If you’ve been to California recently, you likely returned with a heightened awareness of the dangers present in the products you consume and use on a daily basis. That is because in California, Proposition 65 requires businesses to notify California citizens about significant amounts of chemicals in the products they purchase. Manufacturers and retailers of products including food, beverages, and cosmetics have found themselves victims of Proposition 65 lawsuits. The proposed amendments to Proposition 65, issued January 12, 2015, may impose additional warning requirements for companies who do business in California, or whose products are sold there. Detailed warnings may also be required for a growing number of companies based in Texas, including those in the business of petroleum products, service stations and vehicle repair facilities, diesel engines, and alcoholic beverages, if their products make it into California. Keeping apprised of the proposed changes could save companies from larger problems down the road.
What is Proposition 65?
Proposition 65 (i.e., the Safe Drinking Water and Toxic Enforcement Act of 1986) requires businesses to place “clear and reasonable” warnings on their products before knowing and intentionally exposing anyone to one of the 800 chemicals listed by the State of California to cause reproductive toxicity or cancer in certain amounts. These products have included everything from coffee, rice and shampoo to guitar strings and hardwood floors. Under the proposed regulations, even more products would be covered by Proposition 65’s scope.
Although the intentions of Proposition 65 are good, to notify the public about what they are about to use or consume or be exposed to, Proposition 65 also has the effect of victimizing businesses. If businesses do not put these warnings on their products, they may face lawsuits by the California Attorney General, or more commonly by attorneys or private consumer groups acting in the public interest (often referred to as “bounty hunters” due to their high attorneys’ fee recovery). This will often force the businesses to decide between settling the lawsuit or litigating the case. Because litigating the case is expensive and businesses must pay penalties (as high as $2,500 per violation per day) if they are not successful, many businesses put a warning on their product simply to protect themselves from lawsuits, even if their products are not covered by the scope of Proposition 65. Consequently, in California, you may see warnings on almost everything.
In May 2013, Governor Jerry Brown proposed to: “revamp Proposition 65 by ending frivolous ‘shake-down’ lawsuits, improving how the public is warned about dangerous chemicals and strengthening the scientific basis for warning levels.” In response, on January 12, 2015, the California Office of Environmental Health Hazard Assessment (OEHHA) formally released a draft of new Proposition 65 regulations. However, the proposed changes to Proposition 65 do not appear to advance Governor Brown’s goals. Rather, if implemented, these proposed changes may result in increased litigation and further burdened businesses.
What are the proposed changes to Proposition 65?
One of the main proposed changes to Proposition 65 is a comprehensive rewriting of the regulations that require “clear and reasonable” warnings. Under the first proposed change:
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Warnings will have to indicate that the product “can expose you to a chemical” rather than the current language of “this product contains a chemical”;
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The warning must be accompanied by a yellow triangle outlined in black and containing a black exclamation mark;
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Warning labels must list by name whether the product contains acrylamide, arsenic, benzene, cadmium, carbon monoxide, chlorinated tris, formaldehyde, hexavalent chromium, lead, mercury, methylene chloride, and phthalates, as these are the twelve chemicals that OEHHA has identified as frequent targets of Proposition 65 litigation;
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Product exposure warnings must be provided in the same language or languages as any other label, labeling or sign accompanying a product; and
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Warnings must include a URL link to the Lead Agency website to be developed and maintained by OEHHA in order to provide more information regarding potential avenues of exposure and methods to minimize any potential risks.
Another proposed change to Proposition 65 would require additional or alternative warning requirements for: diesel engines, passenger vehicles, enclosed parking facilities, designated smoking areas, petroleum products, service stations and vehicle repair facilities, food, alcoholic beverages, restaurants, prescription drugs, dental care, raw wood products, furniture products, and amusement parks. The proposed changes to Proposition 65 regulations also attempt to place primary responsibility for the safe harbor warnings upon the product manufacturer and impose the requirement upon the retailer only in some situations.
The proposed changes also allow OEHHA to demand broad information from manufacturers, importers and distributors regarding their products and processes including:
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The location of the chemical or chemicals in the product;
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The concentration of the chemical or chemicals in the final product;
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The matrix in which the listed chemical or chemicals are found in the product and the concentration of the listed chemical(s) in the product matrix, if known;
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The anticipated routes and pathways of exposure to the listed chemical(s) for which the warning is being provided;
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The estimated level of exposure to the chemical or chemicals; and
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Any other related information that the agency deems necessary.
While trade secret protection may be available to certain products, the requirement to provide information upon request will be enforceable by public prosecutors, including the California Attorney General and District Attorneys.
Why is Proposition 65 relevant to Texas businesses?
If your business sells products or operates in California, you may fall within the scope of Proposition 65. Some of the largest companies have found themselves as victims of Proposition 65 lawsuits; yes, even Starbucks. No matter the size of your business, big or small, it is pretty safe to say that if you sell consumer products in California, you may want to be apprised of Proposition 65 and its implications.
Furthermore, if you are in the oilfield business, you may especially want to be well informed of the proposed change that would require warnings for petroleum products. The proposed amendments would require specific warnings for environmental or occupational exposures to petroleum products from industrial operations and facilities. The warning would need to be accompanied by the yellow triangle symbol with exclamation point, and read as follows:
WARNING: Crude oil, gasoline, diesel fuel and other petroleum products can expose you to chemicals such as toluene and benzene that are known to the State of California to cause cancer or birth defects or other reproductive harm. These exposures can occur in and around oilfields, refineries, chemical plants, transport and storage operations such as pipelines, marine terminals, tank trucks and other facilities and equipment.
The proposed changes would also require warnings to be placed for environmental exposures to listed chemicals at service stations and vehicle repair facilities to be provided at the most common location for exposures to listed chemicals: at or near the gas pumps. Although your company may only supply the chemicals to these service stations, Proposition 65 “bounty-hunters” have never hesitated to include all levels of the supply chain in their lawsuits.
What should you do?
You may want to look further into Proposition 65 to see whether your business is covered under Proposition 65’s scope. You may also want to begin limiting your inventory by an appropriate amount in the event you need to alter your warning labels to comply with any new warning requirements. Or, you may opt to change the ingredients in your product so as to avoid any Proposition 65 exposure altogether.
You should also stay informed regarding Proposition 65 and these proposed changes. A public hearing is taking place in Sacramento, California, on March 25, 2015. Public comments are also being accepted until April 8, 2015. If you’re opposed to these changes or are worried about the potential impact Proposition 65 may have on your business, now is the time to speak up. If you don’t, you may regret it.
