Prop 65: Recent Changes in this 32-year-old law could affect your business TODAY
In November 1986, when Californians voted to approve a ballot initiative to protect their water supply, it must have seemed like a no-brainer. The primary objective of this new Safe Drinking Water and Toxic Enforcement Act was to prevent companies from discharging toxic chemicals into water or land. But it was a secondary provision of the law, a requirement to place warning labels on products that contain chemicals known to cause cancer or birth defects, that has made this no brainer into a controversial and challenging compliance obligation.
For the past 32 years, the responsibility for these warning labels has belonged to the supplier, not the distributor. Now, under regulations that became effective August 30th, distributors have a responsibility to duplicate these product warnings on their websites, company stores and catalogs. The purpose is to enable end buyers to be aware of any Prop 65 risk before selecting products.
How is a Distributor Responsible Under the New Regulations?
Distributors who operate websites or company stores should find out from their suppliers if any of the products they offer on their websites require a Prop 65 label if distributed in California. If so, an identical warning to the one on the product is required on the website. Same for catalogs, brochures and sales proposals. It’s also smart to ask end buyer customers where they intend to distribute products they purchase from you. If a distributor ships 5,000 products to a customer’s Nevada warehouse, and then the customer ships 2,000 of these products to its office in California, it’s the same as if the distributor shipped directly to California. The issue is where the products will be distributed, not where they are initially shipped.
Be Careful of Suppliers Who Shift the Burden
While the primary responsibility for warning labels belongs to suppliers, under the new regulations, suppliers are allowed to shift this burden by sending labels for the distributor to apply. One promotional supplier is shifting the burden even further by providing a downloadable Avery label template. The distributor is supposed to buy blank Avery labels, use the template to print on the blank labels and then stick the gummy labels on each product. Seriously? Make sure you know the policies of the suppliers you work with and that you choose ones that don’t shift the burden on you.
Even the Label Format Has Changed
In an attempt to make the warnings more informative, the new law requires that the warning labels include a triangle with an exclamation mark, the word WARNING in all caps, and text that lists at least one offending chemical. Since these changes made the new warning larger, California came up with shorter version for small products where the long-form label won’t fit. But the law never specified when the short-form label could be used versus the long-form. So most companies are choosing the short-form regardless of the size of the product. There are indications that California may clarify this in a future ruling but for now, companies can choose either the long form or short form at their own discretion.
Example of Short Form:
Example of Long Form:
Don’t Let a Bounty Hunter Profit at Your Expense
Most regulations are enforced by government regulators. Proposition 65 created a cottage industry of bounty hunters by allowing citizen enforcers (basically, anyone) to earn a bounty – a financial windfall – by bringing a successful action against a business for failing to warn about one product or another. There are bounty hunters who earn vast sums annually by seeking out violators to sue. Avoiding bounty hunters is a great example where an ounce of protection is worth a pound of cure.
What you need to know:
Under the new regulations, distributors have new responsibilities and liability, even if the product is purchased from a domestic supplier.
Businesses with fewer than 10 employees are exempt from Prop 65 enforcement, but their clients could still be named in a Notice of Violation (NOV) and depending on their contract terms, they could be held responsible.
Most Prop 65 actions in the past three years have involved lead and phthalates.
No one could afford to test their products for all 900+ chemicals. Companies test for chemicals that have been the source of previous Prop 65 actions.
Bounty hunters test products and check warnings to make a living
The wording of website and catalog warnings should be the same as on the product.
Avoid Products with Heavy Metals or Phthalates
Lead, cadmium, and phthalates, account for 90% of all Prop 65 actions settled in 2016 and 2017. It’s wise to monitor previous Prop 65 settlements to learn what the bounty hunters are going after. PPAI members have access to a database of these previous settlements. You can search the database by product type, to see if categories that you sell have been the subject of previous Prop 65 actions.
What do we recommend?
Own it – it’s up to you to do your due diligence
Ask the right questions. Will this be distributed in CA? Ever?
Deal with suppliers who employ experts in product safety and compliance.
Deal with suppliers who test their products thoroughly and frequently.
Deal with suppliers who maintain detailed Prop 65 testing documentation.
Get written documentation from the supplier as to which of their products requires a warning.
Put correctly worded and formatted warnings on your website for applicable products. Do the same for your catalogs and proposals.
Get written confirmation that each of your suppliers will be responsible for Prop 65 labeling.
Get written indemnification that Suppliers will defend and hold you harmless in you or one of your clients is named in a Prop 65 Notice of Violation (NOV)
Communicate and provide warning to clients as necessary. Tell them labels will be on products when necessary.
Special thanks to Rick Brenner, President of Product Safety Advisors for contributing to this article.