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Only a few months after new provisions went into effect (on August 30th), California’s Office of Environmental Health Hazard Assessment (OEHHA) is proposing to clarify the rules governing retailer and supply chain responsibility for providing warnings under Proposition 65.  These provisions (found in Section 25600.2 of Article 6 of the Prop 65 regs) are intended to provide greater certainty to retailers, distributors, and manufacturers on who is responsible for providing Prop 65 warnings and when, but have sparked a fair amount of confusion due to several ambiguous provisions.

The 2016 amendments to the warning provisions of Prop 65 aimed to limit potential retailer burdens by providing manufacturers (and distributors) with two basic compliance options: (1) affix an appropriate warning to the product; or (2) provide written notice to the retailer regarding the required warning for the product.  The manufacturer/distributor then must obtain confirmation of the retailer’s receipt electronically or in writing.  Retailers that receive such a notice are only liable if they fail to post, obscure, or alter a warning provided to it.  Retailers also may be liable for products sold under their own brand name or if they have “actual knowledge” that a warning is required for a product and there is no other potentially responsible party.

Most notably, OEHHA is proposing three main changes:

First, OEHHA proposes to allow distributors to satisfy their obligation by providing written notice and warning materials either to the retailer or to the business to which they directly sell or transfer the product (i.e., the next distributor in the supply chain).  The current rule only provides that such notice be sent to “the authorized agent for the retail seller.”  The proposal responds to business concerns that “the original manufacturer, distributor, importer, or others in the chain of commerce may not know where or by whom the product will ultimately be sold to a consumer.”

Second, OEHHA would clarify that where a business has not designated an authorized agent to receive Proposition 65 notices, the notice may be served on the business’s legal agent for service of process.

Third, OEHHA addresses the concept of “actual knowledge” that may trigger retailer responsibility for providing a warning.  Currently, the regulations state that retailers must provide a warning when they have “actual knowledge of a potential consumer product exposure and there is no manufacturer, producer, packager, importer, supplier, or distributor of the product who is subject to the act, and who has a designated agent for service of process or a place of business in California.”  The definition of “actual knowledge” would be expanded to clarify that “actual knowledge” must be of “sufficient specificity for the retail seller to readily identify the product that requires a warning.  Consistent with traditional agency/corporate law, OEHHA also would confine the scope of employees whose knowledge may be attributed to the business to either “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.”

UPDATE:  OEHHA has extended the comment period through January 11, and scheduled a public meeting on January 3.

With the biggest sales day of the year shortly upon us, a new wave of on-line shopping Americans likely will see Proposition 65 warning notices for the first time.  Though California’s notorious program technically only applies within the state’s borders, Prop 65’s impact stretches well beyond.  Non-California businesses long have had to deal with Prop 65’s requirements since it was adopted by voter referendum in 1986.  Now, however, non-California consumers will be introduced to the ubiquitous warnings (that many Californians simply ignore) thanks to recent amendments emphasizing the need to provide warnings for internet purchases.  (For more details on the recent amendments, including the requirements for internet sales, please see my prior blog post.)

With an exponential increase in recent months of such internet warnings (and the fact that most businesses do not maintain “California-only” websites), consumers across the United States will be seeing many more of these warnings, perhaps for the first time, as they start their holiday shopping.  This article from Yahoo News (Article) — “‘This product contains chemicals known … to cause cancer’: How to navigate Prop 65’s scary warnings while toy shopping” — gives a sense of how consumers may respond … and, more importantly, hints at how such warnings should be understood.

In particular, consumers should keep in mind:

→ There are over 900 chemicals listed by the State of California as potentially causing cancer or reproductive/developmental harm.  Many of these substances are listed based on exposures (usually to laboratory animals) at levels hundreds or thousands of times higher than the level to which a person ever would be exposed.

→ Because of the punitive enforcement mechanisms of Prop 65 … and the proliferation of plaintiff “bounty hunters” that enforce the law … many businesses choose to provide a warning (even when one is not necessary) rather than defend a determination (based on sound science and common sense) not to provide a warning in a lawsuit at substantial cost.

→ Most importantly, remember that it “the dose that makes the poison.”  The existence of a warning does not mean that the product actually poses any kind of meaningful risk.  In most cases, the presence of a warning only means that there may be some exposure to a listed substance, mainly due to the practicality of providing a warning even when one is not necessary.

Prop 65 is intended to force businesses to provide a warning if they choose not to reformulate listed chemicals out of their products.  For many products, reformulation is not an option.  Moreover, it may be impossible to avoid miniscule amounts of certain substances, such as lead, which are ubiquitous contaminants in many materials.  Hence, there is a proliferation of warnings on products that are provided simply out of an abundance of caution and serve no real risk-reduction purpose.  (Which is why they are routinely ignored by many Californians … unfortunately, the rest of the country is not nearly as familiar with them.)

Now these warnings are coming en masse to the Black Friday shopping website of your choice ….  something to consider while enjoying your turkey this Thanksgiving!

With Democrats now in control of the House, Congressional oversight of EPA’s implementation of the 2016 amendments to the Toxic Substances Control Act (TSCA) is set to ramp up.  The expected incoming chair of the House Energy & Commerce Committee, Rep. Frank Pallone (D-NJ), announced yesterday his intentions to hold a hearing early next year to address what he calls the agency’s “broad efforts to undermine” the revised TSCA.  Pallone was an early House sponsor of the bipartisan 2016 legislation that fundamentally revised TSCA and triggered a series of regulatory requirements that EPA must fulfill within a relatively aggressive timeframe.

While signed into law by President Obama, the major framework rules that govern how the agency moves forward with prioritizing, evaluating, and regulating existing and new chemicals has fallen primarily to the Trump Administration.  Like any major legislation, the “new TSCA” embodies a multitude of compromises, with differing interpretations competing to be codified in regulations.  Over the last several months, numerous controversies have arisen over how the Trump EPA is implementing the law’s new requirements, most notably with respect to how EPA defines the scope of uses (intended and reasonably foreseen) that must be evaluated in assessing the risks of a given chemical.

Rep. Pallone’s most recent statement, in fact, was issued in conjunction with the release by EPA of the first of ten draft risk assessments for existing chemicals.

“The new draft risk evaluation of [Pigment Violet 29] raises serious red flags about the Trump EPA’s commitments to scientific integrity and protecting the public health.  EPA appears to have purposely discounted known environmental hazards, numerous foreseeable uses, and all manufacturing below reporting thresholds for the Chemical Data Reporting Rule.  This is disturbing but falls in line with the Trump Administration’s ongoing attempts to weaken the updated TSCA law. We look forward to holding hearings on this draft and EPA’s broad efforts to undermine the Lautenberg Act early next year.”

The remaining draft assessments for the first wave of chemicals to be evaluated under the revised TSCA are scheduled to be issued by or soon after the new year.  Given the precedent that these initial risk assessments will establish for future chemical reviews, they are expected to be a key focus of oversight by House majority Democrats.

 

 

 

 

California has added a new chemical to the list of substances known to the state to cause reproductive toxicity under Proposition 65, though the listing is not as broad as originally proposed.  While the Office of Environmental Health Hazard Assessment (OEHHA) is adding “Nickel (soluble compounds)” to the reproductive toxin list, at an October 11 meeting, the expert panel that reviews proposed listings (the Developmental and Reproductive Toxicant Identification Committee or DARTIC) rejected a proposed broader listing that would have included metallic nickel and insoluble nickel compounds.

Extensive comments submitted by the nickel industry detailed how the available scientific information, summarized in a 347-page “hazard information” document released in August, did not support a listing beyond certain soluble compounds of nickel.  The DARTIC agreed, voting unanimously against listing “Nickel and Nickel Compounds” broadly for any of the three reproductive toxicity endpoints the Committee reviews (developmental toxicity and male/female reproductive toxicity).

The decision to limit the listing to only soluble nickel compounds is significant for industries that produce nickel-containing materials, such as stainless steel and other metal alloys, as well as companies that use such materials to manufacture consumer and industrial products.  While metallic nickel and other nickel compounds currently are listed as carcinogens under Proposition 65, the regulations exclude nickel exposures via the route of ingestion.  OEHHA also has stated that the carcinogen listing for nickel does not include “nickel alloys” within its scope.  Perhaps most notably, a series of cases and settlement agreements have determined that stainless steel and other nickel-containing alloys do not require a Proposition 65 warning when used in a variety of “high contact” products, such as  jewelry, body piercings, and medical and dental implants.  These “no warning” determinations have been based on a conclusion that the potential exposure to nickel from various metal alloys — in which nickel is entrained within the alloy matrix and not readily released — is minimal and below the threshold required for warnings under Proposition 65.

A broader reproductive toxicity listing that included metallic nickel would have triggered a review of the “no warning” determinations for these materials, as well as the need to develop a maximum allowable dose level (MADL) to define the safe threshold level for exposure.

OEHHA staff now are charged with the task of defining the scope of the soluble nickel compounds listing.

 

Recent events have raised questions about the viability and utility of California’s infamous Proposition 65.  The past few months have seen courts reject the listing of glyphosate as a “known” carcinogen on First Amendment grounds and rule that federal nutrition policy preempted warnings for acrylamide in cereal, as well as the debacle surrounding whether cancer warnings are required for demonstrably non-carcinogenic coffee.  At root, all of these situations reflect a long-standing concern that Prop 65 often requires warnings that are contrary to sound science, as well as common sense.

The result has been a program that — while it has achieved some notable reformulation successes and, perhaps most significantly, focused needed public and corporate attention on the chemicals found in consumer products and the workplace — ultimately is failing at the goal of providing the public with useful information about chemical risks and actual dangers.  When it seems like Prop 65 warnings are everywhere, the meaning of those warnings lose their impact and undermine any credible sense of the term “risk.”

Enter the Accurate Labels Act (“ALA”), federal legislation sponsored by Sen. Jerry Moran (R-KS) and Reps. Adam Kinzinger (R-IL) and Kurt Schrader (D-OR).  The legislation, which was introduced (as HR 6022 and S 3109) in the Spring, would require that any state-mandated “covered declaration” (e.g., a warning requirement on a product label) be based on sound science and proper risk assessment.  Specifically, the ALA would require that warning requirements and similar mandatory labeling be “risk-based,” supported by the “best available science,” and subject to “appropriate weight of the evidence review.”  Significantly, the legislation would place the burden of proving, by a preponderance of the evidence, these elements on the party (government or private plaintiff) seeking to enforce a warning requirement in court.

Such a shifting of the burden of proof would reverse the signature aspect of Prop 65 that makes the law so frustrating for businesses and promotes the filing of so many frivolous nuisance suits:  that is, when confronted by a plaintiff’s data showing potential low level exposure to a listed substance, Prop 65 requires a defendant to prove in court that the exposure level is “safe” (at great cost and effort) or face stiff penalties.  This is true even if the defendant’s choice not to provide a warning is supported by a gold-plated risk analysis.  Hence, because of the heavy burden of proof on the defendant (with the attendant litigation costs), plaintiffs are incentivized to file a multitude of lawsuits often on dubious grounds and with no evidence of actual risk in the hope of extracting a quick settlement, a solution that many businesses see as far cheaper than “fighting the good fight.”  The ALA, by placing the burden on the plaintiff to show that a warning is required due to an actual risk, would steer Prop 65 lawsuits in a more meaningful direction, and away from the “quick buck” settlements that account for the vast majority of cases that are filed.

In doing so, perhaps most importantly, the ALA could make Prop 65 warnings meaningful and reflective of scientifically-based (and common sense) notions of “risk,” and eliminate much of the misinformation that has come to define the program.

The legislation has strong support from the industry-basked Coalition for Accurate Product Labels, but, like most legislation will face significant hurdles in the path to adoption, particularly in light of expected strong opposition from the California delegation.

 

By November 2021, the European Union (EU) is requiring that clothing, accessories, footwear and other textiles (such as furniture upholstery and bed linens) be essentially free of 33 “CMR” substances, including lead, cadmium, arsenic, hexavalent chromium, formaldehyde, several phthalates, and certain azodyes, aromatic amines, and hydrocarbons, among other substances often found in a variety of dyes, flame retardants, and stain- and water-proofing agents.  The restrictions, adopted on October 10 under Annex XVII of the EU’s REACH legislation, apply to textile products sold in the EU that may come into contact with human skin (or be inhaled or ingested) and aim to reduce exposures to substances identified as carcinogens, mutagens, or reproductive toxins (so-called “CMR” substances).

The regulation specifies acceptable de minimis levels for the 33 substances, ranging from as low as 1 mg/kg to 3,000 mg/kg.  Amounts above these levels, whether present intentionally or as an impurity, would be prohibited.

The restrictions do not apply to (a) products made exclusively of natural leather, fur or hide; (b) non-textile fasteners and non-textile decorative attachments; (c) second-hand clothing or other products; (d) carpets, rugs, and other textile floor coverings; or (e) medical devices or personal protective equipment, as well as disposable (i.e., single or limited use) textiles.

While a two year phase-in is provided to allow for manufacturers to conform to the new restrictions, a number of companies reportedly already have reformulated away from the listed substances and adopted (supposedly) less hazardous alternatives or are on track to do so.

The full text of the new EU regulation can be found here:  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.256.01.0001.01.ENG&toc=OJ:L:2018:256:TOC.

 

 

 

A new framework of fees to cover the costs of implementing the provisions of the 2016 amendments to the Toxic Substances Control Act (TSCA) will go into effect October 1st, under a final rule issued yesterday by EPA.  The fees are designed to collect $20 million annually from chemical manufacturers, importers, and processors, or about 25% of the expected agency costs of implementing the new mandates of TSCA, including chemical prioritization and risk evaluation tasks, as well as review of toxicity and exposure data submitted under an EPA test order.

These fees are intended to achieve the goals articulated by Congress by providing a sustainable source of funds for EPA to fulfill its legal obligations to conduct activities such as designating applicable substances as High- and Low-Priority, conducting risk evaluations to determine whether a chemical substance presents an unreasonable risk of injury to health or the environment, requiring testing of chemical substances and mixtures, and evaluating and reviewing new chemical submissions, as required under TSCA sections 4, 5 and 6, as well as and collecting, processing, reviewing, and providing access to and protecting information about chemical substances from
disclosure as appropriate under TSCA section 14.

Examples of some of the fees manufacturers (and sometimes processors) would pay include:

• $1.3 million for agency-initiated chemical risk evaluations;

• $2.5 million for manufacturer-requested risk evaluations for chemicals not on EPA’s 2014 TSCA Work Plan list, and $1.25 million for chemicals on the list;

• Between $9,800 and $22,800 for EPA review of toxicity, exposure, and other information companies submit in response to an EPA order, regulation, or negotiated agreement;

• $16,000 for EPA review of new chemicals (or certain new uses).

The final rule largely adopts the user fee program as proposed in February, with certain modifications to the procedures for identifying manufacturers subject to the fees, the fee calculation for chemical reviews requested by manufacturers (which are substantially higher than the fees for agency-initiated reviews), and the standard for identifying “small businesses” subject to fee reductions of approximately 80%.

The fee rule is the fourth and final of EPA’s “framework rules” for implementing the 2016 TSCA amendments.  The first three rules addressed chemical prioritization for risk assessment; the process for conducting risk evaluation; and update of the TSCA existing chemical inventory.

Further details and background information on the fee rule is available from EPA’s website:  www.epa.gov/tsca-fees.

Live from San Francisco, Kelley Green Law Blog is reporting today from the Prop 65 Clearinghouse 2018 Conference …. the largest annual assemblage dedicated to the cottage industry that is California’s “Proposition 65.”  Uniquely, the Clearinghouse conference brings together the full spectrum:  California regulators, the plaintiff’s bar, defense and corporate in-house counsel, and assorted other ne’er-do-wells. It’s a great opportunity to be reminded, from my usual defense counsel perch, of what motivates “the other side” and to gain insights into the latest trends, current developments, and future direction of the program.  Forthwith are some of those “insights,” observations and other musings from the front lines of Prop 65:

•  There are a lot of people here … more than ever before (a good sized ballroom’s worth) and the first year it is “sold out.” And not just folks from California.  Testament to the broad interest of the newly in force amendments and, generally, the long reach Prop 65 has for companies from all over and anyone whose products may be sold in the state (meaning:  almost everyone).

•  The best and most enlightened of the plaintiff’s bar do have a good story to tell, highlighting true successes of the program over the last three decades (perhaps the greatest of which is focusing attention, and more thoughtful analysis, on the chemicals in the products we use and encounter every day) … even if it is just part of the story and comes at a significant cost in not only economic terms, but in undermining ACCURATE risk communication and management.

•  Quote of the Day 1:  “Keep the blood pressure under control.”

• Prop 65 is entering a new phase with the advent of the amended warning requirements and emerging judicial challenges … some of the chief questions:  How will “private enforcers” react to departures from the new “safe harbor” warning text and mechanisms?  Will defense counsel launch a wave of preemptive challenges in the wake of the glyphosate “compelled false speech” First Amendment case?

•  Internet warnings very much warrant an entire panel session … for good reason as e-commerce expands exponentially.  Private enforcers are active web surfers!

•  Quote of the Day 2:  “how will the bounty hunt- errrr…. private enforcers react ….?”

•  What’s next from OEHHA?  Expanding warning website chemical “fact sheets.”  Increased use of “information request” authority to obtain from companies details on the source, concentration, route, etc. of the exposure for which a warning is being provided.  Guidance or amended regs on the duty to pass information through along the supply chain.

• The “safe use determination” process is seeing a significant uptick in interest.

• Overwarning is still a major issue despite the goal of the new amendments to reduce “prophylactic warnings.”  Of course it is – the amendments did nothing to address the main issue with Prop 65 (the determination as to WHEN a warning is required) or change the incentives to provide a warning out of an abundance of caution.

•  The retailer/manufacturer provisions on “clarification” of responsibilities throughout the supply chain is riddled with ambiguities and questions with which the market is struggling.  Who is an “authorized agent” for retailer notifications? What and how many warning materials must the manufacturer provide?  How are distributor instructions/notifications to be handled?  How should retailers respond when they receive a 60 day notice?  How can private enforcers certify that a retailer may or may not be held liable under the new standards?

•  More pointedly, the retailer provisions, by allowing independent agreements on liability allocations, may have the perverse result of sticking responsibilities on the smaller actors with less market power.  Which leads to Quote of the Day 3: “Leave me alone or the little guy gets it!”

• There is no foolproof compliance solution … it is a matter of risk tolerance and minimization.  One important component:  testing!  Some is better than none.  For example,  testing showing “non-detect” levels can provide an affirmative defense if done within the past 12 months …. but make sure you meet the requirements of section 25900(a), such as use of a proper test method and a certified laboratory.  Also, how many samples are enough?  There is no set answer but look to do enough for statistical power (maybe three at least?!) given inherent variability.

And that’s a wrap from the City by the Bay!  All signs suggest that next year’s conference will be at least as well attended.  As always, for the latest on Prop 65 stay tuned to Kelley Green Law Blog.

 

After almost a decade of neglect, EPA is once again actively encouraging facilities to utilize the agency’s Audit Policy to “address noncompliance in an efficient and timely manner.”  Over the last several months, EPA has taken steps to promote use of the “e-Disclosure” system and to remind regulated entities of the benefits of the Audit Policy, which allows for substantial (near 100% in many cases) penalty reductions for violations that are self-disclosed and promptly corrected.

In announcing the launch of the new campaign on May 15th, EPA declared the agency’s “renewed emphasis on encouraging regulated entities to voluntarily discover, promptly disclose, expeditiously correct, and take steps to prevent recurrence of environmental violations.”  This renewed emphasis is consistent with the current EPA’s focus on improving compliance through mechanisms, including voluntary self-correction, that achieve environmental goals more quickly and in a less costly, adversarial and time-consuming manner than traditional enforcement means.

More specifically, in the months since the initiative was launched, EPA has sought to expand use of the Audit Policy by enhancing and promoting:
→ the online “eDisclosure” program;
→ the additional flexibility available to new owners who self-disclose violations (“the New Owner Policy”); and,
→ opportunities to increase compliance through use of existing self-disclosure policies or tailored audit programs.

In its May statement, EPA explicitly aimed to remind the regulated community that the Audit Policy offers significant benefits, including:

(1) elimination of 100% of the gravity-based civil penalty that otherwise might apply (in the vast majority of Audit Policy disclosures, EPA will only seek to recover the “economic benefit”portion of a potential penalty);
(2) waiver of the economic benefit component of a potential penalty where EPA deems it insignificant;
(3) does not require advance notice to EPA of an audit;
(4) does not impose time limits on audit completion; and
(5) can provide clarity by defining allowable violation correction time periods.

To obtain these benefits, an audit should be structured and documented appropriately to help facilitate disclosures that best protect a company from liability and obtain maximum penalty mitigation.  In particular, the scope and conduct of the audit should be well-defined and systematic, including documentation of findings and timely review of conclusions to ensure that violations are promptly disclosed within the 21-day time requirement of the Audit Policy.

The New Owner Policy also provides significant potential benefits and incentives for companies that want to make a ‘‘clean start’’ at newly acquired facilities by addressing environmental noncompliance that began prior to acquisition.  Some of the policy’s key incentives and areas of flexibility include:

(1) the ability of new owners to enter into audit agreements that incorporate disclosure reporting that is appropriate to their unique situation;
(2) the waiver of economic benefit penalties that otherwise might apply to delayed expenditures; and
(3) more generous treatment of violations discovered through already legally mandated monitoring, sampling or reporting that would not normally be considered “voluntarily discovered” (such as testing pursuant to a Title V permit).

Aside from provisions specific to new owners of facilities in the upstream oil and gas industry, none of the recent “announcements” reflect any substantive change to the Audit Policy.  EPA’s decision to issue a public statement of support for the Audit Policy, however, is an encouraging signal to the regulated community.

The Audit Policy was used extensively during the Bush Administration, but was effectively discontinued during the Obama Administration.  The move is an affirmative sign that this Administration is more amenable to penalty mitigation for voluntarily discovered and disclosed violations, and a tangible manifestation of recent pronouncements out of the Office of Enforcement and Compliance Assurance that the agency is focused chiefly on finding ways to improve compliance and less towards punishment of violators.

More info on the Audit Policy and and the New Owner Policy can be found at: https://www.epa.gov/compliance/epas-audit-policy.