Businesses operating in California should be carefully watching proposed rulemaking that would significantly change the requirements for warning consumers about chemicals that may cause cancer or reproductive harm.
On Dec. 13, 2023, the Office of Environmental Health Hazard Assessment, the regulatory agency tasked with implementing California's Proposition 65, held a quasi-legislative hearing on its proposed formal rulemaking to significantly amend the Proposition 65 short-form warning requirements. OEHHA closed the public comment period Jan. 3.
Proposition 65—the Safe Drinking Water and Toxic Enforcement Act of 1986—requires businesses with 10 or more employees to provide a "clear and reasonable" warning before exposing individuals in California to any listed chemical that may cause cancer or reproductive harm.
OEHHA proposed changes in October to the short-form warning requirements that would require the listing of at least one Proposition 65 chemical for each exposure pathway.
Companies can currently comply with Proposition 65 simply by warning of the potential harm—cancer, reproductive harm, or both—without identifying a specific chemical in the product.
OEHHA cited concern that companies have been using the short-form warning even when there is no Proposition 65 chemical in the product as a risk management strategy. According to OEHHA, this practice has resulted in over-warning and has necessitated the proposed changes. Pursuant to the proposed changes, identification of one chemical per endpoint—cancer or reproductive harm—would be required.
This isn't the first time OEHHA has proposed sweeping changes to the short-form warning requirements. Two years ago, similar changes were proposed, though OEHHA ultimately allowed the rulemaking to lapse following an extended public comment period and significant push-back from the regulated community.
Following a short presentation on the proposed amendments, public comment began. Opponents of the proposed amendments included key stakeholders, industry representatives, trade associations, and the California Chamber of Commerce. The public comments were overwhelmingly in opposition to the proposed regulatory changes:
Excessive compliance costs. The chief concern with the proposed regulatory changes is that compliance costs would be significant, particularly for small businesses and those with many products.
Single-product lab tests performed to identify chemical composition often cost hundreds of dollars, and single-product exposure assessments may cost thousands. One commenter shared a staggering estimation of $8 million in potential compliance costs for an average-scale manufacturer trying to comply with the proposed regulatory amendments.
Inadequate compliance period. OEHHA mentioned that if it adopts the new regulatory changes, companies will have a two-year compliance period to achieve compliance after the passage of the amendments.
Several commenters expressed concerns about insufficient time to implement measures such as software upgrades, employee and vendor training, physical repackaging/relabeling, and product chemical assessments. Another commenter remarked that the sell-through period should allow use of pre-printed Proposition 65 warning labels using the current warning language to minimize waste.
Consumer confusion. Commenters remarked that the proposed regulatory changes could lead to consumer confusion. Given the size of California's economy and an inability on the part of manufacturers to determine precisely where their products many end up, manufacturers will continue to apply labels to products shipped nationwide, and even internationally. Out-of-state consumers may be confused by an unfamiliar regulatory scheme.
Arbitrary identification of chemicals. In a related comment, a commenter mentioned that the proposed regulatory changes require an arbitrary identification of chemicals.
Because the law permits identification of any one chemical—without regard to relative concentration, quantity, or toxicity—consumers may be misled in assuming that a listed chemical is the primary "offending" chemical. The commenter noted the arbitrary identification of chemicals provides little useful information to California consumers.
Product availability in California. Another commenter raised the prospect that the suggested regulatory alterations might diminish product availability within California.
Given the factors raised above—excessive compliance costs, an insufficient compliance period, consumer confusion, and arbitrariness—businesses, particularly small ones, may simply opt out of the California market. California's stringent regulatory landscape might reach a tipping point for some companies, with this potential change being the final burden they can't bear.
The primary comments lodged in favor of the proposed regulatory changes were made by the Center for Environmental Health, a prolific Proposition 65 enforcer that has issued more than 1,000 notices of violation over the years. The new law, if passed, will certainly create plenty of litigation exposure for companies unfamiliar with the requirements.
Businesses relying on short-form warnings should be wary of the proposed changes and monitor developments. This will help ensure sufficient time to revise warnings should OEHHA adopt the proposed changes.
It is also not too early to start educating stakeholders on potential future changes. This would include all parties in the supply chain, including manufacturers, packagers, distributors, and retailers.
Businesses that don't comply with Proposition 65 become targets for enforcement actions and are at risk for penalties and plaintiffs' attorneys' fees, as well as stressful litigation. For example, Proposition 65 authorizes civil penalties of up to $2,500 per day for each violation.
Recently, there has been an increase in Proposition 65 enforcement actions against alleged non-compliant businesses. These actions target products such as cosmetics, plastic bags, food, clothing, personal care products, nutritional supplements, and others.
Investing in a structured Proposition 65 compliance plan is one effective way to eliminate or minimize the risk of having to defend against a Proposition 65 enforcement action.
Typically, this plan would include analyzing current products to assess risk and implementing a compliant Proposition 65 warning strategy, including periodic compliance monitoring.
Businesses can also contractually shift the burden and liability to other participants in the supply chain. In the end, the best course of action is to get ahead of the curve: preventative forward-looking measures are the key.
Originally published by Bloomberg Law.
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