Five “Green Law” Issues to Look for in 2011

Green Leasing. Arkansas is a landlord-friendly state. Evictions are expensive due to the filing fees and because a lawyer is required, but they are also straight-forward proceedings, and the end result is generally clear: material lease violations mean eviction. Leases in green buildings, however, present new and unique issues. Consider the tenant who leases space in a LEED-certified building that is subsequently decertified, or the landlord of a LEED-certified building faced with a tenant who engages in conduct that threatens certification. In these situations, the tradition remedies of possession or money damages may not be appropriate. This means the parties, and their lawyers, will need to do some new thinking, and they will need to do it on the front end when they are drafting the lease.

LEED as the New Building Code. The City of Little Rock’s resolution that all new city buildings be LEED-certified raises interesting issues because it treats the LEED requirements as though they were building codes. But they are not. LEED standards are aspirational and were designed to codify best practices. Treating them as building codes means using them for an unanticipated purpose, likely with unanticipated consequences. What happens if a new building fails the standard? What is the mechanism of enforcement? Do we really mean to give the U.S. Green Building Council power over our local municipal buildings? Is LEED even the right standard? Why not Energy Star? What happens when the city refuses to pay a contractor who, despite best efforts, has failed to deliver a certified building? The LEED standard was not made for this type of duty. Send in the lawyers.

Green Washing and False Green Claims. Green Washing involves misrepresentations (or outright lies) regarding the “green” or “sustainable” characteristics of place, product, process, or service. Envision a granite countertop advertised as “recyclable.” All things being equal, green-conscious consumers will prefer this product over the granite countertop that is not advertised as “recyclable.” And yet, if there are no places where granite countertops can actually be recycled, then the “recyclable” claim is meaningless. Likewise, even if there are recycling opportunities for granite, if the countertop is made from virgin granite, the “recyclable” claim is misleading. These are examples of green washing, and they related directly to claims that I have seen made in 2010 in the Arkansas sustainasphere. In eight days, on December 9, 2010, the comment period for the FTC’s proposed green guidelines related to green claims will end, and the new guidelines will be final and go into effect sometime in 2011. All making green claims should take notice, and be prepared. And consider this: are those who make false green claims violating the Arkansas Deceptive Trade Practices Act?

Will LEED survive? The answer is yes, but it’s going to be an interesting journey because of a class-action lawsuit filed in federal court in New York in October, Gifford v. USGBC. The Gifford suit challenges the very essence of the LEED certification regime, contending that LEED lacks an empherical, scientific basis, does not result in buildings that are more energy efficient, and steers consumers away from energy efficiency certification programs that do achieve greater efficiency. This lawsuit has it all – allegations of fraud and wrongdoing, misrepresentations, anti-competitive and monopolistic behavior, deceptive trade practices, even criminal racketeering. It is sensational, and I predict that as the case progresses at least three things will happen. First, there will be copycat lawsuits. Second, the USGBC will make some interesting changes to the way in which is promotes and manages the LEED brand. And third, the alleged class will not be certified and the case will be dismissed before trial.

LEEDigation and the Arkansas Deceptive Trade Practices Act. To me, the allegations in the Gifford case with the greatest staying power are those that LEED constitutes a deceptive trade practice. Most states, including Arkansas, have a statute that prohibits businesses from engaging in deceptive, unlawful, and unconscionable practices in business, trade, and commerce. (For a classic example, think rolling back an odometer.) To date, there has not been much LEEDigation in Arkansas. But it is coming, and I predict it will come in 2011. Consider the energy efficiency guru who “guarantees” a certain level of LEED certification and then fails to deliver. The injured party will likely be able to swear out a complaint that the guru violated the Arkansas Deceptive Trade Practices Act. Likewise, many in the sustainable blogosphere are predicting that either (a) there is a wave of LEED-decertification coming or (b) that there are numerous buildings that should be decertified but, for a myriad of reasons, will not be. Either way, the end result is LEEDigation, and if there is actual injury a cause of action for violating the Arkansas Deceptive Trade Practices Act is a natural fit.

It Ain’t Easy Claiming Green Part II: Know the Seven Sins of Greenwashing

The public comment period for the Federal Trade Commission’s new proposed guidance for green claims ends on December 10, 2010. I expect the guidance to become final sometime in early 2011. If you are in the business of making some kind of green claim, you need to be preparing.

One way to begin preparing for the new FTC guidance is to get fluent with the “Seven Sins of Greenwashing.” The Seven Sins of Greenwashing are the product of several years of study by environmental marketing gurus Terrachoice Environmental Marketing. Starting way back in 2007, Terrachoice sent researchers into big-box stores throughout North America. The researchers wrote down every green claim on every product they encountered, along with supporting evidence and other stuff important and obvious to researchers.

Terrachoice found that there was a lot of “greenwashing” going on – that is, “the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service.”

It also turns out that, once identified, greenwashing practices were easily categorized. Hence, “The Seven Sins of Greenwashing.” So, without further ado, here they are:

Sin of the Hidden Trade-Off. A claim suggesting that a product is “green” based on a narrow set of attributes without attention to other important environmental issues. Paper for example, is not necessarily environmentally-preferable just because it comes from a sustainably-harvested forest. Other important environmental issues in the paper-making process, such as greenhouse gas emissions, or chlorine use in bleaching may be equally important.

Sin of No Proof. An environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are facial tissues or toilet tissue products that claim various percentages of post-consumer recycled content without providing evidence.

Sin of Vagueness. A claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. “All-natural” is an example. Arsenic, uranium, mercury, and formaldehyde are all naturally occurring, and poisonous. “All natural” isn’t necessarily “green”.

Sin of Worshiping False Labels. A product that, through either words or images, gives the impression of third-party endorsement where no such endorsement exists; fake labels, in other words.

Sin of Irrelevance. An environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. “CFC-free” is a common example, since it is a frequent claim despite the fact that CFCs are banned by law.

Sin of Lesser of Two Evils. A claim that may be true within the product category, but that risks distracting the consumer from the greater environmental impacts of the category as a whole. Organic cigarettes could be an example of this Sin, as might the fuel-efficient sport utility vehicle.

Sin of Fibbing. Environmental claims that are simply false. The most common examples were products falsely claiming to be Energy Star certified or registered.

Obviously, the Sins of Greenwashing represent a marketing, and not a legal, viewpoint. But, as we will see in future posts, they represent a useful tool for navigating through the new FTC guidelines and for analyzing whether a particular claim complies with state law – for example, the Arkansas Deceptive Trade Practices Act.

More information about the greenwashing and the Sins of Greenwashing can be found here:http://sinsofgreenwashing.org/

(Department of Authorized Use: Terrachoice requests that folks seeking to use the greenwashing studies get appropriate approval from Terrachoice. Accordingly, I sought, and received, permission to use and reproduce The Sins of Greenwashing.)

It Ain’t Easy Claiming Green: The FTC Proposes New Guidelines For Green Claims (Part 1)

On October 6, 2010, the FTC issued proposed guidelines for “green claims.” The proposal updates the “Green Guides” issued by the FTC in 1998 and are a long over due response to the viral proliferation of green claims in today’s marketplace.

In a nutshell, the proposed guidelines are a strong signal that those making green claims in connection with products or services can expect a much higher level of scrutiny from all quarters, and particularly from the federal government. For these eyes, the new guidelines are summed up in this equation: claim + proof = not deceptive (and, therefore, not fodder for an enforcement action).

Here are the high points:

First, the FTC reaches into entirely virgin territory and proposes guidance for claims not currently addressed by the Green Guides.

• The claims “made with renewable materials” and “made with renewable energy” will need to be qualified and explained.

• If you are going to claim a product is “made with renewable materials,” you will also need to explain what the renewable material is, why it is renewable, and where it comes from.

• If you are going to make the unqualified claim a product is “made with renewable energy,” it better be 100% made with renewable energy. If the power used to make any component of the product was generated through the use of fossil fuels, then you cannot make the unqualified claim. Likewise, be prepared to specify the source of the renewable energy, and consider the energy used in making the product packaging.

• Claims involving carbon offsets and credits will need to be specific, quantified, and supported by competent and reliable scientific evidence. For those seeking to benefit by advertising a carbon offset that is the result of mere compliance with the law, no dice: you should not advertise a carbon offset that is a lucky side effect of a legal requirement.

Second, the FTC is looking to add considerable meat to the guidelines already in place, and the new guidance touches on just about every aspect of a green claim.

• General environmental benefit claims like “green” or “eco-friendly” will become difficult, if not impossible to make without some kind of prominent, plain-language qualification.

• Certifications and “Seals of Approval” will also become difficult to use. These to must be substantiated and accompanied by a prominent and substantive qualification. And no more blind reliance on a third-party reviewer; the person making the claim is always responsible for backing it up.

• The use of the terms “degradable” and “compostable,” (it’s a really a real word!), are addressed. The short rows on these: it’s all about timing. A product that takes years to biodegrade or compost cannot carry the claim; the process must occur over a reasonably short period of time.

• The most significant new guidance addresses “recyclable,” and “free-of” claims. Here it is obvious that the FTC is going after the advertising carnies who follow the “it ain’t deceptive if you don’t know you’ve been deceived” maxim. Thus, a product is only recyclable if the consumers where the product is sold have access to recycling facilities for the product. The fact that a product is “free-of” one substance is immaterial if either (a) the substance has never been associated with the product in the first place (i.e., milk that is free of bleach), or (b) the product contains a substance that poses risks similar to those posed by the substance not present.

In all, the proposed guidance, discussion, comments, and examples run nearly 140 pages in the Federal Register. If you are unfamiliar with the Federal Register, picture dense government prose, in a painfully small font, three columns across and then think of a joke that involves a cure for insomnia.

So what’s it all mean? The public comment period for the proposed green guidelines ends in December 2010, and we can expect the final guidelines to go into effect shortly thereafter. This means that if you are in the business of making green claims, you have roughly two months to understand these 140 pages, figure out how they apply to you, and come up with a plan for dealing. Or, more efficiently, two months to buy the advice of someone who has already read and understood the proposed guidelines.

(Department of Blatant Pitch Awareness: I am a lawyer, and that was a blatant pitch.)

The full text of the proposed guidelines can be found here: http://www.ftc.gov/os/fedreg/2010/october/101006greenguidesfrn.pdf