The modifications significantly change both the AG’s Regulations and OEHHA’s Clear and Reasonable Warnings provisions.

California’s Office of Administrative Law recently approved important changes to two sets of Proposition 65 regulations. First, regulations governing lawsuits brought by private enforcers were modified, including provisions relating to settlements of private party lawsuits. Second, the Office of Environmental Health Hazard Assessment (OEHHA) adopted a substantive rewrite of the warning regulations that has been in the works for the last few years. Although the new warning regulations do not become enforceable for two years, anyone subject to the warning requirements under Proposition 65 has the option to comply with the regulations now, and most businesses will want to consider planning for compliance with the changes well in advance of August 2018.

New Attorney General Regulations Governing Private Party Lawsuits

In an effort to address concerns expressed by a number of stakeholders regarding Proposition 65 settlements in private actions brought pursuant to 25249.7(d) of the statute, the attorney general (AG) proposed a number of amendments to the private enforcement regulations. The stated intent of the changes was to

• ensure that OEHHA receives the civil penalties provided by Proposition 65;

• limit the diversion of statutory penalties to private plaintiffs or third parties;

• increase transparency of settlements, and ensure additional payments (beyond civil penalties) are spent on matters with a sufficient nexus to the litigation and the state; and

• reduce incentives for private plaintiffs to bring and settle cases that do not confer a substantial public benefit, without discouraging cases and settlements that do confer such benefit.

The changes include a new definition of a “private enforcer,” as well as modifications to aspects of the relief available in private party settlements, including attorney fees and payments not identified as civil penalties.

A “private enforcer” is now defined and includes any person settling any violation alleged in a notice of intent to sue that is given pursuant to Section 25149.7(d)(1). Thus, even if no action is filed, by virtue of providing a 60-day notice, the noticing party is subject to the private enforcement provisions of the AG’s regulations.

More importantly, the settlement guideline provisions have been changed. For instance, the provision providing for a presumption that reformulation of a product constitutes a “public benefit” now includes language regarding a showing that some of the products were above an agreed-on reformulation standard at some time relevant to the litigation. There are also new provisions regarding the AG’s review of penalties, including an explicit statement that civil penalties shall not be “traded” for payments of attorney fees, and where a settlement provides for additional settlement payments to a plaintiff or third party, such payments are viewed as an “offset” to the civil penalty that must be shown to be in the public interest. The AG also establishes a guideline that the total amount of any additional settlement payments should not exceed the amount of any noncontingent civil penalty. Additional new provisions also address documentation, accountability, and disclosures associated with the use of funds paid as additional settlement payments.

OEHHA’s New Warning Regulations

OEHHA has been working on revising the “clear and reasonable warning” provisions of the Proposition 65 regulations since at least early 2014. The modifications provide new guidance and specificity with respect to the “safe harbor” content of a clear and reasonable warning, as well as the methods of transmission. For instance, the new regulations provide more specifically tailored warnings for more than a dozen types of exposures, including the following:

• Food and dietary supplements

• Alcoholic beverages

• Food and beverage warnings at restaurants

• Prescription drugs and emergency medical care

• Dental care

• Raw wood products

• Furniture

• Vehicles

• Recreational vehicles

• Enclosed parking garages

• Amusement parks

• Petroleum products

• Service stations

• Designated smoking areas

In recognition of the nature of these warnings and the number of products and locations to which the warnings may apply, the date that the new regulations take effect is August 30, 2018. Until then, businesses may comply with either the new regulations or the version of the regulations that existed immediately prior to these regulatory changes.

The new provisions are going to change the look and language of Proposition 65 warnings generally, at least for those businesses that want to provide warnings that meet the regulatory definition of what is deemed to satisfy the clear and reasonable warning requirement. The new provisions require a symbol—a yellow triangle with an exclamation point—and provide for the identification of at least one chemical by name in most warnings. Online retailers and sellers will also have new provisions relating to safe harbor warnings, including direction on prominently displaying a warning to a purchaser prior to completing an online purchase.

Given the scope of Proposition 65 and the nature of these warnings, the two-year window to fully implement the new warning provisions may prove to be a significant challenge for some businesses.