OPENING REMARKS
F. HENRY HABICHT II
DEPUTY ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE
FEDERAL TRADE COMMISSION
HEARINGS ON ENVIRONMENTAL LABELING
July 17, 1991
I. INTRODUCTION
Thank you, Chairman Steiger. I want to thank you and the
other Commissioners for the opportunity to be here today to
present EPA's views on environmental labeling. I very much
appreciate your interest in the issue, and the interest of the
White House Office of Consumer Affairs, state governments, and
the private sector. Al-1 of you deserve a great deal of credit
'for your activities to date on this important issue, and EPA is
delighted to join with you in your efforts to craft a consistent,
unified Federal response.
As you know, over the past few years American consumers have
begun to carry their environmental concerns with them when they
go to the market. They are comparison shopping in a new way:
they are comparing products not only to determine which are
cheaper, and which are better made, but also to select those
which have the least adverse effect on the environment.
U.S. producers of consumer goods are responding to this
recent evolution in consumer preferences with remarkable speed
and ingenuity. They are manufacturing their products in new
ways, and out of different materials, in order to increase their
market share among environmentally-conscious shoppers. Many
EPA Headquarters Library
-------
2
producers are also changing their production processes and
products — I believe — not just to increase profits, but out of
a sense of corporate responsibility for environmental quality.
From EPA's perspective, this heightened sense of
environmental awareness on the part of U.S. consumers and U.S.
producers alike is a very positive development. Bill Reilly and
I are delighted by it, and we're doing everything we can to
applaud and encourage the "greening" of the marketplace. The
recent changes we have seen in production processes, product
composition, and consumer purchasing patterns will bring
substantial environmental benefits to our society for decades to
come.
At the same time, we are concerned that the evolution of an
environmentally-conscious market could be stunted by consumer
confusion over the meaning of terms used to describe different
products, and by consumer distrust of the competing claims made
by different producers. Information is the driving force behind
the free market, and we at EPA are concerned about the lack of
adequate, accurate, and consistent information related to this
newly-emerging, environmentally-conscious market.
Bill Reilly and I both believe that the Federal government
has an important role to play in this area. Clear Federal
guidance on environmental labeling will help clarify the
information provided to consumers, and thus help markets operate
more efficiently. Accurate and consistent information will
-------
3
stimulate marketplace competition and ultimately benefit
consumers, private companies, and the environment alike.
The Federal Interagency Task Force on Environmental Labeling
was created to coordinate the Federal government's role in this
area, and I am pleased that EPA, the Federal Trade Commission,
and the White House Office of Consumer Affairs agreed to form the
task force. The Federal government not only has to have a voice
in environmental labeling, it must have a unified voice. During
my remarks today, I want to talk about what Federal guidance
should address, and what EPA can offer to the interagency process
to help produce such guidance.
II. WHY A FEDERAL ROLE?
As consumer preference for so-called "green products" grows,
the public has expressed confusion over the sometimes competing
claims made by different products. The public is looking for
help in understanding those claims.
A recent Roper poll shows that 63 percent of American
consumers have seen product claims for environmental safety, but
only 12 percent think that such claims are entirely believable.
Almost half do not believe any of those claims. A majority of
consumers (54 percent) feel that the government is not doing
enough to monitor those claims, and 81 percent believe government
needs to act to ensure that products are not environmentally
harmful. Clearly, American consumers want information to help
them make environmentally-beneficial choices, and they think the
-------
4
government has a role to play in ensuring that information on
product labels is accurate.
Equally important, state governments, the private sector,
and public interest groups have all pointed out the need for
national consistency in the use of environmental terms on product
labels. For example, several states have responded to this new
consumer consciousness by enacting state requirements for
environmental labeling. I applaud the states for their efforts,
because they have done much of the groundwork we will be building
on at the Federal level.
Yet the different requirements set by various states could
contribute to the informational problems facing consumers
nationwide. The national marketplace is becoming balkanized;
producers that market products nationwide are facing the prospect
of designing different environmental labels for different states.
This kind of state-by-state inconsistency creates a huge
disincentive for corporate investments in "greener" products,
which in turn restrains the competitiveness of the marketplace,
and — in the long run — limits our national progress in
protecting the environment.
Federal guidance on the use of environmental information
would encourage states and the private sector to use consistent
terminology when describing products or packaging. It would
promote public confidence in the environmental claims made by
producers; terms used in the northeast United States would mean
the same thing as terms used in the south. National guidance
-------
5
also would provide a level playing field for manufacturers and
marketers, because companies making legitimate environmental
claims would not have to compete against companies that did not.
In short, I believe that the Federal government has a role
in clarifying and making consistent the environmental information
being provided to consumers in the marketplace. That role does
not necessarily imply regulation or preemption of state actions;
rather, it simply means that consumers have a right to consistent
and accurate information. Federal action in this area also would
bring substantial benefits to state governments, the private
sector, and — ultimately — the environment.
III. EPA PARTNERSHIP WITH THE FTC
As I mentioned earlier, EPA believes that Federal guidance
should be designed to help the consumer make informed choices in
the marketplace. Our current thinking is that Federal guidance
should not set product standards that might freeze technology or
discourage innovation. EPA believes that the best way to achieve
this balanced approach would be to combine EPA's technical
expertise with the Commission's historic interest in ensuring
fair advertising and labeling practices. Should the FTC decide
to issue guidelines in this area, EPA is prepared to offer some
recommendations pertaining to terms most commonly used in
advertising and labeling.
EPA is now considering proposals for the use of the terms
"recycled" and "recyclable" on products and packaging. We plan
-------
6
to share these proposals with you and the Office of Consumer
Affairs shortly. EPA will solicit public comment on alternative
guidelines for these terms through a Federal Register notice and
a hearing to be held this fall. Through this open, public
process we also will solicit the views of the technical experts
in this field. As part of EPA's guidance development effort, we
have carefully reviewed the good work already done by state
governments, regional groups, industry, and non-profit groups.
We want to build on their experience and make Federal guidance as
consistent with existing state programs as practical.
Should the Commission decide to issue guidance, EPA can use
this process to provide you with some specific recommendations
that take into the account the views of interested parties.
Should the FTC choose not to issue guidelines, we at EPA are
prepared to move forward on our own in the hope that the
Commission would find EPA guidance useful in enforcement actions,
and the states would adopt the guidelines for their own use.
At the same time, we'll begin evaluating the need to issue
guidelines for the use of other terms. We will follow the same
approach of gathering public input and working with the FTC and
OCA in the context of the Federal task force to speak with a
unified voice on this issue.
We especially applaud the FTC's efforts to punish fraudulent
environmental claims — for example, your proscription of the use
of terms like "ecologically safe" and "ozone friendly" for
products containing ozone-depleting substances. We urge
-------
7
continued vigorous FTC enforcement of specious environmental
claims.
IV. RELATED ACTIVITIES OF THE ENVIRONMENTAL PROTECTION AGENCY
Over the past several years the Environmental Protection
Agency has become increasingly interested in the public policy
value of environmental information and labeling. We are
convinced that consumer information is one of the most potent
tools available to us for protecting the environment, and we
already are working under different legislative authorities to
ensure that such information is made available to the public.
For example, under,the newly-reauthorized Clean Air Act,
EPA's Office of Air and Radiation is developing regulations that
would require warning labels on products that contain or are made
with ozone-depleting compounds. Under the Marine Plastic
Pollution Prevention Act we are defining the term "degradable" as
it applies to plastic six-pack rings; our intention is to reduce
risks to marine life from ingestion or entanglement. EPA's
Office of Pesticide Programs is developing criteria to identify
less toxic pesticides; pesticides that meet those criteria might
eventually be able to claim on their labels that they are less
toxic than the alternatives. Through a grant program EPA helped
the Coalition of Northeastern Governors (CONEG) develop packaging
guidelines that established a hierarchy of preference for
reduced, reusable, recycled, and recyclable packaging.
-------
8
EPA also is working to build markets for recycled products
by developing and implementing Federal procurement guidelines.
These guidelines establish criteria for Federal purchases of five
different commodities: cement and concrete containing flyash,
retread tires, lubricating oil, paper, and insulation products.
In addition, we are developing guidelines for several
construction products, including pipes made from recycled
plastic, and we are studying the feasibility of establishing
Federal procurement guidelines for rubberized asphalt and
compost.
As you can see, EPA already is deeply involved in providing
environmental information to the marketplace. And it is in the
context of this historical involvement that EPA intends to
develop options for guidance on the use of certain environmental
terms, and to make recommendations to the FTC on Federal guidance
later this year.
V. SPECIFIC RECOMMENDATIONS
I'd like to share with you some of EPA's views on specific
issues raised in the petitions and in the Green Report. These
views reflect our concern that general, vague, or conflicting
messages could severely undermine the growth of an
environmentally-conscious marketplace.
First, regarding recycled content, while we are still
examining various options, we currently favor a recommendation
-------
9
that products making "recycled" claims clearly disclose the
percentage of recycled content in the product or packaging. Thus
consumers will have the specific information they need to make
meaningful product comparisons on the basis of recycled content.
If consumers act on this information, it will stimulate
competition to increase the recycled content in products.
Companies making products with a higher percentage of recycled
material will benefit, resources will be conserved, and the
useful life of landfills will be extended.
Second, I want to address unqualified claims of
environmental "friendliness" or "safety." We've all seen these
claims, which often are unsupported by more specific information.
We want to encourage "green" marketing, but these unqualified
claims do not provide a meaningful basis for comparing products,
and may mislead consumers into purchasing products that offer no
significant environmental benefits. Producers should take care
not to give the impression that one or two positive environmental
benefits signify overall environmental "goodness."
Similarly, claims such as "safe for disposal" may be
irrelevant, because most consumer products may pose little
environmental risk if disposed in properly designed and operated
municipal solid waste landfills or incinerators. Disposal safety
is more a function of solid waste facility management rather than
the characteristics of any given product. On the other hand,
reducing the quantity of the solid waste stream is very desirable
from a cost as well as environmental perspective, since
-------
10
communities in many parts of the country are facing rapidly
escalating solid waste disposal costs.
Third, EPA believes it is premature for a company to use the
results of lifecycle analysis to promote its product as better
for the environment than another. Lifecycle analysis simply is
not well enough developed as a technical tool to allow such kinds
of specific comparisons. EPA does not want to see products
chased out of the marketplace on the basis of inaccurate
information or unjustifiable comparisons.
At the same time I want to encourage the private sector to
continue working to develop lifecycle analyses, because they are
very promising analytical tools. EPA is conducting research to
make such analyses better, and I want to encourage the private
sector to invest in this area, too.
I also want to strongly endorse the "in-house" use of
lifecycle analysis by companies that want to reduce the adverse
environmental impacts from their own processes and products. EPA
believes it is appropriate for companies to share information
with consumers on the specific steps they have taken to reduce
such impacts, both to generate goodwill for the company and its
products and to further educate consumers.
What does EPA want to encourage? Making environmental
claims as specific as possible will help educate consumers and
promote competition in the marketplace. Specific claims such as
"50 percent less packaging that our earlier container" and
"contains 60 percent recycled paper" give consumers a clear and
-------
11
accurate basis for comparing products. Specific claims also
avoid the confusion and cynicism that may result from public
saturation with "environmentally friendly" claims.
VI. CONCLUSION
I appreciate the opportunity to share EPA's perspective with
you today. I think we are fortunate to be working together at a
critical time on an issue that could bring substantial benefits
to the American people and the environment. EPA looks forward to
continuing its cooperative efforts with FTC, OCA, states, and
other interested groups to develop a consistent, coordinated
Federal position on environmental labeling. Thank you for your
time, and I'd be pleased to answer any questions you may have.
------- |