California Proposes to Clarify Prop 65 Responsibilities in the Supply Chain

In a move that may provide some clarity for companies affected by Proposition 65, California's Office of Health Hazard Assessment (OEHHA) is proposing to revise section 25600.2 of Article 6 of the Proposition 65 regulations. These changes would clarify the responsibility of parties in the supply chain for purposes of complying with Proposition 65.

The proposed changes are to Section 25600.2: "Responsibility to Provide Consumer Product Exposure Warnings." There are three main amendments which are proposed:

Authorized agent for retail sellers

Under the Proposition 65 regulations, manufacturers, producers, packagers, importers, suppliers, or distributors of a product (the responsible entities) have several options for complying with the warning requirements set out in Article 6 (i.e. the Clear and Reasonable Warning Regulations).

Responsible entities have two basic options for compliance:

1. They may provide a compliant warning on the product label or labeling, or alternatively,
2. They may provide a written notice directly to the “authorized agent” for a retail seller.

The current language of the regulations specifies that the retail seller is one "who is subject to Section 25249.6 of the Act." Thus, companies are supposed to provide the written notice (and the required warning materials) to a retail seller in California. In practice, this is difficult to do, since upstream companies may sell to another supplier, a distributor, etc. and may not know where the product ends up.

These proposed amendments would change references to "the authorized agent for a retail seller who is subject to Section 25249.6 of the Act" to instead say “the authorized agent for the business to which they are selling or transferring the product or to the authorized agent for a retail seller who is subject to Section 25249.6 of the Act."

Thus, these changes would allow companies up the supply chain to provide Proposition 65 warning materials and the written notice to the company they are selling directly to.

If there is no “authorized agent”

The amendments would also add language that allows the written notice to be passed on, in cases where a business has not designated an “authorized agent.” Language is added which says: "Where a business has not designated an authorized agent, the manufacturer, producer, packager, importer, supplier, or distributor may serve the notice on the legal agent for service of process for the business."

Definition of "actual knowledge"

Finally, the amendments would clarify the definition of "actual knowledge." The following words will be added: "For purposes of subsection (e)(5), 'actual knowledge' means specific knowledge of the consumer product exposure with sufficient specificity for the retail seller to readily identify the product that requires a warning, and that is received by the authorized agent or a person whose knowledge can be imputed to the retail seller from any reliable source." This language is intended to clarify who can be held accountable for “actual knowledge” and also provide a bit more clarity on what type of information would qualify.

Explanation of the amendments from OEHHA

OEHHA provides a thorough explanation of the proposed amendments in their Statement of Reasons (SoR).

In sum, the amendments would:

• "Allow intermediate businesses in the chain of commerce to satisfy their obligation to provide a warning by providing  a written notice and warning materials directly to either the authorized agent for the business to which they are selling or transferring the product, or to the authorized agent for the retail seller." (From the SoR.) This will help those entities who do not know which retailer will ultimately sell the product to consumers to instead provide the necessary warning materials to the business to which they are directly selling.
• Provide businesses a course of action when a retail seller has not designated an "authorized agent" to receive Proposition 65 materials. In this case, the materials may be provided to the legal agent for that business.
• Under the current regulations, when a retail seller has "actual knowledge" of a potential exposure to a listed chemical, and there is no other responsible entity to hold accountable, then the retail seller must provide a warning. These amendments would narrow the definition of "actual knowledge" and also clarify the specific persons whose knowledge may be imputed.

A comment period on these changes is open until 11 January 2019, with a public hearing scheduled for 3 January 2018.