Request for Comment Concerning Environmental Marketing Guides

FEDERAL TRADE COMMISSION

16 CFR PART 260

Request for Comment Concerning Environmental Marketing Guides

AGENCY: Federal Trade Commission.

ACTION: Request for public comments.

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SUMMARY: The Federal Trade Commission (the ``FTC'' or ``Commission'')

is requesting public comments on its Guides for the Use of

Environmental Marketing Claims (``guides''). The guides were issued on

July 28, 1992, and included a provision for public comment and review

three years after adoption for the purpose of determining how well they

are working and the need for any modifications. The Commission is also

requesting comments about the overall costs and benefits of the guides

and their overall regulatory and economic impact as a part of its

systematic review of all current Commission regulations and guides. All

interested persons are hereby given notice of the opportunity to submit

written data, views and arguments concerning this proposal. All

comments submitted will be placed on the public record and will be made

available to interested persons for inspection and copying at the

Federal Trade Commission, 6th and Pennsylvania Avenue, N.W.,

Washington, D.C., Room 130. Following the period for written comments,

Commission staff plans to conduct a Public Workshop-Conference to

afford Commission staff and interested parties an opportunity to

explore and discuss the issues raised during the comment period.

DATES: Comments must be submitted on or before September 29, 1995.

Notification of interest in representing an affected, interested party

at the Public Workshop-Conference must be submitted on or before August

30, 1995. A list of affected interests appears in Part 2 of this

Notice.

The Public Workshop-Conference will be held in Washington, D.C. on

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November 13 and 14, 1995, from 8:30 a.m. until 5 p.m.

ADDRESSES: Six paper copies of each written comment should be submitted

to: Secretary, Federal Trade Commission, Room H-159, Sixth and

Pennsylvania Ave., N.W., Washington, D.C. 20580. Comments about the

guides should be identified as ``16 CFR Part 260--Comment.'' To

encourage prompt and efficient review and dissemination of the comments

to the public, all comments also should be submitted, if possible, in

electronic form, on either a 5-1/4 or a 3-1/2 inch computer disk, with

a label on the disk stating the name of the commenter and the name and

version of the word processing program used to create the document.

(Programs based on DOS are preferred. Files from other operating

systems should be submitted in ASCII text format to be accepted.)

Individuals filing comments need not submit multiple copies or comments

in electronic form.

The FTC will make this notice and, to the extent technically

possible, all comments received in response to this notice available to

the public through the Internet. To access this notice and the comments

filed in response to this notice, access the World Wide Web at the

following address: http://www.ftc.gov

At this time, the FTC cannot receive comments made in response to

this notice over the Internet.

Notification of interest in the Public Workshop-Conference should

be submitted in writing to Kevin Bank, Division of Advertising

Practices, Federal Trade Commission, Washington, D.C. 20580. The Public

Workshop-Conference will be held in Washington, D.C. on November 13 and

14, 1995.

FOR FURTHER INFORMATION CONTACT: Kevin Bank, (202) 326-2675, Division

of Advertising Practices, Bureau of Consumer Protection, Federal Trade

Commission, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

SUPPLEMENTARY INFORMATION: The Commission has determined, as part of

its oversight responsibilities, to review FTC rules and guides

periodically. These reviews seek information about the costs and

benefits of the Commission's rules and guides and their regulatory and

economic impact. The information obtained will assist the Commission in

identifying rules and guides that warrant modification or rescission.

1. Background

A. Scope of Guides

The Guides for the Use of Environmental Marketing Claims or

``guides'' were adopted by the Commission on July 28, 1992, and

published in the Federal Register on August 13, 1992 (57 FR 36,363

(1992)). Like other industry guides issued by the Commission, the

Environmental Marketing Guides ``are administrative interpretations of

laws administered by the Commission for the guidance of the public in

conducting its affairs in conformity with legal requirements. They

provide the basis for voluntary and simultaneous abandonment of

unlawful practices by members of industry.'' 16 CFR 1.5. Conduct

inconsistent with the guides may result in corrective action by the

Commission if this conduct is found to be in violation of applicable

statutory provisions. The Commission promulgates industry guides ``when

it appears to the Commission that guidance as to the legal requirements

applicable to particular practices would be beneficial in the public

interest and would serve to bring about more widespread and equitable

observance of laws administered by the Commission.'' 16 CFR 1.6.

The Environmental Marketing Guides indicate how the FTC will apply

Section 5 of the Federal Trade Commission Act (``FTC Act'') in the area

of environmental marketing claims.1 Section 5 of the FTC Act

prohibits unfair or deceptive advertising claims. The guides apply to

all forms of marketing of products to the public, whether through

labels, package inserts, or promotional materials.

\1\ 15 U.S.C. 45.

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The guides reiterate Commission policy regarding how Section 5

applies to advertising claims generally, as enunciated in the

Commission's Policy Statement on Deception,2 and its Policy

Statement on the Advertising Substantiation Doctrine.3 They

outline four general principles that apply to all environmental

marketing claims: i.e., that qualifications and disclosures should be

sufficiently clear and prominent to prevent deception; that claims

should make clear whether they apply to the product, the package or a

component of either; that claims should not overstate an environmental

attribute or benefit, expressly or by implication; and that comparative

claims should be presented in a manner that makes the basis for the

comparison sufficiently clear to avoid consumer deception.

\2\ Federal Trade Commission Policy Statement on Deception,

appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984).

\3\ Federal Trade Commission Policy Statement Regarding

Advertising Substantiation, appended to Thompson Medical Co., 104

F.T.C. 648 (1984).

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In addition, the guides address eight specific categories of

environmental claims: general environmental benefit claims, such as

``environmentally friendly''; ``degradable'' claims; ``compostable''

claims; ``recyclable'' claims; ``recycled content'' claims; ``source

reduction'' claims; ``refillable'' claims; and ``ozone safe''/``ozone

friendly'' claims. Each guide describes the basic elements necessary to

substantiate the claim, including suggested qualifications that may be

used to avoid deception. In addition, each guide is followed by several

examples that illustrate different uses of the particular term that do

and do not comport with the guides. In many of the examples, one or

more options are presented for qualifying a claim. The guides state

that these options are intended to provide a ``safe harbor'' for

marketers who want certainty about how to make environmental claims,

but that they do not represent the only permissible approaches to

qualifying a claim.

B. General Areas of Interest for FTC Review

The guides provide that three years after adoption, the Commission

``will seek public comment on whether and how the guides need to be

modified in light of ensuing developments.''

As part of this three-year review of the guides, the Commission is

seeking comment on a number of general issues relating to the guides'

efficacy and the need, if any, to revise or update the guides. The

Commission is also seeking comment on a number of specific issues

related to particular environmental claims addressed by the guides.

The first issue of general interest to the Commission is whether

and to what extent any changes in consumer perceptions related to

environmental marketing may warrant revisions to the guides. The

Commission believes that this three-year review is important to ensure

that the guides are responsive to any changes over time, both in

consumer knowledge and awareness of environmental issues and consumer

perception of specific claims. On this question, the Commission is

seeking to obtain specific consumer survey evidence and consumer

perception data addressing consumer understanding of environmental

claims as well as the efficacy of various approaches suggested in the

current guides for qualifying such claims.

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Second, the Commission is generally interested in whether and to

what extent new developments in environmental technology may need to be

taken into account. The Commission recognized in originally issuing its

guides that the science and technology in the environmental area was

constantly changing, and that new developments, for example, in the

areas of recycling capabilities and composting, might affect the

accuracy of environmental claims. This concern about evolving

technology was one of the principal reasons the Commission chose to

reexamine the guides three years after their issuance.

Third, the Commission seeks to evaluate the impact of the guides on

environmental marketing and is seeking to obtain information about what

effect the guides have had on the prevalence and accuracy of various

environmental claims and whether new environmental claims have emerged

that should be addressed by the guides. As it indicated in its original

notice on environmental marketing claims, the Commission is concerned

both that its guides not inadvertently encourage misleading claims and

that they do not chill truthful, non-misleading claims.4 The

Commission has some data to suggest that certain types of claims, such

as recycled content claims, are being more frequently qualified and

that other claims that would likely be found deceptive under the

guides, such as degradable claims for products that are typically

disposed in landfills, have become extremely rare. These data also

suggest that the total number of environmental claims, at least as

measured on a wide range of supermarket products, has not

diminished.5

\4\ Petitions for Environmental Marketing and Advertising

Guides; Public Hearings, 56 FR 24,968 (May 31, 1991).

\5\ See discussion of Utah Tracking Study, infra.

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A fourth question of general interest to the Commission is the

interaction of its guides with other regulation of environmental

marketing at the federal, state and local level. The Commission is

seeking comment on how federal, state and local laws and regulations

governing environmental marketing relate to the guidance provided by

the Commission.

The Commission has posed below a number of questions intended to

focus comments on these areas of general interest in evaluating the

guides. There are, in addition, a few specific issues that have come to

the Commission's attention relating to particular environmental claims.

For example, the Commission has, on occasion, received informal input

on the efficacy of its guidance on specific claims as well as requests

for clarification through additional examples to the guides. The

questions included in this notice, therefore, also address a number of

claim-specific issues. The inclusion of such issues in this notice is

to facilitate comment and the inclusion or exclusion of any issue

should not be interpreted as an indication of the Commission's intent

to make any specific modifications to the guides.

The Commission requests that commenters address any or all of these

questions, focusing on the areas in which the commenter has particular

expertise. The Commission also requests that responses to its questions

be as specific as possible, include a reference to the question being

answered, and refer to empirical data wherever available and

appropriate.

C. Empirical Evidence on Consumer Perception and Marketing Trends

Since the guides were issued, the Commission has received some

empirical evidence both on marketing trends in the environmental area

and on consumer perception of certain marketing claims. The Commission

believes that this evidence may provide valuable information on the

impact of its guides on the prevalence and accuracy of environmental

marketing claims, as well as suggesting certain specific areas where

further clarification of the guides may be appropriate to prevent

deception.

To aid the comment process, therefore, the Commission is placing on

the public record several surveys. The first is an ``audit'' tracking

environmental marketing claims in the marketplace since the issuance of

the guides, conducted by Robert N. Mayer, Jason Gray-Lee and Debra L.

Scammon of the University of Utah and Brenda J. Cude of the University

of Illinois (``Utah Tracking Study''). The audit was performed on

brands in sixteen supermarket product categories every six months,

beginning in September 1992, with the most recent occurring in

September 1994.

Auditors gathered data from supermarkets in five geographically

dispersed locations throughout the country. The claim categories

tracked in the study are recycled content, recyclability, source

reduction, degradability, toxicity, effect on ozone, general

environmental benefit claims, third party certification claims, and

``green'' brand names containing words like ``enviro,'' ``eco'' and

``natural.''

In addition, the Commission is placing on the public record

consumer surveys examining consumers' perceptions of various

environmental claims. The first survey was conducted for the Commission

in January 1993 (``FTC survey''). This mall intercept survey of 480

consumers tested their perception of several environmental claims on

aerosol products including claims that the products are:

``Environmentally Friendly,'' ``Environmentally Friendly--Will Not Harm

the Ozone Layer,'' ``Ozone Friendly,'' and ``No CFCs.'' The second

series of surveys was conducted by the Council on Packaging in the

Environment (COPE) in March 1993, September 1993, and December 1994

(``COPE surveys''). These omnibus, nationwide telephone surveys have

included questions testing consumer perception of various kinds of

``recyclable'' claims, consumers' beliefs regarding the availability of

recycling programs in their community, and consumer understanding of

the term ``non-toxic.'' Finally, the Commission is placing on the

public record a survey conducted by the Paper Recycling Coalition

testing consumer understanding and perception of recycled content

claims and the chasing arrows symbol, as well as consumer understanding

of the term ``post consumer.'' (``PRC Survey''). The PRC survey was

conducted at three geographically dispersed malls in March 1995.

The Commission is seeking comment on these surveys and also

requests that commenters provide any additional empirical evidence

available to them bearing on the issues raised by these surveys. The

surveys are available for inspection and copying at the Federal Trade

Commission, 6th and Pennsylvania Avenue, N.W., Washington, D.C., Room

130.

D. Commission Enforcement Actions

Since the adoption of the guides, the Commission has continued to

enforce its statutory mandate to prohibit false and misleading claims

through a case-by-case approach to environmental claims. In the past

three years, the Commission has entered into twenty-two consent orders

with a variety of companies and individuals, settling charges that they

made false and/or unsubstantiated environmental claims about their

products. The advertising claims challenged in these cases include

``environmentally safe,'' ``recyclable,'' ``recycled,'' ``ozone

friendly,'' ``degradable,'' ``recyclable via municipal composting,''

``practically non-toxic,'' and ``chlorine-free process.'' The

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Commission is seeking comment on whether there are principles in these

cases which are appropriate for incorporation into the guides. These

consent agreements are available for inspection and copying at the

Federal Trade Commission, 6th and Pennsylvania Avenue, N.W.,

Washington, D.C., Room 130.

2. Public Workshop-Conference

The FTC staff will conduct a Public Workshop-Conference to discuss

written comments received in response to this Notice of Request for

Public Comment. The purpose of the conference is to afford Commission

staff and interested parties a further opportunity to openly discuss

and explore issues raised in the guideline review process, and, in

particular, to examine publicly areas of significant controversy or

divergent opinions that are raised in the written comments. The

conference is not intended to achieve a consensus of opinion among

participants or between participants and Commission staff with respect

to any issue raised in the guide review process. Commission staff will

consider and review the comments made during the conference, in

conjunction with the written comments, in formulating its final

recommendation to the Commission concerning the guide review.

Commission staff will select a limited number of parties, to

represent the significant interests affected by the guideline review.

These parties will participate in an open discussion of the issues.

In addition, the conference will be open to the general public.

Members of the general public who attend the conference may have an

opportunity to make a brief oral statement presenting their views on

issues raised in the guide review process. Oral statements of views by

members of the general public will be limited to a few minutes in

length. The time allotted for these statements will be determined on

the basis of the time allotted for discussion of the issues by the

selected parties, as well as the number of persons who wish to make

statements.

Written submissions of views, or any other written or visual

materials, will not be accepted during the conference. The discussion

will be transcribed and the transcription placed on the public record.

To the extent possible, Commission staff will select parties to

represent the following affected interests: individual manufacturers

and trade associations whose members are involved with environmental

marketing issues; consumer and environmental organizations; federal,

state and local governmental authorities with experience in

environmental issues; and academics or polling firms involved in the

area of environmental claims.

Parties to represent the above-referenced interests will be

selected on the basis of the following criteria:

1. The party submits a written comment on or before September 29,

1995.

2. The party notifies Commission staff of its interest and

authorization to represent an affected interest on or before August 30,

1995.

3. The party's participation would promote a balance of interests

being represented at the conference.

4. The party's participation would promote the consideration and

discussion of a variety of issues raised in the guide review process.

5. The party has expertise in activities possibly affected by the

review of the existing guides.

6. The number of parties selected will not be so large as to

inhibit effective discussion among them.

Parties interested in participating and authorized to represent an

affected interest at the conference must notify Commission staff on or

before August 30, 1995. Prior to the conference, parties selected to

represent an affected interest will be provided with computer disks

containing copies of comments received in response to this notice by

the close of the comment period. The Public Workshop-Conference will be

held on November 13 and 14, 1995.

3. Issues for Comment

The Commission solicits written public comment on the following

questions:

A. General Issues

1. Is there a continuing need for the guides?

(a) What benefits have the guides provided to consumers?

(b) Have the guides imposed costs on consumers?

2. What changes, if any, should be made to the guides to increase

the benefits of the guides to consumers?

(a) How would these changes affect the costs the guides impose on

firms subject to their provisions?

3. What significant burdens or costs, including the cost of

adherence, have the guides imposed on firms subject to their

provisions?

(a) Have the guides provided benefits to such firms?

4. What changes, if any, should be made to the guides to reduce the

burdens or costs imposed on firms subject to their provisions?

(a) How would these changes affect the benefits provided by the

guides?

5. Since the guides were issued, what effects, if any, have changes

in relevant technology or economic conditions had on the guides?

(a) What impact, if any, have the guides had on the development of

environmentally beneficial innovations in technology and products?

(b) Is there other information concerning science or technology

that the Commission should consider in determining whether the guides

should be modified?

6. Do the guides overlap or conflict with other federal, state, or

local laws and regulations? Is there evidence concerning whether the

guides have assisted in promoting national consistency with respect to

the regulation of environmental claims?

7. Are there international developments with respect to

environmental marketing claims that the Commission should consider as

it reviews the guides? Do these developments indicate that the guides

should be modified?

8. What new evidence is available concerning consumer perception of

environmental claims? Please provide any empirical data that are

available on all categories of environmental claims, including claims

not currently covered by the guides. Does this new information indicate

that the guides should be modified?

9. What new evidence is available concerning consumer awareness of

and knowledge about environmental issues? Please provide any available

empirical data. Does this new information indicate that the guides

should be modified?

10. What impact have the guides had on the flow of truthful

information to consumers and on the flow of deceptive information to

consumers?

11. To what extent have the guides reduced consumer skepticism or

confusion about environmental claims?

12. What evidence is available concerning the degree of industry

compliance with the guides?

(a) To what extent has there been a reduction in deceptive

environmental claims since the guides were issued?

(b) To what extent has there been an increase in the degree and

accuracy of qualifications of environmental claims?

Please provide any available empirical data, including any data

relevant to the findings of the Utah Tracking Study cited above. Does

this evidence indicate that the guides should be modified?

13. To what extent have the guides reduced manufacturers'

uncertainty

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about which claims might lead to FTC law enforcement actions?

14. Is there a need for guidance on environmental claims not

currently addressed in the guides? If so, what specific claims should

be addressed and what form should this guidance take?

15. Are there claims addressed in the guides on which guidance is

no longer needed?

B. Specific Issues

A number of specific issues concerning the guides have arisen since

their adoption. The Commission is seeking comment on these issues but

the questions listed below should not be construed as an indication of

the Commission's intent to make any specific modifications to the

guides.

16. The Commission is seeking comment on the following specific

issues relating to the ``ozone friendly/ozone safe'' guide.

(a) To what extent do phrases like ``ozone friendly'' or ``No

CFCs,'' by themselves, convey broad claims of environmental benefit to

consumers, including claims about the harmlessness of the product to

the atmosphere as a whole (i.e., both the upper ozone layer and ground-

level air pollution)? How important is the context in which the claim

appears? Please provide any empirical data, including any data relevant

to the findings of the FTC survey.6 Are there methodological

issues concerning the survey that are relevant to the survey's

findings? Does the survey evidence suggest that the guides should be

modified? If so, what form should the modification take? How would

these modifications affect the benefits the guides provide to consumers

and the costs they impose on firms subject to their provisions?

\6\ The FTC survey (cited above) suggests that when consumers

see claims like ``No CFCs'' and ``Ozone Friendly'' on aerosol

products, they may interpret the claim to mean that the product is

not only harmless to the upper ozone layer, but to the atmosphere as

a whole. In Creative Aerosol Corp., No. C-3548 (January 13, 1995)

(final consent order), the Commission required the company to cease

and desist from representing, through the use of terms such as ``No

Fluorocarbons,'' that any product containing Volatile Organic

Compounds (VOCs), will not harm the atmosphere, unless the claim is

substantiated. The Order defines VOCs as ``any compound of carbon

which participates in atmospheric photochemical reactions as defined

by the Environmental Protection Agency,'' that is, compounds of

carbon that EPA has determined are potential contributors to smog.

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17. The Commission is seeking comment on the following specific

issues relating to the ``recyclable'' and ``compostable'' guides:

(a) The September 1993 COPE survey (cited above) may be interpreted

to suggest that the presence of a ``recyclable'' claim may not increase

the percentage of consumers who think that recycling facilities for a

product or package are available in their community. Please provide any

empirical data regarding whether an unqualified recyclable or an

unqualified compostable claim conveys a deceptive claim concerning

local availability. Are there methodological issues concerning the COPE

survey that are relevant to its findings? Does the COPE survey and any

other new evidence provided indicate that the recyclable and/or

compostable sections of the guides should be modified, and if so, in

what manner? What effect would the proposed changes have on the

benefits the guides provide to consumers and the costs that the guides

impose on firms?

(b) The COPE surveys (cited above) suggest that certain of the

qualifying disclosures suggested in the recyclable and compostable

guides may be more effective than others in conveying to consumers that

facilities may not be available in their community to recycle or

compost the product. Please provide any empirical data relevant to the

findings of the COPE surveys. Are there methodological issues

concerning the COPE surveys that are relevant to the surveys' findings?

Does the COPE evidence (or any other evidence provided) indicate that

these disclosures should be modified, and if so, in what manner? How

would such modifications affect the benefits the guides provide to

consumers and the costs they impose on firms?

(c) Please provide any relevant empirical data regarding consumer

perception of phrases such as ``Please Recycle'' and ``Coded for

Recycling'' and of the ``three chasing arrows'' logo. To what extent do

such claims suggest to consumers that a product or package is

recyclable? What, if any, modifications should be made to the guides in

light of such consumer perceptions? How would such modifications affect

the benefits the guides provide to consumers and the costs they impose

on firms?

(d) The Society of the Plastics Industry (SPI) code, a logo

introduced in 1988 for voluntary use by SPI, has since been mandated

for use on certain plastic packages by thirty-nine states to facilitate

identification of different types of plastic resins. In its guides, the

Commission states that the use of the code, without more, on the bottom

of a package, or in a similarly inconspicuous location, does not

constitute a claim of recyclability. What consumer perception data are

available concerning how consumers interpret the SPI code? What, if

any, modifications should be made to the guides in light of such data?

How would such modifications affect the benefits the guides provide to

consumers and the costs they impose on firms?

18. Please provide any empirical data relevant to whether consumers

perceive that products made from reconditioned parts that would

otherwise have been thrown away should qualify as ``recycled''

products. What modifications, if any, should be made to the guides to

address these consumer perceptions? How would such modifications affect

the benefits the guides provide to consumers and the costs they impose

on firms?

19. Are there other specific issues concerning the guides that the

Commission should review? What empirical data are available to assist

the Commission in its review of these issues? What, if any

modifications should be made in light of these issues? How would such

modifications affect the benefits the guides provide to consumers and

the costs they impose on firms?

List of Subjects in 16 CFR Part 260:

Environmental marketing claims: Advertising.

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

By direction of the Commission.

Donald S. Clark,

Secretary

[FR Doc. 95-18720 Filed 7-28-95; 8:45 am]

BILLING CODE 6750-01-P