Highlights of OEHHA's New Draft Warning Regulation – A Win for California Businesses?

On November 27, the California Office of Environmental Health Hazard Assessment (OEHHA) formally withdrew its January 16, 2015 warning regulation proposal and announced a new proposal which takes into account the multiple public comments received to date.

Officially known as the "Safe Drinking Water and Toxic Enforcement Act of 1986," Prop 65 requires businesses to notify Californians of potential exposures to specifically-listed chemicals "known to" the State to cause cancer, birth defects or other reproductive harm. In reality, this regulation has created a goldmine for "bounty hunter" organizations and their attorneys filing "gotcha" lawsuits compelling companies to either pay excessive settlements (including plaintiff attorneys' fees) or litigate through trial and verdict. As a result, in 2013, Governor Jerry Brown announced his desire for regulatory reform to terminate the ongoing threat of "frivolous, shake-down" lawsuits.

As OEHHA responded with various reform drafts, the California Chamber of Commerce, in conjunction with affected businesses and organizations and member of the Prop 65 defense bar (the Coalition) attempted to collaborate with OEHHA to improve the proposals and address the business community's numerous concerns. Our analyses of these initial comments were discussed in the following Client Alerts: April 20, 2015, Jan. 13, 2015, Nov. 21, 2014, Oct. 14, 2014. The Coalition consistently demonstrated that OEHHA's original proposals would make compliance with Prop 65 more difficult, create new avenues for litigation, and have a substantial negative substantive and financial impact on virtually all companies doing business in California.  

The Coalition spoke and (in certain important instances) OEHHA listened. The new proposed regulation incorporates changes that could benefit the business community; however, work remains to be done. Below are highlights addressing the most notable revisions (or lack thereof):

Sell-Through (Coalition-Supported Development): The current proposal states that a warning for a consumer product manufactured prior to the effective date is deemed to be clear and reasonable if it complies with the September 2008 revision of the "clear and reasonable warnings" article. This is a Coalition-Supported development as, previously, the proposal provided that business owners had two years to allow products that are currently in the market to "sell through." The Coalition had argued that this was an insufficient amount of time to allow for products to exit the marketplace, and asked for an unlimited sell-through period for products in the supply chain at the time the regulation becomes effective.

Supplemental Information (Coalition-Supported Development): The current proposal provides that supplemental information may not "contradict" the warning. The prior proposal stated that supplemental information may not "contradict, dilute or diminish" the warning. The Coalition raised objections with the terminology "dilute" and "diminish." More specifically, the Coalition argued that because OEHHA had failed to define what constitutes "information" that is "supplemental to the warning" or that may "contradict, dilute or diminish the warning," the requirement was unconstitutionally vague and, thus, in violation of the First Amendment. The Coalition proposed reverting back to the language in a previous discussion draft, which simply stated that: "In no case shall supplemental information contradict the warning provided pursuant to Section 25249(e)." See September 23, 2014, Section 25601(c).

Grandfathering (Coalition-Supported Development): The current proposal states that warnings provided pursuant to a court-approved settlement or final judgment are "clear and reasonable." The Coalition had previously asked that OEHHA revise the proposed warning regulation to state, unequivocally, that court-approved Prop 65 warnings are "clear and reasonable," and can be relied upon by both settling and non-settling parties. While the new regulation makes clear that complying with a court-ordered warning method is "clear and reasonable," this is limited to parties to the court-ordered settlement.

Retailer Grace Period (No Change): The current proposal states that a retail seller shall not be deemed to have actual knowledge of any consumer product exposure that is alleged in the notice until two business days after the retail seller receives the notice. The Coalition's request for a longer grace period was ignored.

Safe Harbor (No Change): The current proposal states that businesses may warn in any manner they please so long as they can defend the warning as "clear and reasonable," but does not expand upon existing regulatory guidance regarding what is clear and reasonable. 

Listing for 12 Chemicals (Development Generally Supported By Coalition): The current proposal eliminates the requirement that companies disclose the presence of one or more of 12 listed chemicals in their products. The new proposal provides that warnings (including industry specific warnings) must name one or more of the listed chemicals for which the warning is being provided. The Coalition finds this revision to be more workable and makes it less likely that plaintiff attorneys will bring suit for a company's failure to disclose all of the listed chemicals found in a product.   

Consumer Product Label Method of Transmission (Coalition-Supported Development): The new proposal allows consumer product warnings to be provided on "a label that complies with the content requirements …" The prior version only provided for labels to be provided "on the product."

Owner's Manual (No Change): The new proposal does not accept the Coalition's proposed language to make it clear that it is permissible to provide warnings in an owner's manual. 

Warning Symbol (Minor Change Supported By Coalition): The proposal continues to require the use of an American National Standards Institute (ANSI) pictogram, but OEHHA has modified the proposal slightly so that pictograms can be provided in black and white if the sign, label or labeling for the product is not printed using the color yellow. The Coalition had argued that it would be more sensible to use the symbol "P65" or "65" which would provide more information as to why the warning is being given.

This proposed regulation will be subject to a 60-day comment period ending January 22, 2016. A public hearing on the proposal will be held on January 13, 2016.