Upcoming FTC Green Guides Revisions
Air carriers face increasing pressure from governments, investors, and consumers to reduce greenhouse gas emissions to mitigate climate change. As the aviation industry explores ways to reduce greenhouse gas emissions in the face of industry-specific obstacles to doing so, many air carriers have marketed steps they are taking to combat climate change in response to public demand for action. In this marketing, carriers often use terms such as “carbon neutral” and “net zero” to describe their current operations or future goals. Some of these marketing claims have led to allegations of “greenwashing,”[1] an organization’s dissemination of false or misleading information with the goal of “present[ing] an environmentally responsible public image.”[2]
In marketing efforts to combat climate change, air carriers should pay close attention to upcoming revisions in the Federal Trade Commission’s[3] “Guides for the Use of Environmental Marketing Claims” (the “Green Guides”).[4] Although the Green Guides are not binding on air carriers, the Green Guides’ revisions could help carriers avoid future consumer claims and enforcement actions.
I. What are the Green Guides?
The Green Guides set forth the FTC’s views on environmental marketing claims to “help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. 45,” which prohibits “unfair or deceptive acts or practices in or affecting commerce.”[5] The Green Guides apply to claims made in all forms of marketing and any medium.[6]
The Green Guides are “industry guides” and “do not [alone] have the force and effect of law.”[7] The Guides, however, are the “most frequently cited source of guidance for green marketing in the US”[8] and several states have incorporated the Green Guides into their consumer protection laws.[9] In jurisdictions where the Green Guides are not incorporated into consumer protection laws and lack the force of law, they are seen as persuasive authority, including in FTC enforcement actions.
The FTC first issued the Green Guides in 1992 and published revisions in 1996, 1998, and 2012. The claims covered in the current version include “general environmental benefit claims,”[10] “carbon offsets,”[11] environmental “certifications and seals of approval,”[12] and “renewable energy claims.”[13]
As to general environmental benefit claims, the Green Guides warns marketers against making “unqualified general environmental benefit claims” stating as follows:
Unqualified general environmental benefit claims are difficult to interpret and likely convey a wide range of meanings. In many cases, such claims likely convey that the product, package, or service has specific and far-reaching environmental benefits and may convey that the item or service has no negative environmental impact. Because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims.[14]
This warning is followed by guidance and examples as to how marketers can qualify environmental benefit claims and avoid deceiving their audiences.[15]
As to carbon offsets, the Green Guides advise marketers to “employ competent and reliable scientific and accounting methods to properly quantify claimed emission reductions and to ensure that they do not sell the same reduction more than one time.”[16] The Green Guides further advise that it is “deceptive to misrepresent… that a carbon offset represents emission reductions that have already occurred or will occur in the immediate future” and that it is “deceptive to claim… that a carbon offset represents an emission reduction if the reduction, or the activity that caused the reduction, was required by law.”[17] Although addressing claims using terms such as recyclable, degradable, and compostable, the current version of the Green Guides does not directly address greenhouse gas reduction claim terminology such as “carbon neutrality” and “net zero.”[18]
As part of its scheduled review of the Green Guides, in December 2022, the FTC published a request for public comments on the “efficiency, costs, benefits, and regulatory impact of the [Green] Guides.”[19] Among the specific issues raised in the FTC’s request was that of “Carbon Offsets and Climate Change” and consumer perception of marketing claims of “net zero,” “carbon neutral,” “low carbon,” and “carbon negative.”[20] The comment period closed on April 24, 2023.[21] The FTC is expected to issue revised Green Guides in 2024. Given the increase in climate change-focused claims since 2012 and the FTC’s specific request for comments in this area, many expect that the FTC will revise the Green Guides to guide marketing claims of carbon neutrality.
Without the luxury of waiting for the FTC to issue its revised guidelines, the Southern District of New York recently used guidance from the Green Guides in deciding a motion to dismiss on a consumer protection claim focused on the usage of the term “carbon neutral” in the defendant’s marketing.[22] Perhaps surprisingly, the court found that the term “carbon neutral” “may plausibly deceive and mislead as a type of [unqualified] general environmental benefit that the FTC warns against.”[23]
II. How do the Green Guides Apply to Air Carriers and Air Transportation Sales?
Section 5 of the FTC Act does not apply to air carriers. Instead, the authority to prohibit unfair or deceptive practices of air carriers lies exclusively with the US Department of Transportation (DOT) under 49 U.S.C. 41712, which the DOT has found to be “closely modeled after Section 5.”[24] Section 5 does apply to ticket agents in the sale of air transportation; the FTC and DOT share authority over such sales.[25] Further, unlike consumer protection matters under the FTC’s purview, state law consumer protection statutes, including those incorporating elements of the Green Guides, are preempted by federal law, the Airline Deregulation Act of 1978 (ADA).[26] [27] Therefore, neither Section 5 of the FTC Act nor state consumer protection laws should apply to greenwashing claims against air carriers.
While the FTC lacks the authority to regulate air carriers, the DOT may look to FTC interpretations of “deceptive” practices in bringing enforcement actions. To “provide greater clarity, transparency, and due process in future aviation consumer protection rulemakings and enforcement actions,” the DOT issued a rule defining “unfair”[28] and “deceptive”[29] in a way that echoes the FTC’s interpretation of the terms in Section 5[30] of the FTC Act. According to the DOT, the rule was a codification of existing practice and the DOT “look[s] to FTC Policy Statements, as well as FTC precedent and the [DOT]’s own precedent, for guidance in determining whether any specific practice meets all of the component elements of unfairness and deception.”[31]
Given that the Green Guides were published to help marketers “avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act” and that the DOT’s definitions of “unfair” and “deceptive” are intended to mirror FTC policy, air carriers should pay attention to the Green Guides and the expected Green Guides revision when making environmental marketing claims. In an enforcement action, the DOT is likely to view the Green Guides as persuasive authority.
Conclusion
Air carriers should pay close attention to upcoming Green Guides revisions, which may include guidance as to representations of carbon neutrality and net zero carbon emissions. Although the Green Guides do not have the effect of law and the FTC does not have jurisdiction over air carrier consumer protection claims, air carriers can benefit from compliance with the Green Guides to avoid a DOT enforcement action as to climate change-focused marketing.
[1] See e.g., Complaint, Berrin v. Delta Air Lines, Inc., Case No. 2:23-cv-04150 (C.D. Cal. May 30, 2023).
[2] Celine S. Moubayed, Greener Skyline Disclosures: The SEC, Shareholders, and Airline Industries’ Misunderstood Fight over Mandatory Climate Change-Related Reporting, 29 Hastings Env’t L. J. 143, 153 (2023).
[3] The Federal Trade Commission (FTC) is a government agency with the mission of “protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research, and education.” FTC, Mission (2023), https://www.ftc.gov/about-ftc/mission.
[4] 16 CFR 260.1, et seq.
[5] 16 CFR 260.1(a).
[6] 16 CFR 260.1(c).
[7] 16 CFR 260.1(a).
[8] Meegan Brooks and Anthony Anscombe, Navigating FTC Guidance and Green Marketing Litigation, Steptoe L.L.P. (2019), https://www.steptoe.com/a/web/195909/NavigatingFTCGuidance.pdf.
[9] See e.g., Ala. Code 22-27A-1 (2021); Cal. Bus. & Prof. Code 17580.5(a) (2023); N.Y. Comp. Codes R. & Regs. tit. 6, 368-1.3(a)(2022).
[10] 16 CFR 260.4.
[11] 16 CFR 260.5.
[12] 16 CFR 260.6.
[13] 16 CFR 260.15.
[14] 16 CFR 260.4(b).
[15] 16 CFR 260.4(c) & (d).
[16] 16 CFR 260.5(a).
[17] 16 CFR 260.5(b) & (c).
[18] The current Green Guides do offer an example of an online travel agency inviting consumers to purchase offsets to “neutralize the carbon emissions from your flight.” However, this example was used only to demonstrate that such a claim is deceptive if the proceeds would not reduce greenhouse gas emissions within two years.
[19] Guides for the Use of Environmental Marketing Claims (“Green Guides”), 87 Fed. Reg. 77,766 (Dec. 20, 2022).
[20] Id. at 77,768.
[21] Green Guides, 88 Fed. Reg. 7,657 (Feb. 6, 2023).
[22] Dorris v. Danone Waters of America, 2024 WL 112843 (S.D.N.Y. Jan. 10, 2024).
[23] Id. at *3.
[24] Defining Unfair or Deceptive Practices, 85 Fed. Reg. 78,707, 78,709 (Dec. 7, 2020); Defining Unfair or Deceptive Practices, 85 Fed. Reg. 11,881, 11,882 (Feb. 28, 2020)(Notice of Proposed Rulemaking).
[25] Id.
[26] 49 U.S.C. 41713(b)(“Except as provided in this subsection, a State, political subdivision of a State, or political authority of at least 2 States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.”); American Airlines, Inc. v. Wolens, 513 U.S. 219, (1995)(finding preemption of Illinois Consumer Fraud and Deceptive Business Practices Act).
[27] Notably, consumer advocacy groups and FTC Commissioner Rohit Chopra argued against the proposal that DOT definitions of “unfair” and “deceptive” mirror the FTC’s interpretations, because the ADA preemption prohibits states from regulating airline unfair and deceptive practices. Defining Unfair or Deceptive Practices, 85 Fed. Reg. 78,707, 78,709 (Dec. 7, 2020).
[28] See 14 CFR 399.79(b)(1)(“A practice is ‘unfair’ to consumers if it causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition.”).
[29] See 14 CFR 399.79(b)(2)(“A practice is ‘deceptive; to consumers if it is likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter. A matter is material if it is likely to have affected the consumer’s conduct or decision with respect to a product or service.”)
[30] Unlike the FTC Act’s application to “acts or practices,” Section 41712 applies to “practices” only. Therefore, air carriers may argue that an enforcement action cannot be taken against a carrier for “a single act or isolated acts by a carrier.” Defining Unfair or Deceptive Practices, 85 Fed. Reg. 78,707, 78,709 (Dec. 7, 2020)(noting comments made by A4A and IATA).
[31] Defining Unfair or Deceptive Practices, 85 Fed. Reg. 78,707, 78,709 (Dec. 7, 2020).
