On May 15, 2026, the U.S. Court of Appeals for the Fourth Circuit partially blocked Maryland’s new “greenwashing” law for retail electricity suppliers. Holding that the statute’s core advertising restriction likely violates the First Amendment, the court ordered a preliminary injunction against the provision limiting use of terms like “clean,” “green,” and “100% renewable” if the legislature’s specified conditions were not met. In contrast, the court remanded for further proceedings on Maryland’s newly issued disclosure requirements. The decision underscores the constitutional limits on how far states can go in policing environmental marketing claims — limits that are relevant to companies both in and outside the energy sector.

Background

In 2024, Maryland enacted S.B. 1 to address concerns that residential electricity consumers were paying premiums for “green” products without understanding that suppliers often rely on renewable energy credits (RECs), rather than physically delivering exclusively renewable energy.

S.B. 1 restricts how suppliers can describe their products and requires certain mandatory disclosures. For example:

• Marketing Restrictions: Suppliers may not use terms such as “clean,” “green,” “eco‑friendly,” “environmentally friendly or responsible,” “carbon‑free,” “100% renewable,” “100% wind,” “100% solar,” or similar claims unless the product is at least 51% renewable and supported by RECs that qualify under Maryland’s geographically limited criteria for its renewable portfolio standard.
• Affirmative Disclosure Requirements: S.B. 1 also mandates standardized disclosures explaining how RECs work, what consumers are paying for, how the electricity is generated, the percentage of supply meeting Maryland’s renewable portfolio standard, and the location of generation.

Plaintiffs, an energy company and an advocacy organization, filed a facial First Amendment challenge in the District of Maryland and moved for a preliminary injunction to block S.B. 1’s marketing restrictions and compelled disclosure provisions. After the district court denied the preliminary injunction, the Maryland Public Service Commission (PSC) issued new regulations prescribing a detailed, mandatory REC disclosure to be used in marketing materials.

Key Holdings and Court’s Reasoning

On appeal, the Fourth Circuit applied the familiar Central Hudson framework for evaluating the constitutionality of commercial speech restrictions under intermediate scrutiny, without deciding whether strict scrutiny might also apply. Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n, 447 U.S. 557 (1980). The court first rejected Maryland’s contention that the prohibited terms are inherently misleading whenever the customer’s home is not physically wired to a wind turbine or solar panels and therefore are unprotected under the First Amendment. The opinion emphasized that such language may be accurate when used to describe a product backed by RECs from 100% wind resources and that the state had not shown these phrases to be misleading in all contexts. Nor did the court accept Maryland’s argument that the prohibited speech was not protected by the First Amendment because it was potentially confusing to consumers.

The court agreed that preventing misleading advertising and price gouging is a substantial governmental interest. However, it declined to credit a state interest in promoting local renewable development, which it viewed as a post hoc rationale that appeared only in litigation and was not a central emphasis in the legislative process.

The crux of the court’s analysis was whether Maryland’s advertising restriction directly and materially advanced its consumer protection interest and was no more extensive than necessary. The court acknowledged that the record showed real consumer confusion about what RECs are, how they relate to physical power flows, and what “100% wind” or “green” claims mean.

But the court found that the statute’s ban on “green” claims unless at least 51% of the product’s energy is backed by RECs that meet Maryland’s standards did not meaningfully address that confusion. A supplier could still market “100% renewable” power backed by RECs that met Maryland’s geographical standards, while a competitor using equally “green” RECs could not advertise that fact if its RECs did not meet Maryland’s geographical limits. The court called this geographic line-drawing “curious” and underinclusive because the same confusion persists regardless of the RECs’ origin. Because Maryland could not show that the ban materially reduced the consumer confusion it identified, the court concluded that the speech restriction was unconstitutional.

Applying the traditional preliminary injunction factors, the court held that the plaintiffs were likely to succeed on the merits and that ongoing First Amendment violations constitute irreparable harm. The court directed the district court to preliminarily enjoin the provision limiting “green” and similar claims, while leaving the remainder of S.B. 1 in place.

The court did not finally resolve the constitutionality of Maryland’s compelled disclosure regime. It held that the statute’s “model” disclosure had been superseded by new PSC regulations and that any challenge to the superseded statutory language was moot. The panel remanded for the district court to evaluate the legality of PSC’s new disclosure requirements under the First Amendment.

Why It Matters

The Fourth Circuit’s ruling is a significant marker in the evolving landscape of state “greenwashing” regulation. It suggests that states have room to require transparency about RECs and renewable attributes, but that they must do so through tailored means rather than broad bans on environmental marketing language.

• First Amendment limits on “greenwashing” laws: Environmental marketing claims such as “clean,” “green,” and “100% renewable” are generally protected commercial speech, not inherently deceptive. States cannot simply declare such language misleading and impose categorical bans. Instead, restrictions must be carefully tailored to address demonstrable consumer harm. The court’s decision in this regard has implications for “greenwashing” allegations under UDAP laws as well as regulation under more specific state laws.

• Geographic REC restrictions face heightened scrutiny: Maryland’s attempt to condition “green” claims on sourcing RECs from particular regions, rather than on the accuracy of the claims themselves, proved constitutionally problematic. Other states considering REC‑based “greenwashing” statutes should expect courts to scrutinize geographic lines, and similar limitations on what qualifies as green energy, particularly where the stated interest is consumer understanding.

• Required disclosures must be factual and proportionate: The Fourth Circuit left open the possibility that Maryland can require suppliers to provide clear, factual disclosures regarding RECs, eligibility for Maryland’s renewable portfolio standard, and generation sources. However, compelled statements that read like policy advocacy (e.g., asserting that purchases “support” regional renewable development or “reduce” fossil fuel generation) may fall outside the First Amendment’s allowance for purely factual disclosures, and overly long disclosures may be deemed unduly burdensome.

• Implications for multistate environmental marketing strategies: Retail suppliers and other energy market participants operating across jurisdictions should anticipate continued experimentation with “greenwashing” laws and disclosures. This decision provides a roadmap for challenging overbroad restrictions that hinge on REC geography or that effectively prohibit truthful environmental marketing. At the same time, it signals that courts may be receptive to neutral disclosures designed to improve consumer understanding of complex energy products.

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Troutman Pepper Locke State Attorneys General Team

	Ashley Taylor – Co-leader and Firm Vice Chair Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
	Clay Friedman – Co-leader Clay co-leads the firm’s State Attorneys General practice and is nationally ranked by Chambers USA for AG Government Relations and in Best Lawyers for Advertising Law. He has dedicated his entire career to state attorney general and federal work, serving for nearly a decade in a senior role and more than 25+ years in private practice. Clay focuses his practice on helping industry-leading companies mitigate the risks associated with state and federal regulatory investigations and associated litigation.
	Chris Carlson Chris advises clients on regulatory, civil, and criminal investigations and litigation. With a background as an assistant attorney general, he provides practical guidance to clients with matters involving state attorneys general and federal regulatory agencies.
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	Matthew J. Berns Drawing on his experience in senior leadership roles in the New Jersey Attorney General’s and Governor’s Offices and as a trial attorney for the U.S. Department of Justice, Matt provides an insider’s perspective when guiding clients through complex government investigations, litigation, and other actions.
	Samuel E. “Gene” Fishel Gene is a former regulator with two decades of experience who has overseen state privacy and cybersecurity regulation enforcement, led national, multistate attorneys general privacy investigations, and prosecuted computer crimes at the state and federal levels. He has served at the forefront of state attorney general and federal enforcement, and utilizes this experience to proficiently represent client interests.
	Jeff Johnson Jeff helps clients navigate complex regulatory and litigation challenges with local, state, and federal authorities. His clients benefit from his decade of broad litigation experience, understanding of emerging state and federal regulatory issues, and strong relationships with attorneys general across the U.S. In addition to handling cases from trial through state or federal appeals, Jeff serves as amicus counsel in advancing legal rules to support his clients’ vital interests.
	Jay Myers Jay assists clients in heavily regulated industries, including health care, energy, insurance, emerging industries, and data privacy. He provides both regulatory legal advice and government relations strategies. Jay’s past and current clients include Fortune 10 companies, startups, nonprofits, industry associations, and advocacy groups. Recognizing that state government matters are often complex and multifaceted, he utilizes regulatory guidance, government advocacy, or both in tandem to deliver tailored solutions for each client’s unique needs.
	Zoe Schloss Zoe represents clients in litigation and government investigations. As former deputy attorney general for the Delaware Department of Justice, she is an experienced litigator who understands the enforcement priorities that impact her clients. Zoe works with individuals and corporate entities in highly regulated industries, including financial services, health care, and energy.
	Jessica Birdsong Jessica is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, magna cum laude, where she served as associate articles editor of the Journal of Law & Technology.
	Troy Homesley Troy is an accomplished litigator who has represented and defended clients across a wide range of complex, high-stakes disputes at both the trial and appellate levels. He has represented technology companies, business executives, law firms, investment funds, high-ranking federal officials, international non-profits, and asylum seekers. Troy draws on his broad litigation experience to advise clients before litigation arises, while claims are pending or threatened, and leading up to and through trial and appeals.
	Namrata Kang Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising. Nam’s experience transcends multiple industries, including financial services, telecommunications, media, and sports betting.
	Michael Lafleur Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
	William LaRosa Bill represents clients in complex regulatory investigations, state attorneys general matters, and enforcement proceedings, drawing on his experience as a former assistant U.S. attorney and private sector litigator in high stakes, multistate AG and regulatory matters.
	Philip Nickerson Philip represents clients in sectors such as financial, tech, real estate, and energy in a range of litigation matters. He is experienced in matters involving trade secrets, government investigations, commercial contracts, construction and product defect.
	Lane Page Lane specializes in federal and state regulatory investigations and complex civil litigation. He focuses on representing financial institutions and other businesses, with a particular emphasis on consumer protection and fair lending issues.
	Dascher Pasco Dascher is an attorney within the Regulatory Investigations, Strategy, and Enforcement practice, based in the Richmond office. She joined our firm after working in personal injury and medical malpractice for a Virginia trial law firm. Dascher brings varied legal experience to the firm with strong litigation and regulatory strategy capabilities.
	Kyara Rivera Rivera Kyara is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group. She received her J.D. from the University of Richmond School of Law, cum laude, where she served as publications and online editor of the Public Interest Law Review.
	Timothy Shyu Timothy is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice Group.
	Trey Smith Trey focuses his practice on representing and advising regulated utilities before state public utility commissions. He routinely helps clients obtain certificates of public convenience and necessity for transmission infrastructure. In this role, Trey works with his clients’ subject-matter experts to manage administrative proceedings, including by preparing initial filings; responding to discovery requests; drafting rebuttal testimony; and litigating any disputed issues.
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