On November 16, 2018, California’s Office of Environmental Health Hazard Assessment (OEHHA) proposed amendments to Proposition 65 (Prop 65) regulations setting forth the circumstances when a “retail seller” is required to provide a consumer product exposure warning.  Retail sellers are defined under the regulations as:

[A] person or business that sells or otherwise provides consumer products directly to consumers by any means, including via the internet. For purposes of this article, a retail seller includes those functions of a business involved in the sale of consumer products, including foods, directly to consumers, even if the business or facility is primarily devoted to non-retail activities.

Cal. Code. Regs. tit. 27, § 256001.1.  Under the amended regulations, manufacturers, producers, packagers, importers, suppliers, and distributors have primary responsibility for complying with Prop 65 requirements.  Retail sellers can be responsible for placement and maintenance of consumer product exposure warnings only under specified conditions set forth in the regulations.  OEHHA states that it has proposed these clarifying amendments in response to a number of questions and requests for clarification it has received regarding these conditions.  OEHHA scheduled a public hearing on the amendments for January 3, 2019, from 10:00 a.m. to 12:00 p.m. in Oakland, California.  Comments on the proposed amendments are due by January 11, 2019. 

Background

When OEHHA revised the Prop 65 regulations, it created new requirements setting forth the conditions when retail sellers were responsible for providing warnings, with the intent of minimizing Prop 65 burdens on such retail sellers.  Under Cal. Code Regs. tit. 27, Section 25600.2(b) and (c), manufacturers, producers, packagers, importers, suppliers, and distributors can satisfy warning requirements themselves, or provide written notice with warning materials to the authorized agent of the retail seller -- effectively transferring warning responsibility to the retail seller. 

Considering the complex chain of commerce and the fact that a manufacturer may not know the ultimate retail seller that is selling the consumer product for which a warning is required, OEHHA is proposing to amend the regulations to “clarify that intermediate businesses in the chain of commerce may satisfy their obligation to provide a warning by providing a written notice and warning materials directly to either the authorized agent for the business to which they are selling or transferring the product, or to the authorized agent for the retail seller.”  Initial Statement of Reasons (ISOR) at p. 4.  OEHHA also is proposing a new Section 25600.2(c)(2) to clarify that when “a business has not designated an authorized agent, the manufacturer, producer, packager, importer, supplier, or distributor may serve the notice on the legal agent for service of process for the business.”

OEHHA also is proposing clarifying language to Section 25600.2(f) regarding the definition of “actual knowledge.”  Currently, Section 25600.2(e)(1)-(5) sets forth the exceptions when a retail seller is responsible for providing consumer product exposure warnings.  One of those exceptions is when the retail seller “has actual knowledge of the potential consumer product exposure requiring the warning, and there is no manufacturer, producer, packager, importer, supplier, or distributor of the product who:  (A) Is a ‘person in the course of doing business’ under Section 25249.11(b) of the Act, and (B) Has designated an agent for service of process in California, or has a place of business in California.” 

OEHHA is proposing two modifications to Section 25600.2(f) regarding the definition of “actual knowledge” in this context.  First, OEHHA proposes to clarify the level of specificity for “actual knowledge” such that the basis for “actual knowledge” of the retail seller must be of “sufficient specificity for the retail seller to readily identify the product that require a warning.”  OEHHA states this level of specificity is consistent with what is required in Prop 65 notices of violation involving consumer product exposures.

OEHHA also is proposing to limit those persons whose specific knowledge of a consumer product exposure can be imputed to the retail seller.  Specifically, OEHHA’s proposal would provide that “actual knowledge” requires specific knowledge of the consumer product exposure to be received either by an “authorized agent” for the organization, or an employee in a position of sufficient responsibility that his or her knowledge can be imputed or attributed to the retail seller.  OEHHA states that this “modification would simply clarify OEHHA’s intent to incorporate existing case law and legal principles under which knowledge gained by an agent or employee with a legal relationship may be attributed to the business.”  ISOR at p. 6.

Commentary

OEHHA’s prior guidance (p. 55) regarding the scope of “actual knowledge” stated that “a retail seller may acquire knowledge of an exposure that requires a warning through news media, its customers or a trade association” which may have included lower level employees who may not fully understand the information to have such knowledge imputed or attributed to the retail seller.  The proposed changes are likely welcome as the regulations as adopted left many in industry concerned about the circumstances and procedures necessary to comply with the new requirements applicable to retail sellers.  It is encouraging that OEHHA has proposed regulations in response to questions raised, and hopefully additional guidance and clarifications will be forthcoming as the practical realities of these new regulations demonstrate the need for additional amendments.