Are Proposition 65 Warning Sign Reforms Coming?

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It is said that as Governor Brown exited his car after parking in the Capitol's garage earlier this year, he noticed a Proposition 65 (Prop 65) warning sign. Displeased with the sign, the Governor immediately told his staff he wanted Prop 65 laws changed to ensure that warning signs provide better information.

Whether or not there is any truth to this story, the Governor did make public his commitment to amending Prop 65 law. On May 7, 2013, he released a press release entitled "Governor Brown Proposes to Reform Proposition 65."

Since then, the Governor has made a strong push to get a reform bill passed in this year despite the limited time to do so and the controversial complexities of the law.

The heads of several State agencies, including the Office of Environmental Health Hazard Assessment (OEHHA), California Environmental Protection Agency (CalEPA), and the Office of the Attorney General, were recruited to draft a reform proposal.

In early June, a small work group of business and plaintiff groups were invited to participate in a series of closed-door meetings to analyze the Administration's proposal and provide input. Of this small workgroup, the only real property representatives at the table were the hotel and lodging group and AACSC's lobbyist.

Cal Chamber also created a separate workgroup of the broader business stakeholders to meet and coalesce around ideas and opinions about the proposed amendments.

The Administration's Draft Proposal

Warning Sign Reform — To the apartment industry and the broader business community, the section of Prop 65 that causes the most problems are the warning sign requirements. The current law is regarded as inadequate and vague. Business owners with ten or more employees whose facilities contain a Prop 65 chemical must post signs warning employees and patrons that they may be exposed to harmful chemicals. The signs must be "clear and reasonable." With little guidance as to the meaning of "clear and reasonable," countless lawsuits have been lodged against businesses since the passage of Prop 65.

Warning sign laws should contain specific direction regarding location, placement, and content of a warning sign such that, if followed, it would create a "safe harbor" for businesses. A "safe harbor" shields a business owner from liability. Unfortunately, no draft proposal submitted by the Administration provided for this kind of liability shield.

Instead, various iterations of the draft proposal established new minimum requirements for warning sign content including listing the precise chemical at the site, explaining the route of exposure, and providing directions on how to avoid exposure.

The problems with this approach are many. Each of these new standards would surely open new doors to litigation. Businesses could be sued if they failed to list one of the many chemicals at their site, failed to explain all the scientific ways people are exposed, or failed to provide adequate directions to avoid exposure. Would businesses be required to tell customers to go away in order to meet the proper standard for advising the public on how to avoid exposure?

These minimum standards would also lead to a requirement that property owners post more signs in and around an apartment complex. It would also require different types of signs to be posted depending on the area and the chemical used. For example, a different sign would be required for each of the following: garage entrance, pool, maintenance room, and lawn, because each may contain a different Prop 65 chemical.

Prop 65 Website Proposal — It is generally agreed that too many signs and too much information on a sign is just as unhelpful as little to no information. This is so because people tend to ignore warning signs that contain too much detail.

As a middle ground, the Administration proposed that in lieu of requiring expansive detail and information about chemical exposure on area warning signs, the lead agency would be responsible for running a website containing extensive detail on chemical exposure at various types of businesses and locations.

Property owners would be required to provide a warning sign with the web address at the bottom. Businesses would also be required to submit information to the lead agency running the website about the Prop 65 chemicals at their property.

The plaintiff lobby disliked the idea of directing the public to a website to access Prop 65 chemical information they believe should be on the warning sign itself. For business groups, the website proposal may be good or bad depending on implementation and the type of business at issue. Some businesses would prefer not to hand over to the lead agency complete control over the type of information that is disseminated in fear that the information may not be accurate or will be exaggerated.

For apartment owners, if the regulation required landlords to attach the web address to signs currently posted, did not require new or different signs to be posted, and protected landlords from liability, then the draft proposal including the website idea could be beneficial to apartment owners and to the public. The public could access information they may feel they need, and landlords could easily comply with the regulations without the fear of future litigation.

Unfortunately, the Administration's proposals directed the lead agency to establish a website without providing for any liability protections for those who complied.

Legislative Reform Status: Halted

Some aspects of the Administration's proposals at first glance appeared to be helpful to the business community. For example, businesses with 25 employees (up from ten employees) would be considered a "small business" and exempt from Prop 65 regulations. Some argued, however, that a change to the small business exemption could be later challenged in court as not "furthering the purpose of Prop 65."

The Administration's proposal would have also shielded from liability any warning sign language that was previously approved by a court. Many believe, however, that signs already approved by courts are already shielded from liability.

Thus, on balance, the touted benefits to the business community under the proposal did not outweigh the potential for increased litigation, increased costs, and other burdens of the reforms.

The business community had at one point crafted and submitted a reform proposal of its own, which would have ensured the public was aware of harmful chemicals through the State-run website while providing a safe harbor for apartment owners if they followed the law. The Administration, however, rejected this proposal stating a desire to leave safe harbors out of legislation and to ensure the lead agency retains the power to adopt warning sign regulations in the future.

In the end, the varying stakeholders and the Administration could not reach agreement.

As a result, the Administration decided to halt any legislative reforms on Prop 65 this year.

Many believe that while reforms are needed and desired by all sides, reform efforts of this size and magnitude will take time and energy. The attempt by the Administration to streamline the efforts to get legislation passed this year was probably over ambitious at best.

Regulation Reform Is Next

Although statutory changes to Prop 65 law were not successful, most agree OEHHA, the lead agency, will make substantive and potentially drastic regulatory changes to Prop 65 warning requirements. If the Administration's proposal is any indication, regulatory changes could mean new expenses and new forms of liability for apartment and property owners.

But before any changes can occur, OEHHA will likely hold public meetings to discuss and inform stakeholders and the public at large of pending reforms. Stakeholders and interest groups will have another opportunity to voice their concerns. If the language continues to be problematic, we will explain our reasoned position at that time.

We will be paying close attention to any future regulatory or legislative efforts to reform Prop 65.

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