Amendments to Proposition 65’s Safe Harbor Regulations Finalized in Attempt to Clarify Legal Responsibilities of Businesses Across the Supply Chain
Companies now have more guidance on how to communicate Proposition 65 warnings for products sold through distributors. The California Office of Environmental Health Hazard Assessment (OEHHA) finalized the amendments proposed to Section 25600.2 of the Proposition 65 safe harbor regulations on January 14, 2020. According to OEHHA, the amendments are intended to "provide more specific guidance for manufacturers, retailers and other businesses in the chain of commerce on how to satisfy their responsibilities to provide consumer product exposure warnings" for substances on the Proposition 65 list. The final amendments become effective on April 1, 2020.
Background
In 2016, OEHHA comprehensively redesigned the Proposition 65 safe harbor regulations under Title 27, Article 6 of the California Code of Regulations. Under the 2016 amendments, which became effective on August 30, 2018, warnings that conform to the safe harbor methods and content specified in the regulations are deemed “clear and reasonable” under the Proposition 65 statute. Since the announcement of the 2016 amendments, OEHHA has revised the new regulations on several occasions. As Beveridge & Diamond previously reported, one such initiative targeted Section 25600.2, which governs the allocation of Proposition 65 warning responsibilities for consumer product exposures among the various entities along the supply chain.
Under the 2016 amendments, and in line with the Proposition 65 statute, the primary responsibility for providing warnings of consumer product exposures is placed on manufacturers, producers, packagers, importers, suppliers or distributors, as opposed to retailers. For consumer product exposures, those businesses must either provide a warning on the product or provide notice and warning materials to “the authorized agent” for a retailer and receive an acknowledgment that the notice and materials were received. If the latter approach is taken, the retailer is then responsible for the placement and maintenance of the warning materials. That approach did not address the complexities of some supply chains, however.
The 2016 amendments also enumerated the circumstances in which a retailer is responsible for providing a warning for consumer product exposure. These limited instances include, among other things, where the retailer has obscured the warning affixed to the product or where the retailer has “actual knowledge” of a potential consumer product exposure and there is no other entity in the supply chain that is subject to Proposition 65 and has a legal or physical presence in California.
Under the 2016 amendments, the primarily responsible entities in the supply chain listed above may also enter into a written agreement with the retailer to allocate legal responsibility for providing a warning among themselves.
Amendments to Section 25600.2
In November 2018, OEHHA proposed amending Section 25600.2 to clarify how entities upstream in the supply chain can satisfy their warning obligations in instances where they do not know the identity of the retailer that will ultimately be selling their product. Under the recently finalized amendments to Section 25600.2, manufacturers and others upstream in the supply chain may satisfy their warning obligations by providing written notice and warning materials either directly to the authorized agent for the retailer or to the business to which they directly sell or transfer the product (i.e., the next entity in the supply chain), provided that the business is subject to Proposition 65. The finalized amendments also clarify that the primarily responsible entities in the supply chain may enter into a written agreement with any downstream entity in the supply chain to which they are selling or transferring a product to allocate legal warning responsibilities. Additionally, the revisions clarify that if a business has not designated an authorized agent to accept and acknowledge receipt of the Proposition 65 notice and warning materials, then notice may be served on the business’s legal agent for service of process.
The final amendments also revise the definition of “actual knowledge” used in Section 25600.2 to provide further specificity on the instances that may trigger retailer responsibilities to provide a Proposition 65 warning for a consumer product exposure. Under the 2016 amendments, “actual knowledge” was defined to mean “specific knowledge of the consumer product exposure received by the retail seller from any reliable source.” The most recent amendments clarify the level of specificity required to constitute “actual knowledge” and the persons whose specific knowledge of a consumer product exposure can be imputed to the retail seller. Under the revised regulations, “actual knowledge” is defined to mean “the retail seller receives information from any reliable source that allows it to identify the specific product or products that cause the consumer product exposure. Such knowledge must be received by the retail seller, its authorized agent or a person whose knowledge can be imputed to the retail seller.”
Full copies of the final amendments and OEHHA’s Final Statement of Reasons are available here.
Beveridge & Diamond’s Chemicals Regulation practice group and Chemicals industry group provide strategic, business-focused advice to the global chemicals industry. Beveridge & Diamond's Consumer Products industry group works with U.S. and multinational companies that make, distribute, transport, or sell consumer products in a hyper-competitive and evolving consumer goods market. We help them identify, understand, and comply with complex regulatory requirements throughout the product lifecycle. For more information, please contact the authors.
