Proposition 65

CalChamber Leads in Legislative, Regulatory, Judicial Arenas to Bring Law in Line with Original Intent

Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, is the most far-reaching consumer “right to know” law in the nation. Proposition 65 requires California businesses with 10 or more employees to provide a clear and reasonable warning before knowingly and intentionally exposing individuals to chemicals known to cause cancer and/or reproductive toxicity.

The statutory and regulatory provisions in Proposition 65 have no analog in any California statute or common law. Proposition 65 is unique because it allows private citizens to act as private attorneys general, enforce a public health statute on behalf of the California public, retain a portion of civil penalties that otherwise would be earmarked for the public treasury, and places the burden of proof onto defendants to prove their innocence. These features inherent to Proposition 65 have led to the growth of a multimillion-dollar cottage industry of “citizen enforcers” or “bounty hunters” who enrich themselves by abusing the statute’s warning label requirements as a pretext to file 60-day notices and lawsuits in order to exact settlements from businesses.

The business community’s concern regarding Proposition 65 litigation abuse is supported by statistical data from the California Attorney General’s Office in its Annual Summary of Proposition 65 Settlements. Every year, businesses pay bounty hunters tens of millions of dollars in settlements — not necessarily because the businesses did anything wrong, but too often because it is far too expensive to defend a Proposition 65 lawsuit under the “guilty until proven innocent” legal framework. In 2022, there were more than 860 Proposition 65 settlements totaling over $25.7 million. And since 2010, businesses have settled more than $200 million in Proposition 65 lawsuits.

Basic Requirements of Proposition 65

Although Proposition 65 also prohibits listed chemicals from being discharged to sources of drinking water, the law is best known for its broadly crafted warning requirement. To comply with Proposition 65’s warning requirements, a business must follow three basic steps:

• Assess whether it releases, or its products contain, Proposition 65-listed chemicals;

• Determine whether individuals, whether consumers or bystanders, may be exposed to a listed chemical at levels that necessitate a warning (that is, “when” to warn); and

• Determine what the warning must say, if a warning is required (that is, “how” to warn).

California allows a business to use a chemical without providing a warning as long as exposure does not exceed a specified threshold level. To be clear, the mere presence of a Proposition 65-listed chemical does not trigger the warning requirement; instead, the threshold question is whether the chemical would expose persons at levels that would require a warning.

Of the approximately 900 substances that are on the list of chemicals known to cause cancer, birth defects or other reproductive harm, the Office of Environmental Health Hazard Assessment (OEHHA) has developed threshold levels for about 300 to guide businesses in determining whether a warning is necessary. If the chemical is at or below the levels listed, the business has a “safe harbor” from providing a warning.

Companies often warn under Proposition 65 because not doing so brings substantial liability, even if the exposure to a Proposition 65-listed chemical is de minimis. Private enforcers alleging exposure to a Proposition 65-listed chemical need only demonstrate the presence of the Proposition 65-listed chemical and include a certificate of merit. It is the business that carries the heavy burden of proving that the exposure is below the safe harbor level, a highly technical and often difficult-to-prove analysis that rarely justifies the high cost. The “guilty until proven innocent” liability structure therefore incentivizes bounty hunters to troll businesses looking for easy marks to extract settlements, knowing a company will do what is most financially prudent and settle. Additionally, Proposition 65’s liability framework leads companies to warn out of an abundance of caution, leading to an over-warning marketplace where the average consumer either perceives “everything must cause cancer,” or worse, “nothing does” and ignores all warnings.

Proposition 65 Reform in California Illusory

As originally adopted by the California voters, Proposition 65 prohibits any amendments by the California Legislature unless such amendments are approved by a two-thirds majority in both the Senate and Assembly. Further, any amendment must “further the purposes” of Proposition 65. These twin limitations have prevented any serious efforts at reform for decades in the California Legislature.

Even minor Proposition 65 reform failed in the 2022 legislative session when Assemblymember Mike Fong (D-Monterey Park) introduced AB 2743, a bill seeking modest changes to Proposition 65, requiring additional notice to defendants and the factual information underlying the basis of a certificate of merit be provided to an alleged violator. The bill never even received a committee hearing,

CalChamber’s First Amendment Lawsuit Against California Attorney General

With year-after-year failures in the California Legislature to address known Proposition 65 problems, the California Chamber of Commerce took a different approach by filing a lawsuit against the California Attorney General challenging the need to warn for acrylamide in food and beverage products as a violation of the First Amendment.

At the heart of the issue is a growing number of bounty hunters exploiting the fact that acrylamide is a naturally occurring chemical formed in certain food and beverage products when cooked or heated. Common sources of acrylamide in the human diet include, among others, breakfast cereals, crackers, bread crusts, coffee, grilled or roasted asparagus, French fries, potato chips and other fried and baked snack foods, canned sweet potatoes, canned black olives, prune juice, roasted nuts, and toast. These bounty hunters have filed more than 500 60-day notices for alleged violations of the Proposition 65 warning requirement with respect to alleged exposures to acrylamide in food products.

In 2021, CalChamber successfully secured a preliminary injunction by the Federal District Court. The case was appealed to the Ninth Circuit, where CalChamber again prevailed on the merits with a favorable ruling on March 17, 2022. The intervenor in the case appealed again, this time to the U.S. Supreme Court. That decision is pending at the time of this article.

OEHHA Issues New Safe Harbor Warnings in Response to Lawsuits

OEHHA issued notices for two rulemakings fundamentally altering Proposition 65 safe harbor warnings for glyphosate and acrylamide after two major Proposition 65 litigation victories by the business community. (See National Association of Wheat Growers, et al. v. Becerra, 468 F. Supp. 3d 1247 (E.D. Cal. 2020), challenging warnings for glyphosate; and the California Chamber of Commerce v. Becerra , No. 2:19-cv-02019-KJM-EFB (E.D. Cal. Mar. 29, 2021), challenging warnings for acrylamide in food and beverage products.)

Both rulemakings break with the agency’s historical position that warnings shall contain an unequivocal statement that the chemical is “known” to cause cancer and/or reproductive toxicity and instead place the competing science in the warning for the consumer to decide.

OEHHA’s proposed rulemakings appear to be strategic due to pending litigation. The Initial Statement of Reasons as much as confirms this, stating that “OEHHA is aware of the District Court decision in the National Association of Wheat Growers case in which Plaintiffs challenged a potential Proposition 65 warning for glyphosate,” and that “OEHHA has developed the proposed regulation taking into account the concerns expressed in the District Court decision in that case.” (See Initial Statement of Reasons, Title 27, California Code of Regulations, Proposed Amendments to Article 6, Clear and Reasonable Warnings, New Sections 25607.48 and 25607.49, Warnings for Exposures to Glyphosate from Consumer Products dated July 23, 2021, p. 12.)

The CalChamber, the Consumer Brands Association and a large coalition of industries affected by these rulemakings submitted lengthy opposition letters articulating why both proposals are inconsistent with OEHHA’s longstanding approach to safe harbor warnings, not based in sound policy, and neither needed nor justifiable. (The CalChamber-led coalition letter re: glyphosate rulemaking can be found at https://oehha.ca.gov/media/dockets/20428/20504-california_chamber_of_commerce_consumer_brands_association_et_al_comments_re_warnings_for_exposure_to_glyphosate/calchamber_cba_coalition_comment_letter_-_glyphosate_warning.pdf. Coalition letter re: acrylamide can be found at https://oehha.ca.gov/media/dockets/20484/20548-consumer_brands_association_calchamber_et_al._comment_letter_re_proposed_amendments_to_article_6_clear_and_reasonable_warnings_acrylamide/consumer_brands_calchamber_et_al._prop_65_acrylamide_letter.pdf.)

Both rulemakings were adopted by OEHHA and approved by the Office of Administrative Law in 2022. Nevertheless, the CalChamber’s lawsuit continues as both safe harbors run afoul of the First Amendment. Forcing companies to warn for acrylamide in food and beverages is a violation of the First Amendment as acrylamide in food and beverages is not known to cause cancer in humans. As the National Cancer Institute (NCI) explains, “a large number of epidemiologic studies (both case-control and cohort studies) in humans have found no consistent evidence that dietary acrylamide exposure is associated with the risk of any type of cancer.” (See NCI, Acrylamide and Cancer Risk, https://www.cancer.gov/about-cancer/causes-prevention/risk/diet/acrylamide-fact-sheet.)

OEHHA Seeks to Fundamentally Change Short-Form Warnings

For years, the OEHHA has proposed regulatory amendment packages that it often describes as “merely clarifying existing law,” but which, from the perspective of the business community, often have undermined existing protections provided for businesses.

Such was the case on January 8, 2021 when OEHHA gave notice to the public of proposed “clarifying” amendments to Article 6, Clear and Reasonable Warnings Short-form Warnings. These “clarifying amendments” completely upended one of the most widely used and relied upon warning methods, known as “short-form warnings.” The CalChamber and Consumer Brands Association led a coalition of 119 organizations, representing tens of thousands of companies, opposing the agency’s major changes to Article 6 warning requirements on the basis that the proposed changes were not supported by substantial evidence, injected substantial confusion into the market, failed to consider reasonable alternatives, and imposed substantial financial burdens and additional litigation risks on businesses.

In December 2021, nearly a year after the rulemaking began, OEHHA published a notice of its plan to move forward — but with some notable modifications. Again, the CalChamber and coalition drafted comments opposing the entire rulemaking. Finally, on May 20, 2022, OEHHA announced that it was not moving forward with the proposed rule upending short-form warnings at that time. Notably, the agency publicly stated its intent to restart the rulemaking process at some later juncture. At the time of this publication, OEHHA has not restarted the rulemaking.

California Supreme Court Agrees with CalChamber

On December 21, 2022, the California Supreme Court agreed with the CalChamber and its coalition partners who submitted a letter pursuant to Rule 8.1125(b) asking the high court to deny a bounty hunter’s attempt to depublish its own case that they lost at both the lower court and appellate levels in Environmental Health Advocates, Inc. v. Sream, Inc., 83 Cal. App. 5th 721, 725, 299 Cal. Rptr. 3d 736, 741 (2022), review denied (Dec. 21, 2022).

In Sream, the Court of Appeal shed light on a decades-old issue under California Proposition 65: how should the statute’s warning requirement apply to consumer products that do not themselves contain a listed chemical but that may be used in conjunction with other products to create a listed chemical? Although the lead agency responsible for implementing Proposition 65 and the California Attorney General have provided guidance on this “indirect exposure” issue several times in different situations, private plaintiffs have not heeded this guidance and have continued to raise variations of this issue in new contexts. The Sream court correctly synthesized the prior guidance and Proposition 65’s implementing regulations to provide much-needed clarity for all interested stakeholders of Proposition 65, including plaintiffs, regulated entities, and the California public. The California Supreme Court agreed and denied the Environmental Health Advocates request to depublish the case, thereby preserving this critically important Proposition 65 appellate decision upon which businesses rely.

CalChamber Position

The CalChamber supports the underlying intent of Proposition 65, which is to ensure that consumers can make reasoned and informed choices when they purchase consumer products or enter certain establishments. Unfortunately, the intent of Proposition 65 has been severely undermined by ever-increasing attempts to use the law solely for personal profit, which has exploded into a multimillion-dollar cottage industry of lawyers abusing the statute. For this reason, the CalChamber ardently supports reforms to end frivolous, “shakedown” lawsuits, improve how the public is warned about dangerous chemicals, and strengthen the scientific basis for warning levels and initial listings.

Although achieving these goals legislatively has proven nearly impossible, the CalChamber remains committed to initiating or supporting legislative efforts that seek to restore the original intent of the law. Additionally, CalChamber will continue to utilize the judiciary to address Proposition 65 issues having a negative impact on businesses trying to operate in California. Whether the forum is legislative, regulatory or judicial, the CalChamber continues to lead on Proposition 65 issues for the business community to instigate changes necessary to bring the statute back in line with its original intent.

January 2023