This week, environmental activists in the state of Vermont filed a petition with the United States Federal Trade Commission (FTC) alleging that an electric utility made improper environmental marketing claims regarding its renewable energy portfolio.  Petitioners allege that the utility told its customers that their carbon footprint was reduced by electricity from renewable sources, such as wind and solar projects, in the utility’s portfolio.  However, the utility also allegedly sold substantially all of the Renewable Energy Credits (RECs) generated by these sources to other utilities.  Petitioners argue that the utility’s claims to its customers constituted “double counting” in violation of the Federal Trade Commission Act (FTCA).  Petitioners are requesting that FTC begin an investigation and, if appropriate, institute an enforcement action.  The petition is being widely reported on, including in Washington DC, Miami, and Houston newspapers.

Companies should carefully review all environmental marketing claims to ensure compliance with the FTCA and its overseas counterparts.  The FTC uses its Green Guides, which were substantially updated in October 2012, to evaluate environmental marketing claims.  Since the Green Guides update, FTC has brought seven sets of enforcement actions against a total of 15 defendant companies for allegedly improper environmental marketing claims.  Activists and competitors have several domestic avenues for alleging that such claims are improper, including the following:

  • Competitors or activists may file a petition with the FTC urging an enforcement action.
  • Competitors may file a suit under the Lanham Act alleging that improper marketing claims caused them harm.  Such suits are not limited to environmental marketing claims.  For example, Pom Wonderful sued Coca Cola under the Lanham Act in 2008, alleging that Coca Cola’s Minute Maid juice blend overstated the amount of pomegranate juice it contained.  The Supreme Court recently held that the suit was not precluded by Food and Drug Administration labeling requirements.  Pom Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228 (2014).
  • Competitors may file a public challenge with the National Advertising Division (NAD) of the Better Business Bureau.  After evaluating both the challenger and the advertiser’s positions, NAD will issue a public (albeit non-binding) decision within 60 business days.

Even if a challenge brought under one these mechanisms is ultimately found to be without merit by the relevant authority, the challenges themselves are often widely reported on in the press.  Environmental marketing claims should therefore be carefully evaluated from a risk management perspective before being put in the field.