OVERVIEW
California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) is one of the most onerous and complex environmental statutes in the nation, which has led to hundreds of lawsuits over the past three decades. Proposition 65 generally requires that businesses provide California consumers with “clear and reasonable” warnings about the presence of certain chemicals in the products they sell to California consumers. Proposition 65 also includes requirements related to providing clear and reasonable warnings related to environmental exposures and prohibitions regarding discharging or releasing listed chemicals to “sources of drinking water” in California.
Proposition 65 warnings are common in California, and you may have seen them at your local coffee store, gas station, or restaurant or bar. You may have also seen them on many consumer products you buy such as tools, flashlights, toys, and many other products. You may have also seen them posted in buildings, parking garages, and many other locations, including the happiest place on earth.
There are more than 900 chemicals identified as carcinogens, reproductive toxins, or both, listed on California’s Proposition 65 list. It includes solvents, plasticizers, metals, additives, and/or ingredients in common household, commercial, and office products. Even naturally occurring chemicals found in food products are listed.
If a chemical is listed on the California Proposition 65 list, manufacturers, distributors and/or retailers may be required to provide California consumers with clear and reasonable warnings unless they can prove that exposure to: a) a carcinogen will not pose a “significant risk of cancer,” or b) a reproductive toxin will have “no observable effect” on consumers using the consumer products. Meeting such burden of proof typically involves very complex technical issues, and involves numerous technical assumptions that are often disputed in litigation.
New Proposition 65 warning regulations recently became effective on August 30, 2018. Understanding and complying with the safe harbor warning requirements included in the new regulations can help insulate manufacturers, distributors and/or retailers from allegations and claims asserting failure to comply with Proposition 65 requirements.
PROPOSITION 65 ENFORCEMENT, LITIGATION AND PENALTIES
Proposition 65 allows for public and/or private enforcement. Proposition 65 private enforcers need only allege a Proposition 65 violation has occurred and file the related certificate of merit. They do not need to allege or show harm, injury, or damage to people, property, or the environment in order to send a 60 days notice or to commence a Proposition 65 lawsuit. Failure to comply with Proposition 65 mandates is enforceable by penalties of up to $2,500 per day, per violation. In addition, plaintiffs often seek injunctive relief, including product reformulation to remove the chemicals or to minimize their concentrations in the consumer products going forward.
Commencing a Proposition 65 lawsuit is relatively easy and lucrative for private plaintiffs and their counsel. Given the relative ease and potential payoff of bringing suit, businesses often face aggressive litigation tactics from plaintiffs’ counsel. In response to hundreds of 60 day notices and Proposition 65 lawsuits filed against businesses over the past three decades, businesses have agreed to enter into numerous settlements to resolve outstanding Proposition 65 claims. The California Attorney General’s office keeps track of these settlements, and publishes reports of the total settlement amounts entered into annually. Below are the total settlement amounts paid by businesses to resolve Proposition 65 claims:
- Total 2015 Proposition 65 Settlements totaled $17,828,941;
- 2016 payments increased more than 20% to $21,561,113;
- 2017 payments increased by about 19% to $25,656,500.
The settlements amounts listed above are the settlement payments made by businesses to Proposition 65 private enforcers and their attorneys, and the exclude defense counsel fees, business interruption, and costs to comply with injunctive relief provisions of the settlement agreements. Accordingly, actual total costs to businesses relating to Proposition 65 compliance and litigation expenses significantly exceed the amounts listed above.
RESPONDING TO A PROPOSITION 65 LAWSUIT
A Proposition 65 private enforces merely needs to establish that a Proposition listed chemical is present in the consumer product, and file a related certificate of merit. Once that is done, the burden of proof to demonstrate that a Proposition 65 warning is not required for the product shifts to the manufacturer, distributor and/or retailer defendants. Meeting that burden of proof is often difficult, and often involves complex technical evaluations and analysis, involving numerous assumptions, tests and evaluations.
Any settlement of Proposition 65 lawsuits (other than voluntary dismissal) must be reported to the California Attorney General. Judicially approved settlements with private plaintiffs, often referred to as Consent Judgments, can preclude other private parties from pursing other Proposition 65 claims against the settling parties and/or some of their related entities covered by the terms of the Consent Judgments.
COMPLIANCE
To ensure compliance with Proposition 65 warning requirements, and to avoid related litigation risks, a business that may potentially be exposed to Proposition 65 claims should assess whether it is exposing individuals to any Proposition 65 listed chemical through products, environmental or occupational exposures.
Compliance with Proposition 65 regulations generally insulates a business from liability related to allegations of non-compliance with Proposition 65 warning requirements. Accordingly, it is essential for businesses to evaluate Proposition 65 regulations, receive expert assistance in evaluating their products sold to California consumers, and drafting and implementing compliant Proposition 65 warning programs. Proposition 65 regulations include “safe harbor” warnings that businesses can incorporate to ensure compliance with Proposition 65 warning requirements. There are other requirements that apply to Proposition 65 warnings’ content and how the warnings should be communicated, especially since the new regulations that become operative in August 2018 are particularly detailed.
In addition to warnings, companies may take other actions to protect against Proposition 65 liability, including implementing legal protections such as contractual indemnities, certificate programs, and testing routines. Compliance can also be achieved by demonstrating that an exposure will produce no significant risk of cancer or no observable effect on reproduction. However, because actionable exposures can occur even at trace concentrations, this can be difficult and expensive to prove.