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FTC Updating Green Guides, Which Govern Environmental Building Claims
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February 23, 2009
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Howrey LLP
The Federal Trade Commission’s Green Guides, which govern environmental marketing claims, will be updated this year. The Green Guides are the FTC’s primary tool for preventing consumer deception in the ever-expanding arena of environmental claims. The manual was last updated in 1998. This year’s version will clarify the legal parameters for environmental promises made to consumers and business clients.
The Green Guides are intended to prevent “greenwashing” – claims of environmental superiority or benefit that are untruthful or misleading. Companies may engage in greenwashing in an effort to sell more products or to bolster their reputation with consumers.
The revised Green Guides will address questions such as:
|  | What does it mean to promise that a product or service is “green” or “sustainable”?
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| | What steps has a company taken to earn a third-party certification or seal stating that the company’s products or services do not cause harm to the environment?
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The FTC is fast-tracking this year’s update to ensure that these and other questions are answered and appropriate guidelines are in place.
To view the current regulations, click here. To read more about the updating process, click here.
Third-party certification is a growing trend in construction. Fourteen percent of cities with 50,000 or more residents have green building programs. These programs require that buildings meet certain environmental standards. The U.S. Green Building Council, a Washington, D.C. non-profit organization, publishes one set of green building standards relied on by municipalities.
Green building claims can come up in a variety of contexts. In Shaw Development v. Southern Builders (No. 19-C-07-011405, Somerset County, Maryland), the contractor agreed that the luxury condominium project would be environmentally friendly. The contract required that the completed condominiums be certified by USGBC. The contract was a standard AIA form that included the certification requirement through specifications and incorporation of a Project Manual. The certification requirement read:
Project is designed to comply with a Silver Certification Level according to the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”
When USGBC did not certify the completed condominiums, the developer sued the contractor, claiming $635,000 in lost tax credits. Maryland offers state tax credits of up to 8 percent of a project’s total cost for buildings that 1) are greater than 20,000 square feet and 2) are certified under the USGBC standards.
Although the Shaw Development case settled before trial, it demonstrates the importance of a complete understanding of the green building certification process before making representations or taking on contractual obligations. To learn more about the Shaw Development case, click here.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey’s Construction Practice Group, click here.
©2009 Howrey LLP
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