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California’s Safe Drinking Water and Toxic Enforcement Act of 1986, otherwise known as Proposition 65, continues to be amended to address errors and omissions in the original regulations. Proposition 65 applies to all businesses in the chain of commerce in California and requires all businesses to provide a “clear and reasonable” warning before knowingly and intentionally exposing any individual in California to one of nearly 1,000 listed chemicals. While Proposition 65 has been on the books for more than three decades, the regulations have never been clear as to how an upstream business, such as a manufacturer or distributor, is to provide the mandated warning to the final consumer through the chain of commerce. On November 16, 2018, California’s Office of Environmental Health Hazard Assessment (OEHHA) proposed amending the regulation to help clarify this process. But OEHHA’s proposed amendment falls short of the stated goal.

On August 30, 2016, OEHHA promulgated substantive revisions to certain Proposition 65 regulations, including those related to providing a “clear and reasonable” warning. (Cal. Code Regs. tit. 27, § 25600.2.) Those revisions went into effect August 30, 2018. On November 16, 2018, less than three months later, OEHHA proposed additional revisions to Section 25600.2.

As the regulation currently exists, regulated upstream businesses (i.e., manufacturers, producers, packagers, importers, suppliers, and distributors) have three options by which they may discharge their duty to provide a “clear and reasonable” warning before exposure. First, an upstream business may place a compliant warning on the exposing product, the product’s “label,” or the product’s “labeling” before exposing a consumer to a listed chemical. Second, an upstream business may provide a compliant written notice regarding Proposition 65’s applicability to a product as well as any necessary warning materials to the authorized agent of the retail seller. Third, an upstream business may enter into a written agreement with the retail seller to allocate legal responsibility between them for providing any necessary warning.

OEHHA, acknowledging that in certain instances an upstream business may not know where or by whom the product will ultimately be sold at retail, has now proposed to revise the second option stated above, providing written notice and warning materials. OEHHA proposes to clarify that a manufacturer or other upstream business, may provide written notice and warning materials to the authorized agent for the business to which the manufacturer or other upstream business is selling or transferring the product or to the retail seller. This revision adds clarity that will benefit up- and downstream businesses alike.

But OEHHA does not currently propose to revise the third compliance option, entering into a written agreement to allocate legal responsibility for providing a warning. OEHHA’s failure to clarify that upstream businesses may enter into such written agreements with parties other than the retailer, the identity of which may be unclear, is a disservice to all non-retail regulated businesses. In addition, as the third option is currently phrased, any allocation of legal responsibility between an upstream business and a retailer would be effective only if the retailer in fact provided a Proposition 65-compliant warning. In other words, a retailer could subject an upstream business to liability by unilaterally voiding an otherwise valid contract by failing to perform. So, this option is essentially moot. If a consumer received a Proposition 65-compliant warning before being exposed to a listed chemical, no exposure cause of action exists. If not, any written agreement allocating legal responsibility between an upstream business and the retailer would be void.

In essence, as the regulations are currently proposed, upstream businesses now have only two compliance options: label their products or provide written notice and warning materials to their direct customers and hope that the warning makes its way to the consumer before exposure.

In light of the inconsistency noted above, Miller Nash Graham & Dunn presented oral comments addressing this issue at a public hearing on January 3, 2019. At the public hearing, OEHHA acknowledged the inconsistency and stated its intent to again revise the regulation to address it. The public comment period for this most recent round of revisions closed on January 11, 2019.

Proposition 65 is still under construction. But things appear promising that the end result will be worth the litigious wait.

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