US FTC Announces Possible Updates to “Green Guides”

On December 14, 2022, the United States Federal Trade Commission (“FTC” or “Commission”) announced that it is seeking public comment on possible updates and other changes (“Request for Public Comment” or “RPC”) to its current “Green Guides” (Guides) on the use of environmental marketing claims. The FTC initially adopted the Guides in 1992, and they were last revised in 2012.

Background

The Guides outline general principles applicable to all environmental marketing claims and provide specific guidance regarding many common environmental benefit claims. For each claim covered, the Guides (1) explain how reasonable consumers are likely to interpret it, (2) describe the basic elements necessary to substantiate it and (3) present options for qualifications to avoid what the FTC believes may amount to deception. While the Guides include illustrative qualifications to provide examples for marketers seeking to make non-deceptive claims, the examples do not represent the only permissible approaches. As administrative interpretations of the law, the Guides themselves are not enforceable but are extremely influential within the agency and can form the backbone of suits under Section 5 of the FTC Act alleging that advertising amounted to deceptive practices. (In addition, certain states have incorporated the Guides into state law.)

Because the Guides rely on enforcement via Section 5 of the FTC Act, the FTC generally cannot obtain money penalties in connection with first-time violations related to the Guides. This is a recent development spurred by the Supreme Court’s 2021 decision in AMG Capital Management v. FTC, where the Court rejected the FTC’s longstanding practice of seeking “equitable monetary relief” for violations of Section 5 because the relevant statutory provision referred only to the agency’s ability to obtain an “injunction.” That is why two April 2022 enforcement actions related to greenwashing in bamboo textiles, resulting in more than $5 million in civil penalties collectively, relied on the Textile Act, the Textile Rule, and proof that the companies had knowingly engaged in conduct the FTC has previously found unlawful in prior litigated decision—all of which allow the agency to seek money penalties.

The FTC’s Request for Public Comment

Consistent with the FTC’s regular review of rules and guides, the Request for Public Comment seeks information about the Guides broadly, including about “the efficiency, costs, benefits, and regulatory impact of the Guides to determine whether to retain, modify, or rescind them.” Notably, it does not propose any concrete changes (again, consistent with prior practice). But the RPC does highlight several specific new environmental marketing claims that the agency is contemplating adding to the Guides:  

• Carbon Offsets and Climate Change: The current Guides provide guidance on carbon offset and renewable energy claims. The Commission invites comments on whether the revised Guides should provide additional information on related claims, flagging “net zero,” “carbon neutral,” “low carbon,” and “carbon negative” as claims of particular interest.
• The term “Recyclable”: Among other things, the FTC seeks comments on whether it should change the current threshold that guides marketers on when they can make unqualified “recyclable” claims as well as whether the Guides should address in more detail claims for products that are collected (picked up curbside) by recycling programs but not ultimately recycled.
• The term “Recycled Content”: The FTC also seeks comments on whether unqualified claims about recycled content—particularly claims related to “pre-consumer” and “post-industrial” content—are widely understood by consumers as well as whether alternative methods of substantiating recycled content claims may be appropriate;
• Energy Use/Energy Efficiency: The agency is contemplating addressing guidance on energy-use claims for electric vehicles, among other things;
• The terms “Organic” and “Sustainable”: Noting that the FTC declined to provide a definition of “organic” or “sustainable” in 2012, the agency is seeking comment again on whether to adopt a standard in light of the additional learning over the past decade.
• The need for additional guidance: The Commission also seeks comment on the need for additional guidance regarding claims such as “compostable,” “degradable,” and “ozone-friendly.”

In a related statement, FTC Chair Lina Khan stated that “[t]he Commission has a strong track record of suing companies for deceptive environmental claims. It has reached several multi-million-dollar settlements just in the past few years” and drew attention to a list of cases brought by the FTC for deceptive environmental claims.

Comments are to be made as described in the proposal and are due within 60 days of its publication in the Federal Register, which should happen in the coming days.