Advisories April 8, 2020

Environment, Land Use & Natural Resources Advisory: New Proposition 65 Amendments Clarify Duties to Warn in the Supply Chain

Executive Summary
Minute Read

There are many links in nearly every supply chain – who’s supposed to provide Prop 65 warnings to whom? Our Environment, Land Use & Natural Resources Group highlights three substantive changes in the California Office of Environmental Health Hazard Assessment’s amendments to the “clear and reasonable warning” regulations.

  • Upstream notices
  • Notices to authorized agents and agents for service of process
  • Actual knowledge
The California Office of Environmental Health Hazard Assessment (OEHHA) recently approved another round of amendments to California’s Proposition 65. These amendments provide more specific guidance for businesses in the chain of commerce on how to satisfy their responsibilities to provide consumer product exposure warnings for Prop 65–listed chemicals. The amendments became effective on April 1. 

Background

Prop 65 requires businesses to provide clear and reasonable warnings before they knowingly and intentionally cause an exposure to a chemical listed as known to the state to cause cancer or reproductive toxicity. OEHHA is the lead agency that implements Prop 65. It also maintains the list of chemicals known to the state to cause cancer or reproductive toxicity and has the authority to promulgate and amend Prop 65 regulations. 

On August 30, 2016, OEHHA adopted a new set of “Clear and Reasonable Warnings” regulations intended to make Prop 65 warnings more informative and meaningful than warnings provided under the previous regulations adopted in 1988. The new regulations became effective on August 30, 2018.

On December 31, 2019, OEHHA approved several amendments that clarify the statutory requirement to place the primary obligation for providing a Prop 65 warning on the product manufacturer, minimizing the impact of the warning requirements on the retail seller. The amendments resulted in three substantive changes.

Upstream Notices

Previously, the regulations specified that businesses had to either provide a warning on the product label or provide a written notice and warning materials to “the authorized agent” for a retail seller. In practice, the supply chain has many more actors or intermediaries in addition to the manufacturer and the retailer, and those intermediaries were passing along warning obligations up and down the supply chain. The regulations have now been amended to reflect that practice and specify that intermediate businesses in the chain of commerce may satisfy their obligation to provide a warning by providing a written notice and warning materials directly to the next business in line that is subject to Prop 65 or to the authorized agent for the retail seller. In either case, the business providing the notice and warning materials must obtain written or electronic verification that the warning materials were received.

Many retailers purchase goods from intermediaries that do not manufacture those goods. By specifying that each upstream entity in the chain must communicate with its immediate customer, the amended regulation could help avoid confusion in the marketplace and allow retailers to rely on their communications and contracts with their direct suppliers in determining and allocating responsibility for providing Prop 65 warnings.

Notices to Authorized Agents and Agents for Service of Process

If a business has not designated an authorized agent to receive Prop 65 notices, the notice may be served on the business’s legal agent for service of process. This clarification will help ensure that, if a retailer does not designate an authorized agent, important communications about Prop 65 warnings are not sent to random individuals or job positions at a retailer.

“Actual Knowledge”

A retail seller is responsible for providing a warning when the retailer has “actual knowledge” of a potential consumer product exposure. The new regulatory text clarifies that “actual knowledge” means “information from any reliable source that allows [the retailer] to identify the specific product or products that cause the consumer product exposure.” A notice of violation may serve as actual knowledge of a potential exposure if it provides “sufficient specificity for the retail seller to readily identify the product or products subject to the notice.” A retailer is not deemed to have “actual knowledge” until five days after receiving the notice of violation. 

In Sum: Key Steps for Suppliers and Retailers

The recent amendments provide helpful clarification to facilitate businesses’ compliance with Prop 65. Still, given the complex nature of the modern chain of commerce, businesses should take careful measures to ensure compliance with Prop 65. Manufacturers often do not know who the ultimate retailer of their product will be. Thus, manufacturers should ensure that they provide the requisite notices and warning materials to their immediate customer in the chain of commerce. In addition, because the scope of what constitutes actual knowledge has become broader, retailers should keep thorough records of any notices, warning materials, and instructions they receive from manufacturers and suppliers. Those notices must be renewed annually.
Meet the Authors
Media Contact
Nicholas Clarke
Senior Communications Manager
Phone: 212.210.1222

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