Proposition 65, California’s tough, one-of-a-kind, consumer awareness statute, has been a thorn in the side of countless businesses since its passage by voters in 1986, but the State’s listing of the chemical Bisphenol A (BPA) and related regulatory proposals may be the final straws for industry and consumer advocates alike. With an outcome that’s certain to please no one except attorneys, the calls for basic reforms may finally be heard, even if there’s no quick-fix. In the meantime, non-exempt companies must make difficult decisions with the limited compliance options they have now.
CALIFORNIA ALREADY A PROPOSITION 65 MINEFIELD
Before the BPA listing, Californians were overwhelmed with Proposition 65-imposed warnings that are as ubiquitous as they are vague, and businesses were beset by a decade-long buildup of lawsuits brought by a growing number of citizen enforcers and their attorneys. This trend, which shows no sign of abating, has cost hundreds of millions of dollars, to the regulated community yet a recent study concluded that Californians are no safer from toxic chemicals and there’s no evidence that Californians better perceive risks.
The cacophony of warnings notwithstanding, eating at your favorite lunch spot won’t give you cancer or cause birth defects. This is because Proposition 65 is consumer information law, not a health and safety statute, that requires businesses to add labels to products or post signs warning of exposures to a chemical listed by the California Office of Environmental Health Hazard Assessment (OEHHA) as “known” to the State to cause cancer or reproductive harm. But unlike every other jurisdiction, California requires warnings for objectively safe exposures to an OEHHA-listed chemical. The State can set “safe harbor” thresholds, below which no warning is required, but the statute requires that they be set as orders of magnitude below established safety standards.
For instance, the average European consumes approximately 15 micrograms of lead per day through diet alone, well below FDA guidance, but Proposition 65’s reproductive harm threshold for a single product is a mere 0.5 micrograms of lead (1/30 of regular daily intake). Worse yet, the law allows a plaintiff to take companies to court if there’s any amount of a listed chemical in the product, regardless of the exposure threshold, and it’s up to the company to prove that exposure does not exceed the threshold.
To make matters worse, changes to warning regulations and guidance proposed last year and a hastily
prepared emergency regulation for BPA mean that even businesses that post warnings will face the prospect of litigation. To date, many businesses have weathered the litigation storm by relying on OEHHA regulations that clearly establish when generic warnings are sufficient and enforcement suits are prohibited. If the proposed changes to those rules are adopted as expected, many companies will lose the legal safeguard of existing warnings and incur the expense of complying with far more complex rules.
Against this backdrop, and contrary to the findings of exhaustive investigations by the FDA and European Food Safety Authority, among other agencies, the State listed BPA as a female reproductive toxicant in 2015.
REFORM OR NOT, HARD COMPLIANCE CHOICES NOW
While the BPA listing raises new problems that exacerbate and highlight the need for Proposition 65 reform, non-exempt businesses (generally anyone with 10 or more employees and selling consumer goods in or to California) shouldn’t expect relief any time soon. Before May 11, 2016, when a one-year grace period for BPA enforcement expires, businesses will have to choose between compliance options that offer no practical protections for businesses or their customers.
For food and beverage retailers like grocers or convenience store chains, the recent adoption of OEHHA’s emergency regulation presents a particularly vexing choice. That regulation will require grocers to post point-of-sale signs (online and in-store) that warn of the potential for reproductive toxicity from BPA in food or beverages if a manufacturer or distributor requests it. Specifically, the regulation will require the following language on the sign:
WARNING: Many food and beverage cans have linings containing bisphenol A (BPA), a chemical known to the State of California to cause harm to the female reproductive system. Jar lids and bottle caps may also contain BPA. You can be exposed to BPA when you consume foods or beverages packaged in these containers. For more information, go to: www.P65Warnings.ca.gov/BPA.
Beyond the lack of evidence that BPA is a real threat, the regulation has legal flaws too. First, while suppliers are released from liability, no provision expressly protects retailers except a vaguely worded 24-hour cure period for potential defects in sign placement. Also, the regulation doesn’t even attempt to address BPA exposures from any products other than food or drinks.
In sum, grocers must post a misleading food/beverage warning or risk costly litigation, post another misleading sign for other products or risk costly litigation, or do nothing and, you guessed it, risk costly litigation.
The hand dealt to non-grocers and manufacturers of all other consumer products might be worse. Without a provision for BPA-specific warning signs, other industries must rely instead on the current safe-harbor regulations, which are undergoing a major overhaul, or face costly litigation. Makers of products with even trace amounts of BPA must decide whether to display warning language that may be obsolete in less than a year.
Additionally, another recent proposal to set a safe harbor threshold for BPA, called the
“maximum allowable dose level” or MADL, at 3 micrograms (mcg) per day for dermal exposure, is too low to be any comfort to litigation-weary businesses. The proposal itself has also been called into question because, in establishing the 3mcg level, OEHHA relied on animal studies that reported a subcutaneous “lowest observed effect level” for BPA, but did not report a “no observable effect level,” which the law requires. In addition, OEHHA did not consider differing exposure pathways, such as hand to mouth transfer, leaving several other products without a safe harbor prior to May 11, 2016.
Though well-intentioned, OEHHA’s actions do little to stem the coming tide of potential lawsuits, except to force grocers to unnecessarily alarm their customers about safe exposures to BPA. For makers of other consumer products containing BPA, the agency’s actions offer no assistance at all, perhaps even making litigation more likely by adopting an unreasonable and unscientific dermal safe harbor threshold.
WILL THOUSANDS OF UNNECESSARY BPA WARNINGS FINALLY BE ENOUGH?
In 2014, Governor Brown announced his intention to make regulatory changes to Proposition 65 that would stem the tide of frivolous lawsuits and the over-warning epidemic. Two years later, the situation on both fronts is worse. The BPA listing and OEHHA’s related regulations are unique in their potential to trigger an avalanche of unnecessary warnings and lawsuits, and in the process, open the eyes of voters and political leaders to the need for reform.
To be sure, listings of other benign chemicals have caused controversy in the past – Diisononyl phthalate (DINP) and glyphosate are just two recent examples – but neither triggered the explosion of warnings that’s expected for BPA because, for the first time, OEHHA is now requiring retailers to post signs. Additionally, because OEHHA’s proposal for the safe harbor only makes litigation more likely, bounty hunters have more incentive to litigate and companies, in turn, have more incentive to prophylactically warn. The resulting mayhem may be the groundwork for overdue reforms.
In particular, retailers’ difficulties with the BPA listing are shining the light on the challenges with compliance that retailers have experienced all along. Why, for instance, does the law permit litigation against a retailer and a manufacturer of the same product simultaneously? An enforcement action to require a warning from one entity is always sufficient to achieve the ends of the statute – a warning is added to a label by a manufacturer or a sign is posted by a retailer. Litigation against both only serves to drive up litigation costs.
Furthermore, the proposed mechanism for BPA warning signs in grocery stores is flawed. The proposed regulation at least attempts to address the underlying problem for retailers that, in nearly all cases, do not have access to the same chemical information that their suppliers do. Why not provide a similar mechanism as to all listed chemicals, not just BPA and alcohol? Furthermore, it’s always been a legal fiction that retailers can be held liable for “knowingly” exposing consumers to obscure chemicals when such data is rarely, if ever, provided by suppliers.
The burden on manufacturers that use BPA is more typical, but the benefits of the BPA listing, if any, are overshadowed by the millions spent on compliance attorneys, expert-heavy litigation, and, in most cases, expensive payoffs to plaintiffs and their attorneys. Unlike other safety laws, the Proposition 65 threshold for a listed reproductive toxin, like BPA, must be 1,000 times below an established standard or “no observable effect level.” That means that a product must be labeled or a sign posted even though a consumer must consume 1,000 times more of it, on a daily basis, before there’s even the potential for harm. The thousand-fold factor invariably leads to unnecessary warnings and lawsuits, a result that satisfies neither consumer groups, businesses, nor the true aims of the statute itself.
Unfortunately for all, Proposition 65 may have to get worse before it gets better. But with the spotlight now focused on OEHHA and the law generally, the silver lining of the coming BPA fiasco may be its potential to finally raise awareness of legislative and regulatory fixes to Proposition 65 that all sides can accept.
Greg Sperla is an associate in Greenberg Traurig LLP’s Sacramento office. He can be reached at firstname.lastname@example.org or via the firm’s website – http://www.gtlaw.com.
Anthony J. Cortez is a shareholder in Greenberg Traurig LLP’s Sacramento office. He can be reached at email@example.com or via the firm’s website – http://www.gtlaw.com.
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