TORT AND INSURANCE LAW
By MICHAEL HAZEL, HEIDI RUCKRIEGLE, AND ZACH LASS
On August 30,2018, new regulations took effect implementing California's Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). This article addresses these changes and their impacts on Colorado's outdoor industry.
California's Safe Drinking Water and Toxic Enforcement Act of1986 (Proposition 65) is a California law that has significant legal and financial implications for every industry doing business in California, even those not physically located there. The law requires that businesses provide individuals purchasing goods in California with a "clear and reasonable warning" before exposing them to chemicals in products or places that could cause cancer or reproductive toxicity.1
has a booming outdoor industry,
This article provides an overview of Proposition 65 and its recent regulatory changes, with an emphasis on the law's relevance to Colorado and the outdoor industry and its impacts on businesses throughout the supply chain. It includes recommendations on best business practices for the outdoor industry in light of the new regulations.
What is Proposition 65?
Proposition 65 created a complex regulatory regime that touches a wide range of businesses. Multiple components of the law apply to those in the outdoor industry. The consequences for noncompliance are significant and extend beyond the physical state of California to impact the legal obligations of Colorado companies.
655 is a California law passed by direct
voter initiative.6 This means that the citizens of
California successfully proposed the law without support from
California's governor or legislature, and a majority
voted the proposal into law. Proposition 65 stemmed from
growing concern about exposures to toxic chemicals in water,
places, and products.7 While California already had a number
of programs in place designed to protect people against
harmful chemical exposures, many residents believed the state
was not doing enough.
The primary goals of Proposition 65 are to protect California drinking water sources from toxic chemicals that may cause cancer or birth defects, and more broadly to reduce or eliminate people's exposures to those chemicals, for example in consumer products, by requiring warning labels.10 The labeling requirement is designed to help Californians make informed decisions about potential exposure to chemicals from the products they use and the places they go, but it impacts every state with industry doing business in California.11
The law aims to achieve these goals in two ways. First, it generally prohibits businesses from knowingly discharging or releasing into water or onto land chemicals that are known to cause cancer or birth defects.12 Second, it requires businesses with 10 or more employees to provide a "clear and reasonable" warning before exposing people to such chemicals in products or places.13 This requirement extends beyond California businesses and impacts Colorado manufacturers and retailers selling in California or online to Californians. Although the law does not ban or restrict the sale of products containing these listed chemicals, its significance lies in its warning-label requirement, which applies to many common outdoor products.14
Notably, just because a product bears a Proposition 65 warning does not mean, by itself, that the product is unsafe. The government has explained that "[y]ou could think of Proposition 65 more as a 'right to know' law than a pure product safety law."15 This means that, at its core, the law is focused on providing consumer information rather than attempting to deter purchases.
Enforcement and Consequences of Noncompliance
To promote compliance with these two statutory mandates, Proposition 65 contains comprehensive enforcement mechanisms and establishes significant penalties for businesses that violate the law.16 The Office of Environmental Health Hazard Assessment (OEHHA), part of the California Environmental Protection Agency, administers Proposition 65.17 The state government and private parties can enforce Proposition 65-even against defendants that are outside California or the United States.18
Proposition 65 applies to any entity in the outdoor industry with more than 10 employees doing business in California, including manufacturers, suppliers, importers, distributors, or retailers selling products to California customers, regardless of whether they have a physical presence in California. This is because California courts and other authorities interpret the phrase "in the course of doing business" broadly to include "any act or omission, whether or not for profit, or any act or omission of any employee which furthers the operation of the business."19 While this statutory definition may lack precision, OEHHA intended for it to broadly encompass most "activities of persons who have ten or more employees. . . ."20 In other words, almost every business activity that potentially exposes consumers to products containing Proposition 65 chemicals will likely qualify as "business" under the law. This broadly defined mandate encompasses many Colorado-based outdoor industry companies.
And the consequences for noncompliance are significant. Businesses violating Proposition 65 can face penalties up to $2,500 per day for each violation.21 Because of this high risk, it is critical that businesses in the outdoor industry understand Proposition 65 and take active measures to ensure compliance.22
California Attorney General's Office has primary
enforcement power, but in larger cities (with populations
exceeding 750,000) the district attorney or city attorney may
also enforce Proposition 65.23 Significantly, a
private individual acting in the public interest can file a
lawsuit against a business alleged to be in violation of this
law.24 The importance of these "public
interest" lawsuits cannot be overstated. It is estimated
that private parties bring over 85% of Proposition 65
actions.25 This is largely due to the financial
incentive embedded in the law: successful private parties are
guaranteed 25% of any civil penalty awarded. As a
result, private parties may actively seek out instances of
noncompliance. Indeed, Proposition 65 actions have become
popular with California plaintiffs' attorneys, who have
recovered nearly $200 million on Proposition 65 lawsuits
The Proposition 65 List
further its goal to protect and inform consumers regarding
exposures to potentially hazardous chemicals, Proposition 65
regulates two specific categories of chemicals: those
determined to have a "one in 100,000" chance of
causing cancer over a 70-year period, or those with the
potential to cause birth defects or other reproductive
harm.29 These two categories of chemicals
make up the Proposition 65 list. The list is updated at least
once every year
Chemicals may be added to the Proposition 65 list if they are determined to cause cancer, birth defects, or other reproductive harm by any of the following authorities: (1) an independent committee of scientists and health professionals, based on a review of the most current scientific information and considering public comments;33 (2) an organization designated as an "authoritative body";34 or (3) the California Labor Code.35 In addition, a chemical can be added to the list if a...