Safer Consumer Products Act Overcoming Compliance Hurdles for - - PowerPoint PPT Presentation

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Environmental Hazard Compliance in Sale of Goods: California's Prop 65 and Safer Consumer Products Act

Overcoming Compliance Hurdles for Manufacturers, Distributors, Retailers and Others in the Chain of Business

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, JANUARY 19, 2016

Melissa A. Jones, Partner, Stoel Rives, Sacramento, Calif. Lauren M. Michals, Counsel, Nixon Peabody, San Francisco Belynda S. Reck, Partner, Reed Smith, Los Angeles

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Trends and Developments Re: California Safer Consumer Products Act

Belynda Reck, Partner Reed Smith – Los Angeles January 19, 2016

Background: SCPA

• Governor Schwarzenegger signs twin bills into law

in 2008 (“Green Chemistry Initiative”)

• Laws require California Department of Toxic

Substances Control (DTSC) to regulate “safer consumer products”

• DTSC’s regulations released in October 2013

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SCPA: Core Components

• Step One: DTSC identifies chemicals and prioritizes

products to subject to the regulatory process

• Step Two: DTSC finalizes its Priority Products list
• Step Three: Responsible Entities Must Take Action

(Alternative Analysis)

• Step Four: DTSC Regulatory Response

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SCPA: Responsible Entities

• Any company that manufactures, imports or sells a

Priority Product

• Responsible Entity Can:

a) Remove product from the CA market; b) Replace chemical of concern in the product; or c) Undergo intensive “Alternatives Analysis” process

• Responsible Entities Must Comply with the Act
• Manufacturers Importers, Retailers and

Assemblers

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Alternatives Analysis

• Two stages: Preliminary AA and a Final AA
• Prelim AA is six-step checklist
• Final AA requires responsible entity to engage in

factor-based comparison of alternatives and develop comprehensive plan to implement chosen alternative

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After Final AA Report: DTSC Regulatory Response

• DTSC publishes Final AA report on its website
• Once AA report finalized, responsible entity must

implement proposed plan

• DTSC may elect to impose supplemental regulatory

responses and assess penalties or refer violations to prosecutors

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Compliance and Regulatory Timeframe

• DTSC currently has a Proposed Priority Products list:

(1) Children’s foam padded sleeping products, such as nap mats with polyurethane foam, that contain a flame retardant chemical called tris phosphate or TDCPP (2) Spray polyurethane foam containing unreacted diisocyanates, an insulation product that can cause severe asthma for installers and do-it-yourselfers when it is still wet (3) Paint and varnish strippers and surface cleaners with methylene chloride, used to remove old paint and varnish

• Yet to finalize its Alternative Analysis Guide
• However, DTSC already initiating the process for the

next round of Priority Products

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On the Regulatory Horizon

• All manufacturers and retailers of consumer

products in California, even those unaffected by the three proposed Priority Products, should monitor the regulatory process as it continues to unfold

• The Priority Product Work Plan for 2015-2017 lays
• ut seven new product categories. Also flags

potential candidate chemicals that could be subject to regulations within this period

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On the Regulatory Horizon (cont’d): New Product Categories

• Beauty/Personal Care/Hygiene

E.g., Skin, Hair and Personal Hygiene Products and Cosmetics and Fragrances

• Building Products

E.g., Adhesive and Glues, Roof Coatings, Paints and Primers, Vinyl Flooring

• Household, Office Furniture and Furnishings with PFCs, FRs

E.g., Bedding, Curtains, Household and Office Seating

• Cleaning Products

E.g., Cleaners, Laundry, Surface Care, Fresheners and Deodorizers

• Clothing

E.g., Sportswear, Sleepwear, Underwear, Full Body Wear

• Fishing and Angling Equipment

E.g., Fishing Weights

• Office Machinery (Consumable Products)

E.g., Inks and Toners and Thermal Paper

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Advice for In-House Counsel

a) Become a stakeholder, shape regulatory process b) Consider advising your company to conduct chemical analyses on its products c) Consider advising your company to implement manufacturing process controls to flag chemicals d) Consider advising your company to conduct internal analysis of cost and viability of reformulating products containing chemicals e) Determine feasibility of halting California sales of product

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Advice for In-House Counsel (cont’d)

f) Consider advising your company to conduct confidential internal alternatives analysis g) Consider challenging applicability of regulations h) Consider IP, toxic tort and public relations implications of AA reports i) Protect confidential communications that occur, ensure all documents and discussions are subject to attorney-client privilege

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Questions?

• Belynda Reck

(213) 457-8060 breck@reedsmith.com http://www.reedsmith.com/belynda_reck

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Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Presented by Melissa A. Jones

Tuesday, January 19, 2016 • STRAFFORD WEBINAR

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Agenda

• Overview of Prop 65
• Litigation & Defenses
• Compliance Options (Warnings &

Reformulation)

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Overview of Prop 65

• “Safe Drinking Water and Toxic Enforcement Act
• f 1986.”
• Provides penalties ($2,500 per violation) against

businesses that knowingly expose consumers without warning to chemicals known to the state to cause cancer or reproductive harm.

• Applies to businesses with 10 or more

employees.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Two Components of Prop 65

• 1. The Warning

Requirement: requires warning before exposure to listed chemicals

• 2. The Discharge

Prohibition: prohibits companies from discharging listed chemicals into sources of drinking water

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Prop 65: Bad for Businesses

• Can be enforced by public or private

enforcers– big $$ to “bounty hunters.”

• List has a broad range of chemicals –
• ver 850+ currently listed.
• Compliance can be difficult.
• Defending litigation is

difficult (and costly).

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Minimal Burden on Plaintiffs

Plaintiff only needs evidence of a trace amount of the chemical in the product and then the burden of proof shifts to the defendant company.

Plaintiff

Chemical Trace

Defendant Burden of Proof

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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The List: Some Examples

• 1,4-Dioxane
• Acrylamide
• Arsenic
• Benzene
• Cadmium
• Crystalline silica
• Formaldehyde
• Lead
• 4-MEI
• Mercury
• Phthalates (BBP,

DBP, DEHP, DIDP, DnHP, DINP)

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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60-Day Notice of Violation

• Triggers the Proposition 65 litigation.
• Sets forth alleged facts.
• Certificate of Merit must be sent to

Attorney General.

• Often sent to the CEO/President of the

company.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Prop 65 Litigation: Why It’s So Bad

• Consent judgments are
• ften expensive.
• The release only applies

to the product/chemical in the consent judgment.

• Cannot rely on other consent judgments.
• Defenses difficult to prove and costly.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Prop 65 Defenses

Preemption Safe Harbor Levels Naturally Occurring

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Defenses: Safe Harbor Levels

• Exposure levels (micrograms per day).
• Not content levels (parts per million).
• Based on the “average user” of the

product.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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No Significant Risk Level (NSRL)

Amount of daily exposure to a carcinogen that will result in less than a 1-in-100,000 increase in cancer risk, assuming lifetime exposure at that level.

Maximum Acceptable Dose Level (MADL)

Amount of exposure to a reproductive toxin that is less than one thousandth of the level scientifically shown to have no observable reproductive effect.

Defenses: Safe Harbor Levels (cont.)

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Prop 65 Warnings: Regulations

• Attorney General: “reasonably

conspicuous” under the circumstances.

• OEHHA: “likely to be read and understood

by ordinary individual under customary conditions of purchase or use.” **But as our next presenter will discuss, big changes are coming!

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Compliance: Reformulation

• As another

compliance method, consider whether the product can be reformulated.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Reformulation Questions

• What chemicals to look for?
• Is an exposure analysis needed?
• What content limits?
• What parts of the product need testing?
• How often?

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Compliance & Testing Program

• Adopt and implement content limits.
• Make sure suppliers/vendors know these limits–

consider formal notices.

• Institute formal testing program to ensure

products meet content limits.

• Maintain test reports.
• Conduct audit, review requirements, and make

adjustments, if necessary.

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act

Tuesday, January 19, 2016 • STRAFFORD W EBINAR

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Thank You!

Melissa A. Jones

Stoel Rives LLP (916) 319-4649 melissa.jones@stoel.com

CALIFORNIA'S PROPOSITION 65: RECENT DEVELOPMENTS AND WHAT TO WATCH FOR

LAUREN M. MICHALS NIXON PEABODY LLP, SAN FRANCISCO

JANUARY 19, 2016

CALIFORNIA PROPOSITION 65 DEVELOPMENTS

• ELF v. Beech-Nut Decision
• Proposed Regulations
• OEHHA
• Attorney General
• Other Actions
• Enforcement Trends

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS Key legal development:

Environmental Law Foundation v. Beech-Nut Nutrition Corp., 235 Cal.App.4th 307 (2015)

• Lead in fruit juice and baby food
• Issues at trial:
• “Naturally occurring”--rejected
• Federal preemption--rejected
• Not above safe harbor of 0.5 micrograms per day

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: BEECH NUT DECISION (CONT.)

Not above safe harbor of 0.5 micrograms per day:

— Averaging is allowed

• Over multiple lots of the product
• Over a period of time
• Geometric rather than arithmetic mean

— Limitations?

• Specific to foods?
• Specific to lead?
• Court did not set firm averaging period

— Provides some guidance

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: REGULATORY ACTIONS

But:

Office of Environmental Health Hazard Assessment (OEHHA) has proposed changes to Regulations:

• Testing
• Exposure Measurement
• Warnings

Plus: Attorney General Regulations

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: PROPOSED CHANGES TO REGULATIONS

Proposed Possible Changes to Regulations: 27 Cal. Code

• Regs. § 25821:
• End run around Beech-Nut
• Response to Center for Environmental Health petition
• Lower maximum allowable dose level (MADL) for lead
• Clarify lead should be measures in a single day
• Section 25821(a):
• Calculation of concentration of chemical in foods
• Section 25821(c):
• Exposure based on arithmetic mean of daily intake

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: PROPOSED CHANGES TO REGULATIONS

• Section 25821(a):
• Testing of chemical within single lot
• Not averaged across production lots
• Claim that this was the original intent of regulation
• Section 25821(c)
• “Reasonably anticipated rate of exposure” to be the

arithmetic mean of daily intake or exposure

• Not geometric mean
• Still at early regulatory stage

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: PROPOSED CHANGES TO WARNINGS

Proposed Revised Warning Regulations (27 Cal. Code Regs. § 25600 et seq.):

• New round of proposed changes
• Change existing “safe harbor” warning language
• Add identification of specific chemical
• Add reference to website
• Require information be provided for website
• Provide more guidance on size/placement
• Two–year phase in period
• Does not change prior court ordered settlements

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: PROPOSED CHANGES TO WARNINGS

Current Safe Harbor Warning:

WARNING: This product contains a chemical known to the State of California to cause cancer. WARNING: This product contains a chemical known to the State of California to cause birth defects or

• ther reproductive harm.

Proposed Safe Harbor Warning: WARNING: This product

can expose you to [name of chemical(s)], a chemical [or chemicals] known to the State of California to cause cancer. For more information go to www.Prop65Warnings.ca.gov/pro duct. Or: “ . . . to cause birth defects or

• ther reproductive harms . . .”

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: PROPOSED CHANGES TO WARNINGS

• Additional proposed tailored warning language for:
• Types of products:

 Foods: “Consuming this product can expose you . . .”

• Type of exposure

 Environmental: “Entering this area can expose you . . .”

• Chemicals: at least one listed chemical must be included
• Location of warning
• On-product warning labels: slight variation
• Internet and catalog warnings
• Website content: 27 Cal. Code Regs. § 25205

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: OTHER OEHHA ACTIONS

Other OEHHA Actions:

• Safe Use Determination
• DINP in roofing material, flooring

 Must be requested before 60-Day Notice is served

• Proposed background levels of lead and arsenic in some

foods (proposed 27 Cal. Code Regs. § 25501.1)

 Arsenic in rice  Lead in vegetables, fruit, meat, seafood, eggs, milk  Attempt at a “naturally occurring” level

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: OTHER OEHHA ACTIONS

• Center for Environmental Health Petition
• Lower “safe harbor” for lead
• Current “safe harbor”: 0.5 µg/day
• Would reduce it to 0.1 µg/day or lower
• OEHHA proposal: 27 Cal. Code Regs. § 25805 (b)
• Level based on frequency of exposure

0.2 µg/day for every day exposure 0.3 µg/day for exposure one day in every two days

• Attorney General could revisit prior settlements

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: ATTORNEY GENERAL ACTIONS

• Proposed Revised Attorney General Enforcement

Regulations (11 Cal. Code Regs. § 3000 et seq.):

• Affect settlement terms, penalty amounts, and

attorney's fees in private enforcement actions

• Pertain to review and approval of settlements
• Appear to raise bar for enforcer to obtain fees: must

demonstrate significant public benefit

• Other Attorney General Action
• Letter re lead in chocolate
• Oversight of new private enforcers

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: ENFORCEMENT TRENDS

• Chemicals:
• Lead
• Phthalates (DEHP, DINP)

 DINP new in 2015

• New Products:
• Sunscreen
• Gloves
• E-cigarettes
• Seaweed
• Anything with vinyl/PVC components
• Anything in a hardware store

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CALIFORNIA PROPOSITION 65 DEVELOPMENTS: WHAT TO DO?

• Sign up for OEHHA updates and notices
• http://www.oehha.ca.gov/prop65.html
• Consider submitting comments on proposed warning

regulations

• Wait to see what happens regarding warnings
• Do not rely on ELF v. Beech-Nut
• Test foods within and across lots
• Consider a safe use determination

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QUESTIONS:

Lauren M. Michals Counsel Nixon Peabody LLP San Francisco, CA 415-984-8261 lmichals@nixonpeabody.com

— Focus on toxic tort, products liability, and environmental matters. — Represents a diverse group of clients from small businesses to major international corporations in litigation in federal and state courts. — Serves as local and national counsel in cases involving pharmaceuticals, construction materials, asbestos-containing products, and food. — Decades of experience representing clients in California Proposition 65 including preventive counseling and defense of claims brought by private enforcers, public interest groups and the State of California.

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