California Gov. Jerry Brown promised earlier this year to get serious about reforming some of what the business community calls the worst abuses of Proposition 65 (Prop. 65) – changes in the definition of what constitutes a "clear and reasonable warning" required under the law and limits on the ability of private party litigants to bring and obtain large attorneys’ fees awards from Prop. 65 lawsuits. Because Prop. 65 was a ballot initiative passed by the voters, any changes to the law require a two-thirds vote of the Legislature. The governor did not have the votes to achieve the reforms – at least in this session of the Legislature. He has vowed to continue in his quest to reform the law and we may see another attempt next year.
This isn’t the end of changes to the law. Even though he didn’t have the votes, the governor has ordered the administrative agency that oversees Prop. 65, the Office of Environmental Health Hazard Assessment (OEHHA), to look at trying to effect some of these changes administratively. One such effort is OEHHA looking at ways to make Prop. 65 warnings more effective. The agency held a workshop over the summer.
Environmental groups continue to emphasize that consumers must have the information that a product contains a Prop. 65 chemical before they make their purchasing decision, while some companies believe color-coded symbols cross-referenced to a website or directory should be sufficient to discharge their warning obligation under the law – and could be more cost effective and help avoid some frivolous lawsuits. Some environmental organizations also want the warnings to specify which chemical or chemicals are in the subject product, something the current warning rules do not require, i.e., a generic warning is sufficient. This creates problems, however, for companies that fear they will be a target for other litigation in some other context if they fail to list a chemical that may be in the product at levels not sufficient to warn under Prop. 65. We will await the agency’s next pronouncement on this. It is currently reviewing public comments on the proposed regulation revisions.
Though the governor’s Prop. 65 reforms did not get off the ground this year, there was one bill, AB 227 (Gatto), that has passed the Legislature. It was introduced at the beginning of this year's session in response to complaints by small businesses, such as restaurants, about receiving Prop. 65 notices of intent-to-sue alleging that they were exposing customers to alcohol served on the premises without the proper Prop. 65 warning. The targets of the notices were then told that they could avoid a subsequent lawsuit only by paying the attorney sending the notice a specified amount of money to drop the complaint. Assemblyman Mike Gatto's original version of AB 227 would have allowed all targets of Prop. 65 private party lawsuits to have 14 days to cure the problem and thereby avoid an ensuing lawsuit. The bill was subsequently amended to narrow its application only to exposure to alcoholic beverages, environmental tobacco smoke, and engine exhaust in a parking facility. Under the bill, businesses who fall within these parameters can avoid subsequent litigation by paying a small fine and posting the proper notice.
Hence, if AB 227 becomes law (and one would expect the governor will sign it), and though it is just one small change to the law that only affects a specific subset of chemicals and business, perhaps it will represent the first significant reform legislation to the law in several years, and it shows that the climate in Sacramento is at least open to debating and considering changes to the more Draconian effects of the law. We will continue to monitor what comes next.