Introduction
In response to state decarbonization mandates that require reduced use of fossil fuels, various U.S. jurisdictions, including California and Massachusetts, have set ambitious net zero greenhouse emissions goals. This shift has prompted natural gas distribution companies to market renewable energy, such as renewable natural gas, green hydrogen, biomethane, and other biofuels. However, as the industry embraces these energy technologies, companies should make sure that their renewable marketing claims align with the guidelines set forth in the Federal Trade Commission’s ("FTC") "Guides for the Use of Environmental Marketing Claims,” commonly known as the “Green Guides.”
The Green Guides Framework
The Green Guides, outlined in 16 C.F.R. § 260, are a series of FTC guidelines initially promulgated in 1992 and updated in 2012. These guidelines are designed to prevent deceptive environmental advertising and, while they do not have force of law, hold significant weight as administrative interpretations. Several states, such as Maine, Minnesota, New York, and Rhode Island, have incorporated the Green Guides into their enforceable state laws, demonstrating the acknowledgement of their importance. Moreover, other states, such as California, have enacted statutes with their own guidelines for environmental marketing claims while also incorporating the Green Guides by reference.
Recent Legal Developments
In April 2023, the Attorneys General of 15 states and the District of Columbia submitted joint comments in connection with the FTC’s regulatory review of the “Green Guides” collectively urging the FTC to expand § 260.15, focusing on “Renewable Energy Claims.” Attorneys General, including those from California, Connecticut, Delaware, Illinois, Maryland, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, and Wisconsin; Commonwealths of Massachusetts and Pennsylvania, highlighted the need to explicitly encompass claims related to renewable, clean, or green gas in the marketing of fossil gas and alternatives.4
Section § 260.15 Overview
Section § 260.15 provides, among other things, that a marketer should not make unqualified renewable energy claims if fossil fuel is used to manufacture any part of the advertised item. Notably, Section § 260.15(b) emphasizes the deceptive nature of incomplete or misleading representations in environmental claims. And § 260.15(c), in turn, provides, “It is deceptive to make an unqualified ‘made with renewable energy’ claim unless all, or virtually all, of the significant manufacturing processes involved in making the product or package are powered with renewable energy or nonrenewable energy matched by renewable energy certificates.”
Enforcement Actions Against Gas Distribution Companies
Natural gas distribution companies should exercise caution when marketing natural gas as clean, efficient, or environmentally friendly. Claims that natural gas is “renewable” should be avoided unless it can be established that all, or virtually all, of the natural gas in the gas distribution company’s system is genuinely renewable. Two Attorney General matters illustrate the consequences of violating § 260.15:
- California Case: The California Attorney General invoked § 260.15(a) to establish a violation by a natural gas company that asserted, “Natural Gas is Affordable, Clean and Renewable” in a banner advertisement and included the slogan on promotional materials (hats, t-shirts, and notepads). In fact, only a small percentage of the company’s natural gas portfolio could be deemed “renewable.” The natural gas producer settled for $175,000 and agreed not to state or imply that natural gas is “renewable” unless such statements comply with the standards set forth in the FTC Green Guides.
- Massachusetts Case: The Massachusetts Attorney General utilized § 260.15(b) to argue that a natural gas distributor’s claim on its website that renewable natural gas reduces greenhouse gas emissions and is a “ultra-clean and ultra-low carbon” alternative presented an incomplete and misleading representation of the character and nature of renewable natural gas. The Massachusetts Attorney General stated these claims were possible violations of the Commonwealth’s Consumer Protection Laws.
Conclusion
With several state Attorneys General urging the FTC to expand § 260.15 and enforcing renewable energy marketing claims, attorney generals may ramp up enforcement against natural gas distribution companies making unsupported renewable energy marketing claims. Natural gas distribution companies that have uncertainty regarding compliance or find themselves faced with regulatory inquiries, data requests, or civil investigative demands from a state Attorney General or Utility Commission will be well served to engage outside counsel to advise and assist.
Footnotes
1. California has set a net-zero greenhouse emissions goal by 2045 and Massachusetts has set a net-zero greenhouse emissions mandate by 2050.
2. 16 C.F.R. § 260.1.
3. Letter from Rob Bonta, Att’y Gen., State of Ca., et al., to Lina Kahn, Chair, Fed. Trade Comm’n (Apr. 24, 2023), at 39, available at: www.doj.state.wi.us/sites/default/files/news-media/Comments to FTC re Green Guides 4.24.23.pdf.
4. Id.
5. 16 C.F.R. § 260.15(a).
6. 16 C.F.R. § 260.15(b).
7. 16 C.F.R. § 260.15(c).
