California Proposition 65 - Another Year of Businesses Paying the Price

21 Jun 2016

The threat of settlement fees from notices of violation continue to loom over businesses in California.

On an annual basis, the California Attorney General provides summary information for the number of notices of violation that have been issued, the number of settlements, the individual settlement amounts, the proportion of settlements that went to attorney's fees (typically 70 to 100% of the settlement values) and other bits of information.

Provided below, we've compiled the summary data for the last 5 years of settlement reporting.

Total settlements were slightly down from last year (~$26-million down from $29-million). On an individual business level, these can be costly with settlements typically in the $15,000 to $60,000 range, while a few settlements were in the several hundred thousand dollar region. These settlement costs are just part of the total cost to industry for Proposition 65 compliance, which would also include the costs of legal assistance to respond to notices of violation or for going to court, screening, testing, and exposure analysis, evaluating/researching alternative chemicals for Prop 65-listed chemicals, changing product labels, etc. Compliance can certainly be a headache, and it will certainly take resources to evaluate compliance, but not addressing it can be far costlier! Even with proper due diligence, companies can still be targeted and will need to fight their way out of the grasps of bounty hunters.

Adding additional burdens to Proposition 65 compliance are several regulatory changes that companies need to be aware of, including:

1. The grace period for BPA ended on May 11, 2016: That means that any product that contains, or is suspected of containing, BPA is susceptible to being targeted for a notice of violation. This chemical is quite ubiquitous and companies need to be aware of whether it is present in any of their products. An additional issue is that, although OEHHA has proposed a dermal Maximum Allowable Dose Level (MADL) of 3 ug/day, it has not published an oral-route MADL and one is not expected for several years until the federal government completes additional low-dose toxicity evaluations. Even for products not meant for oral exposure, indirect oral exposure (hand-to-mouth) is a consideration that may be relevant to a range of products. That means that companies must either derive an oral-route MADL by compiling relevant reproductive toxicity data or put a warning label on their BPA-containing products.
2. The lead agency website: OEHHA has established a website for consumers that compiles additional product and chemical information on products with Proposition 65 warnings. Although OEHHA has indicated that companies do not need to produce any new data (or conduct additional testing), the agency can request information on: where the chemical(s) is located in the product, concentration of the chemicals, exposure calculations, or any "other relevant information".
3. Finally, OEHHA is revamping the Article 6: Clear and Reasonable Warning Requirements, which when adopted in November of this year, will bring in a number of new requirements for Proposition 65 warnings. These changes relate to various aspects of warning compliance, including the responsibility of providing warnings in the supply chain between manufacturers and retailers, methods of transmitting warnings, the content of warnings (i.e., the need for a warning symbol; listing the name of at least one of the chemicals present in the product for which a warning is required; including a link to OEHHA's lead agency website), specific warning text, and supplementary warning information. Once adopted, the regulation would come into effect after 2 years, giving companies time to comply with the new regulations.

A lot is going on in the Proposition 65 sphere, so if you have any questions, please do not hesitate to contact us! Intertek has critical experience in helping companies comprehensively address Proposition 65 compliance due diligence, such as screening and risk analysis of products, analytical testing, and exposure assessment/safe harbor development services.

Blogger:

Tom Jonaitis,
Scientific and Regulatory Associate, Intertek