Prop 65 Changes Coming That Could Cause Headaches For Businesses

Introduction

If you sell goods in the State of California, you are probably familiar with Proposition 65 (“Prop 65”), which requires businesses to provide a warning before they “knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity.” Prop 65’s sweeping reach is due to the fact that the state has listed over 900 chemicals as potentially causing cancer or reproductive toxicity, and it applies to any product that a business sells, or manufactures, distributes, or offers for sale, into California.

Because of Prop 65’s reach, the chemicals and products that can trigger the warning obligation can even catch businesses that are familiar with the law off-guard. Other businesses across multiple industries struggle to navigate compliance with confusing regulations detailing what are presumptively clear and reasonable warnings. Despite these challenges, the consequences for not complying with Prop 65 can be severe, leaving businesses on the hook for paying plaintiffs’ inflated attorneys’ fees and costs and civil penalties up to $2,500 per violation, per day. In practice, this can translate into six-figure settlements for seemingly trivial violations of law that do not even require any actual harm to a consumer or anyone else to establish a violation.

It’s about to become more confusing for businesses to comply with Prop 65. Though many legislatures across the U.S. were occupied with COVID-related priorities, it was (remote) business as usual to a large degree for courts and certain regulatory bodies that oversaw laws not directly impacted by COVID. California’s Office of Environmental Health Hazard Assessment (“OEHHA”), which oversees Prop 65, and California courts were no exception.

New Short-Form Warning Regulations: More Words, Smaller Labels Only

Where a clear and reasonable warning is required, the applicable regulations provide specific options for what’s presumed to be “clear and reasonable.” Among other warnings presumed to be clear and reasonable on consumer products are so-called “short-form” warnings. As many businesses are aware, one of the current short-form warnings that became permissible as of August 30, 2018 looks like this:

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

But this, as well as the products on which short-form warnings are permissible, is likely to change soon.

On January 8, 2021, the OEHHA issued its notice of proposed rulemaking proposing changes to Prop 65’s short-form safe harbor warnings. According to OEHHA in its Initial Statement of Reasons, when coming up with the current short-form warning, “OEHHA intended for this warning option to only be used for small products or containers with insufficient space for the longer warning, [but] businesses have used the short form warning on a wide range of consumer products that have more than enough label space for the longer warning.” Of course, OEHHA concedes that businesses doing so were complying with the express terms of the regulations, which did not limit the permissibility of short-form warnings to a maximum label surface or product size.

Among other things, OEHHA’s proposed regulation would:

• Only allow use of the short-form warning on products with five square inches or less of label space,
• Eliminate use of short-form warnings for internet and catalog warnings, 
• Clarify how short-form warnings can be used for food products, and 
• Require that the name of at least one chemical be included in the short-form warning.

For example, a warning compliant with OEHHA’s proposed regulation might look like this:

WARNING: Cancer Risk and Reproductive Harm from Lead Exposure – www.P65Warnings.ca.gov.

And, of course, for products with more than five square inches of label space, the longer warning under the current regulation would be required. As a reminder, it generally looks like this:

WARNING: This product can expose you to chemicals including Lead, which is 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.

Now, after a public hearing on March 11, 2021 and extension of the comment period to March 29, 2021, OEHHA will either adopt its proposed regulation with nonsubstantial changes or issue a new proposed regulation with another comment period of at least 15 days.

As proposed, OEHHA will allow a sell-through period for products manufactured up to one year after the effective date of the final regulation. For example, if the new regulation is effective October 1, 2021, businesses will be able to apply the current or new short-form warnings on products manufactured on or before October 1, 2022. Any products manufactured after that date will need to comply with the new regulations.

New Cannabis Warning

On March 19, 2021, OEHHA issued its notice of proposed rulemaking proposing changes to Prop 65 warnings for products that expose California consumers to cannabis smoke and delta-9-tetrahydrocannabinol (delta-9-THC or THC). Currently, exposure to those listed chemicals falls under the general consumer product, food, and environmental exposure provisions of Prop 65’s regulations. If adopted, OEHHA’s new regulations would provide specific requirements for warnings about cannabis smoke from consumer products, THC from ingested products, THC from vaping or dabbing products, THC from dermally applied products, and cannabis smoke and THC environmental exposures.

The departures from existing regulations are: (i) the elimination of on-product short-form warnings for these exposures, (ii) significantly longer and broader warning language for these exposures, and (iii) the establishment of a cannabis-specific Prop 65 website.

The most significant departure is that the proposed regulation would require the following warning language for exposure to cannabis smoke from consumer products:

WARNING: Smoking cannabis increases your cancer risk and during pregnancy exposes your child to delta-9-THC and other chemicals that can affect your child’s birthweight, behavior, and learning ability. For more information go to www.P65Warnings.ca.gov/cannabis.

Here’s another example:

WARNING: Vaping or dabbing this product during pregnancy exposes your child to delta-9-THC, which can affect your child’s behavior and learning ability. For more information go to www.P65Warnings.ca.gov/cannabis.

As the proposed regulation is presently written, there is no specific effective date or sell-through period once adopted by OEHHA. That could provide compliance issues for companies with products in inventory or in the stream of commerce at the time the regulation is adopted. Another issue with the regulation is that its length may practically be prohibitive for cannabis and THC products that might be in relatively smaller packaging that can’t reasonably accommodate the lengthy, proposed warnings. And it’s not clear whether there will be short-form warnings permitted for cannabis smoke and THC exposures.

Notably, however, OEHHA’s Initial Statement of Reasons reminds that “[w]hile delta-9-THC is on the Proposition 65 list, cannabidiol (CBD) and other cannabinoids in cannabis are not. Products that are made with CBD or other cannabinoids or purified extracts of the cannabis plants [] that do not cause exposures to delta-9-THC or other Proposition 65 listed chemicals . . . do not require a warning.” (Emphasis added.) That said, businesses should consult compliance counsel to determine whether the delivery mechanism for CBD can result in exposure to other Prop 65-listed chemicals that are not cannabis or THC (e.g., certain heavy metals or plant-based chemicals that are on the Prop 65 list and mixed in a CBD product).

The statutorily required comment period closes on May 18, 2021. A public hearing on these proposals will only be held upon request. After reviewing comments, OEHHA will either issue a final statement of reasons or adopt the regulation as proposed with nonsubstantial changes. If substantial changes are proposed, OEHHA will open up the comment period again for a comment period of at least 15 days. In light of the significant nature of these proposals, unless a specific date is ultimately provided for expressly in the regulation, the earliest a regulation like the one proposed by OEHHA will be effective is January 1, 2022.

Acrylamide: Some Good News For Food Manufacturers

Based solely on animal studies of questionable significance to the question of whether acrylamide can practically cause cancer in humans, OEHHA added acrylamide decades ago to the Prop 65 list as potentially causing cancer. 

Acrylamide is not intentionally added to food products; it is formed naturally in many types of food when the food is cooked at high temperatures or otherwise processed with heat. Acrylamide is thus formed during cooking at home, in restaurants, and in food processing and at manufacturing facilities. It has always been present in the foods that humans cook to eat. Such foods include breakfast cereals, crackers, bread (in the crust), coffee, grilled or roasted asparagus, French fries, potato chips and other fried and baked snack foods, olives, prune juice, and roasted nuts, just to name a few.

There has been a proliferation of acrylamide Prop 65 notices of violation in the past few years, with over 400 issued to food manufacturers, distributors, and retailers in 2020 alone. 

Now the good news: the future of acrylamide enforcement under Prop 65 is uncertain. In addition to OEHHA’s exception of coffee from acrylamide warnings, last month a federal court issued a preliminary injunction enjoining the filing of any new lawsuits under Prop 65 based solely on acrylamide exposure. That injunction, spearheaded by the California Chamber of Commerce, will last until the Chamber’s lawsuit against the State of California is concluded. See Cal. Chamber of Commerce v. Becerra, No. 2:19-cv-02019-KJM-EFB (E.D. Cal. Mar. 30, 2021). Though unquestionably a hard-fought and substantial victory for businesses, the injunction does not technically prevent the issuance of new acrylamide notices of violation or the ongoing prosecution of existing Prop 65 cases based on acrylamide exposures. That said, the practical effect of the ruling on enforcement activity is yet to be seen, particularly since it is unclear whether the state will appeal the ruling or how a California judge would view the ruling as potentially impacting pending cases. 

Even before the consequential preliminary injunction, OEHHA issued a notice of proposed rulemaking in 2020 that, if adopted, would effective modify the unreasonably low, current regulatory levels that could trigger a Prop 65 acrylamide warning. While the levels currently proposed by OEHHA are still very low, they are certainly more manageable for businesses. And they would help to put a stop to abusive Prop 65 enforcers.

For more information about how these developments affect your business today, please contact Bao M. Vu or Melissa A. Jones of Stoel Rives LLP.