[osreb]

Myth #7: A flag that touches the ground must be destroyed
According to the Flag Code, the American flag should never touch anything beneath it, including the ground, the floor or the water. “People have taken that to mean that if it ever does that, then it should be destroyed,” said Jeff Hendricks, deputy director of Americanism at the American Legion.
However, that's not necessarily the case. Flags should be destroyed only when they are no longer in good enough condition to be displayed. If touching the ground didn't render the flag unfit for display, then it shouldn't be destroyed. Once a flag is unfit for display, burning it is the preferred method of destruction.