Court Upholds Law Restricting ‘Green’ Labeling : Business: Appeals judges say the measure properly curbs environmental marketing claims, rejecting charges that it limits companies’ 1st Amendment rights.

In a setback for several large business associations, a federal appeals court in San Francisco on Friday upheld a California law regulating claims that manufacturers or distributors can make about the environmental friendliness of their products.

The U.S. 9th Circuit Court of Appeals ruled that the statute properly advances the state’s interest in curbing the potential for abuse raised by the increasing popularity of “green marketing,” which touts a product’s environmental purity.

The appellate judges rejected the claims of 10 groups--including the Assn. of National Advertisers, the Soap and Detergent Assn., the Society of the Plastics Industry and the California Chamber of Commerce--that the law unconstitutionally infringed on their 1st Amendment rights.

The court ruled that the messages regulated by the statute constitute commercial speech and are thus subject to restrictions that could not be placed on other types of speech.

The judges held that the law restricts potentially misleading speech. They said the statute also gives consumers information permitting them to make rational product comparisons and balance price and environmental factors, and helps the state’s environment.

“The statute increases consumer knowledge and awareness and discourages exploitation and deception of the growing ‘green market,’ ” Judge Herbert Y.C. Choy wrote in the 3-0 decision. Judges John T. Noonan and Alfredo C. Marquez joined in the opinion.

The 1990 law, the first of its kind in the nation, set standards for several terms that were being used increasingly in product advertising: “ozone friendly,” “biodegradable,” “photodegradable,” “recyclable” and “recycled.”

For example, “ozone friendly” means that “any chemical or material released into the environment as a result of the use or production of a product will not migrate to the stratosphere and cause unnatural and accelerated deterioration of the ozone,” according to the law.

In urging passage of the law, then California Atty. Gen. John K. Van de Kamp said environmental claims being made on behalf of products were “similar to the ‘health’ claims made for elixirs in the Old West. There was no scientific or medical basis for the claims, but there was also no basis for disproving them.”

Californians Against Waste and the Environmental Defense Fund joined the case in support of upholding the law. Several states, including Connecticut, Massachusetts, Texas and Washington, filed briefs supporting the statute, as did the California Resource Assn., Natural Resources Defense Council and San Diego Recycling Co.

Opposition to the statute was supported by the Washington Legal Foundation and several media organizations, including Capital Cities/ABC, Dow Jones & Co. and the National Assn. of Broadcasters.

District Judge Marilyn Hall Patel of San Francisco upheld most of the law nearly two years ago. However, she struck down the definition of “recyclable,” which said an article could be “conveniently recycled” in each of the state’s 21 most populous counties, a standard she found too vague.

Efforts to amend that term since then have foundered in the Legislature.

The appeals court upheld every aspect of Patel’s decision.

“In setting rather modest minimum targets for the recycling content and decomposition periods of consumer products, the statute creates an incentive for manufacturers of non-complying products to enhance the environmental attributes of their goods in order to capture the benefits of green labeling,” the judges wrote.

“This incentive directly furthers California’s substantial interest in promoting resource conservation, and reducing the burden on its brimming landfills. If producers of ecologically substandard products achieve the statute’s minimum thresholds, these improvements translate directly into less waste being dumped,” the judges added.

The decision was hailed by Albert N. Shelden, deputy attorney general in the California Department of Justice’s consumer protection unit. “We think a legislature has the right to adopt a statute which defines terms so that when those terms are used they will not be misleading or deceptive.”

He added: “We think the environmental goals the Legislature sought to foster by the statute are of utmost importance to the California public.”

Although no prosecutions have been brought under the law because of the litigation, “we think there is less deceptive advertising going on than previously,” Shelden said.

“This was an unabashed victory because it affirms the rights of states to restrict the use of environmental marketing claims,” said Lance King, community outreach director of Californians Against Waste, a nonprofit environmental organization.

Floyd Abrams, a constitutional lawyer who represented the opponents, said his clients “will certainly consider” appealing to the U.S. Supreme Court. “We think the decision . . . restricts rather than expands the information that Californians and others may have about lawfully sold products, and as a result, it threatens well-established 1st Amendment interests.”

Abrams maintained that companies are prohibited from making even truthful assertions about their products simply because they do not adhere to the California definitions.

Abrams and Shelden said the success of an appeal might depend on the outcome of a case pending in the Supreme Court, in which Coors is challenging a 1935 statute that prohibits beer companies from putting alcohol content on their labels.