FTC Leadership Changes Signal Delays and New Challenges for Green Guides Revisions

The FTC's leadership transition is set to delay updates to the Green Guides on environmental claims, reflecting a Republican majority's cautious stance on sustainability.

A significant shift in leadership at the Federal Trade Commission (FTC) is on the horizon with the upcoming transition of the administration.

Chair Lina Khan’s term is set to conclude, ushering in a new Republican majority featuring three Commissioners.

Andrew Ferguson is poised to take the helm as the new Chair, while fellow Republican Commissioner Melissa Holyoak will maintain her position.

President-Elect Trump has indicated his plan to nominate Mark Meador to occupy the vacancy left by Khan.

Should Meador receive confirmation, he will round out the FTC’s Republican representation as the third member.

Meanwhile, Democratic Commissioners Slaughter and Bedoya are anticipated to keep their seats, further solidifying the Republican majority once Meador steps into office.

Implications of the Leadership Change

Two years back, the FTC made headlines by proposing updates to its well-known Green Guides and subsequently organized a workshop focused on Recycling Claims, along with an informal hearing regarding the Energy Labeling Rule.

Initially, there was hope that the final revisions to these Guides would debut in 2024.

However, the lack of recent updates prompts important questions: What is causing these delays? What shifts might Republicans implement in the current drafts? And when can we realistically expect to see an updated timeline for publication?

It’s likely that these holdups are linked to the administrative transition.

Notably, Commissioner Ferguson has voiced concerns over the recently updated Junk Fees Rule, arguing that it is inappropriate for the outgoing Commission to pass new regulations.

Given that context, revisions to the Green Guides before the inauguration seem quite unlikely.

Any potential updates to the Guides may now hinge on Commissioner Meador—or whoever takes on that role—evaluating the drafts after taking office.

If Meador aligns with the proposed revisions, changes could be seen as early as mid-2025.

On the flip side, if he or others suggest alterations, the timeline might stretch even further.

Focus Areas for the Revised Guides

It’s also probable that the Green Guides will continue to exist as guidelines rather than being modified into formal regulations.

While there was discussion about isolating recycling claims into separate legislation, the current Republican configuration of the Commission seems to dampen the likelihood of any new regulatory frameworks being established.

Looking ahead, significant attention is expected to remain on the Guides, with updates now projected for 2025.

No matter marketers’ political affiliations, clarity surrounding the Guides is on the horizon, though any shifts derived from previous speculations still warrant consideration.

Interestingly, while FTC staff members navigate through various administrations, they have largely refrained from discussing the specific content of the Guides.

However, some topics appear to be breeding grounds for contention.

Recycling claims are particularly sensitive within this landscape.

Activism aimed at defining “recycling” in light of thermal reprocessing of plastics has increased, yet a definitive position on this issue in the Guides now seems less likely.

Traditionally, legal interpretations classify “recyclable” materials as those theoretically eligible for recycling, irrespective of actual recycling rates.

The newly formed Commission seems hesitant to issue guidance that might alter established legal interpretations.

Moreover, a number of states have begun forming their own recycling laws, commonly referred to as Extended Producer Responsibility (EPR) laws.

As a result, it’s anticipated that the FTC will adopt a more hands-off approach in its guidance, allowing states the freedom to enact their own rules without excessive interference.

Potential Regulatory Shifts

Another focal point for deliberation has been “carbon claims.” The Republican Party has shown skepticism towards cooperative Environmental, Social, and Governance (ESG) initiatives; this skepticism may also affect how the FTC engages with non-governmental programs aimed at collectively reducing carbon emissions.

Given that carbon offset programs often fall within that realm, the new Commission may not be particularly receptive to voluntary carbon markets.

Proposed changes to the Guides could include more stringent requirements for substantiating carbon neutrality claims and a closer examination of aspirational environmental claims related to cutting carbon emissions and boosting energy efficiency.

Considering the GOP’s skepticism about the efficacy of human initiatives in combating climate change, the revised guidelines are likely to stress the importance of credible and reliable scientific evidence to back any corporate claims regarding climate impact mitigation.

This heightened scrutiny may challenge many businesses, pushing them to adopt a more cautious stance towards such assertions.

Notably, many consultants are suggesting that the term ESG has taken on a more negative connotation, especially given its frequent ties to initiatives focusing on diversity, equity, and inclusion.

As opinions evolve, the term “environmental” might gain more traction in discussions around corporate responsibility.

Claims regarding “sustainability” are also likely to undergo intensified evaluation during the revision process.

Certain practices previously praised for their sustainability might face challenges under the new Republican majority, potentially leading to stricter definitions and use of the term.

It’s plausible that the updated Guides will categorize “sustainability” claims as general environmental benefit claims, necessitating specific qualifications—a practice that many reputable companies are already familiar with.

Given the Green Guides’ critical function, their revision has been long overdue.

While Canada and the European Union are advancing with new restrictions on environmental claims, the U.S. is lagging behind on the global stage.

There may be increasing pressure for the U.S. government to update these vital guidelines, particularly to prevent international standards from becoming the default regulations for American businesses.

Source: Natlawreview.com