Ryan Landis

Ryan Landis

It is critical for all manufacturers, distributors and retailers selling products into California to evaluate their product lines for compliance determination because on August 30, 2018, new California regulations go into effect that will impact warning requirements for such products.

Virtually any company that sells or distributes consumer products in California will need to assess possible compliance with the new regulations under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, (referred to as “Proposition 65”) in order to manage their liability risks in the upcoming year. That includes any online sales. Thus, companies located out of-state also will be affected. Many companies will face considerable challenges for products manufactured or sourced overseas as the chemical regulations in other countries tend to be less stringent.

Under Proposition 65 product manufacturers, retailers, distributors, business owners, and property managers will be subject to new warning requirements for products and/or premises that can expose anyone in the state of California to any one of over 900 listed chemicals if exposures to the chemical(s) exceed a certain threshold level. Subject products can range from brass nozzles on water hoses to vinyl picture book covers to dietary supplements. The regulatory revisions are considered the most significant change in the Proposition 65 implementation process within the last 30 years. The regulatory revisions modify both the warning language content for the product or premises and the method of transmission for the warning language. Failure to comply may result in actions pursued by the Attorney General, respective local enforcement prosecutor, or even from private individuals acting as citizen enforcers “in the public interest.” Penalties for violating Proposition 65’s warning requirement can be up to $2,500 per violation per day and, in addition, a company may be responsible for attorneys’ fees incurred by the prosecuting counsel.

Under the revised regulations that will go into effect, California’s Office of Environmental Health Hazard Assessment (OEHHA) has mandated certain changes to the warning requirements for qualified compliance. The Proposition 65 statutory scheme provides that the warning must be “clear and reasonable.” To avoid prosecution under Proposition 65, and a potential litigation battle over what is “clear and reasonable,” the regulations set forth specific language and identification requirements for warnings that will be deemed “safe harbor” compliant. Examples of “safe harbor” warnings for products that contain a chemical, or chemicals, under the carcinogen and reproductive toxicant list are as follows:

Long form:

WARNING: This product can expose you to chemicals including [name of one or more chemicals] which is [are] known to the State of California to cause cancer and birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.

Short-form:

WARNING: Cancer and Reproductive Harm www.P65Warnings.ca.gov.

One critical change is the identification on the warning of at least one chemical in the product, or on the premises, that may result in an exposure. This specific chemical identification requirement poses a significant burden on manufacturers, distributors and retailers doing business in the State or selling products into the State insofar as: the language of the warning( s); the methods and timing of transmission (placement of labels and/or signage, when the warnings must be given, etc.); and avenues of sale (retail outlets, internet, catalog, etc.). There are certain long-form and short-form language options under the new warning regulations which include additional specifications such as: a hazard symbol (black exclamation in a yellow triangle); the word “WARNING” bold in all caps; identification link to the OEHHA controlled website on Prop 65; and possible reiteration in other languages. Failure to strictly comply with the “safe harbor” language or methods of transmission can create a significant risk of liability.

Virtually any company that sells or distributes consumer products in California will need to assess possible compliance with the new regulations under California’s Safe Drinking Water and Toxic Enforcement Act of 1986, (referred to as “Proposition 65”) in order to manage their liability risks in the upcoming year. That includes any online sales. Companies located out-of-state also will be affected.

Proposition 65 requires companies with 10 or more employees that do business in California to provide warnings to consumers regarding Proposition 65-listed chemicals in their products that may cause cancer, birth defect or other reproductive harm. The Proposition 65 chemical list, which is updated several times a year, has grown to include more than 900 chemicals. It includes a wide range of naturally occurring substances as well as synthetic chemicals that include additives or ingredients in common household products, pesticides, food, drugs, dyes or solvents. Most Proposition 65 “failure-to-warn” claims involve allegations of “lead” or certain plasticizers known as phthalates (e.g. DEHP, DINP, DIDP) in consumer products. It is critical that companies know and understand all the chemicals in their consumer products so that they can ensure whether warnings are required.

Under the new regulations there will still be exceptions for:

• Companies with less than 10 employees;

• Exposures below a certain threshold level – to the extent one is established and a company can prove it by way of exposure assessment;

• Warnings set forth in a Court-entered Orders or Judgments.

Even the first two exemptions listed above can be challenging. Small companies that fall under the employee number exemption may still find that their product retailers (with more than 10 employees) turn to them to cover any costs for enforcement actions related to those products. Out of the more than 900 Proposition 65 listed chemicals OEHHA has only established threshold exposure levels for approximately a third of them. For the remaining two-thirds of the listed chemicals a company asserting this exception will have the burden, and cost, of establishing such a threshold level.

The nuances from the current regulations to those that go into effect on August 30, 2018 are intricate and, therefore, preparation of company compliance and standard operation procedures should begin to be implemented sooner rather than later. These changes will have a significant impact on any company that does business in California, or sells products into California, if they are not otherwise exempt.

Ryan Landis is Principal with Polsinelli LLP.

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