PROPOSITION 65: TEN YEARS AFTER
by Christopher G. Foster

HISTORY
The Safe Drinking Water and Toxics Enforcement Act of 1986 (commonly known as Proposition 65) was adopted as an initiative by California voters on November 4, 1986 and became effective January 1, 1987.  Proposition 65 is codified in the California Health and Safety Code at Chapter 6.6, Section 25249.5 -- 25249.13.  Regulations implementing Proposition 65 are contained in Title 26 of the California Code of Regulations at Section 22-12000 through 22-14000.

Although California, in 1972, became the first state to deal with the dangers of handling hazardous waste when it adopted the California Hazardous Waste Control Act, by 1985 a report by the State Economic Development Commission noted several disturbing potential economic and health impacts of toxic substances on California.

In late 1985 the Sierra Club and the Environmental Defense Fund commissioned a survey that found over 80% of California voters reacted favorably to the concept of regulating the discharge of known cancer-causing chemicals and would support a "safe drinking water" initiative.  The two environmental groups then took the lead in drafting what would become Proposition 65.

Proposition 65's inclusive language makes it potentially the most widely applicable environmental statute.  Coupled with its inducements for private enforcement, its severe penalties and the fact that defendants bear the burden of proving that no prohibited exposure or discharge occurred, Proposition 65 presents unique and important issues for industry.

STRUCTURE
Proposition 65 imposes limitations on persons "in the course of doing business" regarding chemicals "known to the state to cause cancer or reproductive toxicity".

Proposition 65 required the Governor to publish a list of chemicals known to the State to cause cancer or reproductive toxicity by March 1, 1987.  The list must be revised and republished at least once a year.  At the end of 1987 the list contained 84 chemicals.  As of September 1996 the list had expanded to include 604 chemicals.

There are three ways a chemical may be added to the Proposition 65 list.  A state created Scientific Advisory Board ("SAB") serves as California's qualified experts for Proposition 65.  A chemical is added to the list if, in the opinion of the SAB, it has been "clearly shown through scientifically valid testing according to generally accepted principles to cause cancer or reproductive toxicity."  A chemical is also added to the list automatically if an "authoritative body" has formally identified it as causing cancer or reproductive toxicity.  Examples of authoritative bodies include the U.S. Environmental Protection Agency, the U.S. Food and Drug Administration and the National Institute for Occupational Safety and Health.  The third way a chemical may be added to the list is if an agency of the State or federal government requires it to be labeled or identified as causing cancer or reproductive toxicity.

With respect to the substantive limitations, first, Proposition 65 prohibits the knowing discharge of listed chemicals to a potential source of drinking water.  Second, it prohibits the knowing and intentional exposure of any individual to such chemicals without first giving a "clear and reasonable" warning.

The term "knowingly" is defined by regulation as referring "only to knowledge of the fact that a discharge of, release of, or exposure to a chemical listed pursuant to [Proposition 65] is occurring.  No knowledge that the discharge, release or exposure is unlawful is required."  22 C.C.R. § 12201(d).  The term "exposure" is defined to mean "to cause to ingest, inhale, contact via body surfaces or otherwise come into contact with a chemical.  An individual may come into contact with a chemical through water, air, food, consumer products and any other environmental exposure as well as occupational or workplace exposures."

The regulations implementing Proposition 65 specify the following language for warning notices:

"WARNING: This product contains a chemical know to the State of California to cause birth defects or other reproductive harm"

or,

"WARNING: This product contains a chemical know to the State of California to cause cancer."

Both the Attorney General and private enforcement groups have successfully prosecuted companies using language differing from the above or adding additional information that could act as a disclaimer.  Facilities that emit Proposition 65 chemicals into the air must include in their warning notices a map of the area surrounding the facility that outlines the approximate area of significant exposure to the chemical.

The restrictions in Proposition 65 are not applicable to businesses employing fewer than 10 employees or to government agencies.

ENFORCEMENT
The Attorney General, any district attorney and city attorneys of cities with populations over 750,000 may initiate enforcement actions to enjoin violations or threatened violations, and seek penalties against the violator.  In addition, an enforcement action "in the public interest" may be brought by a private citizen if such person has (1) first provided written notice of his intent to sue to the Attorney General and the district attorney and city attorney in whose jurisdiction the violation is alleged to have occurred and (2) 60 days after such notice, none of the government attorneys notified has commenced and is "diligently prosecuting" an action against the alleged violator.

The penalty for a violation of Proposition 65 is a maximum of $2,500 per day, per person exposed.  A reward or bounty based on 25 percent of the penalty collected is available to a private citizen who brings a successful enforcement action. 

The trend in Proposition 65 enforcement is toward actions brought by private citizens.  In this context two groups are emerging as private citizen enforcers.  One group includes private law firms traditionally associated with plaintiffs class action lawsuits.  The second group includes smaller environmental organizations who devote a majority or the entirety of their efforts to investigating and prosecuting Proposition 65 lawsuits.  Both groups are vastly aided by the fact that information on which Proposition 65 enforcement actions are based is generally publicly available.

CASE LAW
The following is a brief list of litigation involving the paint and coatings industry or of particular interest in analyzing Proposition 65.

People v. PPG, Industries (1981)
Settlement prohibited PPG from using certain forms of warnings and required payment of $75,000 in penalties and fees.

People v. The Sherwin-Williams Company (1994)
Action brought against manufacturers of spray paints, coatings and adhesives that expose users to toluene, for failure to warn.  Settlement required warnings, including detailed follow-up provisions where the warnings are provided by sending signs to retail stores and the payment of $1.2 million in penalties and costs. 

EDF v. Thompson & Formby (1992)
Action brought against manufacturers of paint strippers and removers for failure to warn of exposure to methylene chloride.  Settlement required that warning materials be provided to retailers and distributors and required extensive follow-up to ensure that retailers actually posted the warnings.  Thompson & Formby also paid $190,000 in costs and fees. 

As You Sow v. Akzo Nobel Coatings, Inc. (1995)
Action against manufacturer of paint products for failure to warn of exposure to toluene, formaldehyde, chromium, lead, silica and other chemicals.  Settlement required Akzo to label certain of its automotive paint and paint related products with Proposition 65 warnings and to pay $55,000 for educational purposes and a penalty plus fees and costs. 

People v. Gallo Vineyards, Inc. (1991)
Action against thirteen wineries for exposure of consumers to lead through the use of lead foil caps on the bottles.  Settlement required that wineries stop using lead caps and pay $700,000 into a fund to provide warning signs and a media campaign and an additional $200,000 in penalties.

People v. American Standard (1996)
Action against sixteen manufacturers of brass bathroom and kitchen faucets for violation of discharge requirement due to lead leaching into the drinking water transported by the faucets.  Although all defendants settled for a total of more than $2.5 million in penalties, fees and funding for educational programs, the California Supreme Court issued an opinion that water in residential faucets was a "source of drinking water" within the meaning of Proposition 65. 

The Attorney General is currently prosecuting manufacturers of antacids (e.g. Tums and Rolaids) for consumer exposure to lead.  A private enforcement group was denied intervention in the lawsuit. 

COMPLIANCE STRATEGIES
1 .  Determine What Operations and Products Are Covered by Proposition 65  

The initial step in devising a compliance strategy is to determine if, and to what extent, Proposition 65 covers your operations or products.  This step involves comparing the most current list of chemicals subject to Proposition 65 with all the chemicals and substances present in your operations and associated in any way with the products you manufacture or distribute.  To develop a comprehensive list of all the chemicals and substances present in your operation: (1) prepare an inventory of all raw materials, chemicals, products, intermediates or substances found or used in any service, maintenance or manufacturing operations; (2) review the MSDSs for all chemical components of products and mixtures used or manufactured by you; (3) investigate Proposition 65 chemicals that may not be obviously identified by the supplier or its MSDS; and (4) check with the suppliers of proprietary chemicals and products as to whether they contain any Proposition 65 chemicals.  In connection with preparing the list you should also review information submitted to public agencies such as SARA Title III filings, hazardous waste filings, Clean Air Act permit applications, and Toxic Hot Spots reports. 

 2 . Identify Persons Potentially Subjected to Exposure and Prohibited Discharges

Once the existence of a Proposition 65 chemical is determined in an operation or product, the next step is to determine whether any person may be exposed to the listed chemical and to identify the route of exposure and to determine if there is a potential for the listed chemical to reach a potential source of drinking water.  Exposure to the listed chemical may occur in numerous ways. 

For manufacturing, formulation or packaging operations, the employees engaged in such operations may be exposed. 

Exposure may also result to members of the community around the facility or to persons handling the operations' waste products. 

For products containing a listed chemical, exposure may result from consumers using the product as intended.

A determination should also be made whether discharges containing the listed chemical result from any manufacturing, formulating or packaging operations.

Any discharges that have the capacity to enter a potential source of drinking water should be carefully analyzed.  However, discharges to a publicly operated sewer system are exempt from Proposition 65 as long as all permit requirements and discharge limitations are met.  In this context you must be aware that any violation report may form the basis for a Proposition 65 enforcement action.

 3 . Assess Whether Risks to Exposed Persons Are Significant or Whether Discharges Are in a Significant Amount

This step is designed to determine whether the exposure to a Proposition 65 chemical or its discharge to a potential source of drinking water is significant enough to require a warning or to prohibit the discharge.  The burden of proving that an exposure or discharge is not significant is on the person or entity allegedly causing the exposure or discharge. 

The no significant risk determination procedure involves measuring exposures to the Proposition 65 chemical for each of the routes of exposure identified above, conversion of this exposure into an average daily dose and a comparison to the "no significant risk levels" established by the State or determined independently by your company.  A similar process is used to determine whether a discharge to a potential source of drinking water is "in a significant amount."

For substances known to the State to cause cancer, no warning is required for exposures where such exposure poses "no significant risk" assuming lifetime exposure at the level in question.  For substances known by the State to be reproductive toxins, no warning is required for exposures that will have "no observable effect" assuming exposure at one thousand (1,000) times the level in question.

Although the State has conducted risk assessments for certain Proposition 65 chemicals to determine no significant risk levels ("NSRL") and no observable effect levels ("NOEL"), these levels are published for guidance and assistance only.  Reliance on the State's NSRLs and NOELs will not insulate you from liability.  Even if an exposure to a Proposition 65 chemical is found to be below the published NSRL or NOEL, the burden of proof is still with the business responsible for the exposure.

Determination of defensible NSRLs and NOELs by an individual business involves rigorous scientific measurement and analysis.  It is unlikely that any business would be able to perform such analysis in-house.  In very general terms the steps required are (1) quantify the extent and duration of exposure of exposed individuals or classes; (2) measure the environmental concentrations or the amount of the Proposition 65 chemical in a consumer product or in a source drinking water; (3) convert the environmental concentrations or product amounts into daily exposures or uptakes; and (4) compare the daily exposures to State established levels or other scientifically justified levels.

  4 .  Develop a Mechanism to Provide Clear and Reasonable Warnings and to Address Prohibited Discharges

As an alternative to expending the time and money necessary to demonstrate that exposures to Proposition 65 chemicals satisfy the NSRL or NOEL, you may comply with the regulatory warning requirements.  The regulations implementing Proposition 65 state that in order for a warning to be "clear and reasonable" "the method employed to transmit the warning must be reasonably calculated, considering the alternative methods available under the circumstances, to make the warning message available to the individual prior to exposure."

The three classes of persons to whom warnings may need to be given are employees, those using a consumer product in a reasonably foreseeable manner and those in the community adjacent to your facility.  For employees appropriate warnings include product labels, signs and statements in MSDSs.  For consumers appropriate warnings include product labels, package inserts or signs at retail outlets.  Although not absolutely required both Proposition 65 and its regulations state a clear preference that consumer product warnings be supplied by the manufacturer.  Warnings to the adjacent community may be given by posting signs at the facility, mailing notices to residents or announcements in public media targeting the affected area.  If mailed notices or media announcements are used they must be provided at least once in any three-month period.

 5 .   Implement a System to Monitor Proposition 65 Developments and New Chemical Listings

Someone familiar with your products and operations should be assigned to monitor relevant developments.  The developments include additions or deletions to the list of Proposition 65 chemicals and any changes in the statutory or regulatory language.  You may wish to establish a system of periodic compliance audits and a new compliance audit should be conducted whenever a significant change occurs in your operations or in the components or ingredients of any of your products.  Compliance audits and all steps taken to ensure compliance should be documented.

FUTURE CONSIDERATIONS
Because Proposition 65 was adopted as an initiative any amendments thereto must be passed by a two-thirds "super majority."  In the most recent legislative session a bill was introduced that would have clarified the requirement for the contents of a notice of alleged violation and would have allowed a private plaintiff to go forward only if the Attorney General issued a finding that such enforcement action was "in the public interest."  The bill failed to achieve even a simple majority vote.  Thus, it seems unlikely that any near term changes to the law will occur.

The most effective strategies for avoiding Proposition 65's draconian penalties are vigilance in your understanding of the requirements of the law and its regulations and a thorough knowledge of your manufacturing, distribution, sales and handling practices.  With Proposition 65 an ounce of prevention is definitely worth a pound of cure.