Companies throughout the United States need to comply with California Proposition 65. Formally known as the Safe Drinking Water and Toxic Enforcement Act of 1986 and commonly referred to as “Prop 65,” Proposition 65 is a state law that establishes warning and disclosure requirements for companies that sell products containing chemicals identified as potentially hazardous by the California Environmental Protection Agency (Cal EPA).

Proposition 65 applies (or can apply) to companies throughout the supply chain—from suppliers and manufacturers to distributors and retailers—and it applies to companies in all industries that are involved in the sale of food products and consumer goods. From dietary supplements and cosmetics to cleaning products, and from children’s products to sporting goods and yard tools, numerous types of products may need to carry warnings about “listed chemicals” in order to comply with California law.

“California’s Proposition 65 presents significant litigation risks for companies nationwide. Not only can companies face enforcement actions initiated by the California Attorney General, but private citizens and plaintiffs’ law firms can sue companies under Prop 65 as well. Enforcement actions and lawsuits can involve a wide range of compliance issues, and they can pose risks for substantial liability exposure.” – James Bell, Senior Trial Attorney Oberheiden P.C.

When facing an enforcement action or lawsuit under Proposition 65, building a successful defense requires a strategic approach that is custom-tailored to the circumstances at hand. The specific defenses companies have available depend on the unique circumstances of each case; and, to avoid unnecessary liability, companies must make informed decisions about when to target favorable settlements and when to prepare their defenses for trial.

Companies that Sell Consumer Products to California Residents Must Comply with Proposition 65

As a general rule, companies that sell consumer products to California residents must comply with Proposition 65 and the regulations promulgated thereunder. As the California Office of Environmental Health Hazard Assessment (OEHHA) explains:

“Proposition 65 requires the State to publish a list of chemicals known to cause cancer or birth defects or other reproductive harm. . . . [and] requires businesses to notify Californians about significant amounts of chemicals in the products they purchase, in their homes or workplaces, or that are released into the environment. . . .

“The list contains a wide range of naturally occurring and synthetic chemicals that are known to cause cancer or birth defects or other reproductive harm. These chemicals include additives or ingredients in pesticides, common household products, food, drugs, dyes, or solvents. Listed chemicals may also be used in manufacturing and construction, or they may be byproducts of chemical processes, such as motor vehicle exhaust.”

In short, Proposition 65 is extremely broad in scope. At present, there are more than 800 chemicals on the list maintained by the OEHHA. To comply with Proposition 65 with respect to listed chemicals, companies must generally either:

• Include compliant warning notices on their products; or,
• Establish compliance with one of the quantity-based “safe harbors” under Proposition 65.

Companies that bring products to market in California without establishing Proposition 65 compliance can face both public and private enforcement litigation as discussed above. In many cases, companies that are accused of violating 65 will face accusations related to their other marketing and environmental practices as well. As a result, facing litigation under Prop 65 can lead to substantial liability exposure, and targeted companies must defend themselves effectively to avoid summary judgment or an unfavorable verdict.

California Proposition 65 Applies to All Types of Consumer Goods

Proposition 65 effectively applies to all types of consumer goods. If any consumer good contains a listed chemical, then its manufacturer (and other companies in the good’s supply chain) must assess their statutory and regulatory compliance obligations. As noted in the quote for the OEHHA above, this includes not only goods that consumers use at home, but also goods that can present risks for workplace exposures.

California Proposition 65 Applies to More Than 800 Chemicals

At present, Proposition 65 applies to more than 800 chemicals. While certain chemicals have been removed from the Proposition 65 list (or “delisted”), many chemicals have remained on the list for decades. The OEHHA regularly lists new chemicals as well, and this makes it critical for companies to monitor the list so that they can maintain compliance on an ongoing basis. Some of the most commonly used chemicals currently included on the Proposition 65 list include:

• Acrylamide
• Bisphenol A (BPA)
• Phthalates
• Formaldehyde
• Cadmium
• Lead and lead compounds
• Mercury

This is just a small sampling. The list includes numerous other chemicals identified as potentially dangerous by the OEHHA, including potential carcinogens and reproductive toxins. Reproductive toxicity has been a focus area of Prop 65 litigation in recent years, with multiple companies facing lawsuits involving acrylamide, BPA, and other chemicals identified as possible reproductive toxicants under California law.

California Proposition 65 Applies to In-State and Out-of-State Businesses

By its nature, Proposition 65 applies to business both in and outside of California. This means that companies throughout the United States can face state enforcement actions and claims under the law’s private enforcement provisions. Due to the complexity of these cases and the potential liability risks involved, it is imperative for targeted companies to engage defense counsel with specific and extensive experience in this area.

Companies and Trade Groups Have Attempted to Fight Proposition 65 for Decades

Due to the substantial compliance obligations that Prop 65 creates—and the substantial liability risks that come with these obligations—companies and trade associations have fought the statute for decades. However, while these efforts have proven successful in isolated circumstances, Proposition 65 compliance remains a substantial burden for companies nationwide.

This is important background information for targeted companies to keep in mind. While Prop 65 in its current form is not necessarily bulletproof, targeted companies must make informed decisions about whether it makes sense to fight the statute itself or fight the allegations against them.

Public and Private Enforcement Actions Pose Substantial Risks for Targeted Businesses

In both public and private enforcement cases, facing allegations of Prop 65 noncompliance can pose substantial risks. Targeted businesses can face civil penalties of up to $2,500 per violation per day. Additionally, in private enforcement cases, California residents do not need to be able to prove an actual injury. These two factors combined make Prop 65 an extremely potent weapon for plaintiffs’ law firms in California, and we have seen an uptick in private right of action cases under Proposition 65 in recent years.

Targeted Businesses Can Also Face Liability Under Other California and Federal Environmental Laws

As mentioned above, businesses targeted in Prop 65 enforcement actions will often face other claims as well. Selling products that contain potentially hazardous chemicals can implicate a host of environmental laws at the state and federal levels. This includes not only laws focused on protecting consumers, but also laws that protect natural resources. In cases involving actual exposure, toxic tort lawsuits are a very real concern as well—and, here too, companies across the country can face high-stakes litigation in state or federal court.

What Companies Can (and Should) Do to Effectively Manage Their Proposition 65 Litigation Risk

With all of this in mind, what can (and should) companies do to effectively manage their risk of facing litigation under Proposition 65? To protect themselves, manufacturers and other companies should prioritize all of the following:

Compliance Counseling

Companies that need to comply with Prop 65 should engage a law firm that regularly counsels clients on all aspects of California environmental compliance. A law firm that routinely helps clients understand and address their specific compliance obligations will be able to assist with developing a custom-tailored compliance program. A law firm with relevant experience will be able to assist with negotiating indemnity agreements and other appropriate contractual protections as well.

Compliance Program Implementation

After developing a custom-tailored compliance program, the next step is implementation. Here too, companies should work with legal counsel that routinely advises clients in this area. When companies diligently implement Proposition 65 compliance programs—and when they have the documentation to prove it—this can help facilitate an efficient and favorable resolution in the event of a public or private enforcement action.

Compliance Monitoring

Once companies have implemented Proposition 65 compliance programs, they must proactively monitor their compliance efforts on an ongoing basis. If this monitoring uncovers any compliance failures—or the need for any additional compliance efforts—companies should engage their environmental legal counsel’s services promptly.

Compliance Documentation

When facing enforcement actions under Proposition 65, being prepared to affirmatively demonstrate compliance is key. With this in mind, along with maintaining robust compliance programs, companies should also prioritize maintaining robust compliance documentation.

Litigation Preparedness

Finally, in light of the risk of facing both public and private enforcement actions, companies that are subject to Prop 65 compliance should ensure that they are prepared to respond to allegations of noncompliance when necessary. Among other things, this means ensuring that they are prepared to promptly implement a legal hold and that relevant personnel know what to do (and what not to do) when litigation is pending.