[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]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
16 CFR PART 260
Request for Comment Concerning Environmental Marketing Guides
AGENCY: Federal Trade Commission.
ACTION: Request for public comments.
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
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
[[Page 38981]]
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
[[Page 38982]]
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.
---------------------------------------------------------------------------
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
