FTC Settles Charges Over Deceptive Zero VOC Claims

Paint Can Label from Exhibit B in FTC Complaint

Four paint companies have agreed to settle Federal Trade Commission charges that they deceptively promoted products as containing zero volatile organic compounds (VOCs) or as emission free, including during and immediately after application. Some promotions also made explicit safety claims.

Specifically, the first FTC complaint alleges,

In connection with the advertising, promotion, offering for sale, or sale of Natura paints, Respondent has represented, directly or indirectly, expressly or by implication, that: a. Natura paints are emission-free.

Natura paints are emission-free during or immediately after painting.

Natura paints will not emit any chemical or substance, including VOCs, that causes material harm to consumers, including sensitive populations such as babies, asthmatics, and allergy sufferers.

Natura paints will not emit any chemical or substance, including VOCs, during or immediately after painting, that causes material harm to consumers, including sensitive populations such as babies, asthmatics, and allergy sufferers.

The FTC alleged, the company had no evidence to support those claims.

The four companies, Benjamin Moore & Co., Inc., ICP Construction Inc., YOLO Colorhouse, LLC, and Imperial Paints, LLC, have agreed to consent orders that would bar them from making unqualified VOC free and emission free claims.

VOCs are chemical compounds that easily evaporate at room temperatures. All paints emit chemicals during the painting process and while drying. Some of these chemicals can be harmful to the environment and people, especially to sensitive groups such as babies and those suffering from asthma or allergies. Arguably there is no zero VOC paint, but that was not the basis of these complaints.

In these four complaints, the FTC charged each company with making “unsubstantiated” claims that their paints were free of emissions and/or that they contained no VOCs, without any qualification (e.g., after X number of hours). The FTC also charged the companies with facilitating deception by retailers who sold their paint. Additionally, in its complaints against Benjamin Moore and ICP Construction, the FTC alleged that the companies marketed their paint using “Green Promise” and “Eco Assurance” environmental seals, respectively, without disclosing to consumers that they had awarded the seal to their own products.

Each of the proposed consent orders settling the charges against Benjamin Moore & Co., Inc., Imperial Paints, LLC, YOLO Colorhouse, LLC, and ICP Construction Inc. contains four provisions designed to ensure the companies do not engage in similar conduct in the future, including:

First, they would prohibit the companies from making unqualified VOC free claims and emission free, unless both content and emissions are actually zero, or emissions are at trace levels, beginning at application and thereafter. The proposed orders’ definition of “trace level of emissions,” which track the Green Guides,’ “trace amount” test, requires, in part, that emission at that level does not cause material harm that consumers typically associate with emission from the covered product, including harm to the environment or human health.

Second, they would prohibit the companies from making claims about VOC levels, emission, odor, and other environmental or health benefits, unless they are true and not misleading, and unless the companies have competent and reliable scientific evidence to back them up.

Third, to correct existing unsubstantiated claims, the orders would require the companies to send letters to their distributors, instructing them to stop using existing marketing materials and providing stickers or placards to correct misleading claims appearing on product packaging or labeling.

Fourth, the orders would bar the companies from providing third parties with the means of making false, unsubstantiated, or misleading representations about material facts regarding paints described.

The proposed orders against Benjamin Moore & Co., Inc. and ICP Construction Inc. contain two additional provisions, which would prohibit them from misrepresenting third party certifications and failing to adequately disclose a material connection with an endorser.

The Commission vote to accept the consent agreements was 2-0. The FTC published a description of the consent agreement packages in the Federal Register. The agreements are subject to public comment for 30 days through August 10, 2017, after which the Commission will decide whether to make the proposed consent orders final.

Note that the Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,654.

There are potentially significant legal ramifications for owners of walls to which the paint has been applied, including those that utilized the application of paint on the 94% of LEED new construction 2009 projects that earned the indoor environmental quality credit for low emitting materials – paints and coatings, and there are implications for the design professionals who specified the product and for the erectors of buildings that applied it.

South Miami Poised to Mandate Solar Panels

The City of South Miami, Florida City Commission is scheduled to take a final vote on July 18 on an ordinance that will require rooftop photovoltaic panels on new construction and major renovations.

The ordinance is likely to pass given that at its July 12 meeting the second reader version of this ordinance passed with a 4 to 1 vote.

The proposed requirement is a first anywhere except in California where there are only a very few locales with a similar mandate. The ordinance is modeled after similar laws enacted in the California municipalities of Lancaster, Sebastopol, and Santa Monica, and the City of San Francisco.

There are places like Baltimore that as part of its green building code require 1% onsite renewable energy (not only rooftop solar) and in lieu allow the purchase of green power. Such is arguably more progressive than mandating rooftop solar only, but still makes matters of energy a priority. And many governments incentivize solar on top of the existing federal tax incentives.

There was opposition to this mandate expressed at the City Commission session, including real concern this will pressure affordable housing. There was also concern expressed that it can be difficult and more expensive to sell a house with rooftop solar panels.

But the Commission members were swayed by the June 13 Planning Board review and unanimous approval for “requiring solar energy collectors as part of new construction of certain residential dwellings.” The Commission concluded rooftop solar installations will benefit the local economy by supporting small businesses, creating well-paying jobs, and directing profits to local business owners; in spite of opposition that characterized the real beneficiaries as Wall Street lenders and Chinese solar panel manufacturers.

Specifically, the ordinance mandates this new requirement applies to,

All new construction of single-family residences, townhouses, and any multi-story residential building where a section of roof can be reasonably allocated, as determined by the Director of the Building Department or the Planning and Zoning Department, ..

This requirement shall also apply to existing residential buildings as described above, if an alteration or addition is made that either increases the square footage of the principal structure by 75% or greater, or that replaces 75% or more of the existing sub-roof.

And the mandate requires, at a minimum,

One panel with a minimum of 2.75 kW nameplate photovoltaic capacity per 1,000 square 20 feet of living area provided there is sufficient space within the available roof top Solar Zone; or 175 square feet of solar collectors per 1,000 square feet of roof area.

The ordinance is here.

The ordinance is likely not a model for other jurisdictions, but viewed most positively, noting it impacts only one small south municipality in the sunshine state, this is part of an evolving energy dialogue that may force a larger debate about the nature of energy in our society. In the country that banned the 100 watt lightbulb, should anyone be surprised that a small city in Florida is legislating onsite renewable energy as a public good?

Mold can be Arrested in the Marketplace

Extensive mold contamination on ceiling and wall

Concern about exposure to indoor mold has been increasing as the public becomes sensitive to issues of building occupant health and wellbeing.

Mold problems in buildings have in large measure been exacerbated by changes in building codes and construction practices that began in the 1970s. In the quest to be more energy efficient, buildings are more tightly sealed, with minimum ventilation rates that are intended to provide indoor air quality that is acceptable to human occupants but often has the unintended consequence of allowing moisture buildup and resultant environmental externalities, including mold. Moreover, many modern materials, such as drywall, do not allow moisture to escape easily.

Some suggest mold is an externality of green building.

It is time for more and better science about mold including methodologies to minimize adverse health effects. Adverse health impacts from mold can most efficiently be recognized by the marketplace and enforced by the rule of law in state courts in lieu of new top-down government regulation in this area.

There are no EPA regulations or other federal standards for airborne mold contaminants. Maybe more correctly stated, there is no government enforcement mechanism or Threshold Limit Values for airborne concentrations of mold, or mold spores.

Mold is a microscopic form of fungi. Mold is found nearly everywhere both indoors and outdoors. Mildew refers to certain kinds of mold. Mold growth is encouraged by warm and humid conditions, although it can grow during cold weather also. There are many thousands of species of mold and they can be in any color, including white, orange, green, brown or black. Most fungi, including molds, produce microscopic cells called “spores” that spread easily through the air. Live spores act like seeds, forming new mold growths (colonies) when they find the right conditions. All of us are exposed to fungal spores daily in the air we breathe, both outside and inside.

Most, if not all, of the mold found indoors comes from outdoor sources. Indoors it grows and become a problem when there is water damage, high humidity or dampness. Mold needs moisture to grow. Common sources of indoor moisture that can cause mold problems include flooding, roof and plumbing leaks, damp basements or places where moist air condenses.

Small amounts of mold growth in workplaces or homes are not a major concern. When molds are present in large quantities, they may cause nuisances and health problems for some people.

Most people will have no reaction when exposed to mold. Allergic reactions, similar to pollen, including runny nose, eye irritation and skin rash, are the most common health effects for individuals sensitive to mold. Flu-like symptoms, such as cough, congestion, headache and fatigue may also occur. Some individuals are more sensitive than others, including possibly infants and children, individuals with respiratory conditions or allergies and asthma, and persons with weakened immune systems.

Most symptoms are temporary and are eliminated by correcting the mold problem.

Some mold can produce toxic substances termed mycotoxins. Airborne mycotoxins have not been shown to cause health problems to occupants in residential or commercial buildings. The health effects of breathing mycotoxins are not well understood and requires more study.

The fake news sometimes refers to “black mold” or “toxic black mold.” It is at times associated with the mold Stachybotrys Chartarum, a type of greenish-black mold commonly arising from significant water damage. Known health effects are similar to other common molds. EPA has made clear, early reports of severe effects have been put in doubt by later research.

In most instances when visible mold is present, sampling is unnecessary. Since no EPA or other federal limits have been set for mold or mold spores, sampling or testing cannot establish a building’s compliance with a nonexistent government standard; and that is not a bad thing. Surface sampling may be useful to determine if an area has been adequately cleaned or remediated.

It is time for the problems of mold to be addressed when Americans, on average, spend approximately 90% of their time indoors. We need more and better science about adverse health effects of mold, including an examination by the environmental industrial complex of mold as an externality of green building?

Adverse health impacts from mold can most efficiently be policed by the marketplace and enforced by the rule of law.

Superfund can Save Our Current Way of Life

Superfund is broken. “[W]e all know it doesn’t work — the Superfund has been a disaster,” said President Clinton. President Bush described the need for a program overhaul. President Obama acknowledged the 37 year old federal program’s flaws while seeking more funding.

And now under President Trump there is action to clean up the Superfund mess.

There is no dispute that the 1980 Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund, has failed to clean up more than a small fraction of the nation’s worst hazardous waste sites.

And while those in the know can debate why Superfund has not in the past worked despite Billions of dollars in spending, most agree that remedies should encourage faster cleanups, prioritize risks to human health, reduce litigation among potentially responsible parties, reduce spending on administrative program compliance, encourage competitive bidding on cleanups, and the like.

To that end, in a major step toward restoring Superfund cleanup to EPA’s core mission, EPA Administrator Scott Pruitt is prioritizing Superfund cleanup and streamlining the approval process for sites with remedies estimated to cost $50 million or more. The May 9, 2017 delegation of authority memo is here.

Concomitantly, the EPA Administrator is reviewing the recommendations of a task force announced on May 22 about how the agency can realign incentives for the involved parties to promote expeditious remediation, reduce the burden on cooperating parties, incentivize parties to remediate sites, encourage private investment in cleanups and sites, and promote the revitalization of properties across the country. The task force, chaired by Albert Kelly, provided detailed actions that the agency can take to:

Focus on reducing the amount of time between identification of contamination at a site and determination that a site is ready for reuse, encouraging private investment at sites during and after cleanup and realigning incentives of all involved parties to foster faster cleanups.

Overhaul and streamline the process used to enter into prospective purchaser agreements, bona fide prospective purchaser status, comfort letters, ready for reuse determinations and other administrative tools under the agency’s existing authorities used to incentivize private investment at sites.

Streamline and improve the remedy selection, particularly at sites with contaminated sediment.

Utilize alternative and non-traditional approaches for financing cleanups, as well as improvements to the management and use of Superfund special accounts.

Improve the agency’s interactions with key stakeholders under the Superfund program, particularly other federal agency potentially responsible parties, and expand the role that tribal, state and local governments, and public-private partnerships play in the Superfund program.

Moreover, a negative externality of the Superfund law is that nearly every nonresidential real estate transaction in the U.S. now has a Phase I Environmental Site Assessment completed, at a cost of thousands of dollars and little true environmental efficacy.

One final idea is an expansion of state Brownfield programs that today generally cannot include Superfund sites.

Critics will focus wrongly on agency’s role in the ideological Armageddon over climate change and on the EPA 2018 budget that proposes to reduce federal spending on Superfund from $1.1 Billion to $762 Million. Those dollars are not going to cleanup the over 1,100 sites on the cleanup priority list.

However, with a renewed sense of urgency restoring Superfund cleanup to EPA’s core mission and fresh ideas, the 37 year old federal program can effectively return formerly contaminated sites to the private sector for their reuse and “save both mankind and our current way of life.”

PACE in Maryland is Not Keeping Pace

In 2008 I said Property Assessed Clean Energy (PACE) loans “could be bigger than anything in U.S. real estate since the invention of the glass window.”

But today, despite Maryland having enacted a PACE enabling law in 2014, only one PACE loan has closed in the State.

By any measure, one is not an overwhelming success.

Nationwide, only about a thousand PACE loans have closed. So, what is wrong?

The concept is sound. PACE state enabling statutes generally authorize local governments to engage private sector lenders to provide upfront low interest financing to commercial property owners for energy efficiency, water conservation and renewable energy projects (e.g., HVAC system upgrades, photovoltaic system installations, replacement cool roofs, etc.) collecting the repayment through annual assessments on the property’s real estate tax bill.

At this time of major changes in the national environmental agenda, PACE is an ideal means of voluntarily mitigating the negative environmental impacts that human activity has on the planet, not to mention providing the capital for renovating the nearly 4.9 million existing commercial buildings in the U.S.

But PACE loan programs are still very new. They are gaining acceptance nationally and 34 states have enacted enabling legislation with 15 states of those having active PACE programs.

PACE offers a host of benefits, including: removing the barrier of a large upfront cash outlay by the property owner; allowing 100% financing of improvements; in amounts over loan value ratios available in the marketplace; without disturbing existing mortgage financing; underwriting tied to the property and improvements and not individual creditworthiness; repayment over a long period of time (up to 20 years); low interest rates (resulting from high security of repayment); reduced utility bills that can offset the payments; the obligation to repay runs with the property and not the owner; the improved properties have an increased value, benefiting both the owner and the property taxing authority; the owner may be eligible to take advantage of federal, state and local tax incentives; cash flow advantage where many owners like the single tax bill payment in lieu of monthly; under most commercial leases the PACE payment (on a property tax bill) can be passed along to the tenant avoiding the ‘split incentive’ problem; local government can facilitate the program with no direct debt obligation; and, in fact at no cost to government (because the borrower pays all costs).

PACE could provide the funding to have the LEED Existing Building rating systems realize their potential.

In the event of a default, the amount in default (but not the entire principal of the PACE loan) is a liability that is a property tax lien collected by the local government with the priority associated with other real property tax liens, so existing mortgage holder acknowledgment of  a PACE loan is required.

Nationally, including in Maryland, “residential” PACE programs (as opposed to the commercial programs) were put on hold as a result of a directive in 2011 that Fannie Mae and Freddie Mac refrain from purchasing mortgage loans secured by single family properties with outstanding PACE obligations. However, as I wrote in this blog on July 24, 2016, HUD Jumpstarted Financing For Homes, reversing their previous position and now widely allowing residential PACE loans on top of FHA and VA loans (but still not on top of Fannie Mae and Freddie Mac loans).

I was asked recently to recommend how PACE in Maryland could be improved. The state statute is fine. The disconnect is that implementation by the local government programs is flawed. What follows is my top 10 list actions to make PACE a success in Maryland. And most of this compilation has direct application to make PACE programs a success across the country.

  1. More and additional PR explaining PACE to prospective borrowers and lenders
  2. Reduce cost of a PACE loan by eliminating the requirement that a PACE lien notice be recorded among the land records
  3. Lower cost of a PACE loan by not collecting recordation tax on a PACE lien notice recorded among the land records
  4. Modify the existing mortgage holder consent forms to be acknowledgments
  5. Standardize programs and documents across all counties in the State
  6. Local government programs should not limit the definition of what projects qualify as “energy efficiency, water conservation and renewable energy”
  7. Eliminate the requirement for a pre-improvement Energy Audit
  8. Standardize the effective date of a PACE lien to be first advance of funds, not when the project is completed
  9. Draft new and improved attorney prepared loan documents that work to ‘sell’ PACE
  10. Expressly authorize PACE for new construction (i.e., the top 10% of a building)

A PACE improved building is great for the planet. And PACE is also down right awesome for business.

You Need a Green Building Consultant (Who Speaks for the Trees)

The Lorax Partnerships Team

We are often asked “what is the best way to assure success in a green building project?”

Whether that query is from a Fortune 1000 businesses or an architect, the answer is the same, have the owner engage an experienced green building consultant as early as possible in the project.

Which often leads to a follow up question, “who do you recommend?”

My go to move is to recommend Lorax Partnerships based in Baltimore who are among the best of green building consultants we work with.

Those responses are not inconsistent with and, in fact, should be considered concomitantly with the conclusion, having worked on LEED projects since 2001, that the second best way to mitigate risk and avoid liability in sustainable building is a green building consultant working for the owner. (Okay, the single best way to mitigate risk in a green building project are properly drafted contract documents.)

Both other owner and architect are advantaged by the consultant contracting directly with the owner and not being a subcontractor of the architect or other design professional, .. including by example the owner avoiding having an architect specify a LEED credit for Green Power because it does not increase first costs that the architect is responsible for, and the architect mitigating risks from proposed credits not being achieved by the contractor during construction.

Sustainability and building green require skill and expertise beyond that in common stick built erection of a structure, to be successful. Owners may define success differently, .. achieving LEED certification, 25% less energy use than a comparable building, improved indoor air quality or the like, but a skilled green building consultant capable taking the project from craftsman to artist, is a key indicator of success.

By analogy, the Parthenon or for that matter the Taj Mahal and Borobudur would not have been built without skilled stone masons. Stone carvers have existed for thousands of years while green building consultants are a new trade, but the best of both cross the line from craft to art. Since 2003, the green building consultants at Lorax Partnerships have refined the art of sustainable building, including lowering first costs for construction driving reduced costs of operations and resultant higher effective rents that culminate in higher ROI.

There are more than 200,000 LEED professional credential holders and while many of them are very good at what they do, .. we work with a lot of good consultants; and, while I am pleased to recommend multiple consultants with particular skill sets in specific geographic areas for our clients to consider, I have focused on Lorax Partnerships in this blog post, without reservation, not only because they speak for the trees, but because as a corporate culture they find the sweet spot of saving the planet and having the owner prosper from its sustainability efforts.

Only the largest design firms have the knowledge and expertise required to competently specify EPDs and HPDs without exposing themselves to all but certain liability. Again, enter green building consultants who have expertise in specifying materials.

Yes, you can easily earn a LEED credit simply by including any one of the LEED accredited professionals as a member of the project team. In fact, 99% on LEED 2009 New Construction certified projects (6,881 of 6,939 projects) earned this credit.

And what I am describing is much more than only the LEED v4 Integrative Process credit, that you can also easily earn, with the project team taking an integrative approach to optimizing energy and water.

Today, green building is much more than only LEED, so consultants assist an owner in selecting the most efficacious green building standard, rating system or code for a particular project, with increasing numbers of projects pursuing the ICC 700 certification or no third party certification at all. They serve as the owner’s representative, working to satisfy that owner’s objectives while saving the planet.

But for skilled stone masons, the Parthenon would not be standing today. You may not be erecting a building to stand the test of time, but the best way to assure success with your green building project is to, early on, engage an experienced green building consultant working for the owner.

Attorney General’s End of Third Party Settlements is Good for the Environment

Attorney General Jeff Sessions issued a memo on June 5, 2017 to all Department of Justice components and 94 U.S. Attorney’s Offices prohibiting them from entering into any agreement in settlement of federal claims or charges that directs or provides for a settlement payment to non-governmental, third parties that were not directly harmed by the conduct.

When the federal government settles a case against a corporate wrongdoer, any settlement funds should go first to the victims and then to the American people – not to bankroll third-party special interest groups or the political friends of whoever is in power,

said Attorney General Jeff Sessions.

Unfortunately, in recent years the Department of Justice has sometimes required or encouraged defendants to make these payments to third parties as a condition of settlement.

Under the last Administration, the DOJ repeatedly required settling parties to pay settlement funds to third party community organizations that were not directly involved in the litigation or harmed by the alleged conduct.

This abuse of enforcement power was particularly prevalent during the last eight years in pursuant of alleged violations of environmental laws. By way of good example, I wrote in this blog in 2013 in a post First Ever Criminal Prosecution For Deaths Of Birds By Wind Turbine,

As part of the plea agreement, a $400,000 fine will be directed to the North American Wetlands Conservation Fund. The company will also pay $100,000 in restitution to the State of Wyoming, and perform community service by making a $160,000 payment to the congressionally chartered National Fish and Wildlife Foundation. Duke Energy is also required to contribute $340,000 to a conservation fund for the purchase of land, or conservation easements on land, in Wyoming containing high use golden eagle habitat.

Last year environmental enforcement by the DOJ resulted in more than $6 Billion in administrative, civil penalties and criminal fines; and that does not include the $14.7 Billion Volkswagen Clean Air Act violation settlement, and more than $1 Billion in commitments of responsible parties to clean up Superfund sites. So, we are talking about a lot of money.

Pursuant to the Attorney General’s memorandum,

With this directive, we are ending this practice and ensuring that settlement funds are only used to compensate victims, redress harm, and punish and deter unlawful conduct.

There are instances when it is in the best interests of the United States to settle a lawsuit or end a criminal prosecution. Settlements, including civil settlement agreements, deferred prosecution agreements, non-prosecution agreements, and plea agreements, are a useful tool for DOJ attorneys to achieve the ends of justice at a reasonable cost to the taxpayer. It is now again clear that the lawful and proper goals of any settlement are, first and foremost, to compensate victims, redress harm, or punish and deter unlawful conduct.

Effective immediately, DOJ attorneys may not enter into any agreement on behalf of the United States in settlement of federal claims or charges, including agreements settling civil litigation, accepting plea agreements, or deferring or declining prosecution in a criminal matter, that directs or provides for a payment or loan to any non-governmental person or entity that is not a party to the dispute.

Stopping the misuse of settlement dollars will level the playing field for responsible businesses, allowing for the orderly administration of justice, while protecting the natural environment in communities across the country.

Retailers Pay Millions for Hazardous Waste Violations

Retailers across the nation are buttressing their trash disposal practices after Dollar General Stores and Big Lots Stores paid Millions of dollars to settle civil suits for environmental violations for the unlawful disposal of hazardous waste, including customer returned merchandise and batteries.

Most businesses should have a solid waste management plan to provide staff with procedures for complying with laws (e.g., at a minimum, many businesses have batteries and mercury containing lamps, the disposal of which is regulated) and ideally aimed at reducing the amount of waste sent to landfills, a mainstay in environmental stewardship.

In the latest case on April 27, 2017, the Riverside County, California District Attorney along with 34 District Attorney’s Offices and two City Attorney’s Offices across California, announced in a press release that Superior Court Judge Bryan F. Foster ordered Ohio based Big Lots Stores, Inc., and its subsidiary corporations, to pay $3.5 Million in civil penalties and costs for environmental violations.

The judgement in the civil lawsuit filed in San Bernardino County Superior Court is the result of an investigation into the unlawful disposal of hazardous waste by Big Lots Stores at its distribution center and its 206 California stores over several years.

The lawsuit alleged that, instead of transporting hazardous waste to authorized hazardous waste facilities, Big Lots illegally disposed of the waste in the trash and illegally transported it to local landfills. The hazardous waste included ignitable and corrosive liquids, toxic materials, batteries, and waste from electronic devices. Some of the waste was the result of spills, damaged containers, or customer returns.

Big Lots cooperated during the subsequent investigation. Big Lots has now adopted and implemented new policies and procedures, as well as new training programs to properly manage and dispose of hazardous waste. Big Lots hazardous waste is now collected by state registered haulers to transport it to authorized disposal facilities and is now being properly documented.

In another case brought only days before, Yolo County District Attorney along with 31 other California District Attorneys announced on April 17, 2017 in a media release that Superior Court Judge Sidney P. Chapin ordered the Tennessee based company Dolgen California and its subsidiary corporations, to pay $1.125 Million as part of a settlement of a civil environmental prosecution.  Dolgen and its subsidiary corporations own and operate Dollar General stores and distribution center in California.

The consent judgment resolves allegations made in a civil enforcement lawsuit that alleged Dollar General retail stores throughout the state and its distribution center unlawfully handled and disposed of various hazardous wastes and materials over a five year period.  Those hazardous wastes and materials included automotive fluids, alkaline batteries, electronic waste, aerosol cans, expired over the counter medications and other toxic, ignitable and corrosive wastes.

This settlement holds Dolgen California and its subsidiary corporations responsible for years of unlawful management of hazardous waste,

said District Attorney Reisig.

The terms of this settlement will require these companies to improve the training of their staff and the monitoring and management of their hazardous waste.

This is not a California only issue. Media reports describe that in recent years many retailers, including single stores and national brands, from Whole Foods to Wal-Mart have been the subject of federal and state hazardous waste violation actions.

In the event products sold by retailers nationwide are returned, recalled, damaged in the store or expire on the shelves, which are every day occurrences, when discarded many of those products are a hazardous waste under federal and state laws.

As a practical matter, many if not most businesses should have a solid waste management plan to provide staff with procedures for complying with laws for waste from ongoing consumables, from durable goods, as well as from facility alterations and additions. Many items that appear to the unknowledgeable to be “trash” are regulated hazardous waste.

This law firm has provided hazardous waste management services for retailers, including in the pharmaceutical industry, as well as a host of other businesses from landscapers to medical offices, ranging from solid waste management plans (that can qualify for LEED credits), to waste characterization, training programs, and regulatory notifications.

Solar Powered Advertisement is Deceptive

Billboard in Italian Train Station

A business installs photo voltaic panels on its roof to generate power, and advertises that it is “solar powered.”  The business, however, sells the Renewable Energy Certificates (RECs) that are generated by the solar power. Even if the business is near net zero for electricity generated by the solar panels, according to guidance from the Federal Trade Commission; it has, by selling RECS, transferred the right to characterize that electricity as renewable. The businesses’ claim is therefore deceptive.

This law firm is regularly asked about advertising claims for environmental matters, including most often issues of renewable energy.

While no two situations are the same and legal queries are always fact specific, many of the answers to questions about environmental marketing claims are found in the FTC’s Green Guides. The Green Guides help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. § 45.  They do not operate to bind the FTC, other governments or the public, and are not legal advice, but they are characterized as the current thinking of the FTC.

So, with apologies to the FTC, but there is no better way to communicate the thinking of the federal government than to quote extensively from the Green Guides, including examples published in the Guides,

If a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses renewable energy.

Example 1:  A marketer advertises its clothing line as “made with wind power.”  The marketer buys wind energy for 50% of the energy it uses to make the clothing in its line.  The marketer’s claim is deceptive because reasonable consumers likely interpret the claim to mean that the power was composed entirely of renewable energy.  If the marketer stated, “We purchase wind energy for half of our manufacturing facilities,” the claim would not be deceptive.

Example 2:  A company purchases renewable energy from a portfolio of sources that includes a mix of solar, wind, and other renewable energy sources in combinations and proportions that vary over time.  The company uses renewable energy from that portfolio to power all of the significant manufacturing processes involved in making its product.  The company advertises its product as “made with renewable energy.”  The claim would not be deceptive if the marketer clearly and prominently disclosed all renewable energy sources.  Alternatively, the claim would not be deceptive if the marketer clearly and prominently stated, “made from a mix of renewable energy sources,” and specified the renewable source that makes up the greatest percentage of the portfolio.  The company may calculate which renewable energy source makes up the greatest percentage of the portfolio on an annual basis.

Example 3:  An automobile company uses 100% non-renewable energy to produce its cars.  The company purchases renewable energy certificates to match the non-renewable energy that powers all of the significant manufacturing processes for the seats, but no other parts, of its cars.  If the company states, “The seats of our cars are made with renewable energy,” the claim would not be deceptive, as long as the company clearly and prominently qualifies the claim such as by specifying the renewable energy source.

Example 4:  A company uses 100% non-renewable energy to manufacturer all parts of its product, but powers the assembly process entirely with renewable energy.  If the marketer advertised its product as “assembled using renewable energy,” the claim would not be deceptive.

Example 5:  A toy manufacturer places solar panels on the roof of its plant to generate power, and advertises that its plant is “100% solar-powered.”  The manufacturer, however, sells renewable energy certificates based on the renewable attributes of all the power it generates.  Even if the manufacturer uses the electricity generated by the solar panels, it has, by selling renewable energy certificates, transferred the right to characterize that electricity as renewable.  The manufacturer’s claim is therefore deceptive.  It also would be deceptive for this manufacturer to advertise that it “hosts” a renewable power facility because reasonable consumers likely interpret this claim to mean that the manufacturer uses renewable energy.  It would not be deceptive, however, for the manufacturer to advertise, “We generate renewable energy, but sell all of it to others.”

Of note, with the very expansive FTC definition of who is a consumer, many of the environmental claims that this law firm reviews are within documents drafted for other businesses or for government; not what many think of as advertising to consumers.

The current Green Guides were revised in 2012. The guidance they provide does not rise to being the rule of law, but assist businesses, in concert with their legal counsel, avoid making environmental claims that mislead and expose businesses to jeopardy.

If this law firm can assist you in finding the words or correctly advertising an environmental project, to advantage that work while mitigating any risk associated with the claims, do not hesitate to give Stuart Kaplow a call.

Selling a House with Solar Panels is Not for the Faint of Heart

There are more than a Million houses in the U.S. with solar panels installed on the roof and that number is increasing. It can be difficult if not dangerous to fail to properly address rooftop solar panels at the time of sale of a house.

Among the most often made inquiries to this law firm arise from the failure to properly transfer installed solar panels.

We assist real estate owners and those acquiring property in positively leveraging the constraints and finding advantages in matters involving solar panels, often including new approaches and possibilities in this emergent arena.

But contract forms for the sale and purchase of a house are often provided by a local board of realtors and today those forms do not adequately address the new and only now evolving issues arising from a sale with rooftop solar panels.

There is no one homogenized solar panel ‘deal’ and the business terms including ‘who owns the panels’ varies from one transaction type to another, and in most instances these installations are governed by varying state laws. But commonly, residential solar panel leases provide language similar to, ..

You agree that the solar panel system is the Company’s personal property under the Uniform Commercial Code.  You understand and agree that this is a lease and not a sale agreement. The Company owns the solar panel system for all purposes.

Obviously this creates issues when selling a house with solar panels on the roof that belong to someone else. It is common that residential solar panel leases provide language similar to,

If you sell your home you can transfer this lease and the monthly payments.

The person buying your home can sign a transfer agreement assuming all of your rights and obligations under this lease by qualifying in one of three ways: (1) the home buyer has a FICO score of 650 or greater; (2) the home buyer is paying cash for your home; or (3) if the home buyer does not qualify under (1) or (2), if the home buyer qualifies for a mortgage to purchase your home and the home buyer pays us a $250 credit exception fee.

Or, if you are moving to a new home in the same utility district, then where permitted by the local utility, the system can be moved to your new home. You will need to pay all costs associated with relocating the system, ..

Timing also needs to be considered when entering into a contract to sell a house,

You agree to give the Company at least 15 days but not more than 90 days prior written notice if you want someone to assume your lease obligations.

Many of the companies engaged in this business (.. but not all) file a UCC-1 financing statement in the real estate records that puts third parties on notice to their rights in the system. That fixture filing is in most states a lien or encumbrance against the system. But because in many residential transactions, title companies do not search the UCC-1 indexes (.. that are primarily used for business purposes), solar leases are regularly missed.

However, the express language of solar system leases cannot be missed,

EXCEPT AS SET FORTH IN THIS LEASE, YOU WILL NOT SUBLEASE, ASSIGN, SELL, PLEDGE OR IN ANY OTHER WAY TRANSFER YOUR INTEREST IN THE SYSTEM OR THIS LEASE WITHOUT OUR PRIOR WRITTEN CONSENT.

That accepted, as suggested by the solar lease language above, there are options and fertile, enabling and desirable business terms that can add significant value to the real estate. The solar lease, as well as any power purchase agreement need to be considered in light of federal and state law (including tax laws) that stimulate new possibilities including create profit.

Shockingly, this is not only a residential problem. This firm regularly receives inquiries arising from commercial real estate transactions that have not adequately addressed matters of solar panels, PPAs, tax credits and the like.

Selling a house with solar panels is not for the faint of heart. There can be real legal jeopardy and significant dollar liability for those failing to address the issues associated with solar panels. It we can assist you in positively leveraging the constraints and finding advantages in matters of transactions involving solar panels do not hesitate to give Stuart Kaplow a call.

LexBlog