 
and requests comment on whether the Guides should specify a 
decomposition time period for liquid substances or dissolvable solids 
marketed without qualification.
---------------------------------------------------------------------------

    \204\ Although one group of testing protocols for 
biodegradability in water emphasizes a 28-day period for ``ready 
biodegradability,'' these tests do not appear to ensure the complete 
decomposition of the substance. EPA Office of Prevention, Pesticides 
and Toxic Substances, 835.3110 Ready Biodegradability Guideline, 
Pub. EPA 712-C-98-076 (1998), available at (http://www.epa.gov/opptsfrs/publications/OPPTS_Harmonized/835_Fate_Transport_and_Transformation_Test_Guidelines/Series/835-3110.pdf).
---------------------------------------------------------------------------

d. Emerging Oxo-degradable Claims
    The EPA's Sustainable Products Network urged the Commission to 
include guidance concerning emerging degradable claims - ``oxo-
degradable'' and ``oxo-biodegradable.''\205\ Claims relating to 
purported oxo-degradability have entered the marketplace in connection 
with some of the same disposable items, e.g., bottles and bags, that 
have featured other degradable claims.\206\ According to relevant trade 
associations, the technology behind these claims depends upon a 
catalyst, typically light or oxygen, to commence and sustain the 
decomposition process.\207\ However, as discussed above, these elements 
are lacking in customary methods of disposal. Although commenters did 
not provide any consumer perception evidence relating to oxo-degradable 
claims, it is likely consumers would understand these claims similarly 
to other degradable claims.\208\ Therefore, the Commission proposes 
treating oxo-degradable and oxo-biodegradable claims like all other 
degradable claims.\209\
---------------------------------------------------------------------------

    \205\ EPA-SPN, Comment 536013-00062 at 6, 12.
    \206\ See, e.g., The recession: packaging fights back, Packaging 
Today, Feb. 2009, at 32 (oxo-degradable bottle); Print Media: 
Footprints with a lighter touch, Marketing Week, Mar. 27, 2008, at 
23 (oxo-biodegradable bag).
    \207\ OxoBiodegradable Plastics Institute, Frequently Asked 
Question 11, (http://www.oxobio.org/faq.htm#q4) (``Heat and/or 
sunlight are required to initiate degradation and there has to be 
oxygen present.''); BPI, Background on Biodegradable Additives (Mar. 
18, 2009) at 1 (``Oxo-biodegradables . . . theoretically foster 
oxidation and chain scission in plastics when exposed to heat, air 
and/or light.'').
    \208\ The root word, degradable, is identical; consequently, 
consumers' basic intuition about decomposition after customary 
disposal is likely to be the same, regardless of prefixes such as 
bio-, photo-, or oxo-. The National Advertising Division also found 
that oxo-biodegradable is similar to degradable. With respect to 
bags marketed as ``100% oxo-biodegradable,'' NAD recommended that 
the marketer discontinue the claim ``and otherwise modify its 
advertising to avoid conveying the message that PolyGreen bags will 
quickly or completely biodegrade when disposed of through `ordinary 
channels,' e.g., when placed in a landfill.'' NAD Press Release 
Regarding GP Plastics Corp.'s PolyGreen Plastic Bags (Mar. 9, 2009).
    \209\ For the purposes of interpreting and applying revised 
Section 260.8, the FTC considers the term ``degradable'' to include 
all variants, such as biodegradable, photodegradable, oxo-
degradable, and oxo-biodegradable. Thus, degradable claims include 
any and all of the foregoing.
---------------------------------------------------------------------------

D. Compostable Claims

1. The Current Guides
    Currently, the Guides advise marketers to substantiate compostable 
claims with competent and reliable scientific evidence demonstrating 
that ``all of the materials in the product or package will break down 
into, or otherwise become a part of, usable compost (e.g., soil-
conditioning material, mulch) in a safe and timely manner in an 
appropriate composting program or facility, or in a home compost pile 
or device.''\210\ Further, the Guides advise marketers to qualify 
compostable claims ``to the extent necessary'' to avoid consumer 
deception. For instance, they state: ``A claim that a product is 
compostable in a municipal or institutional composting facility may 
need to be qualified'' to alert consumers to any ``limited availability 
of such composting facilities.''
---------------------------------------------------------------------------

    \210\ 16 CFR 260.7(c).
---------------------------------------------------------------------------

    The Guides provide six examples illustrating this guidance, 
including several relating to the limited availability of large-scale 
composting facilities. For instance, Example 4 discusses a product 
designed to be composted only in yard trimmings composting programs but 
merely labeled ``compostable.'' Such yard trimmings programs are not 
available to a substantial majority of consumers or communities where 
that particular product is sold. Consequently, the claim is deceptive, 
but could be corrected with a clear and prominent disclosure indicating 
the limited availability of such programs.
2. Comments
    The comments on this issue were extremely limited. Some commenters 
suggested that the Guides state that two ASTM tests, specifications D 
6400 and D 6868, constitute adequate substantiation for compostable 
claims.\211\
---------------------------------------------------------------------------

    \211\ BPI, Comment 533431-00087 at 4; EPA-EPPP, Comment 533431-
00038 at 8; EPA-SPN, Comment 536013-00062 at 13; see also Earthcycle 
Packaging Ltd., Comment 534743-00005 at 1.
---------------------------------------------------------------------------

3. Consumer Perception Evidence
    As discussed above, the Biodegradable Products Institute submitted 
a consumer research study conducted by APCO concerning degradable and 
compostable claims. According to this study, 62 percent of consumers 
said they do not have access, and an additional 28 percent do not know 
if they have access, to large-scale composting facilities.\212\ 
Nevertheless, 43 percent of consumers interpreted an unqualified 
compostable claim to mean that a large-scale composting facility is 
available in their area.\213\ The study also found that 71 percent of 
consumers believed that a package labeled ``compostable'' would 
decompose in a home compost pile or device.\214\
---------------------------------------------------------------------------

    \212\ See APCO, Biodegradable and Compostable Survey Topline at 
9.
    \213\ Id. at 8.
    \214\ Id. at 6.
---------------------------------------------------------------------------

4. Analysis and Guidance
    The Commission's current compostable guidance is consistent with 
consumer perception data from the APCO survey. As discussed below, the 
Commission does not propose adding references to ASTM's compostability 
tests to the Guides but proposes including advice concerning the 
``timely manner'' of compost production.\215\
---------------------------------------------------------------------------

    \215\ This proposed guidance can be found in 16 CFR 260.7.
---------------------------------------------------------------------------

a. Limited Availability of Composting Facilities
    Large-scale composting facilities, particularly those taking 
feedstocks other than yard trimmings (e.g., leaves and grass), are 
still uncommon in the United States.\216\ Unsurprisingly, 90 percent of 
consumers in the APCO survey reported having no access, or being 
unaware of access, to such facilities. Nevertheless, 43 percent 
interpreted an unqualified compostable claim to mean that such 
facilities are available in their area.
---------------------------------------------------------------------------

    \216\ See Food Composting Infrastructure, BioCycle, Dec. 2008, 
at 30 (noting that in 2008, only 92 commercial composters and 39 
municipal composters provided food waste composting); EPA, Municipal 
Solid Waste in the United States: 2007 Facts and Figures at 148, 
available at (http://www.epa.gov/epawaste/nonhaz/municipal/pubs/msw07-rpt.pdf) (``In 2007, there were 16 mixed waste composting 
facilities, two more than in 2006.'').
---------------------------------------------------------------------------

    In light of the persistent scarcity of municipal facilities and 
many consumers' mistaken belief about their availability, the 
Commission proposes retaining its advice that marketers qualify their 
compostable claims to avoid deception about the limited availability of 
composting facilities.\217\

[[Page 63571]]

Example 4 in the current Guides explains that this disclosure is needed 
when facilities ``are not available to a substantial majority of 
consumers or communities.''\218\ It does not, however, specify what 
proportion of consumers constitutes a substantial majority. As 
discussed below in the recyclable section, staff informally has 
interpreted ``substantial majority'' in the recycling context to mean 
at least 60 percent.\219\
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    \217\ Example 4 in the current Guides suggests an effective 
qualification that would convey the scarcity of large-scale 
facilities, e.g., ``Appropriate facilities may not exist in your 
area.'' 16 CFR 260.7(c), Example 4.
    \218\ Id.
    \219\ See Part V.E, infra.
---------------------------------------------------------------------------

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

    \220\ See Rhodes Yepsen, Compostable Products Go Mainstream, 
BioCycle, July 2009, at 25.
    \221\ See id.; Susan Moran, The New Bioplastics, More Than Just 
Forks, N.Y. Times, Mar. 7, 2007.
    \222\ See ASTM D 6400 - 04 at Sec.  4; ASTM D 6868 - 03 at Sec.  
4. These two protocols incorporate a third ASTM protocol, D 5338, a 
detailed test method for plastics disposed of in large-scale 
composting facilities.
---------------------------------------------------------------------------

    These protocols, however, have significant limitations. As a 
threshold matter, they apply to materials discarded only in scarce 
large-scale composting facilities, not home compost piles or 
devices.\223\ Moreover, the laboratory procedures ignore ``wide 
variation'' in actual composting facility operations, simulating 
instead ``optimum conditions.''\224\
---------------------------------------------------------------------------

    \223\ See ASTM D 6400 at Sec.  1.1; ASTM D 6868 at Sec.  1.1.
    \224\ See ASTM D 5338 - 98 (Reapproved 2003) at Sec.  5.2 
(``Because there is a wide variation in the construction and 
operation of composting systems and because regulatory requirements 
for composting systems vary, this procedure is not intended to 
simulate the environment of any particular composting system. 
However, it is expected to resemble the environment of a composting 
process operated under optimum conditions.''). One example of such 
an optimum condition is the testing of only a small piece of the 
subject material - a two-centimeter scrap - rather than full-size 
plastic feedstock waste items.
---------------------------------------------------------------------------

    It is unclear whether these ``optimum conditions'' reflect real 
world conditions. There are no comprehensive, mandatory operating 
requirements for large-scale composting facilities.\225\ Instead, 
individual facilities appear to accept incoming plastic feedstock based 
upon a number of variables.\226\ Such variables include operator 
assumptions concerning whether the plastic is petroleum-based and the 
length of time an operator feasibly can wait to complete 
composting.\227\ Therefore, it is doubtful that there are typical 
large-scale composting practices consistent with the ASTM protocols, 
but more likely numerous and varied facility-specific restrictions on 
feedstock acceptance and processing.
---------------------------------------------------------------------------

    \225\ EPA regulations contain detailed minimum requirements for 
landfills (40 CFR Part 258) and guidelines for incinerators (40 CFR 
Part 240). However, compost facility operations are not nationally 
standardized, apart from certain requirements applying to end-
product safety - e.g., maximum hazardous materials levels (40 CFR 
Part 503). States and localities range widely in their governance of 
these facilities.
    \226\ See, e.g., Lisa McKinnon, Compostable Controversy, Ventura 
County Star, Mar. 16, 2009 (noting that a facility cannot convert 
plastics to compost in a commercially viable way within 90 days); 
Press Release, Ohio University, Aug. 24, 2009, available at (http://www.ohio.edu/outlook/08-09/August/791.cfm) (stating that a modern 
facility cannot process a brand of plastic dining utensils in a 
timely manner); Janice Sitton, Insider's Guide to Compostables 
Collection at Events, BioCycle, Aug. 2009, at 25 (``[P]roducts 
accepted for composting in one location may not be accepted for 
composting in another location. It all depends on the infrastructure 
and what a processor will accept as feedstock.''); Rhodes Yepsen, 
Operation Insights: Compostable Products, BioCycle, June 2008 
(Facilities may reject certain plastics because visually they ``are 
indistinguishable from conventional plastics'' and can be ``tricky 
to compost.'').
    \227\ Id.
---------------------------------------------------------------------------

    Given this uncertainty, it does not appear that the ASTM protocols 
substantiate compostable claims. Therefore, the Commission does not 
propose referencing the ASTM standards in the Guides.
c. Time Period for Composting
    As discussed above, the Commission proposes adding specificity to 
the degradable guidance in connection with the ``period of time'' for 
solid waste decomposition.\228\ Consistent with that advice, the 
Commission proposes to clarify the time period referenced in the 
compostable section (i.e., ``timely manner'').\229\ Specifically, the 
Commission restates the position it articulated in its 1998 Green 
Guides review and proposes adding it to the compostable section.\230\ 
That is, ``timely manner'' means that the product or package will break 
down in approximately the same time as the materials with which it is 
composted, e.g., natural plant matter.
---------------------------------------------------------------------------

    \228\ See Part V.C.4.a, supra.
    \229\ GPI requested clarification on the ``timely manner'' 
guidance. Comment 534743-00026 at 8.
    \230\ See 63 FR 24241 n.7 (May 1, 1998); FTC Staff's Business 
Brochure at 7.
---------------------------------------------------------------------------

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

    \231\ 16 CFR 260.7(d).
---------------------------------------------------------------------------

    The Guides provide additional advice about the need for these 
disclosures and suggest qualifications depending on the level of 
available recycling facilities. Specifically, the Guides provide a 
three-tiered disclosure approach. First, when recycling facilities are 
available to a ``substantial majority'' of consumers or communities 
where the item is sold, marketers can make unqualified recyclable 
claims. Second, when facilities are available to a ``significant 
percentage'' of the population or communities, but not to a substantial 
majority, the Guides suggest that marketers qualify their claims by 
stating ``This product [package] may not be recyclable in your area'' 
or ``Recycling programs for this product [package] may not exist in 
your area'' or by providing the approximate percentage of communities 
or the population to whom programs are available.\232\ Third, when 
recycling facilities are available to less than a significant 
percentage of communities or the population, the Guides recommend 
either disclosing that the product is recyclable only in the few 
communities with recycling facilities available for the particular 
product or stating the number of communities, the percentage of 
communities, or the percentage of the

[[Page 63572]]

population where programs are available to recycle the product.\233\
---------------------------------------------------------------------------

    \232\ See id., Examples 4, 6, and 7.
    \233\ See id., Example 6.
---------------------------------------------------------------------------

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

    \234\ See id., Example 5.
    \235\ FTC Staff's Business Brochure at 8.
---------------------------------------------------------------------------

2. Comments
    Recyclable claims garnered attention from many commenters. In 
particular, they addressed two issues: (1) the need for clarity 
regarding the ``substantial majority'' threshold; and (2) consumer 
confusion about the Society of the Plastics Industry code.
a. The Substantial Majority Threshold
    As discussed above, the Guides advise marketers to qualify 
recyclable claims when recycling facilities are not available to a 
``substantial majority'' of consumers or communities where a product is 
sold. Commenters identified difficulties in substantiating recyclable 
claims pursuant to this guidance. They did not agree, however, on how 
to modify the guidance, suggesting that the Commission either: (1) 
lower the substantial majority threshold; (2) quantify the substantial 
majority threshold; or (3) permit more positive disclosures when 
marketers do not meet the substantial majority threshold.
i. Lower the Substantial Majority Threshold
    Several commenters urged the FTC to lower the Guides' substantial 
majority threshold so that marketers could make an unqualified 
recyclable claim even when recycling facilities are not available to a 
substantial majority of consumers.\236\ Environmental Packaging 
International (``EPI'') suggested that the FTC consider a ``middle 
ground,'' where recyclability is available to ``20 to 60 percent'' of 
communities.\237\ According to EPI, in order to meet the substantial 
majority standard, marketers must send their packaging to numerous 
communities to determine whether they can be recycled. Thus, EPI opined 
that a more lenient threshold would reduce this financial burden. An 
EPA staff member suggested that the substantial majority threshold may 
limit marketers' ability to make recyclable claims for some products, 
which in turn may stifle efforts to develop recycling programs for 
those products.\238\
---------------------------------------------------------------------------

    \236\ Sara Hartwell, EPA (``EPA''), Green Packaging Workshop Tr. 
at 81, 92-93; Tetra Pak, Comment 536013-00012 at 2; Vinyl Institute, 
Comment 536013-00019 at 4-5.
    \237\ EPI, Green Packaging Workshop Tr. at 237-238.
    \238\ EPA, Green Packaging Workshop Tr. at 81, 92-93.
---------------------------------------------------------------------------

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

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

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

    \242\ See, e.g., Janice Frankle, Federal Trade Commission, Green 
Packaging Workshop Tr. at 100.
    \243\ AF&PA, Comment 534743-00031 at 2 (stating that it ``would 
be helpful for the FTC to clarify definition of `substantial 
majority'''); EPA, Green Packaging Workshop Tr. at 100 (recommending 
the FTC provide a ``quantitative'' interpretation of ``substantial 
majority''); GreenBlue, Comment 533431-00058 at 3; Kate Krebs, 
National Recycling Coalition (``NRC''), Green Packaging Workshop Tr. 
at 92; see also International Paper, Comment 533431-00055 at 4 
(noting that the access to recycling test needs to be made more 
explicit).
    \244\ EPI, Comment 533431-00063 at 3; see also AF&PA, Comment 
534743-00031 at 2 (clarifying the definition of ``substantial 
majority'' would encourage the recovery of more materials that have 
the capacity to be recycled). Commenters also suggested that the 
FTC, or another agency, compile data concerning consumers' access to 
recycling facilities for specific materials and provide a ``safe 
harbor'' list of materials that the FTC considers recyclable to a 
``substantial majority.'' See, e.g., EPA, Green Packaging Workshop 
Tr. at 79-80; EPI, Comment 533431-00063 at 3; Est[eacute]e Lauder, 
Green Packaging Workshop Tr. at 183; NRC, Green Packaging Workshop 
Tr. at 92.
---------------------------------------------------------------------------

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

    \245\ See, e.g., Tetra Pak, Comment 536013-00012 at 2-3; Vinyl 
Institute, Comment 536013-00019 at 4-5.
    \246\ Tetra Pak, Comment 536013-00012 at 2-3.
---------------------------------------------------------------------------

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

    \247\ The three-chasing-arrows symbol is also known as the 
``M[ouml]bius Loop.''
    \248\ 16 CFR 260.7(d), Example 2.
    \249\ Id.
---------------------------------------------------------------------------

    Several commenters observed that even inconspicuous use of the SPI 
code may cause consumer confusion.\250\ The Glass Packaging Institute, 
for example, asserted that consumers believe the SPI code indicates the 
packaging can be

[[Page 63573]]

recycled regardless of the consumer's geographic location.\251\ 
Similarly, the American Beverage Association (``ABA'') observed that 
consumers interpret the SPI code - regardless of where the code is 
located, or what number is inside the code - to mean the package is 
``recyclable.''\252\ The ABA argued that due to this incorrect belief, 
consumers discard non-recyclable packaging into recycling bins that 
then require extra sorting or ultimately result in contamination of the 
recycled plastic feedstock.\253\ These commenters urged the FTC to 
revise the Guides to clarify that the SPI codes are, in fact, 
recyclability claims that must be properly qualified.\254\
---------------------------------------------------------------------------

    \250\ ABA, Comment 533431-00066 at 2-3; GPI, Comment 534743-
00026 at 7.
    \251\ GPI, Comment 534743-00026 at 7; see also ISLR, Green 
Packaging Workshop Tr. at 141-42 (noting that consumers confusing 
the SPI code on corn-based polylactic (``PLA'') bottles with the 
three-chasing-arrows are inadvertently contaminating the recycling 
stream with bioplastics since most recycling facilities do not 
accept PLA).
    \252\ ABA, Comment 533431-00066 at 2.
    \253\ Id. at 2-3.
    \254\ Id. at 3; GPI, Comment 534743-00026 at 7.
---------------------------------------------------------------------------

    SPI countered that the Guides properly recognize that inconspicuous 
use of the SPI code is not a recyclability claim. It emphasized that 
the code was designed to help companies easily and quickly communicate 
the makeup of plastic packages to downstream consumers and recyclers 
sorting these products into various recycling streams.\255\ As such, 
SPI stated that it has guidelines, consistent with those mandated by 
state law, for the proper sizing and positioning of the code on 
containers and bottles.\256\ For example, SPI noted that its guidelines 
provide that the code ``should be molded, formed or imprinted'' and 
should appear on the bottom of the container, as close to the center as 
feasible, so that it can be quickly located and easily identified.\257\ 
SPI's guidelines also state that the code should ``be applied where it 
will be inconspicuous to the consumer at the point of purchase so it 
does not influence the consumer's buying decision,'' and 
``[r]ecyclable' and other environmental claims should not be made in 
close proximity to the code, even if such claims are properly 
qualified.''\258\ According to SPI, if the FTC were to abandon its 
position that inconspicuous use of the SPI code is not an environmental 
claim, it would impose an undue burden on the plastics industry and its 
customers who are complying with state law.\259\
---------------------------------------------------------------------------

    \255\ SPI, Comment 533431-00036 at 6; SPI, Comment 534743-00034 
at 1.
    \256\ SPI, Comment 534743-00034 at 2.
    \257\ Id.
    \258\ Id.
    \259\ Id. at 3. According to SPI, 39 states have laws requiring 
use of the SPI code. SPI also commented that it is working to expand 
the resin identification code to address new types of plastics 
through an initiative with ASTM. SPI, Comment 533431-00036 at 7.
---------------------------------------------------------------------------

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

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

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

    \261\ This proposed guidance can be found in 16 CFR 260.11.
---------------------------------------------------------------------------

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

    \262\ 63 FR 24240, 24243 (May 1, 1998).
---------------------------------------------------------------------------

    Some commenters contended that the substantial majority threshold 
may stifle recycling efforts because it forces marketers to send their 
products or packaging to numerous communities to determine if they can 
satisfy the threshold. Even if true, however, this argument would not 
provide a sufficient basis to revise the threshold. The purpose of the 
Green Guides is not to promote recycling or to minimize costs for 
marketers making recycling claims. Rather, it is to ensure that 
marketers' claims are consistent with consumer perception and thereby 
prevent deception. Commenters did not submit any evidence demonstrating 
that consumers have altered their view that an unqualified recyclable 
claim means that recycling facilities are available in their area. As a 
result, the Commission does not have any evidence that would warrant 
changing its conclusion.
    As noted above, several commenters recommended that the Commission 
consider replacing the substantial majority threshold with the ISO 
14021 ``reasonable proportion'' threshold. The ISO 14021 reasonable 
proportion standard arguably permits unqualified recyclable claims 
where less than a majority of communities have access to recycling 
facilities for a given product or package. However, because consumers 
interpret unqualified recyclable claims to mean that facilities are 
available in their area, the Commission has no basis for adopting this 
standard.
ii. Quantifying the Substantial Majority Threshold
    As noted by several commenters, the ambiguity of the substantial 
majority standard causes problems. One marketer might interpret 55 
percent as a substantial majority and, thus, make an unqualified 
recyclable claim. A competitor might believe that substantial majority 
means 75 percent and, thus, decline to make the same claim. Commission 
staff, therefore, has informally interpreted substantial majority to 
mean at least 60 percent.\263\

[[Page 63574]]

The Commission proposes to advise marketers of this informal guidance 
in a footnote in the Guides. The Commission also requests comment on 
whether the Guides should formally quantify ``substantial majority,'' 
and, if so, what the appropriate minimum figure should be.
---------------------------------------------------------------------------

    \263\ FTC Staff concluded that the 60 percent figure is an 
appropriate minimum threshold because it is consistent with the 
plain meaning of ``substantial majority.'' The adjective 
``substantial'' requires that there be something greater than a 
simple majority. Sixty percent is not so high that it permits 
unqualified claims only when nearly all communities have recycling 
facilities. Staff further found that this figure is consistent with 
previous Commission statements and court decisions. See, e.g., 73 FR 
51164, 51177 (Aug. 29, 2008) (``[A] substantial majority of 
consumers dislike telemarketing calls that deliver prerecorded 
messages. . . . [A]t least 65 to 85 percent of consumers do not wish 
to receive prerecorded telemarketing calls.''); Report to Congress: 
Marketing Food to Children and Adolescents, at 3-4 (July 2008) (``In 
addition . . . , the companies accounted for 60% to 90% of U.S. 
sales. Therefore, the Commission believes that the companies that 
received and responded . . . were responsible for a substantial 
majority of expenditures for food and beverage marketing to children 
and adolescents during 2006.''); Mihailovich v. Laatsch, 359 F.3d 
892, 909-10 (7\th\ Cir. 2004) (75 percent is substantial majority); 
United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 39 (D.D.C. 2001) 
(59 percent is substantial majority).
---------------------------------------------------------------------------

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

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

b. Use of Positive Disclosures
    As noted above, several commenters recommended that the Guides 
permit positive disclosures where recycling facilities are not 
available to a substantial majority of communities or consumers (e.g., 
``check to see if facilities exist in your area''). The Commission 
previously determined that these types of positive disclosures, 
standing alone, are not sufficient to correct consumers' 
misimpressions, and, in fact, may reinforce them. Prior to the 1998 
revisions, the recyclable section expressly stated that ``recyclable 
where facilities exist'' was an appropriate disclosure. However, in 
1998, the Commission highlighted consumer perception data suggesting 
that consumers interpreted this phrase and a similar phrase, ``check to 
see if recycling facilities exist in your area,'' to mean that 
recycling programs did, in fact, exist in their area.\265\ Based on 
that data, the Commission changed its guidance and withdrew its 
approval of those disclosures.\266\
---------------------------------------------------------------------------

    \265\ 63 FR 24244 (May 1, 1998).
    \266\ Id. The Commission included an example in the Guides 
demonstrating that the ``recyclable where facilities exist'' 
disclosure is inadequate. 16 CFR 260.7(d), Example 5. The FTC 
Staff's Business Brochure included an example specifying that the 
``check to see'' disclosure was inadequate. FTC Staff's Business 
Brochure at 8.
---------------------------------------------------------------------------

    Commenters have provided no consumer perception evidence to alter 
this conclusion. The Commission, therefore, declines to include such 
disclosures in the Guides, and instead proposes to revise the Guides to 
make clear that, standing alone, ``check to see'' disclosures do not 
adequately qualify recyclable claims. The Commission proposes modifying 
existing Example 5 to illustrate that both disclosures - ``recyclable 
where facilities exist'' and ``check to see if recycling facilities 
exist in your area'' - are inadequate.
    Although the Commission retains its finding that ``check to see'' 
disclosures standing alone are insufficient, such positive disclosures, 
including those referring to websites or toll-free telephone numbers, 
may be appropriate in combination with the disclosures that the 
Commission has provided in its examples. Thus, a disclosure such as 
``Recyclable - recycling programs for this product may not exist. Call 
1-800-XXX-XXXX'' likely would not be deceptive.
c. Use of the SPI Code
    Although some commenters asserted that consumers perceive even 
inconspicuously placed SPI codes as recyclable claims, they did not 
provide any consumer perception evidence to support their assertions. 
In the absence of consumer perception evidence, the Commission does not 
propose modifying Example 2 of the recyclable guide, which discusses 
the use of the SPI code.

F. Recycled Content Claims

1. The Current Guides
    The Guides provide that marketers may make a recycled content claim 
only for materials that have been recovered or otherwise diverted from 
the solid waste stream, either during the manufacturing process (pre-
consumer) or after consumer use (post-consumer).\267\ To make a pre-
consumer recycled content claim, an advertiser must substantiate that 
the pre-consumer material would otherwise have entered the solid waste 
stream.\268\ The Guides do not advise marketers to distinguish between 
pre-consumer and post-consumer materials, but marketers may do so. 
Marketers must substantiate any express or implied claims about the 
specific amount of pre- or post-consumer content in their products.
---------------------------------------------------------------------------

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

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

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

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

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

2. Comments
    The commenters addressing recycled content claims discussed three 
main issues: (1) pre-consumer recycled content claims for textile 
products; (2) the distinction between pre- and post-consumer recycled 
content claims; and (3) the methods for calculating recycled content.
a. Pre-consumer Recycled Content Claims for Textiles
    Several commenters stated that the Guides do not provide sufficient 
guidance regarding pre-consumer recycled content claims for textile 
products. For instance, the EPA's Sustainable Products Network (``EPA-
SPN'') stated that it would be helpful to have more specific guidance, 
including examples, to help determine whether certain materials qualify 
as pre-

[[Page 63575]]

consumer recycled content.\272\ EPA-SPN noted that re-use of off-
quality materials generated during the manufacturing process presents 
difficult questions and suggested that several factors may be relevant 
to determine whether such materials should be regarded as pre-consumer 
recycled content or as industrial scrap that is normally reused in the 
manufacturing process. EPA-SPN indicated that an important factor may 
be whether the material must undergo significant processing before it 
can be reused.\273\
---------------------------------------------------------------------------

    \272\ EPA-SPN, Comment 536013-00062 at 2.
    \273\ Id. at 2-3.
---------------------------------------------------------------------------

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

    \274\ Valdese Weavers, Comment 536013-0006 at 1.
    \275\ Another commenter recommended that the Guides allow pre-
consumer recycled content claims if synthetic polymers change in 
form, such as from a chip to fiber to yarn. Designtex, Comment 
533431-00024 at 1.
---------------------------------------------------------------------------

b. Distinction Between Pre- and Post-consumer Recycled Content
    The commenters raised two issues with respect to the Guides' 
distinction between pre-consumer and post-consumer recycled content. 
First, two commenters stated that the Guides should ``eliminate the 
artificial distinction'' between pre-consumer and post-consumer 
materials for recycled paper.\276\ Although it is not entirely clear, 
it appears that these commenters believe the Guides should advise 
marketers not to distinguish between the amount of pre-consumer and 
post-consumer materials used in an item. Rather, marketers should make 
claims only about the total amount of recycled content (which combines 
both pre- and post-consumer material).\277\
---------------------------------------------------------------------------

    \276\ AF&PA, Comment 533431-00083 at 1-2; FBA, Comment 533431-
00015 at 2. They contend that the overwhelming majority of fibers 
recovered and recycled are post-consumer, and that the distinction 
between pre-consumer and post-consumer materials ``is not meaningful 
to the consumer.'' Id.
    \277\ Another commenter, however, recommended that the Guides 
continue to permit marketers to distinguish between pre-consumer and 
post-consumer materials. Amy Wilson, Comment 534743-00004 at 1. A 
different commenter recommended that the Guides should permit 
recycled content claims only for post-consumer materials. Tracy 
Artley, Comment 534743-00019 at 1.
---------------------------------------------------------------------------

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

    \278\ PRC, Comment 533431-00035 at 1-2, Comment 534743-00024 at 
1-2, Comment 534743-00023 at 3. ISO 14021 defines post-consumer 
material as ``[m]aterial generated by households or by commercial, 
industrial and institutional facilities in their role as end-users 
of the product which can no longer be used for its intended purpose. 
This includes returns of material from the distribution chain.'' ISO 
14021 7.8.1.1(a)(2):1999(E).
    \279\ PRC, Comment 534743-00024 at 2.
    \280\ Id.
---------------------------------------------------------------------------

c. Calculating Recycled Content
    The commenters had differing opinions regarding the appropriate 
methods to calculate recycled content. Several recommended that the 
Guides continue to use the annual weighted average.\281\ Others 
recommended revising the Green Guides to permit alternative calculation 
methods.\282\ For example, one commenter recommended that the Guides 
permit the use of the annual weighted average for the specific 
company's business or the use of an industry sector annual weighted 
average.\283\ Another argued that requiring each product to have a 
minimum percentage of recycled content may limit the ability of 
vertically-integrated manufacturers to use recycled content.\284\ Yet 
another argued that the Commission should consider a ``mass 
allocation'' methodology that would permit recycled content 
``offsets.'' Under this approach, a company could earn credits for 
using recycled content and allocate those credits to make claims for 
other products.\285\ Some commenters, however, argued that these 
alternative approaches could mislead consumers by implying that 
individual products have a greater percentage of recycled content than 
they actually do.\286\
---------------------------------------------------------------------------

    \281\ Bailey, Comment 533431-00028 at 6; GreenBlue, Comment 
533431-00058 at 8; NAIMA, Comment 533431-00042 at 15; SDA, Comment 
533431-00020 at 3; Saint-Gobain, Comment 533431-00037 at 15; Stepan 
Company, Comment 533431-00011 at 3.
    \282\ AF&PA, Comment 533431-00083 at 2-3; Georgia-Pacific, 
Comment 533431-00007 at 9; MBDC, Comment 533431-00022 at 1-3; 
MeadWestvaco, Comment 533431-00013 at 2; Weyerhaeuser, Comment 
533431-00084 at 6.
    \283\ Georgia-Pacific, Comment 533431-00007 at 9.
    \284\ MBDC, Comment 533431-00022 at 1-2. This commenter claimed 
that vertically-integrated manufacturers have difficulty achieving 
high per-product percentages because of challenges tracking 
materials in large operations, incorporating high percentages of 
recycled content in high-volume product lines, and using high 
percentages of recycled content in products without affecting their 
performance.
    \285\ Shaw Industries Group, Inc. (``Shaw''), Comment 533431-
00050 at 1-3; see also Sappi, Comment 534743-00023 at 3-5 
(recommending ``credit system'' for recycled content).
    \286\ Bailey, Comment 533431-00028 at 6; Stepan Company, Comment 
533431-00011 at 3.
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3. Consumer Perception Evidence
    The Commission's consumer perception study tested respondents' 
understanding of the phrase ``made with recycled materials'' as this 
claim appeared on three different products - wrapping paper, a laundry 
basket, and kitchen flooring. The study asked respondents whether a 
statement that a product is ``made with recycled materials'' suggests 
that all, most, or some of the materials were made with recycled 
material. The largest group, 35 percent, indicated that they would 
interpret the claim as meaning that ``all'' of the product was made 
with recycled materials, while 20 percent believed that ``most'' of the 
product was made with recycled materials.\287\
---------------------------------------------------------------------------

    \287\ Further, 26 percent stated that the claim means that 
``some'' of the product was made with recycled materials; 15 percent 
stated that the claim does not suggest anything about how much of 
the product was made with recycled materials; and 5 percent stated 
they were not sure. These figures total 101 percent because of 
rounding. These percentages were derived by combining the responses 
to all claims that included the phrase ``made with recycled 
materials'' (i.e., ``made with recycled materials,'' ``green - made 
with recycled materials,'' ``eco-friendly - made with recycled 
materials,'' and ``sustainable - made with recycled materials'').
---------------------------------------------------------------------------

    The study further explored which claims were implied by a product 
advertised as ``made with recycled materials.'' The responses to a 
closed-ended question indicated that 52 percent of respondents believe 
that a ``made with recycled materials'' claim suggests that the 
advertised product was recyclable.\288\ The study also used an open-
ended question to explore this same point. In response, only three 
percent said that the statement suggests the product is recyclable. Not 
surprisingly, a majority, 57 percent, stated that the advertised 
product was made of recycled content.
---------------------------------------------------------------------------

    \288\ This number is net of the non-environmental control claim.

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[[Page 63576]]

4. Analysis and Guidance
    The comments sought additional guidance concerning recycled content 
claims, focusing mainly on pre-consumer recycled content claims for 
textiles, the distinction between pre- and post-consumer recycled 
content, and the appropriate methods for calculating recycled content. 
The Commission analyzes these issues as well as issues raised by its 
consumer perception study below.
a. Pre-consumer Recycled Content Claims for Textiles
    Although the Guides do not specifically address textiles, they 
provide advice concerning recycled content claims for all products, 
including textiles. To constitute pre-consumer recycled content, 
materials must have been ``recovered or otherwise diverted from the 
solid waste stream . . . during the manufacturing process (pre-
consumer). . . .''\289\ Examples 1-3 in the current Guides discuss 
factors relevant to determining whether the material was diverted from 
the solid waste stream - the amount of reprocessing needed before reuse 
and whether the material is normally reused in ``the original 
manufacturing process.'' Specifically, when spilled raw materials and 
scraps undergo only ``a minimal amount of reprocessing'' and are 
``normally reused in the original manufacturing process,'' they are not 
diverted from the solid waste stream (and, therefore, do not qualify as 
recycled content).\290\
---------------------------------------------------------------------------

    \289\ 16 CFR 260.7(e). The Guides further specify that the 
advertiser must have substantiation that the material would 
otherwise have entered the solid waste stream.
    \290\ See 16 CFR 260.7(e), Example 1; see also 16 CFR 260.7(e), 
Examples 2 and 3.
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    The commenters' discussion of innovations in the textile industry 
highlights difficulties in using the existing guidance to determine 
whether a particular material qualifies as recycled content.\291\ The 
commenters explain that the textile industry for many years has sought 
to reuse waste materials from the manufacturing process and that recent 
innovations have allowed manufacturers to put that material to higher 
use. These innovative processes likely do not divert the waste material 
from the solid waste stream because the material already was being 
reused (albeit in a lower value form). Despite the fact that these 
higher-use processes do not satisfy the Commission's guidance on 
recycled content (diversion from the solid waste stream), they satisfy 
the two factors the Commission considers in determining if waste is 
diverted from the solid waste stream. Specifically, the innovations may 
involve significant reprocessing before the material can be reused, and 
the material may be reused in something different from the original 
manufacturing process. These innovations, therefore, reveal some 
ambiguity in the Commission's current guidance.
---------------------------------------------------------------------------

    \291\ The difficulty in determining whether material qualifies 
as pre-consumer recycled content is not exclusive to the textile 
industry. One commenter from the lumber industry expressed concern 
about the pre-consumer recycled content claims of its competitors. 
Weyerhaeuser, Comment 533431-00084 at 6. It asserted that some 
companies interpret recycled content to include chips produced by 
sawmills as a byproduct of lumber production. Weyerhaeuser stated 
that it did not believe that this was a common interpretation of 
recycled content and did not treat such materials as recycled 
content. Id.
---------------------------------------------------------------------------

    The comments, however, did not address the broader issue of whether 
the Commission should revise its guidance for pre-consumer recycled 
materials generally, and, if so, what changes it should make.\292\ For 
instance, the comments did not address whether the Commission should 
eliminate the factors it currently uses to determine if material is 
diverted from the solid waste stream. In addition, it is unclear 
whether consumers interpret recycled content to mean more than 
diversion from the solid waste stream. For example, do they believe 
that any material that is significantly reprocessed and reused 
constitutes recycled content? If material is reused in place of virgin 
material, do consumers consider that material recycled content? If, 
over time, it becomes standard practice within an industry to reuse 
certain material, do consumers still regard that material as 
constituting recycled content? The Commission, therefore, declines to 
propose changes to its guidance at this time.\293\ Instead, the 
Commission solicits comment on what changes, if any, it should make to 
its existing guidance on pre-consumer recycled content claims for all 
products. In particular, the Commission seeks evidence of consumer 
perception of pre-consumer recycled content claims.
---------------------------------------------------------------------------

    \292\ One textile industry member suggested that recycled 
content claims hinge on whether there has been a change in form 
(e.g., from chip to fiber to yarn). In the Commission's judgment, it 
is unlikely that consumers would perceive material as recycled 
content merely because of a change in form.
    \293\ This guidance can now be found in 16 CFR 260.12.
---------------------------------------------------------------------------

b. Distinction Between Pre- and Post-consumer Recycled Content
    Some commenters recommended that the Guides advise marketers to 
make claims only for the total amount of recycled content in an item, 
and not to distinguish between the amount of pre-consumer and post-
consumer materials used in that item. The Commission does not propose 
adding this advice to the Guides. Currently, marketers making recycled 
content claims have the option to disclose whether the recycled content 
is pre-consumer or post-consumer. The Commission has no evidence that 
specific claims about the type of recycled content mislead consumers. 
In the absence of evidence that these terms are deceptive, the 
Commission declines to advise marketers that they should discontinue 
using them.
    The Commission also does not propose incorporating the ISO 14021 
definition of ``post-consumer'' material into the Guides. As discussed 
above, material returned from the distribution chain (e.g., overstock 
magazines) qualifies as ``post-consumer'' recycled material under ISO 
14021. It is unlikely, however, that consumers would interpret such 
material as ``post-consumer'' recycled content because the material 
never actually reaches consumers. The commenters did not provide any 
consumer perception evidence to the contrary. Under the Guides, 
therefore, marketers may claim that this material constitutes recycled 
content, but not ``post-consumer'' recycled content.
c. Calculating Recycled Content
    Currently, the Guides advise marketers that recycled content claims 
may be based on the annual weighted average of recycled content in an 
item.\294\ Certain commenters suggested that the Guides allow for 
alternative calculation methods, such as the average amount of recycled 
content within a product line or across all product lines, or an 
offset-based approach.\295\
---------------------------------------------------------------------------

    \294\ 16 CFR 260.7(e), Example 9.
    \295\ As noted above, one commenter argued that requiring 
products to have a minimum percentage of recycled content may 
constrain the ability of vertically-integrated manufacturers to use 
recycled content. The Guides do not specify minimum recycled content 
levels for products. The Guides permit marketers to make recycled 
content claims for products with only a small percentage of recycled 
content, as long as the claims are adequately qualified.
---------------------------------------------------------------------------

    The Commission does not propose making the suggested changes. As 
some commenters cautioned, claims based on these alternative 
calculation methods could mislead consumers by implying that products 
contain more recycled content than they actually do. Indeed, these 
approaches could permit marketers to make recycled content claims for 
products that do not contain any such material. For example, a marketer 
may sell residential carpeting

[[Page 63577]]

that contains no recycled content and commercial carpeting that 
contains 50 percent. If the marketer believes that individuals are more 
interested than businesses in recycled content, it could choose to 
average the amount of recycled content in both products and then make a 
25 percent recycled content claim for its residential carpeting (even 
though this carpeting contains no recycled content).\296\ Such a claim 
appears to be deceptive; therefore, without consumer perception 
evidence to the contrary, the Commission declines to sanction it.
---------------------------------------------------------------------------

    \296\ For mathematical simplicity, the hypothetical assumes 
equal sales of each product.
---------------------------------------------------------------------------

    The Commission, however, proposes retaining Example 9, which 
illustrates that using annual weighted average is not deceptive.\297\ 
The Guides have included this example since 1992, and there is no 
evidence that consumers have been deceived by recycled content claims 
based on this type of calculation. Moreover, it does not appear that 
consumers would likely be deceived by a percentage recycled content 
claim for a single product because their chances of getting a product 
with a lower percentage of recycled content is roughly the same as 
their chances of getting one with a higher percentage. At least 
theoretically, however, using annual weighted average could lead to 
deception. For example, a company could use two manufacturing sites to 
make the same product - one using recycled content but selling to local 
consumers who give little weight to this fact, and another using no 
recycled content but selling to local consumers who place a premium on 
products containing recycled materials. In this circumstance, the 
company could use the annual weighted average to make recycled content 
claims to the second set of consumers, even though those consumers 
would never receive products with such content. The Commission, 
therefore, requests comment on whether recycled content claims based on 
annual weighted average are misleading, and, if so, whether these 
claims should be qualified.
---------------------------------------------------------------------------

    \297\ 16 CFR 260.7(e), Example 9.
---------------------------------------------------------------------------

d. Unqualified Recycled Content Claims
    The Guides currently advise marketers to qualify recycled content 
claims unless the entire product or package, excluding minor, 
incidental components, is made with recycled content. Any needed 
qualifications should specify the percentage of recycled content in the 
item. The Commission's study indicates that this guidance remains 
valid. Specifically, a significant minority of respondents (35 percent) 
indicated that an unqualified recycled content claim means that all of 
the product was made with recycled materials. The Commission, 
therefore, proposes retaining this guidance.
e. Implied Claims
    The results of the Commission's consumer perception study suggest 
that some consumers understand a ``made with recycled materials'' claim 
to convey a recyclable claim. In response to a closed-ended question, 
52 percent of respondents indicated that they believed that a ``made 
with recycled materials'' claim suggested that the product was 
recyclable. In response to an open-ended question, however, only three 
percent of respondents stated that they thought the advertised product 
was recyclable.
    Although the responses to the closed-ended questions suggest that 
many consumers may perceive an implied recyclable claim, the Commission 
does not propose advising marketers that make unqualified recycled 
content claims to disclose if their product is not recyclable. Even if 
some consumers do perceive an implied recyclable claim, their 
understanding appears to be accurate. The Commission's study asked 
respondents only about an unqualified ``made with recycled materials'' 
claim. Assuming marketers are following the Guides, they make 
unqualified recycled content claims only where the products are made 
from 100 percent recycled materials. Products that are made of 100 
percent recycled materials appear to be recyclable.\298\ Assuming this 
is the case, marketers would be able to substantiate any implied claim 
that their product is recyclable. Therefore, the Commission does not 
propose advising marketers that make unqualified recycled content 
claims to disclose that the product is not recyclable. The Commission 
requests comment on this advice and seeks any additional consumer 
perception evidence addressing this issue.
---------------------------------------------------------------------------

    \298\ Although relatively few products are made from 100 percent 
recycled materials, those that are - including some paper products 
and some glass products - appear to be recyclable. See, e.g., 
(http://www.epa.gov/wastes/conserve/materials/paper/faqs.htm).
---------------------------------------------------------------------------

    The Commission also does not propose such guidance for marketers 
making qualified recycled materials claims, such as ``made with 50 
percent recycled materials.'' It is unclear whether consumers believe 
that a qualified recycled materials claim suggests that the product is 
also recyclable. Without such evidence, the Commission is hesitant to 
advise marketers to make such disclosures. The Commission, 
nevertheless, requests comment on its proposal and, in particular, 
seeks any consumer perception evidence.

G. Ozone-Safe and Ozone-Friendly Claims

1. The Current Guides
    The current Guides state that it is deceptive to misrepresent, 
directly or by implication, that a product is safe for, or ``friendly'' 
to, the ozone layer or the atmosphere.\299\ This section contains four 
examples.
---------------------------------------------------------------------------

    \299\ 16 CFR 260.7(h).
---------------------------------------------------------------------------

    Example 1 provides that an ozone friendly claim is deceptive if the 
product ``contains any ozone-depleting substance, including those 
listed as Class I or Class II chemicals in Title VI of the Clean Air 
Act Amendments of 1990, Pub. L. No. 101-549, and others subsequently 
designated by the EPA as ozone-depleting substances.''\300\
---------------------------------------------------------------------------

    \300\ Example 1 also notes that Class I chemicals include 
chlorofluorocarbons (CFCs), halons, carbon tetrachloride, 1,1,1-
trichloroethane, methyl bromide, and hydrobromofluorocarbons (HBFCs) 
and that Class II chemicals are hydrochlorofluorocarbons (HCFCs).
---------------------------------------------------------------------------

    Example 2 illustrates that an ozone friendly claim may be 
deceptive, even if the product does not contain ozone-depleting 
chemicals. In this example, an aerosol air freshener is labeled
    ``ozone friendly'' but contains volatile organic compounds, which 
may cause smog. Even though the product does not contain ozone-
depleting substances, the unqualified ozone friendly claim is deceptive 
because it inaccurately conveys that the product is safe for the 
atmosphere as a whole.
    Example 3 discusses an unqualified claim that an aerosol product 
``contains no CFCs.'' Although the product does not contain CFCs, it 
contains HCFC-22, another ozone-depleting substance. Because the no-
CFCs claim likely implies that the product does not harm the ozone 
layer, the claim is deceptive.
    Finally, Example 4 illustrates a qualified comparative ozone-
related claim that is unlikely to be deceptive. This example states 
that a product is labeled ``95% less damaging to the ozone layer than 
past formulations that contained CFCs,'' and explains that the 
manufacturer has substituted HCFCs for CFC-12. If the marketer can 
substantiate the decrease in ozone depletion, this qualified 
comparative claim is not likely to be deceptive.
2. Comments
    Several commenters discussed the Guides' treatment of ozone-safe 
and no-CFCs claims. The EPA's Stratospheric

[[Page 63578]]

Protection Division (``EPA-SPD''), which regulates ozone-depleting 
substances, stated that the Guides should continue to provide guidance 
concerning ozone-safe claims and allow marketers to use no-CFCs 
claims.\301\ The EPA-SPD explained that no-CFCs claims may provide 
useful information to consumers because many consumers do not realize 
that CFCs are no longer used. Other commenters disagreed, and argued 
that the Guides should advise marketers not to make no-CFCs 
claims.\302\ One commenter stated that because CFCs have been banned 
for almost 30 years, no-CFCs claims do not distinguish a marketer's 
product from other CFC-free products.\303\ Another similarly stated 
that ``given the universal ban on ozone depleting substances,'' ozone-
safe claims imply that products without that claim contain ozone-
depleting substances. Therefore, the commenter argued that ``there 
really is no reason to continue use of this claim.''\304\
---------------------------------------------------------------------------

    \301\ Letter from the EPA Stratospheric Protection Division, 
Mar. 18, 2010, available at (http://www.ftc.gov/green).
    \302\ Several commenters also mentioned no-CFCs claims, but only 
to provide context for their recommendation that the Commission 
provide guidance on free-of claims generally, which the Commission 
discusses in detail in Part V.H below. Eastman Chemical Company 
(``Eastman''), Comment 533431-00051 at 2; GPI, Comment 534743-00026 
at 11; GreenBlue, Comment 533431-00058 at 4; SPI, Comment 533431-
00036 at 10.
    \303\ TerraChoice, Comment 533431-00040 at 1, attached report 
``The Six Sins of Greenwashing'' at 4.
    \304\ EHS, Comment 534743-00011 at 2.
---------------------------------------------------------------------------

    In addition to the general discussion regarding ozone-safe and no-
CFCs claims, the EPA-SPD recommended several modifications to the 
examples in the Guides.\305\ First, the EPA-SPD stated that the 
Commission should delete the references to HCFC-22 in Examples 3 and 4 
because of EPA's general prohibition on the use of newly produced 
ozone-depleting chemicals HCFC-22 and HCFC-14b. Second, the EPA-SPD 
recommended that the Commission provide guidance for air conditioning 
manufacturers that substitute non-ozone depleting refrigerants for the 
prohibited HCFCs. Specifically, EPA-SPD suggested advising marketers 
not to make unqualified ``environmentally friendly'' claims about their 
air-conditioning equipment. The EPA-SPD noted this equipment still may 
have adverse environmental effects because it uses large quantities of 
energy and because its refrigerants are greenhouse gases.\306\
---------------------------------------------------------------------------

    \305\ Letter from the EPA Stratospheric Protection Division.
    \306\ At least with respect to ozone-depletion claims for 
packaging, one commenter offered a different view, stating that 
ozone-related claims are no longer of significant relevance because 
of changes in packaging. GPI, Comment 534743-00026 at 11.
---------------------------------------------------------------------------

3. Analysis and Guidance
    Based on the record, the Commission proposes retaining its guidance 
regarding ozone- safe claims.\307\ Below, the Commission addresses the 
two specific issues raised by commenters: (1) the use of no-CFCs 
claims; and (2) modification to the Guides' examples.
---------------------------------------------------------------------------

    \307\ This proposed guidance can be found in 16 CFR 260.10.
---------------------------------------------------------------------------

    First, the Commission does not propose advising marketers to avoid 
using no-CFCs claims. Although CFCs have been banned for years, the 
Commission agrees with EPA-SPD that many consumers may not realize this 
is the case. Consumers may still associate CFCs with certain products, 
such as aerosol sprays. No-CFCs claims may provide valuable information 
to these consumers who might otherwise assume that certain products 
have the negative environmental effects associated with CFCs. This 
conclusion is consistent with the Commission's proposed guidance 
concerning no or free-of claims generally, discussed below.\308\ The 
Commission, however, seeks any consumer perception evidence concerning 
no-CFCs claims.
---------------------------------------------------------------------------

    \308\ Specifically, the Commission proposes that a claim that a 
product does not contain a substance may be deceptive if that 
substance has never been associated with the product. category.
---------------------------------------------------------------------------

    Second, the Commission proposes deleting current Examples 3 and 4 
in the Guides, which both reference HCFC-22, in light of EPA's general 
prohibition on its use. The Commission, however, proposes adding a new 
example, as recommended by the EPA-SPD, to illustrate that 
``environmentally friendly'' claims by an air conditioning equipment 
manufacturer may be deceptive, even if the manufacturer has substituted 
non-ozone depleting refrigerants. This general environmental benefit 
claim likely would convey to consumers that the product has far 
reaching environmental benefits. Because currently available air 
conditioning equipment relies on refrigerants that are greenhouse gases 
and also consume a substantial amount of energy, this claim likely 
would be deceptive.

H. Free-of and Non-toxic Claims

1. The Current Guides
    The current Guides do not contain a section that specifically 
addresses claims that products or services have no, are free of, or do 
not contain certain substances (``free-of claims'') or that they are 
non-toxic. The current Guides, however, include three examples that 
address such claims.
    Example 4 in the ``overstatement of environmental attribute'' 
portion of Section 260.6 discusses a ``chlorine-free bleaching 
process'' claim for coffee filters.\309\ The coffee filters are 
bleached without chlorine, but with a process that releases a reduced, 
but still significant, amount of the same harmful byproducts associated 
with chlorine bleaching. The claim, therefore, likely overstates the 
product's benefits because consumers likely would interpret the claim 
to mean that the manufacturing process does not cause any of the 
environmental harm that chlorine bleaching does.\310\
---------------------------------------------------------------------------

    \309\ 16 CFR 260.6(c), Example 4.
    \310\ Example 4 provides a qualified claim - ``bleached with a 
process that substantially reduces, but does not eliminate, harmful 
substances associated with chlorine bleaching'' - that likely would 
not be deceptive.
---------------------------------------------------------------------------

    Example 4 in the general environmental benefit claims section 
addresses claims that a lawn care pesticide is ``essentially non-
toxic'' and ``practically non-toxic.''\311\ Consumers likely would 
interpret these claims to mean that the pesticide does not pose any 
risk to both human health and the environment. The example states that 
the claims would be deceptive if the pesticide poses a significant risk 
to either.
---------------------------------------------------------------------------

    \311\ 16 CFR 260.7(a), Example 4.
---------------------------------------------------------------------------

    Finally, Example 3 in the ozone safe and ozone friendly section 
discusses an unqualified claim that an aerosol product ``contains no 
CFCs.''\312\ Although the product does not contain CFCs, it contains 
another ozone depleting substance. Because the no-CFCs claim likely 
implies that the product does not harm the ozone layer, the claim is 
deceptive.
---------------------------------------------------------------------------

    \312\ 16 CFR 260.7(h), Example 3.
---------------------------------------------------------------------------

2. Comments
a. Free-of Claims
    Numerous commenters recommended that the Commission provide further 
guidance regarding free-of claims. Several noted that the Guides 
address no-CFCs claims only in an example and suggested that the 
Commission address free-of claims generally.\313\
---------------------------------------------------------------------------

    \313\ Eastman, Comment 533431-00051 at 2; GPI, Comment 534743-
00026 at 11; GreenBlue, Comment 533431-00058 at 4; SPI, Comment 
533431-00036 at 10. One commenter noted that because CFCs have been 
banned it is not clear whether the Guides' treatment of no-CFCs 
claims would also apply to other substances. Eastman, Comment 
533431-00051 at 2.
---------------------------------------------------------------------------

    Several commenters discussed the appropriate standard for 
determining whether a product is free of a

[[Page 63579]]

substance.\314\ One argued that a product is not free of a substance if 
the substance is present at greater than background or regulated 
levels.\315\ Similarly, one commenter noted that under the ISO 14021 
standard, marketers can make free-of claims only if the ``specified 
substance is no more than that which would be found as an acknowledged 
trace contaminant or background level.''\316\ Finally, another 
contended that free-of claims should be substantiated by evidence that: 
``(1) none of the chemical was added during the manufacturing process, 
and (2) when tested, the product does not emit or off-gas levels of the 
chemical that are material to consumers, i.e., in the context of health 
considerations, no more than background and applicable health-based 
standards for safe exposure.''\317\
---------------------------------------------------------------------------

    \314\ CSPA, Comment 533431-00049 at 4; EHS, Comment 533431-00057 
at 1; Johns Manville, Comment 536013-00034 at 4. Several commenters 
stated that generic ``chemical-free'' claims are misleading because 
nothing is actually chemical-free. EHS, Comment 533431-00057 at 1; 
OMI, Comment 536013-00022 at 1; TerraChoice, Comment 533431-00040, 
attached report ``The Six Sins of Greenwashing'' at 3.
    \315\ EHS, Comment 533431-00057 at 1.
    \316\ CSPA, Comment 533431-00049 at 4 (quoting ISO 14021). 
Another commenter recommended that the Commission look to ISO 14021 
for guidance on free-of claims. 3M Company, Comment 533431-00027 at 
3.
    \317\ Johns Manville, Comment 536013-00034 at 2.
---------------------------------------------------------------------------

    Several commenters stated that truthful free-of claims may be 
misleading. For example, some commenters raised concerns that a 
truthful free-of claim could mislead consumers if the marketer does not 
disclose that the product contains other substances that may be harmful 
to the environment.\318\ Others stated that a claim that a product is 
free of a substance may be deceptive if the substance is not typically 
associated with the product and competitors' products do not typically 
contain the substance.\319\ One commenter noted that the ISO 14021 
standard does not permit free-of claims if the substance has never been 
associated with the product.\320\ Another commenter illustrated this 
point with an ``extreme hypothetical,'' in which a marketer's claim 
that its fruit juice does not contain cyanide could mislead consumers 
by suggesting that other fruit juices do.\321\
---------------------------------------------------------------------------

    \318\ See, e.g., GPI, Comment 534743-00026 at 11; NAIMA, Comment 
533431-00042 at 10-11; Saint-Gobain, Comment 533431-00037 at 9-10.
    \319\ CSPA, Comment 533431-00049 at 4; Johns Manville, Comment 
536013-00034 at 2; NAIMA, Comment 533431-00042 at 10; Saint-Gobain, 
Comment 533431-00037 at 9-10; TerraChoice, Comment 533431-00040, 
attached report ``The Six Sins of Greenwashing'' at 4.
    \320\ CSPA, Comment 533431-00049 at 4.
    \321\ NAIMA, Comment 533431-00042 at 10.
---------------------------------------------------------------------------

    Several commenters raised two concerns that unqualified free-of 
claims imply other environmental claims.\322\ First, they stated that 
while a free-of claim explicitly conveys that a product does not 
contain a certain substance, it also implies that a product is superior 
to other products that contain the substance.\323\ They argued that 
free-of claims should be qualified to inform consumers of the basis of 
the comparison, such as whether the free-of claim is relevant to the 
environmental or health risks or the performance of the product.\324\ 
Second, they asserted that free-of claims are often general claims of 
environmental benefit, i.e., claims that products without the specified 
substance are good for the environment.\325\ They recommended that such 
claims not be permitted without qualifying language that substantiates 
both the express claim and all implied claims.\326\
---------------------------------------------------------------------------

    \322\ ACC, Comment 533431-00023 at 4; Formaldehyde Council, 
Comment 533431-00047 at 2-3; Vinyl Institute, Comment 533431-00046 
at 2-3.
    \323\ Id.
    \324\ Id.
    \325\ Id.
    \326\ Id.
---------------------------------------------------------------------------

    Other commenters, however, stated that free-of claims may provide 
valuable information to consumers and do not necessarily imply 
additional comparative or general environmental benefit claims.\327\ 
One commenter explained that these claims should be qualified only if 
they are susceptible to more than one interpretation by a non-
insignificant portion of the target audience and at least one such 
interpretation is false, misleading, or unsubstantiated.\328\ They 
recommended that the Commission not establish a bright-line rule 
requiring that marketers qualify all free-of claims.\329\
---------------------------------------------------------------------------

    \327\ Eastman, Comment 533431-00051 at 2-3; Johns Manville, 
Comment 536013-00034 at 3-5.
    \328\ Johns Manville, Comment 536013-00034 at 3.
    \329\ Eastman, Comment 533431-00051 at 2; Johns Manville, 
Comment 536013-00048 at 3-4.
---------------------------------------------------------------------------

    The National Advertising Review Council submitted comments 
summarizing the National Advertising Division (``NAD'') cases 
addressing environmental claims, including several cases that involved 
claims that products were free of, or did not contain, certain 
substances.\330\ In one case, the NAD found that a manufacturer 
adequately substantiated a formaldehyde-free claim for insulation.\331\ 
The NAD concluded that it was appropriate for the advertiser to make a 
formaldehyde-free claim, even if the insulation emitted a de minimis 
amount of formaldehyde because it would be inconsequential to 
consumers. The NAD noted that the determination of whether an amount is 
de minimis depends on the substance at issue and requires a case-by-
case analysis.
---------------------------------------------------------------------------

    \330\ NAD, Comment 534743-00029 at 4.
    \331\ Although the NAD determined that the formaldehyde-free 
claim was appropriate, it also found that the manufacturer should 
discontinue comparative claims that, without proper support, raised 
doubts about the safety of competing products. Id.
---------------------------------------------------------------------------

b. Non-toxic Claims
    Commenters discussed several issues raised by non-toxic 
claims.\332\ One commenter stated that a non-toxic claim is vague, 
noting that everything is toxic in sufficient doses.\333\
---------------------------------------------------------------------------

    \332\ EPA-SPN, Comment 536013-00062 at 4; Seventh Generation, 
Comment 533431-00033 at 6; TerraChoice, Comment 533431-00040, 
attached report ``The Six Sins of Greenwashing'' at 3.
    \333\ TerraChoice, Comment 533431-00040, attached report ``The 
Six Sins of Greenwashing'' at 3.
---------------------------------------------------------------------------

    The EPA's Sustainable Products Network (``EPA-SPN'') stated that, 
consistent with the example in the current Green Guides, consumers 
likely would interpret non-toxic claims broadly. Accordingly, the EPA-
SPN stated that non-toxic claims should be supported by evidence that 
addresses health and environmental effects for all exposed 
populations.\334\
---------------------------------------------------------------------------

    \334\ EPA-SPN, Comment 536013-00062 at 4.
---------------------------------------------------------------------------

    The EPA-SPN also noted that non-toxic claims based on regulatory 
definitions may mislead consumers.\335\ The EPA-SPN stated that 
regulatory agencies typically set thresholds to identify moderate to 
high toxicity levels, and the fact that a substance does not exceed the 
regulatory standard does not necessarily mean that it is non-
toxic.\336\
---------------------------------------------------------------------------

    \335\ Id.
    \336\ Id.
---------------------------------------------------------------------------

    Addressing specific products, two commenters stated that insulation 
manufacturers make non-toxic claims but use toxic fire retardants.\337\ 
These commenters recommend prohibiting non-toxic claims if the product 
contains toxic substances in amounts of 10 percent of weight or more.
---------------------------------------------------------------------------

    \337\ NAIMA, Comment 533431-00042 at 8; Saint-Gobain, Comment 
533431-00037 at 9.
---------------------------------------------------------------------------

3. Analysis and Guidance
    The Commission agrees with commenters that it should provide 
expanded guidance for free-of and non-toxic claims. Accordingly, the 
Commission proposes including a new Guides section to address these 
claims.\338\ The Commission also proposes moving two of the three

[[Page 63580]]

examples in the current Guides, cited above, into this section, and 
adding an additional example.
---------------------------------------------------------------------------

    \338\ This proposed guidance can be found in 16 CFR 260.9.
---------------------------------------------------------------------------

a. Free-of Claims
    Marketers can always substantiate free-of claims by confirming that 
their products are, in fact, completely free of the relevant substance. 
As noted above, however, commenters raised a more difficult issue: 
whether marketers should be able to make free-of claims if their 
products contain background levels or trace amounts of a substance. No 
commenters provided evidence regarding how consumers interpret free-of 
claims. Accordingly, the Commission must apply its own expertise to 
determine how consumers likely would interpret such claims. Consistent 
with the NAD decision, discussed above, the Commission proposes 
advising that free-of claims may be appropriate where a product 
contains a de minimis amount of a substance that would be 
inconsequential to consumers. To illustrate this point, the Commission 
proposes adding a new example. In proposed Example 2, an insulation 
seller advertises its product as ``formaldehyde-free.'' Although the 
seller does not use formaldehyde as a binding agent to produce the 
insulation, tests show that the insulation emits trace amounts of 
formaldehyde. The seller has substantiation that formaldehyde is 
produced both synthetically and at low levels by people, animals, and 
plants; that the substance is present in most indoor and (to a lesser 
extent) outdoor environments; and that its insulation emits lower 
levels of formaldehyde than are typically present in outdoor 
environments. In this context, the trace amount of formaldehyde likely 
would be inconsequential to consumers, and, as a result, a 
formaldehyde-free claim likely would not be deceptive.
    However, as the NAD cautioned, the determination of what 
constitutes de minimis depends upon the substance at issue and, 
therefore, requires a case-by-case analysis. In some cases, consumers 
may view the presence of even trace amounts of a substance as material. 
For example, trace amounts of a substance such as mercury, which is 
toxic and may accumulate in the tissues of humans and other organisms, 
likely would be relevant to consumers.\339\
---------------------------------------------------------------------------

    \339\ See 75 FR 41696, 41715 (July 10, 2010) (requiring that 
labels for compact fluorescent light bulbs disclose that the bulbs 
contain mercury).
---------------------------------------------------------------------------

    As suggested by several commenters, the Commission proposes 
cautioning marketers that an otherwise truthful free-of claim may 
nevertheless be deceptive. For example, it may be deceptive if a 
marketer claims that its product is free of a particular substance but 
does not disclose that the product contains another substance that may 
cause environmental harm, particularly if it is the same type of harm 
caused by the absent substance. To illustrate this point, the 
Commission proposes moving the chlorine-free coffee filter example, 
discussed above, into the new proposed section.
    The Commission also proposes advising marketers that an otherwise 
truthful claim that a product is free of a substance may be deceptive 
if the substance has never been associated with that product category. 
This proposed guidance is consistent with ISO 14021's free-of 
standards.\340\ Such claims may deceive consumers by falsely suggesting 
that competing products contain the substance or that the marketer has 
``improved'' the product by removing the substance. However, in some 
circumstances, these claims may provide useful information to consumers 
who are interested in knowing whether a particular substance is present 
in a product. This could be the case, for example, where products in 
one category contain a substance and products in a competing category 
do not. Marketers making such ``free-of'' claims can minimize the risk 
of deception if they clarify that the entire product category is free 
of the substance. The Commission solicits comment on what guidance it 
should give for ``free-of'' claims based on substances which have never 
been associated with a product category. The Commission also seeks 
consumer perception evidence regarding these claims.
---------------------------------------------------------------------------

    \340\ ISO 14021 states that free-of claims should not be based 
on ``the absence of ingredients or features which have never been 
associated with the product category.'' ISO 14021 5.7(p):1999(E). 
See also Environmental Claims: A Guide for Industry and Advertisers, 
Competition Bureau Canada, Canadian Standards Association, June 25, 
2008, Clause 5.17.
---------------------------------------------------------------------------

    The Commission also agrees with several commenters that free-of 
claims may, depending on the context, convey that the product has broad 
environmental benefits or is environmentally superior to competing 
products. Thus, a marketer who makes a free-of claim that reasonable 
consumers would interpret to convey additional environmental claims 
must have substantiation for all of those claims.\341\ The Commission, 
however, declines to advise that all free-of claims be qualified. In 
the absence of evidence that reasonable consumers would, no matter the 
context, perceive free-of claims as making implied general 
environmental benefit or comparative superiority claims, such guidance 
is not appropriate.
---------------------------------------------------------------------------

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

b. Non-toxic Claims
    The Commission proposes moving its guidance concerning non-toxic 
claims from the existing example in current Section 260.7(a) to the 
proposed new Section 260.9.\342\ This proposed section states that 
consumers likely think a non-toxic claim conveys that a product is non-
toxic both for humans and for the environment. This section also 
advises marketers to qualify non-toxic claims to the extent necessary 
to avoid consumer deception.
---------------------------------------------------------------------------

    \342\ The Commission also proposes moving the example into this 
new proposed section.
---------------------------------------------------------------------------

    Marketers should use caution when relying on regulatory standards 
as substantiation for claims that products are non-toxic. Reasonable 
consumers would likely interpret non-toxic claims to mean that a 
product is not harmful to humans or to the environment. Yet, as EPA-SPN 
noted, some regulatory thresholds allow moderately to highly toxic 
substances that do not meet these consumer expectations. Therefore, 
marketers should examine the scope and purpose of the regulatory 
standard to ensure that it substantiates a non-toxic claim in light of 
consumer expectations. For example, the standard for acute toxicity, 
which measures the effects of the substance from exposure during a 
short time period, may not provide an appropriate basis for non-toxic 
claims if the substance may be toxic to humans or the environment over 
a longer period of time.

I. Source Reduction Claims

    Section 260.7(f) of the Guides states that it is deceptive to 
misrepresent that a product or package has been reduced in size or is 
lower in weight, volume, or toxicity. The Guides advise marketers to 
qualify source reduction claims to avoid deception about the amount of 
the reduction and the basis for any comparison. The Soap and Detergent 
Association agreed that marketers should qualify source reduction 
claims and ``measure source reduction through a `package weight per 
unit or use of the product' approach as well as physical reduction of 
packaging material.''\343\ No comments suggested modifying the guidance 
in this section. The Commission, therefore, proposes retaining this 
section without change.\344\
---------------------------------------------------------------------------

    \343\ SDA, Comment 534743-00028 at 2.
    \344\ This guidance can now be found in 16 CFR 260.16.

---------------------------------------------------------------------------

[[Page 63581]]

J. Refillable Claims

    Section 260.7(g) states that it is deceptive to misrepresent that a 
package is refillable. It advises marketers not to make an unqualified 
refillable claims unless: (1) they provide a system to collect and 
return the package for refill; or (2) consumers can refill the package 
with a separately purchased product. The Glass Packaging Institute 
stated that this guidance remains useful, and no other commenters 
recommended changes.\345\ The Commission, therefore, proposes retaining 
this section.\346\
---------------------------------------------------------------------------

    \345\ GPI, Comment 534743-00026 at 8-9.
    \346\ This guidance can now be found in 16 CFR 260.13.
---------------------------------------------------------------------------

VI. Claims Not Addressed by the Current Green Guides

    The Commission asked commenters to discuss whether and how the 
Guides should be modified to address the use of environmental marketing 
claims that either are new or were not common during the last Guides 
review. Commenters discussed five types of claims: (1) sustainable; (2) 
organic/natural; (3) made with renewable materials; (4) made with 
renewable energy; and (5) carbon offsets. For each of these claims, the 
following summarizes the comments and the relevant workshop 
discussions, reviews the consumer perception evidence, and provides the 
Commission's analysis.

A. Sustainable Claims

1. Comments
    Many commenters and workshop panelists addressed whether the 
Commission should revise the Guides to address sustainable claims. 
Commenters disagreed on the meaning of sustainable and whether the term 
could even be defined. Some argued the claim should be banned, while 
others asserted it could be used properly in certain contexts. Others 
observed that the term may be used to convey information about a 
company's environmental philosophies, independent of specific product 
claims.
    Many commenters observed that the term ``sustainable'' has become 
part of the national vernacular.\347\ GMA, for example, cited a study 
finding that from September 2006 through December 2007, the use of the 
term on Internet blogs increased more than 100 percent.\348\
---------------------------------------------------------------------------

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

    Several Packaging Workshop panelists noted that sustainable claims 
may embrace such diverse issues as child labor, community relations, 
economic development, and other non-environmental considerations.\349\ 
For example, the Sustainable Packaging Coalition's ``vision'' for 
sustainable packaging includes the aspiration that the packaging 
``benefits individuals and communities throughout its life 
cycle.''\350\ Another commenter, the Center for Sustainable Innovation, 
broadly defined sustainability as ``how an organization contributes, or 
aims to contribute in the future, to the improvement or deterioration 
of economic, environmental, and social conditions, developments, and 
trends at the local, regional, or global level.''\351\
---------------------------------------------------------------------------

    \349\ See, e.g., Dow, Comment 533431-00010 at 8; FPI, Comment 
533431-00074 at 2; GMA, Green Packaging Workshop Presentation at 
(http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf); International Paper, Comment 533431-00055 at 8.
    \350\ Anne Johnson, The Sustainable Packaging Coalition 
(``SPC''), Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/johnson.pdf). SPC 
remarked that this definition is an ``aspirational vision'' rather 
than a standard. This definition includes packaging that, among 
other things, ``is sourced, manufactured, transported, and recycled 
using renewable energy''; ``is made from renewable or recycled 
source materials''; and ``is made from materials healthy in all 
probable end of life scenarios.'' See SPC, Green Packaging Workshop 
Tr. at 127, 131.
    \351\ Center for Sustainable Innovation, Comment 534743-00003 at 
2.
---------------------------------------------------------------------------

    Several commenters asserted that there is no clear understanding of 
the term, not just for the typical consumer, but among experts and 
business managers.\352\ These commenters, however, disagreed regarding 
whether the FTC should attempt to define the specific attributes of 
sustainability. For example, some urged the FTC ``to avoid tackling the 
onerous and possibly unachievable task of defining the specific 
attributes of sustainability.''\353\ In contrast, others argued that 
the Guides should address the term.\354\ The Environmental Packaging 
Institute, for example, suggested that the term ``sustainable'' 
warrants the addition of a new section ``complete with guidance, 
specific criteria, and examples.''\355\
---------------------------------------------------------------------------

    \352\ EHS, Comment 534743-00011 at 1; EPI, Comment 533431-00063 
at 4; GMA, Comment 533431-00045 at 9; Georgia-Pacific, Comment 
533431-00007 at 8; GreenBlue, Comment 533431-00058 at 7; NAIMA, 
Comment 536013-00017 at 12-13; Saint-Gobain, Comment 533431-00037 at 
12.
    \353\ NAIMA, Comment 536013-00017 at 12-13; Saint-Gobain, 
Comment 533431-00037 at 12.
    \354\ EPI, Comment 533431-00063 at 4; see also GMA, Comment 
533431-00045 at 9 (``[T]he Guides should be updated to include a 
discussion of `sustainable' claims and what constitutes a reasonable 
basis for substantiating such claims.'').
    \355\ EPI, Comment 533431-00063 at 4.
---------------------------------------------------------------------------

    Because of the claim's expansiveness, several commenters likened 
the term ``sustainable'' to general environmental benefit claims.\356\ 
Thus, some of these commenters recommended that the Guides caution that 
the term ``sustainable'' be accompanied by language limiting its 
environmental superiority claim to the particular attribute, or 
attributes, that can be substantiated.\357\ Others suggested that 
marketers making sustainable claims should demonstrate that all aspects 
of a product's life cycle meet the criteria for sustainability.\358\ 
Some suggested that the FTC include new examples using the term 
``sustainable'' in the general environmental benefit claim section of 
the Guides to clarify which sustainability claims may be 
deceptive.\359\
---------------------------------------------------------------------------

    \356\ See 16 C.F.R. Part 260.7(a); see also BSR, Comment 533431-
00016 at 1; P&G, Comment 533431-00070 at 2; SDA, Comment 534743-
00028 at 1; SPI, Comment 533431-00036 at 5; Seventh Generation, 
Comment 533431-00033 at 5; Weyerhaeuser, Comment 533431-00086 at 1.
    \357\ SDA, Comment 534743-00028 at 1-2; see also GMA, Comment 
533431-00045 at 8-9 (recognizing complexity of measuring 
sustainability, but arguing for allowing such claims when qualified 
with a statement identifying environmental product attributes); ACC, 
Comment 533431-00023 at 8-9; Dow, Comment 533431-00010 at 10; 
Formaldehyde Council, Comment 533431-00047 at 5; Georgia-Pacific, 
Comment 533431-00007 at 8; Hammer, Comment 533431-00017 at 9; P&G, 
Comment 533431-00070 at 3; Seventh Generation, Comment 533431-00033 
at 5; Vinyl Institute, Comment 533431-00046 at 3.
    \358\ CSPA, Comment 533431-00049 at 3 (stating comparative 
sustainability claims ``should have a clear basis for verification, 
such as certified life cycle assessment''); Rachel Chadderdon and 
Meghan Genovese, Comment 533431-00054 at 1 (arguing that, because no 
product can be fully sustainable unless all aspects of its life 
cycle meet the criteria for sustainability, marketers wishing to 
make environmental sustainability claims ``must disclose exactly 
which components of the production cycle are and are not 
sustainable''); Stepan Company, Comment 533431-00011 at 2; Tandus, 
Comment 536013-00037 at 1.
    \359\ Eastman, Comment 533431-00051 at 1 (suggesting the Guides 
define sustainability for marketing purposes and provide categories 
of industry practices and product properties that support this 
definition); GMA, Green Packaging Workshop Tr. at 143 (recommending 
the Guides include examples on how to qualify sustainability claims 
to ``put [them] in the proper context''); EPI, Green Packaging 
Workshop Tr. at 210; GPI, Comment 534743-00026 at 10; USGBC, Comment 
534743-00027 at 3.
---------------------------------------------------------------------------

    On the other hand, some commenters argued that the term 
``sustainable'' simply should not be used as a marketing claim.\360\ 
The Sustainable

[[Page 63582]]

Packaging Coalition (``SPC''), for example, stated that currently no 
accepted criteria with supporting test methods exists to qualify a 
package as sustainable.\361\ According to SPC, the term 
``sustainable,'' like the terms ``green'' or ``environmentally 
friendly,'' has no intrinsic meaning and confuses consumers, even if 
marketers qualified it with text that describes the specific 
attribute(s) that make their product sustainable.\362\
---------------------------------------------------------------------------

    \360\ See EHS, Comment 534743-00011 at 1 (stating that 
``sustainable'' should not appear as a product or package descriptor 
because ``[t]he term is ill-defined and made up of several factors, 
often specific to a particular product or manufacturer''); 
GreenBlue, Comment 533431-00058 at 7 (``We recommend strengthening 
the Guides to actively discourage companies from describing their 
products as . . . `sustainable.'''); William Mankin, Comment 534743-
00020 at 1 (stating that the FTC should prohibit use of the term 
``sustainable'' and any claims related to the sustainability of a 
product in all on-product or off-product labels or claims); ILSR, 
Green Packaging Workshop Tr. at 144.
    \361\ SPC, Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/johnson.pdf).
    \362\ Id. But see ACC, Comment 533431-00023 at 9 (asserting the 
Guides should cover sustainability claims because they can be 
appropriately qualified); AF&PA, Comment 533431-00083 at 3-4 
(recommending the Guides allow use of ``sustainable,'' provided the 
marketer transparently communicates a reasonable basis for the 
claim; also noting that ISO is expecting to amend its current 
prohibition of the term due to growing experience and new consumer 
attitudes).
---------------------------------------------------------------------------

    Some commenters noted that, because there are no definitive methods 
for measuring sustainability or confirming its accomplishment, the 
Green Guides should discourage statements claiming achievement of 
sustainability but permit general references to sustainablity goals or 
processes.\363\ ACC, for example, recommended that the Guides clarify 
that ``claims of a product or process being `sustainable' are more 
properly characterized as that [the] product or process promotes or 
contributes to sustainability and/or sustainable outcomes, since 
sustainability is a process or a goal.''\364\ Weyerhaeuser noted that 
ISO 14021 prohibits claims of achieving sustainability, but that this 
prohibition does not apply to marketer's statements about their 
``sustainability goals, processes, or aspirations.''\365\
---------------------------------------------------------------------------

    \363\ See, e.g., CRI, Comment 533431-00026 at 1 (recommending 
the Guides distinguish between ``sustainability (zero net impact) 
and environmental attributes (minimal net impact),'' which 
contribute to sustainability); ACC, Comment 533431-00023 at 8; 
Weyerhaeuser, Comment 533431-00084 at 5-6.
    \364\ ACC, Comment 533431-00023 at 8 (emphasis in original).
    \365\ Weyerhaeuser, Comment 533431-00084 at 5. ISO 5.5 states 
that no claim of achieving sustainability shall be made because 
there are no definitive methods for measuring sustainability or 
confirming its accomplishment. ISO 14021 5.5:1999(E).
---------------------------------------------------------------------------

    Other commenters argued that the term ``sustainable'' can be used 
properly in specific contexts. The Sustainable Forestry Initiative 
(``SFI''), for example, stated that, in forestry, ``sustainable'' is a 
well-recognized concept that can be clearly and specifically 
defined.\366\ SFI explained that it has a specific forest certification 
standard, the ``SFI Standard,'' which defines ``sustainable forestry,'' 
sets forth performance measures and indicators, and confirms compliance 
with a third-party certification audit. Thus, SFI proposed that the 
Guides state that a forest certification label may properly claim 
compliance with a specific forest certification standard and that a 
third-party audit verifying conformance with the standard is adequate 
substantiation.\367\
---------------------------------------------------------------------------

    \366\ SFI, Comment 534743-00010 at 3-4; see also AF&PA, Comment 
534743-00031 at 2 (``A broad definition of sustainability may be 
adopted by the FTC, but . . . specific sectors should be able to 
develop focused definitions that meet the needs of that sector.''); 
Weyerhaeuser, Comment 534743-00033 at 1 (stating that a claim of 
``sustainable forestry'' in the context of a forest certification 
system ``provides consumers with specific, factual information and 
is not a broad claim'').
    \367\ In support of its argument, SFI referenced the Canadian 
Competition Bureau's analysis of ISO 140121, clause 5.5, ``which 
prohibits general and undefined claims of sustainability, but 
permits claims that a seller conforms to a specific forest 
certification standard.'' Id. at 5.
---------------------------------------------------------------------------

    In contrast, commenter William Mankin argued that sustainable 
claims should not be used in any particular context, including 
forestry.\368\ In his view, it is difficult to attain sustainability in 
forests because forests are complex ecological systems. Moreover, he 
asserted that there is no widespread consensus on a definition of the 
term ``sustainable,'' particularly in fields involving the management 
of ecological systems and biological resources. He noted, for example, 
that in the field of forest management, some believe the term applies 
primarily to the ecological attributes of forests, while others believe 
it pertains more to social and economic concerns outside forests.\369\
---------------------------------------------------------------------------

    \368\ William Mankin, Comment 534743-00020 at 1; see also 
Caroline Pufalt, Comment 534743-00021 at 1.
    \369\ Id.
---------------------------------------------------------------------------

    Finally, some commenters observed that terms such as 
``sustainable'' may be used independently from product claims to 
communicate important information about a company or organization's 
mission and vision. For example, GMA referenced the following example 
of a company's statement about its environmental efforts: ``The General 
Mills Sustainability Initiative is a company-wide effort to responsibly 
manage the natural resource base our business depends on.''\370\ GMA 
argued that this is a broad statement about corporate philosophy rather 
than a claim made for specific products or services, and, therefore, 
should be outside the scope of the Guides.\371\ In addition, USGBC 
recommended that the FTC distinguish between ``statements . . . which 
are used to convey broad organizational goals and should not require 
substantiation, and product claims, which make assertions about 
specific product attributes.''\372\
---------------------------------------------------------------------------

    \370\ GMA, Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/tullier.pdf).
    \371\ GMA, Comment 533431-00045 at 8 (citing as examples company 
website sections on environmental activities and discussions of 
activities in annual reports or other comparable communication 
vehicles); see also EHS, Comment 534743-00011 (asserting that 
companies should discuss their programs regarding sustainable 
development in a ``full text document,'' such as their website or in 
their ``corporate sustainability report''); Georgia-Pacific, Comment 
533431-00007 at 8 (recommending that the FTC discourage the 
unqualified use of ``sustainable'' for products and reserve it for 
``providing information about a company's [environmental] indicators 
and overall improvement on those indicators in time''); PCPC, 
Comment 533431-00075 at 6 (recommending that the FTC maintain the 
Guides' focus on products, packages, and services, not ``general 
company practices''); SPI, Comment 533431-00036 at 4 (stating that 
businesses should be able to explain commitments and activities 
intended to advance ``sustainability'').
    \372\ USGBC, Comment 534743-00027 at 3.
---------------------------------------------------------------------------

2. Consumer Perception Evidence
    Commenters submitted limited consumer perception evidence regarding 
sustainable claims. Weyerhaeuser cited findings from its 2006 focus 
groups in four U.S. cities indicating that consumers were unable to 
define the term.\373\ Similarly, the National Cotton Council of America 
(``National Cotton Council'') described its own 2006 research, which 
found that only one third of consumers understand the term 
``sustainable'' in the context of ``sustainable agriculture.''\374\ It 
also cited a 2007 study by the Hartman Group finding that just over 
half of consumers claim any familiarity with the term 
``sustainability,'' and most cannot define it ``appropriately'' upon 
probing.\375\ The National Cotton Council also provided the Commission 
with findings from a 2008 study indicating that 43 percent of 
respondents believed the term ``sustainable'' means ``will last longer/
good quality.''\376\
---------------------------------------------------------------------------

    \373\ Weyerhaeuser, Comment 533431-00086 at 1.
    \374\ National Cotton Council (``NCC''), Comment 536013-00027 at 
4. This study is available at (http://www.ftc.gov/green). The NCC 
considered the following responses to be correct interpretations of 
``sustainable'': ``minimum impact on environment'' and ``reuse or 
replenish land, use in future, doesn't deplete.'' E-mail from Cotton 
Incorporated (Mar. 11, 2010).
    \375\ NCC, Comment 536013-00027 at 52. The commenter did not 
indicate what the Hartman Group considers the ``appropriate'' 
meaning of sustainable.
    \376\ Cotton Incorporated, Lifestyle Monitor Survey, July 2008, 
available at (http://www.ftc.gov/green).
---------------------------------------------------------------------------

    These results are consistent with the Commission's consumer 
perception

[[Page 63583]]

study. Specifically, in response to an open-ended question about the 
meaning of the term ``sustainable,'' some respondents stated the term 
means nothing (13 percent) or that they do not know what the term means 
(eight percent). Many others stated that it suggests a product is 
``strong/durable'' (19 percent) or long-lasting (16 percent). 
Relatively few respondents indicated that the term ``sustainable'' was 
related to any particular environmental benefit,\377\ and only seven 
percent stated that the term suggested a product is ``good for,'' 
``helps,'' or ``benefits'' the environment.\378\
---------------------------------------------------------------------------

    \377\ Although 25 percent of respondents cited a specific 
environmental benefit, these responses were distributed over ten 
different environmental benefits (e.g., ``made from recycled 
materials''; ``recyclable''; ``made with renewable materials''; 
``made from sustainable resources'').
    \378\ In contrast, 27 percent of respondents viewing ``green,'' 
and 15 percent of respondents viewing ``eco-friendly,'' believed 
those claims suggested the product is ``good for/helps/benefits the 
environment.''
---------------------------------------------------------------------------

    In addition, responses to the closed-ended questions suggested that 
respondents did not view ``sustainable'' in the same way as a general 
environmental benefit claim. Specifically, respondents were less likely 
to believe that unqualified sustainable claims suggested specific, 
unstated environmental benefits than respondents who viewed ``green'' 
and ``eco-friendly'' claims. For example, while, on average, 52 percent 
of respondents viewing unqualified ``green'' claims, and 49 percent of 
respondents viewing ``eco-friendly'' claims, stated that these claims 
suggested that the product had several specific environmental 
attributes, only 17 percent of respondents viewing ``sustainable'' 
claims stated the product had these attributes.\379\ Moreover, while 
qualifying general environmental claims with a specific environmental 
attribute made respondents less likely to believe those claims 
suggested other, unstated environmental attributes, qualifying a 
``sustainable'' claim did not have the same effect. Sixteen percent of 
respondents viewing an unqualified ``sustainable'' claim saw unstated 
environmental attributes, compared to 24 percent of respondents who saw 
such attributes when the claim was qualified with a specific 
environmental attribute.
---------------------------------------------------------------------------

    \379\ These results were similar for all three tested products - 
kitchen flooring, laundry basket, and wrapping paper.
---------------------------------------------------------------------------

3. Analysis
    While marketers making sustainable claims may intend to convey that 
a product has general and/or specific environmental benefits, the 
consumer perception evidence indicates that the claim has no single 
environmental meaning to a significant number of consumers or that it 
conveys non-environmental characteristics (e.g., durable or long-
lasting).\380\ In addition, the evidence indicates that consumers view 
sustainable claims differently than general environmental benefit 
claims.\381\
---------------------------------------------------------------------------

    \380\ Section 5 of the FTC Act does not require that an 
advertiser have intended to convey a deceptive claim. See Chrysler 
Corp. v. FTC, 561 F.2d 357, 363 and n.5 (D.C. Cir. 1977); Regina 
Corp. v. FTC, 322 F.2d 765, 768 (3d Cir. 1963). Therefore, if, in 
the particular context in which it is presented, a sustainable claim 
implies to consumers that the product has non-environmental 
characteristics, marketers must substantiate this implied claim.
    \381\ Unlike the other tested claims, the term ``sustainable,'' 
on its face, did not suggest that the advertised product had 
environmental attributes.
---------------------------------------------------------------------------

    The Commission, however, is unable to provide specific advice on 
sustainable as an environmental marketing claim. Unlike other claims we 
tested, the term contains no cue alerting consumers that it refers to 
the environment. If used in combination with environmental terms and 
images, consumers may perceive ``sustainable'' as an environmental 
claim. However, given the diversity of possible phrases and imagery, 
testing the claim in context was not practical. Therefore, the 
Commission lacks a sufficient basis to provide meaningful guidance on 
the use of sustainable as an environmental marketing term. Marketers, 
however, are responsible for substantiating consumers' understanding of 
this claim in the context of their advertisements.
    Some commenters noted that, to the extent the term ``sustainable'' 
is used to communicate information about a company's environmental 
philosophy, such statements should be outside the scope of the Guides. 
Corporate image advertising raises First Amendment issues. The degree 
of constitutional protection provided to corporate image advertising is 
determined by the category of speech into which that expression falls. 
Therefore, as with all types of claims, the Commission evaluates each 
advertisement to determine whether it constitutes commercial speech. 
There is no clear standard for determining whether speech with elements 
of both commercial and non-commercial speech will be considered 
commercial, as opposed to non-commercial speech. Rather, the Supreme 
Court has assessed the totality of circumstances surrounding the 
expression to determine its character, including the content of the 
speech, whether the speaker's motivation is economic, the audience to 
whom and the manner in which the speech is directed, and whether its 
commercial and non-commercial component parts are inextricably 
intertwined.\382\ Because the determination of an advertisement's 
constitutional status must be conducted on a case-by-case basis, the 
issue is not appropriate for general guidance.
---------------------------------------------------------------------------

    \382\ See generally Riley v. Nat'l Fed'n of the Blind, 487 U.S. 
781, 795-96 (1988); Bolger v. Youngs Drug Prod. Corp., 463 U.S. 60, 
67 n.14 (1983).
---------------------------------------------------------------------------

B. Organic and Natural Claims

    The current Guides do not specifically address claims that 
products, packages, or services are organic or natural. Several 
commenters discussed these claims and recommended that the Commission 
provide guidance regarding their use.\383\ Below, the Commission 
discusses other federal agencies' guidance concerning the terms 
``organic'' and ``natural,'' summarizes the relevant comments, and 
analyzes the issues.
---------------------------------------------------------------------------

    \383\ EPA-EPPP, Comment 533431-00038 at 1, 5; SDA, Comment 
533431-00020 at 3; Seventh Generation, Comment 533431-00033 at 3, 5; 
Terressentials, Comment 534743-00012 at 1-2.
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1. Overview - Guidance from Other Agencies
    Other government agencies have provided guidance on the appropriate 
scope of organic and, to a lesser extent, natural claims.
a. Organic Claims
    The USDA's National Organic Program (``NOP'') regulates the term 
``organic'' for agricultural products.\384\ Agricultural products that 
are sold, labeled, or represented as ``100 percent organic,'' 
``organic,'' or ``made with organic ingredients'' must be produced and 
processed in accordance with NOP standards.\385\ Under these standards, 
organic agricultural products must be produced and handled without 
using prohibited methods or synthetic substances, except as 
specifically authorized on the National List of Allowed and Prohibited 
Substances.\386\ Operators who produce or handle such products must be 
certified by an NOP-accredited agent.\387\ Products that qualify as 
``100 percent organic'' or ``organic'' may use the USDA's organic seal 
on their packaging and in their advertisements.\388\
---------------------------------------------------------------------------

    \384\ See 7 CFR Part 205.
    \385\ See 7 CFR 301.
    \386\ See 7 CFR 205.105; 205.601-606.
    \387\ See 7 CFR 205.100.
    \388\ See 7 CFR 205.311.
---------------------------------------------------------------------------

    The USDA does not regulate organic claims for non-agricultural 
products. No other federal agencies provide specific guidance regarding 
organic claims for non-agricultural products.

[[Page 63584]]

b. Natural Claims
    To the extent that federal agencies have defined, or administered 
statutes defining, ``natural,'' they have done so only in specific 
contexts. For example, the Textile Products Identification Act, which 
is administered by the Commission, defines ``natural fiber'' as ``any 
fiber that exists as such in the natural state.'' 15 U.S.C. Sec.  
70(c). The USDA has defined ``natural'' meat and poultry as ``a product 
containing no artificial ingredient or added color'' and which ``is 
only minimally processed.''\389\ The FDA has defined ``natural flavor 
or natural flavorings'' as substances containing the flavoring 
constituents derived from specified items, such as spices, fruits, 
vegetables, herbs, plant materials, meat, seafood, and eggs.\390\ At 
least in part because of the difficulties in developing a definition of 
``natural'' that would be appropriate in multiple contexts, both the 
FDA and the FTC have previously declined to establish a general 
definition.\391\
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    \389\ USDA Food Safety and Inspection Service, Fact Sheet, Meat 
and Poultry Labeling Terms, available at (http://www.fsis.usda.gov/Fact_Sheets/). The fact sheet further notes that the ``label must 
explain the use of the term `natural' (such as - no added colorings 
or artificial ingredients; minimally processed).''
    \390\ 21 CFR 101.22.
    \391\ See 58 FR 2407 (Jan. 6, 1993) (FDA declines to undertake 
rulemaking to define ``natural''); 48 FR 23270 (May 24, 1983) (FTC 
terminates rulemaking that would have regulated natural food 
claims).
---------------------------------------------------------------------------

    The FDA, however, has employed an informal policy regarding the 
term ``natural.''
Specifically, it:

 has considered ``natural'' to mean that nothing artificial or 
synthetic (including colors regardless of source) is included in, or 
has been added to, the product that would not normally be expected to 
be there. For example, the addition of beet juice to lemonade to make 
it pink would preclude the product being called ``natural.'' \392\

    \392\ 56 FR 60466 (Nov. 27, 1991).
---------------------------------------------------------------------------

2. Comments
    Several commenters stated that marketers increasingly employ 
organic and natural claims and recommended that the Commission provide 
guidance regarding their use.\393\ Most commenters focused on the use 
of these terms to describe textiles.\394\
---------------------------------------------------------------------------

    \393\ EPA-EPPP, Comment 533431-00038 at 1, 5; SDA, Comment 
533431-00020 at 3; Seventh Generation, Comment 533431-00033 at 3, 5; 
Terressentials, Comment 534743-00012 at 1-2.
    \394\ In addition to textiles, one commenter asserted that many 
organic claims for personal care products may be misleading. 
Terressentials, Comment 534743-00012 at 1. That commenter stated 
that the USDA has issued a policy statement permitting companies 
selling personal care products to apply for organic certification 
under the NOP, but many companies are making organic claims for 
personal care products without obtaining certification. Id. The 
commenter argued that many consumers mistakenly believe that such 
products comply with NOP standards. Id. On March 12, 2010, Consumers 
Union and the Organic Consumers Association filed a petition raising 
this concern and asking the Commission to investigate the use of 
organic claims for personal care products. The Commission has placed 
the petition on the record.
---------------------------------------------------------------------------

a. Organic Claims
    Several commenters recommended that the Commission provide guidance 
for organically labeled textiles.\395\ Some suggested that the 
Commission consult with the NOP to clarify guidance for organic claims 
for textiles.\396\ Many of these commenters also recommended that the 
Guides adopt NOP's production standards for organic raw fibers.\397\ 
Other commenters suggested that marketers of products that contain any 
organic fiber should be able to make claims about the amount of organic 
fiber, as long as the organic content has been certified by a third 
party.\398\
---------------------------------------------------------------------------

    \395\ Better for Babies, Comment 536013-00033 at 1; ECOnscious, 
Comment 536013-00023 at 1-2; International Sleep Products 
Association (``ISPA''), Comment 536013-00015 at 1; OMI, Comment 
536013-00022 at 2-3; Organic Exchange, Comment 536013-00032 at 3-4; 
Organic Trade Association (``OTA''), Comment 536013-00016 at 1.
    \396\ Better for Babies, Comment 536013-00033 at 1-2; 
ECOnscious, Comment 536013-00023 at 2; OTA, Comment 536013-00016 at 
2.
    \397\ Better for Babies, Comment 536013-00033 at 1-2; 
ECOnscious, Comment 536013-00023 at 1; OTA, Comment 536013-00016 at 
1; Harmony Susalla (``Susalla''), Comment 536013-00028 at 1.
    \398\ Organic Exchange, Comment 536013-00032 at 3; Texas Organic 
Cotton Marketing Cooperative (``TOCMC''), Comment 536013-00014 at 2.
---------------------------------------------------------------------------

    Commenters noted that consumers may understand organic claims to 
refer to the manufacturing of the textile and not just its fabric 
content.\399\ The commenters differed, however, in their views 
regarding how to address this issue. Several recommended that the 
Guides reference the Global Organic Textile Standard (``GOTS'') for the 
processing and manufacturing of organic textile products.\400\ One 
commenter noted, however, that GOTS is a ``process review standard'' 
that ``leaves too many opportunities for mistakes and fraud within the 
dyeing and finishing process for textiles.''\401\ That commenter stated 
there is a need for analytical verification to determine the presence 
of various chemicals in textile products.\402\ Another commenter 
recommended that marketers disclose a complete list of ingredients when 
they make organic claims.\403\
---------------------------------------------------------------------------

    \399\ See, e.g., OTA, Comment 536013-00016 at 2. The NOP 
standards apply only to the raw fibers; they do not cover the 
processing and manufacturing of textile products.
    \400\ Better for Babies, Comment 536013-00033 at 2; ECOnscious, 
Comment 536013-00023 at 2; OMI, Comment 536013-00022 at 4; OTA, 
Comment 536013-00016 at 4; Susalla, Comment 536013-00028 at 1-2; 
TOCMC, Comment 536013-00014 at 2. One commenter recommended that the 
Guides consider GOTS, as well as other processing standards such as 
Oeko-Tex and Bluesign. Organic Exchange, Comment 536013-00032 at 4. 
That commenter asserted that third-party organic certification 
should be recognized as substantiation for an organic claim. Id. 
Another commenter, however, expressed concern that references to the 
Oeko-Tex certification process may be misleading if the marketer 
does not disclose which Oeko-Tex certification process it is using. 
Susalla, Comment 536013-00028 at 2.
    \401\ Oeko-Tex, Comment 536013-00013 at 4.
    \402\ Id.
    \403\ OMI, Comment 536013-00022 at 2.
---------------------------------------------------------------------------

    Several commenters discussed whether marketers should be permitted 
to claim that fibers are ``transitional organic'' fibers. The USDA 
requires that to be certified as organic, fibers must be grown without 
chemical fertilizers, defoliants, or pesticides for three years. The 
term ``transitional organic'' refers to fiber grown according to these 
guidelines that has not yet met the three-year requirement. One 
commenter noted that some retailers are selling products containing 
``transitional cotton,'' despite the fact that USDA does not recognize 
that term.\404\ Other commenters recommended that the Guides permit 
marketers to make ``transitional organic'' claims ``to enable the 
organic fiber marketplace to grow while supporting the farmer during 
the three-year transition period.''\405\
---------------------------------------------------------------------------

    \404\ NCC, Comment 536013-00027 at 2.
    \405\ Organic Exchange, Comment 536013-00032 at 4; TOCMC, 
Comment 536013-00014 at 2. The Organic Exchange noted that the proof 
for a transitional claim would be that the farm has applied for 
organic certification, an initial on-site inspection has been 
conducted, and the farm has an organic system plan which includes 
the last date of use of prohibited substances. Organic Exchange, 
Comment 536013-00032 at 4.
---------------------------------------------------------------------------

    One commenter indicated that numerous retailers appear to be 
marketing products made with conventional cotton as organic.\406\ That 
commenter also reported that retailers are making claims that products 
are certified organic but are not providing information about the 
certification.\407\ The commenter stated that research indicates 
consumers are confused about the meaning of organic claims and do not 
trust that products labeled as organic are, in fact, organic.\408\
---------------------------------------------------------------------------

    \406\ NCC, Comment 536013-00027 at 3.
    \407\ Id. The NOP regulations require that the products labeled 
as ``100 percent organic'' or ``organic'' must identify the agent 
that certified the products as organic. 7 CFR 205.303.
    \408\ Id. at 4.
---------------------------------------------------------------------------

b. Natural Claims
    Several commenters stated that the term ``natural'' does not have a 
clear

[[Page 63585]]

meaning.\409\ One commenter explained that natural claims for textiles 
are unclear because the products have ``undergone significant 
transformation from the raw materials'' they contain.\410\ Another 
asserted that the term is meaningless and is used to exaggerate the 
environmental benefits of a product.\411\ One commenter, however, 
stated that consumers may understand the term given the context in 
which it is used.\412\
---------------------------------------------------------------------------

    \409\ ECOnscious, Comment 536013-00023 at 1; OTA, Comment 
536013-00016 at 2; Oeko-Tex, Comment 536013-00013 at 5; Susalla, 
Comment 536013-00028 at 1.
    \410\ OTA, Comment 536013-00016 at 2 (stating also that the term 
``natural'' ``has only rarely been used as a term of art . . . by 
any U.S. regulatory agency'').
    \411\ Susalla, Comment 536013-00028 at 1.
    \412\ Tetra Pak, Comment 536013-00012 at 3. The commenter 
provided an example of the use of natural in context. It stated that 
claiming a product is ``made from trees, a natural and renewable 
resource,'' would not be deceptive if the product is made entirely 
using that material.
---------------------------------------------------------------------------

    The commenters discussed whether the Guides should address the term 
``natural.'' Several recommended generally that the Guides address or 
define the term, but did not specify how the Guides should do so.\413\ 
Some commenters suggested that natural may be appropriately used to 
distinguish between textiles derived from agricultural products and 
those derived from petrochemicals.\414\ Another commenter recommended 
that the Guides advise marketers to substantiate natural claims with 
third-party verification or independent testing.\415\
---------------------------------------------------------------------------

    \413\ ISPA, Comment 536013-00015 at 1 (proposing that the 
Commission establish objective criteria regarding when natural may 
be used as well as documentation required to substantiate the 
claim); SDA, Comment 536013-00018 at 1 (stating that natural claims 
for all products should be specific and verifiable); Susalla, 
Comment 536013-00028 at 1; Tandus, Comment 536013-00037 at 1; Tetra 
Pak, Comment 536013-00012 at 3.
    \414\ Better for Babies, Comment 536013-00033 at 2; NCC, Comment 
536013-00027 at 2; OTA, Comment 536013-00016 at 2.
    \415\ TOCMC, Comment 536013-00014 at 1; see also OMI, Comment 
536013-00022 at 3 (stating that if the Commission decides to address 
natural claims, a clear definition is required); Oeko-Tex, Comment 
536013-00013 at 5 (stating that marketers should substantiate 
natural claims with specific, science-based definitions); Susalla, 
Comment 536013-00028 at 1 (stating that the Cotton Incorporated 
``green'' message is deceptive because although U.S. cotton is grown 
on less land and with fewer chemicals, this is not the case with 
farms around the world).
---------------------------------------------------------------------------

    Others recommended that the Guides not allow the use of the term. 
For example, one commenter stated that because the term lacks a clear 
meaning in the textile sector, the Commission should not allow 
marketers to use it.\416\ Another suggested that the Guides not allow 
natural claims even for fibers grown agriculturally because agriculture 
can have a negative impact on the environment, such as water and air 
pollution and soil erosion.\417\
---------------------------------------------------------------------------

    \416\ ECOnscious, Comment 536013-00023 at 1.
    \417\ Todd Copeland, Patagonia, Comment 536013-00011 at 1; see 
also REI, Comment 536013-00031 at 1 (stating that the Commission 
should be mindful that agriculture can have a significant impact on 
the environment).
---------------------------------------------------------------------------

3. Consumer Perception Evidence
    Only one commenter, the National Cotton Council, cited consumer 
perception evidence regarding organic claims. It asserted that its 
research indicates that consumers are confused about these claims, with 
more than two-thirds of respondents either believing, or not sure, if 
organic cotton textiles were made from recycled materials or contain 
soy.\418\ The research also indicated that consumers do not trust that 
products labeled as organic are, in fact, organic.\419\
---------------------------------------------------------------------------

    \418\ NCC Comment 536013-00027 at 4 (citing 2003 and 2006 
studies conducted jointly with the OTA).
    \419\ Id.
---------------------------------------------------------------------------

    No commenters provided consumer perception evidence indicating how 
consumers understand the term ``natural.''
4. Analysis
    The Commission does not propose creating a new section of the 
Guides to address organic and natural claims. The explanation for this 
decision is discussed below separately for each claim.
    Although the Commission is not proposing a new section for these 
claims, the general principles set forth in the Guides still apply. 
Marketers must have substantiation for their environmental benefit 
claims, including implied claims.\420\ More specifically, to the extent 
that reasonable consumers perceive organic or natural claims as general 
environmental benefit claims or comparative claims, the marketer must 
be able to substantiate those claims and all other reasonably implied 
claims, as described in Part V.A.4 above.\421\
---------------------------------------------------------------------------

    \420\ 16 CFR 260.5.
    \421\ 16 CFR 260.6(d), 260.7(a).
---------------------------------------------------------------------------

a. Organic Claims
    The Commission does not propose addressing organic claims for two 
reasons. First, the NOP already addresses organic claims for 
agricultural products. Second, for products that are outside the NOP's 
jurisdiction, the current record is insufficient for the Commission to 
provide specific guidance.
i. Organic Claims for Agricultural Products
    As described above, the NOP provides a comprehensive regulatory 
framework governing organic claims for agricultural products. Because 
of this framework and the NOP's ongoing work in this area, the 
Commission does not want to propose duplicative or possibly 
inconsistent advice. Therefore, the Commission declines to address 
organic claims covered by NOP standards in the Guides.\422\
---------------------------------------------------------------------------

    \422\ Although some commenters recommended that the Guides 
endorse ``transitional organic'' claims for fibers, it is unlikely 
consumers would understand the meaning of this term and the issue is 
more appropriately addressed by the NOP.
---------------------------------------------------------------------------

    For the same reason, the Commission does not propose addressing 
standards for processing organic textiles. The USDA has indicated that 
organic claims for finished textile products fall within its 
jurisdiction. Following the Commission's Green Building and Textiles 
Workshop, the NOP released a new fact sheet, ``Labeling of Textiles 
Under National Organic Program (NOP) Regulations,'' which discussed 
organic claims regarding textiles.\423\ Therefore, rather than 
proposing duplicative or potentially inconsistent advice, Commission 
staff will continue to consult with NOP staff to ensure that marketers 
have sufficient guidance regarding organic claims for textile products.
---------------------------------------------------------------------------

    \423\ USDA Labeling of Textiles Under National Organic Program 
(NOP) Regulations Fact Sheet, July 2008, available at (http://www.ams.usda.gov/AMSv1.0/getfile?dDocName= 
STELPRDC5070818&acct=nopgeninfo).
---------------------------------------------------------------------------

ii. Organic Claims for Non-agricultural Products
    Although the NOP's regulatory framework governs organic claims for 
agricultural products, it does not apply to organic claims for non-
agricultural products. Therefore, within a particular category (e.g., 
cosmetics), some products are covered by NOP standards and other 
products are not, depending on their ingredients.\424\ Yet, both 
products could be advertised as organic. It is unclear how consumers 
understand organic

[[Page 63586]]

claims that describe non-agricultural products, and how marketers of 
those products substantiate their claims.
---------------------------------------------------------------------------

    \424\ Cosmetics, body care products, and personal care products 
illustrate this difference. The USDA has stated that if these 
products contain agricultural ingredients and can satisfy NOP 
organic production, handling, processing, and labeling standards, 
they are eligible for certification under NOP regulations. However, 
the USDA has stated that it does not have authority over the 
production and labeling of such products if they do not contain 
agricultural ingredients or do not make any claim that they meet 
USDA organic standards. USDA Cosmetics, Body Care Products and 
Personal Care Products Fact Sheet, April 2008, available at (http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5068442&acct= 
nopgeninfo).
---------------------------------------------------------------------------

    No commenters submitted consumer perception evidence on this issue. 
The Commission, therefore, lacks a basis to provide guidance on the use 
of organic claims for products outside NOP's jurisdiction. Accordingly, 
the Commission requests comment on what guidance, if any, it should 
provide regarding the use of organic claims to describe non-
agricultural products.
b. Natural Claims
    The Commission also does not propose addressing natural claims. As 
discussed above, the role of the Guides is to prevent consumer 
deception, so definitions for terms such as natural must be based on 
what consumers understand those terms to mean. However, no commenters 
provided consumer perception evidence indicating how consumers 
understand the term ``natural.'' In addition, natural may be used in 
numerous contexts and may convey different meanings depending on that 
context.\425\ Thus, the Commission does not have a basis to provide 
general guidance on the use of the term.
---------------------------------------------------------------------------

    \425\ As noted above, the FTC and the FDA have previously 
declined to adopt a wide-ranging, formal definition of ``natural.''
---------------------------------------------------------------------------

    Some commenters recommended that the Guides prohibit the use of 
natural claims. In evaluating whether a representation is misleading, 
the Commission examines not only the claim itself, but the net 
impression of the entire advertisement.\426\ Thus, in order to state 
that marketers should never use the term ``natural,'' the Commission 
would have to conclude that the use of the term is deceptive in every 
context and that no reasonable qualification is sufficient to prevent 
that deception. In the absence of evidence demonstrating that natural 
is always deceptive and that its use could not be qualified to avoid 
such deception, the Commission cannot prohibit marketers from using the 
term. Moreover, as noted above, several agencies, including the FTC, 
the FDA, and the USDA, acknowledge that natural may be an appropriate 
descriptor in some contexts.\427\
---------------------------------------------------------------------------

    \426\ Deception Policy Statement, 103 F.T.C. at 179 (when 
evaluating representations under a deception analysis, one looks at 
the complete advertisement and formulates opinions ``on the basis of 
the net general impression conveyed by them and not on isolated 
excerpts''). Depending on the specific circumstances, qualifying 
disclosures may or may not cure otherwise deceptive messages. Id. at 
180-81.
    \427\ See Part VI.B.1.b, supra.
---------------------------------------------------------------------------

    Marketers that are using terms such as natural must ensure that 
they can substantiate whatever claims they are conveying to reasonable 
consumers. If reasonable consumers could interpret a natural claim as 
representing that a product contains no artificial ingredients, then 
the marketer must be able to substantiate that fact. Similarly, if, in 
a given context, a natural claim is perceived by reasonable consumers 
as a general environmental benefit claim or as a comparative claim 
(e.g., that the product is superior to a product with synthetic 
ingredients), then the marketer must be able to substantiate that claim 
and all attendant reasonably implied claims.\428\
---------------------------------------------------------------------------

    \428\ See Part V.A.4, supra.
---------------------------------------------------------------------------

C. Renewable Materials Claims

    Although the Commission solicited comments on whether the Guides 
should be revised generally to include renewable claims, the vast 
majority of commenters addressed this term in the context of 
``renewable materials''\429\ or ``renewable energy.''\430\ Therefore, 
the Commission has focused on these two types of renewable claims. This 
part discusses comments, relevant consumer perception evidence, and the 
Commission's proposed guidance for renewable materials claims. Part 
VI.D, below, addresses renewable energy claims.
---------------------------------------------------------------------------

    \429\ Although commenters also referred to ``renewable 
resources,'' the Commission uses the term ``materials'' for 
consistency.
    \430\ According to the FTC Staff Internet Surf, among 
renewability claims, the phrases ``renewable energy'' and 
``renewable resource'' occurred most frequently. ``Renewable 
energy'' occurred in 46 percent of the 387 web pages containing 
renewable claims, and ``renewable resource'' occurred in 37 percent.
---------------------------------------------------------------------------

1. Comments
    Comments addressed the following issues: (1) use of an unqualified 
renewable claim; (2) the elements of a renewable materials claim, 
including the time frame under which material must be renewed; (3) the 
quantity of renewable materials in a product or package marked ``made 
with renewable materials''; (4) the specific substantiation for a 
renewable materials claim; and (5) consumer confusion between renewable 
materials claims and biodegradability.
a. Unqualified Renewable Claims
    Two commenters recommended that the Guides clarify that ``the 
characteristic of `renewable' must be ascribed to a material or fuel,'' 
and not to the product or package itself.\431\ According to these 
commenters, ``it is not proper to ask if [a product] is renewable but 
rather if the material composing it in a majority by weight is 
renewable.''\432\ A third commenter asserted that a product labeled 
with an unqualified renewable claim is deceptive because it does not 
provide consumers with information that can be used to evaluate the 
claim.\433\
---------------------------------------------------------------------------

    \431\ FBA, Comment 533431-00015 at 4; Georgia-Pacific, Comment 
533431-00007 at 8.
    \432\ Id.
    \433\ ACC, Comment 533431-00023 at 11 (suggesting that a product 
labeled, for example, ``uses 20% renewable feedstock'' would not be 
deceptive).
---------------------------------------------------------------------------

b. Elements of Renewable Materials Claims
    Most commenters did not offer evidence or views on how consumers 
perceive renewable materials claims.\434\ Rather, they suggested 
definitions for the term. For example, two commenters defined renewable 
materials as materials having ``the capacity of being regenerated 
either through natural processes or with human assistance, for example, 
through replanting with nursery seedlings or natural reseeding.''\435\ 
Another stated that renewable materials are ``capable of being replaced 
by natural ecological cycles or sound management practices.''\436\
---------------------------------------------------------------------------

    \434\ In fact, only one commenter, the National Cotton Council, 
cited consumer perception evidence. NCC, Comment 536013-00027 at 4; 
See Part VI.C.2, infra.
    \435\ AF&PA, Comment 533431-00083 at 4; see also FBA, Comment 
533431-00015 at 4.
    \436\ NCC, Comment 536013-00027 at 1.
---------------------------------------------------------------------------

    Commenters, however, argued that there is an ongoing debate 
regarding the definition of ``renewable'' and strongly urged the 
Commission to ``approach renewability broadly and recognize that there 
is no consensus on what should be treated as a renewable 
resource.''\437\ Moreover, although some commenters observed that 
renewable materials include biobased products,\438\ one commenter 
remarked that defining renewable materials to include only 
agriculturally based materials is too limiting.\439\ According to this 
commenter, although not agriculturally based, sand is a renewable 
resource because deposits are increased daily ``by the normal, ongoing 
geological processes that generate new deposits of sand in the hundreds 
of millions of tons each year.''\440\
---------------------------------------------------------------------------

    \437\ NAIMA, Comment 536013-00017 at 14; Saint-Gobain, Comment 
533431-00037 at 13.
    \438\ See, e.g., Dow, Comment 533431-00010 at 15; GreenBlue, 
Comment 533431-00058 at 7.
    \439\ NAIMA, Comment 536013-00017 at 14.
    \440\ Id.; see also FBA, Comment 533431-00015 at 4; Georgia-
Pacific, Comment 533431-00007 at 8.
---------------------------------------------------------------------------

    Another commenter provided a more detailed definition. According to 
this

[[Page 63587]]

commenter, a material is renewable if: (1) the rate of the material's 
replenishment matches the rate of consumption; (2) the sourcing of the 
material does not harm the ecosystem or negatively impact 
``sustainability''; (3) sourcing of the material reduces consumption of 
non-renewable resources; and (4) use of the renewable material does not 
``significantly increase the product's environmental footprint in other 
relevant indicators (e.g., water, waste, energy, etc.).''\441\ Along 
these lines, other commenters stated that renewability claims may 
deceive consumers if the beneficial attributes associated with the 
renewable materials do not account for every environmental trade-off, 
after analyzing the entire life cycle of the source.\442\
---------------------------------------------------------------------------

    \441\ P&G, Comment 533431-00070 at 3. This commenter's remarks 
also applied to renewable energy.
    \442\ Seventh Generation, Comment 533431-00033 at 5 (stating the 
attribute should cover the entire life cycle of the source so as to 
account for any trade-off); SDA, Comment 533431-00020 at 4.
---------------------------------------------------------------------------

    Other commenters suggested that renewable materials claims may 
convey some broader environmental benefit.\443\ In particular, one 
commenter cautioned that advertisers should be careful not to equate 
such claims with an overall environmental benefit, observing, for 
example, that although ethanol may be renewable, its overall 
environmental benefit is debated because of ``the large amount of 
energy needed to create it (and the carbon emissions that its creation 
entails).''\444\
---------------------------------------------------------------------------

    \443\ SPI, Comment 533431-00036 at 6.
    \444\ Hammer, Comment 533431-00017 at 9.
---------------------------------------------------------------------------

    In contrast, another commenter stated that consumers understand 
renewability to refer to only one attribute (i.e., the biological 
properties of a material) and do not interpret renewability claims to 
imply that ``there are no other environmental issues.''\445\ Thus, this 
commenter urged the FTC not to expand renewability ``beyond a simple 
biological claim.''\446\
---------------------------------------------------------------------------

    \445\ Weyerhaeuser, Comment 533431-00084 at 6.
    \446\ Id.
---------------------------------------------------------------------------

    Some commenters specifically addressed whether and how the Guides 
should address time frames for renewability. One commenter, for 
example, suggested that the Guides provide that the time frame within 
which a resource is renewed is ``commensurate with the rate of its use 
and that the appropriate management practices are used to ensure a 
material's renewability.''\447\ This commenter explained that the term 
``begs the question `On what time scale?' The argument can be made that 
everything is renewable in geologic time or that products are renewable 
if fossilization is included in the life cycle.''\448\ Others similarly 
asked the FTC to provide specific time frames for renewability.\449\
---------------------------------------------------------------------------

    \447\ GreenBlue, Comment 533431-00058 at 7.
    \448\ Id.
    \449\ CRI, Comment 533431-00026 at 2 (stating that the FTC 
should define applicable time frames but not recommending specific 
time frames); Georgia-Pacific, Comment 533431-00007 at 4 (same); 
Tandus, Comment 536013-00037 at 1 (suggesting, as an example, a 10-
year time frame).
---------------------------------------------------------------------------

c. Quantity of Renewable Materials
    Several commenters addressed the question of how much of a product 
should be renewable for a marketer to make an unqualified ``made with 
renewable materials'' claim. Some recommended that the FTC use its 
current guidance on recyclability and recycled content as a model, 
i.e., a renewable claim could be made only if an entire product or 
package, excluding minor incidental components, is made of renewable 
materials.\450\ Otherwise, the marketer should qualify the renewability 
claim by stating the percentage of renewable materials.
---------------------------------------------------------------------------

    \450\ ACC, Comment 533431-00023 at 11; see also SPI, Comment 
533431-00036 at 6 (recommending that the FTC address situations 
where less than 100 percent of contents are ``renewable''; could 
take approach similar to guidance on products containing less than 
100 percent recycled content); Stepan Company, Comment 533431-00011 
at 3.
---------------------------------------------------------------------------

    Other commenters presented slightly differing views. The 
Biodegradable Products Institute (``BPI,'') for example, recommended a 
more specific cut-off, asserting that marketers make unqualified ``made 
with renewable materials'' claims only for products that have greater 
than 95 percent non-petroleum resources.\451\ In contrast, two 
commenters argued that marketers should be able to make an unqualified 
claim if a ``majority'' of the product consists of renewable 
materials.\452\
---------------------------------------------------------------------------

    \451\ Steve Mojo, Biodegradable Products Institute (``BPI''), 
Green Packaging Workshop Presentation at (http://www.ftc.gov/bcp/workshops/packaging/presentations/mojo.pdf) (recommending that 
products containing less than 95 percent renewable content should 
state that percentage).
    \452\ FBA, Comment 533431-00015 at 4; Georgia-Pacific, Comment 
533431-00007 at 6, 8.
---------------------------------------------------------------------------

    In addition to recommending a threshold for an unqualified claim, 
some commenters suggested that marketers' promotional materials should 
provide specific information about the renewable material, such as the 
exact percentage of renewable materials in a product\453\ or the source 
of specific raw materials used.\454\
---------------------------------------------------------------------------

    \453\ ACC, Comment 533431-00023 at 11; see also Hammer, Comment 
533431-00017 at 8 (stating marketers should specify the percentage 
of the total product that is renewable).
    \454\ SPI, Comment 533431-00036 at 6.
---------------------------------------------------------------------------

d. Substantiating Renewable Materials Claims
    Some commenters suggested that the Guides specifically address the 
procedures needed to substantiate renewable and biobased claims. For 
example, one commenter suggested that the Guides recommend either self-
certification with publicly available documentation using EPA 
definitions or a third-party certification.\455\ Others opined that the 
Green Guides specify the methods used to determine biocontent.\456\ For 
example, some commenters suggested ASTM D 6866\457\ could be used to 
accurately determine the percentage of the product that comes from 
renewable resources.\458\
---------------------------------------------------------------------------

    \455\ CRI, Comment 533431-00026 at 2.
    \456\ BPI, Green Packaging Workshop Tr. at 90-91; Georgia-
Pacific, Comment 533431-00007 at 8; ILSR, Green Packaging Workshop 
Tr. at 136-138; Stepan Company, Comment 533431-00011 at 2.
    \457\ ASTM D 6866 ``Standard Test Methods for Determining the 
Biobased Content of Natural Range Materials Using Radiocarbon and 
Isotope Ratio Mass Spectometry Analysis.''
    \458\ BPI, Green Packaging Workshop Tr. at 83; Georgia-Pacific, 
Comment 533431-00007 at 8; ILSR, Green Packaging Workshop Tr. at 
136-138.
---------------------------------------------------------------------------

e. Confusion Between Renewable Materials Claims and Biodegradability
    Two commenters noted that consumers may mistakenly believe that 
products labeled ``made with renewable materials'' are also 
biodegradable.\459\ Specifically, BPI cited a study conducted by APCO 
Insight in 2006 finding that 80 percent of consumers believe that a 
package made from natural materials, such as corn-based plastics, were 
more likely to be biodegradable than a package made from synthetic 
materials.\460\ However, some biobased products, such as products made 
from sugar cane, contain non-degradable polymers.\461\ Moreover, 
according to the Institute for Local Self-Reliance, some of the 
plastics on the market that meet biodegradability standards contain no 
plant matter.\462\ To address this confusion, BPI recommended that the 
Guides make clear that naturally based materials may, or may not, be 
compostable or biodegradable.\463\
---------------------------------------------------------------------------

    \459\ BPI, Green Packaging Workshop Tr. at 89 and (http://www.ftc.gov/bcp/workshops/packaging/presentations/mojo.pdf).
    \460\ See APCO, Biodegradable and Compostable Survey Topline at 
4.
    \461\ Id.; ILSR, Green Packaging Workshop Tr. at 137-138.
    \462\ ILSR, Green Packaging Workshop Tr. at 137-138.
    \463\ BPI, Green Packaging Workshop Tr. at 102-103.

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[[Page 63588]]

2. Consumer Perception Evidence
    As noted above, one commenter, the National Cotton Council, 
described a finding from its 2006 telephone/Internet study that ``only 
one third of consumers correctly understand the term . . . 
`renewable''' when referring to cotton.\464\
---------------------------------------------------------------------------

    \464\ NCC, Comment 536013-00017 at 4. This study, which Cotton 
Incorporated conducted, is available at (http://www.ftc.gov/green). 
The NCC counted the terms ``recycled,'' ``reused/regrown,'' and 
``sustainable for environment'' as ``correct'' interpretations of 
the term. E-mail from Cotton Incorporated (Mar. 11, 2010).
---------------------------------------------------------------------------

    The Commission's consumer perception study tested respondents' 
understanding of the phrase ``made with renewable materials'' as this 
claim appeared on three different products - wrapping paper, a laundry 
basket, and kitchen flooring. The study results indicated that, for all 
products, respondents thought this claim definitely or probably 
suggested that the product had other environmental attributes. For 
example, 53 percent believed that this phrase suggested that the 
product was recyclable.\465\ In addition, 45 percent believed the 
phrase suggested that the product was made from recycled materials. 
Fewer, but still a significant number, believed that a ``made with 
renewable materials'' claim suggested that the product was 
biodegradable (28 percent), compostable (24 percent), and made with 
renewable energy (23 percent).
---------------------------------------------------------------------------

    \465\ This and the following numbers are net of the non-
environmental control claim.
---------------------------------------------------------------------------

    Responses to the open-ended question ``[w]hat, if anything, does 
this statement suggest or imply to you about the product,'' confirmed 
these results. For all three tested products, a significant number said 
that the product was made from recycled materials (31 percent) or 
materials that can be recycled (17 percent).
    A smaller number of respondents answering the open-ended questions 
perceived the claim in the same way as marketers appear to intend. 
Specifically, 10 percent stated the term implied that materials could 
be replenished, replaced, or regrown; 4 percent stated the materials 
were derived from plant matter; 0.4 percent suggested the materials 
were non-petroleum based; and 0.6 percent indicated the materials could 
be grown quickly.\466\
---------------------------------------------------------------------------

    \466\ These findings are based on FTC staff's more detailed 
analysis of the open-ended responses rather than Harris' general 
findings.
---------------------------------------------------------------------------

    The study further tested what a ``made with renewable materials'' 
claim conveyed about the percentage of renewable materials in a 
product. Specifically, the study asked respondents whether a statement 
that a product is ``made with renewable materials'' suggests that all, 
most, or some of the materials were renewable. In response, 37 percent 
indicated that they would interpret the claim to mean that ``all'' of 
the materials were renewable, and an additional 20 percent believed 
that the claim meant ``most.''\467\
---------------------------------------------------------------------------

    \467\ Further, 26 percent stated that ``some'' of the product 
was made with renewable materials; 13 percent stated that the claim 
does not suggest anything about how much of the product was made 
with renewable materials; and six percent stated that they were not 
sure. The figures total 102 percent because of rounding. These 
percentages were derived by combining the responses to all claims 
that included ``made with renewable materials'' (i.e., ``made with 
renewable materials,'' ``green - made with renewable materials,'' 
``eco-friendly - made with renewable materials,'' and ``sustainable 
- made with renewable materials'').
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3. Analysis and Guidance
    To avoid deception, the Commission proposes advising marketers to 
qualify a ``made with renewable materials'' claim with specific 
information about the material.\468\ In addition, marketers should 
qualify this claim for products containing less than 100 percent 
renewable materials, excluding minor, incidental components. The 
Commission does not propose defining the term or endorsing any 
particular test to substantiate such claims.
---------------------------------------------------------------------------

    \468\ This proposed guidance can be found in 16 CFR 260.15.
---------------------------------------------------------------------------

a. Qualifying Renewable Materials Claims
    Rather than providing a technical or scientific definition for 
environmental claims, the Guides state what consumers understand the 
claims to mean. The results of the Commission's consumer perception 
study suggest there is a disconnect between consumer understanding of 
``made with renewable materials'' claims and what marketers appear to 
intend to convey. Marketers, for example, may intend to communicate 
that a product is made from a material that can be replenished at the 
same rate, or faster, than consumption.\469\ Consumers, however, likely 
believe the product has other specific environmental benefits, such as 
being made with recycled content, recyclable material, and 
biodegradable material. The Commission, therefore, proposes advising 
marketers to qualify ``made with renewable materials'' claims to avoid 
misleading consumers.
---------------------------------------------------------------------------

    \469\ See, e.g., P&G, Comment 533431-00070 at 3.
---------------------------------------------------------------------------

    While the Commission did not test particular qualifiers, it 
nevertheless believes that providing specific information about the 
renewable material may correct consumers' misimpressions about this 
claim. For example, providing information regarding which renewable 
materials were used, how the materials were sourced, and why the 
materials are renewable may align consumer perception with what 
marketers are trying to convey. Accordingly, in proposed Example 1, the 
Commission states that a ``made with renewable materials'' claim is 
unlikely to be deceptive if the marketer provides specific information 
about the material it uses (bamboo), how it sources the material (it 
grows the bamboo), and why it is renewable (the bamboo grows at a rate 
comparable or faster than its use). Providing this information should 
reduce confusion by providing context for the claim. The Commission 
seeks comment on whether providing this information, as in proposed 
Example 1, adequately qualifies a ``made with renewable materials'' 
claim.
b. Quantity of Renewable Materials
    As noted above, a significant percentage of respondents (37 
percent) indicated that they would interpret a ``made with renewable 
materials'' claim to mean that ``all'' of the materials in a product 
are renewable. Based on this result, the Commission proposes that, 
unless the entire product or package, excluding minor, incidental 
components, is made from renewable materials, marketers need to qualify 
the claim to specify the amount of renewable materials in a product or 
package. Thus, as illustrated in proposed Example 2, a marketer's 
``made with renewable materials'' claim would not be deceptive if it 
clearly states that its product, made from a blend of 50 percent 
petroleum-based plastic and 50 percent plant-based plastic, contains 50 
percent renewable material. This proposed guidance is consistent with 
many of the commenters' views and is modeled on the Commission's 
current recycled content guidance.\470\
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    \470\ The Guides currently provide that unqualified claims of 
recycled content may be made if the entire product or package 
(excluding minor, incidental components) is made from recycled 
content. 16 CFR 260.7(e). The recyclable section of the current 
Guides also contains similar language: ``Unqualified claims of 
recyclability for a product or package may be made if the entire 
product or package, excluding minor incidental components, is 
recyclable.'' 16 CFR 260.7(d).
---------------------------------------------------------------------------

c. Substantiating Renewable Materials Claims
    As discussed above, several commenters suggested that the 
Commission reference ASTM Method D 6866 as a means to substantiate 
``made with renewable material'' claims. Although this protocol may 
determine the biobased content of natural

[[Page 63589]]

materials, it does not necessarily substantiate all claims that 
consumers reasonably infer. Therefore, the Commission declines to 
reference it in the Guides as acceptable substantiation for renewable 
materials claims.
    Proposed Example 3 illustrates this point. In this example, 
although the marketer used test results to determine that its product 
consists entirely of biological material, the marketer cannot 
substantiate other consumer interpretations of its unqualified ``made 
with renewable materials'' claim, including that the product is 
recyclable, made with recycled content, or biodegradable.
d. Biobased Claims
    Some commenters used the term ``biobased'' interchangeably with the 
phrase ``renewable material.''\471\ It is not clear whether consumers 
interpret this claim in the same way as ``renewable.'' At this time, 
the Commission does not propose addressing biobased claims in the 
Guides because the USDA is conducting its own consumer perception study 
of biobased claims as part of its proposed voluntary labeling program 
for biobased products.\472\ In developing this program, USDA has sought 
public comment on a proposed ``USDA Certified Biobased Product'' logo, 
which will include a statement that identifies the biobased\473\ 
content of the product and that indicates whether the label applies to 
the product or packaging (e.g., ``Product: 57% biobased; Packaging: 90% 
biobased''). The USDA proposes that marketers determine biobased 
content by testing products pursuant to the ASTM Method D 6866 
standard. Given USDA's ongoing work in this area, the Commission does 
not want to propose duplicative or potentially inconsistent advice. 
Therefore, the Commission has decided not to address this issue in the 
Guides at this time.
---------------------------------------------------------------------------

    \471\ See, e.g., BPI, Green Packaging Workshop Tr. at 89; ILSR, 
Green Packaging Workshop Tr. at 137-138; SDA, Comment 533431-00020 
at 4.
    \472\ 74 FR 38295, 38298 (July 31, 2009).
    \473\ The USDA defines ``biobased product'' as a ``product 
determined by the Secretary to be a commercial or industrial product 
(other than food or feed) that is (A) composed, in whole or in 
significant part, of biological products, including renewable 
domestic agricultural materials and forestry materials; or (B) an 
intermediate ingredient or feedstock.'' Id.
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D. Renewable Energy Claims

    This section discusses claims about the sale of renewable energy as 
well as claims that a product is ``made with renewable energy.'' 
Specifically, the Commission discusses the ways renewable energy is 
sold, comments addressing renewable energy claims, relevant consumer 
perception research, and the Commission's analysis of the issues.
1. Overview
    Renewable energy generally refers to electricity derived from 
constantly replenished sources (e.g., wind power).\474\ Once renewable 
electricity is introduced into the grid, it is physically 
indistinguishable from electricity generated from conventional sources. 
Consumers, therefore, cannot determine for themselves the source of the 
electricity flowing into their homes. Because electricity transactions 
can be tracked, however, retail customers can ``buy'' renewable power 
by either: (1) purchasing renewable energy certificates (RECs) \475\; 
or (2) purchasing renewable power through contracts with their utility.
---------------------------------------------------------------------------

    \474\ See (http://www.nrel.gov/learning/re_basics.html).
    \475\ RECs are also known as green certificates, green tags, or 
tradable renewable certificates. Lori Bird, National Renewable 
Energy Laboratory (``NREL''), Carbon Offsets Workshop Tr. at 42.
---------------------------------------------------------------------------

    Under the REC method, a renewable electricity generator splits its 
output into two components: (1) the electricity itself; and (2) 
certificates representing the renewable attributes of that 
electricity.\476\ Specifically, generators that produce renewable 
electricity sell their electricity at market prices for conventionally 
produced power and then sell the renewable attributes of that 
electricity through separate certificates.\477\ Organizations purchase 
RECs to characterize all or a portion of their electricity usage as 
``renewable'' by matching the certificates with the conventionally 
produced electricity they normally purchase.\478\
---------------------------------------------------------------------------

    \476\ Although one REC generally represents the right to 
describe one megawatt hour of electricity as ``renewable,'' a REC's 
precise attributes continue to be a matter of debate. NREL, Carbon 
Offsets Workshop Tr. at 42, 52. Moreover, no single, national 
standard dictates whether a REC also represents other environmental 
attributes that may stem from renewable energy generation, such as a 
reduction in air pollution. Id.; Ed Holt, Ed Holt & Associates 
(``Holt''), Carbon Offsets Workshop Tr. at 151.
    \477\ See NREL, Carbon Offsets Workshop Tr. at 45; NREL, Carbon 
Offsets Workshop Presentation at (http://www.ftc.gov/bcp/workshops/carbonoffsets/ presentations/lbird.pdf); CRS, Comment 533254-00049 
at 3; Lori Bird, Claire Kreycik, and Barry Friedman, Green Power 
Marketing in the United States: A Status Report, National Renewable 
Energy Laboratory (Sept. 2009) (``NREL Green Power Marketing 
Report''), available at (http://www.nrel.gov/docs/fy09osti/46581.pdf) at 14.
    \478\ Businesses and organizations purchase nearly 100 percent 
of these unbundled RECs. See Renewable Energy Marketers Association 
(``REMA''), Comment 533254-00028 at 2; NREL Green Power Marketing 
Report at 18.
---------------------------------------------------------------------------

    Under the contract method, consumers and businesses purchase 
renewable energy through traditional electricity contracts with their 
local utility or power provider.\479\ Energy sold through these ``green 
power pricing'' programs generally costs more than conventional energy. 
Utilities (or other electricity retailers) can obtain the renewable 
energy they sell through different means. Some generate renewable 
energy themselves and sell it to their customers. Others contract with 
renewable energy generators to purchase electricity, which utilities 
then sell to their customers. Additionally, some utilities purchase 
RECs to match their own conventionally produced energy so that they can 
characterize the energy they sell as renewable.\480\
---------------------------------------------------------------------------

    \479\ CRS, Comment 533254-00049 at 2-3. Renewable energy is not 
sold in all areas of the country. However, in the U.S., more than 50 
percent of consumers can purchase green power directly from their 
utility or electricity provider. NREL, Carbon Offsets Workshop 
Presentation at (http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/lbird.pdf).
    \480\ CRS, Comment 533254-00049 at 3; NREL, Carbon Offsets 
Workshop Tr. at 45; NREL Green Power Marketing Report at 14.
---------------------------------------------------------------------------

    Many businesses tout their renewable energy purchases to market 
their products or services.\481\ For example, a clothing company may 
claim that its garments are ``made with renewable energy,'' or a snack 
food manufacturer may claim that it ``buys green energy credits to 
match 100% of the electricity needed to produce'' its snacks.\482\ By 
purchasing such products, consumers can indirectly support renewable 
energy.
---------------------------------------------------------------------------

    \481\ NREL, Carbon Offsets Workshop Tr. at 48-49. Businesses 
also may purchase RECs to facilitate compliance with regulatory 
requirements. The FTC's focus is not on these sales.
    \482\ See, e.g., Rob Schasel, PepsiCo, Carbon Offsets Workshop 
Tr. at 207.
---------------------------------------------------------------------------

2. Comments
    The comments discussing renewable energy focused on three issues: 
(1) the definition of ``renewable energy'' and guidance on ``made with 
renewable energy'' claims; (2) whether utilities must disclose that the 
renewable energy they sell is based on RECs; and (3) the types of 
practices and advertising claims that should be considered ``double 
counting.''
a. Defining Renewable Energy and Interpreting Renewable Energy Claims
    Several comments discussed the definition and scope of the term 
``renewable energy.'' One recommended that the Commission clearly state 
what qualifies as renewable energy.\483\

[[Page 63590]]

Another asserted consumers may not have a clear understanding of the 
term,\484\ but a different commenter believed that consumers understand 
it to mean energy generated from sources other than fossil fuels or 
nuclear power.\485\ Another commenter stated that there is no uniform 
definition of ``renewable energy.''\486\
---------------------------------------------------------------------------

    \483\ P&G, Comment 533431-00070 at 3 (stating that an energy 
source is renewable if the rate of replenishment matches the rate of 
its consumption, the sourcing and use of the energy does not harm 
the ecosystem or increase the product's environmental footprint, and 
the sourcing of the energy reduces consumption of non-renewable 
resources). Another commenter stated that a federal Executive Order 
defines renewable energy, and others noted that many states have 
different definitions of what constitutes renewable energy. Dow, 
Comment 533431-00010 at 13; see also Edison Electric Institute, 
Comment 533254-00055 at 4-5; Exelon Corp., Comment 533431-00059 at 
5.
    \484\ Tandus, Comment 536013-00037 at 1.
    \485\ CRS, Comment 533254-00049 at 4.
    \486\ Edison Electric Institute, Comment 533254-00055 at 4-5.
---------------------------------------------------------------------------

    Some commenters recommended that the Commission include guidance 
about the scope of renewable energy claims and the possible need to 
qualify them.\487\ One commenter provided examples of potentially 
broad, implied claims and suggested that the Commission include these 
examples in the Guides.\488\ For instance, consumers may interpret a 
``made with renewable energy'' claim on a product label as applying to 
the product, its packaging, and the label itself.\489\ Several 
commenters also cautioned that consumers may interpret the claim 
``manufactured with renewable energy'' to mean that the product was 
made entirely with renewable energy.\490\ In these commenters' view, 
marketers should not make an unqualified ``made with renewable energy'' 
claim if less than 100 percent of the electricity used comes from 
renewable sources.\491\
---------------------------------------------------------------------------

    \487\ Cameron Brooks, Renewable Choice Energy (``Renewable 
Choice''), Carbon Offsets Workshop Tr. at 214 (encouraging the FTC 
to provide guidance on making more precise claims); CRS, Comment 
533254-00049 at 4-14; SDA, Comment 534743-00028 at 2 (suggesting 
that the Commission provide guidance on which environmentally 
beneficial attributes are associated with the use of renewable 
energy, such as reductions in greenhouse gases); David A. Zonana, 
California Department of Justice, Carbon Offsets Workshop Tr. at 219 
(stating that it generally is easier for marketers to substantiate 
more precise marketing claims).
    \488\ CRS, Comment 533254-00049 at 4-14.
    \489\ Id. at 10; CRS, Comment 534743-00009 at 2.
    \490\ CRS, Comment 533254-00049 at 10; CRS, Comment 533431-00061 
at 6; Jennifer Martin, CRS (``CRS''), Carbon Offsets Workshop Tr. at 
194-195; Sharp Electronics Corporation, Solar Energy Solutions Group 
(``Sharp Electronics''), Comment 533254-00036 at 1; see also Dow, 
Comment 533431-00010 at 13 (recommending that marketers specify the 
percentage of renewable energy used).
    \491\ Id.
---------------------------------------------------------------------------

b. REC Disclosures
    Some commenters discussed whether utilities or other electricity 
retailers must disclose that the renewable energy they sell is based on 
their purchase of RECs.\492\ Some argued that sellers should disclose 
this fact so consumers will not believe mistakenly that the utility 
either generated the renewable power itself or purchased it through 
electricity contracts.\493\ As one commenter explained, consumers may 
believe that the renewable energy they purchase is generated in their 
geographic location, when, in fact, the utility may have purchased RECs 
generated in a distant location.\494\ These commenters, therefore, 
argued that without a disclosure, consumers might be misled. The 
Renewable Energy Marketers Association disagreed, maintaining that a 
disclosure about the source of the renewable energy is unnecessary 
because there is no difference in the environmental benefits of REC-
based renewable energy and contract-based renewable energy.\495\
---------------------------------------------------------------------------

    \492\ See,e.g., Ecology Center, Comment 533254-00020 at 1; Sol 
Metz (``Metz''), Comment 533254-00023 at 1; REMA, Comment 533254-
00028 at 3-4; James Svensson (``Svensson''), Comment 533254-00021 at 
1; Weyerhaeuser, Comment 533431-00084 at 13.
    \493\ Ecology Center, Comment 533254-00020 at 1; Metz, Comment 
533254-00023 at 1; Svensson, Comment 533254-00021 at 1.
    \494\ Climate Clean, Comment 533254-00039 at 3 n.7 (stating that 
claims such as ``made with green energy'' are ``misleading insofar 
as they may imply on-site generation, not the market purchase 
(possibly well out of market) of environmental attributes of 
renewable energy production''). Another commenter stated that 
marketers advertise products as ``produced with wind power'' and 
questioned whether consumers understand that the wind power may be 
generated in a distant location. The commenter stated that many 
marketers include disclaimers that explain they use power from the 
grid. Weyerhaeuser, Comment 533431-00084 at 3.
    \495\ REMA, Comment 533254-00028 at 3-4; see also CRS, Comment 
533254-00049 at 2-3 (explaining that in neither case ``is the 
consumer directly receiving actual electrons generated by the 
renewable energy facility, which is physically impossible'').
---------------------------------------------------------------------------

c. Double Counting
    Commenters also discussed the problem of ``double counting.'' 
Double counting generally occurs when an entity sells the same REC to 
more than one purchaser or when multiple parties make claims based on 
the same REC. Although some instances of double counting are 
straightforward,\496\ the commenters discussed more subtle variations. 
Some argued a company should not generate renewable power onsite (e.g., 
by using solar panels on store roofs), sell RECs based on the renewable 
attributes of that same power, and then advertise that they use 
renewable energy (e.g., ``our stores are 100% solar-powered'').\497\ In 
their view, such practices constitute double counting and are 
misleading. Some commenters suggested, however, that it would not 
constitute double counting if those companies simply claimed that they 
``host'' a renewable energy facility.\498\
---------------------------------------------------------------------------

    \496\ A marketer, for example, may knowingly sell the same REC 
multiple times.
    \497\ Matthew Clouse, EPA Green Power Partnership (``Green Power 
Partnership''), Carbon Offsets Workshop Tr. at 221; CRS, Comment 
533254-00049 at 6; REMA, Comment 533254-00028 at 10; Sharp 
Electronics, Comment 533254-00036 at 1-2.
    \498\ CRS, Comment 533254-00049 at 6; REMA, Comment 533254-00028 
at 10; Sharp Electronics, Comment 533254-00036 at 1-2.
---------------------------------------------------------------------------

3. Consumer Perception Evidence
    No commenters submitted research exploring how consumers perceive 
renewable energy claims. The Commission's study, however, explored 
respondents' understanding of such claims.
    The study asked respondents to describe, in their own words, what a 
``made with renewable energy'' claim means. In response to this open-
ended question, 16 percent referenced a particular form of renewable 
energy, such as solar or wind power. Five percent stated that the 
product was made with energy that is not derived from fossil fuels; 
four percent stated the product was made with ``alternative'' or 
``clean'' energy; and one percent stated that it was made with energy 
that is readily replenished. Seventeen percent did not understand the 
claim's meaning or stated that it meant nothing to them, and another 17 
percent stated that the product was made from recycled materials.\499\
---------------------------------------------------------------------------

    \499\ In addition to these responses, 11 percent stated that the 
product was made with renewable energy without elaborating on what 
the term ``renewable energy'' meant. Respondents provided numerous 
other unique answers in response to this open-ended question. All 
reported findings are based on FTC staff's more detailed analysis of 
responses rather than Harris' general findings.
---------------------------------------------------------------------------

    Through a closed-ended question, the study also explored what 
claims respondents thought were implied by a product advertised as 
``made with renewable energy.'' The study provided seven possible 
claims from which respondents could choose. In response, 28 percent 
thought the claim implied the product was made with renewable 
materials, 21 percent thought the product was made from recycled 
materials, and 18 percent thought the product was recyclable.\500\
---------------------------------------------------------------------------

    \500\ Because consumers could choose one or more claims, or no 
claims, the responses provided do not add up to 100 percent.
---------------------------------------------------------------------------

    In addition, the study asked respondents whether a statement that a 
product is ``made with renewable

[[Page 63591]]

energy'' suggests that all, most, or some of the product was made with 
renewable energy. The largest group, 36 percent, indicated that they 
interpret the claim as meaning that ``all'' of the product was made 
with renewable energy and 17 percent believed that ``most'' of it was 
made with renewable energy.\501\
---------------------------------------------------------------------------

    \501\ Further, 23 percent stated that ``some'' of the product 
was made with renewable energy, 18 percent stated that the claim 
does not suggest anything about how much of the product was made 
with renewable energy, and seven percent stated that they were not 
sure. The provided figures total 101 percent because of rounding. 
These percentages were derived by combining the responses to all 
claims that included ``made with renewable energy'' (i.e., ``made 
with renewable energy,'' ``green - made with renewable energy,'' 
``eco-friendly - made with renewable energy,'' and ``sustainable - 
made with renewable energy'').
---------------------------------------------------------------------------

    Finally, the study asked about a product advertisement that 
included the statement ``our manufacturing plant hosts a solar [or 
wind] power facility.''\502\ The study asked which, if any, of the 
following three claims were implied by the statement: (1) there is a 
solar/wind power facility on the company's premises; (2) solar/wind 
power is used in making the company's products; and (3) the company 
hosts a solar/wind power conference meeting in its manufacturing 
plants. Respondents could choose more than one answer. Eighty-five 
percent stated that there is a solar/wind power facility on the 
company's premises, 62 percent stated that solar/wind power is used in 
making the company's products, and 12 percent stated that the company 
hosts a solar/wind power conference meeting in its manufacturing 
plants.\503\
---------------------------------------------------------------------------

    \502\ The survey asked half of the respondents about solar power 
facilities and the other half about wind power facilities. Because 
there were no meaningful differences between the responses of these 
two groups, we discuss the combined results.
    \503\ The results also were calculated using one response (that 
the company hosts a meeting in its plant) as a control claim to 
roughly adjust for guessing. The results net of the control are: 73 
percent of respondents stated there is a solar/wind power facility 
on the company's premises, and 50 percent stated that solar/wind 
power is used in making the company's products.
---------------------------------------------------------------------------

4. Analysis and Guidance
    Based on the record, the Commission proposes new guidance 
concerning renewable energy claims.\504\ The following discusses this 
guidance and addresses the issues raised by commenters concerning 
consumer interpretation of renewable energy claims, REC disclosures, 
geographic location disclosures, and claims that could constitute 
``double counting.''
---------------------------------------------------------------------------

    \504\ This proposed guidance can be found in 16 CFR 260.14.
---------------------------------------------------------------------------

a. Consumer Interpretation of Renewable Energy Claims
    The commenters and the Commission's study raise three main issues 
related to consumer interpretation of renewable energy claims: (1) the 
meaning of ``renewable energy''; (2) claims implied by renewable energy 
advertisements; and (3) potentially overbroad renewable energy claims.
    First, the term ``renewable energy'' has an emerging meaning. 
Industry does not appear to have a uniform definition of the term, and 
commenters discussed different energy sources that they believe are 
``renewable.'' There appears to be a consensus, however, that renewable 
energy excludes fossil fuels. The results of the Commission's study 
suggests that a significant minority of consumers have a similar, 
general understanding of renewable energy; specifically, it is not 
derived from fossil fuels.\505\ Based on both this information and the 
comments, the Commission proposes advising marketers not to make an 
unqualified ``made with renewable energy'' claim if an item was 
manufactured with energy produced using fossil fuels. Given the 
available information, however, the Commission does not propose further 
guidance on which specific energy sources consumers consider to be 
renewable.
---------------------------------------------------------------------------

    \505\ Responding to open-ended questions, 16 percent of 
respondents explained the term by referring to a particular energy 
source (e.g., the sun, wind, biomass, and other non-fossil fuel 
sources), and five percent expressly stated that the energy was not 
derived from fossil fuels.
---------------------------------------------------------------------------

    The second issue is the extent to which renewable energy claims 
require qualification. The Commission's study suggests that some 
consumers believe that a ``made with renewable energy'' claim implies 
that the advertised product is also made with renewable materials (28 
percent of respondents) or made from recycled materials (21 
percent).\506\ The cause of these consumers' confusion is not entirely 
apparent. Although some renewable energy is itself made from renewable 
or recycled materials (e.g., biomass), not all products made with 
renewable energy are necessarily made with such materials.
---------------------------------------------------------------------------

    \506\ The open-ended responses are consistent with these closed-
ended results.
---------------------------------------------------------------------------

    When a claim misleads a small, but significant, minority of 
consumers, the Commission generally advises marketers to qualify the 
claim to prevent deception.\507\ Although the Commission did not test 
any specific qualifiers, it proposes that marketers disclose the type 
or source of the renewable energy (e.g., solar or wind). Similar to the 
proposal to qualify renewable materials claims, discussed above, the 
Commission believes that providing context for renewable energy claims 
may help reduce consumers' misperception. If consumers are armed with a 
better understanding of renewable energy, they may be less likely to 
draw inferences that are unrelated to the claim.
---------------------------------------------------------------------------

    \507\ For example, as discussed in the general environmental 
benefit claims section (Part V.A, supra), the Commission's consumer 
perception study indicated that 27 percent of respondents 
interpreted the claims ``green'' and ``eco-friendly'' as suggesting 
a product has no negative environmental impact. Based in part on 
these findings, the Commission proposes to advise marketers to 
qualify general environmental benefit claims.
---------------------------------------------------------------------------

    The Commission does not propose advising marketers to qualify 
renewable energy claims by specifically stating that the product does 
not contain renewable or recycled materials. Qualifiers such as ``not 
made with renewable materials'' or ``does not contain recycled 
materials'' bear no relation to a renewable energy claim and, 
therefore, could cause more consumer confusion than the qualifier 
alleviates. The Commission, however, requests comment on whether 
specifying the source of the renewable energy adequately qualifies a 
``made with renewable energy'' claim.
    Third, as with other environmental claims, marketers should be 
cautious that they do not overstate their renewable energy claims. For 
example, a vehicle manufacturer should not state that its product is 
made with renewable energy when the claim applies only to certain 
components of the vehicle. Section 260.6(b) of the Guides already 
advises marketers to specify whether the advertised environmental 
attributes apply to the product, its packaging, or only a component of 
the product or packaging. This guidance applies equally to renewable 
energy claims. The Commission proposes including new guidance about 
whether consumers interpret a ``made with renewable energy'' claim to 
mean the product was made entirely using renewable energy. In the 
Commission's research, 36 percent of respondents interpreted a ``made 
with renewable energy'' claim to mean that ``all'' of the product was 
made with renewable energy.\508\ This result is consistent with several 
commenters' views, as well as the Commission's existing guidance 
regarding ``made with recycled content'' claims.\509\
---------------------------------------------------------------------------

    \508\ In addition, 17 percent stated that most of the product 
was made with renewable energy.
    \509\ 16 CFR 260.7(e).
---------------------------------------------------------------------------

    The Commission does not have evidence, however, regarding exactly 
how consumers interpret the term ``all''

[[Page 63592]]

in this context or how broadly consumers interpret ``made with 
renewable energy'' claims. For example, for a product advertised as 
``made with renewable energy,'' it is unclear whether consumers would 
expect that all product components are made with renewable energy. This 
ambiguity, however, does not prevent the Commission from providing some 
guidance. Specifically, based on its research, the commenters' views, 
and its own judgment, the Commission proposes advising marketers not to 
use unqualified ``made with renewable energy'' claims unless all, or 
virtually all, of the significant manufacturing processes used to make 
the product are powered by renewable energy or powered by 
conventionally produced energy that is offset by RECs.\510\ For 
example, it would be deceptive for a toy manufacturer to make an 
unqualified renewable energy claim if it did not purchase renewable 
energy to power all of the significant processes used to manufactured 
its toys. Determining whether that same manufacturer could make an 
unqualified claim if its plant were powered with renewable energy, but 
its delivery trucks used fossil fuels, would require further consumer 
perception research. The Commission requests comment on this proposed 
advice and seeks any additional consumer perception evidence addressing 
this issue.
---------------------------------------------------------------------------

    \510\ The Commission also applies the ``all or virtually all'' 
standard to unqualified ``Made in USA'' claims. See Enforcement 
Policy Statement on U.S. Origin Claims, 62 FR 63760, 63755 (Dec. 2, 
1997).
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b. REC Disclosures
    The Commission also considered whether specific disclosures are 
necessary for renewable energy claims based on the purchase of RECs, 
rather than the purchase through contracts. As discussed earlier, the 
commenters held different opinions on this issue. Some argued that 
sellers must inform consumers when their renewable energy sales are 
based on RECs because consumers would otherwise assume that the 
marketer either generated the renewable energy itself or purchased it 
through contracts. The commenters, however, did not submit consumer 
perception evidence to support this view.
    Even assuming that consumers thought renewable energy claims were 
based on contractual purchases (rather than REC purchases), there is no 
reason to believe that this fact would be material to consumers. No 
evidence on the record suggests that a contract-based system more 
reliably tracks renewable energy than a well-designed REC-based system. 
Accordingly, the Commission does not have a sufficient basis to advise 
marketers to disclose that their renewable energy claims are based on 
RECs.
c. Geographic Location of Renewable Energy Generation
    Regardless of whether the marketer purchases renewable energy 
through RECs or contracts, the energy may have been generated in a 
distant geographic location. It is unclear whether consumers interpret 
renewable energy claims to mean that the energy was generated in their 
location and, thus, yields local benefits. As discussed above, 
marketers must have substantiation for all reasonably implied 
interpretations of their claims. Therefore, marketers must evaluate the 
net impression of their advertisements and, when needed, obtain 
consumer research to determine if their advertisements imply that the 
renewable energy was generated locally. If a particular advertisement 
implies that renewable energy yields local benefits, marketers should 
inform consumers that this is not the case to prevent deception. 
Because the need for such disclosures will depend on the specific 
advertisement in question, the Commission does not propose adding 
guidance on this issue to the Guides. Nevertheless, marketers should be 
mindful of this issue to avoid misleading consumers.
d. Double Counting
    Double counting can occur as a result of fraud or inadequate 
accounting, as well as in more subtle ways.\511\ Fraudulent activity, 
such as knowingly selling the same offset to multiple purchasers, is 
best addressed through law enforcement actions rather than Commission 
guidance. The Commission's Guides are intended for those marketers 
seeking to comply with the law.
---------------------------------------------------------------------------

    \511\ CRS, Comment 533254-00049 at 5-6; see also Holt, Carbon 
Offsets Workshop Tr. at 153; NREL, Carbon Offsets Workshop Tr. at 
51. Because REC sales often involve multiple transactions and a 
large number of entities, businesses must track RECs through the 
market. Therefore, inadequate accounting or tracking practices can 
lead marketers to sell multiple certificates based on the same 
renewable energy activity. Accurate, well-designed registries or 
tracking systems can help to minimize this problem. For example, 
several regional tracking systems, covering more than 30 states, use 
metered generation data for the issuance of RECs. CRS, Comment 
533254-00049 at 3 n.3; REMA, Comment 533254-00028 at 4-5; see also 
Holt, Carbon Offsets Workshop Tr. at 153; NREL, Carbon Offsets 
Workshop Tr. at 51.
---------------------------------------------------------------------------

    Aside from outright fraud, the written comments provide examples of 
more subtle methods of double counting. Guidance for these types of 
practices may be useful. The Commission agrees with commenters that 
companies should not sell RECs for renewable energy they generate 
onsite (e.g., by using solar panels on store roofs) and then tout their 
renewable energy facilities or equipment in advertising (e.g., ``this 
store is 100% solar powered''). By selling RECs, the company has 
transferred the right to characterize its electricity as renewable. 
Therefore, even if the company technically uses the electricity from 
its onsite solar panels, an advertising claim about the renewable 
aspects of this energy is misleading. The Commission, therefore, 
proposes to include this example in the Guides.
    Some commenters suggested companies in these circumstances should 
be able to claim that they ``host a renewable energy facility.'' The 
Commission's study, therefore, tested this claim, and 62 percent of 
respondents stated that the company used solar/wind power to make its 
products.\512\ The Commission, therefore, proposes advising marketers 
that the phrase ``hosts a renewable energy facility'' is likely to 
mislead consumers if, in fact, the company has sold its rights to claim 
credit for the renewable energy.
---------------------------------------------------------------------------

    \512\ As discussed in note 503, using a control claim yields 
similar results. Net of control, 50 percent of respondents believe 
the company used solar/wind power to make its products.
---------------------------------------------------------------------------

E. Carbon Offset Claims

    Carbon offsets, relatively new products in the green marketing 
field, received significant attention in the comments. To provide 
background on the consumer protection issues involved with these 
products, the following describes offsets and the advertising claims 
associated with them. It then discusses the comments addressing this 
topic, relevant consumer perception research, and the Commission's 
analysis of the issues.
1. Overview
    Carbon offsets are credits or certificates that represent 
reductions in greenhouse gas (``GHG'') emissions. These reductions stem 
from different types of projects, such as methane capture from 
landfills or livestock feedlots, tree planting, and industrial gas 
destruction.\513\ Marketers quantify

[[Page 63593]]

their GHG reductions and then sell carbon offsets to purchasers seeking 
to meet their own environmental goals by reducing their ``carbon 
footprints'' or by striving to make themselves ``carbon neutral.''\514\ 
Offset purchasers include individual consumers, businesses, government 
agencies, and non-profit organizations.\515\
---------------------------------------------------------------------------

    \513\ These projects occur around the globe, often in locations 
removed from offset purchasers. The location of an offset project is 
immaterial to its impact on greenhouse gas levels because these 
gases circulate evenly throughout the earth's atmosphere. Katherine 
Hamilton, Ecosystem Marketplace (``Ecosystem''), Carbon Offsets 
Workshop Tr. at 31.
    \514\ No uniform definition for either term appears to exist. 
See, e.g., Exelon Corp., Comment 533431-00059 at 4 (stating that 
there is no clear consensus as to what the term ``carbon footprint'' 
includes); Carbon Claims and the Trade Practices Act, Australian 
Competition & Consumer Commission (June 2008) at 7, available at 
(http://www.accc.gov.au/content/index.phtml/itemId/833279) 
(discussing ``carbon neutrality''). ``Carbon footprint'' generally 
refers to the net greenhouse gas emissions caused by the activities 
of an individual, business, or organization. ``Carbon neutral'' 
generally describes an entity whose greenhouse gas emissions net to 
zero.
    \515\ Ecosystem, Carbon Offsets Workshop Tr. at 37-38 and 
(http://www.ftc.gov/bcp/workshops/carbonoffsets/presentations/khamilton.pdf). The vast majority (80 percent) of offset purchasers 
in the international voluntary market are businesses. Across the 
globe, offset sales generally occur in two types of markets: (1) 
those that facilitate compliance with regulatory targets (so-called 
``mandatory'' or ``compliance'' markets); and (2) those unrelated to 
existing regulatory programs (so-called ``voluntary'' markets). This 
discussion addresses offsets in the voluntary market.
---------------------------------------------------------------------------

    Individual consumers, for example, generally purchase offsets to 
reduce, balance, or neutralize greenhouse gas emissions associated with 
their own activities, such as automobile use or airplane travel. In 
these instances, offset sellers advertise their products directly to 
individual consumers. For example, some online travel vendors have 
partnered with offset sellers to allow consumers to buy offsets when 
they purchase airplane tickets.\516\
---------------------------------------------------------------------------

    \516\ Matthew Kotchen, University of California, Santa Barbara, 
Carbon Offsets Workshop Tr. at 92.
---------------------------------------------------------------------------

    Businesses purchase carbon offsets to balance the emissions 
associated with the production, sale, or use of their own products and 
services. They often tout these offsets in advertisements for their 
products and services. For example, a potato chip seller that purchases 
offsets to match its GHG emissions might advertise its chips as 
``carbon neutral.'' Marketers make similar claims for a wide range of 
products and services, from clothing to paper goods.\517\
---------------------------------------------------------------------------

    \517\ See generally EcoSecurities, Comment 533254-00044 at 4-5. 
Although many businesses purchase offsets to make advertising claims 
for individual products, others do so to prepare for future 
mandatory carbon markets, to help their corporate image more 
generally, or to promote corporate responsibility efforts. See, 
e.g., Ecosystem, Carbon Offsets Workshop Tr. at 40-41; Mario Teisl, 
University of Maine, Carbon Offsets Workshop Tr. at 175. The 
Commission has not identified any data addressing the volume of 
purchases attributable to these various activities.
---------------------------------------------------------------------------

2. Comments
a. Defining Carbon Offsets and Requiring Disclosures
    The comments differed in the degree and extent the FTC should be 
involved in regulating carbon offset marketing. Several commenters 
called on the Commission to provide detailed guidance or create a 
regulatory framework for offsets.\518\ For example, some suggested that 
the FTC define or clarify the meaning of certain terms, such as 
``carbon neutral.''\519\ Another asked the FTC to establish a list of 
allowable offset projects and mandate uniform calculation methods for 
emission reductions.\520\ Others urged mandatory disclosures about the 
type of activity (e.g., reforestation) that forms the basis for carbon 
offsets.\521\ In addition, Consumers Union called for an annual FTC 
statement about the amount of global carbon production to help 
consumers compare the offset impacts in a global context.\522\
---------------------------------------------------------------------------

    \518\ See Climate Clean, Comment 533254-00039 at 5; Consumers 
Union, Comment 533254-00026 at 1-2; NativeEnergy, Inc., Comment 
533431-00044 at 2; State of New Jersey, Department of Environmental 
Protection (``NJ DEP''), Comment 533431-00082 at 1; Pacific Gas & 
Electric Company, Comment 533254-00041 at 1; Seventh Generation, 
Comment 533431-00033 at 6.
    \519\ See, e.g., Urvashi Rangan, Consumers Union (``Consumers 
Union''), Carbon Offsets Workshop Tr. at 210 (``I think 
clarification of terminology out there is really important. Things 
like carbon-free, carbon neutral, carbon offset, carbon negative . . 
. are really confusing to consumers.''); International Paper, 
Comment 533431-00006 at 2; Kim Sheehan, Comment 533431-00004 at 1.
    \520\ NJ DEP, Comment 533431-00082 at 2.
    \521\ Consumers Union, Comment 533254-00026 at 2 (recommending 
disclosure of offset type); Hydrodec North America LLC 
(``Hydrodec''), Comment 533254-00046 at 8 (same); NJ DEP, Comment 
533431-00082 at 2 (recommending disclosure of the name, owner, and 
location of the project that produced the emission reductions, among 
other things); 3M Company, Comment 533431-00027 at 2 (recommending 
disclosure of the source of and methodology used to calculate the 
carbon offsets); see also Carbon Offset Providers Coalition 
(``COPC''), Comment 533254-00032 at 4 (recommending that the FTC 
promote ``clarity and transparency'').
    \522\ Consumers Union, Comment 533254-00026 at 1-2. Consumers 
Union also recommended that sellers disclose the benefits that the 
product yields beyond the baseline impacts (i.e., the emissions that 
would have occurred in the absence of the offset project).
---------------------------------------------------------------------------

    While some commenters called for regulatory requirements, others 
urged the FTC to avoid setting standards.\523\ For example, Exelon 
Corporation stated that the FTC lacks the technical expertise and 
authority to set standards in this area.\524\ Walmart indicated that, 
while the FTC should insist that marketers have a reasonable basis for 
their claims, the agency should not mandate one reasonable approach 
over another.\525\ In addition, Constellation Energy Group noted that, 
given the relative youth of these products, ``market-driven solutions 
are being and will continue to be developed to address consumer 
confidence or credibility concerns.''\526\ Finally, commenters warned 
that any FTC action in this area might negatively impact ongoing policy 
debates at the federal and state levels.\527\
---------------------------------------------------------------------------

    \523\ See, e.g., Constellation Energy Group, Inc. 
(``Constellation''), Comment 533254-00029 at 4-5; Hydrodec, Comment 
533254-00046 at 5; Wal-Mart Stores, Inc. (``Wal-Mart''), Comment 
533254-00040 at 3-4.
    \524\ Exelon Corp., Comment 533431-00059 at 2.
    \525\ Wal-Mart, Comment 533254-00040 at 3-4.
    \526\ Constellation, Comment 533254-00029 at 2.
    \527\ See Exelon Corp., Comment 533431-00059 at 2; Wal-Mart, 
Comment 533254-00040 at 3-4.
---------------------------------------------------------------------------

b. Timing of Emission Reductions
    The comments also raised concerns about the timing of the actual 
GHG emission reductions associated with carbon offsets. Some reductions 
occur prior to the sale of offsets and others occur after. For example, 
offsets generated from methane capture activities are typically sold 
after the methane reductions occur. Other sellers, however, use offset 
proceeds to fund future projects (such as constructing renewable energy 
facilities) that are expected to create emission reductions at a later 
date.
    Many commenters stated that offsets should be based on prior 
emission reductions because those reductions are verifiable.\528\ The 
commenters disagreed, however, about the propriety of selling offsets 
based on future GHG reductions. One commenter preferred such offsets 
because, in its view, consumers are concerned with future GHG 
emissions.\529\ Another suggested that consumers implicitly understand 
that reductions from activities such as tree-planting do not happen 
immediately but rather ``incrementally and over a longer time 
horizon.''\530\ Others disagreed and argued that consumers do not 
necessarily understand that emission reductions funded by their 
purchase have not yet

[[Page 63594]]

occurred.\531\ In one commenter's view, sellers should disclose 
prominently that the reductions caused by their products will occur in 
the future.\532\
---------------------------------------------------------------------------

    \528\ See, e.g., Edison Electric Institute, Comment 533254-00055 
at 10; Michael Gillenwater (``Gillenwater''), Comment 533254-00005 
at 3; The Fertilizer Institute, Comment 533254-00052 at 4. One 
commenter, however, noted that such sellers cannot show that the 
offset purchase caused an emission reduction. NativeEnergy, Inc., 
Comment 533431-00044 at 3 (``As one cannot change the past, it is 
impossible for the purchase of a previously generated reduction to 
be the cause of that reduction.'')
    \529\ NativeEnergy, Inc., Comment 533431-00044 at 3.
    \530\ Edison Electric Institute, Comment 533254-00055 at 17 
(stating that as long as the offset is substantiated, timing should 
not be an issue).
    \531\ See, e.g., AgRefresh, Comment 533254-00004 at 1, 6; 
TerraPass, Inc. (``TerraPass''), Comment 533254-00045 at 5.
    \532\ AgRefresh, Comment 533254-00004 at 1, 6.
---------------------------------------------------------------------------

    In addition to concerns about consumer understanding, many 
commenters raised concerns about the certainty of future projects.\533\ 
With forestry-based offsets, for instance, events such as fire or 
insect infestation may damage trees and release carbon stored within 
them.\534\ Because of these uncertainties, one commenter stated that 
offsets for unverified emission reductions should not be allowed.\535\ 
Others suggested that offset sellers take steps to account for such 
uncertainties, such as using accounting practices to reflect the risks 
associated with future projects.\536\
---------------------------------------------------------------------------

    \533\ Climate Clean, Comment 533254-00039 at 5; see Wiley 
Barbour, Environmental Resources Trust, Inc. (``ERT''), Carbon 
Offsets Workshop Tr. at 216 (``There are real differences of opinion 
about whether or not a forestry project, which is going to take 
fifty years to grow, . . . should be counted as a reduction 
today.'').
    \534\ Offset Quality Initiative, Comment 533254-00047 at 8.
    \535\ AgRefresh, Comment 533254-00004 at 6.
    \536\ For example, one commenter stated that ``[s]elling 
emission offsets before they are created is not inherently 
problematic . . . . However, forward crediting should be done 
transparently and provisions made for failure of delivery.'' 
Gillenwater, Comment 533254-00005 at 3.
---------------------------------------------------------------------------

c. Substantiating Carbon Offset Claims - Additionality
    One of the most contentious issues surrounding the substantiation 
of carbon offset claims is the concept of ``additionality,'' 
specifically, whether reductions associated with a carbon offset 
product would have occurred without the offset sale.\537\ Both the 
workshop participants and comments discussed this issue at length, with 
most agreeing that offset sellers have a duty to demonstrate that their 
underlying GHG reduction projects are additional.\538\ Without such a 
showing, the underlying projects do not produce meaningful GHG 
reductions.\539\
---------------------------------------------------------------------------

    \537\ Some commenters noted that it is difficult to define 
additionality, and FTC staff have set forth merely one variation 
(examining whether the emission reduction project would have gone 
forward without the additional revenue stream associated with the 
sale of carbon offsets). Another variation examines whether the 
project causes emissions beyond what is required by law or beyond 
``business as usual.'' See, e.g., Anadarko Petroleum Corp. 
(``Anadarko''), Comment 533254-00058 at 4. The Commission discusses 
these differences in more detail below.
    \538\ See, e.g., Anadarko, Comment 533254-00058 at 3; Derik 
Broekhoff, World Resources Institute (``WRI''), Carbon Offsets 
Workshop Tr. at 123-125, 165; COPC, Comment 533254-00032 at 5; CRS, 
Comment 533254-00049 at 11; EcoSecurities, Comment 533254-00044 at 
4; Gillenwater, Comment 533254-00005 at 3; Hydrodec, Comment 533254-
00046 at 6; Offset Quality Initiative, Comment 533254-00047 at 4; 
TerraPass, Comment 533254-00045 at 5.
    \539\ See, e.g., TerraPass, Comment 533254-0045 at 5.
---------------------------------------------------------------------------

    The concept of additionality raises difficult technical and policy 
challenges, which have generated substantial disagreement among 
experts. In particular, the commenters did not form a consensus 
regarding which tests industry members should use to determine whether 
an offset project is additional. In fact, according to various 
commenters, industry members rely on numerous, different tests, alone 
or in combination. Examples of these various tests include:\540\
---------------------------------------------------------------------------

    \540\ See Anadarko, Comment 533254-00058 at 4; EcoSecurities, 
Comment 533254-00044 at 9; Gillenwater, Comment 533254-00006 at 8; 
Green Power Partnership, Carbon Offsets Workshop Tr. at 241-242; 
Holt, Carbon Offsets Workshop Tr. at 154-155; Hydrodec, Comment 
533254-00046 at 4-5; Maurice LeFranc, EPA (``LeFranc EPA''), Carbon 
Offsets Workshop Tr. at 143; Offset Quality Initiative, Comment 
533254-00047 at 4-8; WRI, Carbon OffsetsWorkshop Tr. at 123-125; 
Mark Trexler, Derik Broekoff, and Laura Kosloff, A Statistically-
Driven Approach to Offset-Based GHG Additionality Determinations: 
What Can We Learn?, Sustainable Development Law and Policy (Winter 
2006) at 30, available at (http://conserveonline.org/workspaces/climate.change/carbonmarkets/AdditionalityOffset).
---------------------------------------------------------------------------

    <bullet> 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.
    <bullet> 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.
    <bullet> Common Practice Test: Addresses whether the project 
involves widely-used technologies and is merely a ``business as usual'' 
project. If so, the project is not additional.
    <bullet> 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.
    <bullet> 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.
    <bullet> Barriers Test: Addresses whether there are barriers, such 
as local opposition or lack of knowledge, that must be overcome to 
implement the project. If the project succeeds in overcoming unusual 
barriers such as these, the project is additional.
    <bullet> Performance Test: Addresses whether the project achieves a 
level of performance (e.g., an emission rate, a technology standard, or 
a practice standard) with respect to emission reductions and/or 
removals that is significantly better than ``business as usual.'' If 
so, the project is additional.\541\
---------------------------------------------------------------------------

    \541\ The EPA Climate Leaders program recommends this approach 
for use in evaluating offsets by its partners. See (http://www.epa.gov/stateply/); LeFranc EPA, Carbon Offsets Workshop Tr. at 
143.
---------------------------------------------------------------------------

    The commenters variously criticized these tests as vague, 
subjective, and likely to yield undesirable outcomes. For example, one 
commenter noted that the investment test requires ``subjective analyses 
of the intent of the project developer or the sufficiency of a 
project's investment return . . . [and ignores] market realities as 
they relate to capital formation and the tenure of commercial 
arrangements which make private activity projects feasible.''\542\ Such 
subjective criteria encourage ``gaming'' and usually result in 
increased costs.\543\ Another criticized the common practice, 
technology, and barrier tests because they all involve ``complex 
counter-factual questions of what constitutes the baseline scenario . . 
. and how the offset project differs.''\544\ Still another noted that 
the timing test may create incentives to delay much-needed investments 
until an offset system is established.\545\ Some workshop participants, 
however, supported the regulatory additionality test because it offers 
an objective standard (i.e., if the law requires the project, one 
cannot sell offsets from it).\546\ But even this approach drew 
criticism when one panelist explained that multiple regulations can 
apply to a project, making it difficult to determine whether 
regulations actually require a particular technology investment.\547\
---------------------------------------------------------------------------

    \542\ COPC, Comment 533254-00032 at 3. Another commenter 
explained that the investment test is subjective because there are 
no industry-specific metrics on whether an internal rate of return 
is ```attractive' or not to project developers.'' Anadarko, Comment 
533254-00058 at 6.
    \543\ COPC, Comment 533254-00032 at 3. A workshop participant 
also noted that it may be difficult to determine which source of 
funding ``made a difference.'' Green Power Partnership, Carbon 
Offsets Workshop Tr. at 242.
    \544\ Anadarko, Comment 533254-00058 at 6.
    \545\ Hydrodec, Comment 533254-00046 at 5.
    \546\ Anadarko, Comment 533431-00032 at 4; Renewable Choice, 
Carbon Offsets Workshop Tr. at 262; see also LeFranc EPA, Carbon 
Offsets Workshop Tr. at 143.
    \547\ ERT, Carbon Offsets Workshop Tr. at 254-256; see also Anja 
Kollmus, Stockholm Environmental Institute (``SEI''), Carbon Offsets 
Workshop Tr. at 258-259.

---------------------------------------------------------------------------

[[Page 63595]]

    Many commenters urged the FTC to refrain from issuing guidelines 
that address additionality. They suggested that a combination of 
legislative action, efforts by agencies with greater expertise, and 
evolving market practices are the best means for addressing these 
questions.\548\ For example, one commenter warned that the ``FTC risks 
becoming entangled in highly complex policy issues at the core of 
ongoing discussions concerning the design of market-based mechanisms 
addressing climate change.''\549\ Another argued that, because pending 
legislation would assign the role of addressing additionality standards 
to agencies other than the FTC, it would be neither ``appropriate nor 
productive for the FTC to take a stance on the issue'' at this 
time.\550\
---------------------------------------------------------------------------

    \548\ AF&PA, Comment 533254-00042 at 2-3; Anadarko, Comment 
533254-00058 at 2; Clean Air Conservancy, Comment 533254-00027 at 1; 
COPC, Comment 533254-00032 at 3; Edison Electric Institute, Comment 
533254-00055 at 11-13; Exelon Corp., Comment 533431-00059 at 2-3; 
Hydrodec, Comment 533254-00046 at 5-6; REMA, Comment 533254-00028 at 
12; The Fertilizer Institute, Comment 533254-00052 at 5; 
Weyerhaeuser, Comment 533431-00084 at 2.
    \549\ Anadarko, Comment 533254-00058 at 2.
    \550\ Hydrodec, Comment 533254-00046 at 6.
---------------------------------------------------------------------------

d. Substantiating Carbon Offset Claims - Use of RECs
    Some carbon offsets are based on the purchase of renewable energy 
certificates (``RECs''). The practice of using RECs to create carbon 
offsets is controversial and garnered significant attention at the 
workshop and in the comments.\551\
---------------------------------------------------------------------------

    \551\ Carbon Offsets Workshop participant Edward Holt provided 
an overview of the issues involved in using RECs to form the basis 
for carbon offset claims. Holt, Carbon Offsets Workshop Tr. at 150-
158.
---------------------------------------------------------------------------

    Some workshop panelists and commenters approved of using RECs to 
substantiate offset claims.\552\ In their view, renewable energy 
generation (represented by RECs) creates emission reductions by causing 
fossil fuel-fired facilities to produce less energy and, therefore, 
fewer emissions.\553\
---------------------------------------------------------------------------

    \552\ Adam Stern, TerraPass (``TerraPass''), Carbon Offsets 
Workshop Tr. at 227-228 (stating that there are reputable 
organizations such as ``the World Resources Institute, The Union of 
Concerned Scientists, Natural Resources Defense Council, that have 
all indicated a support for using RECs as an offset value''); Eric 
Carlson, Carbonfund.org, Carbon Offsets Workshop Tr. at 229-230; 
CRS, Comment 533254-0049 at 9; Edison Electric Institute, Comment 
533254-00055 at 6.
    \553\ Carbonfund.org, Carbon OffsetsWorkshop Tr. at 229-230; 
CRS, Comment 533254-00049 at 4; Edison Electric Institute, Comment 
533254-00055 at 6. One commenter argued that it ``is universally 
accepted that the generation of renewable energy can displace and 
reduce the emission of carbon and other greenhouse gases'' from 
conventional facilities. The commenter further stated that the 
practice is recognized by international offset programs including 
the United Nations' Clean Development Mechanism of the Kyoto 
Protocol, the Gold Standard, and the Voluntary Carbon Standard. CRS, 
Comment 533254-00049 at 11. Some of these commenters, however, 
cautioned that RECs do not always equate to reduced emissions from 
conventional facilities, and offset sellers must demonstrate that 
the reduced emissions are additional. COPC, Comment 533254-00032 at 
2-3; CRS, Comment 533254-0049 at 3-7; Offset Quality Initiative, 
Comment 533254-00047 at 11.
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    Others argued that RECs should not be used for offsets because the 
two are distinctive commodities and conflating them could mislead 
consumers.\554\ They provided three main arguments to support their 
position. First, they argued that there is little or no evidence that 
renewable energy generation always reduces traditional power 
generation\555\ because the actual emission reductions associated with 
grid power vary considerably across the United States, and there are no 
uniform standards for calculating the emissions displaced by renewable 
energy.\556\ Second, even if such displacement occurs, sellers cannot 
prove that renewable energy generation, and any associated GHG emission 
reductions, are additional.\557\ Some argued that RECs merely subsidize 
existing projects and do not contribute sufficiently to a project's 
income stream to create a market for new renewable energy 
generation.\558\ Third, the critics questioned whether the renewable 
energy generators can take credit for the emission reductions that 
occur at fossil fuel-fired facilities.\559\ There is currently no 
mechanism to establish who owns such emission reductions - the 
renewable energy generator or the fossil fuel-fired generator.\560\ 
Therefore, the comments raised concerns about double counting if both 
generators take credit for the same emission reduction.\561\
---------------------------------------------------------------------------

    \554\ Climate Clean, Comments 533254-00038 at 1-3, 533254-00039 
at 3 (stating that use of RECs as offsets is a ``uniquely American 
practice''); Gillenwater, Comment 533254-00006 at 15-16; 533254-
00007 at 5 (stating that there is an incentive to rely on RECs as a 
source of offsets because RECs are generally less expensive than 
most offset projects); SEI, Carbon Offsets Workshop Tr. at 226-227.
    \555\ Gillenwater, Comment 533254-00006 at 16 (stating that 
``the effect of an input of electricity from a renewable generator 
on other grid-connected generators [e.g., fossil fuel plants] is 
difficult to quantify''); EcoSecurities, Comment 533254-00044 at 3-
4.
    \556\ Id.
    \557\ EcoSecurities, Comment 533254-00044 at 4 (stating that 
RECs ``are subject to no . . . additionality testing requirements, 
and require no reference to whether or not the REC market was 
instrumental in the development of the project''); Climate Clean, 
Comments 533254-00038 at 2, 533254-00039 at 2-3; see also NREL, 
Carbon Offsets Workshop Tr. at 75-76 (explaining the concept of 
additionality for RECs).
    \558\ Id.
    \559\ ERT, Carbon Offsets Workshop Tr. at 225 (``[W]hat you're 
saying is [that] you own a reduction on someone else's property.''); 
see also Gillenwater, Comment 533254-00006 at 14.
    \560\ Holt, Carbon Offsets Workshop Tr. at 151-152. In contrast, 
other emission reduction projects have a clear owner who can take 
credit for the reductions or sell the reductions.
    \561\ EcoSecurities, Comment 533254-00044 at 10. For example, a 
renewable energy generator might claim that its RECs represent a 
reduction in traditional electricity generation and a corresponding 
reduction in emissions. However, these reductions actually occur at 
the fossil fuel plant. The fossil fuel plant could argue that, 
because it produced less energy, it caused the reduction in 
emissions. The fossil fuel plant could sell offsets that represent 
the same emission reduction as the RECs.
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3. Consumer Perception Evidence
    Some commenters emphasized the need to research consumer 
understanding of specific terms and claims in carbon offset 
advertisements.\562\ The commenters, however, did not identify existing 
consumer perception data in this area.\563\ Therefore, the Commission 
tested certain issues related to carbon offset claims in its consumer 
research. The study split respondents into two groups - asking one 
about carbon offsets and the other about carbon neutrality. The 
research explored respondents' understanding of these terms, whether 
respondents had seen advertisements for carbon offsets or for products 
or services described as carbon neutral, and whether they had ever 
purchased such items.
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    \562\ Vermont Office of Attorney General (``Vermont AG''), 
Comment 553254-00051 at 5 (writing on behalf of the Offices of the 
Attorneys General of Arkansas, California, Connecticut, Delaware, 
Illinois, Maine, Mississippi, New Hampshire, Oklahoma, and Vermont).
    \563\ See Georgia-Pacific, Comment 553254-00059 at 2 (``We do 
not know of specific, credible surveys or even market sensing 
studies on this matter.''); Rebecca Tushnet, Georgetown University 
Law Center, Carbon Offsets Workshop Tr. at 82-83 (stating that 
companies' consumer research is likely to be part of a marketing 
initiative and, therefore, proprietary). In considering potential 
consumer research, some noted that consumer interpretation of claims 
may change over time. Id.; Alan Levy, FDA, Carbon Offsets Workshop 
Tr. at 80; GE AES Greenhouse Gas Services LLC, Comment 533254-00043 
at 2.
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    A significant percentage of respondents demonstrated a general 
understanding of carbon offsets when they chose from a list of possible 
descriptions, but a much smaller percentage could describe a carbon 
offset in their own words. Specifically, in response to a closed-ended 
question, 41 percent identified a carbon offset as ``a way of reducing 
carbon dioxide and other greenhouse gases,'' while 35 percent stated 
that they were not sure

[[Page 63596]]

what a carbon offset was.\564\ When asked to describe a carbon offset 
in their own words, only 18 percent provided an answer which 
communicated a general understanding of the term, while 58 percent 
stated that they did not know or provided no response to the 
question.\565\ A much smaller number (11 percent) reported seeing an 
advertisement for an offset and only two percent actually recalled 
purchasing a carbon offset.\566\
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    \564\ The other responses were: a way of eliminating all 
pollution that results from using a product or service; a method for 
replacing scarce carbon resources; a way of reducing chemical 
pollutants in water; a way of making carbonated beverages; a laundry 
additive for removing pencil and ink stains from clothing; and none 
of the above.
    \565\ These figures are based on FTC staff's more detailed 
analysis of responses rather than Harris' general findings. Examples 
of responses that indicate an understanding of the term include: ``A 
way to reduce greenhouse gases''; ``Trees are planted or other 
environmental restoration is performed to supposedly make up for 
environmental damage being caused by other activities''; and ``A 
credit on the amount of carbon used in manufacturing process.''
    \566\ Of those few who purchased an offset, 21 percent stated 
that they were offsetting airline travel, 15 percent automobile 
travel, and 15 percent lighting.
---------------------------------------------------------------------------

    In a closed-ended question, the study also asked respondents to 
identify what it meant to be ``carbon neutral.'' Thirty-nine percent of 
respondents answered that greenhouse gases, such as carbon dioxide, 
were offset. Twenty-five percent were not sure what ``carbon neutral'' 
meant.\567\ When asked to describe the term in their own words, 22 
percent provided an answer that demonstrated a general understanding of 
the term, and 35 percent stated that they did not know or provided no 
answer.\568\ Similar to the carbon offset results, few respondents 
(only 10 percent) recalled seeing an advertisement for carbon neutral 
products or services, and only four percent stated that they had 
purchased a product or service at least partly because it was 
advertised or labeled carbon neutral.
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    \567\ The other responses were: no pollution was generated in 
making the product; carbon resources were not used in making the 
product; water pollutants were reduced to improve water quality; 
clothing that resists pencil and ink stains; soft drinks that were 
made without carbonation; and none of the above.
    \568\ These findings are based on FTC staff's more detailed 
analysis of responses rather than Harris' general findings. Examples 
of responses that indicate an understanding of the term ``carbon 
neutral'' include: ``The amount of carbon created in producing the 
product is offset by other means that eliminates carbon''; ``doesn't 
have a negative impact in terms of carbon emissions''; and ``does 
not leave a carbon footprint.''
---------------------------------------------------------------------------

    For the subset of respondents who generally understood that carbon 
offsets were a way to reduce greenhouse gas emissions, the study 
attempted to gauge their understanding about the timing of greenhouse 
gas emission reductions.\569\ The study asked each respondent to 
consider an airline advertisement that states: ``For every flight you 
take with us, we will buy carbon offsets to offset the greenhouse gas 
emissions from your flight.'' The study explained that the offsets in 
question involve capturing and destroying methane. It then described 
two methane projects that both result in reduced emissions, but in 
different timeframes. The study attempted to gauge respondents' views 
on whether the timing of the emission reductions was material. For each 
project, the study asked whether respondents agreed or disagreed with 
the airline's statement that it offsets the emissions from their 
flight. When the methane was to be captured ``within the next few 
months,'' 53 percent of respondents agreed that the airline was 
offsetting emissions from the flight and 20 percent disagreed.\570\ But 
when the equipment used to capture methane had not yet been installed 
and the methane was not to be captured ``for several years,'' only 28 
percent of respondents agreed that the airline was offsetting emissions 
from the flight, while 43 percent disagreed.\571\
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    \569\ As mentioned above, the study asked approximately half of 
all respondents about carbon offsets (and the remainder about carbon 
neutral claims). Of the 1,879 respondents who answered carbon offset 
questions, 770 generally understood carbon offsets. Only these 770 
respondents answered questions about the timing of emission 
reductions.
    \570\ Additionally, 16 percent stated that they neither agreed 
or disagreed and 11 percent stated that they were not sure.
    \571\ Additionally, 16 percent stated that they neither agreed 
or disagreed and 12 percent stated they were not sure. These figures 
add up to 99 percent because of rounding.
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4. Analysis and Guidance
    The Commission proposes to provide only limited guidance regarding 
carbon offsets in the Guides.\572\ Although many commenters urged the 
Commission to provide detailed advice or extensive regulatory 
requirements, such an approach is not appropriate at this time given 
the extent of the Commission's authority, the available consumer 
perception evidence, and the ongoing policy debates among experts in 
the field concerning the appropriate tests to substantiate offset 
claims. However, it is appropriate for the Commission to provide advice 
to marketers regarding some aspects of carbon offset marketing and we 
discuss these below. Regardless of the Guides' scope, the Commission 
may take law enforcement action to stop deceptive practices involving 
carbon offset marketing pursuant to Section 5 of the FTC Act. For 
example, clearly deceptive activity, such as knowingly selling the same 
offset to multiple purchasers, does not need to be addressed in the 
Guides and, indeed, is best addressed through enforcement actions.
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    \572\ This proposed guidance can be found in 16 CFR 260.5.
---------------------------------------------------------------------------

a. Consumer Interpretation of Claims and Disclosures
    Some commenters asked the Commission to define terms such as carbon 
offsets and require sellers to disclose to consumers certain 
characteristics of their offsets. As previously discussed, under the 
FTC Act, the Commission has authority to combat deceptive and unfair 
practices. It does not have authority to develop environmental policies 
or regulations. Accordingly, the Commission does not create definitions 
or standards for environmental terms. Rather, it provides guidance to 
marketers on how consumers understand those terms. The Commission's 
study suggests that some consumers have a general understanding of 
carbon offsets and products advertised as carbon neutral, but few 
reported seeing advertisements for such items, and even fewer have 
actually purchased them. The study did not identify any pattern of 
confusion among respondents about what a carbon offset is that would 
warrant any general FTC guidance. The Commission, therefore, does not 
believe a discussion about consumer understanding of these terms in the 
Guides would be useful to marketers. In addition, any such guidance 
could become obsolete quickly given this rapidly evolving market.
    Marketers also requested more detailed FTC guidance with respect to 
the identification of allowable offset projects and the establishment 
of uniform methodologies for calculating emission reductions. Such 
guidance, however, would place the Commission in the role of setting 
environmental policy, which is outside the agency's authority. The 
Commission, therefore, declines to do so.
    Except as described below, the Commission does not propose advising 
offset sellers to make certain disclosures, such as the type of 
projects funded by the offset sales. Although such disclosures may 
provide helpful information to potential purchasers, there is no 
evidence on the record to conclude that they are necessary to prevent 
consumer deception. This distinction is critical under FTC law. 
Pursuant to the FTC Act, advertisers must disclose information that is 
necessary to prevent consumers from being misled - not all information 
that

[[Page 63597]]

consumers may deem useful.\573\ Therefore, the Commission declines to 
advise marketers to provide such information in every offset 
advertisement.\574\
---------------------------------------------------------------------------

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

b. Timing of Emission Reductions
    Some commenters suggested that the Commission advise marketers to 
disclose the fact that their offsets reflect emission reductions 
scheduled to occur in the future. The Commission's study, therefore, 
explored respondents' views on the timing of emission reductions. The 
results suggest that this timing is important to consumers.\575\ 
Specifically, when emission reductions did not occur for several years, 
43 percent of respondents indicated that the carbon offset claim was 
misleading.\576\ Accordingly, marketers may need to qualify their 
offset claims to avoid deceiving consumers. Absent evidence that 
consumers view their claims differently, the Commission proposes 
advising marketers to disclose if the offset purchase funds emission 
reductions that will not occur for two years or longer.\577\ The 
Commission, however, requests comment on this proposed disclosure.
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    \575\ As discussed above, this finding is based on the subset of 
respondents who generally understood carbon offsets. Despite the 
smaller sample size, the Commission relies on these findings because 
they provide the only available consumer perception evidence upon 
which to base guidance.
    \576\ The study asked respondents about an airline's statement 
that it would buy carbon offsets to offset the greenhouse gas 
emissions from their flight.
    \577\ Additionally, the Commission proposes advising offset 
marketers that they should not state or imply that their products 
have already reduced emissions or will do so in the near future if, 
in fact, the reductions will occur at a significantly later date.
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c. Substantiating Carbon Offset Claims - Tracking Offsets
    Like all marketers, carbon offset marketers must ensure that their 
advertising claims are truthful, not misleading, and substantiated. 
Section 260.2 of the proposed, revised Guides explains that 
substantiation for environmental marketing claims often requires 
competent and reliable scientific evidence. Carbon offset sellers - 
particularly those new to the market - must pay special attention to 
this substantiation requirement given the complexities of 
substantiating offsets. For example, marketers must employ 
sophisticated accounting protocols to properly quantify the GHG 
emission reductions that result from a project, as well as rigorous 
tracking methods to ensure that the reductions are not sold more than 
once. Although savvy carbon offset marketers likely have these 
procedures in place already, the Commission proposes adding this point 
to the Guides to ensure that new market participants are fully informed 
of their responsibilities.
d. Substantiating Carbon Offset Claims - Additionality
    Many aspects of the additionality debate raise unresolved technical 
and environmental policy issues. Because the Commission does not set 
environmental standards or policy, establishing a specific 
additionality test or tests appears to be outside of the FTC's purview. 
However, in accordance with its responsibility to ensure that consumers 
are not misled, the Commission proposes issuing guidance regarding 
regulatory additionality.
    When consumers purchase carbon offsets, they expect that they are 
supporting a reduction in greenhouse gas emissions. If the law mandates 
a particular emission reduction, however, that reduction will occur 
whether or not someone buys an offset for the activity. In other words, 
if a company sells an offset based on a mandatory emission reduction, 
the purchaser is essentially funding that company's regulatory 
compliance activities.\578\ Therefore, in such situations, the proposed 
Guides advise marketers that offset sales are deceptive.\579\
---------------------------------------------------------------------------

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

    The Commission does not propose promulgating guidance on which 
specific additionality tests sellers must meet to substantiate offset 
claims. Even if consumers have a vague expectation of 
``additionality,'' it is still unclear which test is appropriate to 
substantiate that interpretation.\580\ In addition, there is no 
consensus among experts in the field about which tests are appropriate. 
Of course, marketers are free to provide consumers with information 
about how and why their offset products are additional. While such 
disclosures may, or may not, be required to prevent deception, 
depending on the context, they may aid consumers in differentiating 
various offsets on the market.
---------------------------------------------------------------------------

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

e. Substantiating Carbon Offset Claims - Use of RECs
    Similar to additionality, the use of RECs as a basis for offset 
claims involves unresolved technical and policy issues. These issues 
include the methods marketers should use to demonstrate that the RECs 
they purchase cause the claimed GHG reductions and which additionality 
tests they should apply. Further, it is unclear which entity owns the 
GHG reductions - the renewable energy generator or the fossil fuel-
fired facility. Because of this uncertainty, there is a risk of double 
counting the emission reductions.
    It is unlikely that the Commission can provide general guidance on 
these issues without setting environmental policy, which is beyond the 
agency's purview. Nevertheless, as with other environmental claims, 
marketers must substantiate their offset claims. Given the complexity 
of the issues related to the use of RECs as a basis for offsets, 
marketers should be cautious that they possess competent and reliable 
scientific evidence to substantiate their claims and ensure that the 
emission reductions are not double counted.

VII. Request for Comment

    The Commission invites comment on all issues raised in this Notice, 
including all aspects of the proposed, revised Green Guides. In 
addition, the Commission requests responses to the following specific 
questions:
1. Do consumers interpret general environmental claims, when qualified 
by a particular attribute, to mean that the particular attribute 
provides the product with a net environmental benefit? Please provide 
any relevant consumer perception evidence. Should the Commission advise 
marketers that a qualified-general environmental claim is deceptive if 
a particular attribute represents an environmental improvement in one 
area, but causes a negative impact elsewhere that makes the product 
less environmentally beneficial than the product otherwise would be? 
Why or why not?
2. Would it be helpful to include an example in the Guides illustrating 
a qualified general environmental claim that is nevertheless deceptive? 
For example, a marketer advertises its product as ``Eco-friendly sheets 
- made from bamboo.'' Consumers would likely interpret this claim to 
mean

[[Page 63598]]

that the sheets are made from a natural fiber, using a process that is 
similar to that used for other natural fibers. The sheets, however, are 
actually a man-made fiber, rayon. Although bamboo can be used to make 
rayon, rayon is manufactured through a process that uses toxic 
chemicals and releases hazardous air pollutants. In this instance, the 
advertisement is deceptive.
3. The Commission's consumer perception study found that 27 percent of 
respondents interpreted the claims ``green'' and ``eco-friendly'' as 
suggesting that a product has no (rather than ``some'') negative 
impact. Viewing this finding alone, would it be deceptive for a product 
to be advertised with an unqualified general environmental benefit 
claim if the product had a negligible environmental impact? Please 
provide any relevant consumer perception evidence.
4. If a marketer makes an unqualified degradable claim for a liquid 
substance (or dissolvable solid), how long do consumers believe the 
substance will take to completely degrade? Please provide any relevant 
consumer perception evidence. Should the Commission provide guidance 
concerning this time period in the Guides? Why or why not?
5. The Commission proposes adopting a maximum period of one year for 
complete decomposition of solid materials marketed as degradable 
without time qualification. Would this guidance lead to deceptive 
claims in circumstances where consumers would expect a material to 
degrade in less than one year?
6. Should the Commission quantify the ``substantial majority'' 
threshold in the recyclable section of the Guides? If so, how? If not, 
why not?
7. Should the Commission quantify the ``significant percentage'' 
threshold in the recyclable section of the Guides? If so, how? If not, 
why not?
8. What changes, if any, should the Commission make to its guidance on 
pre-consumer recycled content claims? How do consumers interpret such 
claims? Please provide any relevant consumer perception evidence.
a. If the Commission should retain its guidance that pre-consumer 
recycled materials be diverted from the solid waste stream: (1) should 
the Commission continue to consider ``reuse in the original 
manufacturing process'' and ``significant reprocessing'' to determine 
if material is diverted from the solid waste stream; (2) what factors 
should the Commission consider to determine whether material was 
diverted from the solid waste stream; and (3) when processes that 
divert material from the waste stream become standard practice in an 
industry, do consumers continue to consider that material recycled 
content?
b. If materials have historically been diverted from the solid waste 
stream and reused for one purpose (e.g., fiber fill in toys), but now 
may be reused for other higher purposes (e.g., as raw fiber for 
textiles), do consumers still consider that material to be recycled 
content even though the material was already being diverted from the 
solid waste stream?
9. Do consumers understand the difference between pre-consumer and 
post-consumer recycled content? Please provide any relevant consumer 
perception evidence.
10. Should the Commission continue to advise marketers that recycled 
content claims may be based on the annual weighted average of recycled 
content in an item? If so, why? If not, why not? Are recycled content 
claims based on this method likely to mislead consumers? Would 
qualifying the claim avoid that deception? If so, please describe what 
the disclosure should be, and why. Please also provide any relevant 
consumer perception evidence.
11. If a product is advertised as ``made with recycled materials,'' 
either in whole or in part, should the Commission advise marketers to 
qualify that claim to indicate that the product is not recyclable if it 
is not? Why or why not? If a disclosure is needed, please describe what 
the disclosure should be, and why.
12. Are consumers aware that manufacturers are no longer permitted to 
use CFCs in their products? Do no-CFCs claims imply that other products 
still contain CFCs? Please provide any relevant consumer perception 
evidence.
13. What guidance, if any, should the Commission provide concerning 
free-of claims based on substances which have never been associated 
with a product category? How do consumers understand such claims? 
Please provide any relevant consumer perception evidence.
14. What guidance, if any, should the Commission provide concerning 
organic claims about non-agricultural products? How do consumers 
interpret organic claims for non-agricultural products? Do consumers 
understand such claims as referring to the products' ingredients, 
manufacturing, or processing, or all three? Please provide any relevant 
consumer perception evidence.
15. How should marketers qualify ``made with renewable materials'' 
claims, if at all, to avoid deception? Does disclosing the type of 
material, how the material was sourced, and the reason the material is 
renewable adequately qualify the claim? Why or why not? Are there other 
disclosures that would adequately qualify a ``made with renewable 
materials'' claim? Please describe such disclosures. Please also 
provide any relevant consumer perception evidence.
16. How, and under what circumstances, should marketers qualify ``made 
with renewable energy'' claims to avoid deception?
a. Does disclosing the source of the renewable energy adequately 
qualify the claim and prevent deceptive implications that the 
advertised product is made with renewable or recycled materials? Why or 
why not? Are there other disclosures that would adequately qualify a 
``made with renewable energy'' claim? Please describe such disclosures. 
Please also provide any relevant consumer perception evidence.
b. Should the Commission advise marketers to qualify a ``made with 
renewable energy'' claim if the advertised product is not made entirely 
with renewable energy? If so, should marketers qualify such claims if 
all or virtually all significant processes used in making a product are 
powered by renewable energy? Why or why not? Please provide any 
relevant consumer perception evidence.
17. How do consumers understand ``carbon offset'' and ``carbon 
neutral'' claims? Is there any evidence of consumer confusion 
concerning the use of these claims? Please provide any relevant 
consumer perception evidence.
18. How should marketers qualify carbon offset claims, if at all, to 
avoid deception about the timing of emission reductions? Should 
marketers disclose if their offsets reflect emission reductions that 
are not scheduled to occur in two years? Should marketers make a 
disclosure if emission reductions are not scheduled to occur in some 
other time period? If so, what time period, and why? Would such a 
disclosure adequately qualify an offset claim to

[[Page 63599]]

avoid deception? Please provide any relevant consumer perception 
evidence about this issue or on carbon offsets, generally.
    Interested parties are invited to submit written comments 
electronically or in paper form. Comments should state ``Proposed, 
Revised Green Guides, 16 CFR Part 260, Project No. P954501'' in the 
text and, if applicable, on the envelope.
    The FTC will place your comment -- including your name and your 
state -- on the public record of this proceeding, and to the extent 
practicable, will make it available to the public on the FTC website at 
(http://www.ftc.gov/os/publiccomments.shtm). As a matter of discretion, 
the Commission endeavors to remove individuals' home contact 
information from the comments before placing them on its website. 
Because comments will be made public, they should not include: (1) any 
sensitive personal information, such as any individual's Social 
Security number, date of birth, driver's license number or other state 
identification number or foreign country equivalent, passport number, 
financial account number, or credit or debit card number; (2) any 
sensitive health information, such as medical records or other 
individually identifiable health information; or (3) any trade secret 
or any commercial or financial information which is privileged or 
confidential, as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). Comments containing 
material for which confidential treatment is requested must be filed in 
paper form, must be clearly labeled ``Confidential,'' and must comply 
with FTC Rule 4.9(c), 16 CFR 4.9(c).\581\
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    \581\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The FTC's General Counsel 
will grant or deny the request consistent with applicable law and 
the public interest. See FTC Rule 4.9(c), 16 CFR 4.9(c).
---------------------------------------------------------------------------

    Because postal mail addressed to the FTC is subject to delay due to 
heightened security screening, if possible, please submit your comments 
in electronic form or send them by courier or overnight service. To 
ensure that the Commission considers an electronic comment, you must 
file it at (https://ftcpublic.commentworks.com/ftc/revisedgreenguides) 
by following the instructions on the web-based form. If this Notice 
appears at (http://www.regulations.gov/search/Regs/home.html#home), you 
may also file a comment through that website. The Commission will 
consider all comments that regulations.gov forwards to it. You may also 
visit the FTC website at (http://www.ftc.gov) to read the Notice and 
the news release describing it.
    A comment filed in paper form should include the reference 
``Proposed, Revised Green Guides, 16 CFR Part 260, Project No. 
P954501'' in the text of the comment and, if applicable, on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission, Office of the Secretary, Room H-135 (Annex 
J), 600 Pennsylvania Avenue, NW, Washington, DC 20580.
    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. The Commission will consider all timely and responsive 
comments it receives. More information, including routine uses 
permitted by the Privacy Act, may be found in the FTC's privacy policy 
at (http://www.ftc.gov/ftc/privacy.shtm).

VIII. Proposed, Revised Green Guides

List of Subjects in 16 CFR Part 260

    Advertising, Environmental protection, Labeling, Trade practices.
    For the reasons set forth in the preamble, the Federal Trade 
Commission is proposing to revise 16 CFR Part 260 to read as follows:

PART 260--GUIDES FOR THE USE OF ENVIRONMENTAL MARKETING CLAIMS

Sec.
260.1 Purpose, scope, and structure of the guides.
260.2 Interpretation and substantiation of environmental marketing 
claims.
260.3 General principles.
260.4 General environmental benefit claims.
260.5 Carbon offsets.
260.6 Certifications and seals of approval.
260.7 Compostable claims.
260.8 Degradable claims.
260.9 Free-of and non-toxic claims.
260.10 Ozone-safe and ozone-friendly claims.
260.11 Recyclable claims.
260.12 Recycled content claims.
260.13 Refillable claims.
260.14 Renewable energy claims.
260.15 Renewable materials claims.
260.16 Source reduction claims.

    Authority: 15 U.S.C. 41-58.


Sec.  260.1  Purpose, scope, and structure of the guides.

    (a) These guides set forth the Federal Trade Commission's current 
thinking about environmental claims. The guides help marketers avoid 
making environmental marketing claims that are unfair or deceptive 
under Section 5 of the Federal Trade Commission Act (FTC Act), 15 
U.S.C.45. They do not confer any rights on any person and do not 
operate to bind the FTC or the public. The Commission, however, can 
take action under the FTC Act if a marketer makes an environmental 
claim inconsistent with the guides. In any such enforcement action, the 
Commission must prove that the challenged act or practice is unfair or 
deceptive in violation of Section 5 of the FTC Act.
    (b) These guides do not preempt federal, state, or local laws. 
Compliance with those laws, however, will not necessarily preclude 
Commission law enforcement action under the FTC Act.
    (c) These guides apply to claims about the environmental attributes 
of a product, package, or service in connection with the marketing, 
offering for sale, or sale of such item or service to individuals, 
businesses, or other entities. The guides apply to environmental claims 
in labeling, advertising, promotional materials, and all other forms of 
marketing in any medium, whether asserted directly or by implication, 
through words, symbols, logos, depictions, product brand names, or any 
other means.
    (d) The guides consist of general principles, specific guidance on 
the use of particular environmental claims, and examples. Claims may 
raise issues that are addressed by more than one example and in more 
than one section of the guides. The examples provide the Commission's 
views on how reasonable consumers likely interpret certain claims. 
Marketers can use an alternative approach if the approach satisfies the 
requirements of Section 5 of the FTC Act. Whether a particular claim is 
deceptive will depend on the net impression of the advertisement, 
label, or other promotional material at issue. In addition, although 
many examples present specific claims and options for qualifying 
claims, the examples do not illustrate all permissible claims or 
qualifications under Section 5 of the FTC Act.


Sec.  260.2  Interpretation and substantiation of environmental 
marketing claims.

    Section 5 of the FTC Act prohibits deceptive acts and practices in 
or affecting commerce. A representation, omission, or practice is 
deceptive if it is likely to mislead consumers acting reasonably under 
the circumstances and is material to consumers' decisions. See FTC 
Policy Statement on Deception, 103 F.T.C. 174 (1983). To determine if 
an advertisement is deceptive, marketers must identify all express and 
implied claims that the advertisement

[[Page 63600]]

reasonably conveys. Marketers must ensure that all reasonable 
interpretations of their claims are truthful, not misleading, and 
supported by a reasonable basis before they make the claims. See FTC 
Policy Statement Regarding Advertising Substantiation, 104 F.T.C. 839 
(1984). In the context of environmental marketing claims, a reasonable 
basis often requires competent and reliable scientific evidence. Such 
evidence consists of tests, analyses, research, or studies that have 
been conducted and evaluated in an objective manner by qualified 
persons and are generally accepted in the profession to yield accurate 
and reliable results. Such evidence should be sufficient in quality and 
quantity based on standards generally accepted in the relevant 
scientific fields, when considered in light of the entire body of 
relevant and reliable scientific evidence, to substantiate that each of 
the marketing claims is true.


Sec.  260.3  General principles.

    The following general principles apply to all environmental 
marketing claims, including those described in Sec. Sec.  260.4 through 
260.16. Claims should comport with all relevant provisions of these 
guides.
    (a) Qualifications and disclosures: To prevent deceptive claims, 
qualifications and disclosures should be clear, prominent, and 
understandable. To make disclosures clear and prominent, marketers 
should use plain language and sufficiently large type, should place 
disclosures in close proximity to the qualified claim, and should avoid 
making inconsistent statements or using distracting elements that could 
undercut or contradict the disclosure.
    (b) Distinction between benefits of product, package, and service: 
Unless it is clear from the context, an environmental marketing claim 
should specify whether it refers to the product, the product's 
packaging, a service, or just to a portion of the product, package, or 
service. In general, if the environmental attribute applies to all but 
minor, incidental components of a product or package, the marketer need 
not qualify the claim to identify that fact. However, there may be 
exceptions to this general principle. For example, if a marketer makes 
an unqualified recyclable claim, and the presence of the incidental 
component significantly limits the ability to recycle the product, the 
claim would be deceptive.

 Example 1: A plastic package containing a new shower curtain is 
labeled ``recyclable'' without further elaboration. Because the context 
of the claim does not make clear whether it refers to the plastic 
package or the shower curtain, the claim is deceptive if any part of 
either the package or the curtain, other than minor, incidental 
components, cannot be recycled.

 Example 2: A soft drink bottle is labeled ``recycled.'' The bottle is 
made entirely from recycled materials, but the bottle cap is not. 
Because the bottle cap is a minor, incidental component of the package, 
the claim is not deceptive.
    (c) Overstatement of environmental attribute: An environmental 
marketing claim should not overstate, directly or by implication, an 
environmental attribute or benefit. Marketers should not state or imply 
environmental benefits if the benefits are negligible.

 Example 1: An area rug is labeled ``50% more recycled content than 
before.'' The manufacturer increased the recycled content of its rug 
from 2% recycled fiber to 3%. Although the claim is technically true, 
it likely conveys the false impression that the manufacturer has 
increased significantly the use of recycled fiber.

 Example 2: A trash bag is labeled ``recyclable'' without 
qualification. Because trash bags ordinarily are not separated from 
other trash at the landfill or incinerator for recycling, they are 
highly unlikely to be used again for any purpose. Even if the bag is 
technically capable of being recycled, the claim is deceptive since it 
asserts an environmental benefit where no meaningful benefit exists.
    (d) Comparative claims: Comparative environmental marketing claims 
should be clear to avoid consumer confusion about the comparison. 
Marketers should have substantiation for the comparison.

 Example 1: An advertiser notes that its glass bathroom tiles contain 
``20% more recycled content.'' Depending on the context, the claim 
could be a comparison either to the advertiser's immediately preceding 
product or to its competitors' products. The advertiser should have 
substantiation for both interpretations. Otherwise, the advertiser 
should make the basis for comparison clear, for example, by saying 
``20% more recycled content than our previous bathroom tiles.''

 Example 2: An advertiser claims that ``our plastic diaper liner has 
the most recycled content.'' The diaper liner has more recycled 
content, calculated as a percentage of weight, than any other on the 
market, although it is still well under 100%. The claim likely conveys 
that the product contains a significant percentage of recycled content 
and has significantly more recycled content than its competitors. If 
the advertiser cannot substantiate these messages, the claim would be 
deceptive.

 Example 3: An advertiser claims that its packaging creates ``less 
waste than the leading national brand.'' The advertiser implemented the 
source reduction several years ago and supported the claim by 
calculating the relative solid waste contributions of the two packages. 
The advertiser should have substantiation that the comparison remains 
accurate.

 Example 4: A product is advertised as ``environmentally preferable.'' 
This claim likely conveys that the product is environmentally superior 
to other products. Because it is highly unlikely that the marketer can 
substantiate the messages conveyed by this statement, this claim is 
deceptive. The claim would not be deceptive if the marketer accompanied 
it with clear and prominent language limiting the environmental 
superiority representation to the particular attributes for which the 
marketer has substantiation, provided the advertisement's context does 
not imply other deceptive claims. For example, the claim 
``Environmentally preferable: contains 50% recycled content compared to 
20% for the leading brand'' would not be deceptive.


Sec.  260.4  General environmental benefit claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service offers a general environmental 
benefit.
    (b) Unqualified general environmental benefit claims are difficult 
to interpret and likely convey a wide range of meanings. In many cases, 
such claims likely convey that the product, package, or service has 
specific and far-reaching environmental benefits and may convey that 
the item or service has no negative environmental impact. Because it is 
highly unlikely that marketers can substantiate all reasonable 
interpretations of these claims, marketers should not make unqualified 
general environmental benefit claims.
    (c) Marketers can qualify general environmental benefit claims to 
prevent deception about the nature of the environmental benefit being 
asserted. To avoid deception, marketers should use clear and prominent 
qualifying language that limits the claim to a specific benefit.

[[Page 63601]]

    (d) Even if a marketer explains, and has substantiation for, the 
product's specific environmental attributes, this explanation will not 
adequately qualify a general environmental benefit claim if the 
advertisement otherwise implies deceptive claims. Therefore, marketers 
should ensure that the advertisement's context does not imply deceptive 
environmental claims.

 Example 1: The brand name ``Eco-friendly'' likely conveys that the 
product has far-reaching environmental benefits and may convey that the 
product has no negative environmental impact. Because it is highly 
unlikely that the marketer can substantiate these claims, the use of 
such a brand name is deceptive. A claim, such as ``Eco-friendly: made 
with recycled materials,'' would not be deceptive if the statement 
``made with recycled materials'' is clear and prominent; the marketer 
has substantiation for the statement; and provided that the 
advertisement's context does not imply other deceptive claims.

 Example 2: A product wrapper bears the claim ``Environmentally 
Friendly.'' Text on the wrapper explains that it is environmentally 
friendly because it was ``not chlorine bleached, a process that has 
been shown to create harmful substances.'' Although the wrapper was not 
bleached with chlorine, its production releases into the environment 
other harmful substances. Since reasonable consumers likely would 
interpret the ``Environmentally Friendly'' claim, in combination with 
the explanation, to mean that no significant harmful substances are 
released into the environment, the ``Environmentally Friendly'' claim 
is deceptive.

 Example 3: A marketer states that its packaging is now ``Greener than 
our previous packaging.'' The packaging weighs 15% less than previous 
packaging, but it is not recyclable nor has it been improved in any 
other material respect. The claim is deceptive because reasonable 
consumers likely would interpret ``Greener'' in this context to mean 
that other significant environmental aspects of the packaging also are 
improved over previous packaging. A claim stating ``Greener than our 
previous packaging'' accompanied by clear and prominent language such 
as, ``We've reduced the weight of our packaging by 15%,'' would not be 
deceptive, provided that the advertisement's context does not imply 
other deceptive claims.


Sec.  260.5  Carbon offsets.

    (a) Given the complexities of carbon offsets, sellers should employ 
competent and reliable scientific and accounting methods to properly 
quantify claimed emission reductions and to ensure that they do not 
sell the same reduction more than one time.
    (b) It is deceptive to misrepresent, directly or by implication, 
that a carbon offset represents emission reductions that have already 
occurred or will occur in the immediate future. To avoid deception, 
marketers should clearly and prominently disclose if the carbon offset 
represents emission reductions that will not occur for two years or 
longer.
    (c) It is deceptive to claim, directly or by implication, that a 
carbon offset represents an emission reduction if the reduction, or the 
activity that caused the reduction, was required by law.

 Example 1: On its website, an airline invites consumers to purchase 
offsets to ``neutralize the carbon emissions from your flight.'' The 
proceeds from the offset sales fund future projects that will not 
reduce greenhouse gas emissions for two years. The claim likely conveys 
that the emission reductions either already have occurred or will occur 
in the near future. Therefore, the advertisement is deceptive. It would 
not be deceptive if the airline's website stated ``Offset the carbon 
emissions from your flight by funding new projects that will begin 
reducing emissions in two years.''

 Example 2: An offset provider claims that its product ``will offset 
your own `dirty' driving habits.'' The offset is based on methane 
capture at a landfill facility. State law requires this facility to 
capture all methane emitted from the landfill. The claim is deceptive 
because the emission reduction would have occurred regardless of 
whether consumers purchased the offsets.


Sec.  260.6  Certifications and seals of approval.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service has been endorsed or certified by 
an independent third-party.
    (b) A marketer's use of the name, logo, or seal of approval of a 
third-party certifier is an endorsement, which should meet the criteria 
for endorsements provided in the FTC's Endorsement Guides, 16 CFR Part 
255, including Definitions (Sec.  255.0), General Considerations (Sec.  
255.1), Expert Endorsements (Sec.  255.3), Endorsements by 
Organizations (Sec.  255.4), and Disclosure of Material Connections 
(Sec.  255.5).
    (c) Third-party certification does not eliminate a marketer's 
obligation to ensure that it has substantiation for all claims 
reasonably communicated by the certification.
    (d) A marketer's use of an unqualified environmental certification 
or seal of approval (i.e., one that does not state the basis for the 
certification) likely conveys a general environmental benefit claim 
(addressed in Sec.  260.4). Because it is highly unlikely that 
marketers can substantiate such claims, marketers should not use 
unqualified certifications or seals of approval.
    (e) To avoid deception, language qualifying a certification or seal 
of approval should be clear and prominent and should clearly convey 
that the certification or seal of approval refers only to specific and 
limited benefits. This qualifying language may be part of the 
certification or seal itself.

 Example 1: An advertisement for paint features a ``GreenLogo'' seal 
and the statement ``GreenLogo for Environmental Excellence.'' This 
advertisement likely conveys that: the GreenLogo seal is awarded by an 
independent, third-party certifier with expertise in evaluating the 
environmental attributes of paint; and the product has far-reaching 
environmental benefits. If the paint manufacturer placed the GreenLogo 
seal in its advertisement, and no independent, third-party certifier 
evaluated the paint, the claim would be deceptive. The claim would not 
be deceptive if the marketer accompanied the seal with clear and 
prominent language: indicating that the marketer itself created the 
GreenLogo seal; and limiting the general environmental benefit 
representation to the particular product attributes for which the 
marketer has substantiation, provided that the advertisement's context 
does not imply other deceptive claims.

 Example 2: A product advertisement includes a seal with the text 
``Certified by the Renewable Energy Association.'' The product 
manufacturer is a dues-paying member of that association. Even if the 
association certified that the manufacturer uses only renewable energy, 
the use of the seal is deceptive because it likely conveys that the 
association is independent from the product manufacturer. To avoid 
deception, the manufacturer should accompany the seal with clear and 
prominent language disclosing the material connection.


[[Page 63602]]


 Example 3: A manufacturer advertises its product as ``certified by the 
American Institute of Degradable Materials.'' The advertisement does 
not mention that the American Institute of Degradable Materials is an 
industry trade association. Regardless of whether the manufacturer is a 
member, this advertisement is deceptive because it likely conveys that 
the product is certified by an independent certifying organization, not 
an industry group. The advertisement would not be deceptive if the 
manufacturer accompanies its statement that the product is ``certified 
by the American Institute of Degradable Materials'' with clear and 
prominent language indicating that the Institute is an industry trade 
association, and if the manufacturer otherwise complies with Sec.  
260.8 of the Guides.

 Example 4: A marketer's industry sales brochure for overhead lighting 
features a seal with the text ``U.S. EcoFriendly Building Association'' 
to show that the marketer is a member of that organization. Although 
the lighting manufacturer is, in fact, a member, this association has 
not evaluated the environmental attributes of the company's product. 
This advertisement would be deceptive because it likely conveys that 
the U.S. EcoFriendly Building Association evaluated the product through 
testing or other objective standards. It also is likely to convey that 
the lighting has far-reaching environmental benefits. The use of the 
seal would not be deceptive if the manufacturer accompanies it with 
clear and prominent qualifying language: indicating that the seal 
refers to the company's membership only and that the association did 
not evaluate the product's environmental attributes, and limiting the 
general environmental benefit representation to the particular product 
attributes for which the marketer has substantiation, provided that the 
advertisement's context does not imply other deceptive claims. For 
example, the marketer could state, ``Although we are a member of the 
U.S. EcoFriendly Building Association, it has not evaluated this 
product. Our lighting is made from 100 percent recycled metal and uses 
energy efficient LED technology.''

 Example 5: A product label contains an environmental seal, either in 
the form of a globe icon or a globe icon with the text ``EarthSmart.'' 
EarthSmart is an independent, third-party certifier that uses standards 
previously adopted by EarthSmart and suitable for evaluating products' 
chemical emissions. While the marketer meets EarthSmart's standards for 
reduced chemical emissions during product usage, the product has no 
other specific environmental benefits. Either seal likely conveys that 
the product has far-reaching environmental benefits, and that Earth 
Smart certified the product for all of these benefits. If the marketer 
cannot substantiate these claims, the use of the seal would be 
deceptive. The seal would not be deceptive if the marketer accompanied 
it with clear and prominent language limiting the general environmental 
benefit claim to the particular product attributes for which the 
manufacturer has substantiation, provided that the advertisement's 
context does not imply other deceptive claims. For example, the 
marketer could state next to the globe icon: ``EarthSmart certifies 
that this product meets EarthSmart standards for reduced chemical 
emissions during product usage.'' Alternatively, the claim would not be 
deceptive if the EarthSmart environmental seal itself stated: 
``EarthSmart Certified for reduced chemical emissions during product 
usage.''

 Example 6: Great Paper Company sells photocopy paper with packaging 
that has a seal of approval from the No Chlorine Products Association, 
a non-profit third-party association. There are no material connections 
between Great Paper Company and the No Chlorine Products Association. 
Using standards widely recognized by industry experts, the No Chlorine 
Products Association certifies that products are chlorine-free. 
Moreover, the Association's endorsement was reached by a process 
sufficient to ensure that the endorsement fairly reflects the 
collective judgment of the Association. The claim would not be 
deceptive.


Sec.  260.7  Compostable claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is compostable.
    (b) A marketer claiming that an item is compostable should have 
competent and reliable scientific evidence that all the materials in 
the item will break down into, or otherwise become part of, usable 
compost (e.g., soil-conditioning material, mulch) in a safe and timely 
manner (i.e., in approximately the same time as the materials with 
which it is composted) in an appropriate composting program or facility 
or in a home compost pile or device.
    (c) A marketer should clearly and prominently qualify compostable 
claims to the extent necessary to avoid deception if: the item cannot 
be composted safely or in a timely manner in a home compost pile or 
device; or the claim misleads reasonable consumers about the 
environmental benefit provided when the item is disposed of in a 
landfill.
    (d) To avoid deception about the limited availability of municipal 
or institutional composting facilities, a marketer should clearly and 
prominently qualify compostable claims if such facilities are not 
available to a substantial majority of consumers or communities where 
the item is sold.

 Example 1: A manufacturer indicates that its unbleached coffee filter 
is compostable. The unqualified claim is not deceptive, provided the 
manufacturer has substantiation that the filter can be converted safely 
to usable compost in a timely manner in a home compost pile or device. 
If so, the extent of local municipal or institutional composting 
facilities is irrelevant.

 Example 2: A garden center sells grass clipping bags labeled as 
``Compostable in California Municipal Yard Trimmings Composting 
Facilities.'' When the bags break down, however, they release toxins 
into the compost. The claim is deceptive if the presence of these 
toxins prevents the compost from being usable.

 Example 3: An electronics manufacturer makes an unqualified claim that 
its package is compostable. Although municipal or institutional 
composting facilities exist where the product is sold, the package will 
not break down into usable compost in a home compost pile or device. To 
avoid deception, the manufacturer should clearly and prominently 
disclose that the package is not suitable for home composting.

 Example 4: Nationally marketed lawn and leaf bags state 
``compostable'' on each bag. The bags also feature text disclosing that 
the bag is not designed for use in home compost piles. Yard trimmings 
programs in many communities compost these bags, but such programs are 
not available to a substantial majority of consumers or communities 
where the bag is sold. The claim is deceptive because it likely conveys 
that composting facilities are available to a substantial

[[Page 63603]]

majority of consumers or communities. To avoid deception, the marketer 
should clearly and prominently indicate the limited availability of 
such programs. A marketer could state ``Appropriate facilities may not 
exist in your area,'' or provide the approximate percentage of 
communities or consumers for which such programs are available.

 Example 5: A manufacturer sells a disposable diaper that states, 
``This diaper can be composted if your community is one of the 50 that 
have composting facilities.'' The claim is not deceptive if composting 
facilities are available as claimed and the manufacturer has 
substantiation that the diaper can be converted safely to usable 
compost in solid waste composting facilities.

 Example 6: A manufacturer markets yard trimmings bags only to 
consumers residing in particular geographic areas served by county yard 
trimmings composting programs. The bags meet specifications for these 
programs and are labeled, ``Compostable Yard Trimmings Bag for County 
Composting Programs.'' The claim is not deceptive. Because the bags are 
compostable where they are sold, a qualification is not needed to 
indicate the limited availability of composting facilities.


Sec.  260.8  Degradable claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is degradable, biodegradable, oxo-degradable, 
oxo-biodegradable, or photodegradable. The following guidance for 
degradable claims also applies to biodegradable, oxo-degradable, oxo-
biodegradable, or photodegradable claims.
    (b) A marketer making an unqualified degradable claim should have 
competent and reliable scientific evidence that the entire item will 
completely break down and return to nature (i.e., decompose into 
elements found in nature) within a reasonably short period of time 
after customary disposal.
    (c) It is deceptive to make an unqualified degradable claim for 
solid items if the items do not completely decompose within one year 
after customary disposal. Unqualified degradable claims for items that 
are customarily disposed in landfills, incinerators, and recycling 
facilities are deceptive because these locations do not present 
conditions in which complete decomposition will occur within one year.
    (d) Degradable claims should be qualified clearly and prominently 
to the extent necessary to avoid deception about: the product or 
package's ability to degrade in the environment where it is customarily 
disposed; and the rate and extent of degradation.

 Example 1: A marketer advertises its trash bags using an unqualified 
``degradable'' claim. The marketer relies on soil burial tests to show 
that the product will decompose in the presence of water and oxygen. 
Consumers, however, customarily dispose of trash bags in incineration 
facilities or landfills where they will not degrade within one year. 
The claim is, therefore, deceptive.

 Example 2: A marketer advertises a commercial agricultural plastic 
mulch film with the claim ``Photodegradable,'' and clearly and 
prominently qualifies the term with the phrase ``Will break down into 
small pieces if left uncovered in sunlight.'' The advertiser possesses 
competent and reliable scientific evidence that within one year, the 
product will break down after being exposed to sunlight and into 
sufficiently small pieces to become part of the soil. Thus, the 
qualified claim is not deceptive. Because the claim is qualified to 
indicate the limited extent of breakdown, the advertiser need not meet 
the consumer expectations for an unqualified photodegradable claim, 
i.e., that the product will not only break down, but also will 
decompose into elements found in nature.

 Example 3: A marketer advertises its shampoo as ``biodegradable'' 
without qualification. The advertisement makes clear that only the 
shampoo, and not the bottle, is biodegradable. The marketer has 
competent and reliable scientific evidence demonstrating that the 
shampoo, which is customarily disposed in sewage systems, will break 
down and decompose into elements found in nature in a reasonably short 
period of time in the sewage system environment. Therefore, the claim 
is not deceptive.

 Example 4: A plastic six-pack ring carrier is marked with a small 
diamond. Several state laws require that the carriers be marked with 
this symbol to indicate that they meet certain degradability standards 
if the carriers are littered. The use of the diamond, by itself, does 
not constitute a degradable claim.\1\
---------------------------------------------------------------------------

    \1\ The guides' treatment of unqualified degradable claims is 
intended to help prevent deception and is not intended to establish 
performance standards to ensure the degradability of products when 
littered.

    Example 5: A fiber pot containing a plant is labeled 
``biodegradable.'' The pot is customarily buried in the soil along with 
the plant. Once buried, the pot fully decomposes during the growing 
season, allowing the roots of the plant to grow into the surrounding 
soil. The unqualified claim is not deceptive.


Sec.  260.9  Free-of and non-toxic claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product, package, or service is free of, or does not contain or 
use, a substance or that a product, package, or service is non-toxic. 
Such claims should be clearly and prominently qualified to the extent 
necessary to avoid deception.
    (b) A truthful claim that a product, package, or service is free 
of, or does not contain or use, a substance may nevertheless be 
deceptive if: the product, package, or service contains or uses 
substances that pose the same or similar environmental risks as the 
substance that is not present; or the substance has never been 
associated with the product category.
    (c) Depending on the context, some no, free-of, or does-not-contain 
claims may be appropriate even where a product, package, or service 
contains or uses a de minimis amount of a substance.
    (d) A marketer that makes a no, free-of, or does-not-contain claim 
that reasonable consumers would interpret to convey additional 
environmental claims, including general environmental benefit claims or 
comparative superiority claims, must have substantiation for each such 
claim.
    (e) A non-toxic claim likely conveys that a product, package, or 
service is non-toxic both for humans and for the environment generally. 
Therefore, marketers making non-toxic claims should have competent and 
reliable scientific evidence that the product, package, or service is 
non-toxic for humans and for the environment or should clearly and 
prominently qualify their claims to avoid deception.

 Example 1: A package of t-shirts is labeled ``Shirts made with a 
chlorine-free bleaching process.'' The shirts, however, are bleached 
with a process that releases a reduced, but still significant, amount 
of the same harmful byproducts associated with

[[Page 63604]]

chlorine bleaching. The claim overstates the product's benefits because 
reasonable consumers likely would interpret it to mean that the 
product's manufacture does not cause any of the environmental risks 
posed by chlorine bleaching. A claim, however, that the shirts were 
``bleached with a process that substantially reduces harmful substances 
associated with chlorine bleaching'' would not be deceptive, if 
substantiated.

 Example 2: A manufacturer advertises its insulation as ``formaldehyde 
free.'' Although the manufacturer does not use formaldehyde as a 
binding agent to produce the insulation, tests show that the insulation 
still emits trace amounts of formaldehyde. The seller has 
substantiation that formaldehyde is present in trace amounts in 
virtually all indoor and (to a lesser extent) outdoor environments and 
that its insulation emits less formaldehyde than is typically present 
in outdoor environments. In this context, the trace levels of 
formaldehyde emissions likely are inconsequential to consumers. 
Therefore, the seller's free-of claim would not be deceptive.

 Example 3: A marketer advertises a lawn care product as ``essentially 
non-toxic'' and ``practically non-toxic.'' The advertisement likely 
conveys that the product does not pose any risk to humans or the 
environment. If the pesticide poses no risk to humans but is toxic to 
the environment, the claims would be deceptive.


Sec.  260.10  Ozone-safe and ozone-friendly claims.

    It is deceptive to misrepresent, directly or by implication, that a 
product, package, or service is safe for, or friendly to, the ozone 
layer or the atmosphere.

 Example 1: A product is labeled ``ozone friendly.'' The claim is 
deceptive if the product contains any ozone-depleting substance, 
including those substances listed as Class I or Class II chemicals in 
Title VI of the Clean Air Act Amendments of 1990, Pub. L. No. 101-549, 
and others subsequently designated by EPA as ozone-depleting 
substances. These chemicals include chlorofluorocarbons (CFCs), halons, 
carbon tetrachloride, 1,1,1-trichloroethane, methyl bromide, 
hydrobromofluorocarbons, and hydrochlorofluorocarbons (HCFCs).

 Example 2: An aerosol air freshener is labeled ``ozone friendly.'' 
Some of the product's ingredients are volatile organic compounds (VOCs) 
that may cause smog by contributing to ground-level ozone formation. 
The claim likely conveys that the product is safe for the atmosphere as 
a whole, and, therefore, is deceptive.

 Example 3: A manufacturer has substituted non-ozone-depleting 
refrigerants for the ozone-depleting substances in its residential air 
conditioning equipment. The manufacturer advertises its equipment as 
``environmentally friendly.'' This general environmental benefit claim 
likely conveys that the product has far reaching environmental 
benefits. However, the manufacturer's air conditioning equipment 
consumes a substantial amount of energy and relies on refrigerants that 
are greenhouse gases. Accordingly, this claim is deceptive.


Sec.  260.11  Recyclable claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is recyclable. A product or package should 
not be marketed as recyclable unless it can be collected, separated, or 
otherwise recovered from the solid waste stream through an established 
recycling program for reuse or use in manufacturing or assembling 
another item.
    (b) Marketers should clearly and prominently qualify recyclable 
claims to the extent necessary to avoid deception about the 
availability of recycling programs and collection sites to consumers.
    (1) When recycling facilities are available to a substantial 
majority\2\ of consumers or communities where the item is sold, 
marketers can make unqualified recyclable claims.
---------------------------------------------------------------------------

    \2\ Commission staff has informally interpreted the term 
``substantial majority,'' as used in this context, to mean at least 
60 percent.
---------------------------------------------------------------------------

    (2) When recycling facilities are available to a significant 
percentage of consumers or communities where the item is sold, but not 
to a substantial majority, marketers should clearly and prominently 
qualify their recyclable claims. Suggested qualifications are: ``This 
product [package] may not be recyclable in your area,'' ``Recycling 
programs for this product [package] may not exist in your area,'' or a 
statement of the percentage of communities or the population that have 
programs where the item can be recycled.
    (3) When recycling facilities are available to less than a 
significant percentage of consumers or communities where the item is 
sold, marketers should clearly and prominently qualify their recyclable 
claims. Suggested qualifications are: ``This product [package] is 
recyclable only in the few communities that have recycling programs,'' 
or a statement of the percentage of communities or the population that 
have programs where the item can be recycled.
    (c) Marketers can make unqualified recyclable claims for a product 
or package if the entire product or package, excluding minor incidental 
components, is recyclable. For items that are partially made of 
recyclable components, marketers should clearly and prominently qualify 
the recyclable claim to avoid deception about which portions are 
recyclable.
    (d) If any component significantly limits the ability to recycle 
the item, any recyclable claim would be deceptive. An item that is made 
from recyclable material, but, because of its shape, size, or some 
other attribute, is not accepted in recycling programs, should not be 
marketed as recyclable.\3\
---------------------------------------------------------------------------

    \3\ Batteries labeled in accordance with the Mercury-Containing 
and Rechargeable Battery Management Act, 42 U.S.C. Sec.  14322(b), 
are deemed to be in compliance with these Guides.

 Example 1: A packaged product is labeled with an unqualified claim, 
``recyclable.'' It is unclear from the type of product and other 
context whether the claim refers to the product or its package. The 
unqualified claim likely conveys that both the product and its 
packaging, except for minor, incidental components, can be recycled. 
Unless the manufacturer has substantiation for both messages, it should 
clearly and prominently qualify the claim to indicate which portions 
---------------------------------------------------------------------------
are recyclable.

 Example 2: A nationally marketed plastic yogurt container displays the 
Society of the Plastics Industry (SPI) code (which consists of a design 
of arrows in a triangular shape containing a number in the center and 
an abbreviation identifying the component plastic resin) on the front 
label of the container, in close proximity to the product name and 
logo. This conspicuous use of the SPI code constitutes a recyclable 
claim. Unless recycling facilities for this container are available to 
a substantial majority of consumers or communities, the manufacturer 
should qualify the claim to disclose the limited availability of 
recycling programs. If the manufacturer places the SPI code, without 
more, in an

[[Page 63605]]

inconspicuous location on the container (e.g., embedded in the bottom 
of the container), it would not constitute a recyclable claim.

 Example 3: A container can be burned in incinerator facilities to 
produce heat and power. It cannot, however, be recycled into another 
product or package. Any claim that the container is recyclable would be 
deceptive.

 Example 4: A paperboard package is marketed nationally and labeled 
either ``Recyclable where facilities exist'' or ``Recyclable - Check to 
see if recycling facilities exist in your area.'' Recycling programs 
for these packages are available to a significant percentage of the 
population, but not to a substantial majority of consumers nationwide. 
Both claims are deceptive because they do not adequately disclose the 
limited availability of recycling programs. To avoid deception, the 
marketer should use a clearer qualification, such as those suggested in 
Sec.  260.11(b)(2).

 Example 5: Foam polystyrene cups are advertised as ``Recyclable in the 
few communities with facilities for foam polystyrene cups.'' A half-
dozen major metropolitan areas have established collection sites for 
recycling those cups. The claim is not deceptive because it clearly 
discloses the limited availability of recycling programs.

 Example 6: A package is labeled ``Includes some recyclable material.'' 
The package is composed of four layers of different materials, bonded 
together. One of the layers is made from recyclable material, but the 
others are not. While programs for recycling this type of package are 
available to a substantial majority of consumers, only a few of those 
programs have the capability to separate the recyclable layer from the 
non-recyclable layers. Even though it is technologically possible to 
separate the layers, the claim is deceptive. An appropriately qualified 
claim would be ``Includes material recyclable in the few communities 
that can process multi-layer products.''

 Example 7: A product container is labeled ``recyclable.'' The marketer 
advertises and distributes the product only in Missouri. Collection 
sites for recycling the container are available to a substantial 
majority of Missouri residents but are not yet available nationally. 
Because programs are generally available where the product is sold, the 
unqualified claim is not deceptive.

 Example 8: A manufacturer of one-time use cameras, with dealers in a 
substantial majority of communities, operates a take-back program that 
collects those cameras through all of its dealers. The manufacturer 
reconditions the cameras for resale and labels them ``Recyclable 
through our dealership network.'' This claim is not deceptive, even 
though the cameras are not recyclable through conventional curbside or 
drop off recycling programs.

 Example 9: A manufacturer advertises its toner cartridges for computer 
printers as ``Recyclable. Contact your local dealer for details.'' 
Although all of the company's dealers recycle cartridges, the dealers 
are not located in a substantial majority of communities where 
cartridges are sold. Therefore, the claim is deceptive. If dealers are 
located in a significant number of communities, the manufacturer should 
qualify its claim as suggested in Sec.  260.11(b)(2). If participating 
dealers are located in only a few communities, the manufacturer should 
qualify the claim as suggested in Sec.  260.11(b)(3).

 Example 10: An aluminum can is labeled ``Please Recycle.'' This 
statement likely conveys that the can is recyclable. If collection 
sites for recycling these cans are available to a substantial majority 
of consumers or communities, the marketer does not need to qualify the 
claim.


Sec.  260.12  Recycled content claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made of recycled content. Recycled content 
includes recycled raw material, as well as used,\4\ reconditioned, and 
re-manufactured components.
---------------------------------------------------------------------------

    \4\ The term ``used'' refers to parts that are not new and that 
have not undergone any re-manufacturing or reconditioning.
---------------------------------------------------------------------------

    (b) It is deceptive to represent, directly or by implication, that 
an item contains recycled content unless it is composed of materials 
that have been recovered or otherwise diverted from the solid waste 
stream, either during the manufacturing process (pre-consumer), or 
after consumer use (post-consumer). If the source of recycled content 
includes pre-consumer material, the advertiser should have 
substantiation that the pre-consumer material would otherwise have 
entered the solid waste stream. Recycled content claims may - but do 
not have to - distinguish between pre-consumer and post-consumer 
materials. Where a marketer distinguishes between pre-consumer and 
post-consumer materials, it should have substantiation for any express 
or implied claim about the percentage of pre-consumer or post-consumer 
content in an item.
    (c) Marketers can make unqualified claims of recycled content if 
the entire product or package, excluding minor, incidental components, 
is made from recycled material. For items that are partially made of 
recycled material, the marketer should clearly and prominently qualify 
the claim to avoid deception about the amount or percentage, by weight, 
of recycled content in the finished product or package.
    (d) For products that contain used, reconditioned, or re-
manufactured components, the marketer should clearly and prominently 
qualify the recycled content claim to avoid deception about the nature 
of such components. No such qualification is necessary where it is 
clear to reasonable consumers from context that a product's recycled 
content consists of used, reconditioned, or re-manufactured components.

 Example 1: A manufacturer collects spilled raw material and scraps 
from the original manufacturing process. After a minimal amount of 
reprocessing, the manufacturer combines the spills and scraps with 
virgin material for use in production of the same product. A recycled 
content claim is deceptive since the spills and scraps are normally 
reused by industry within the original manufacturing process and would 
not normally have entered the waste stream.

 Example 2: A manufacturer purchases material from a firm that collects 
discarded material from other manufacturers and resells it. All of the 
material was diverted from the solid waste stream and is not normally 
reused by industry within the original manufacturing process. The 
manufacturer includes the weight of this material in its calculations 
of the recycled content of its products. It would not be deceptive for 
the manufacturer to advertise the amount of recycled content in its 
product because, absent the purchase and reuse of this material, it 
would have entered the solid waste stream.

 Example 3: Fifty percent (50%) of a greeting card's fiber weight is

[[Page 63606]]

composed from paper that was diverted from the solid waste stream. Of 
this material, 30% is post-consumer and 20% is pre-consumer. It would 
not be deceptive if the marketer claimed that the card either 
``contains 50% recycled fiber'' or ``contains 50% total recycled fiber, 
including 30% post-consumer fiber.''

 Example 4: A paperboard package with 20% recycled fiber by weight is 
labeled ``20% post-consumer recycled fiber.'' The recycled content was 
composed of overrun newspaper stock never sold to customers. Because 
the newspapers never reached consumers, the claim is deceptive.

 Example 5: A product in a multi-component package, such as a 
paperboard box in a shrink-wrapped plastic cover, indicates that it has 
recycled packaging. The paperboard box is made entirely of recycled 
material, but the plastic cover is not. The claim is deceptive because, 
without qualification, it suggests that both components are recycled. A 
claim limited to the paperboard box would not be deceptive.

 Example 6: A manufacturer makes a package from laminated layers of 
foil, plastic, and paper, although the layers are indistinguishable to 
consumers. The label claims that ``one of the three layers of this 
package is made of recycled plastic.'' The plastic layer is made 
entirely of recycled plastic. The claim is not deceptive, provided the 
recycled plastic layer constitutes a significant component of the 
entire package.

 Example 7: A frozen dinner package is composed of a plastic tray 
inside a cardboard box. It states ``package made from 30% recycled 
material.'' Each packaging component is one-half the weight of the 
total package. The box is 20% recycled content by weight, while the 
plastic tray is 40% recycled content by weight. The claim is not 
deceptive, since the average amount of recycled material is 30%.

 Example 8: A manufacturer labels a paper greeting card ``50% recycled 
fiber.'' The manufacturer purchases paper stock from several sources, 
and the amount of recycled fiber in the stock provided by each source 
varies. If the 50% figure is based on the annual weighted average of 
recycled material purchased from the sources after accounting for fiber 
loss during the production process, the claim is not deceptive.

 Example 9: A packaged food product is labeled with a three-chasing-
arrows symbol (a M[ouml]bius loop) without explanation. By itself, the 
symbol likely conveys that the packaging is both recyclable and made 
entirely from recycled material. Unless the marketer has substantiation 
for both messages, the claim should be qualified. The claim may need to 
be further qualified, to the extent necessary, to disclose the limited 
availability of recycling programs and/or the percentage of recycled 
content used to make the package.

 Example 10: In an office supply catalog, a manufacturer advertises its 
printer toner cartridges ``65% recycled.'' The cartridges contain 25% 
recycled raw materials and 40% reconditioned parts. The claim is 
deceptive because reasonable consumers likely would not know or expect 
that a cartridge's recycled content consists of reconditioned parts. It 
would not be deceptive if the manufacturer claimed ``65% recycled 
content; including 40% from reconditioned parts.''

 Example 11: A store sells both new and used sporting goods. One of the 
items for sale in the store is a baseball helmet that, although used, 
is no different in appearance than a brand new item. The helmet bears 
an unqualified ``Recycled'' label. This claim is deceptive because 
reasonable consumers likely would believe that the helmet is made of 
recycled raw materials, when it is, in fact, a used item. An acceptable 
claim would bear a disclosure clearly and prominently stating that the 
helmet is used.

 Example 12: An automotive dealer recovers a serviceable engine from a 
wrecked vehicle. Without repairing, rebuilding, re-manufacturing, or in 
any way altering the engine or its components, the dealer attaches a 
``Recycled'' label to the engine, and offers it for sale in its used 
auto parts store. In this situation, an unqualified recycled content 
claim likely is not deceptive because reasonable consumers likely would 
understand that the engine is used and has not undergone any 
rebuilding.

 Example 13: An automobile parts dealer purchases a transmission that 
has been recovered from a junked vehicle. Eighty-five percent of the 
transmission, by weight, was rebuilt and 15% constitutes new materials. 
After rebuilding\5\ the transmission in accordance with industry 
practices, the dealer packages it for resale in a box labeled ``Rebuilt 
Transmission,'' or ``Rebuilt Transmission (85% recycled content from 
rebuilt parts),'' or ``Recycled Transmission (85% recycled content from 
rebuilt parts).'' These claims are not deceptive.
---------------------------------------------------------------------------

    \5\ The term ``rebuilding'' means that the dealer dismantled and 
reconstructed the transmission as necessary, cleaned all of its 
internal and external parts and eliminated rust and corrosion, 
restored all impaired, defective or substantially worn parts to a 
sound condition (or replaced them if necessary), and performed any 
operations required to put the transmission in sound working 
condition.
---------------------------------------------------------------------------


Sec.  260.13  Refillable claims.

    It is deceptive to misrepresent, directly or by implication, that a 
package is refillable. A marketer should not make an unqualified 
refillable claim unless the marketer provides the means for refilling 
the package. The marketer may either provide a system for the 
collection and refill of the package, or offer for sale a product that 
consumers can purchase to refill the original package.

 Example 1: A container is labeled ``refillable three times.'' The 
manufacturer has the capability to refill returned containers and can 
show that the container will withstand being refilled at least three 
times. The manufacturer, however, has established no collection 
program. The unqualified claim is deceptive because there is no means 
to return the container to the manufacturer for refill.

 Example 2: A small bottle of fabric softener states that it is in a 
``handy refillable container.'' In the same market area, the 
manufacturer also sells a large-sized bottle that consumers use to 
refill the smaller bottles. The claim is not deceptive because there is 
a reasonable means for the consumer to refill the smaller container.


Sec.  260.14  Renewable energy claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made with renewable energy or that a 
service uses renewable energy. Marketers should not make unqualified 
renewable energy claims, directly or by implication, if power derived 
from fossil fuels is used to manufacture any part of the advertised 
item or is used to power any part of the advertised service.
    (b) Research suggests that reasonable consumers may interpret 
renewable energy claims differently than marketers may intend. Unless 
marketers have substantiation for all their express and reasonably 
implied claims, they should

[[Page 63607]]

clearly and prominently qualify their renewable energy claims by 
specifying the source of the renewable energy (e.g., wind or solar 
energy).
    (c) It is deceptive to make an unqualified ``made with renewable 
energy'' claim unless all or virtually all of the significant 
manufacturing processes involved in making the product or package are 
powered with renewable energy or conventional energy offset by 
renewable energy certificates.
    (d) If a marketer generates renewable electricity but sells 
renewable energy certificates for all of that electricity, it would be 
deceptive for the marketer to represent, directly or by implication, 
that it uses renewable energy.

 Example 1: A marketer advertises its clothing line as ``made with wind 
power.'' The marketer buys renewable energy certificates to match only 
50% of the energy it uses. The marketer's claim is deceptive because 
reasonable consumers likely interpret the claim to mean that the power 
was composed entirely of renewable energy. If the marketer stated ``we 
purchase wind energy for half of our manufacturing facilities,'' the 
claim would not be deceptive.

 Example 2: A company places solar panels on its store roof to generate 
power and advertises that its store is ``100% solar-powered.'' The 
company, however, sells renewable energy certificates based on the 
renewable attributes of all the power it generates. Even if the company 
uses the electricity generated by the solar panels, it has, by selling 
renewable energy certificates, transferred the right to characterize 
that electricity as renewable. The company's claim is therefore 
deceptive. It also would be deceptive for this company to advertise 
that it ``hosts a renewable power facility'' because reasonable 
consumers likely would interpret this claim to mean that the company 
uses renewable energy.


Sec.  260.15  Renewable materials claims.

    (a) It is deceptive to misrepresent, directly or by implication, 
that a product or package is made with renewable materials.
    (b) Research suggests that reasonable consumers may interpret 
renewable materials claims differently than marketers may intend. For 
example, reasonable consumers may believe an item advertised as being 
``made with renewable materials'' is made with recycled content, 
recyclable, and biodegradable. Unless marketers have substantiation for 
all their express and reasonably implied claims, they should clearly 
and prominently qualify their renewable materials claims by specifying 
the material used, how the material is sourced, and why the material is 
renewable.
    (c) It is deceptive to make an unqualified ``made with renewable 
materials'' claim unless the product or package (excluding minor, 
incidental components) is made entirely with renewable materials.

 Example 1: A marketer makes the unqualified claim that its flooring is 
``made with renewable materials.'' Reasonable consumers likely 
interpret this claim to mean that the flooring also is made with 
recycled content, recyclable, and biodegradable. Unless the marketer 
has substantiation for these implied claims, the unqualified ``made 
with renewable materials'' claim is deceptive. The marketer could 
qualify the claim by stating, clearly and prominently, ``Our flooring 
is made from 100% bamboo, a fast-growing plant, which we cultivate at 
the same rate, or faster, than we use it.''

 Example 2: A marketer's packaging states that ``Our packaging is made 
from 50% plant-based renewable materials. Because we turn fast-growing 
plants into bio-plastics, only half of our product is made from 
petroleum-based materials.'' If substantiated, this claim is unlikely 
to be deceptive.

 Example 3: Through testing, a marketer can establish that its product 
is composed entirely of biological material. It markets its product as 
``made with 100% renewable materials.'' This claim, without further 
explanation, likely conveys that the product has other environmental 
benefits, including that it is recyclable, made with recycled content, 
or biodegradable. If the marketer cannot substantiate these messages, 
the claim would be deceptive.


Sec.  260.16  Source reduction claims.

    It is deceptive to misrepresent, directly or by implication, that a 
product or package has been reduced or is lower in weight, volume, or 
toxicity. Marketers should clearly and prominently qualify source 
reduction claims to the extent necessary to avoid deception about the 
amount of the source reduction and the basis for any comparison.

 Example 1: An advertiser claims that disposal of its product generates 
``10% less waste.'' Because this claim could be a comparison to the 
advertiser's immediately preceding product or to its competitors' 
products, the advertiser should have substantiation for both 
interpretations. Otherwise, the advertiser should clarify which 
comparison it intends and have substantiation for that comparison. A 
claim of ``10% less waste than our previous product'' would not be 
deceptive if the advertiser has substantiation that shows that the 
current product's disposal contributes 10% less waste by weight or 
volume to the solid waste stream when compared with the immediately 
preceding version of the product.

    By direction of the Commission.

Donald S. Clark
Secretary
[FR Doc. 2010-25000 Filed 10-14-10; 8:45 am]
BILLING CODE 6750-01-S