California's Proposition 65 Regulatory and Statutory Reform Initiative

Richard P. Bozof

Richard P. Bozof is Of Counsel to Bergeson & Campbell, P.C., a law firm in Washington, D.C., that focuses on chemical, medical device, and diagnostic product approval and regulation, and associated business matters. Mr. Bozof has a medical degree from the Yale University School of Medicine and an undergraduate degree in biology and physics. He received his law degree from Boalt Hall School of Law, University of California-Berkeley.

In early 2001, the director of the California Environmental Protection Agency's Office of Environmental Health Hazard Assessment (OEHHA) and the California Attorney General's Office announced that efforts were underway to clarify and improve Proposition 65, the "Safe Drinking Water and Toxic Enforcement Act of 1986" (Proposition 65 or the Act), both in its implementation through regulatory modifications and through legislative changes. This effort is intended to allow input from stakeholders. As discussed below, the reform effort is already underway and can be expected to continue over the next several years.

Background
Proposition 65 was adopted as an initiative statute by California voters on November 4, 1986. (In California, an initiative statute is a law placed on the general election ballot by citizen petition and adopted by a majority of California voters. CAL. CONST. art. 2, §§ 8, 10. Section 2 of Proposition 65, which contains the Act's core substantive provisions, is encoded in Cal. Health & Safety Code §§ 25249.5-.13.) The Act authorizes the State of California formally to list any chemical that it determines is "known to the state to cause cancer or reproductive toxicity." The listing of a chemical imposes important potential legal obligations on businesses that discharge that chemical or that manufacture, distribute, or sell products containing it. Under the Act, any listed chemical in effect is presumed to constitute a potential health hazard. Subject to certain limited exemptions, no person in the course of doing business (as defined by the Act) in California may knowingly and intentionally expose any individual to a listed chemical without first giving clear and reasonable warning to such individual. (The Act excludes from the definition of a "person in the course of doing business" any person employing fewer than ten employees in his/her business and any local, State of California, or federal government or agency. Cal. Health & Safety Code § 25249.11(b). Other exemptions are provided in Cal. Health & Safety Code §§ 25249.9 and 25249.10.) In addition, no such person may knowingly discharge a listed chemical, directly or indirectly, into a source of drinking water. Any person doing business in California, otherwise subject to the exposure warning requirement or the discharge prohibition as the result of use of a listed chemical, may avoid that requirement or prohibition only by proving that any exposure resulting from the business activities is not unsafe or that a discharge or release will not cause a "significant amount" of the chemical to enter a source of drinking water.

Neither the warning requirements nor the "no discharge" prohibition comes into play with regard to a specific chemical unless that chemical has been listed by the State of California as either a carcinogen or a reproductive toxicant. (Listed reproductive toxicants include chemicals that cause developmental toxicity, female reproductive toxicity, or male reproductive toxicity. See Cal. Code Regs. tit. 22, § 12000.) As of June 15, 2001, over 735 chemicals had been listed as carcinogens or reproductive toxicants.

The lead agency for implementing Proposition 65 is OEHHA. Among other things, OEHHA is charged with issuing regulations for purposes of implementing and clarifying the Act. The Proposition 65 regulations, most of which have been on the books with little or no change since the late 1980's and early 1990's, are voluminous.

State-Sponsored Proposition 65 Regulatory and Statutory Reform Efforts
At a public conference on Proposition 65 held in March 2001, OEHHA Director Dr. Joan Denton announced that OEHHA had initiated a comprehensive review of the Proposition 65 regulations directed toward identifying and clarifying ambiguous and vague provisions. Dr. Denton also indicated that OEHHA would be affording opportunities for meeting with stakeholders and interested members of the public to discuss their concerns about the regulations.

At the same conference, California Deputy Attorney General Edward Weil announced that the Attorney General's office would consider proposals to amend Proposition 65, and would be soliciting input from business, environmental, and other stakeholders. Mr. Weil indicated that the Attorney General's office had already initiated a reform agenda intended to correct abuses by both plaintiffs and defendants in litigation under the Act and intended to sponsor legislation to amend the statute.

Since the March 2001 conference, Dr. Denton has met with various representatives of the regulated community, environmental groups, and the Attorney General's Office to obtain input as to which provisions of the Proposition 65 regulations warrant clarification. OEHHA has received input from these meetings suggesting both major and minor regulatory changes. As a consequence, OEHHA has decided that rather than proposing a single comprehensive regulatory package, it will propose a series of regulatory amendments over the next several years, beginning with minor changes and progressing to more significant and complex regulatory amendments.

On October 5, 2001, OEHHA announced the availability of the first in the series of planned draft regulatory amendment packages that OEHHA is putting forward in advance of the formal rulemaking process required under the California Administrative Procedure Act. This draft regulatory amendment package contains little if any revisions of substantive importance. Rather, the proposed revisions, as explained in the introductory note to the reader in the package, were primarily made to replace outdated terminology, to make grammatical corrections, and to consolidate and alphabetize definition terms. Some of the changes are merely organizational, and involve relocation of sections within the chapter of the regulations.

The notice announcing the availability of the first regulatory package also announced that a public workshop would be held on November 2, 2001, for input on OEHHA's implementation of Proposition 65 and indicated that anyone could comment on the draft regulatory package at the workshop, or submit written comments.

In addition to the regulatory clarification effort described above, OEHHA has recently announced that a recent budget increase has provided OEHHA with the necessary funds to resume developing safe harbor numbers, consisting of "no significant risk levels" for chemicals listed as carcinogens and "maximum allowable daily levels" for chemicals listed as causing reproductive toxicity. Letter from Dr. Joan Denton to "Interested Parties," dated August 15, 2001. While OEHHA had established safe harbor numbers for a significant number of listed chemicals (primarily listed carcinogens), by the early 1990's, it discontinued establishing such numbers at that time due to budget cuts. OEHHA now anticipates developing between 20-35 safe harbor numbers per year for chemicals that currently do not have such numbers. OEHHA has indicated that continuation of this activity is designed to bring greater clarity and certainty in determining the need to provide warnings for exposures to listed chemicals and for determining whether certain discharges of listed chemicals into sources of drinking water are prohibited.

The statutory reform effort by the State Attorney General's Office has also progressed since the March 2001 conference. On October 5, 2001, the Governor approved SB 471, which amends the enforcement provisions of Health and Safety Code Section 25249.7 of Proposition 65, focusing largely on the provisions governing private plaintiffs lawsuits. Attorney General Bill Lockyer worked with Senator Byron Sher (D) in introducing the legislation, which apparently was widely supported in the legal community. This amendment is only the second amendment of Proposition 65 since the statute was enacted 15 years ago. The first amendment, which was passed in 1999, also addressed private enforcement actions, but was less comprehensive in scope than SB 471. The purpose of the 1999 amendment, as implemented by regulations that took effect on July 1, 2001, was to allow better tracking by the public and the Attorney General of private enforcement actions, and to permit the Attorney General to comment on or object to a settlement of any such actions when necessary.

The most recent amendment, SB 471, adds, among other things, the following provisions to Proposition 65:

• The court, in assessing the amount of a civil penalty for a violation of the Act, must consider a number of factors, including the nature and extent of the violation; the economic effect of the penalty on the violator; whether the violator took good faith measures to comply with the Act; the willfulness of the violator's misconduct; and the deterrent effect that the imposition of the penalty would have on both the violator and the regulated community as a whole.
• In the case of a private action alleging the violation of the warning requirements of the Act, the required 60-day notice must include a certificate of merit stating that the person executing the certificate of merit (either the attorney for the noticing party or the noticing party, if not represented by counsel) has consulted with one or more persons with relevant and appropriate experience or expertise, who has reviewed facts, studies, or other data regarding the exposure to the listed chemical that is the subject of the action, and that based on that information, the person executing the certificate believes that there is a reasonable and meritorious case for the private action.
• If there is a settlement of a private plaintiff's enforcement action under the Act, the plaintiff must submit the settlement, other than a voluntary dismissal in which no consideration is received from the defendant, to the court for approval, and the court may approve the settlement only if the court makes each of several specified findings.

The regulated community has expressed a number of concerns that have yet to be addressed and which possibly could be addressed in the future by revisions of the implementing regulations or, if necessary, by future amendments to the Act. Concerns that can be addressed only by amendment of Proposition 65 may be more difficult to resolve, particularly given the fact that any amendment of the Act requires approval by a two-thirds vote by both houses of the State Legislature (the Assembly and the Senate).

Some of the concerns and issues that the regulated community have raised and that have not been fully addressed include the following:

• The need for revisions to or clarifications of the mechanisms by which new chemicals are added to the Proposition 65 list of chemicals known to cause cancer or reproductive toxicity. For example, the manner in which OEHHA has listed or proposed to list certain chemicals under the authoritative bodies mechanism has been particularly controversial.
• The widely held belief that the Act is overly conservative in requiring that a 1,000-fold uncertainty factor, rather than a smaller factor, be applied to the no observable effect level in determining the no significant risk level for reproductive toxicity, which in turn determines the applicability of the exemptions from the warning requirement and the discharge prohibition.
• The need for clarification of the meaning of the term "significant amount," which determines whether a discharge of a listed chemical into a source of drinking water is prohibited.
• Clarification of the nature and extent of the respective responsibilities of businesses down the distribution chain, from manufacturers to retailers, with regard to the duty to provide warnings.

Conclusion
The State of California has begun what appears to be a serious and committed effort to address problems that have surfaced in the application of Proposition 65 and the implementing regulations. This effort, which could extend over several years, may provide the regulated community with a vehicle for resolving some of its major concerns with the Act and its implementation.