Creative Aerosol Corp.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 922 3197]

Creative Aerosol Corp.; Proposed Consent Agreement With Analysis

To Aid Public Comment

agency: Federal Trade Commission.

action: Proposed consent agreement.

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summary: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, a New Jersey manufacturer of children's

bath soap from representing that certain products or packaging will not

harm the environment or atmosphere, or that any product or package

offers any environmental benefit, unless it possesses competent and

reliable evidence that substantiates the representation. The consent

agreement also prohibits the respondent from misrepresenting that any

product or packaging is capable of being recycled, or the extent to

which recycling collection programs for them are available.

dates: Comments must be received on or before December 30, 1994.

addresses: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th Street and Pennsylvania Avenue NW., Washington, DC 20580.

for further information contact: Michael Dershowitz, FTC/S-4002,

Washington, DC 20580, (202) 326-3158.

supplementary information: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the following consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. Public comment is invited. Such

comments or views will be considered by the Commission and will be

available for inspection and copying at its principal office in

accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of

Practice (16 CFR 4.9(b)(6)(ii)).

In the Matter of Creative Aerosol Corp., a Corporation; Agreement

Containing Consent Order to Cease and Desist

[File No. 922-3197]

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Creative Aerosol Corp., a corporation

(``proposed respondent''), and it now appears that proposed respondent

is willing to enter into an agreement containing an order to cease and

desist from the acts and practices being investigated,

It is hereby agreed by and between Creative Aerosol Corp., by its

duly authorized officer, and counsel for the Federal Trade Commission

that:

1. Proposed respondent Creative Aerosol Corp. is a corporation

organized, existing and doing business under and by virtue of the laws

of the State of New Jersey, with its principal office or place of

business at 71 West Main Street, Freehold, New Jersey 07728-2114.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint here attached.

3. Proposed respondent waives:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) All claims under the Equal Access to Justice Act.

4. This agreement shall not become a part of the public record of

the proceeding unless and until it is accepted by the Commission. If

this agreement is accepted by the Commission, it, together with the

draft of the complaint contemplated hereby, will be placed on the

public record for a period of sixty (60) days and information in

respect thereto publicly released. The Commission thereafter may either

withdraw its acceptance of this agreement and so notify proposed

respondent, in which event it will take such action as it may consider

appropriate, or issue and serve its complaint (in such form as the

circumstances may require) and decision, in disposition of the

proceeding.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the attached draft complaint or that the facts

as alleged in the attached draft complaint, other than the

jurisdictional facts, are true.

6. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may without further notice to proposed

respondent, (1) issue its complaint corresponding in form and substance

with the draft complaint here attached and its decision containing the

following order to cease and desist in disposition of the proceeding,

and (2) make information public in respect thereto. When so entered,

the order to cease and desist shall have the same force and effect and

may be altered, modified or set aside in the same manner and within the

same time provided by statute for other orders. The order shall become

final upon service. Delivery by the U.S. Postal Service of the decision

containing the agreed-to order to proposed respondent's address as

stated in this agreement shall constitute service. Proposed respondent

waives any right it might have to any other manner of service. The

complaint may be used in construing the terms of the order, and no

agreement, understanding, representation, or interpretation not

contained in the order or in the agreement may be used to vary or

contradict the terms of the order.

7. Proposed respondent has read the proposed complaint and the

order contemplated hereby. It understands that once the order has been

issued, it will be required to file one or more compliance reports

showing it has fully complied with the order. Proposed respondent

further understands that it may be liable for civil penalties in the

amount provided by law for each violation of the order after it becomes

final.

Order

Definitions

For purposes of this Order, the following definitions shall apply:

``Volatile Organic Compound'' (``VOC'') means any compound of

carbon which participates in atmospheric photochemical reactions as

defined by the U.S. Environmental Protection Agency at 40 CFR

51.100(s), and as subsequently amended. When the final rule was

promulaged, 57 FR 3941 (February 3, 1992), the EPA definition excluded

carbon monoxide, carbon dioxide, carbonic acid, metallic carbides or

carbonates, ammonium carbonate and certain listed compounds that EPA

has determined are of negligible photochemical reactivity.

``Class I ozone-depleting substance'' means a substance that harms

the environment by destroying ozone in the upper atmosphere and is

listed as such in Title 6 of the Clean Air Act Amendments of 1990, Pub.

L. No. 101-549, and any other substance which may in the future be

added to the list pursuant to Title 6 of the Act. Class I substances

currently include chlorofluorocarbons, halons, carbon tetrachloride,

and 1,1,1-trichloroethane.

``Class II ozone-depleting substance'' means a substance that harms

the environment by destroying ozone in the upper atmosphere and is

listed as such in Title 6 of the Clean Air Act Amendments of 1990, Pub.

L. No. 101-549, and any other substance which may in the future be

added to the list pursuant to Title 6 of the Act. Class II substances

currently include hydrochlorofluorocarbons.

``Product or package'' means any product or package that is offered

for sale, sold or distributed to the public by respondent, its

successors and assigns, under the Funny Color Foam brand name or any

other brand name of respondent, its successors and assigns; and also

means any product or package sold or distributed to the public by third

parties under private labeling agreements with respondent, its

successors and assigns.

``Competent and reliable scientific evidence'' means tests,

analyses, research, studies or other evidence based on the expertise of

professionals in the relevant area, that has been 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.

I

It is ordered that respondent, Creative Aerosol Corp., a

corporation, its successors and assigns, and its officers, agents,

representatives, and employees, directly or through any corporation,

subsidiary, division, or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of any

product or package containing any volatile organic compound, in or

affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from representing, in any

manner, directly or by implication, through the use of such terms as

``environmentally safe,'' ``environmentally safe, contains no

fluorocarbons,'' or any other term or expression, that any such product

or package will not harm the environment, or through the use of such

terms as ``no fluorocarbons,'' or any other term or expression, that

any such product or package will not harm the atmosphere, unless at the

time of making such representation, respondent possesses and relies

upon competent and reliable evidence, which when appropriate must be

competent and reliable scientific evidence, that substantiates such

representation.

II

It is further ordered that respondent, Creative Aerosol Corp., a

corporation, its successors and assigns, and its officers, agents,

representatives, and employees, directly or through any corporation,

subsidiary, division, or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of any

product or package containing any Class I or Class II ozone-depleting

substance, in or affecting commerce, as ``commerce'' is defined in the

Federal Trade Commission Act, do forthwith cease and desist from

representing that any such product or package contains ``no

fluorocarbons'' or representing, in any manner, directly or by

implication, that any such product or package will not deplete,

destroy, or otherwise adversely affect ozone in the upper atmosphere or

otherwise harm the atmosphere.

III

A. It is further ordered that respondent, Creative Aerosol Corp., a

corporation, its successors and assigns, and its officers, agents,

representatives, and employees, directly or through any corporation,

subsidiary, division, or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of any

product or package in or affecting commerce, as ``commerce'' is defined

in the Federal Trade Commission Act, do forthwith cease and desist from

misrepresenting, in any manner, directly or by implication the extent

to which:

(1) any such product or package is capable of being recycled; or,

(2) recycling collection programs for such product or package are

available.

B. Provided, however, respondent will not be in violation of Part

III(A)(2) of this Order, in connection with the advertising, labeling,

offering for sale, sale, or distribution of any high-density

polyethylene cap or aluminum aerosol can, if it truthfully represents

that such packaging is recyclable, provided that:

(1) respondent discloses clearly, prominently, and in close

proximity to such representation:

(a) in regard to any high-density polyethylene cap, that it is

recyclable in the few communities with recycling collection programs

for high-density polyethylene caps; and in regard to any aluminum

aerosol can, that such packaging is recyclable in the few communities

with recycling collection programs for aluminum aerosol cans; or

(b) the approximate number of U.S. communities with recycling

collection programs for such high-density polyethylene cap or aluminum

aerosol can; or

(c) the approximate percentage of U.S. communities or the U.S.

population to which recycling collection programs for such high-density

polyethylene cap or aluminum aerosol can are available; and

(2) in addition, in the case of a high-density polyethylene cap,

such cap itself bears a clear identification of the specific plastic

resin(s) from which it is made.

For purposes of this Order, a disclosure elsewhere on the product

package shall be deemed to be ``in close proximity'' to such

representation if there is a clear and conspicuous cross-reference to

the disclosure. The use of an asterisk or other symbol shall not

constitute a clear and conspicuous cross-reference. A cross-reference

shall be deemed clear and conspicuous if it is of sufficient prominence

to be readily noticeable and readable by the prospective purchaser when

examining the part of the package on which the representation appears.

IV

It is further ordered that respondent, Creative Aerosol Corp., a

corporation, its successors and assigns, and its officers, agents,

representatives, and employees, directly or through any corporation,

subsidiary, division, or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of any

product or package in or affecting commerce, as ``commerce'' is defined

in the Federal Trade Commission Act, do forthwith cease and desist from

representing, in any manner, directly or by implication, that any such

product or package offers any environmental benefit, unless at the time

of making such representation, respondent possesses and relies upon

competent and reliable evidence, which when appropriate must be

competent and reliable scientific evidence, that substantiates such

representation.

V

It is further ordered that for five (5) years after the last date

of dissemination of any representation covered by this Order,

respondent, or its successors and assigns, shall maintain and upon

request make available to the Federal Trade Commission for inspection

and copying:

A. All materials that were relied upon in disseminating such

representation; and

B. All tests, reports, studies, surveys, demonstrations, or other

evidence in its possession or control that contradict, qualify, or call

into question such representation, or the basis relied upon for such

representation, including complaints from consumers.

VI

It is further ordered that respondent shall distribute a copy of

this Order to each of its operating divisions and to each of its

offices, agents, representatives, or employees engaged in the

preparation and placement of advertisements, promotional materials,

product labels or other such sales materials covered by this Order.

VII

It is further ordered that respondent shall notify the Commission

at least thirty (30) days prior to any proposed change in the

corporation such as a dissolution, assignment, or sale resulting in the

emergence of a successor corporation, the creation or dissolution of

subsidiaries, or any other change in the corporation which may affect

compliance obligations under this Order.

VIII

It is further ordered that respondent shall, within sixty (60) days

after service of this Order upon it, and at such other times as the

Commission may require, file with the Commission a report, in writing,

setting forth in detail the manner and form in which it has complied

with this Order.

Analysis of Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from respondent Creative

Aerosol Corporation, a Delaware corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement and take other appropriate action, or make

final the agreement's proposed order.

This matter concerns the labeling and advertising of the

respondent's Funny Color Foam soap. The Commission's complaint in this

matter alleges that Funny Color Foam soap is sold in an aluminum

aerosol can with a plastic cap which is made from high-density

polyethylene. The product contained the volatile organic compounds

(VOCs) isobutane and propane and was then reformulated by substituting

for the VOCs hydrochlorofluorocarbon--chlorodifluoromethane (HCFC-22).

The Commission's complaint charges that the respondent made the

following advertising claims while the product contained VOCs:

``ENVIRONMENTALLY SAFE Contains no fluorocarbons. Non-Irritant. Non-

toxic.'' The complaint alleges that through such claims, the respondent

represented without substantiation that Funny Color Foam does not

contain any ingredients that harm or damage the environment. In fact,

Funny Color Foam contained VOCs--chemicals that under many atmospheric

conditions contribute to the formation of ground level ozone, a major

component of smog.

The complaint also charges that the respondent claimed that its

reformulated product contains ``NO FLUOROCARBONS.'' The complaint

alleges that through this claim, the respondent falsely represented

that because Funny Color Foam contains no fluorocarbons, it will not

deplete the earth's ozone layer or otherwise harm or damage the

atmosphere. In fact, Funny Color Foam contains the harmful ozone-

depleting ingredient chlorodifluoromethane (HCFC-22), which harms or

causes damage to the atmosphere by contributing to the depletion of the

earth's ozone layer.

In addition, the complaint charges that the respondent falsely

represented that Funny Color Foam's aluminum aerosol can and plastic

cap are recyclable. In fact, the complaint alleges, while the aluminum

can and plastic cap are capable of being recycled, the vast majority of

consumers cannot recycle them because there are virtually no collection

facilities that accept aluminum aerosol cans for recycling and only a

few collection facilities nationwide that accept the high-density

polyethylene cap for recycling.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondent from engaging in

similar acts and practices in the future.

The term ``volatile organic compound'' (VOC) is defined in the

consent order in accordance with the definition adopted by the

Environmental Protection Agency (EPA) in a February 3, 1992,

rulemaking. To assist the public and the industry in understanding the

coverage of this order, those compounds that EPA expressly excluded

from the definition of VOC at the time the definition was promulgated

are listed in the order. Because EPA could in the future modify the

definition based on evolving scientific evidence, the term VOC as used

in the order will vary depending upon EPA's definition of the term.

Those compounds that EPA may decide should be excluded from the

definition of VOC because of negligible photochemical reactivity will

thus be excluded under the consent order. Likewise any compounds that

EPA may decide should be defined as VOCs will be covered by the order.

The proposed order also defines Class I and Class II ozone-

depleting substances, incorporating the definitions established in the

Clean Air Act Amendments of 1990. Class I substances currently listed

under the Act include CFCs, halons, carbon tetrachloride, and 1,1,1-

trichloroethane. Class II substances currently consist of HCFCs.

Part I of the proposed order requires the respondent to cease and

desist from representing that any product or package containing

volatile organic compounds is ``environmentally safe,''

``environmentally safe, contains no fluorocarbons,'' contains ``no

fluorocarbons,'' or through the use of any other term or expression,

that any such product or package will not harm the environment or the

atmosphere, unless the respondent possesses competent and reliable

evidence, which when appropriate must be competent and reliable

scientific evidence, that substantiates the representation.

Part II of the proposed order requires the respondent to cease and

desist from representing that any product or package containing any

Class I or Class II ozone-depleting substance contains ``no

fluorocarbons'' or representing, in any manner, that any such product

or package will not deplete, destroy, or otherwise adversely affect

ozone in the upper atmosphere or otherwise harm the atmosphere.

Under the Clean Air Act Amendments, the EPA has authority to add

new chemicals to the Class I and Class II lists. In fact, EPA has added

methyl bromide and hydrobromofluorocarbons (HBFCs) to the list of Class

I substances. Thus, the order's definitions of Class I and Class II

ozone-depleting substances include these and any other substances that

may be added to the lists. If additional substances are added to the

Class I or II lists, Part II of the order becomes applicable to claims

made for products containing those substances after the substances are

added to the lists.

Part III of the proposed order requires that the respondent cease

and desist from misrepresenting, in any manner, directly or by

implication, with respect to any product or package the extent to which

it is capable of being recycled or the extent to which recycling

collection programs are available. Part III also contains a proviso

that allows the respondent to advertise high-density polyethylene caps

and aluminum aerosol cans as recyclable without violating Part III of

the order. The respondent may do so if it truthfully represents that

such packaging is capable of being recycled; discloses clearly,

prominently and in close proximity to such claim (a) that such

packaging is recyclable in the few communities with recycling

collection programs for high-density polyethylene caps or aluminum

aerosol cans; or (b) the approximate number of U.S. communities with

recycling collection programs for such packaging; or (c) the

approximate percentage of U.S. communities or the U.S. population to

which recycling collection programs for such packaging is available;

and in addition, in the case of the high-density polyethylene cap, the

cap itself bears a clear identification of the specific plastic

resin(s) from which it is made.

Part IV of the proposed order provides that if the respondent

represents in advertising or labeling that any product or package

offers any environmental benefit, it must have a reasonable basis

consisting of competent and reliable evidence, which when appropriate

must be competent and reliable scientific evidence, that substantiates

the claims.

The proposed order also requires the respondent to maintain

materials relied upon to substantiate the claims covered by the order,

to distribute copies of the order to certain company officials, to

notify the Commission of any changes in corporate structure that might

affect compliance with the order, and to file one or more reports

detailing compliance with the order.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 94-26932 Filed 10-28-94; 8:45 am]

BILLING CODE 6750-01-M