[Federal Register Volume 60, Number 146 (Monday, July 31, 1995)]
[Proposed Rules]
[Pages 38978-38982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18720]



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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 

[[Page 38979]]
    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. 

[[Page 38980]]

    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