FTC Staff Comment to the Honorable Michael J. Machado Concerning Environmental Marketing Claims and California A.B. 362 to Restore an Environmental Labeling Law

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
April 7, 1997
Michael J. Machado
Assemblymember, Seventeenth District
California Legislature
State Capitol
P.O. Box 94248-0001
Sacramento, CA 94248
Dear Assemblymember Machado:
Thank you for your March 14, 1997 letter requesting our views on the effectiveness of the Federal Trade
Commission's Guides for the Use of Environmental Marketing Claims, or the "Guides," 16 C.F.R. Part 260 (1996).(1)
Your letter notes that in 1995 California enacted legislation that brought California's existing environmental product
labeling standards into conformance with the FTC Guides. You state further that new legislation, Assembly Bill 362,
has now been introduced, which essentially restores California's previous labeling law, in apparent conflict with the
FTC Guides, as well as other state laws. You request our opinion of the benefits to consumers and businesses in
establishing uniform guidelines for interpreting environmental marketing claims, and in particular "whether firms doing
business nationally would find it difficult and costly to comply with different definitions in different states."
The impetus for the FTC Guides dates back to the late 1980s, when consumer concerns about the environment led to
enormous interest in the environmental characteristics of products and packaging. The market responded to this
increased consumer demand with a rapid proliferation of claims, many of which appeared to be deceptive and
unsubstantiated. The Commission initiated a number of investigations to determine whether such claims violated
Section 5 of the FTC Act, which generally prohibits "unfair or deceptive acts or practices," including advertising or
labeling that is false or misleading. These investigations led to the acceptance of several consent orders in which
companies agreed to stop making the challenged claims and to take other remedial action.(2)
The proliferation of environmental marketing claims and the resulting consumer deception led to multiple responses
by other federal, state, and local authorities in the U.S. with authority over environmental and marketing issues. Both
the federal and several state governments began considering legislative remedies to eliminate deceptive claims and
consumer confusion.
By the early 1990s, there were reports of uncertainty by businesses and advertisers about the potential development
of differing or inconsistent standards on a state-by-state basis. At the same time, state law enforcers and
environmental groups continued to express concern about preventing deceptive claims. Business, industry, consumer
groups, and the state Attorneys General, including California's Attorney General, petitioned the Commission to
provide national industry-wide guidance to reduce consumer deception and skepticism, in order to promote the use of
truthful and substantiated environmental marketing claims. The Commission, working with the U.S. Environmental
Protection Agency and the state Attorneys General, responded to these concerns by issuing the Guides in 1992.

Although the FTC Guides help ensure that environmental claims are not deceptive and are adequately supported,
they are not law, and they do not preempt state law. The Guides are administrative interpretations of Commission
policies, laws, and cases. They are intended to help advertisers voluntarily comply with the law by indicating how the
Commission intends to apply Section 5 of the FTC Act to environmental claims.
When the Commission issued the Guides in 1992, it determined to review the Guides in three years and to seek
public comment on the effectiveness of the Guides and on whether and how they should be modified to reflect
changes in consumer understanding and developments in environmental technology. The comments the Commission
received during the 1995-1996 review period from industry, environmental groups, and federal and state authorities
indicated that the Guides were working well and that industry largely was complying with them.
During the review, the Commission focused on the Guides' effect on environmental marketing. The Commission
received empirical data and comments that we found encouraging. For example, the University of Utah submitted a
study of trends in the frequency, content, and format of green claims on supermarket product labels for the past
several years.(3) The Utah study shows that the number of environmental claims on products actually increased
substantially between 1992 and 1994, indicating that the Guides did not discourage manufacturers from making
environmental claims. The first audit suggested that compliance with the Guides was not widespread, but later audits
found a significant improvement in the presentation of several types of environmental claims. In their 1995 report, the
authors concluded that environmental claims had improved in quality (that is, they had become more specific and
more qualified) without any decrease in their frequency. We also determined, independently, that the most egregious,
deceptive claims had disappeared from the marketplace, and the total number of deceptive claims had also been
reduced.
Because the Guides received such broad support during the review process, few changes were made to them.(4) In
the Federal Register notice announcing the publication of the revised Guides in October 1996, the Commission
stated: "There was a general consensus among commenters that the guides benefit consumers by stemming the tide
of spurious environmental claims; bolster consumer confidence; increase the flow of specific and accurate
environmental information to consumers, enabling them to make informed purchasing decisions; and encourage
manufacturers to improve the environmental characteristics of their products and packaging."(5)
In addition, the Commission noted: "Commenters generally agreed that the guides benefit industry by providing
uniform, consistent guidance regarding the making of non-deceptive environmental claims; promoting national
consistency in the treatment of environmental marketing claims; assisting advertisers in determining what claims
would likely lead to Commission challenge; encouraging network review and industry self-regulation; and allowing
flexibility for manufacturers to improve the environmental attributes of their products and to communicate those
improvements to consumers." Since the Guides were issued, several states, including California, New York, and
Rhode Island, either repealed or modified their pre-existing laws concerning environmental marketing claims to be
consistent with the Guides. Other states are also following the Commission's approach. The Commission has closely
cooperated with the State Attorneys General for the past several years in bringing law enforcement cases against
firms engaged in allegedly deceptive environmental advertising. This collaborative approach has proven effective,
and has been consistent and non-duplicative.(6) Although the Commission sought comment specifically about the
Guides' costs and benefits, it received no financial data on the subject. Many industry members, however, did
comment generally on the difficulties that differing state standards for environmental marketing claims pose to
marketers. The following excerpts are illustrative of those views (see attached comments):
According to Mobil Chemical Company:
As a result of these inconsistencies [among state laws], manufacturers have to:
• 	Make no environmental claims, thereby withholding information that the consumer
could use to make purchasing decisions,

• 	Produce and market jurisdictionally specific products which increases costs due to
shorter production runs, multiple inventories, and higher labeling and record keeping
costs, or
• 	Risk noncompliance at the federal or state level, because once a product enters the
distribution chain, manufacturers cannot control its entry into a particular jurisdiction
(Comment of Mobil Chemical Co., p.2.)
The Association of National Advertisers commented:
In the absence of a uniform, national regulatory policy, advertisers faced a bewildering array of inconsistent state
laws which would make it very difficult, if not impossible, to make environmental claims on a national basis. The most
egregious example was the California law adopted in 1990. ... Under threat of criminal law, many companies have
decided that the only safe speech is no speech. (Comment of the Association of National Advertisers, pp. 2-3.)
One national advertiser, Kodak, expressed the following view:
The lack of consistency between the FTC Guides and various state and local laws has been problematic for Kodak
and other companies that market their products on a nationwide basis. (Comment of Kodak, p. 1.)
Finally, the Food Marketing Institute reiterated:
Prior to the guides, states were adopting environmental marketing laws that were so inconsistent it was difficult if not
impossible for marketers to comply, making the abandonment of useful labels an unfortunate necessity. (Comment of
the Food Marketing Institute, p. 2.)
The Commission noted in the Federal Register Notice that "[a] significant number of ... industry representatives
voiced strong opposition to changing the guides in any way that would undermine the important state support the
Guides are now receiving." In short, we believe the Commission has established a consistent approach to
environmental marketing regulation that has resulted in substantial benefits for consumers and businesses alike. I
hope these views will be helpful to the Committee as it considers AB 362.
Very truly yours,
Joan Z. Bernstein
Director
Attachments
1. The views expressed in this letter are those of the Bureau of Consumer Protection and do not necessarily
represent the views of the Commission or any individual Commissioner.
2. See, e.g., RMED Int'l, 115 F.T.C. 572 (1992); Tech Spray, Inc., 115 F.T.C. 433 (1992); American Enviro Prods.,
115 F.T.C. 399 (1992); First Brands Corp., 115 F.T.C. 1 (1992); Jerome Russell Cosmetics, U.S.A., 114 F.T.C. 514
(1991); Zipatone, Inc., 114 F.T.C. 376 (July 9, 1991); The Vons Cos., 113 F.T.C. 779 (1990).
3. R.N. Mayer, B. Cude, J. Gray-Lee & D.L. Scammon, Trends in Environmental Marketing Claims Since the FTC
Guides: Technical Report (May 1, 1995).
4. The Commission is continuing to review the Compostable and Recyclable sections of the Guides, § 260.7(c)-(d).
These sections remain in effect during the review process. The Commission is also considering whether product
parts that can be reconditioned and/or reused in the manufacture of new products can claim to be "recyclable" under

the Guides, and whether products manufactured from reconditioned and/or reused parts can be labeled "recycled"
under the Guides.
5. 61 Fed. Reg. 53,311, 53,312 (1996) (copy attached).
6. Since the Guides were issued, the Commission has entered into 26 consent agreements concerning environmental
claims: RBR Prods., Docket No. C-3696 (Dec. 10, 1996); Benckiser Consumer Prods., Docket No. C-3659 (May 22,
1996); Amoco Oil Co., Docket No. C-3655 (May 7, 1996); Safe Brands Corp., Docket No. C-3647 (Mar. 26, 1996);
Mattel, Inc., Docket No. C-3591 (June 23, 1995); Creative Aerosol Corp., Docket No. C-3548 (Jan. 13, 1995);
Chemopharm Laboratory, No. C-3545 (Dec. 6, 1994); BPI Env'l, Docket No. C-3535 (Oct. 17, 1994); North American
Plastics Corp., Docket No. C-3526 (Sept. 7, 1994); Amoco Foam Prods., Docket No. C-3514 (Aug. 9, 1994); Keyes
Fibre Co., Docket No. C-3512 (Aug. 2, 1994); AJM Packaging Corp., Docket No. C-3508 (July 20, 1994); LePage's,
Inc., Docket No. C-3506 (July 19, 1994); Oak Hill Indus., Docket No. C-3507 (July 19, 1994); America's Favorite
Chicken Co., Docket No. C-3504 (July 5, 1994); Orkin Exterminating Co., Docket No. C-3495 (May 25, 1994); Archer
Daniels Midland Co., Docket No. C-3492 (Apr. 12, 1994); Mr. Coffee, Inc., Docket No. C-3486 (Mar. 25, 1994);
Redmond Prods., Docket No. C-3479 (Feb. 10, 1994); White Castle Sys., Docket No. C-3477 (Jan. 13, 1994); G.C.
Thorsen, Inc., 116 F.T.C. 1179 (1993); Texwipe Co., 116 F.T.C. 1169 (1993); Nationwide Indus., 116 F.T.C. 853
(1993); DeMert & Dougherty, Inc., 116 F.T.C. 841 (1993); PerfectData Corp., 116 F.T.C. 769 (1993); Mobil Oil Corp.,
116 F.T.C. 113 (1993).