Legislation was introduced in the California Assembly last week to provide much-needed relief from frivolous Proposition 65 claims and avoid “over-warning” the public where scientific evidence shows that products or premises pose no significant risk of exposure to chemicals.  California Assembly Bill 543 (AB 543)[1] would define the “knowingly and intentionally” element of the statute to provide a clearer, more scientifically-based standard for determining whether potential exposures to a listed chemical exceed applicable levels and therefore require a Proposition 65 warning. 

Background on Proposition 65

Proposition 65, officially known as the Safe Drinking Water and Toxic Enforcement Act,[2] was enacted by voter initiative in 1986.  The statute prohibits companies that have 10 or more employees and do business in California from “knowingly and intentionally
expos[ing] any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual.”[3]  The California Office of Environmental Health Hazard Assessment (OEHHA) has published and periodically updates a list of chemicals that are “known to the state to cause cancer and reproductive toxicity,” which are commonly referred to as “listed chemicals.”  There are more than 500 chemicals on OEHHA’s list.[4]  Enforcement is allowed by private individuals and groups, in addition to government entities, and a prevailing plaintiff may recover a percentage of penalties as well attorneys fees and costs.

Companies with products that are sold in California and contain a listed chemical must provide consumers with a Proposition 65 warning regarding potential exposure unless there is an applicable exemption:  Federal warning requirements that preempt state law; in the case of food products, the chemical is “naturally occurring;” the exposure poses no significant risk of cancer, assuming lifetime exposure at the level in question; or the exposure will have no observable effect for reproductive toxicity, assuming exposure at 1,000 times the level in question.[5]  For certain listed chemicals, OEHHA has established No Significant Risk Levels (NSRLs) and Maximum Allowable Dose Levels (MADLs) that provide a “safe harbor” from Proposition 65 warning requirements if risk analysis shows potential exposures are below the applicable level.[6]  The defendant has the burden of establishing that potential exposures are below the NSRL, MADL or “safe harbor” level, or otherwise exempt from warning requirements.[7]

The “Knowingly and Intentionally” Element

As noted above, the Proposition 65 statute prohibits companies from “knowingly and intentionally” exposing individuals to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning.[8]  The Proposition 65 regulations define “knowingly” as knowledge that an exposure to a listed chemical is occurring, not knowledge that the exposure is unlawful, and explain that an exposure “through misfortune or accident and without evil design, intention or negligence” is not a violation.[9] 

Based on the language of the statute and regulations, one might reasonably assume that there would be no Proposition 65 liability for a company unaware that its products or premises pose the potential for exposure to a listed chemical.  However, many Proposition 65 plaintiff groups take the position that a company is on notice based on the materials used in the products or premises.  Moreover, even if there were no prior knowledge, the company is on notice once it receives the plaintiff’s 60-day notice of the alleged violation and must provide warnings or agree to reformulate, in addition to providing settlement payments.

Indeed, even where a company has a scientific analysis showing that potential exposures are below NSRLs, MADLs or “safe harbor” levels, many plaintiff groups refuse to accept the results and demand reformulation or implementation of warnings coupled, of course, with payments for penalties and attorneys fees.  Faced with such demands, some companies have successfully litigated the issues and established that potential exposures are below NSRLs, MADLs or “safe harbor” levels.[10]  However, many companies elect to avoid the time and expense of litigation when Proposition 65 claims can be settled for a fraction of the cost of defending the case through trial. 

The result is an untenable situation for businesses and the general public:  Plaintiffs can pursue claims and leverage settlements even though the scientific evidence shows no exposure requiring a warning under Proposition 65; businesses incur substantial expenses for unnecessary reformulation and warnings; and the public is subjected to “over-warning,” which the California Supreme Court has recognized can be misleading to consumers and potentially dissuade them from using beneficial products.[11]  Legislation introduced last week seeks to address these concerns by creating a clearer standard for compliance with Proposition 65.

Proposed Legislation to Limit Frivolous Claims

California Assembly Bill 543 (AB 543),[12] introduced last week by Assembly Member Bill Quirk (D-20^th District),[13] would create more of a “bright line” legal standard to determine whether potential exposure to a listed chemical exceeds NSRLs, MADLs or “safe harbor” levels and therefore requires a Proposition 65 warning:  It does so by amending the statute to provide a definition of “knowingly and intentionally.”

Specifically, under the proposed amendment, an alleged exposure to a listed chemical would not be “knowing and intentional” if an exposure assessment has been conducted (1) by a qualified scientist; (2) in accordance with regulations adopted by OEHHA; and (3) evaluating the same chemical in or from the relevant source; and such exposure assessment (4) concludes that the alleged exposure is below the levels that would require a Proposition 65 warning; and (5) was documented and signed by the qualified scientist prior to the company receiving notice of the alleged exposure.[14] 

Thus, the amendment provides companies, trade associations and others with the option of protecting against potential claims by retaining a qualified scientist to perform a risk assessment for products that contain chemicals listed under Proposition 65.  If the risk assessment is performed according to specified criteria and shows that potential exposures are below NSRLs, MADLs or “safe harbor” levels for the chemical in question, it should provide a scientific basis for concluding that no warning is required and can be asserted in response to a subsequent notice of alleged violation.  However, the amendment would not require businesses to perform risk assessments, and preserves their ability to otherwise determine whether Proposition 65 warnings are required for products or premises.

More than 80 chambers of commerce and trade associations have gone on record expressing their support for AB 543.[15]  Although there will undoubtedly continue to be disputes under Proposition 65, the legislation should help to provide much-needed relief from frivolous Proposition 65 claims and avoid “over-warning” the public where scientific evidence shows that a product poses no risk from exposure.