On January 12, 2015, the Office of Environmental Health Hazard Assessment (OEHHA) proposed important new regulations that would repeal and replace the existing Article 6 regulations regarding the all-important "clear and reasonable warnings" requirements under Proposition 65 (Proposed Rule). OEHHA previously released a Pre-Regulatory Proposal for a potential draft regulation amending Proposition 65 (Prop 65) regulations with some sweeping and controversial proposed changes, including, for example, more detailed requirements for the content of required warnings. OEHHA simultaneously proposed a rule to establish the framework for a website operated by OEHHA that would provide supplemental information to the public about potential exposures to Prop 65 listed chemicals (Website Proposed Rule).

A memorandum discussing OEHHA's March 7, 2014, Pre-Regulatory Proposal is available online. The text of the Proposed Rule and the Initial Statement of Reasons regarding Prop 65 warnings are available on OEHHA's website. The text of the Website Proposed Rule and the Initial Statement of Reasons for the Prop 65 website (Website Initial Statement of Reasons) are available on OEHHA's website. Public hearings on both Proposed Rules will be held in Sacramento, California, on March 25, 2015. Comments on both Proposed Rules are due by April 8, 2015.

Below we discuss OEHHA's Proposed Rule and the proposed changes to the warnings, including the ways in which the Proposed Rule differs from existing regulations and the Pre-Regulatory Proposal.

General Provisions

Importantly, OEHHA proposes a two-year delayed effective date to allow businesses time to comply with new requirements. OEHHA notes that it wishes to provide businesses with a transition period to "sell through" products with the old warning language as well as provide sufficient time for companies to determine compliance with the new regulations.

OEHHA also is proposing to allow an "interested party" to request OEHHA to adopt additional regulations that address exposures to listed chemicals in products or the environment to the extent they are not already sufficiently covered by the regulations. Section 25600(c). OEHHA states this provision is intended to "encourage businesses to continue to work with OEHHA to develop a tailored warning method or message where the existing regulatory provisions are not sufficient to address a particular exposure scenario." Initial Statement of Reasons at 5. This solicitation arguably also allows any entity to critique the sufficiency of any warning requirement, a troubling possibility considering the additional requirements and details already being proposed as discussed below.

Definitions

The Proposed Rule will re-adopt many of the definitions currently in the regulations, with the following exceptions:

• New Definitions for "Food," "Knowingly," and "Retailer." OEHHA is proposing new definitions for "Food," "Knowingly," and "Retailer," which it states is for the purpose of clarity and consistency with other provisions of the law. "Food," for example, references existing statutory definitions for "food" and "dietary supplements."
• Modified Definitions for "Consumer Product Exposure," "Environmental Exposure," "Label," "Labeling," and "Sign." OEHHA is proposing to change "Consumer Product Exposure" to "Product Exposures" "to clarify that a warning for an exposure to a listed chemical from any product, or component of a product, whether it is sold directly to a consumer or not, may be provided using the methods and content described in the regulation." Initial Statement of Reasons at 8. The definitions for "Label" and "Labeling" are updated to reference electronic use technology as a means to communicate required warnings.

Proposed Rule Section 25600.1.

Responsibility to Provide Product Warnings

The Proposed Rule's Section 25600.2 is new (i.e., not in the existing regulations) and sets forth the circumstances under which the manufacturer, producer, packager, importer, or distributor has primary responsibility for providing the warning, and the more limited circumstances when the retailer is responsible for providing the warning. OEHHA states it is proposing this Section in response to requests for more clarity regarding the relative responsibilities between manufacturers and retailers to provide warnings.

• Proposed Section 25600.2 is intended to clarify that the primary responsibility for providing warnings for consumer products, including foods, is with the manufacturer, importer, distributor, producer, or packager of those products. In these cases, the retailer is responsible for placing and maintaining any warning materials it receives from the manufacturer, importer, distributor, producer, or packager.
• The retailer has responsibility to provide warnings only where the retail seller itself is responsible for introducing a listed chemical into the product, for example, when the retailer is selling the product under its own brand name, or when it has "actual knowledge" of the potential product exposure requiring the warning, and there is no product manufacturer, producer, packager, importer, or distributor of the product that is subject to Prop 65 warning requirements. For example, when a retailer would be responsible is when a product requiring a warning is produced and packaged by a foreign company with no agent for service of process in the United States, and it is distributed by an importer with fewer than ten employees. Initial Statement of Reasons at 11-12. "Actual knowledge" is defined as "specific knowledge of the product exposure that the retailer receives from any reliable source." Section 25600.2(d)(5)(C).

Warnings Covered by Existing Court-Approved Settlements

In its Pre-Regulatory Proposal, OEHHA proposed a section that would recognize warnings covered by existing court-approved settlements. Specifically, OEHHA considered providing that any new requirements would not apply to parties to settlements that have been approved by a court prior to January 1, 2015. This provision is not included in the existing regulations or the Proposed Rule. OEHHA's explanation for removing it is as follows:

The pre-regulatory draft of these regulations released by OEHHA for comment in April 2014 contained a provision stating that the new requirements in the regulations would not apply to the parties to settlements that have been approved by a court prior to January 1, 2015. This "grandfathering" provision is not, however, incorporated in this formal regulatory proposal.
 
The Agency agreed with comments from stakeholders questioning the need for a grandfathering provision in light of the non-mandatory, safe harbor approach in the proposed regulation and the fact that businesses who are parties to a settlement or judgment must comply with the provisions of the court's order, regardless of whether this regulation states that fact. Further, under proposed Section 25600(c), a non-party has the option of petitioning the Agency to adopt warning content or methods specific to a product, chemical or type of exposure pursuant to Government Code Section 11340.6 et seq., including warning methods or content contained in a court settlement.

Initial Statement of Reasons at 13.

Safe Harbor Warnings -- Methods and Content

Proposed Section 25601 states that a warning is considered "clear and reasonable" when it complies with all applicable requirements of this Article. This is similar to the existing regulations and the Pre-Regulatory Proposal, although the current regulations state further that a clear and reasonable warning be "reasonably calculated" to make the warning available and "clearly communicate" the warning.

Chemical Name Disclosures in Warnings

The current Prop 65 regulations do not contain any provisions regarding the specific disclosure of chemical substances in the text of the warning. OEHHA's Pre-Regulatory Proposal discussed the disclosure of 12 chemicals in the warning, and the Proposed Rule also proposes 12 chemicals to be named specifically in warnings to make such warnings "more informative and meaningful to the public," although the substances are not the same as the 12 initially proposed. Initial Statement of Reasons at 15. The Proposed Rule adds three substances -- carbon monoxide, hexavalent chromium, and methylene chloride -- while dropping 1,4-dioxane, tobacco smoke, and toluene. The complete list of the substances in the Proposed Rule is as follows:

• Acrylamide;
• Arsenic;
• Benzene;
• Cadmium;
• Carbon Monoxide;
• Chlorinated Tris;
• Formaldehyde;
• Hexavalent Chromium;
• Lead;
• Mercury;
• Methylene Chloride; and
• Phthalates.

In response to comments questioning OEHHA's list of substances, OEHHA has provided the following criteria that it used to select chemicals:

• Widespread prevalence of the listed chemical in products and/or locations beyond those that are covered by specific warning language in Section 25608;
• Potential for significant exposure to the listed chemical through human interactions with products, including food, or at locations frequented by the public;
• Recent Prop 65 enforcement activity;
• Recognizability of the chemical name among the general public; and
• The general availability of additional authoritative information and resources for the public on the toxicity and exposure to the chemical, doses of concern, and ways to prevent or reduce exposure.

Initial Statement of Reasons at 14. In its Initial Statement of Reasons, OEHHA also sets forth, for each listed chemical, more specific information regarding how these chemicals met the criteria for inclusion in this Section. As in the Pre-Regulatory Proposal, OEHHA states that the "chemical names required to be included in a warning under this section is not intended to be exhaustive and may be changed over time as the public becomes more familiar with the improved warning format." Initial Statement of Reasons at 22. OEHHA notes for the first time that it will not, however, add or remove a chemical from this list without going through a formal regulatory process (including a public notice, hearing, and opportunity for comment). Id.

Product Exposure Warnings -- Methods of Transmission

Prop 65 regulations currently provide several methods of transmission for warning messages, including signs, notices, stickers, or labels. The Pre-Regulatory Proposal and Proposed Rule expand the list of acceptable methods for providing a warning for an exposure to a listed chemical from a product to incorporate warnings via electronic means. The specific listed methods of transmission are:

• A product-specific warning provided on a shelf tag or on a shelf sign for the product at each point of display of the product. The entire warning message must be in a font no smaller than the largest type size used for other information on the shelf tag or shelf signs for the same or similar products.
• A product-specific warning provided via any electronic device or process that automatically provides the warning to the purchaser prior to or during the purchase of the product, without requiring the purchaser to seek out the warning.
• A label on the product that includes all the elements specified in Section 25604.

Section 25603(a). For Internet purchases, OEHHA specifies that "the warning message must be provided by a clearly marked hyperlink on the product display page, or otherwise prominently displayed to the purchaser before the purchaser completes his or her purchase of the product." Section 25603(b). This is more specific than the Pre-Regulatory Proposal, which states that Internet purchases need "warnings provided on the Internet prior to the time the consumer completes its purchase of the product." For catalog purchases, OEHHA states that "the warning message must be provided in the catalog in a manner that clearly associates it with the item being purchased." Section 25603(c). This is the same language that was proposed in the Pre-Regulatory Proposal.

Product Exposure Warnings -- Content

Some of the most significant proposed revisions in the Proposed Rule address the mandatory elements required for a warning to be considered "clear and reasonable." The following are the minimum required core elements for warnings that this proposal would establish:

• Warning Symbol: Proposed Rule Section 25604(a)(1) requires the inclusion of a warning symbol, consisting of a black exclamation point in a yellow equilateral triangle with a bold black outline:

OEHHA had previously proposed to use a Globally Harmonized System (GHS) pictogram, but changed the symbol in response to comments that the GHS pictogram would not be recognized and could result in confusion and unnecessary alarm.
 
OEHHA clarifies in Section 25604(a)(1) that when "other signage or labeling for the product is not provided in color, the symbol may be printed in black and white." Further, the symbol must be placed to the left of the text of the warning, in a size no smaller than the height of the word "WARNING." OEHHA states that using a "graphic symbol that is familiar to consumers on both a domestic and international level is likely to enhance the effectiveness of the warnings, particularly for non-English speaking or low literacy populations." Initial Statement of Reasons at 26.

• "WARNING" Signal Word: As in the Pre-Regulatory Proposal, the Proposed Rule would require that the signal word "WARNING" appear in all capital letters and bold print. Section 25604(a)(2). While "warning" is already required in the current Prop 65 regulations, OEHHA states the capital letters and bold print requirements "ensures that consumers will immediately know the information being provided is important and not just informational in nature." Initial Statement of Reasons at 26.
• "Expose": One of the most noteworthy changes in the warning requirements is the change of text from "This product contains a chemical known to the State of California to cause [cancer or birth defects or other reproductive harm]" to "This product can expose you to a chemical known to the State of California to cause [cancer or birth defects or other reproductive harm]. For more information go to www.P65Warnings.ca.gov/product." Sections 25604(a)(2)(A)-(B) (emphasis added). OEHHA's reasoning for this proposal is the same as it was in its Pre-Regulatory Proposal: "Since the existing regulations were adopted over 25 years ago, it has become clear that using the word 'contains' does not communicate the fact that individuals will actually be exposed to a chemical if they use a given consumer product." Initial Statement of Reasons at 26. OEHHA was not persuaded by comments that the word "expose" could cause unnecessary alarm or allege an exposure that may not actually occur. Instead, OEHHA stated: "Requiring that the warnings include more specific, relevant information will further the right-to-know purposes of the law and reduce the likelihood that businesses will provide unnecessary warnings for non-existent or insignificant exposures." Initial Statement of Reasons at 27. One improvement OEHHA made in response to comments is to modify the proposed language from "will expose" to "can expose" in recognition of concerns raised in comments that any individual sample may or may not actually expose a consumer. OEHHA also is now including a reference to its new website to assist consumers in more easily accessing the website.
• On-Product Labels: Businesses may use a more truncated warning on product labels, using the same symbol, "WARNING," and website reference noted above, but with only the words "Cancer," "Reproductive Harm," or "Cancer and Reproductive Harm," depending on the reason the chemical(s) requires a warning. Such truncated warnings, which need not identify any specific chemicals, would be subject to specific font size requirements (i.e., no smaller than 8-point type). OEHHA states it is proposing this option "to accommodate some product manufacturers' stated concern that a longer warning message will simply not fit on the labeling or packaging of some small products." Initial Statement of Reasons at 27.

Environmental Exposure Warnings -- Methods of Transmission and Content

In the Proposed Rule, OEHHA generally retains the same requirements for the methods of transmission for environmental exposure warnings, although it updates those requirements to "remove obsolete citations and to reflect changes in communication technology that have occurred since the original regulation was adopted, while recognizing that some individuals may not have access to current technology." Initial Statement of Reasons at 28. For example, instead of the current method of warning in a "notice mailed or otherwise delivered to each occupant in the affected area" at least once in any three-month period, the Proposed Rule now states that an acceptable method is a warning provided in a "notice mailed, or sent electronically or otherwise delivered to each occupant in the affected area . . . at least every three months, in English and in any other language ordinarily used by the business to communicate with the public." Section 25605(a)(2).

OEHHA is proposing the same changes to the content of environmental exposure warnings to those proposed for product exposure warnings (e.g., symbol, "WARNING," "can expose," OEHHA website reference).

Occupational Exposure Warnings

Current Prop 65 regulations set forth the methods of transmission and content for occupational warnings. The Pre-Regulatory Proposal and Proposed Rule do not set forth any particular requirements regarding methods of transmission or content. Instead, the Proposed Rule states:

A warning to an exposed employee about the chemical in question which fully complies with all information, training and labeling requirements of the federal Hazard Communication Standard (29 Code of Federal Regulations, section 1910.1200), the California Hazard Communication Standard (Title 8, California Code of Regulations section 5194), or, for pesticides, the Pesticides and Worker Safety requirements (Title 3, California Code of Regulations section 6700 et seq.) meets the requirements of this Article.

Section 25607. OEHHA explains that its proposal responds to concerns raised by stakeholders over the possibility of federal preemption of Prop 65 warning requirements for occupational exposures, and that by incorporating by reference existing federal and state law and regulatory requirements related to occupational exposure warnings, OEHHA intends to harmonize the Proposed Rule with existing laws and regulations and "pose no preemption concern." Initial Statement of Reasons at 28-29.

Specific Product, Chemical, and Area Exposure Warnings

Proposed Sections 25608 through 25608.27 provide tailored methods for transmission of warnings and warning language for certain scenarios that "would benefit from exposure-specific methods of transmission and content in order to provide certainty to businesses subject to the warning requirements of the Act, while ensuring that the public is properly warned about the exposures that can occur through these products of facilities." Initial Statement of Reasons at 29. Additional specific warning requirements are provided for the following products, chemicals, and area exposures:

• Food (including dietary supplements);
• Alcoholic beverages;
• Restaurants;
• Prescription drugs;
• Dental care;
• Raw wood;
• Furniture;
• Diesel engines;
• Passenger vehicles;
• Parking garages;
• Amusement parks;
• Petroleum products;
• Service stations; and
• Designated smoking areas.

New OEHHA Website

Originally part of OEHHA's Pre-Regulatory Proposal regarding revisions to the warning regulations, OEHHA proposed its rule related to a proposed Prop 65 website as a separate but concurrent rulemaking (Website Proposed Rule). Under the proposal, OEHHA intends to "increase the availability of consistent, understandable information to the public regarding warnings provided for potential exposures to listed chemicals" by establishing a "one-stop shop for supplemental information concerning the warnings Californians see on products and at locations throughout the state." Website Initial Statement of Reasons at 2.

OEHHA's decision to separate the warning and website rulemakings was in response to comments and concerns that combining the proposals could imply that the website regulations were enforceable by private plaintiffs. OEHHA also has clarified that its website is intended to provide information to the public that supplements the warning requirements and is not a substitute for a clear and reasonable warning for a given exposure. Section 25205(d).

The information for the website will be "obtained primarily from public sources or be developed by OEHHA, and occasionally from industry sectors or businesses providing warnings." Website Initial Statement of Reasons at 4. If requested, the information to be provided to OEHHA is:

• The name and contact information for the person providing the information.
• The name and contact information for the manufacturer of the product.
• The name of the listed chemical or chemicals for which a warning is being provided.
• For environmental warnings, the location of the chemical or chemicals in the area.
• For product warnings, the location of the chemical or chemicals in the product.
• For product warnings, the concentration (mean, minimum, maximum) of the chemical or chemicals in the final product. If the product contains multiple component parts, the business must provide the concentrations (mean, minimum, maximum) of the chemical or chemicals in each of the component parts.
• For product warnings, the matrix, as defined in subsection 25900(g), in which the listed chemical or chemicals is found in the product and the concentration of the listed chemical(s) in the product matrix, if known.
• The anticipated routes and pathways of exposure to the listed chemical(s) for which the warning is being provided.
• The estimated level of exposure to the chemical or chemicals.
• Any other related information that the lead agency deems necessary.

Section 25205(b). This information to be provided does not include some information requested in the Pre-Regulatory Proposal that was potentially problematic, including but not limited to the type of occupational exposure to a listed chemical that the warning is intended to cover, if any, and information concerning actions a person can take to minimize or eliminate exposure to the listed chemical, if any. Other changes to the Website Proposed Rule that OEHHA has included in response to comments received include providing a process for a person to request a correction of potentially inaccurate information, clarifying that information should be provided only when "reasonably available," and allowing stakeholders to request that information submitted to OEHHA be treated as Confidential Business Information (CBI) and therefore not be available for public inspection under provisions of the Public Records Act and Evidence Code.

Commentary

The Proposed Rule includes changes in response to comments on the Pre-Regulatory Proposal that improve the proposed regulations, including the change in warning language from "will expose" to "can expose," separating the OEHHA website proposal from the warning requirements so that businesses providing information for the website are not vulnerable to Prop 65 bounty hunter lawsuits, and clarifying the occupational exposure warning requirements to help ensure there are no preemption concerns.

The proposal still includes game-changing additional warning requirements that continue to inspire controversy for companies that manufacture, distribute, or sell consumer products with Prop 65 warnings, particularly the complexity of the different warning requirements, the ability of plaintiffs to petition OEHHA to demand additional warnings for substances in products or the environment, and the requirements to provide information for OEHHA's website. These proposed regulations address only warning requirements and do not address litigation reform issues such as "opportunities to cure." Efforts to limit private enforcement and stop frivolous and shakedown lawsuits must still be pursued beyond those already enacted with AB 227.

Companies should review carefully the proposal and how the significant changes to the warning requirements will affect its cost and compliance capabilities. Comments should be submitted by April 8, 2015.