The copy was wrong
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The cleaner was sold as making oil disappear
The second limb of the clause reaches a discharge that causes "a sludge or emulsion to be deposited beneath the surface of the water". An emulsifier moves the oil rather than removing it.
Which is a copy problem with a legal shape
A product whose marketing describes dispersing oil into the water is describing something the regulation names. Read the clause before writing the claim.
The concentrate was labeled like a ready-to-use
And applied neat to a gelcoat or a canvas. The dilution is part of the product and it belongs on the panel in the same size as the name.
A claim was made about in-water use
Whether a product may be used in the water depends on the product, the water body and often a permit. This property does not answer it and neither should a label.
Environmentally safe was asserted
Which is an absolute claim about a product going into water, and the kind of claim that invites scrutiny from more than one direction. Say what it is and what it does not contain.
Biodegradable was used without a basis
A measurable property with test methods behind it, not an adjective. Either there is a result or there is not.
The placard requirement was assumed not to apply
26 feet is the threshold and it is shorter than most owners expect. A boat with a machinery space and a bilge pump is the intended subject.
Or the placard was printed on paper
"At least 5 by 8 inches, made of durable material." Paper taped to a bulkhead in an engine space is not durable material and will not be there next season.
One placard on a twin-engine boat
The requirement is a conspicuous place "in each machinery space". Two spaces, two placards.
The fix for all of it is the same
Write the claim from the clause, state the dilution, and put the honest limits of use on the label. None of that costs anything at the point it is decided.