Reforming California's Prop 65

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June 30, 2014 - James Lee

California Proposition 65 (Prop 65) is possibly one of the most expansive state environmental laws for the chemical industry. Officially entitled, the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health & Safety Code section 25249.5 et seq., requires persons conducting business in the state to provide a clear and reasonable warning in sign or label before exposing consumers or employees to chemicals listed as carcinogens or reproductive toxins under the law. However, if the exposure is below the established safe harbor levels (No Significant Risk Levels (NSRL) for carcinogens and Maximum Allowable Dose Levels (MADL) for reproductive toxins), the warning is not required.

There are approximately 900 chemicals currently listed under Prop 65, which are compiled by the Office of Environmental Health Hazard Assessment (OEHHA). Even though Prop 65 designates the term “known to cause” cancer or reproductive harm, many of the substances on the list are not necessarily known carcinogens or reproductive toxins, but are only those that could, under certain circumstances, pose a risk of cancer or reproductive harm evidenced by the existing scientific data.

Businesses that breach Prop 65 are subject to civil penalties of up to $2500 per day for each offense, as well as injunctions requiring violating parties to provide the required warnings, or to cure the violation. There is a small business exemption that exempts businesses with less than ten employees from Prop 65 action.

On March 7, 2014 OEHHA published proposed amendments to Prop 65. The proposed revision would substantially change the warnings if products or premises contain Prop 65 chemicals and the changed warnings are to convey “more clarity to the Proposition 65 warning requirements and more specificity regarding the minimum elements for providing a ‘clear and reasonable’ warning for exposures that occur from a consumer product, including foods and exposures that occur in occupational or environmental settings.”

Probably the most significant amendment, however, is that businesses would no longer be able use the “safe harbor” warning language if a Prop 65-listed chemical may be in their product. The proposed regulation instead requires them to know definitively the chemical content of all their products and premises, including possible contaminants, and warn of potential “exposures” to the specified chemicals.

At the same time, the increased burden in creating the Globally Harmonized System of Classification and Labeling of Chemicals (GHS) style warnings and additional language requirements can be costly for businesses of any size. The proposal also requires companies to submit information about the chemicals to OEHHA for posting to a website. All of these requirements create a substantial economic and human resources burden for businesses, combined with the potential risk of new enforcement lawsuits for those who do not or cannot comply.

Industry Reaction

OEHHA on April 14, 2014 held a public workshop to discuss its proposed amendments in Sacramento, California and was met by strong opposition of many stakeholders, including the California Chamber of Commerce, California Manufacturers and Technology Association, American Coatings Association, and Association of Home Appliance Manufacturers. After an overview of the revisions by OEHHA and showing example images of the proposed warnings, many trade groups presented pointed questions and expressed opposition and skepticism. After the workshop, OEHHA extended the public comment submission deadline to June 13, 2014. On June 18, 2014, OEHHA published the public comments received on the pre-regulatory proposal on its website.

Close to 60 comments were submitted from various industry associations and NGOs. Most comments were from industry groups, which were largely opposed to the proposal. Expectedly, several public interest groups were supportive of OEHHA’s proposal. The general consensus of stakeholders is that the businesses to be most financially burdened by the proposed changes are mostly unaware of the proposals and will not raise concerns in time to have any meaningful effect on the legislative development.

The Impact on Business

In addition to the financial costs, businesses are concerned about whether they can obtain the information required to comply with the proposal. Currently under Prop 65, businesses are not required to disclose the specific identities of chemicals in a product, nor do they have to disclose specific potential exposure information to OEHHA. In most cases, distributors, importers, restaurants and retailers do not have the detailed ingredient data like chemical manufacturers and suppliers do. However, the proposed amendments would expand the “clear and reasonable warning” requirement considerably:

  • The proposal requires the listing of 12 “common” chemicals on warning labels.
  • Companies would need to submit full rosters of the listed chemicals in their products or premises.
  • Detailed information concerning occupational hazard and environmental exposure potential must be submitted to OEHHA, including “reasonably available” data on exposure levels, routes and types and steps the public may take to reduce or eliminate exposure.
  • OEHHA’s website would publish such information, supposedly to increase public knowledge about Prop 65 chemicals.

Those businesses that rely on manufacturers or suppliers to provide such data can easily be targeted for lawsuits when their manufacturers or suppliers add a newly listed Prop 65 substance without prior knowledge or notice. Additionally, the proposed information submission requirements are simultaneously heavy and vague, which can produce compliance traps stemming from minor and technical errors. For instance, several important terms are undefined (e.g., “reasonably available”), and such oversight can create basis for lawsuits. Lastly, the exhaustive disclosure requirements create a concern for protecting confidential business information (CBI) of chemical manufacturers and suppliers.

Instead of placing greater burden of proof on plaintiffs or revising the enforcement framework to reduce enforcement lawsuits, OEHHA’s proposed changes place greater burden on businesses and open up more opportunities for Prop 65 violations.

It is anticipated that companies will face lawsuits if they unintentionally fail to warn about a chemical they were not aware of or do not comply to the letter with the proposals’ burdensome data-submission requirements. OEHHA declared that its goals for Proposition 65 reform were: providing more useful warnings to the public; establishing warning standards for increased compliance certainty for businesses; and reducing litigation. However, the amendments do not seem compatible with the purpose for change, and Proposition 65 remains a troublesome law.

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