During the last few decades, consumers in the United States have shown a significant interest in purchasing consumer products and packaging that appear to be beneficial—or at least not harmful—to the natural environment. In response to consumers' willingness to pay a premium for these products, manufacturers and others have increasingly touted the positive environmental attributes of their products in marketing materials, such as in advertising or on product labels. These environmental marketing claims may be self-declared by manufacturers or made by a government or third party through a certified "seal of approval" or "environmental label" awarded to products that meet certain environmental criteria. Some Members of Congress and commentators have argued that consumers may have difficulty verifying claims made about the environmental attributes of a particular product, and thus that environmental marketing messages have the potential to deceive consumers. According to these arguments, misleading claims may lead consumers to purchase products that lack the advertised environmental benefits or cause consumers to become indifferent to the claims. In addition, some commentators have argued that the prevalence of misleading claims in the marketplace could potentially discourage companies from competing to produce more environmentally beneficial products. This report examines the Federal Trade Commission's (FTC's) role in regulating environmental marketing claims under the Federal Trade Commission Act (FTC Act) and other federal laws. It begins with an overview of the FTC's enforcement powers under the FTC Act, including their potential extraterritorial application to unfair or deceptive claims made by foreign entities outside of the United States' territorial jurisdiction (e.g., labels on products that are imported into the United States). It then examines how the FTC has exercised its powers under the act and other laws in the environmental marketing context. The report concludes by considering legal issues potentially implicated by regulating environmental marketing claims, including questions involving the First Amendment, international trade law, and federal preemption of state law. This report does not examine the role that other federal agencies may play in regulating or monitoring the use of environmental marketing claims. It also does not consider the possible use of the Lanham Act to bring a private cause of action against an entity that makes a false or deceptive environmental marketing claim. Finally, it does not address "private industry self-regulation" of claims by the National Advertising Division (NAD) administered by the Council of Better Business Bureaus, which issues nonbinding decisions in alternative dispute resolution proceedings regarding advertising claims. The FTC derives its general consumer protection powers from Section 5 of the FTC Act. That section declares it unlawful for certain "persons, partnerships, or corporations" to engage in "unfair or deceptive acts or practices in or affecting commerce." The FTC Act's definition of "commerce" encompasses both domestic commerce among the states, U.S. territories, and the District of Columbia, as well as commerce with foreign nations. Under the FTC Act, the commission has authority to promulgate or issue trade regulation rules, interpretive rules, and policy statements, and to investigate certain trade practices. The FTC may enforce the act using administrative or judicial processes. There is no private right of action in the FTC Act. The commission's powers under the FTC Act are summarized below. Although a rule addressing a particular unfair or deceptive act or practice does not have to exist in order for the FTC to bring an enforcement action under Section 5 of the FTC Act, Section 18 of the act authorizes the commission to promulgate trade regulation rules, interpretive rules, and policy statements addressing unfair or deceptive acts or practices in or affecting commerce. When the commission promulgates a trade regulation rule under the FTC Act, the agency must follow the procedures outlined in the FTC Act and the Administrative Procedure Act (APA) (5 U.S.C. §553). In addition, promulgation (and in certain cases, amendment) of trade regulation rules requires the commission to publish a regulatory analysis. Trade regulation rules are subject to judicial review, and entities may petition the FTC for exemptions from them. In addition to granting the FTC general rulemaking powers, the FTC Act authorizes the commission to investigate certain trade practices, including foreign practices. The FTC may require persons to submit reports or answers to questions; make the submitted information publicly available (except for confidential or privileged information); and share the obtained information with federal, state, and foreign law enforcement agencies under certain conditions. This section discusses the general administrative and judicial processes that the FTC may use to enforce the FTC Act. The commission may bring an administrative complaint against an entity subject to its jurisdiction when the agency has "reason to believe" that the entity has violated the act. After notice and an opportunity for a hearing, the commission may issue an order instructing the entity to cease and desist from acts or practices that violate the act. If the entity subsequently violates an order that is in effect after it has become final, the United States may seek civil penalties (generally, up to $16,000 per violation), injunctions, and other equitable relief in federal district court. Often, however, respondents opt to settle with the FTC, and the parties enter into an agreement containing a consent order in which the respondent does not admit liability; waives judicial review of the order; and agrees not to engage in the allegedly unfair or deceptive acts or practices in the future. Depending on the circumstances, the FTC Act may provide one or more avenues for the FTC or Attorney General to seek judicial relief when an entity subject to FTC jurisdiction has violated, or is about to violate, the FTC Act. As described below, potential forms of relief include injunctive relief, civil penalties, and consumer redress (e.g., refunds). However, the FTC and defendants often settle these cases prior to trial. Section 13(b) of the FTC Act authorizes the commission to seek preliminary and permanent prohibitive injunctive relief in the proper federal district court in cases in which the commission has "reason to believe" that an entity subject to its jurisdiction is violating or is about to violate a provision of law enforced by the FTC, provided that such relief would be in the public interest. Several federal courts of appeals have held that Section 13(b)'s authorization of injunctive relief allows a federal court to exercise the full scope of its inherent equitable powers, permitting the court to order other equitable relief such as monetary consumer redress. The FTC may also bring a complaint in federal district court seeking imposition of a civil penalty (generally, up to $16,000 per violation) against an entity that knowingly violates a rule (not an interpretive rule) under the FTC Act respecting unfair or deceptive acts or practices. Moreover, the commission may bring an action seeking a civil penalty against an entity subject to FTC jurisdiction under the FTC Act that engages in an unfair or deceptive act or practice that was the subject of a prior final cease and desist order (not a consent order), regardless of whether that entity was originally subject to the order and provided that the entity had actual knowledge that its conduct was unlawful under Section 5(a)(1) of the FTC Act. Under Section 19 of the FTC Act, the commission may seek redress for consumers and others in state or federal court when an entity subject to its jurisdiction has violated (1) a trade regulation rule or (2) a final cease and desist order that applies to the entity, provided that a reasonable person would have known that the entity's violation was "dishonest or fraudulent." Available relief under this section includes "rescission or reformation of contracts, the refund of money or return of property, the payment of damages, and public notification" of the rule violation or unfair or deceptive act or practice, but Section 19(b) does not authorize "the imposition of any exemplary or punitive damages." The FTC frequently receives complaints from consumers about cross-border fraud, including allegations that a foreign business located outside of U.S. territory has engaged in unfair or deceptive acts or practices causing injury to consumers in the United States. It is possible that a foreign entity in a foreign country could make false or misleading environmental marketing claims that injure U.S. consumers. For example, a foreign manufacturer might affix deceptive labels to its products prior to their import into the United States. Partly in order to address cross-border fraud, Congress amended the FTC Act in 2006 to expand and clarify further the FTC's international enforcement authorities, allowing greater cooperation between the agency and foreign countries and specifically allowing extraterritorial application of the FTC Act by U.S. courts to certain conduct by foreign entities located in foreign countries. However, despite these amendments, the FTC may face several procedural hurdles in litigating cases against a foreign defendant who lacks a legal presence in the United States, including the challenges involved in serving process on foreign defendants in a foreign country; overcoming defendants' motions to dismiss for lack of personal jurisdiction or forum non conveniens ; engaging in discovery abroad; and obtaining recognition and enforcement of U.S. judgments by foreign courts. In addition to the commission's general investigative powers described above, the FTC may also assist certain foreign law enforcement agencies with investigations and enforcement actions involving potential violations of foreign consumer protection laws upon written request of the foreign agencies. The FTC may, with State Department approval, negotiate and enter into international agreements with foreign law enforcement agencies in certain circumstances for the purposes of receiving information and enforcement assistance from the agencies. Provisions of the FTC Act state that commission attorneys may assist the Attorney General in foreign litigation in which the FTC has an interest—and that the FTC may use appropriated funds to reimburse the Attorney General for retaining foreign counsel—with approval of the Attorney General. Complaints about cross-border fraud committed by foreign companies in foreign countries that injures U.S. consumers in the United States have raised questions about the extraterritorial application of the FTC Act to this conduct by U.S. courts. As noted above, the FTC Act defines "commerce" to include trade between the United States and foreign nations. Although federal courts of appeals had previously disagreed about whether the FTC Act could apply to activity outside of the territorial boundaries of the United States, Congress explicitly addressed the issue in legislation in 2006. Amendments to the FTC Act in the Undertaking Spam, Spyware, and Fraud Enforcement with Enforcers Beyond Borders Act of 2006 (U.S. SAFE WEB Act) provide that the FTC may use its enforcement powers to seek remedies for unfair or deceptive acts or practices that "(i) cause or are likely to cause reasonably foreseeable injury within the United States; or (ii) involve material conduct occurring within the United States." This amendment appears to demonstrate Congress's intent that the FTC Act apply to conduct by foreign companies that occurs outside of the United States but has (or is likely to have) certain effects on U.S. consumers, overcoming the statutory canon of construction applied by U.S. courts that there is a general presumption against extraterritoriality. Even prior to the U.S. SAFE WEB Act amendments, the FTC had brought enforcement actions in federal district court against foreign defendants whose conduct in a foreign country allegedly caused injury to consumers in the United States. However, the FTC may face procedural challenges that make civil litigation in a U.S. court against foreign entities with no legal presence in the United States time-consuming, expensive, or impossible, including challenges involved in serving process on foreign defendants in a foreign country; overcoming defendants' motions to dismiss for lack of personal jurisdiction or forum non conveniens ; engaging in discovery abroad; and obtaining recognition and enforcement of U.S. judgments by foreign courts. The FTC's enforcement of Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce, is central to the agency's role in regulating environmental marketing claims. To explain to businesses and the public how the FTC interprets Section 5 in determining which environmental marketing claims are unfair or deceptive, the agency has issued nonbinding Guides for the Use of Environmental Marketing Claims. Because these "Green Guides" are administrative interpretations of law, the FTC cannot bring an enforcement action alleging a violation of them per se , but must find that the practice at issue is unlawful under Section 5 of the FTC Act or other applicable law. In addition to enforcement efforts directly under Section 5 of the FTC Act, the FTC also enforces various other laws passed by Congress aimed at assisting consumers in making meaningful comparisons regarding products' environmental attributes. Most of these laws state that violators are subject to FTC enforcement actions under Section 5 of the FTC Act. As noted above, Section 5 of the FTC Act prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC's Guides for the Use of Environmental Marketing Claims seek to assist businesses and the public in making lawful environmental marketing claims. The "Green Guides" explain how the FTC believes a consumer would interpret certain terms or symbols that appear in claims made about products, packaging, or services. Building upon existing agency policy statements, such as those regarding deception and advertising substantiation, the guides provide general principles for environmental marketing regarding claim qualification; overstatement of environmental attributes or benefits; substantiation of comparisons between products; and unqualified general environmental benefit claims. The guides frequently use examples to illustrate these principles. The Green Guides also provide guidance to entities making specific environmental marketing claims. New claims addressed by the guides in the 2012 revision include those pertaining to carbon offsets; certifications and seals of approval by independent third parties; "free-of" and "non-toxic" claims; and claims that a product is made with renewable energy or materials. Other claims addressed in the guides include compostable claims; degradable claims; ozone-safe and ozone-friendly claims; recyclable claims; recycled content claims; refillable claims; and source reduction claims. The guides do not include specific guidance for "organic," "natural," or "sustainable" claims. The Green Guides are not legally binding FTC rules. They appear to be administrative interpretations of law that inform businesses and the public of how the FTC interprets Section 5 of the FTC Act in the context of environmental marketing claims. Thus, the FTC cannot bring an enforcement action alleging a violation of the Green Guides per se , but must find that the practice at issue is unfair or deceptive under Section 5 of the FTC Act or other applicable law. Furthermore, the Green Guides do not preempt state laws, and compliance with state laws is not a safe harbor from FTC enforcement action. In addition to its general enforcement powers under Section 5, the FTC also enforces trade regulation rules it has promulgated under the FTC Act. These include rules regarding the labeling and advertising of home insulation and advertising of fuel economy for new automobiles. In addition to its enforcement efforts under Section 5 of the FTC Act, the FTC also enforces various other laws passed by Congress aimed at assisting consumers in making meaningful comparisons of the environmental attributes of different products. These laws, which could be construed as regulating environmental marketing claims, include the following: The Energy Policy and Conservation Act of 1975 (EPCA), as amended, which directed the FTC to promulgate labeling rules concerning the energy and water use of certain covered consumer products in consultation with the Department of Energy (DOE). EnergyGuide labels generally must show, among other things, the "estimated annual operating cost of such product," as well as the "range of estimated annual operating costs for covered products [of the type] to which the rule applies." EPCA also directed the FTC to promulgate rules regarding the testing and labeling of recycled oil. The Dolphin Protection Consumer Information Act of 1990 (DPCIA), which, among other things, makes it a violation of Section 5 of the FTC Act for any producer, importer, exporter, distributor, or seller of any "tuna product" that is "exported from or offered for sale in the United States" to misrepresent that the product is "dolphin safe" or otherwise falsely suggest that the tuna in the product "were harvested using a method of fishing that is not harmful to dolphins" if the tuna were harvested in a certain manner outlined in the statute. The Energy Policy Act of 1992, which directed the FTC, in consultation with other federal agencies, to establish "uniform labeling requirements" that provide the costs and benefits of alternative fuels and alternative-fueled vehicles to assist consumers in their purchasing decisions. The Petroleum Marketing Practices Act (PMPA), as amended by the Energy Policy Act of 1992, which, among other things, regulates the determination, certification, disclosure, and display by various parties in the fuel supply chain of the "automotive fuel rating" (e.g., "octane rating") of motor vehicle fuels, and requires manufacturers to represent properly the automotive fuel rating requirements of new motor vehicles. The Energy Independence and Security Act of 2007, which includes provisions regarding the labeling of retail diesel fuel pumps with, in general, "the percent of biomass-based diesel or biodiesel that is contained in the biomass-based diesel blend or biodiesel blend that is offered for sale." To enforce Section 5 of the FTC Act and trade regulation rules promulgated thereunder in the environmental marketing context, the FTC (or Attorney General) has brought administrative or judicial complaints against entities subject to its jurisdiction. These complaints generally allege that the entity has violated the act, a regulation, or a prior commission order by engaging in unfair or deceptive environmental marketing practices. As described below, such allegations include that an entity, in connection with advertising or selling a product, has made express or implied misrepresentations; failed to substantiate claims; or made deceptive omissions of material fact. Examples of environmental marketing claims alleged to violate Section 5 of the FTC Act include claims that a product or its packaging is made of or contains post-consumer recycled content; recyclable by "a substantial majority of consumers or communities where the item is sold"; degradable, biodegradable, or photodegradable; free of volatile organic compounds or chemicals; certified by an independent third party as environmentally beneficial according to objective standards; manufactured using an environmentally friendly process; likely to result in a certain amount of energy savings; generally beneficial to the environment; free of chlorofluorocarbons; or "ozone friendly." The commission has also brought enforcement actions in which it has alleged a violation of Section 5 more specifically tied to a particular product. These include allegations that an entity has misrepresented the light output and lifetime of LED lamps; that fuel or motor oil additives will increase fuel economy and lower toxic emissions; that pesticides are "practically nontoxic"; or that coffee filters are manufactured without chlorine. In some cases, the FTC or Attorney General has alleged that respondents violated trade regulation rules enforced by the commission. For example, it has been alleged that respondents violated the Textile Fiber Products Identification Act and its implementing regulations by misrepresenting that its textile products contain "bamboo"; or the rule concerning the Labeling and Advertising of Home Insulation ("R-value Rule") by misrepresenting home insulation's resistance to heat flow. In many cases, an entity and the FTC have agreed voluntarily to a consent order or stipulated court order settling a case. These settlements typically require an entity to refrain from making (or providing others with the means of making) future express or implied misrepresentations that a product or its packaging provides a specific or general environmental benefit, at least not without proper qualification. The entity must also generally rely on "competent and reliable evidence" in order to substantiate any representations that it makes. The orders typically contain language stating that the respondent does not admit liability but will comply with certain record-keeping requirements; disseminate the order to current and future personnel; notify the commission when major events affecting the entity (e.g. the dissolution of a corporation) might affect its compliance obligations; and submit a compliance report. A consent order may contain language providing that it will terminate on a future date. Some commentators have suggested that certain environmental marketing messages have the potential to deceive consumers, and that the prevalence of such messages in the marketplace may discourage companies from competing to create more environmentally beneficial products. Environmental marketing claims may be self-declared by manufacturers in advertising or on product labels, or made by a government or third party through a certified "seal of approval" or "environmental label" awarded to a product that meets certain environmental criteria. These claims may concern a single environmental attribute or relate to the environmental impacts of a product during all or part of its life cycle, such as the effect on the environment of the product's manufacture, distribution, use, or disposal. Currently, federal regulation of environmental marketing claims consists primarily of the FTC's case-by-case enforcement approach under Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in commerce. Through the Green Guides, the commission has provided nonbinding guidelines explaining how it might enforce Section 5 in the environmental marketing context. The FTC and other federal agencies also enforce federal laws and regulations that address specific types of environmental claims such as "dolphin-safe" or "organic" claims. The federal government has also established voluntary labeling programs such as Energy Star that allow manufacturers to affix a label to a product if a third party certifies that the product has met environmental criteria set by federal agencies. Finally, in some contexts, the federal government has required manufacturers to disclose certain information about their products in marketing materials, including on labels. While the FTC's Green Guides and private voluntary standards, such as the International Organization for Standardization (ISO) 14020 series of standards for environmental labels and declarations, to protect consumers currently shape many environmental marketing claims, environmental marketing claims may also be regulated by, among other things: (1) enacting a government standard to set a floor for regulation and allowing private voluntary standards to provide stricter requirements or (2) codifying a private voluntary labeling and marketing standard into law or using such a standard as a basis for a law. For instance, Congress could compel manufacturers to disclose certain environmental attributes of a product or its packaging, as it has done with the EnergyGuide label. In addition, an existing voluntary environmental labeling program, such as the Energy Star program, could be expanded to cover more product categories and attributes. Under the Energy Star program, the federal government sets specifications that products must meet to qualify for a government-owned label; licenses third parties that determine whether products conform with these specifications; and monitors use of the label to ensure it remains meaningful to consumers. This section examines legal issues potentially implicated by these various approaches to federal regulation of environmental marketing claims, including issues involving the First Amendment, international trade law, and preemption of state law. Challenges related to the First Amendment right to free speech may arise from environmental marketing standards. The First Amendment restricts the government's ability to constrain speech; however, some types of speech may be restricted to a greater extent than others. This section discusses the tests a reviewing court may apply in a First Amendment challenge to different hypothetical legislative schemes regulating environmental claims in advertisements and on product labels. Such legislation could regulate how manufacturers or sellers make certain claims about their products in advertisements or on labels. For example, standards governing the use of terms such as "recyclable" or "biodegradable" may raise questions about the constitutional limits of regulating commercial speech. Requiring manufacturers to disclose certain information relating to the environmental characteristics of their products in advertisements and labels may raise questions about the constitutionality of legislation that compels speech. The Supreme Court has held that the Constitution affords less protection to commercial speech than other constitutionally safeguarded forms of expression. Commercial speech is "speech that proposes a commercial transaction." The Court has further noted that the combination of speech in an advertising format, that references a specific product, and for which the speaker has an underlying economic motivation is "strong support" for characterizing such speech as commercial speech. Commercial speech is subject to a more relaxed level of scrutiny, often described as intermediate scrutiny, than other forms of protected speech. Central Hudson Gas and Electric Corporation v. Public Service Commission of New York provides the four-part test used to analyze whether a regulation of commercial speech is permissible under the First Amendment. The first prong of the test examines whether the speech at issue is protected. For commercial speech to be protected, it must at least concern a lawful activity and not be misleading. The government has authority to ban commercial messages which are "more likely to deceive the public than to inform it" without running afoul of the First Amendment. Second, there must be a substantial government interest behind the regulation. Third, the regulation must "directly advance" that substantial interest. The Court has noted that "in the commercial context, the speech-restrictive means chosen [must] provide more than 'ineffective or remote support' for a legitimate governmental policy goal." Finally, the restriction must be no more extensive than necessary to further the government interest. This fourth prong was further clarified by the Court in a case decided nine years after Central Hudson . The Court explained in Board of Trustees of the State University of New York v. Fox that the fourth prong did not amount to a least restrictive means requirement, but rather necessitated a less rigorous test. The fit between the regulation and the interest need not be perfect, but simply reasonable. While restrictions on commercial speech are subject to intermediate scrutiny, if a restriction applies where commercial and noncommercial speech are inseparable, strict scrutiny analysis is required. How is this commercial speech test applied in the context of restrictions on speech relating to environmental marketing? A 1994 decision from the U.S. Court of Appeals for the Ninth Circuit provides a sample case for a First Amendment challenge to environmental marketing restrictions imposed at the state level. In 1990, California adopted a law prohibiting a manufacturer or distributor of consumer goods from representing their products as "ozone friendly," "biodegradable," "photodegradable," "recyclable," or "recycled" unless the products satisfied the statutory definition of each term. The law was enacted following the efforts of an interstate task force, which found that there were disparities in the way these terms were used, and was concerned that the resulting confusion "creat[ed] a fertile ground for abusive business practices." In Association of National Advertisers, et al. v. Lungren , several trade associations challenged the law as impermissibly restricting commercial and noncommercial speech. The court began by addressing the plaintiffs' claim that the law regulated not just commercial speech but also noncommercial speech. The court rejected this argument, concluding that by the statute's own terms, the only speech being restricted were claims about specific consumer goods in advertisements and product labels. Therefore, the speech met the three criteria used by the Supreme Court to find evidence of commercial speech: it was in an advertising format, it referenced a specific product, and the speaker had an underlying economic motive. Additionally, the plaintiffs failed to provide any examples in which "political, editorial, or otherwise non-commercial representation[s]" would fall within the scope of the statute's restrictions. Since the court determined that the restriction applied to commercial speech, it was appropriate to analyze its constitutionality under the intermediate scrutiny test articulated in Central Hudson . First, the court determined that the speech at issue should be afforded First Amendment protection because it concerned a lawful activity and was not outright misleading. Instead, the court concluded that the use of terms like "recyclable" and "biodegradable" was only potentially misleading because whether a specific product bought by a specific consumer could be recycled or would biodegrade depends on factors such as access to recycling facilities and composting techniques in local landfills. The parties agreed that California satisfied the second prong of the Central Hudson test since it had a substantial interest in "ensuring truthful environmental advertising and encouraging recycling." Moving to the third prong of the Central Hudson test, the court determined that the statute directly advanced California's interests. The case's record had "abundant support" for the idea that environmental marketing increased consumer demand for environmentally friendly products. Without standardized terms, such marketing could present "potentially specious claims or ecological puffery[,]" leading to an increase in sales of "products with minimal environmental attributes." Therefore, it was reasonable to believe that uniform standards for environmental marketing terms would promote the state's interest in truthful advertising and consumer protection. Finally, the court addressed the fourth prong, which is described as "a more deferential 'far-less-restrictive means test' for commercial speech." The court determined that there were no less restrictive and more precise alternatives available that achieved California's stated interests. The two alternatives offered by the plaintiffs were rejected because they were less precise than the existing statute, and required more speech by forcing manufacturers to qualify or explain their use of nonconforming terms, respectively. Restrictions on commercial speech must withstand Central Hudson 's intermediate scrutiny in order to be upheld when faced with a First Amendment challenge. In accordance with this test, regulation of environmental marketing claims in advertisements and labels must be consistent with the government's interest in regulating such commercial speech, and must directly advance that interest. Legislation that compels commercial speech, such as requiring the disclosure of environmental characteristics on product advertisements and labels, may be subject to a different standard of review based on how a reviewing court interprets the nature of the compelled speech. In general, the required disclosure of "accurate, factual, commercial information does not offend the core First Amendment values of promoting efficient exchange of information or protecting individual liberty interests." Therefore, compelled commercial speech will be subject to a more relaxed level of scrutiny than the Central Hudson test if it satisfies the criteria established in a 1985 Supreme Court case, Zauderer v. Office of Disciplinary Counsel . First, the compelled disclosure must concern "purely factual and uncontroversial information." Second, the disclosure must be "reasonably related" to a legitimate government interest. While Zauderer addressed a disclosure requirement that was aimed at preventing deception to customers, later circuit courts have applied its reasoning to other governmental interests. Lastly, the disclosure requirement must not be "unjustified or unduly burdensome" such that it chills protected commercial speech. Consequently, environmental marketing requirements mandating the disclosure of purely factual and uncontroversial information would be governed by the "reasonable relationship" standard articulated in Zauderer . However, a heightened standard of scrutiny is likely to apply to laws that require manufacturers to espouse a particular opinion; perform ideological speech; or disclose nonpurely factual statements, which may for instance be designed to evoke a particular emotional response. Laws regulating environmental marketing claims made on product labels could potentially raise issues concerning the United States' trade obligations under the World Trade Organization agreements, specifically the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on Technical Barriers to Trade (TBT Agreement). The GATT generally prohibits WTO Members from enacting measures that discriminate against imported products in favor of like domestic products or like products from other countries unless an exception applies. However, WTO jurisprudence concerning labeling measures has focused on the TBT Agreement, which seeks to ensure that standards-related measures, including labeling requirements or standards, do not create unnecessary obstacles to international trade while at the same time allowing WTO Members to take actions necessary, for example, to protect human health and the environment. As a WTO Member, the United States has an obligation to comply with the disciplines of the TBT Agreement. If a WTO Member believes that an environmental labeling measure promulgated by the United States, one of its state or local governments, or a nongovernmental body within U.S. territory is not in compliance with the disciplines of the TBT Agreement, the Member may challenge the measure using procedures in the WTO agreements. Consultations and dispute settlement under the TBT Agreement are governed by the dispute settlement rules of the GATT and the Dispute Settlement Understanding. WTO Members have challenged one of the environmental marketing laws enforced by the FTC as inconsistent with U.S. obligations under the WTO agreements. As noted above, the Dolphin Protection Consumer Information Act of 1990 (DPCIA) regulates representations that a tuna product exported from, or offered for sale in, the United States is harvested in a manner that does not harm dolphins. In 2008, various WTO Members requested consultations with the United States with respect to the DPCIA, its implementing regulations, and a related federal court of appeals decision. In 2012, the Appellate Body found that the U.S. "dolphin-safe" labeling measure violated the TBT Agreement by discriminating against tuna products imported from Mexico. Subsequently, the United States modified its regulations implementing the DPCIA in an effort to bring them into conformity with the Appellate Body's ruling. However, in November 2013, Mexico requested the establishment of a compliance panel to determine whether the United States' changes to its regulations brought them into conformity with the United States' WTO obligations. According to the WTO's website, a compliance panel has been established but has not yet issued its final report to the parties. This section examines the United States' trade obligations under the TBT Agreement potentially implicated by a law or standard governing environmental marketing claims made on product labels. It analyzes when such a law would fall within the coverage of the TBT Agreement, and discusses potentially relevant trade obligations under the agreement pertaining to the preparation, adoption, and application of an environmental labeling measure that qualifies as a "technical regulation." If a WTO Member challenged a U.S. environmental labeling measure for consumer products as inconsistent with the TBT Agreement, an initial question that might arise is whether the labeling measure is a "technical regulation" or "standard" covered by the TBT Agreement. If a WTO panel were to find that a measure promulgated by the United States federal government meets one of these definitions, then the United States would have to comply with several trade obligations with respect to that measure, including obligations concerning nondiscrimination; trade-restrictiveness; transparency; and reliance on international standards as a basis for regulation. In addition, if a private standardizing body or state or local government within United States territory were to promulgate a labeling measure that qualified as a "standard," the United States would generally have to take reasonable measures to ensure that this entity complied with the Code of Good Practice for the Preparation, Adoption and Application of Standards in Annex 3 of the TBT Agreement. Because WTO jurisprudence under the TBT Agreement has focused almost exclusively on obligations related to "technical regulations," this section examines when an environmental labeling measure would potentially qualify as a "technical regulation," and discusses the obligations that the United States would have with respect to such a measure under the TBT Agreement. Criteria for marking or labeling products may fall within the definition of a "technical regulation" under Annex 1.1 to the TBT Agreement. According to the Appellate Body's interpretation of Annex 1.1, a technical regulation is a measure (1) that is applicable to an identifiable product or group of products, although the measure does not have to identify these products expressly; (2) that lays down product characteristics, including packaging, marking, or labeling requirements, in either positive or negative form "or their related processes and production methods"; and (3) with which compliance is mandatory. An environmental labeling measure seems likely to satisfy factor (1) because it would arguably apply to a group of products that share a particular characteristic regulated by the measure, such as "consumer products that claim to be biodegradable." Under factors (2) and (3), a measure stating that products must be labeled with certain information would appear to lay down mandatory product characteristics within the meaning of the TBT Agreement. In addition, WTO case law suggests that a measure permitting a product to carry a certain label only if the product possesses certain characteristics is a "technical regulation" that lays down mandatory product characteristics. In United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products , the Appellate Body held that a U.S. law, the Dolphin Protection Consumer Information Act (DPCIA), laid down product characteristics when the law provided that an entity would violate Section 5 of the FTC Act if the entity voluntarily labeled a tuna product as "dolphin-safe" when the product's harvesting methods failed to meet certain dolphin safety criteria. The Appellate Body emphasized that the DPCIA provided penalties for the voluntary use of the government-designed "dolphin-safe" label, as well as any other "dolphin safety" label or statement on a product when the product's harvesting methods did not meet certain criteria. Thus, when a measure subjects a company to government enforcement proceedings or penalties for voluntarily using a label on a product that possesses or lacks certain characteristics, the labeling measure could potentially constitute a "technical regulation" under the TBT Agreement. Some environmental labeling measures might regulate claims made on labels concerning product characteristics that are not physical characteristics. For example, some labeling measures might regulate claims addressing the environmental impacts of a product during all or part of its life cycle, such as the effect on the environment of the product's manufacture, distribution, use, or disposal. These characteristics of a product may be considered non-product-related processes and production methods (NPR PPMs). NPR PPMs are those processes and production methods that do not leave a trace in the final product. An example of an environmental labeling measure based on NPR PPMs is a law stating that a piece of furniture may carry a certain label only if it is made with "sustainably managed wood." It remains unclear whether the TBT Agreement applies to a measure that requires a product label to provide information regarding the product's NPR PPMs, or permits a product to carry a label concerning NPR PPMs only if the product's PPMs meet certain criteria. In a recent case not involving a labeling measure, the Appellate Body confirmed that the TBT Agreement may cover product-related PPMs, but declined to address the extent of the relationship that the PPM must have with the product in order for the TBT Agreement to apply. Commentators have noted that because of lingering ambiguity in the text of the TBT Agreement, it is unclear whether the agreement covers labeling of NPR PPMs. If outside the scope of the TBT Agreement, a U.S. labeling measure might be subject to the GATT, including Article I:1, which sets forth most-favored nation treatment obligations, or Article III:4, which contains national treatment obligations pertaining to a WTO Member's internal regulations, if there is sufficient government involvement in its formulation, adoption, or application. However, it is unclear whether these GATT provisions allow a WTO Member to treat an imported product less favorably than a domestic product (or product from another country) solely because the imported product's NPR PPMs differ from those of the domestic product in a way that the regulating Member deems undesirable. If a WTO panel were to determine that a labeling measure was inconsistent with the GATT, then the United States might raise defenses under one or more of the exceptions in GATT Article XX pertaining to protection of "human, animal, or plant life or health" or "conservation of exhaustible natural resources." It is important to note, however, that it is unclear to what extent the United States may assert these exceptions when the measure at issue seeks to protect solely those persons or resources outside of U.S. territory. If a WTO panel were to find that an environmental labeling measure was a "technical regulation" under the TBT Agreement, the United States would have WTO obligations pertaining to the preparation, adoption, and application of the measure, including obligations concerning nondiscrimination; trade-restrictiveness; transparency; and reliance on international standards as a basis for regulation. Under TBT Agreement Article 2.1, the United States has an obligation to ensure that a labeling measure that is a "technical regulation" does not treat imported products less favorably than like domestic products or like products imported from other countries. To decide whether products are "like," a panel generally seeks to determine whether a competitive relationship exists between the products by considering several factors. In the past, the Appellate Body has suggested that a product which presents greater health concerns might not be "like" a substitute safer product, at least insofar as these concerns "have an impact on the competitive relationship between and among the products" at issue. It is possible that a panel would extend this reasoning to imported products that present greater environmental concerns. Thus, it is possible that a U.S. environmental labeling measure could treat an imported WTO Member product less favorably than a domestic product or product from another country based on the fact that the domestic product (or product of another country) was better for the environment or health when compared to the imported WTO Member product that possessed the same physical characteristics. If a measure applies to "like products," then a panel would probably next consider whether the measure discriminates against the imported products by granting these products less favorable treatment than the like domestic products or products of another country. The Appellate Body has held that a measure grants an imported product less favorable treatment when it (1) modifies the conditions of competition to the detriment of the imported product as compared to the like domestic product or like product of another WTO Member; and (2) this detrimental impact "reflects discrimination" against the imported product. Because access to an environmental label may provide an advantage to a product in the marketplace, a WTO panel might determine that the de jure or de facto denial of access to the label for like imported products treats these products less favorably. For a complainant to establish a violation, it must demonstrate a genuine relationship between the labeling measure and the detrimental impact on competitive opportunities for the imported products. Such a relationship may exist, for example, when the government creates "incentives for market participants to behave in certain ways, and thereby treat[s] imported products less favorably." For instance, less favorable treatment may result from a labeling measure that "entails higher costs" for handling imported products than domestic products. A measure that is discriminatory may be consistent with the TBT if the discrimination stems from a legitimate regulatory distinction. To stem from such a distinction and avoid violating TBT Agreement Article 2.1, a labeling measure that appears to discriminate de facto against like imported products must be "even-handed." One example of a lack of evenhandedness is when "informational requirements imposed on upstream producers under [a measure] are disproportionate as compared to the level of information communicated to consumers through mandatory retail labels." Under Article 2.4 of the TBT Agreement, a WTO Member must use relevant international standards or parts thereof as a basis for their technical regulations except when the standards would not effectively or appropriately assist the Member in fulfilling its legitimate objectives. One international standard that could potentially serve as the basis for an environmental labeling measure is the International Organization for Standardization (ISO) 14020 series of standards for environmental labels and declarations. This standard would appear to meet the definition of "standard" in Annex 1.2 of the TBT Agreement, and the ISO would appear to qualify as an "international body" under Annex 1.4. For the United States to have an obligation to use a standard as a basis for regulation, the standard must be "relevant," which means that it deals with the same product as the domestic regulation and covers similar characteristics of that product, or at least regulates the same subject matter. Thus, a WTO panel's determination of relevance would likely involve a comparison between the U.S. labeling measure and the potentially relevant international standard. For an international standard to be "used as a basis" for a U.S. labeling measure, the measure need not conform to the standard in all respects; rather, the standard or its relevant parts must serve as the "principal constituent or fundamental principle" of the measure. In addition, the measure and standard cannot be contradictory. Notably, the United States would not have to use a relevant international standard as a basis for a labeling measure when that standard would not effectively or appropriately assist it in fulfilling the United States' legitimate objectives. WTO panels have suggested that an international standard may be ineffective or inappropriate at fulfilling the objective of providing consumers with information when the standard does not allow the Member to convey to consumers all of the critical information that the Member wants to provide. In order to ensure that technical regulations do not create unnecessary obstacles to international trade, Article 2.2 of the TBT Agreement states that technical regulations must not be "more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create." Objectives identified in the TBT Agreement or by the Appellate Body as "legitimate" that could be cited in support of an environmental labeling measure include "providing accurate and reliable information [to] protect consumers from being misled or misinformed," as well as the "protection of human health or safety, animal or plant life or health, or the environment." A panel evaluating whether a labeling measure is more trade-restrictive than necessary to fulfill such an objective would likely engage in a fact-specific examination of, among several other things, the degree to which the technical regulation as written and applied "actually contributes to the legitimate objective pursued by the Member." The Appellate Body has indicated that a measure may satisfy Article 2.2 even if it does not completely fulfill its legitimate objective. The TBT Agreement also contains provisions intended to increase the transparency of central government bodies' promulgation of mandatory technical regulations. If Congress (or a federal agency like the FTC) proposes a technical regulation that may have a significant effect on the trade of other Members in the absence of, or in deviation from, a relevant international standard, the agreement obligates the United States to notify interested parties in other Member countries and allow them to comment on the proposal. WTO Members must make adopted technical regulations available to interested parties in other Member countries. The TBT Agreement contains several additional obligations with respect to the preparation, adoption, and application of technical regulations by central government bodies. For example, Members have an ongoing obligation to reassess their technical regulations to ensure that circumstances or objectives still require them and that they are the least trade-restrictive means of addressing such circumstances or objectives. The agreement also states that Members should specify technical regulations based on product requirements in terms of performance rather than design or descriptive characteristics wherever appropriate. The agreement contains rules governing procedures for the assessment of conformity with standards and technical regulations by central government, local government, and nongovernmental bodies. It also addresses the provision of technical assistance and special and differential treatment to developing country WTO Members. The degree to which federal laws and regulations governing environmental marketing claims should expressly preempt state laws is unclear. Some states have laws that specifically regulate environmental marketing claims. For example, California requires any person who makes an environmental marketing claim in advertising, on a product's label, or on a product's container to maintain written records supporting the claim. The entity making the claim must furnish this information to the public upon request. California's law provides that conformance with the FTC's Green Guides may be used as a safe harbor from liability in a lawsuit or complaint. Other laws, such as Indiana's, provide a statutory list of definitions for terms such as "biodegradable" that are to be used in conjunction with the definitions found in the Green Guides. Scholars disagree about the extent to which a binding federal law on environmental marketing claims should preempt state laws. On the one hand, commentators argue, federal preemption could bring uniformity to varying state standards, making it less costly for manufacturers to market their products throughout the United States and making it easier for consumers to evaluate environmental claims. Such preemption could take various forms including federal preemption that allows states to retain "an active role in defining and enforcing" federal law on environmental marketing; permits states to make laws that exceed federally created minimum standards; or allows a federal agency to grant states waivers from preemption on a case-by-case basis. On the other hand, commentators note that courts have traditionally considered consumer protection to fall within the states' police powers. States could arguably tailor environmental marketing regulations to fit local conditions and concerns. In addition, without the assistance of states, the federal government may lack sufficient resources for vigorous enforcement efforts against entities making deceptive environmental marketing claims. State laws could supplement federal enforcement efforts. Some commentators have suggested that certain environmental marketing messages have the potential to deceive consumers, and that the prevalence of such messages in the marketplace may discourage companies from competing to create more environmentally beneficial products. Currently, federal regulation of environmental marketing claims consists primarily of the FTC's case-by-case enforcement approach under Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in commerce. The commission has provided nonbinding guidelines explaining how it might enforce Section 5 in the environmental marketing context. Federal regulation of environmental marketing claims potentially raises legal issues involving the First Amendment, international trade law, and preemption of state law. Legislation that regulates how manufacturers or sellers make certain claims about their products in advertisements or on labels may raise questions about the constitutional limits of regulating commercial speech. Requiring manufacturers to disclose certain information relating to the environmental characteristics of their products in advertisements and on labels may raise questions about the constitutionality of legislation that compels speech. In addition, a law regulating environmental marketing claims that appear on product labels could potentially raise issues concerning the United States' obligations under international trade law. For example, such measures could potentially be subject to the WTO TBT Agreement, which generally requires WTO Members preparing, adopting, and applying a measure to adhere to obligations concerning nondiscrimination; trade-restrictiveness; transparency; and reliance on international standards as a basis for regulation. However, the extent to which the TBT Agreement applies to measures that regulate claims made on labels that address so-called "non-product-related processes and production methods" (e.g., the amount of carbon dioxide emitted during manufacture of a product) is unclear. Another issue is the degree to which federal laws and regulations governing environmental marketing claims should expressly preempt state laws. On the one hand, commentators argue, federal preemption could bring uniformity to varying state standards, making it less costly for manufacturers to market their products throughout the United States and making it easier for consumers to evaluate environmental marketing claims. On the other hand, commentators note that courts have traditionally considered consumer protection to fall within the states' police powers. States could arguably tailor environmental marketing regulations to fit local conditions and concerns, and state laws could potentially supplement federal enforcement efforts.

Summary: During the last few decades, consumers in the United States have shown a significant interest in purchasing consumer products and packaging that appear to be beneficial—or at least not harmful—to the natural environment. In response to consumers' willingness to pay a premium for these products, manufacturers and others have increasingly touted the positive environmental attributes of their products in marketing materials, such as in advertising or on product labels. These environmental marketing claims may concern a single environmental attribute or relate to the environmental impacts of a product during all or part of its life cycle, such as the effect on the environment of the product's manufacture, distribution, use, or disposal. Some commentators have suggested that certain environmental marketing messages have the potential to deceive consumers, and that the prevalence of such messages in the marketplace may discourage companies from competing to create more environmentally beneficial products. Currently, federal regulation of environmental marketing claims consists primarily of the Federal Trade Commission's (FTC's) case-by-case enforcement approach under Section 5 of the Federal Trade Commission Act (FTC Act), which prohibits unfair or deceptive acts or practices in commerce. The commission has issued nonbinding guidelines that explain how it might enforce Section 5 in the environmental marketing context. The FTC and other federal agencies also enforce federal laws and regulations that address specific types of environmental claims such as "dolphin-safe" or "organic" claims. Finally, in some cases, the federal government has required manufacturers to disclose certain information about the environmental attributes of their products. The EnergyGuide labeling program administered by the FTC and Department of Energy (DOE) serves as one example. Federal regulation of environmental marketing claims raises certain legal issues including questions involving the First Amendment, international trade law, and federal preemption of state law. For example, legislation that regulates how manufacturers or sellers make certain claims about their products in advertisements or on labels may raise questions about the constitutional limits of regulating commercial speech. Requiring manufacturers to disclose certain information relating to the environmental characteristics of their products in advertisements and on labels may raise questions about the constitutionality of legislation that compels speech. In addition, laws regulating environmental marketing claims that appear on product labels could potentially raise issues concerning the United States' obligations under international trade law. For example, such measures could potentially be subject to the World Trade Organization (WTO) Agreement on Technical Barriers to Trade (TBT Agreement), which generally requires WTO Members preparing, adopting, and applying a measure to adhere to obligations concerning nondiscrimination; trade-restrictiveness; transparency; and reliance on international standards as a basis for regulation. However, the extent to which the TBT Agreement applies to measures that regulate claims made on labels that address so-called "non-product-related processes and production methods" (e.g., the amount of carbon dioxide emitted during manufacture of a product) is unclear. Another issue that might arise is the degree to which federal laws and regulations governing environmental marketing claims should expressly preempt state laws.