Hearing Of The Commerce, Trade And Protection Subcommittee Of The House Energy And Commerce Committee - "It's Too Easy Being Green": Defining Fair Green Marketing Practices

Statement

Chaired By: Rep. Bobby Rush

Witnesses James Kohm, Director, Enforcement Division, Federal Trade Commission; M. Scot Case, Vice President, Terrachoice, Executive Director, Ecologo Program; Urvashi Rangan, Ph.D., Director, Technical Policy, Consumers Union, Dara O'Rourke, Ph.D., Associative Professor, University of California Berkeley, Co-Founder, Goodguide; Scott Cooper, Vice President, Government Relations, American National Standards Institute

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REP. RUSH (D-IL): All right, let me start. The mike's on, and they're all working all right. Okay, let me -- the chair recognizes himself for five minutes for the purposes of opening statement.

The Subcommittee on Commerce, Trade and Consumer Possession is holding a hearing titled, "It's Too Easy Being Green: Defining Fair Green Marketing Practices." During this hearing, will be taking up the truthfulness of green advertising claims, consumer perception of green claims, and the role of the Federal Trade Commission in regulating these proliferating claims.

More than ever before, the shelves of our supermarkets, hardware, "Big Box," home improvement and pet stores are being lined with goods bearing labels touting themselves as "natural," "biodegradable," "eco-friendly," "sustainable," "carbon-neutral," "recyclable," and "non-toxic," just to name a few.

With the increased demand by these stores for more green products, we are seeing an increase in third-party companies certifying these green claims. While some responsible companies have created certifications and labels backed by criteria and testing, other companies have spotted an opportunity amidst the consumer demand for information. For a fee, these companies will certify anything as green, affording false comfort to purchasers that their products meet environmental and safety standards.

Just to cite a few relevant statistics, in 2008 consumers purchased $290 million in natural household cleaners and supplies. In addition, the Wall Street Journal reported in April 2009 that, "There are more than 300 such environmental labels putting a green stamp on everything from cosmetics and seafood, to bird-friendly coffee," end of quote.

Because there are no common agreements on generally accepted definitions related to the meaning of many of these words, and since consumers are being bombarded by so many of these claims and certifications, there is legitimate concern that some consumers are basing their purchasing decisions on misleading, and in some cases even deceptive labels.

And I am especially concerned that Americans with less disposable income to spend on quote, "green," end of quote, goods are not getting the benefits that they expect when they spend their hard- earned dollars on these goods, which promise more and often cost more at our checkout lines.

At the conclusion of today's hearing, I would like for this body to have more insight into the FTC's update of its green guides, and how extensively consumers, manufacturers and advertisers are consulting and relying on these guides.

Second, I want for us to discuss whether the FTC should be more aggressive in monitoring and/or regulating the placement of claims on products. And how, in the flow of commerce, can the Commission ensure that green labels are more useful and informative than is currently the case.

Thirdly, I would like for us to explore the role of the private sector. We'll ask how responsible vendors of truly environmentally responsible and safe products can differentiate themselves from the product that make unsubstantiated claims. And we'll examine the role of the privately run certification and labeling programs.

I would also just add another objective possibility. There might be another role for the Congress to play in these matters, and we'll keep a keen eye and a hearing ear to the role that the Congress should be playing in this particular matter.

I look forward to hearing the testimony, and to participating in the exchange that follows. I want to thank you all very much for agreeing to help us examine this topic, and come up with constructive proposals to address issues that we have identified.

I yield back the balance. I don't have any more time.

So now, it's my pleasure to recognize the ranking member of the subcommittee for five minutes for the purposes of an opening statement. My friend, the gentleman from California, Mr. Radanovich, is recognized.

REP. RADANOVICH (R-CA): Thank you so much, Mr. Chairman. And I want to thank you also for calling this hearing to examine green marketing practices.

We all agree that consumers should not be deceived through false marketing when making a decision to buy a product. Such dubious practices would fall squarely within the Federal Trade Commission's jurisdiction when a company violates existing labeling rules, or when a company clearly makes a false statement about its product with the intent to deceive.

I understand the Commission has taken several enforcement actions against companies for such practices, and they should be commended. And I look forward to hearing more about these when Mr. Kohm testifies shortly.

I agree with the premise that a business that markets its products as green should be held accountable for accuracy and truthfulness. The problem arises from the larger debate about what is green and who will definite it, and how will it be defined. Consumer confusion does not help anybody, but a simple solution does not readily exist that all stakeholders can agree upon, which is why we're having this debate. I imagine we could ask 10 different people to define green, and we would not be surprised if we received ten different answers.

Many consumers seek out recyclable or biodegradable products, and these products may be labeled accurately and be attractive to consumers for their environmental sensitivity. However, depending on how we define green, a recyclable product could be considered greener than a biodegradable one, or vice versa. And that is a relatively simple example of similar products.

When multiple variables are considered in the determination, the comparison of the products becomes more complicated. Regardless, some of the discussions and suggestions that we will hear today will focus on the Environmental Protection Agency.

For purposes of this hearing, we would be better served confining our discussion to the area of our jurisdiction over the marketing practices and what would be defined as an unfair or deceptive practice under the FTC act. I would also suggest the subcommittee should hear the views of businesses that are manufacturing products that may fall subject to FTC enforcement.

Ideally, mutually agreeable definitions for the purposes of marketing will emerge through a process of all stakeholders working together. This may not result in a one-size fits all approach, but it will have the benefit of an open and transparent process where everybody has a voice, and all viewpoints are considered.

The marketplace implicated by this discussion is extremely broad with many diverse products. If the goal is to enforce manufacturing practices that leave a smaller footprint on the earth through consumer marketing appeal, the definition of green must be inclusive. Labeling and marketing are intended to be tools that educate the public, not points of litigation. And more importantly, they should not be the goal of a given product.

Further, we have seen many unforeseen consequences of technological advances that were supposed to help reduce environmental footprint, but had the opposite effect due to unwitting consumers. Energy efficiency and the ENERGY STAR label may be useful, but not only to the extent that they alter the overall consumption of home energy use. Saving more energy on one product may be beneficial, but if the savings is used to keep the television and stereo on longer, the environmental pictures hasn't really changed. Ultimately, the consumer's use of the information is what really matters.

I only point this out because consumers are hard to predict. We continue to battle obesity in this country, despite extensive labeling requirements for decades. Labels can be a useful tool for information if the consumer uses it wisely, and is not inundated with information overload. Foods may be accurately labeled as low sugar, low carbohydrate or low fat, but that does not change the overall trend of increase in the average calories Americans consume.

One final point I will make, which is -- I'm sure experts have discussed, is that any green standard should take into account he diverse geography of resources of this country. For example, if new green standards delve into the lifecycle carbon footprint of a product, manufacturers should not be disadvantaged based on the limitations of available energy resources to which they may be captive. To do so based on today's desires will cause more harm than good.

Mr. Chairman, I want to thank you and also our witnesses today for appearing. I look forward to your testimony, and I yield back. Thank you, Mr. Chairman.

REP. RUSH: The chair thanks the gentleman, and the chair now recognizes the gentleman from Maryland for five minutes for the purposes of an opening statement. Mr. Sarbanes of Maryland is recognized.

REP. SARBANES (D-MD): Thank you, Mr. Chairman. I will take five minutes. I appreciate your convening this hearing.

This is definitely something we need to look at. This is kind of the next big thing when it comes to labeling, I think, and the role of this committee and the FTC and others to put in place a regime that makes sense with respect to green labeling is a very, very important one.

There's no question when you go to the store -- I fall prey to this myself. And you see this green labeling or these green claims that are made that you're either thinking green is healthy or you're thinking green is environmentally friendly. You're basically in the mindset that green is good, and so it does have a very powerful affect on people's purchasing patterns, and their expectation of what their getting for themselves and their families.

(The notion ?) that that claim is being made in many instances when it can't really be justified is when I think that it's offensive to many, and certainly to the consumer that's looking for that seal of good housekeeping when it comes to what is environmentally friendly and what is healthy.

I don't worry too much about the question of what is greener than the next thing as long as the things that are claiming to be green have met a certain baseline standard and definition. And I certainly recognize it's going to certainly be difficult to come up with those definitions that can have some sort of uniform application, but I think we can find out way to it, and our panelists today will help us think that through.

The other point you made is just as important, and that is it's not fair to those businesses and manufacturers and others who really are trying to do the right thing and make products that are green in all their different aspects. To have a system that is allowing others to make false claims with respect to whether they're delivering green products, and the more sinister view to take on that is it actually discourages companies from doing the right thing because they says well, what difference does it make. If I can just slap a green label on something and get the benefit of that in terms of marketing, why not cut corners.

So there's many reasons to pursue this on behalf of the consumer and on behalf of businesses that are trying to lead the way with good practices. And thank you for convening the hearing today to look at those issues. And I yield back my time.

REP. RUSH: The chair thanks the gentleman. The chair now recognizes for the purposes of opening statements Dr. Gingrey from Georgia. Dr. Gingrey, you're recognized for five minutes.

REP. GINGREY (R-GA): Mr. Chairman, thank you. I know you can't have notes. I'm sitting here drinking this soft drink in a green can. This is by the great Coca Cola Company, and they don't imply anything in here about being environmentally friendly. They just tell you how much caffeine, and what a great soft drink this is, and it is a good soft drink, but it has nothing to do -- but certainly, you get the impression, and you could package something in a green -- even politicians.

I noticed in the last campaign cycle in our state, more and more politicians actually wearing green shirts and having a green logo, and just that subliminal message.

Mr. Chairman, I want to thank you, of course, for calling the hearing today on green marketing techniques that are clearly being used now more than ever by all types of companies and individuals.

Unfortunately, despite the increased efforts by corporate citizens attempting to be more environmentally friendly, there's still a great deal of confusion that exists, particularly for the consumer, with the way that these marketing practices currently function. The FTC issued its own set of environmental guides back in 1992 called the Green Guides, and this working document allows the FTC to better understand what constitutes false or deceptive green claims within marketing.

However, although these guides provide a base of understanding for the FTC, the Green Guides have not been fully updated since when, 1998. And so that leaves a wide gap between the increase in green marketing and the way by which we understand these techniques today.

Mr. Chairman, there are some fundamental questions that we must answer at the outset of any discussion of green marketing. First and foremost, how is this marketing defined? As this panel of witnesses will describe, there are varied interpretations of how a company use these marketing tools. Is green marketing an environmental matter, or is it a health matter? It can be argued that individual consumers may have different ideas of what green means for them. So this needs to be factored into any discussion that is had by the FTC as it updates these Green Guides.

The last question, and arguably the most important for this subcommittee, is what role the FTC should play in the structure or enforcement of green marketing.

The FTC already has the authority to conduct investigations on false and deceptive marketing practices, and this should be taken into consideration as regulations continue to be updated.

Mr. Chairman, with the increase in green marketing that have occurred, there are still a number of question marks that exist, both for companies and for consumers. And I think in this realm, Jim Henson's lovable character, Kermit the Frog, may have said it best when he said, "It's not easy being green."

I look forward to hearing from our panel on these increasingly -- on the present issues. And I yield back the balance of my time.

REP. RUSH: The chair thanks the gentleman. The chair now recognizes the gentle lady from Florida, Ms. Castor, for five minutes for the purposes of opening statement.

REP. CASTOR (D-FL): Thank you, Mr. Chairman. Thank you very much for calling this hearing. Good morning.

In recent years, we've had a substantial increase in products that promote environmental consciousness and tell how their products minimize environmental impacts. There is an increasing public awareness of the dangers of climate change and environmental degradation, and Americans want to help, naturally.

And one of the places folks look to reduce their environmental impact is at the store. The last few years have seen a proliferation of new products marketed as being green or environmentally friendly, and frankly, this can be confusing for consumers. Consumers have a hard time telling the difference between companies that do the hard work to develop products and manufacturing processes that are more sustainable and environmentally friendly, and those companies that simply start printing their labels in green with sustainable written on the label, and then charge a green premium for the same old dirty products.

It seems sometimes that some retailers and product suppliers are engaged in a race to poorly define and use meaningless terms, like sustainable and eco-friendly. And with that, there's a real risk that consumers will lose confidence in the entire concept of being -- having a sustainable product or green-friendly product. And the consumers will simply tune out the environmental message.

A study by the Shelton Group found that consumers surveyed in 2007 were between 22 and 55 percent less likely to buy a wide range of green products than in 2006. And a major factor in that decline was message overload. Consumer groups have done an admirable job of stepping up to try to provide clarity by operating independent claims verification and marketing standards groups, and I look forward to hearing from some of those groups who are with us today.

However, they still must compete with unreliable and unscrupulous certification programs that are all to often concerned more with collecting the fee than in reliably labeling the product. I'm very interested in what more we can do to help consumers cut through the noise and find the truly sustainable products that they would like to purchase.

I yield back my time.

REP. RUSH: The chair thanks the gentle lady.

Now, it is my honor and privilege to welcome the witnesses who are gathered here. And I do want to -- before I recognize each one of them, I want to announce that Dr. Rangan is on her way. She had a late flight from New York, and now she is at the airport in the capital, in a cab trying to make it here. So we'll swear her in once she arrives. But we will proceed now.

Recognizing our first witness. He's Mr. James Kohm. He's the director of the Enforcement Division of the Federal Trade Commission.

Next to Mr. Kohm is Mr. M. Scot Case. He's the vice president of a company called TerraChoice, and he's also the executive director of the EcoLogo Program, which is the Canadian government's green cell.

And next to Mr. Case would be Mr. Dara O'Rourke. Dr. O'Rourke, rather, is an associate professor who comes from California, from the University of California at Berkley. And he's a co-founder of GoodGuide.

And next to Mr. O'Rourke, we have Mr. Scott P. Cooper, who's the vice president of government relations of the American National Standards Institute.

I again want to welcome each and every one of you witnesses. You don't know how it makes our heart glad that you are taking the time out from your busy schedules to come and participate with us today. And it is the practice of this subcommittee -- we're operating under some new practices -- that we swear in the witnesses, swear you in. And so I would ask if each one of you would stand and raise your right hand.

Do you solemnly swear to tell the truth, the whole truth and nothing but the truth? Let the record reflect that all witnesses have responded in the affirmative.

Now, our first witness we will recognize for five minutes for the purposes of opening statement is Dr. James Kohm. Dr. Kohm, would you please, again, restrict your comments to four minutes -- five minutes, rather, or thereabouts.

MR. KOHM: Thank you very much, Mr. Chairman.

Mr. Chairman, Ranking Member Radanovich and members of the committee, my names is James Kohm. I'm the associate director of the Division of Enforcement in the Federal Trade Commission's Bureau of Consumer Protection.

Let me begin by noting that the views expressed in the written testimony represent those of the Commission, while those in my oral testimony and answers to your questions reflect only my own views, and not necessarily those of the Commission or any particular commissioner.

I appreciate the opportunity today to discuss the FTC's role in the environmental marketing arena. The Commission, as you know, does not set environmental policy or standards. That, however, is not to say that the Commission does not have a significant role to play in the marketing of environmentally friendly and energy efficient products.

Specifically, the FTC polices the marketplace to help ensure that consumers are not harmed by deceptive claims, and that honest marketers advertising is not drowned out by the false claims of their competitors.

To achieve this goal, the Commission employs a three-prong strategy. First, we help businesses comply with the law. To accomplish this goal, the Commission has developed its Green Guides that explain how consumers understand commonly used environmental claims, such as recyclable and biodegradable, and describe the basic elements needed to substantiate those claims.

The Commission is currently reviewing its Green Guides to ensure that they remain responsive in today's marketplace. This is especially important given the explosion of green marketing in recent years, and the prevalence of claims that were not common when the Commission last reviewed the guides more than a decade ago.

To help develop a robust record upon which to base its guidance, the Commission solicited public comment, and held a series of public workshops on emerging green marketing issues. While we received a lot of useful information and response, unfortunately, we obtained little evidence of how consumers understand certain claims. The Commission, therefore, is in the process of developing its own research to help it provide accurate, informed advice.

Second, it is critical to compliment rules and business guidance with a solid law enforcement presence. The Commission's recent cases in this area have challenged, for example, home insulation sellers who vastly overstated the insulating properties of their products, businesses that falsely claim that their devices would dramatically improve your car's gas mileage, and companies making false claims about the green attributes of their products.

A particular note, the Commission today announced three enforcement actions against companies that advertise their products as biodegradable.

The Green Guides advise marketers that consumers understand unqualified biodegradable claims to mean that a product will break down into the elements found in nature within a reasonably short time after customary disposal. All three defendants could not substantiate this fact.

Consumers typically throw products like those challenged in these cases into the trash, which is in turn disposed of in places like landfills that do not present conditions under which products can biodegrade quickly, even if they could do so under ideal conditions.

Finally, the FTC employs a wide array of innovative consumer education materials to help consumers make informed green purchasing decisions, and avoid energy saving scams.

For example, our interactive website, Saving Starts at Home, offers tips to help consumers conserve energy and save money in almost every room of their homes. In the virtual kitchen, for example, consumers can learn about how to use our energy guide label to select energy efficient appliances. In the attic, they can find tips on choosing insulation, and in the trash room, they can encounter explanations of terms like recyclable and biodegradable, and the meaning of common environmental symbols.

Continued consumer interest in conserving energy and protecting the environment will no doubt result in continued environmental marketing. The FTC therefore will continue its efforts to ensure the truthfulness and accuracy of these green claims.

Thank you for providing the Commission an opportunity today to appear before the committee and describe our work. I'll be happy to answer any of your questions. Thank you.

REP. RUSH: Mr. Kohm.

And now the chair recognizes Mr. M. Scot Case for the purposes of opening statement. Mr. Case, would you please restrict your comments to five minutes or thereabouts.

MR. CASE: Chairman Rush and members of the subcommittee, thank you for inviting me to share my prospective.

My name is Scot Case. I'm a vice president of TerraChoice, and executive director of the EcoLogo program, a 21-year-old environmental standard setting and certification program.

For 16 years, I have been working in various capacities to make it easier for consumers, retailers and professional purchasers to buy more environmentally preferable or green products. Despite lengthy experience in the field, I am also a recent victim of green consumer fraud.

In 2007, I bought a $2,500 LG Electronics manufactured refrigerator because it claimed to be ENERGY STAR compliant. After consumer reports published a September 2008 story, I learned my refrigerator actually uses twice as much electricity as advertised. It does not even come close to meeting the ENERGY STAR criteria.

LG Electronics misuse of the ENERGY STAR label highlights well- known weaknesses in DOE's management of the ENERGY STAR program. More importantly, the fraudulent use of the ENERGY STAR label provides an example of a broader issue with the ways in which green products sold in this country are routinely marketed with partial truths, misleading and irrelevant information, and the occasional blatant lie. FTC has been unable to adequately protect U.S. consumers from this misinformation.

U.S. consumers are one of the most powerful forces on the planet. Their spending power can drive environmental innovation, create green jobs, and expand the green economy. This market-based environmentalism, however, is dependent on consumers having accurate, reliable and relevant information about the products they buy. U.S. consumers want to buy greener products, but they are confused by competing environmental claims, unsure when a claim is accurate, and increasingly skeptical of all environmental claims.

The current system is not working. Green washing is ramped. FTC is not equipped to define green, and the United States lacks a single unifying label to make buying green easy. LG Electronics misuse of the ENERGY STAR label is an extreme example of green washing. Green washing ranges from blatant misrepresentation, to telling only partial truths about a product's environmental impacts.

According to the "Sins of Greenwashing," more than 98 percent of products making environmental claims make at least one questionable claim. Manufacturers are making misleading claims because they lack clear guidance about what claims are legitimate, and what kind of evidence they need to support their claims.

As a result, U.S. consumers are spending their money to buy environmental benefits that might not exist. FTC recognizes the problem. It has been working diligently to improve its environmental marking guide, which was last revised in late 1998 or '99. I was able to provide my insights into their process. I remain very hopeful that FTC's revised guide combined with the necessary funding to support enforcement will help produce greenwashing.

While incredibly beneficial, I think FTC's actions are only part of the solution. FTC lacks the relevant environmental expertise to address the most fundamental question -- how does one identify an environmentally-preferable product? This question is being addressed by a variety of EPA departments with narrowly-focused attention on single environmental issues. One part of EPA focuses on energy- efficient products; another focuses on less hazardous products. Another looks at water-efficient products.

EPA's silo-based approach is understandable given the agency's organization. With the exception of the Environmentally Preferable Purchasing Program that focuses narrowly on federal government purchasing, no one at EPA is looking holistically at the issue. As a result, it appears almost every manufacturer is finding an excuse to claim their product is green.

Environmental labels like Energy Star, EcoLogo and Green Seal are supposed to make it easier to identify more environmentally-preferable products; but there are now hundreds of labels and claims being made. According to "The Seven Sins of Greenwashing," 22 percent of products making environmental claims include a certification-like label that has no apparent meaning. As the title of this hearing suggests, it is too easy being green. Some enterprising companies sell a green certification for a fee. They proudly advertise that they can certify a green product or business without reviewing the product, without visiting the business, and without requiring any testing.

All one has to do is pay as little as $150, credit cards accepted. How is my mom in Charlotte, North Carolina supposed to keep track of hundreds of environmental labels to know which ones are meaningful? I have 16 years of experience with this issue; and I regularly run into claims that I've never seen before.

To address these challenges, I recommend the following three items. Direct FTC to require every environmental claim to be supported by publicly-available proof. Provide research money for EPA and the national academies to conduct the basic research. And establish an EPA office to launch a voluntary, non-regulatory, environmental leadership label.

Launching a single label would provide benefits similar to the way the USDA organic label united multiple organic standards. Having a single label will make it significantly easier for my mom to identify greener products the same way Energy Star made it easier to identify more energy-efficient products. In conclusion, market-based environmentalism only works if manufacturers and consumers have the tools to make intelligent decisions. I encourage the subcommittee to direct or endorse the development of the necessary tools. Thank you.

REP. RUSH: The chair thanks the gentleman.

Now, it is my pleasure to recognize Dr. Dara O'Rourke for five minutes for the purpose of an opening statement.

MR. O'ROURKE: Chairman Rush, members of the committee, thank you very much for the opportunity to testify this morning on green marketing claims; and the very important underlying issues of public access to accurate information on the health and environmental impacts of consumer products.

My name is Dara O'Rourke, I am a professor at the University of California at Berkeley; and also the cofounder of a for-benefit company called GoodGuide, which I am here today representing. My research focuses on global supply chains; and better ways to monitor and measure the impacts of those supply chains to deliver information to consumers here in the U.S. on the full environmental, social and health impacts of the products we consume.

We have found in our research -- and the reason I'm here today, is that our current system information available to the public is incomplete at best; and actually confusing or deceptive at worst. The public either had little information on critical aspects of product choices such as ingredients within household chemicals, fragrances, electronics. Or they have questionable information such as green claims about a product being natural or eco-friendly, as the chairman mentioned.

For markets to function efficiently, we need good information and low transaction cost in accessing that information. Today we have the exact opposite. We have very poor information and very high cost for the public to access that information.

I want to make three very simple points today. First is the public wants to know this information. They are seeking this out, they want to know it. The second is there is a huge gap between what the public wants to know and what they can currently access.

That leads to, I think, a number of problems which other people have spoken about, which I'll talk about one case. And the third is, I think there is a current opportunity right now for this committee and the FTC to make a significant step forward in improving transparency in consumer markets and improving market functioning through a couple of simple steps.

From our research, we have found out first that consumers do want to know this information. Very rapid growth in concern among the public about what they are putting in, on and around their families and themselves. This is driven partly by a stream of continuous scandals quite frankly -- lead in toys, melamine in baby formula, salmonella in peanuts, almost one a week that we're seeing now. And the press showing up, leading consumers to ask where are our products made, how are they made, under what conditions and what are the impacts for our health and the environment?

A number of national surveys, which are in my written testimony, discuss even in this economic climate we're seeing increased demand among the public to buy greener, healthier products. Even among a very broad spectrum of the consumer population Walmart released a study of their consumers showing 57 percent of Walmart customers concerned about the environment, wanting to make environmentally- friendly purchases. This is not a left-right, Democrat-Republican, high income-low income issue, this is across the board. Parents in the U.S. want to find safe, health products.

At the same time, as Mr. Case mentioned, there is a very fast growth in product claims, which I think are quite questionable. And consumer marketing, which is quite questionable, going up against these demands for the public to know. The public wants to know if products are safe and healthy. They want simple advice on choosing products to bring into their homes. They also want to know detailed information as their education level grows about ingredients of concern -- carbon, other issues that they are increasingly concerned about.

In our research, we found health impacts -- to Congressman Castor's point, health is the number one issue of concern among our users in our research. That relates to potential cancer risks, other long-term health hazards, and nutritional impacts of food products. They also are concerned about environmental impacts -- again related primarily to their health and their family's health -- toxic releases, hazardous waste, and even climate change often comes back for consumers to a personal or the health of their grandchildren and their family.

Despite these demands for this kind of information, more and more consumers wanting this information; almost impossible for consumers to get this information even with dozens of hours of research online. And completely impossible in stores as they look at products and look at the product claims. Let me just talk about one example which Chairman Rush mentioned, the growth in green cleaners and the demand for green- cleaning products in the U.S. These are quite harsh chemicals that we bring into our house every day that are on our floor, that are on our plates, that are in the air around our families.

Consumers want to know whether these products are safe and healthy. With the rapid growth in these products there has also been a rapid growth in claims around these products -- that they are safe for kids, pets, the environment, they are non-toxic, they are natural, they are biodegradable. And at the same time, almost none of these companies disclose the ingredients in these products. They make claims without disclosing what's actually in them. So a claim like plant-based or natural is meaningless unless we know the actual ingredients, the actual chemicals derived from plants or other natural sources or petroleum to know what's in them.

Over and over we see in our research personal care products. Again, words like fragrance from essential oils, sounds environmental, sounds natural. But we don't know the actual chemicals which may include chemicals like phthalates, their endocrine receptors, chemicals of concern. But that are masked underneath these product labels. Toys also -- we're seeing more and more claims about green toys, healthy, safe toys. And again, we don't know what's in them. We don't know what the plastic is made out of. We don't know if there are phthalates again or other problematic chemicals.

There is an opportunity, I think now from these gaps, for this commission and for the FTC I think to move forward on disclosure. The first is that information should be disclosed on key life-cycle impacts. We need to know the key material pieces of information about a product. Not vague, irrelevant claims, but what actually matters. The second is that companies should publicly disclose the ingredients in their products before they make any environmental or health claim about those ingredients.

The information should be scientifically precise and verifiable and available on the manufacturer's website at a minimum, on the packaging ideally. And this information over time should be verified by third parties. To sum up, I think Chairman Rush and the committee there is a huge opportunity right now to remedy a failure in the marketplace of information. To move and motivate increased transparency among industry and ultimately support innovation in our markets that will lead to development of cleaner, safer, healthier products; that are better for our health and better for the environment of the United States. Thank you.

REP. RUSH: The chair thanks the gentleman. The chair now recognizes for five minutes Mr. Cooper.

Mr. Cooper, please limit your remarks to five minutes or thereabout.

MR. COOPER. Thank you, Mr. Chairman and members of the subcommittee. My name is Scott Cooper and I'm vice president of government relations and policy for the American National Standards Institute. For more than 90 years, ANSI has served as the coordinator of this nation's private sector led and public sector supported, voluntary consensus standards; and conformity assessment systems comprised of government agencies. Many of them including EPA, Commerce, DOE, DOD, USDA, CPSC, DHS; as well as companies, trade associations, professional societies and consumer groups, including Consumers Union, I'm happy to say.

ANSI represents the interests of more than 125,000 organizations and 3.5 million professionals worldwide. Today's consumer is shopping with sustainability in mind, placing every increasing value on the environmental and societal aspects of product design, manufacture, distribution, use and disposal. Where consumers see value in going green there is a competitive advantage to those companies who can supply environmentally-sustainable products. Where an advantage can be perceived, there will be those who want to game the system.

We need to ensure the credibility and consistency of environmental claims. And so I commend you, Mr. Chairman and the members of this subcommittee for holding this hearing. By collaborating across industry sectors and bringing in environmental groups and others, we can build upon some of the excellent standards and compliance programs that are already in the marketplace; identify gaps where new solutions will help and start building consensus through a partnership between the public and private sectors.

In April ANSI took a first step in organizing the workshop Towards Product Standards for Sustainability.

Convened at the request of one of our members, the U.S. EPA, the workshop was attended by over 240 in-person participants and over 100 via a live webinar. Representatives of multiple U.S. government agencies, companies, retailers, trade associations, standards developers and environmental groups were on hand to join the discussion.

And one of the -- I think the great take-a-ways from that discussion was, I think, people are ready -- all groups of people involved in this are ready to take a step inward and try to find ways of working together. In the coming weeks, we expect to release the final workshop report, which will detail the discussions and recommendations that came out of the meeting. In the meantime, I'd like to share a few of those messages that we heard from attendees.

First, consistent and globally-accepted terminology tops the list of needs. I think that that's also been described by other witnesses. There is a consensus that terms like attribute and certification need to be interpreted -- are now interpreted differently by consumers and standards developers in government and industry. We need to bring consensus to that process.

Second, standards need to be clearly written so they can be effectively used for reliable certification. The marketplace needs to -- the marketplace claims can be substantiated so consumers can reward good performance with their purchasing power. And finally, participants saw a clear need for an overarching body that will coordinate and guide the process going forward with input from both the public and the private sectors.

As part of our mission, ANSI is proud to facilitate problem solving through a number of public-private partnerships. The workshop is just the latest example of ANSI's many issue-drive coordination activities, which include partnerships with other agencies such as HHS on health care information technology. We work with the CPSC and this committee on toy safety; with EPA on water conservation, with DOE and NIST on developing maybe the next generation of nuclear civilian power plants.

A number of other issues that we think are sort of front and center to the public policy formulators in this committee and other places. As the voice of the U.S. Standardization and Conformity Assessment System, ANSI is actively engaged in accrediting programs that assess conformance to standards for a number of different industries. There are many conforming assessment activities applied in today's marketplace including accreditation, certification, inspection, registration, supplier's declaration and testing. All of which are important in sort of this holistic approach towards issues like green claims.

As an independent, third-party process, ANSI accreditation helps to promote best industry practices while reducing the need for government agencies to individually monitor conforming assessment organizations. ANSI is currently offering accreditation services in a variety of conforming assessment areas that are directly related to sustainable products and practices, including greenhouse gas emissions, sustainable forestry, environmental management system, as well as in food and agriculture. Third-party accreditation demonstrates conformance, verifies competence, and strengthens consumer confidence in product, people and services. We feel strongly that it has an important role to play in the success and credibility of environmental labeling efforts.

Mr. Chairman and members of the subcommittee, I think we all can agree that labels and communications to consumers about the degree to which products, people and services address sustainability need to be uniform, transparent and comprehensible. In order to make this vision a reality, we need to a have more efficient use of standards and conformance resources some of which are already in place. And we need to identify every gap that does exist.

We also need to bring to bear new human and financial resources that can strengthen existing systems while satisfying future needs. I think that we see from the work of the FTC, the idea that first do no harm. I think we also need to look at sort of what can we do to advance the cause for good environmental claims. I think both need to be done at the same time.

Government and industry need to work with the single purpose if we are to define fair green claims marketing practices. ANSI stands ready to coordinate the public-private partnership and take the -- and help and make the next step towards a meaningful solution, the challenges associated with standards and compliance programs that address environmental and societal impacts. Thank you and I welcome questions.

REP. RUSH: The chair thanks the gentleman.

Now it is my pleasure to welcome our witness, who we announced earlier was en route. We have with us now at the witness table Dr. Dara O'Rourke, who is an associate professor of the University of California at Berkeley -- no I'm sorry.

Let me start all over again. Dr. Urvashi Rangan is the director of technical policy at the Consumers Union. Dr. Rangan, it is certainly a pleasure to have you here before us. And as I have done with the other witnesses, I would ask that you stand and be sworn in before you begin your testimony.

(The witness was sworn.)

Let the record reflect that Dr. Rangan is responding affirmatively. Now, we will recognize you now all in one fell swoop here. We will recognize you for five minutes for the purpose of opening statement.

MS. RANGAN: Thank you so much, Chairman Rush and members of the subcommittee. It was wheels off, and we did take off from New York. So I'm really pleased to be here.

My name is Urvashi Rangan, I am director of technical policy at Consumers Union, the non-profit publisher of Consumer Reports magazine. I've been with the company for just about 10 years now. I am an environmental-health scientist and I provide technical support to our research and testing and helping develop our advice and policy recommendations; as well as advocacy initiatives on a wide array of environmental and public health issues.

I also have been directing our Free Green public-service website, Greenerchoices.org, which disseminates a wide range of reports on the green marketplace. Including an eco-labels database that gives consumers our evaluation and ratings of more than 150 environmental claims, including those found on food, personal care products and cleaners. We also advocate for strong labeling standards across a wide array of products.

There are broad and specific challenges in defining a fair green marketing place. And we believe that the government does have a very important role in guiding and protecting this marketplace. Consumers are faced with the dizzying array of labels. I think you've probably heard that from every panelist. Some of which are very specific like no phthalates, to those that are vague and not well defined like natural and green. This marketplace is incredibly confusing for consumers; and it's often filled with a lot of noise that can be misleading and at times deceptive.

Often consumers are presented with claims that sound better than they are -- carbon negative, which has minimal standards or none, natural, non-toxic. While there are also meaningful, certified, credible labels to choose from, of the certified label programs there are several viable business models, including public, private, non- profit, and for-profit that may or may not be of interest to a particular consumer. Some claims have comprehensive standards behind them with robust verification like certified labels while many do not, like general claims that can voluntarily be made by a manufacturer.

But it is virtually difficult to impossible for a consumer to make an accurate assessment of what type of green claim they are being faced with in the marketplace. The Federal Trade Commission's role in reducing deceptive marketing practices is necessary and should be broadened. At the same time, the baseline for good marketing practices and minimum standards for common claims should be established.

Consumers are currently faced with this huge learning task that better guidance and regulation could reduce. Requirements for transparency and standards and product information as Professor O'Rourke mentioned about ingredient list and full disclosure should be standard for all products sold with green claims. Government regulation and guidance again would be helpful in maintaining these universal requirements for credible green marketing practices.

We've been rating the meaning of green claims for consumers for the last 10 years. We measure the value of green claims over the conventional baseline. I have this in more detail in my written testimony, but quickly, we assess how meaningful the labels are. We look at standards -- are they credible, have they moved over time, do they evolve with time?

Verification -- consistency in meaning from product to product. Transparency not only of the standards, but of information about the certifying organization. Stakeholder input -- that is the opportunity for all stakeholders to have input into the standard-setting process. But also independence, which is that once all the input has been sought, we believe the best labels are those that are defined by an independent body and judged upon by an independent body.

In evaluating these claims, we provide consumers with comparative rating snapshots. And I also presented at the American National Standards Institute a presentation and can also submit that in for the record as well.

Based on our experience of rating and monitoring claims, we've identified a few trends. Comprehension and accessibility are challenges for all green claims. Whether they are specific or broad, the maintenance and evolution of standards must be addressed over time. And consistency across different product categories can also be a challenge. The ability to respond and incorporate emerging marketplace issues whether its phthalates, visvinala (ph), whatever the flavor of the day is, it's another hurdle for label standards and programs.

All of these standards can be addressed with the increasing complexity of the label. A few recommendations from us are one we feel that the government can play a role in eliminating or better defining meaningless claims in the marketplace. So voluntary claims like natural or carbon negative or non-toxic or even free range, if you can believe it; don't have standardized meaning. They don't mean much for consumers. We just prefer to see those labels gone from the marketplace altogether in order to increase the opportunity for credible labels to actually succeed.

We think that there should be baseline practices set for all green marketing claims. That there should be a floor for transparency, there should be full disclosure. And we think that government labeling programs -- so this is where the government decides to take on a labeling program really ought to meet the highest standards out there for credibility in order to ensure -- give the highest level of assurance to consumers.

There are several market -- government-based labeling programs that could use a boost at this point. Whether they are the myriad of programs at EPA which have varying transparency and verification requirements; and also whether it's the FTC overseeing some of those labeling programs that are going on in the other agencies. Things like no antibiotics, natural, fragrance free, these don't have properly defined meaning and yet they are overseen by our government agencies. We think that the FTC has a broader role to play in the oversight of those labeling programs as well. Thank you.

REP. RUSH: The chair thanks Dr. Rangan. The chair thanks all the witnesses now. The chair recognizing himself for five minutes for the purpose of asking questions of today's witnesses. In today's testimony, we heard about the growing number of quote "green" unquote, end of quote claims made about household products. Dr. Kohm told us about a quote "virtual tsunami" end of quote of these claims. And Ms. Rangan used the term quote "green noise" end of quote to talk about the conflicting, confusing and overabundant information in the marketplace.

And I want to start with a question for the entire panel regarding the types of information that green labels should provide to consumers. There appear to be so many expectations for what these labels cover. Environmental impacts on the packaging or the products themselves, the possible health impacts of the products on individuals among others. The question for each one of the panelists is this. What is the reasonable -- what is reasonable for consumers to expect from these labels? And what is beyond the scope of green labeling? More simply, what should it mean for a product to be green?

I'd like to begin with Dr. Kohm, what is reasonable for consumers to expect for these labels to cover?

MR. KOHM: Chairman, we look at this in a way that would turn your question around. We look first at what a reasonable consumer expects. And then, we require marketers to meet that expectation. So the question for us is what is -- the label convey to a reasonable consumer? And then, the marketer has to meet whatever that reasonable interpretation is. Obviously, that's a problem, as you indicated, given the breadth of these kinds of claims and the fact that they cut across virtually every market sector. It's very challenging to have one label that meets all those expectations.

MR. CASE: Thank you, Mr. Chairman. I think the challenge here is that it's almost impossible to determine what a reasonable expectation is. I think what we can do however is require that any manufacturer making an environmental claim publicly provides proof of the accuracy of that claim. And that any label on a product that suggests green in some sort of broader sense, clearly define what tests were required to meet the eligibility requirements for that label. So basically, it boils down to greater transparency so that consumers have the information they need to evaluate products.

MR. O'ROURKE: I agree completely with Mr. Case. I think the first question is, what is the key material impact of the product, what matters most? And we use a tool called life cycle assessment to determine what really matters in evaluating a product's environmental and social health impact. And the second is, is there full transparency on those impact categories? So the ideal product label would tell you information on what actually matters in that product.

So we see products including in the foyer to this committee hearing that are claiming they are environmentally-sensitive products. But they are not disclosing what really matters in this product -- to the environment, to whether there are chemicals that are bio- cumulative or toxic to human health or the environment. That's the information for each product. If we're looking at electronics, we want to know is the -- does the company have a good take back program to reduce the end of life impact of the product? If it's apparel it's a different set of issues.

Right now, our big problem is that companies can claim anything whether it's irrelevant to the main impact category or not; and not disclose the underlying information -- the ingredients or the performance, which makes up the real impact to the environment and human health.

MR. COOPER: I think it's a very good question. I think the FTC already has some tools available to it. One is called the Pfizer doctrine, which says that if you make a claim you had better be able to substantiate it. There is also what's called material information that consumers have the right to certain material information for them to be able to make an informed choice. And that actually was developed with a series of letters between then Chairman Dingell and the FTC back in the early '80s.

I think what you have, a lot of members here talked about, is sort of the baseline that you need; that you should not be able to go below that if you're going to be able to make a claim. Now how you define that is something that I think we could all work on. But I think that's not a bad starting point. I think you also have to recognize that the FTC really is sort of in the position of saying first do no harm. Making sure that whatever claim you do make that it is credible, that it's accurate.

I think also though there is a need to look at proactive efforts. In other words, we want to get the marketplace to expand beyond just the baseline. We want to make this a comparative advantage, a true comparative advantage where people are constantly looking for new ways of improving their score on environmental issues. I mean that should be sort of a positive incentive that we want to create. So I think there is a lot of balances that have to be in the mix here, but I think they all can be part of, if we have sort of a consensus process that we try to develop.

MR. RANGAN: Thank you. I agree with most of what this panel has said and would just add that consumers are often faced with a premium when they're choosing among these labels, and so it takes more than just being truthful. It actually has to have some meaning.

And so when you see the "No CFC" label, for example, on an aerosol, typical personal care product or cleaning aerosol product, that's the law. You can't have CFCs.

And yet manufacturers use that claim without any other disclosure that, in fact, that's what all products in that category have to meet. So to disclaim a lack of value over the baseline or like products would be very important in terms of being truthful and not deceptive to consumers. And then, in terms of, just to capture something that was just said about marketplace capture, these premium labels shouldn't be able to be met by most of the market place. They should be reserved for a top tier and that, in and of itself, should drive innovation within a product sector, to meet those standards.

In Japan, there's a program called the Roadrunner Standard, which, in their energy efficiency standards, I can't remember the number, but it's a certain small percentage of the market that can meet it, that's expected to be the bottom a few years later, and again, you slice it off at ten percent who can meet the high premium label standards. So creating incentives in innovation like that, in the green market place, will also drive the industry to create the innovation to meet higher standards.

REP. RUSH: The Chair's time has concluded.

The Chair now recognizes the Ranking Member, Mr. Radanovich, for five minutes.

REP. GEORGE RADANOVICH (R-CA): Thank you, Mr. Chairman, and welcome. I've enjoyed the testimony of all the members. Glad you made it, Dr. Rangan.

And I would like to start off with a couple of questions, one for Mr. Case. I appreciated your testimony. In trying to define what's green and what's not, do you believe a regulated product with a chemical in it could be defined green?

M. SCOT CASE: Most products have chemicals in them, so, absolutely. Yes. There are in fact greener chemical base products.

REP. RADANOVICH: Okay. Question for the whole panel, then, as we're trying to define what green is. If you were to define it, would you limit its definition to biodegradability and life cycle carbon footprint alone, or would you add other things to that definition? I'd like to just go down the line. Say you got those two things, biodegradability and life cycle carbon footprint. What would you add to that, if that wasn't sufficient to you?

MR. KOHM: Well, what the commission has said, Congressman, is that general environmental claims, like green or eco friendly, aren't very useful and can be deceptive, because they mean --

REP. RADANOVICH: But what would you add to those? If you had two things, what would you add --

MR. KOHM: Well, what we would do is look at how consumers interpret a claim in context and not add --

REP. RADANOVICH: Could you just, because I've got to go down the line, and I don't mean to be rude.

MR. KOHM: Right.

REP. RADANOVICH: Don't take it the wrong way, but if you just had those two things, biodegradability and life cycle carbon footprint as the definition of what you'd label green, if you think that's not sufficient, what short responses would you add to it?

MR. KOHM: I think you would have to add many, many claims, depending on how a consumer would interpret something --

REP. RADANOVICH: Okay. Thank you. Mr. Case?

MR. CASE: So obviously, you would need to take a look at all of the environmental impacts throughout the product's entire life cycle, from the raw materials that are used, all the way through. So you didn't mention, for example, energy efficiency --

REP. RADANOVICH: Okay.

MR. CASE: You didn't mention water efficiency. You didn't mention low toxicity. You didn't mention how one defines biodegradability. I see the smile. I'll stop there. But we could go on all afternoon, listing the various environmental attributes, depending on the product's category, as Dr. O'Rourke mentioned.

REP. RADANOVICH: Okay.

MR. CASE: Then standards would be different --

REP. RADANOVICH: Thanks.

MR. CASE: For computer products than cleaning.

REP. RADANOVICH: I'm working down the list here. Dr. O'Rourke?

MR. O'ROURKE: Right. I also agree that using lifecycle approaches to understand the real impact across from raw material extraction to manufacturing to use to disposal. For consumer products, the things that I would add to your short list are persistence, is it biocumulative, and is it toxic to human health or the environment? I would add those on top of yours.

REP. RADANOVICH: Okay. Dr. Cooper? Mr. Cooper, excuse me. Thank you.

SCOTT P. COOPER: I don't have that other degree. When I worked for the subcommittee back in the early '90s, the jurisdiction was not only consumer affairs, it was also RCRA and Superfund, and so the issues then --

REP. RADANOVICH: I'm sorry. I need to get you on the question, though, because if you had biodegradability and lifecycle carbon footprint defining what was green, what else, if that was --

MR. COOPER: The issues that were front and center for the subcommittee then were recyclability, post consumer waste, a lot of issues around the whole recycling mandate. So those are the ones I would add to it at this point.

REP. RADANOVICH: Okay. Thank you Dr. Cooper and Dr. Rangan. Mr. Cooper. Dr. Rangan?

MS. RANGAN: I agree with, again, most of what was said. I would stress the health aspect of it, whether it's persistence or toxicity. And I'd also add social responsibility, whether fair trade is the common term that people talk about. And there's a Venn diagram. There's plenty of Venn diagrams about sustainability, but you'd be amazed and almost shocked and awed as to the multiple attributes that you could consider in any kind of green marketing claim.

REP. RADANOVICH: All right. Question for everybody, too. Should government dictate the process of a manufacturing of a product or the makeup of a product in order to be able to get some kind of a green designation?

MR. KOHM: That would certainly not be within the FTC's purview.

REP. RADANOVICH: Okay.

MR. CASE: And absolutely not. These are not prescriptive. What we're doing instead is identifying what environmental leadership looks like and some people will make an awful lot of money meeting those high standards.

REP. RADANOVICH: Okay.

MR. O'ROURKE: I think that the key here is transparency. That Congress requires public disclosure of what's actually in these products, and just through making that public alone, not mandating what's in it, how it's made. Just mandating the disclosure and the transparency will create incentives for leading firms to innovate and other firms to change their products.

REP. RADANOVICH: Okay.

MR. COOPER: We like the public private model, the Underwriters' Laboratory is a member of ANSI. The UL label is seen everywhere. In fact, it's in the Energy Bill. So I think that model, I think, could work in this area as well.

REP. RADANOVICH: Okay.

MS. RANGAN: My answer's a little different. I think where there are common terms, that baseline definition should be provided. If we're going to continue to allow natural to be used and widely, we ought to have some baseline as to what that ought to mean, and in food, there's a plethora of examples where we have really common, even discrete terms like no antibiotics, and yet, that doesn't have to mean the same thing from product to product. So, yes, we think there is a role for the government to play in providing some baseline definitions to some of the claims out there.

REP. RADANOVICH: All right, thank you.

Thank you, Mr. Chairman.

REP. RUSH: The Chair now recognizes the gentleman from Maryland, Mr. Sarbanes.

REP. JOHN P. SARBANES (D-MD): Thank you, Mr. Chairman.

I was curious, as you look at the challenge of this kind of labeling, the sort of transparency in labeling regime that we're trying to bring to bear with respect to green products, is there any analogous labeling challenge you would point to over and above some of the others to kind of be a frame of reference for this, or is this kind of, does this have some unique dimensions to it that we ought to be aware of? So I'd just ask anybody to jump into that.

MS. RANGAN: Even within the government, there's a number of labeling programs at sort of varying levels of maturity, and even, you have Energy Star, which is one of the oldest ones. You have organic, which is now pretty mature, and there's a lot of learning lessons to be had from both the way the model is set up in terms of how the labeling programs are run, how they're overseen, and how the standards evolve or don't evolve over time, and so there are a lot of lessons to be learned, and there's a lot of variation in quality among even the government based labeling programs.

REP. SARBANES: Anybody else want to try?

MR. COOPER: Sure. I will say that there are a number of excellent standard setting protocols that are out there. ANSI runs a wonderful program. There are ISO programs that define how environmental leadership should be established, so those are very, very useful. And what I really liked is the USDA organic model, because what they did is they took a confusing space with dozens of different standards for organic and grouped them under one label, and that's what allowed the organic farmers in this country to really make a lot of money, because that provided clarity and a single brand for consumers to look for.

REP. SARBANES: Well, it occurred to me the organic example would be a good one to consult, or the organic experience, with that kind of labeling, would be a good one to consult, but I wanted to get your thoughts on that again.

MR. KOHM: I might add a quite different experience, which is in financial disclosure and the role of the Securities and Exchange Commission in requiring disclosure of key material information from companies. I think that we're moving towards, I think, a system that would require disclosure of non-financial metrics from companies and standard formats through XBRL or other formats that would allow people, either analysts or consumers, to evaluate products and the companies more accurately. So, just as we've had this problem with toxic assets over the last few years, we are realizing we're having problems with toxic products where people would not buy them if they knew what was really in them.

REP. SARBANES: Let me ask this question. I think, Dr. O'Rourke, you're the one that founded GoodGuide, is that right?

MR. O'ROURKE: Correct.

REP. SARBANES: Yeah. Which is an online resource for people to kind of check on the claims.

MR. O'ROURKE: That's right.

REP. SARBANES: And what I was curious about is how you see the service you provide relating to the level of kind of government regulation that needs to be in this area? In other words, do you view what you're doing largely now as just being a compensator for the absence of some good other oversight and transparency mechanisms, or do you see the potential, whatever we achieve in that regard, to be a kind of partner in the effort and achieve a higher level of accountability across the board?

MR. O'ROURKE: Thank you very much for that question. We'd basically begun GoodGuide out of this huge gap in the information available to consumers and it really was an attempt just to fill this hole and get people information that they were desiring about health, environmental, and social impacts of products. We're now working closely with the State of California and hopefully, we would be very excited about working with the federal government about getting better information out, required disclosure of this key information that would allow the public to get this information in the standard format.

I think, over the long term, there's a huge and vital role for government in facilitating better communication of information out to the public, and this small project, GoodGuide is really an attempt to learn what information does the public want, and in what form it is most effective in helping them make better decisions in the market place.

REP. SARBANES: This is an off the wall question, but has there been any ideas about technology that would allow consumers, as they move through a store, for example, on their phone or some other device, to scan right there and go straight to a consumer guide? Did you already talk about that?

MR. O'ROURKE: No, but we have actually built that software at GoodGuide and we have the ability to scan barcodes. We're looking at RFID tagging of products, and over time, what we want to do is allow people in stores to get the best available information in the world on products and companies, so that they can make better decisions for themselves, and not have to depend on marketing or package claims, but they can get --

REP. SARBANES: Right.

MR. O'ROURKE: Scientific information on these products.

REP. SARBANES: Okay. Thank you.

MR. : And GoodGuide is actually not the only company that is doing it. There are dozens of companies that have approached us saying, "Hey, we've got the technology. We just need the information." And what's lacking is, how do you define this as a green product? Because we've got the technology. It's the definition we need.

REP. SARBANES: Thank you. I yield my time back.

REP. RUSH: The Chair now recognizes the gentleman from Michigan, Mr. Stupak, for five minutes, for the purposes of questioning the witnesses.

REP. BART STUPAK (D-MI): Thank you, Mr. Chairman. Sorry I couldn't be here for all the hearing. I've been in and out with other hearings on other matters.

Mr. Cooper, let me ask you this question, because I want to know more about these standards, because I support the scientific rigor and the transparent process that the American National Standards Institute requires of any organization seeking accreditation as an ANSI standards development organization. My understanding is that there are three primary green building certification systems in the market place. Green Globes lead in the National Association of Home Builders, a National Green Building Standard.

Can you discuss for us whether the organizations that develop these standards are ANSI standards development organizations, and whether they use your approved procedures to develop these standards? Because what I hear everybody saying, they're all talking about different standards, but who's regulating the standards?

MR. COOPER: There are multiple paths, which makes it a little bit more complicated. But every one of those codes you mentioned does fall under the ANSI rubric. Some of those will have their own approaches, say like the ICC, International Codes Council --

MR. STUPAK: Right.

MR. COOPER: Who works very closely with local units of government. So it's not quite the consensus process that we have for most of our standards because it's only with the local units of government that they interact with. Usually we insist that it's a much more ecumenical group, including consumer groups or government agencies as well, at the federal or local level. So each one of those can approach it differently, but every one of them has to meet basic ANSI standards of transparency, of involving the interested parties. They have to be able to respond to questions of inclusion and if they want to become an ANSI standard, then there's a whole other level of involvement with ANSI. If they then want to become an international standard, there's a whole other level with ISO.

REP. STUPAK: Right.

MR. COOPER: So there's sort of built in suspenders in each one of these. And against the standard, you also have all the obligations for the (conformance ?). You know, the testing and inspection, the measurement which is not only the certification, which we don't do, but, say like a UL would do. But then we would accredit the UL so that we're looking at the testers. So there are levels of these things, and partly because we are not a government agency, we have to overcompensate for these things. Our job in most any other country would be done by a government agency.

REP. STUPAK: Does anyone care to comment on that any further?

Let me ask this one, then, Mr. Kohm. The FTC is announcing today three complaints, alleging false and misleading claims regarding environmental claims. Despite the discussion of a vast array of misleading green claims on products, three is a very small number of enforcement actions. So, can you tell us, describe the FTCs approach to enforcement in this area, and under what circumstances do you turn to enforcement of some standards?

MR. KOHM: Well, we turn to enforcement when it's necessary and we use enforcement, not only to get people under order, and to have an effect on the people who are violating the law, but also to lay out a marker for those people who might otherwise violate the law, and the hope is that, in bringing cases in certain areas, that we will have an effect well beyond the cases that we bring.

REP. STUPAK: Did you work with state governments to do enforcement at the more local levels?

MR. KOHM: Well, we bring national enforcement action.

REP. STUPAK: Right.

MR. KOHM: We regularly work with state partners and with other federal agencies. For example, in at least one of these cases, the EPA is helping with expert testimony.

REP. STUPAK: What's your tipping point? When do you actually bring enforcement standards? I mean, do you work with these industries and companies? When do you actually? What's the point where you turn to enforcement?

MR. KOHM: Well, it's different in each circumstance, that we regularly work with companies. We work with various associations to try and get the word out. When that isn't working, or when people step way over the line, then enforcement is necessary. There's kind of two folks we deal with, the folks that step over the line and the people who live over the line. And for the people who are committing fraud and living over the line, like the cases I mentioned for car devices --

REP. STUPAK: Right.

MR. KOHM: One of them is called a Nano Detonator that runs on nuclear fusion, it would be about 100 million degrees, that, if it actually worked, those people need to be sued, and the commission's been quite active bringing eight cases over the last year and I would expect more in the future.

REP. STUPAK: Okay. Does anyone else care to comment on that, what is the FTC role in enforcement, while at the same time trying to set standards? Mr. Case?

MR. CASE: My challenge is that when the enforcement action occurs after consumers have been defrauded, that I'm stuck at this point with a $2500 refrigerator that doesn't even come close to meeting the Energy Star standard. So these, you know, allowing companies to make claims without requiring them to provide proof so that as a consumer, I know the claim is accurate before the purchase, is sinful.

REP. STUPAK: Yeah, but how do you do it? Until they advertise, we have some victims, right?

MR. CASE: Well, one of the things that you can do is actually require that, if you're going to be making an environmental claim, that you have to post information providing evidence that the claim is accurate, so that as a consumer, I could stand there in the store with my phone and go online and see, yes, this claim is accurate.

REP. STUPAK: So, until we get Mr. Sarbanne's idea ginned up on your cell phone, we have to have something else posting prior to the time of sale. That's what you're saying.

MS. RANGAN: And the example that Mr. Case used about the refrigerator is actually Consumer Reports' test --

REP. STUPAK: Right.

MS. RANGAN: Of Energy Star and the energy standards that showed that the standards don't capture what the problems are out there. If you can turn off the icemaker and you can turn off all the bells and whistles of a refrigerator and test it for energy consumption, but when you turn them all on, it's doubled, that's not good enough. And it just highlights again how standards, and in this case, a government labeling program standard, needs to evolve over time. And where we would like to see more FTC involvement in making sure that those claims are truthful and meaningful over time for consumers.

REP. STUPAK: Thank you, Mr. Chairman.

REP. RUSH: The Chair thanks the gentleman.

The Chairman would like to inform the witnesses and the members of the subcommittee that he intends to allow for a second round of questioning. And so, if the witnesses could please let us use a little bit more of your time for a second round of questions, and we will have a second round of questioning.

The chair recognizes himself for two minutes for the purposes of asking additional questions.

Mr. Kohm, and all the witnesses, this has been some very interesting testimony, some quite provocative, I might add. One of the questions that I wanted to ask Mr. Kohm, you talked about your enforcement actions, and you did not reference at all the Green Guide, when you said, or alleged that the companies step over the line. Can you, let's get back to this place of the Green Guides. I think this is very important. What place should the Green Guides have in the future of enforcement cases? Should that be a beginning, or how should that Green Guide inform future enforcement actions?

MR. KOHM: Well, Chairman, I think the Green Guides are incredibly important.

That one of the things the Green Guides are intended to do is demarcate that line so that the people who are trying to stay on the right side more easily can do so. There are some people who step over because they don't know where the line is and we can make that line clearer. There are some people who step over because the whole market place starts to go over the line, and that's where we need to take enforcement action, to make clearer where that line is and that's one of the things we did today.

REP. RUSH: And any of the other witnesses who want to respond about the importance of lack thereof, of the Green Guides?

MR. : I'll support Mr. Kohm. I think that absolutely, when the original Green Guides came out in '92, we saw lots of additional clarity in the market place about what was acceptable and what wasn't. Again, with the revisions in '98 and '99, and what we're hopeful is that the next version of the Guides actually provides a much more comprehensive assessment, and really kind of requires people to provide proof, requires people to provide some clarity on these issues and make sure that as consumers, we know whether the information is accurate, relevant and verifiable.

MS. RANGAN: We also support the Green Marketing Guides by the FTC and we also look forward to the update, because they could be expanded to be much more broad in terms of the scope of claims that they're covering and much more detailed in terms of what's acceptable and what isn't.

REP. RUSH: Thank you.

The chair now recognizes the Ranking Member, and then Chair wanted to clarify before the Ranking Member begins his questioning, it's been requested by the Ranking Member, by the Republican side, that we have five minutes of additional questioning, and the Chair had said it'd be two minutes. So the Chair will recognize the Ranking Member for five minutes, recognize Mr. Stupak for an additional five minutes, and then the Chair will come back for his other three minutes. (Laughter) So, with that, the Chair recognizes the Ranking Member for five minutes of additional questioning.

REP. RADANOVICH: Thank you, Mr. Chairman. I appreciate the openness to try to answer as many questions as we can and get a benefit from this panel of speakers.

Mr. O'Rourke, you had mentioned something in your testimony that consumers have little information on critical aspects of a product, and it reminds me of getting up in the middle of the night, needing an aspirin or something, and trying to go through what's on the back of an aspirin label. And you search for the dosage because you want to take the correct amount, and oh, my gosh, it's not on the first page. You have to peel back to get to the second page, and there's so much garbage on that label, that really, really all what you're looking for is the dosage. And I guess my question is, how much information can you expect to give a consumer on a label, and how much of this is subject to buyer beware?

MR. O'ROURKE: Yeah, so we're seeing, I think, more and more consumers are looking for some key pieces of information when they look at products. So in your case, it was the dosage or the directions on how many you should take. When I look at a green cleaner, I want to know, are there specific chemicals of concern that I don't want in my house, in the air, on the dishes, wherever. Personal care products that I don't want certain chemicals.

And what I think the first step is, is deciding what are the key pieces of information that need to go on that label that are most pertinent to protecting people's health and the environment. If there is too much information, then what we're proposing is that it needs to be disclosed on the manufacturer's website. So, we're seeing right now, in the household cleaners area, that there is not a federal mandate to disclose all the ingredients in your floor cleaner, your toilet bowel cleaner. Some of the harshest chemicals in your house, they're not disclosed on the package.

What we would like is that they would be disclosed somewhere, either on the manufacturer's website, or ultimately, on the package. So, I think that for things like that, you're putting a harsh chemical in your house. I don't think you can put it on the consumer to just be buyer beware. I think that they need certain pieces of information to know how to protect themselves from chemicals.

REP. RADANOVICH: Could you clarify to me, it's my understanding that the Federal Hazardous Substance Act requires all that to be on there?

MR. O'ROURKE: No, so on household chemical products in the U.S., there's a requirement of disclosure of certain active ingredients over certain percentages. So if you look at, if you go back home tonight and look in your bathroom or underneath your sink, most of the harshest chemicals you'll find in your house will have either one ingredient listed or zero ingredients listed.

Whereas, if you look at your personal care products, your liquid hand soap, the requirement is all ingredients in order of concentration. So your liquid hand soap will have thirty ingredients listed and your tub and tile cleaner will have zero, one or maybe two at the most. And what they will do is say, either, call it inactive ingredients or they'll dilute them enough that they don't have to disclose, so you will literally have no ingredients listed and sometimes will have phrases like fragrance, as I mentioned, which just masks ingredients --

REP. RADANOVICH: Right, right. Okay.

MR. O'ROURKE: So, unfortunately, we don't have accurate disclosure on chemicals in our houses.

REP. RADANOVICH: All right. Thank you very much.

Mr. Case, I can to ask a second question here. You mentioned that the labeling program at the USDA dealing with organic foods, and as you know, the USDA website states that it's not a health or environmental program, but it's really a marketing program, and yet many people think that buying products with organic labels on them are somehow getting a health or environmental benefit. If transparency about the products and their manufacture are what you seek, why do you hold up a program that relies on implied, but not guaranteed benefits as your model?

MR. CASE: What the USDA organic program does is actually bring clarity to the market. So for those consumers that are concerned with the pesticides that are used on fields with the farming technologies and techniques, worries about pesticides on food, what the USDA organic label does is provide a consistent platform for consumers to make educated comparisons between an organic product and a nonorganic product. So what it does is provide a common definition, a litmus test, if you will.

REP. RADANOVICH: All right. Thank you very much.

Dr. Rangan, you suggested other factors such as fair trade, should be included in green labeling, but many of the environmental practices in fair trade countries is not up to U.S. standards. Is that useful to the consumer?

MS. RANGAN: The International Labor Organization, ILO, is a good start. That's where Trans Fair bases their fair trade labeling program and their standards from, and it's a good international labeling start for fair practices. Do you mind if I just expand on your organic question --

REP. RADANOVICH: If you'd like.

MS. RANGAN: For one minute, which is that there are cases where consumers rightfully infer that organic may offer them a healthier alternative. And I'll just give you an example. When mad cow came out, organic was one of the few programs that actually required no animal biproducts in the feed. So is it a healthier alternative? Well, when it comes to mad cow, yes, it was an alternative, if you still wanted to eat beef, that minimized your potential exposure.

And then that's the inadvertent side of health and benefit from organic, but on the advertent side, all the materials used in organic production have to be reviewed by the National Organic Standards Boards, and health and safety are components that have to be addressed in that review process. It happens to be based in agricultural marketing service and after ten years of watch dogging that program, we hear that mantra. We're not anything else but marketing, but I think that has more to do with where it lives than what it actually is.

REP. RADANOVICH: All right.

Thank you very much.

And I yield back, Mr. Chairman.

REP. RUSH: The Chair thanks the gentleman.

The Chair now recognizes Mr. Stupak for five minutes.

REP. STUPAK: Thank you, Mr. Chairman.

I think what I've taken from this hearing so far is that what constitutes green can be sort of a tricky business. But as we see the global supply chains get farther and farther removed from the everyday consumer, we're using more and more fossil fuels, so let me give you an example, because I think we mentioned cleaners and that today.

We have green cleaners, or cleaners made basically from the same chemicals as always, but they're purchased from a closer distance. So the companies are saying, well we're a greener chemical because we're not using as much fossil fuel to transport. Now, does this fact alone, use less fuel to transport the product, qualify a product to be a green product? Anyone want to answer that? Dr. O'Rourke?

MR. O'ROURKE: I would say the short answer is no. What we need to do is evaluate the full lifecycle of that product and determine whether transport or the manufacturing process is highly energy inefficient and that it is a major impact category. For a few products, energy use and transport matter a lot, and for other products, they don't matter that much. So you really need to know, does it matter to the product category? What we are seeing now in many cleaners is the claim that they are plant based rather than petroleum based.

REP. STUPAK: Okay.

MR. O'ROURKE: Again, that may actually be a confusing concept because what they're doing is they're deriving a chemical from a plant like sodium laurel sulfate, that can also be derived from petroleum. So the same chemical ends up in your product, it's just derived from a different source. So the key is finding out what really matters to environmental or health effects on these things, and is that claim, can you verify or can you back up that claim with transparent information.

REP. STUPAK: Well, give me an example where transportation costs alone would qualify it to be green, that use less transportation costs.

MR. O'ROURKE: There are a few product categories in which transport of the product really long distances, heavy products. So for instance, air shipping products a long way has a very high energy impact. So if you see something that was either grown in a greenhouse or flown to you, that's probably going to have a very high energy impact, and it's going to matter.

So, we see now more and more people in the U.S. looking for locally produced food for that reason. That they want local, which reduces the big transportation chain, the big energy. But there are many products in which the transport is a minor impact category.

REP. STUPAK: Well, couldn't you make that claim, then on any waterborne product, basically? Water, you know, from iron ore pellets from Northern Michigan down to the steel mills? That's the only way you can transport it. It's the most efficient way, and less fuel. Or even cars coming across the ocean, because of the size and the weight and the bulk. I would think there would have to be more to it than just transportation.

MR. O'ROURKE: That's right, that's right. Air travel's the highest carbon intensity. Shipping is actually quite efficient, carbon wise. Train transport, quite efficient carbon wise. Local production, the most efficient. So, there's a range of impacts and you need to understand those things to be able to either evaluate it or make the claim.

Another thing we're seeing a lot of bottled water. For instance, one bottled water company shipped from the South Pacific and claiming it's a green bottled water company. Huge transport and energy impacts --

REP. STUPAK: Sure.

MR. O'ROURKE: Of the manufacture and transport of that product, and then it's got a beautiful green label and an eco bottle in which it's sold. We view that as confusing at best, deceptive at worst.

REP. STUPAK: Dr. Rangan, you wanted to say something on that?

MS. RANGAN: You know, I think that in talking about the sphere of green, there's a top and a bottom, and sides, and if we're establishing a floor or talking about that floor, at the very least, disclosure and truthfulness to the meaning should be there, so that if a company is making a carbon claim that either they use recyclable energy, wind energy to generate a product, those aren't voided value. They have some value.

But the claim should reflect what they're doing. Should a carbon claim be interpreted as a health claim? It shouldn't be. And our advice to consumers is, always read these claims quite literally. And it's also why we continue to say that discrete labels right now in the market place offer consumers the quickest way to understand what a product is. So if you need to group discrete claims together in order to explain the many attributes of green a product may have, then so be it. We prefer that method, at least right now, versus an overarching label where it's very difficult to tell the variations in the components.

REP. STUPAK: Mr. Cooper?

MR. COOPER: (Inaudible).

REP. STUPAK: You've got to turn that on, your mike on.

MR. COOPER: That you have aggressions law in effect here, that bad labels are going to drive the good labels out of the market place. So I think you first do no harm. I think, though, one of the points that Dr. Rangan made about is in Japan where you have an effort to sort of up the ante, where you're looking for constantly improving the product, is something that I think that we should also consider as part of this mix.

That you want to have companies who actually have a role to play in sort of being the pathfinders, where you're constantly improving the products. Getting that sort of seal or label recognized is not going to be easy, but when it is, sort of like a Good Housekeeping or Better Business Bureau or Underwriters Laboratory, then it's a very powerful tool. So I think that that should be part of the mix as well.

REP. STUPAK: Okay.

Thank you, Mr. Chairman. It looks like my time has expired. Thanks for this second round.

REP. RUSH: Thank you.

The Chair recognizes himself for his three minutes.

You mentioned water. I mean, somebody tell me about the false labeling that is involved with water. I've got a bottle of water here. It says smaller labels equal more trees, and also under that it says we could write more on a bigger label but saving trees is important, which we understand and we agree with. By keeping this short, we've saved almost ten million pounds of paper per year in the U.S. That's about 30,000 trees. And then it says "Be Green".

And I just want to know, first of all, this is a label, but also in this, some of this stuff is nothing but tap water in a bottle. All right? And, but yet, consumers are buying the water. We saw this as a part of being green and being healthy. Can you all respond to that and help us to help deliver the American consumer from the trap that they find themselves in?

MS. RANGAN: Chairman Rush, you have just highlighted in that bottle what the problems are. Because there aren't baselines for what should be disclosed or not disclosed, it's up to a company to decide what they feel like disclosing and what they don't feel like disclosing, they can weave that into a green claim and say we're using less paper and less disclosure is less paper.

And in terms of the water inside the bottle, absolutely, our tests have shown year after year, if you filter your water, you're going to get as good of quality with regard to health as anything that's in one of those bottles. I think this is a great example of where the baseline has a lot of holes and in filling those holes and getting rid of these generic claims that are vague and meaningless, we can do a lot toward reducing the confusion that comes from that bottle and a consumer trying to buy it.

MR. : I think you're absolutely right. It is, in some circumstances, a legitimate claim. Under the Seven Sins Taxonomy, though, we would refer to it as the sin of the hidden tradeoff. What manufacturers are able to do with almost any product that you make is find some little nugget that allows them to say, oh, this makes it green.

And so the question is, well, how many nuggets are acceptable? At what point does it become green? And so, what one needs is some sort of voluntary environmental label so that there are actual standards that say this is what green is, and if you have products that meet a standard developed in an open, public, transparent process, you'll be able to resolve those kinds of issues. And so it would be open to these kind of standard setting committees, whether those kinds of claims are worthy of some sort of national label.

REP. RUSH: (Inaudible.)

MR. : Chairman, those are fairly specific claims, and those are claims that, if true, a consumer can understand and make choices based on. A lot of the discussion today has been about these general green claims that I'm green, I'm eco friendly, that are very difficult to substantiate. But if, assuming all those claims are true, and a consumer wanted to contribute to using less paper, and assuming they didn't take any implied claim from that about the water, that those are useful claims.

MR. : The problem with those claims is that they're completely irrelevant to the actual environmental impact or health impact of that product. So, it may be an accurate claim, but it is, in a sense, a kind of magician's bait and switch, where you're looking at one hand and the real action is in the other hand. For that product, it's around the manufacturing of the water, the manufacturing of the plastic bottle and the disposal of the plastic bottle, are the real environmental impacts, not the little tiny piece of paper around the sleeve of the plastic. So their claim may be accurate, but it is largely irrelevant to the actual environmental and health impact of the product.

REP. RUSH: Well, that concludes our hearing today, and I want to relay to our witnesses, I have not had a greater panel of witnesses to help us on any issue that I can think of since I've been chairman of this subcommittee. You've been outstanding and your testimony has been very, very informative and provocative and very interesting. And I really want to thank each and every one of you for participating, and I think that you've made this subcommittee much more prepared to deal with this particular issue.

And I hope that this translates, and I know that it will, translates into us being much more sensitive and much more vigilant and helpful and in partnership with LTC as we move forward. We've got to help solve this problem for the American consumer, and you have really been pivotal in terms of bringing us to a solution. Thank you so very much, and Godspeed to each and every one of you. Thank you.

MR. : Thank you.

REP. RUSH: The subcommittee stands adjourned. (Sounds gavel)

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