Green marketing: The urgent need for federal regulation

Penn State Environmental Law Review

Volumn 14, Issue 3, 2006, Pages 685-702

  Avallone, Lauren C ^a  

^a PENNSYLVANIA STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 33745712745     PISSN: 15463427     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Note

References (136)

1. C.F.R. § 260 (1998).
2. The guidelines were made pursuant to 15 U.S.C. § 45, which prohibits unfair methods of competition. The guidelines are to be applied specifically to environmental claims made in connection with sales or marketing of a product. They do no preempt state or federal law and do not have the force of administrative regulations.
3. The guides in this part represent administrative interpretations of laws administered by the Federal Trade Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. These guides specifically address the application of Section 5 of the FTC Act to environmental advertising and marketing practices. They provide the basis for voluntary compliance with such laws by members of industry. Conduct inconsistent with the positions articulated in these guides may result in corrective action by the Commission under Section 5 if, after investigation, the Commission has reason to believe that the behavior falls within the scope of conduct declared unlawful by the statue. Id. at § 260.1. The guides in this part represent administrative interpretations of laws administered by the Federal Trade Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. These guides specifically address the application of Section 5 of the FTC Act to environmental advertising and marketing practices. They provide the basis for voluntary compliance with such laws by members of industry. Conduct inconsistent with the positions articulated in these guides may result in corrective action by the Commission under Section 5 if, after investigation, the Commission has reason to believe that the behavior falls within the scope of conduct declared unlawful by the statue. at § 260.1
4. C.F.R. § 260.2(b) (1998). (a) These guides apply to environmental claims included in labeling, advertising, promotional materials and all other forms of marketing, whether asserted directly or by implication, through words, symbols, emblems, logos, depictions, product brand names, or through any other means, including marketing through digital or electronic means, such as the Internet or electronic mail. The guides apply to any claim about the environmental attributes of a product, package or service in connection with the sale, offering for sale, or marketing of such product, package or service for personal, family or household use, or for commercial, institutional or industrial use. (b) Because the guides are not legislative rules under Section 18 of the FTC Act, they are not themselves enforceable regulations, nor do they have the force and effect of law. The guides themselves do not preempt regulation of other federal agencies or of state and local bodies governing the use of environmental marketing claims. Compliance with federal, state or local law and regulations concerning such claims, however, will not necessarily preclude Commission law enforcement action under Section 5.
5. California Attorney Gen. et al., The Green Report: Findings and Preliminary Recommendations For Responsible Envtl. Advertising 4-6 (1990) [hereinafter The Green Report]. The ten states participating were California, Florida, Massachusetts, Minnesota, Missouri, New York, Texas, Utah, Washington, and Wisconsin. The Green Report specifically notes, that "by recommending a national regulatory scheme for environmental claims, the Task Force is not recommending that states be preempted from regulating the area. Indeed, the states would vigorously oppose any federal statute or regulation that would preempt states' rights in the area." This opposition to preemption is odd in that it conflicts with one of the stated reasons for enacting national legislation in the first place: preventing national retailers from having to comply with varying standards.
6. See also Environmental Advertisement Enforcement, FTC: WATCH (Wash. Regulatory Reporting Assoc., Washington, D.C.), July 29, 1991.
7. For discussions of the growing use of green claims, see Hearings on Environmental Marketing Issues Before the Federal Trade Comm'n 30-36 (1991) (statement of Hubert H. Humphrey, III, Attorney General of Minnesota).
8. The Green Report, supra note 3, at 4-6.
9. Green claims have also been called "environmental marketing," S. 615, 102d Cong., 1st Sess. § 3(4) (1991) (The Environmental Marketing Claims Act of 1991);
10. "green labeling," Barry Meier, It's Green and Growing Fast, But Is It Good for the Earth?, N.Y. Times, Apr. 21, 1990, Consumer's World section at 48;
11. and "environmental labeling," Jonathan Schorsch, It's Not Easy Being Green: Can Our Economy Come Clean?, Council On Econ. Priorities Res. Rep., Apr. 1990, at 1, 3.
12. For an extensive list of examples of green marketing claims, see Bristol Voss, The Green Marketplace, Sales & Marketing Mgmt., July 1991, at 74, 75-76.
13. Roger D. Wynne, Defining "Green": Toward Regulation of Environmental Marketing Claims, 24 U. Mich. J. L. Ref. 785, 787 (1991).
14. A basic example of a deceptive green claim is a label on a plastic trash bag claiming the bag is biodegradable. The bag may very well degrade within a reasonable amount of time if it is exposed to sunlight. But many, maybe even most, such trash bags will be deposited in landfills. Since these landfills lack the sunlight and microorganisms needed to efficiently degrade such plastics, degradation can take 25, 30, or possibly even 50 years. Thus, while the bag is readily "degradable" in theory, this kind of claim is almost certainly deceptive. See Mobil Oil Corp., 116 F.T.C. 113 (1993) (consent order) (challenging "biodegradable" and landfill benefit claims for Hefty plastic trash bags).
15. California Attorney Gen. et al., The Green Report II: Recommendations For Responsible Envtl. Advertising 1 (1991) [hereinafter Green Report II]. Some changes were made to the original recommendations in light of some criticism that the original recommendations were "untenable, unfair, and ill-advised." Tennessee joined the original ten states in the Green Report II.
16. Id.
17. Id.
18. Id.
19. Advertising and Unfair Competition: Federal and State Enforcement § IX (American Law Institute 2004). The Guides were revised in 1996 and 1998.
20. 16 C.F.R. § 260.1 (1998).
21. 16 C.F.R. § 260.2(a) (1998).
22. 16 C.F.R. § 260.2(b) (1998).
23. 15 U.S.C. § 45 (1994).
24. 16 C.F.R. § 260.5 (1998).
25. Section 5 of the FTC Act makes unlawful deceptive acts and practices in or affecting commerce. The Commission's criteria for determining whether an express or implied claim has been made are enunciated in the Commission's Policy Statement on Deception. In addition, any party making an express or implied claim that presents an objective assertion about the environmental attribute of a product, package or service must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim. A reasonable basis consists of competent and reliable evidence. In the context of environmental marketing claims, such substantiation will often require 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, using procedures generally accepted in the profession to yield accurate and reliable results. Further guidance on the reasonable basis standard is set forth in the Commission's 1983 Policy Statement on the Advertising Substantiation Doctrine. 49 FR 30999 (1984);
26. appended to Thompson Medical Co., 104 F.T.C. 648 (1984). The Commission has also taken action in a number of cases involving alleged deceptive or unsubstantiated environmental advertising claims. A current list of environmental marketing cases and/or copies of individual cases can be obtained by calling the FTC Consumer Response Center at (202) 326-2222.
27. David F. Welsh, Comment, Environmental Marketing and Federal Preemption of State Law: Eliminating the "Gray" Behind the "Green," 81 Cal. L. Rev. 991, 1006 (1993).
28. These include California, Indiana, Maine, Michigan, and Rhode Island. See Cal. Bus. & Prof. Code § 17580 (West 1997);
29. Ind. Code § 24-5-17-1 (1989);
30. Me. Rev. Stat. Ann. 38, § 2142 (West 2004);
31. Mich Comp. Laws Ann. § 445.903 (West 2002);
32. R.I. Gen. Laws § 6-13.3-1 (1993). A few states incorporate the FTC Guides into their own statutes that constitute violations of the state's Unfair Trade Practice Act while other states choose to use their statutes to define complex environmental terms which lead to inconsistent standards across the nation. Indiana and Rhode Island are definitional in nature. California has the most extensive regulations. The California statute regulates the commercial use of five environmental terms: "zone friendly," "biodegradable," "photodegradable," "recycled," and "recyclable." These terms may not be used to describe any consumer product unless the state's definition is met. Advertisers run the risk of criminal prosecution for violating the terms of this section. The statute does provide a safe harbor for advertisers: if the consumer product does not meet the definitions the state has set forth in section 17508.5, but instead conforms to the "definitions established in trade rules adopted by the Federal Trade Commission...," the representation will not run afoul of the statute. While the safe harbor provision allows for conformance with FTC "rules," the FTC has issued "guidelines" instead of "rules." The FTC guidelines therefore do not fall within the safe harbor provision. Two substantive differences set the Indiana statute apart from the California statute. First, the safe-harbor provision allowing qualifying language in the Indiana statute is broader. Whereas California exempts only representations conforming to the FTC rules, the Indiana statute exempts marketing practices that conform to either rules or guidelines set by the FTC. The second difference is that the Indiana statute provides for a private cause of action for anyone who suffers actual damages.
33. Peter J. Tarsney, Note, Regulation of Environmental Marketing: Reassessing the Supreme Court's Protection of Commercial Speech, 69 Notre Dame L. Rev. 533, 538 (1994).
34. These states include Maine, Michigan, and Rhode Island. All three states discourage deceptive advertising claims by reference to the FTC Guides.
35. Two such organizations are Green Seal and Scientific Certification Systems. Neither organization is certified by the Federal Government. They are both independently run organizations that claim to provide accurate information to consumers about green marketing. Green Seal describes themselves as "an independent, non-profit organization that strives to achieve a healthier and cleaner environment by identifying and promoting products and services that cause less toxic pollution and waste, conserve resources and habitats, and minimize global warming and ozone depletion. Green Seal has no financial interest in the products that it certifies or recommends in any manufacturer or company. Green Seal's evaluations are based on state-of-the-art science and information using internationally recognized methods and procedures. Thus, Green Seal provides credible, objective, and unbiased information whose only purpose is to direct the purchaser to environmentally responsible products and services," http://www.greenseal.org. Scientific Certification Systems describes itself as certifying "a wide variety of claims related to environmental achievement in product manufacturing. Specific product attributes, such as recycled content and biodegradability, are certified under the Environmental Claims Certification program. SCS also certifies Environmentally Preferable Products, which are products or services that can demonstrate a reduced or lessened environmental impact when compared to other products performing the same function. SCS's program is consistent with guidance established by the federal government for environmentally preferable purchasing, and established practices for Life Cycle Impact Assessment," http://www.scscertified.com.
36. 16 C.F.R. § 260.1; § 260.2(b)(1998).
37. 16 C.F.R. § 260.3 (1998). The guides are composed of general principles and specific guidance on the use of environmental claims. These general principles and specific guidance are followed by examples that generally address a single deception concern. A given claim may raise issues that are addressed under more than one example and in more than one section of the guides. In many of the examples, one or more options are presented for qualifying a claim. These options are intended to provide a "safe harbor" for marketers who want certainty about how to make environmental claims. They do not represent the only permissible approaches to qualifying a claim. The examples do not illustrate all possible acceptable claims or disclosures that would be permissible under Section 5. In addition, some of the illustrative disclosures may be appropriate for use on labels but not in print or broadcast advertisements and vice versa. In some instances, the guides indicate within the example in what context or contexts a particular type of disclosure should be considered.
38. C.F.R. § 260.6 (1998). The section provides the following general guide: Overstatement of Environmental Attribute. An environmental marketing claim should not be presented in a manner that overstates the environmental attribute or benefit, expressly or by implication. Marketers should avoid implications of significant environmental benefits if the benefit is in fact negligible.
39. Id. § 260.6(c). The sub-section continues: Example 1: A package is labeled, "50% more recycled content than before." The manufacturer increased the recycled content of its package from 2 percent [sic] recycled material to 3 percent [sic] recycled material. Although the claim is technically true, it is likely to convey the false impression that the advertiser has increased significantly the use of recycled material.
40. Id. 16 C.F.R. § 260.7 (1998). The examples take various factual situations and interpret the situations in light of the guidelines.
41. Id. This allows manufacturers a chance to see how the guidelines operate in a substantive situation. For example: a) General Environmental Benefit Claims. It is deceptive to misrepresent, directly or by implication, that a product or package offers a general environmental benefit. Unqualified 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 or package has specific and far-reaching environmental benefits. As explained in the Commission's Ad Substantiation Statement, every express and material, implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product must be substantiated. Unless this substantiation duty can be met, broad environmental claims should either be avoided or qualified, as necessary, to prevent deception about the specific nature of the environmental benefit being asserted.
42. Id. The following example relates to the general guide stated above: Example 1: A brand name like "Eco-Safe" would be deceptive if, in the context of the product so named, it leads consumers to believe that the product has environmental benefits which cannot be substantiated by the manufacturer. The claim would not be deceptive if "Eco-Safe" were followed by clear and prominent qualifying language limiting the safety representation to a particular product attribute for which it could be substantiated, and provided that no other deceptive implications were created by the context.
43. Id.
44. Welsh, supra note 17, at 1001.
45. Environmental Protection Agency, http://www.epa.gov/epahome/ aboutepa.htm. EPA leads the nation's environmental science, research, education and assessment efforts. Below are some of the activities the EPA does: Develop and enforce regulations: EPA works to develop and enforce regulations that implement environmental laws enacted by Congress. EPA is responsible for researching and setting national standards for a variety of environmental programs, and delegates to states and tribes the responsibility for issuing permits and for monitoring and enforcing compliance. Where national standards are not met, EPA can issue sanctions and take other steps to assist the states and tribes in reaching the desired levels of environmental quality. Offer financial assistance: In recent years, between 40 and 50 percent of EPA's enacted budgets have provided direct support through grants to State environmental programs. EPA grants to States, non-profits and educational institutions support high-quality research that will improve the scientific basis for decisions on national environmental issues and help EPA achieve its goals. Perform environmental research: At laboratories located throughout the nation, the Agency works to assess environmental conditions and to identify, understand, and solve current and future environmental problems; integrate the work of scientific partners such as nations, private sector organizations, academia and other agencies; and provide leadership in addressing emerging environmental issues and in advancing the science and technology of risk assessment and risk management. Sponsor voluntary partnerships and programs: The Agency works through its headquarters and regional offices with over 10,000 industries, businesses, non-profit organizations, and state and local governments, on over 40 voluntary pollution prevention programs and energy conservation efforts. Partners set voluntary pollution-management goals; examples include conserving water and energy, minimizing greenhouse gases, slashing toxic emissions, re-using solid waste, controlling indoor air pollution, and getting a handle on pesticide risks. In return, EPA provides incentives like vital public recognition and access to emerging information. Further environmental education: EPA advances educational efforts to develop an environmentally conscious and responsible public, and to inspire personal responsibility in caring for the environment. Publish information: Through written materials and its Web site, EPA informs the public about its activities.
46. Id.
47. Id.
48. Id.
49. Id.
50. 16 C.F.R. § 260.5.
51. Id.
52. Welsh, supra note 17, at 1007-08.
53. Id.
54. Id. at 1008.
55. Id. at 1009.
56. I. Leo Motiuk & Diane M. Miller, Giving the Green Light to Green Marketing 731-32 (Practicing Law Institute, 1991).
57. Welsh, supra note 17, at 996.
58. Tarsney, supra note 19, at 537.
59. Id.
60. Motiuk & Miller, supra note 37, at 732.
61. Welsh, supra note 17, at 996.
62. See supra note 21.
63. Welsh, supra note 17, at 998.
64. Tarsney, supra note 19, at 537.
65. Id.
66. Id.
67. See supra note 18.
68. Id.
69. John M. Church, A Market Solution to Green Marketing: Some Lessons from the Economics of Information, 79 Minn. L. Rev. 245, 304 (1994).
70. Id.
71. See supra note 18.
72. Jack E. Karns, State Regulation of Deceptive Trade Practices Under "Little FTC Acts": Should Federal Standards Control?, 94 Dick. L. Rev. 373, 376 n.11 (1990).
73. Id.
74. Church, supra note 50, at 304.
75. Id. at 307.
76. Id.
77. Id. at 308.
78. Brett B. Coffee, Environmental Marketing After Association of National Advertisers v. Lungren: Still Searching for an Improved Regulatory Framework, 6 Fordham Envtl. L.J. 297, 346 (1995).
79. Welsh, supra note 17, at 1018.
80. U.S. Const. Art. VI, cl. 2;
81. U.S. Const. Art. I § 8, cl. 3;
82. Gibbons v. Ogden, 22 U.S. 1, 210-211 (1824).
83. Through its enumerated powers, Congress may legislate in such a way as to "preempt" state laws, i.e., to announce one uniform law to be followed throughout the country. The Supremacy Clause guarantees that state laws in conflict with such a federal law will be preempted. The areas of green marketing regulation would almost certainly affect interstate commerce within the broad meaning of the Commerce Clause. Thus, Congress has the power to preempt state laws that regulate green marketing. The question then is not whether Congress can preempt state laws dealing with green marketing, but whether it should do so. For a discussion of the Commerce Clause and preemption doctrines, see Susan Bartlett Foote, SMR Forum: Changing Regulatory Strategies - What Managers Should know About Federal Preemption, Sloan Mgmt. Rev. (MIT), Fall 1984, at 69, 69-70.
84. Congress can also grant an agency power to promulgate preemptive laws, either at the time the agency is created or at some later point. For instance, the FTC was not given preemptive power when it was established. Therefore, the FTC can pass a preemptive administrative rule only if Congress passes a law expressly preempting a given area of regulation and giving the FTC power to replace the state laws that have been preempted. For a discussion of preemption by administrative agencies, see Richard J. Pierce, Jr., Regulation, Deregulation, Federalism, and Administrative Law: Agency Power to Preempt State Regulation, 46 U. Pitt. L. Rev. 607 (1985).
85. Welsh, supra note 17, at 1014.
86. Id.
87. Id. at 1015.
88. Id. at 1019.
89. Id. at 1020.
90. Id.
91. Welsh, supra note 17, at 1014.
92. Id.
93. Coffee, supra note 56, at 350.
94. Id. at 350-51.
95. Welsh, supra note 17, at 1023.
96. Id.
97. Id. at 1024.
98. Id.
99. Id.
100. Id. at 1025.
101. Welsh, supra note 17, at 1024.
102. Id.
103. Coffee, supra note 56, at 347.
104. John Schwartz, Read It and (Maybe) Eat; FDA Promotes New Food Label Format as Major 'Health Opportunity, 'Wash. Post, May 3, 1994, at A8;
105. Carole Sugarman, How Do You Label a Kumquat?, Wash. Post, Mar. 14, 1990, Food at 1;
106. Carole Sugarman, Lord of the Label; Commissioner Kessler Launches His New Idea, Wash. Post, May 4, 1994, (Food), at 1;
107. Truth in Eating; New Labeling Will Be A Start On Avoiding Health Risks, San Jose Mercury News, Dec. 4, 1992, at 10B.
108. 21 U.S.C. § 343 (West Supp. 1994).
109. Id.
110. See Colman McCarthy, Junk Food and Label Literacy, Wash. Post, May 17, 1994, at C10.
111. Coffee, supra note 56, at 347.
112. Id.
113. See Ken Miller, 'Green' Label Buying Still a Multiple Choice, Houston Post, Nov. 28, 1993, at A30.
114. Coffee, supra note 56, at 348. These specific labeling requirements are beyond the scope of this Comment.
115. For detailed analysis of the Nutrition Labeling and Education Act of 1990, see Edward Dunkelberger & Sarah E. Taylor, The NLEA, Health Claims, and the First Amendment, 48 Food & Drug L.J. 631 (1993);
116. Eric F. Greenberg, The Changing Food Label: The Nutrition Labeling and Education Act of 1990, 3 Loy. Consumer L. Rep. 10 (1990);
117. Geoffrey M. Levitt, FDA Enforcement Under the Nutrition Labeling and Education Act, 48 Food & Drug L.J. 119 (1993);
118. Jean Lyons & Martha Rumore, Food Labeling - Then and Now, 2 J. Pharmacy & L. 171 (1994);
119. John McCutcheon, Nutrition Labeling Initiative, 49 Food & Drug L.J. 409 (1994);
120. James M. Serafino, Developing Standards for Health Claims - The FDA and the FTC, 47 Food & Drug L.J. 335 (1992);
121. Fred R. Shank, The Nutrition Labeling and Education Act of 1990, 47 Food & Drug L.J. 247 (1992);
122. Roseann B. Termini, The Prevention of Misbranded Food Labeling: The Nutrition Labeling and Education Act of 1990 and Alternative Enforcement Mechanisms, 18 Ohio N.U. L. Rev. 77 (1991);
123. John M. Blim, Comment, Free Speech and Health Claims Under The Nutrition Labeling and Education Act of 1990: Applying a Rehabilitated Central Hudson Test for Commercial Speech, 88 Nw. U. L. Rev. 733 (1994).
124. Id. The categories include calories, calories from fat, total fat, saturated fat, cholesterol, sodium, total carbohydrates, dietary fiber, sugars, protein, and various vitamins and minerals.
125. See also supra section III.
126. Coffee, supra note 56, at 349.
127. Id.
128. 21 C.F.R. §§ 101.54-101.56;
129. see also Carole Sugarman, Truth in Labeling, But What About Advertising?; Controversy Over FTC's Plans to Keep Product Claims Consistent With FDA's New Labels, Wash. Post, May 31, 1994, at Z16.
130. Coffee, supra note 56, at 350.
131. Id. at 351.
132. Id.
133. Id. at 352.
134. See supra note 37.
135. Coffee, supra note 56, at 352.
136. Id.