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Locke Lord QuickStudy: New California Law More Restrictive Than FTC Guides on Environmental Claims

12/9/2011

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New California Law More Restrictive Than FTC Guides on Environmental Claims

For Food, Beverages and Plastic Bags 

BEWARE marketers, retailers, distributors and manufacturers of plastic bags and food and beverages in plastic packaging! Environmental packaging claims that pass muster under Federal Trade Commission (FTC) law and guides may now be unlawful under a new, more restrictive California law.

In California, Marketing and Package Claims Unlawful
Recently, in the first lawsuit to enforce a new law, California Attorney General Kamala Harris sued two makers of plastic bottled water and their bottle supplier for marketing and labeling the bottles as “100 percent biodegradable and recyclable” in violation of California law. The Complaint alleges that the California Legislature has determined that any marketing claims for plastic bottles as being biodegradable are inherently misleading to consumers.

In 2008, the California Legislature passed a landmark environmental marketing law banning the use of words like “biodegradable,” “degradable,” or “decomposable” in the labeling of plastic food or beverage containers. The 2008 law also prohibited labeling plastic bags and plastic food and beverage containers as “compostable” or “marine degradable” unless the item met specific testing standards established by the American Society for Testing and Materials (ASTM).

Beginning in July 2011, the 2008 law also required manufacturers of “compostable plastic bags” to comply with the FTC Guides for Use of Environmental Marketing Claims (colloquially known as the “Green Guides”). In particular, makers of plastic compost bin liners must ensure that the bags contain visual reminders that the bags are compostable for consumers, like dying the bag green, or labeling both sides as “COMPOSTABLE” in big letters next to a big green stripe. After July 1, 2011, compostable plastic bag makers also were not allowed to market their bags as “recyclable” for fear that they will “contaminate” the recycling stream.

Violators under the statute could be on the hook for civil fines up to $2,000 per violation for repeat offenders, plus court costs if the state sues and wins. But the price tag for companies not playing by the rules could be even higher, since the law does not rule out class action lawsuits under California’s Unfair Competition Law or False Advertising Law.

Further, on October 9, 2011, California Governor Jerry Brown signed Senate Bill 567 into law. This bill will expand the 2008 law to all plastic products beginning in 2013.

Companies Claim Plastic Bottles Decompose in 5 Years
Two of the companies named in the recent California Attorney General action, Balance and Aquamantra, claim that their bottles are the first ones created with the ability to decompose in less than five years in a landfill or compost area. According to the label, the bottle manufacturer, ENSO, claims that a microbial additive created the “first truly biodegradable and recyclable” plastic bottle. The California Attorney General’s Office disagrees in the recent suit, contending that plastic takes thousands of years to break down, that the breakdown does not always happen when the bottles sit in a landfill after consumers fail to recycle properly and that the additives introduced by the defendants are ineffective, thus rendering the “biodegradable” claim false.

FTC Green Guides Have Different Standard
The FTC issued proposed changes to its Green Guides that provide in Sec. 260.7 a requirement for substantiation of unqualified biodegradable claims:

An unqualified claim that a product or package is degradable, biodegradable or photodegradable should be substantiated by competent and reliable scientific evidence that the entire product or package will completely break down and return to nature, i.e., decompose into elements found in nature within a reasonably short period of time after customary disposal.

Thus, the FTC Green Guides permit marketers to justify the use of a biodegradable claim by submitting proof of biodegradability “within a reasonably short period after customary disposal.” In contrast, California law creates an inherent and irrefutable presumption that a biodegradable claim is inherently deceptive to consumers and cannot be saved by showing of substantiation proof.

Implications
Since California law creates an irrefutable presumption that environmental claims such as biodegradable and compostable are deceptive to consumers, national marketing of plastic bottles and plastic bags (and as soon as 2013 all forms of plastic) cannot include claims of biodegradable and compostable. Alternatively, national marketers can adopt a separate bottle for marketing and distribution in California. Compliance with the FTC Green Guides will not be a safe harbor against violation of the California law.

For more information on the matters discussed in this Locke Lord QuickStudy, please contact the authors:

Paul C. Van Slyke | T: 713-226-1406 | pvanslyke@lockelord.com
Brandon J. Witkow | T: 213-687-6781  | bwitkow@lockelord.com
Gaston Kroub | T: 212-415-8585 | gkroub@lockelord.com