WARNING: Entire Supply Chain Implicated in Proposition 65 Amendments

In an effort to minimize the burden on retail sellers of consumer products, the California Office of Environmental Health Hazard Assessment expressly expects manufacturers, producers, packagers, importers, suppliers, and distributors will fulfill their own duty to warn. In addition, the amendments require new, more detailed content and format for the warnings, with special considerations for products sold on the internet and certain industry and location-specific warnings. Market participants across the board are updating their Proposition 65 compliance plans to reflect new requirements that are highlighted below.

Warning Label

As amended, Proposition 65 continues to require “clear and reasonable warnings” be provided on the product label or labeling (which will now include a package insert), or on signs or shelf tags at each point of display of the product. However, the amendments redefine the safe harbor language that is used to ensure warnings meet that standard. To fall within the safe harbor, effective August 30 2018, the warning will now need to:

• Begin with a yellow pictogram and text reading, “ WARNING:”
• Identify at least one of the Proposition 65 chemicals for each endpoint (i.e., cancer or reproductive toxicity);
• State that the product can expose the consumer to chemicals, including [one or more listed chemicals, to be identified in the warning], known to the State of California to cause cancer and/or birth defects or other reproductive harm ; and
• State the URL of California’s Proposition 65 website.

For certain classes of products, a “short-form” warning may be used instead of the full warning if supplied on the product’s physical label. Exemplar safe harbor warnings are provided below to help illustrate the impact of the latest Proposition 65 warning amendments for a listed carcinogen:

Previous Warning	New Full Warning	New Full Warning
WARNING: This product contains chemicals known to the state of California to cause cancer.	WARNING: This product can expose you to chemicals including arsenic, which is known to the State of California to cause cancer. For more information, click  - www.P65Warnings.ca.gov.	WARNING:Cancer - www.P65Warnings.ca.gov.

Internet Sales

Products that require a warning under Proposition 65 must be accompanied by an online warning if the product is sold on the internet. The warning must be provided to the purchaser prior to completing the online purchase and can be supplied by displaying the entire warning on the product webpage or via a clearly marked hyperlink to the warning using the word “WARNING” on the product webpage. Because Proposition 65 only requires the warning be displayed to California residents, some businesses may elect to only display the warning as a pop-up when the online purchaser enters a California zip code. The options for providing a Proposition 65 for items sold over the internet are displayed in the diagram below:

Supply Chain Responsibilities and Options

Despite the burden of new requirements, parties upstream in the supply chain have various ways they can fulfill their Proposition 65 obligations. Rather than providing the warning on the physical label or in the product’s labeling, upstream entities can provide appropriate written notice to a retail seller’s "authorized agent" so long as it is confirmed received. The notice must identify the listed chemical(s), specify to which product(s) the particular warnings apply, and provide the required warning materials.

The upstream entity’s role in the supply chain and influence in product packaging/labeling will largely determine whether taking advantage of the notice option is preferable. Supply chain businesses between the manufacturer and retailer often will not be aware of which chemicals are present in the affected products because they are not involved in the product manufacturing or production. Further, the upstream entities have a warning obligation to the retailer but not necessarily to inform other downstream parties of the relevant chemicals. Therefore, agreements with manufacturers can be one of many critical tools for downstream entities to become aware of chemicals in the products so that they may fulfill their own duty to inform the retailer.

Industry-Specific Warnings

Some businesses may not be aware that Proposition 65 encompasses their products at all (see our previous alert concerning cannabis). Even market participants that are aware their product contains a listed chemical should investigate whether special warnings may apply to their business. For certain industries, the new Proposition 65 amendments require warnings tailored to the type of exposure. The industries include, but are not limited to:

• Restaurants
• Foods
• Alcoholic Beverages
• Amusement Parks
• Automotive
• Enclosed Parking Facilities
• Gas Service Stations
• Vehicle Repair Facilities
• Commercial Real Estate
• Hotels

Enforcement

With less than a month to satisfy the new Proposition 65 warning requirements, retailers and upstream businesses should ensure their compliance programs are current and implementable to minimize liability to public and private plaintiffs alike. Because Proposition 65 allows private plaintiff “bounty-hunters” to obtain up to $2,500 per day per violation from non-compliant businesses, we expect that plaintiffs will pursue actions on or shortly after the effective date of the new requirements - August 30, 2018.

Arent Fox LLP has extensive experience counseling clients in Proposition 65 matters, from notice of violation through all phases of litigation. We also provide Proposition 65 training seminars for clients with practical tips on effective compliance. This Alert is meant to highlight some of the significant changes in the new warning rules. Arent Fox's Complex Litigation group will continue to analyze these regulations and will publish future Alerts with more details on best practices to ensure compliance and decrease the likelihood of litigation.