Prop 65 and Green Chemistry: Reform Efforts, Litigation Trends and Regulatory Update Presented by Melissa Jones Litigation Partner 1 October 22, 2013 Long Beach, CA
Overview of Presentation Understanding Proposition 65 Litigation Trends Reform Efforts and Status Green Chemistry 2
Welcome to California 3
Understanding Prop 65 Fundamentals of Prop 65 The Prop 65 List Problems with Prop 65 What happens in Prop 65 litigation 4
Understanding Prop 65 5
Fundamentals of Prop 65 Enacted by voters: Safe Drinking Water and Toxic Enforcement Act of 1986 Penalties ($2,500 per violation) Businesses with fewer than 10 employees are exempt 6
The Prop 65 List 7
The List: Some Examples 1,4-Dioxane Acrylamide Arsenic Benzene Cadmium Formaldehyde Cocamide-DEA Lead 4-MEI Mercury Phthalates (BBP, DBP, DEHP, DIDP, and DnHP) Tris (TDCPP, TCEP) 8
Problems with Prop 65 Enforced by public or private enforcers List of chemicals is long Compliance is difficult Defending a lawsuit can be costly Applies to virtually everything sold in CA 9
How is a lawsuit initiated? No injury needed Plaintiff determines product contains a Prop 65 chemical If no warning, plaintiff serves a 60-Day Notice 10
Burden on Defendant Plaintiff only needs evidence of a trace amount of the chemical, then burden shifts to the defendant Plaintiff Chemical Trace Defendant Burden of Proof 11
60-Day Notice 12
60-Day Notice Sets forth alleged facts: product + chemical(s) Certificate of Merit sent to AG Notice often sent to CEO/President of the company 13
Settlement options Out-of-court settlement Consent Judgment (in-court) 14
Litigation Trends 15
Litigation Trends Industry-wide attacks still common. Latest exs: TDCPP and Cocamide-DEA Higher penalties demanded in consent judgments Uptick in post-settlement enforcement efforts (CEH v. Lulu) 16
Litigation Trends: Footwear 23 Notices of Violation sent between Jan. 1, 2013 and Oct. 16, 2013 Notices involve lead, phthalates Sent to retailers, distributors, and manufacturers 17
Reform Efforts 18
Reform Efforts Legislation (California s AB 227) Gov. Brown s Task Force 19
Legislation: AB 227 Originally proposed a fix it period for all Later amended to limit the fix it provision to exposures to alcoholic beverages and food, tobacco smoke and exhaust fumes 20
Other Limits to AB 227 Only applies to business with no 60 Day Notice in past 5 years Requires corrective action and payment within 14 days of receiving the notice 21
Legislation: AB 227 Result After amended, signed into law on Oct. 5 Unlikely to have any notable impact on Prop 65 activity and litigation in CA 22
Gov. Brown Task Force Big Ideas Cap attorney s fees More evidence before litigation Limits on $$ in enforcement cases State more flexibility to adjust safe harbor levels Etc. 23
Gov. Brown Task Force Sept. 2013- Brown administration ended efforts due to lack of consensus Will proceed with regulatory proposals to change Prop 65 warning requirements 24
Green Chemistry CA Department of Toxic Substance Control 25
Green Chemistry: Purpose require manufacturer to seek alternative ingredients in widely used products, offering California industry the opportunity to lead the way in producing safer versions of goods in demand around the world 26
Green Chemistry Regulations effective Oct. 1, 2013 Same as regulations released for public comment in April 2013, but with added trade secret protection 27
Green Chemistry: Scope Apply to responsible entities : importers, manufacturers, assemblers and retailers Exempt products: prescription drugs, medical devices, food, pesticides) 28
Green Chemistry Four Step Process 29
Four Step Process 1. DTSC list of Candidate Chemicals 30
Initial Candidate Chemical List 31
Four Step Process 2. By March 31, 2014, DTSC analyze product/chemical combinations to develop list of 5 priority products 32
Four Step Process 3. Companies that sell priority products in CA will perform alternative assessment (AA) to determine if safer versions are available 33
Four Step Process 4. DTSC evaluates AA report and issues regulatory response 34
Regulatory Response 35
Enforcement DTSC broad authority: Failure to Comply list Enforcement actions for penalties and fines (criminal and civil; up to $25,000 per violation) Can audit any information submitted by a responsible entity 36
Other takeaways Potential priority products: children s products, personal care products, cleaning products Responsible entities will have only 60 days to notify DTSC if sell priority products in CA and only 180 days to submit AA Sign up for alerts on dtsc.ca.gov 37
Contact Information Melissa Jones (916) 319-4649 majones@stoel.com 38