Prop 65 Means Re-evaluating Existing Signage

SAN FRANCISCO—Business owners should be aware of the new regulations of Proposition 65, which uses stricter warning signage and imposes hefty fines for non-compliance. In the second of a two-part exclusive, John Allen and Vaneeta Chintamaneni of Allen Matkins discuss which businesses will be affected and how the law will be enforced when amendments to Prop 65 take effect on August 30, 2018.

GlobeSt.com: What types of businesses will these amendments affect?

Chintamaneni: The amendments will impact most businesses that are required to provide a Prop 65 warning. There are some exceptions, such as if you are providing a warning pursuant to a previous court-approved settlement or judgment.

But the amendments modify the safe harbor content and delivery methods for all Prop 65 warnings in a number of ways. For instance, the amendments increase the specificity of the content and method of delivery required to meet the Prop 65 warning requirement. For many exposure types, businesses will now have to list at least one listed chemical in the product or affected area, use the new warning symbol, and provide the warnings in certain font sizes and languages. There are also a number of tailored warnings for specific industries or types of exposures.

Because of the broad scope of the amendments and the significant number of tailored warnings the amendments now provide, many types of businesses will have to re-evaluate existing warnings and signage. Commercial establishments are going to be significantly impacted. Whereas the prior regulations allowed commercial establishments to provide generic warnings, as a result of the amendments, they will have to identify the types of warnings required for that industry and the types of exposures that may occur as a result of the specific activities at that property. Businesses associated with multi-use buildings also need to be aware of the new warning regulations. One mixed-use commercial building, for example, may need environmental exposure warnings at entrances, designated smoking area warnings in smoking areas, enclosed parking lot warnings, food and non-alcoholic beverage warnings, alcoholic beverage warnings and consumer product warnings.

The amendments are also going to affect businesses across the supply chain for consumer products, including manufacturers, distributors and retailers. A notable section of the amendments attempts to shift the burden of providing warnings away from retail sellers and towards manufacturers and distributors. If a product is required to have a Prop 65 warning, a manufacturer or distributor now has the option of either providing a warning on the product label or labeling, or providing a written notice (with confirmation of receipt) to an authorized agent of a retail seller that identifies the listed chemical, and includes the exact product information and the required warning materials to be used. Under the amendments, retail sellers are primarily responsible for providing warnings in certain limited circumstances, including if the retail seller sells the product under its brand or trademark, or introduces a listed chemical to a product. However, it is important to recognize that although the amendments try to reduce retailer seller’s liability, the amendments do not exclude retail sellers from Prop 65 liability.

GlobeSt.com: How is Prop 65 enforced?

Allen: Prop 65 imposes fines of up to $2,500 per day, per violation. Prop 65 can be enforced by the attorney general as well as other state actors or local district attorneys, but it also allows private parties to bring enforcement actions on behalf of the state whenever they believe a violation has occurred. They do this by first serving a 60-day notice of violation/NOV on the target, as well as state and local enforcement agencies. Once the 60-day period has run, private enforcers can proceed on behalf of the state and recover their attorney’s fees as part of a settlement or if successful in a lawsuit.

Under Prop 65, unlike most statutes, the burden is on a business that receives a NOV to prove that it is not liable. There are only a few ways that a business can definitively prove to a private or state enforcer that it is not liable under Prop 65: (1) it is not subject to Prop 65 pursuant to a limited number of statutory exemptions, (2) it can show that no exposure results from use of the area or the intended use of the product and (3) if there is an exposure, it can try to prove the exposure does not pose a significant risk (for listed chemicals causing cancer) and has no observable effect (for listed chemicals causing reproductive harm). Unless a business can prove it qualifies for a statutory exemption (and there are only a few of these), it is often costly and time consuming to prove there is no violation. For example, to prove that an exposure does not require a warning, a business will often have to engage a consultant to conduct costly exposure analyses of the product or affected area and an attorney to negotiate with the private enforcer. As a result of this structure of enforcement and liability, over the last several decades, private enforcement has expanded into a multi-million-dollar enterprise.

Commercial property owners and businesses should take steps now to ensure that their Prop. 65 warnings comply with the new warning requirements by August 30, 2018.