CA Regulator Eying More Detailed Warnings in Prop 65 Reform

<p>But lawyers representing industries subject to Prop 65, including food and supplement companies, contend the pre-regulatory proposal would burden businesses and open the door to more litigation.</p>

SACRAMENTO, Calif.—Last year, California Gov. Edmund Brown, Jr. (Democrat) sought to modernize Proposition 65, a 28-year-old law intended to alert consumers about the presence of dangerous chemicals in foods, supplements and consumer products.

The governor's ideas for reform of Prop 65 were promising: reduce the potential for groundless litigation; furnish the public with more detailed warnings; and modify certain safe harbor levels at which warnings are not required.

In an effort to reach a broad consensus on the proposals that would yield the support of at least two-thirds of the California Legislature, Brown convened a large, diverse group of stakeholders ranging from environmental groups to industries subject to the law, which is more formally known as the Safe Drinking Water and Toxic Enforcement Act of 1986.

Although the talks among a group of some 200 stakeholders didn't lead to sweeping legislative reform, the governor has moved to provide more detailed Prop 65 warnings through administrative regulations.  

A "pre-regulatory draft," unveiled on March 7, 2014, by the Office of Environmental Health Hazard Assessment (OEHHA) within the California Environmental Protection Agency (CalEPA), would include the "most significant changes" to regulations under Prop 65 in more than two decades, according to Greenberg Traurig LLP, an international law firm whose clients include conventional food and dietary supplement firms.

Passed in 1986 by California voters, Prop 65 requires businesses to "provide a 'clear and reasonable' warning before knowingly and intentionally exposing" individuals to a list of chemicals that are known to cause cancer, birth defects or other reproductive harm, according to OEHHA. Approximately 800 chemicals are subject to the law.

OEHHA's draft builds on Brown's efforts to provide the public more useful information about the warnings and help them protect themselves from hazardous substances.

"In general, the idea is to provide more useful information that would describe the type of exposure or hazard when applicable, the things you can do to reduce or eliminate your exposure and in some cases to name the chemicals involved," said Sam Delson, deputy director for external and legislative affairs with OEHHA. "Overall, we are trying to provide the public with better information and provide businesses more certainty, clarity and additional warning options."

Warning labels under the proposal would have to identify the chemical in question if it contains a list of 12 substances, including the following: acrylamide, arsenic, benzene, cadmium, chlorinated tris, 1, 4-dioxane, formaldehyde, lead, mercury, phthalates, tobacco smoke and toluene. In the warnings, businesses also would have to state whether a product actually causes exposure to a listed chemical, said Amy Lally, a partner with the international law firm Sidley Austin LLP and trial lawyer who has represented dietary supplement firms.  

While determining whether a chemical is in a product and subject to Prop 65 is "readily ascertainable," identifying whether a product actually causes exposure to a listed chemical cannot be easily determined and is a highly contested area, particularly in food litigation, Lally said. OEHHA points out chemicals that are "naturally occurring" in food and reduced to the "lowest level currently feasible" are exempt from Prop 65's warning requirements.  

"Figuring out the naturally occurring levels can be time consuming and expensive," Lally said. "If the warning must say that the product will expose users, many Proposition 65 settlements will be scuttled and our already overburdened court system could become more taxed with food cases that cannot be resolved short of trial."

The statute governing Prop 65 offers safe harbor language that businesses frequently insert in their warnings to ensure compliance with the law and shield themselves from a lawsuit. For consumer products, the safe harbor language includes a statement that a product contains a chemical known to the State of California to cause cancer (for carcinogens) or birth defects or reproductive harm (for reproductive toxins). But OEHHA's pre-regulatory draft would require the disclosure of far more information, either on the warning itself or in a notice to the agency that could be disseminated to consumers via a Prop 65 website.

Stacy Don, a partner with the law firm Toledo Don LLC in Roseville, Calif., which practices Prop 65 law, cites the following information that businesses would have to provide to OEHHA or include on the warning:

·        the name and contact information of the person providing the warning;

·        the name and contact information for the manufacturer of any product the warning is intended to cover;

·        the specific products or category of products the warning is intended to cover, including barcodes, if applicable;

·        the type of occupational exposure to a listed chemical the warning is intended to cover, if applicable;

·        the type of environmental exposure the warning is intended to cover, if applicable, and the intended area;

·        the name of the chemical(s) for which the warning is being provided;

·        whether warning is being provided for cancer, or birth defects, or other reproductive harm, or both;

·        the anticipated route(s) or pathway(s) of exposure to the listed chemical for which the warning is required;

·        reasonably available information concerning the anticipated level of human exposure to the listed chemical, if known;

·        information concerning actions a person can take to minimize or eliminate exposure to the listed chemical, if any; and

·        whether the warning is being provided in any language other than English and a copy of the translated warning, if any.

"So this is going to be a substantially different type of obligation" than under current law, Don said, referring to Section 25604 of the draft. "This is going to be more of a burden."

Other attorneys representing industries subject to Prop 65, including conventional food and dietary companies, expressed concerns that the proposed reforms would exacerbate, rather than alleviate, the current groundswell of litigation over the law.

In a 2012 presentation, the international law firm Alston & Bird LLP reported that Prop 65 has led to 16,000 lawsuits and nearly $500 million in settlements. Prop 65 grants private parties (as well as the California Attorney General and California District Attorneys) a right to enforce the law. Private entities, such as the Consumer Advocacy Group, Inc., and Center for Environmental Health, spearhead most of the litigation.

For instance, in 2012, the Center for Environmental Health was involved in 80 settlements totaling $4.1 million, with nearly 69% of the funds being earmarked for attorney's fees and costs, according to the AG's website. By comparison,  the AG's Office and DAs negotiated just 33 settlements totaling $1.8 million.

In 2012 alone, private groups brokered 397 Prop 65 settlements totaling $20.4 million, with 71% of the funds earmarked for attorney's fees and costs, according to the AG's website.

Few cases go to trial, said Prop 65 lawyers, citing the extraordinary costs of litigation.

To date, Prop 65 litigation hasn't focused on the content of the warnings, but rather whether a warning was required, said Maureen Gorsen, a partner with Alston & Bird and former general counsel of CalEPA. What OEHHA is proposing will open up the door to more litigation because, in part, the content in the warnings will vary from product to product, she said.

"Where is the reform in any of this?" Gorsen asked. "They are just making it more complex."

But the current Prop 65 warnings are not clear and have room for improvement, according to the Center for Environmental Health (CEH). 

"When we are purchasing and testing products, too often we see warnings that are confusing or hidden from consumers," CEH Spokesman Charles Margulis said. "We also support OEHHA's efforts to require some warnings to identify the specific chemical involved and to require that some warnings provide information about how to reduce exposure."

Added Margulis: "The proposed warning requirements will also significantly improve the existing situation by discouraging over-warning (i.e., warnings even when there is no known chemical hazard) and by providing Californians with meaningful warnings regarding real exposures to toxic chemicals."

That's not to say CEH is entirely supportive of the draft. Margulis expressed concern over a provision that would exempt businesses from the new requirements if they were a party to a Prop 65 settlement agreement.

CEH also opposes a provision that would enable retailers with fewer than 25 employees to cure minor violations within 14 days and avoid private enforcement. The proposal represents a similar approach to a law passed last year in California, which authorizes small business owners that receive notice of a Prop 65 signage violation to insulate themselves from legal action by complying within 14 days and paying a small fine.  

OEHHA's 14-day cure proposal "is a solution in search of a problem (since there have not been instances of companies being sued for signs falling down), will not solve the alleged problem (since someone intent on abusing P65’s private right of action can still sue by alleging that the violation does not qualify for the cure provisions), is a slippery slope, and exceeds OEHHA’s authority," Margulis argued.

CEH is likely to reiterate its concerns during an April 14 public workshop, which OEHHA is holding at CalEPA headquarters in Sacramento to discuss the pre-regulatory draft. Delson said the agency hopes to adopt a formal regulation next year.

OEHHA is accepting written comments on its draft until May 14, 2014, and encouraging the public to send comments in email rather than paper form to the following address: P65Public.Comments@oehha.ca.gov

"We are open to any and all comments and we hope to receive useful feedback that can help to improve the formal regulation that will be proposed later this year," Delson said.

Randy Pollack, a partner with the Sacramento law firm Churchwell White LLP, who has served as a lobbyist on issues involving dietary supplements, pointed out the administrative process is in the early stages.

"This is just the beginning of the process," he said. "I think the discussion will be very lively at the pre-workshop."

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