Brian Dunkiel

House and Senate pass legislation to expand options for handling excavated soils from projects located in smart growth areas.

The Vermont House and Senate passed legislation this week that will help save hundreds of thousands, if not millions, of dollars for economic development and redevelopment projects located in downtowns, village centers, and other areas where state policies incentivize investment. The legislation, which now heads to the Governor for approval, addresses certain development projects that require the excavation and offsite management or disposal of soils for essential infrastructure such as: foundations and footers, parking garages, stormwater control measures, and grading. These excavated soils frequently contain levels of polycyclic aromatic hydrocarbons (“PAHs”), arsenic, and lead. The source of these PAHs, metals and other potentially hazardous materials is often simply the area-wide atmospheric deposition of exhaust products from the incomplete combustion of hydrocarbons including wood, oil, coal, gasoline, and garbage. As a result, PAHs and select metals are often found in soils associated with downtowns and village centers at concentrations that exceed the current Vermont soil screening standards for residential use. Therefore, under existing Vermont environmental rules, these soils are not allowed to be treated as clean fill, are typically forbidden from being used on any other property, and are almost always required to be shipped for disposal at a certified landfill (i.e., Coventry). Unfortunately, the State requirements imposed on Coventry limit its ability to use most of this mildly impacted development soil as daily cover for the landfill. Allowing the use of the soils for daily cover would be a much more cost-effective disposal option than what the State currently allows.

Under the current soil management regulatory regime, the shipping costs, district charges, and tipping fees to dispose of these soils in certified landfills are expensive and add hundreds of thousands or even millions of dollars to project costs. Under existing Vermont rules, these costs are frequently unavoidable. Moreover, these costs are incurred by both public projects financed with Vermont and federal tax dollars, including Tax Increment Financing, state and federal grants and loans, and other public sources of funds and private development. The new legislation should significantly reduce or even eliminate these costs for eligible soils, while maintaining the protection of human health and the environment. The legislation requires the Department of Environmental Conservation (“DEC”) to use interim procedures set forth in the new statute and to promulgate rules by July 2016 to establish a regulatory process that will appropriately manage development soils. The new rules must create a process to identify suitable alternative disposal or reuse locations for these excavated development soils and to authorize the deposit of soils at these locations.

Here are key points contained in the legislations:

“Development soils” are eligible for the alternative handling options, and are defined as soils that contain concentrations of PAHs, arsenic, and lead that exceed the residential screening standard. The soils, when managed according to the requirements of legislation, will not pose new risk to the environment or human health. The legislation includes specific standards that must be met and approved by DEC before the soils are excavated and managed.
Soils excavated at properties located in designated downtowns, village centers, Tax Increment Finance districts, and Neighborhood Activity Centers are potentially eligible for alternative management, as long as the property is not part of a CERCLA site or subject to a CERCLA action.
The excavated development soils must be tested and handled in accordance with plans submitted and approved by DEC.
In some cases, excavated development soils can be moved to another parcel with “approximately equivalent” concentrations of PAHs, arsenic, and/or lead.
Excavated development soils can also be sent to approved categorical solid waste facilities or used as alternative daily cover at a certified landfill.
By July 2016, DEC is required to promulgate rules that, among other things, set a statewide or regional background soil concentration level for PAHs, arsenic and lead that represents “typical soil concentrations.” Soils with concentrations of PAHs, arsenic and lead below the background levels would not be considered “solid waste” under Vermont law and could be relocated and reused with fewer regulatory restrictions.

Click here to read the Burlington Free Press article: “State sympathizes with developers’ dirt”.

FTC resolves complaints against misleading and unsubstantiated biodegradability marketing claims

The FTC, yesterday, issued final orders in three cases involving biodegradable claims for plastic products.

The FTC charged the three companies under the Federal Trade Act, alleging the use of marketing materials that misrepresented the environmental characteristics of plastic products. More specifically, the marketing claims said that the products were biodegradable in a landfill or biodegradable over any specific period of time. The agency alleged that the companies made the biodegradable claims with insufficient scientific evidence.

The FTC’s Green Guides provide guidance to marketers on making environmental marketing claims in compliance with consumer protection laws. The Green Guides, updated in October 2012, offers new, more stringent requirements on the use of unqualified biodegradable claims.

Examples of the challenged claims from the FTC complaints include:

The products are “are biodegradable, i.e., will completely break down and decompose into elements found in nature within a reasonably short period of time after customary disposal”; and

The products “have been shown to be biodegradable, biodegradable in a landfill, or biodegradable in a stated qualified timeframe under various scientific tests including, but not limited to, ASTM D5511.”

These FTC enforcement actions continue the agency’s efforts to more closely watch environmental marketing claims.

photo by Kathleen Franklin

FDA announces standards for “Gluten-Free” labeling

Last week, the Food and Drug Administration announced new standards for “Gluten Free” labeling that apply to certain foods and dietary supplements. Thirty percent of American adults claim to cut down on or avoid gluten, according to research by the NPD group.

Under the new regulations, in order to be labeled “gluten-free,” “no gluten,” “free of gluten,” or “without gluten,” a food product must contain less than 20 parts per million of gluten. The FDA estimated that before the labeling regulations took affect, 5 percent of foods bearing “gluten-free” labels contained more than 20 parts per million of gluten. The FDA will allow foods to be labeled “gluten-free” when the food is inherently gluten-free, or it contains no gluten-containing grain, ingredient derived from a gluten-containing grain from which the gluten has not been removed, or ingredient derived from a gluten-containing grain from which the gluten has been removed if the gluten content remains above 20 parts per million.

The rule applies to foods and dietary supplements that are regulated by the FDA but does not apply to products regulated by the USDA, such as meat and eggs, and products regulated by the Alcohol and Tobacco Tax and Trade Bureau, such as alcoholic beverages. The FDA does not require manufacturers to test for gluten content before making “gluten-free” claims, but any “gluten-free” product found to contain more than 20 ppm of gluten will be deemed “misbranded.”

The information provided in this blog post is generic and based on the general definitions and provisions of FDA regulations as well as other FDA publications. This blog post and the information it contains should not be interpreted as legal advice for any specific situation. Individuals with specific questions about their business are encouraged to consult an attorney.

photo by Emily Carlin

Green Marketing: FTC orders mattress companies to cease unsubstantiated claims

The Federal Trade Commission has announced several proposed settlements in which mattress companies agreed not to make unsupported environmental claims about their latex mattresses. Relief-Mart, EcoBaby Organics, and Essentia Natural Memory Foam Company had each promoted their products as free of volatile organic compounds (VOCs). Relief-Mart and Essentia had also claimed that their products did not have the odor typically associated with memory foam. Essentia and EcoBaby had represented that their products were chemical-free, formaldehyde-free, and non-toxic. And finally, Essentia had advertised its mattresses as 100% natural, while EcoBaby’s promotional materials displayed its certification by NAOMI, the National Association of Organic Mattress Industry. The FTC initiated enforcement actions because the three companies could not demonstrate that their claims were backed by competent and reliable scientific evidence. The FTC also determined that NAOMI is merely an alter-ego of EcoBaby and that NAOMI did not apply objective standards when it granted EcoBaby its seal of approval.

The FTC, which has the task of policing unfair and deceptive marketing practices, issued its revised Green Guides in October 2012. The Green Guides indicate that environmental marketing claims—including “free-of” and “natural” claims—must have a reasonable basis, which often includes competent and reliable scientific evidence. Marketers must ensure not only the truthfulness of their express claims, but also the reasonable interpretations of their claims. Thus, when Relief-Mart claimed that its mattresses lacked the odors typically associated with other memory foam mattresses, the FTC found that a reasonable consumer could infer that Relief-Mart mattresses were free of VOCs. Without scientific evidence to substantiate that its mattresses meet the FTCs definition of VOC-free, Relief-Mart may neither directly state that its mattresses are VOC-free, nor may it indicate that the mattresses have no odor.

The Green Guides offer specific guidance on seals and certifications and provide that such seals may be endorsements. The FTC’s Endorsement Guides require disclosure of material connections between the endorser and the marketer. EcoBaby created NAOMI, which granted EcoBaby its seal of approval, according to the FTC, without applying objective standards. NAOMI’s website indicates that Pure-Rest Organics (EcoBaby) is the only company to have met NAOMI’s standards. The FTC has found that EcoBaby’s use of the NAOMI seal is deceptive because it gives the impression of a third-party, independent certification that is based on the application of objective standards.

These FTC actions are important beyond the mattress industry because they demonstrate that the FTC will take action against unsubstantiated “free-of” claims. Marketers should ensure that they have competent and reliable scientific evidence to back claims that a product is free of VOCs, and should also have substantiation for more general claims such as “non-toxic” or “chemical-free.” Terms like “100% natural” and “no chemical odor” may trigger FTC scrutiny because of the meanings they might imply to a reasonable consumer.

The FTC’s proposed settlements with the mattress companies indicate that a marketer should not claim that a product is “VOC-free” unless it has competent and reliable scientific evidence that the VOC emission level is zero micrograms per meter cubed or that the product contains no more than a trace level of VOCs. The FTC allows for “trace” levels when 1) no VOCs have been intentionally added; 2) the level is so low that it does not cause the harm to environment or health typically associated with the VOCs; and 3) the level is not higher than the “background levels in the ambient air.” In no case should a marketer claim that a product has been tested for VOCs or other chemicals when the marketer does not actually possess evidence of such tests.

The information provided in this blog post is generic and based on the general definitions and provisions of FTC regulations as well as the FTC’s documents concerning the actions against Relief-Mart, EcoBaby Organics, and Essentia Natural Memory Foam Company. This blog post and the information it contains should not be interpreted as legal advice for any specific situation. Individuals with specific questions about their business are encouraged to consult an attorney.

photo by bird’s eye

“All Natural” and “100% Natural” Claims in Food Marketing

Lawsuits against food producers marketing products as “all natural” and “100% percent natural” understandably make food makers nervous. Once named in a class action suit, the cost of defending the case, whether it has merit or not, can put a real strain on small food makers. Unfortunately, other than avoiding the use of the “all natural” claim altogether, there are not many clear legal rules to follow, in part because the use of the claim “natural” is largely unregulated by federal agencies. The exception is the U.S. Department of Agriculture, which has outlined some requirements for natural claims associated with meat and poultry.

There are some commonsense measures food makers can take, however, to evaluate and possibly minimize the risk of being the next named defendant. By way of background, a survey of the pending class action cases shows that the “natural” cases tend to ask courts to resolve the following questions:

1) Are processed sugars and sweeteners natural?

2) Are foods containing GMOs natural?

3) Are foods containing certain synthetic preservatives natural, and

4) At some point, does a certain method or extent of processing render a product no longer natural?

Food makers labeling products as “all natural” can use these questions as an initial filter to assess legal risk by evaluating if the products they sell contain the ingredients or use the processes that have been the basis of complaints in prior or pending cases.

There are other measures food makers can take to protect themselves. Obviously, removing the “all natural” claim is the surest way to avoid a class action suit. But, before conceding defeat, natural food product makers should consult with their scientists and supply chain professionals to carefully review their ingredient lists. Does the product contain ingredients that the average customer can pronounce without thinking too hard? Are some ingredients difficult to source or certify as non-GMO? It can be important in this evaluation to clarify internally what the use of the claim “all natural” means to the company.

With sound information, there are also precautions food makers can take. For example, can the “all natural” claim be qualified by specifying what aspect of the product or which ingredient(s) are “all natural.” Consider also, if there are alternative terms that can effectively and accurately describe the product, such as made with “only simple ingredients.” With similar efforts to clarify or rephrase “all natural” claims some of the risk associated with those terms may be avoided.

There are, of course, numerous other issues that arise when claiming that products are “all natural”, and we can’t cover them all in this article. These examples are intended as general information and not specific legal advice. Products and situations can be unique and we encourage food producers to speak with an attorney if they have questions about their specific situation.

The article appeared in The Griffin Report of Food Marketing, May 2013

Changes to Vermont’s Brownfield Clean-up Program Expected to Become Law Soon

Towards the end of the 2013 legislative session, the Vermont House and Senate unceremoniously passed H. 226, advancing potentially significant changes to Vermont’s brownfield clean-up program. The updates generally fall into two categories: 1) align Vermont defenses to clean-up liability with federal defenses under CERCLA, and 2) provide new and improved options for municipalities and regional development corporations to participate in getting contaminated properties characterized, cleaned and prepared for redevelopment.

A core component of Vermont’s brownfield program is limitations on liability codified in Vermont statutes. Property owners can participate in the Brownfields Reuse Initiative Environmental Liability Limitation Program, which is run by Vermont’s Agency of Natural Resources. The legislation passed defines the amount of site investigation required to have been conducted by a person to be eligible to liability defenses the same as the “all appropriate inquiry” used by the U.S. Environmental Protection Agency in 40 C.F.R. Part 312. This change clarifies potential confusion created by the Vermont Supreme Court decision in State v. Howe Cleaners, which involved a fact-intensive inquiry into whether a property owner was eligible for the defenses to clean-up liability. The legislation also aligns the state rules governing limitation to liability for secured lenders with federal law.

Similar to some municipalities, some Vermont Regional Development Corporations (RDCs) play an important role in redeveloping contaminated properties in Vermont. RDCs can purchase, investigate, and remediate contaminated properties prior to selling them to private developers for redevelopment. Yet, the special status available to municipalities as an innocent owner when they elected to conduct predevelopment work was not available to RDCs. The legislation corrects this oversight, along with making several other technical modifications that would apply to both municipalities and RDCs acting in the predevelopment role.

Vermont Governor Shumlin is expected to sign the legislation into law in June.

NAD Recommends Marketer Discontinue “Eco-Friendly” Claim

Almost a month after the Federal Trade Commission (FTC) released its revised Green Guides, the National Advertisers Division (NAD) of the Better Business Bureau ruled that GreenPan, Inc. should discontinue numerous environmental claims when marketing its nonstick cookware. GreenPan’s claims promoted the fact that its products do not use the chemicals PFOA or PTFE.

DuPont, a chemical company which also markets a nonstick coating system for cookware that use perfluorooctanoic acid (PFOA) in its manufacturing process for coatings containing Polytetrafluoroethylene (PTFE), argued that GreenPan’s claims conveyed the misleading message that PTFE non-stick coatings – including non-stick coating systems manufactured without PFOA – are unsafe, unhealthy, and environmentally harmful. DuPont’s chief concern was that GreenPan’s advertising conveyed the misleading message that all PTFE non-stick coatings are made with PFOA.

PFOA — a key processing agent in making nonstick and stain-resistant materials — has been linked to cancer and birth defects in animals and is in the blood of 95 percent of Americans, including pregnant women. It has also been found in the blood of marine organisms and Arctic polar bears. DuPont and several other companies agreed in 2006 to virtually eliminate this harmful chemical used to make Teflon from all consumer products coated with the ubiquitous nonstick material by 2015.

The NAD recommended that GreenPan discontinue the use of certain “free-of” PFOA claims. Most noteworthy in the decision; however, is the NAD’s recommendation that GreenPan discontinue its “eco-friendly” claims. This is noteworthy because the FTC’s revised Green Guides discourage in very certain terms the use of generic clean claims, such as “eco-friendly.” The combined effect of the FTC’s revised Green Guides and the NAD’s decision which promptly follows it should put marketers on notice to start revising those generic green claims that are virtually impossible to substantiate.

FTC Issues Final Revised Green Guides 2012

Today, as anticipated, the Federal Trade Commission (FTC) issued its updated Green Guides for 2012.

At a briefing on the Green Guides held today in New York City, the FTC’s, Jim Kohm, explained that the FTC applied some basic principles when reviewing the thousands of public comments on the draft Green Guides, which were published more than two years ago. These principles included:

1. The FTC is not an environmental enforcement or policy setting agency. The purpose off the Green Guides is to help consumers get truthful information about products and services and to help make sure that that market for these products and services is a fair playing field for marketers.

2. The final guides generally follow the draft guides, unless comments provided sound evidence supporting a change is warranted and made specific recommendations for modifications supported by the evidence provided.

3. The FTC tried to harmonize the Green Guides with International environmental marketing standards, but frequently could not do so because international standards often have the purpose of promoting green choices, which is not a statutory directive for the FTC.

This third principle is likely to be a source of frustration for some stakeholders following the FTC’s work on environmental claims.

As expected, the FTC’s final Green Guides remained silent on sustainable, natural, and organic claims.

We will soon post further analysis on various claims covered by the Green Guides, including new guidance on claims involving: general environmental benefits, recyclable products, recycled content, carbon offsets, biodegradable, compostable, renewable materials, renewable energy, and others.

Long Anticipated FTC Green Guides Expected to be Published Next Monday?

It has been almost two years since the Federal Trade Commission (FTC) published for public comment its draft revised Green Guides (a.k.a. Guides for the Use of Environmental Marketing Claims). It is now anticipated that the FTC intends to release its final revised version next Monday, October 1, 2012. What are some of the issues that we are looking for in the FTC’s final version?

By way of background, the 2010 draft left some of its previous guidance unchanged, but updated guidance in these important areas:

General benefit environmental claims (i.e. “Eco-friendly”) are strongly discouraged and viewed by the FTC as virtually impossible to substantiate.
More stringent requirements and substantiation for the use of claims pertaining to biodegradable and compostable products.
Guidance on the use of green certifications and seals placing the burden on the marketer to disclose material connections with the certifier and maintain the ability to substantiate the claim based on the certification or seal.
All new guidance on claims involving the use of renewable materials, renewable energy, and carbon offsets.

It has been reported that the FTC received thousands of comments on its draft Green Guides. Here are three issues we are looking for in the final draft:

Will the draft guidance on “recyclable” claims stand? The FTC’s draft guidance on recyclable claims possibly has the broadest impact on existing green marketing claims. The FTC’s 2010 draft would create three tiers of possible claims based upon the general availability of recycling programs to consumers. If a “substantial majority” of consumers or communities have access to relevant recycling facilities, a marketer can make an unqualified claim that the product is recyclable. If only a “significant percentage” of consumers or communities have access to relevant recycling facilities, qualifications such as “the product may not be recyclable in your area” should be used. If less than a “significant percentage” of consumers or communities have access to the relevant recycling programs, then the claim must be qualified with “the product is recyclable only in the few communities that have relevant recycling programs.” This proposal received significant public comment, many comments questioning the administrative burden to accurately review each community’s recycling program and to keep this information current.
Revised guidance on “biodegrable” and “compostable” claims: The FTC received significant push-back through many public comments that its guidance on the use of these terms is confusing at best and unworkable at worst. For example, in its 2010 draft, the FTC’s analysis casts doubt on widely used tests for biodegradation, causing confusion among companies that sell biodegradable products and have substantiation to validate these claims.
Guidance on the use of “all natural” claims: Since 2010, dozens of lawsuits have been filed in numerous states challenging marketers’ use of “all natural” claims. The FTC’s 2010 draft sidestepped the issue and provided no guidance to marketers. With the litigation pending, will the FTC continue to remain silent?

We will have to wait until next Monday to see if these issues are resolved and what new issues emerge.

Green Marketing Claims – FTC Green Guides: Renewable Energy and Carbon Offsets

When informing customers, clients and consumers about the new solar panels located at your business, is there any difference between saying that the electricity is being “powered by solar energy” versus “generating energy from the sun”? Yes, there very well could be. According to the Federal Trade Commission (FTC) and other regulators, when it comes to advertising a business’s best intentions to obtain energy from more climate-friendly sources, it could be the difference between a truthful advertisement and consumer fraud. The line between the two could depend on whether the Renewable Energy Credits (RECs) associated with the new solar panels are retained or sold.

The rapid development of renewable energy projects and the marketing of the environmental attributes associated with them have attracted the FTC’s attention and that of several other regulators (including several states’ attorneys general and even the Vermont Public Service Board). The FTC’s draft revised Guides for the Use of Environmental Marketing Claims (Green Guides) was published almost eighteen months ago and observers still await its final publication. What is delaying the FTC in releasing the final revised guides? Some observers suspect the delay could be due to the thousands of comments the agency received, many in response to the Green Guides’ proposed handling of renewable energy and carbon offset claims.

The Green Guides are not binding regulations. The Green Guides provide marketers with insight into how the FTC may define deceptive marketing claims under the Federal Trade Commission Act (FTC Act). The FTC Act gives the FTC broad powers to prosecute “deceptive acts or practices,” including misleading advertising and marketing.

The proposed Green Guides guidance on renewable energy includes:

Marketers should not make unqualified renewable energy claims if the power used to manufacture any part of the product was derived from fossil fuels.
Marketers should qualify claims by specifying the source of renewable energy (e.g., wind or solar). Additionally, marketers should qualify claims if less than all, or virtually all, of the significant manufacturing processes involved in making the product/package were powered with renewable energy or conventional energy offset by renewable energy certificates (“RECs”).
Marketers that generate renewable energy (e.g., by using solar panels), but sell RECs for all of the renewable energy they generate should not represent that they use renewable energy.

Guidance offered by the FTC on carbon offsets includes the following:

Marketers should have competent and reliable scientific evidence to support their carbon offset claims, including using appropriate accounting methods to ensure they are properly quantifying emission reductions and are not selling those reductions more than once.
Marketers should disclose if the offset purchase funds emission reductions that will not occur for two years or longer.
Marketers should not advertise a carbon offset if the activity that forms the basis of the offset is already required by law.

Here in Vermont, the Public Service Board has addressed renewable energy marketing claims in the context of renewable energy projects participating in Vermont’s Standard Offer program (also known as a Feed-in Tariff). In Vermont’s Standard Offer program, selected new renewable projects enter into a long-term power purchase agreement (PPA) with the program’s facilitator. Under the PPA, all of the renewable and other environmental attributes of the power produced at the plant are to be managed in a manner to benefit Vermont ratepayers and are sold to retail utilities. This raises the issue of what, if any, marketing claims the plant owners can make about the environmental characteristics of the energy produced at these projects.

In some early Public Service Board (PSB) proceedings for Standard Offer projects, the Department of Public Service (DPS) asked the PSB to set conditions in the Certificate of Public Good (CPG) limiting how a project owner can describe the energy produced at the plant. More specifically, the DPS sought a condition that would have prohibited a plant owner from doing anything that could “cause the renewable energy credits (“RECs”) or other environmental attributes . . . to be double counted.” In later proceedings, the PSB required plant owners to follow all pertinent Standard Offer program rules and declined to adopt a specific condition like the one sought by DPS.

In plain terms, RECs are “double counted” when the renewable energy attributes of the energy are claimed by more than one party. These attributes can be claimed in advertisements or marketing or in more formal ways to satisfy regulatory requirements. No matter the nature of the claim, the attributes should only be claimed by one party. Green-E, an organization that certifies environmental commodities and products that mitigate climate change has published several reports on “best practices” to follow when making renewable energy and climate neutrality claims.

Small and large businesses are concluding that the multiple bottom line benefits of renewable energy are compelling. Promoting the production of renewable energy for advertising purposes, however, is increasingly complicated business.

House and Senate pass legislation to expand options for handling excavated soils from projects located in smart growth areas.

FTC resolves complaints against misleading and unsubstantiated biodegradability marketing claims

FDA announces standards for “Gluten-Free” labeling

Green Marketing: FTC orders mattress companies to cease unsubstantiated claims

“All Natural” and “100% Natural” Claims in Food Marketing

Changes to Vermont’s Brownfield Clean-up Program Expected to Become Law Soon

NAD Recommends Marketer Discontinue “Eco-Friendly” Claim

FTC Issues Final Revised Green Guides 2012

Long Anticipated FTC Green Guides Expected to be Published Next Monday?

Green Marketing Claims – FTC Green Guides: Renewable Energy and Carbon Offsets

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