A sage lawyer, once opined…
“Kermit the Frog seems to have had it right when he warbled his catchy little tune lamenting the perils of being green; although he might soon be singing a new ditty called ‘Is that red, I’m seeing?’” That quote aptly describes what many out-of-state national or multi-national companies may experience when confronted with California’s array of unique and more stringent environmental laws. Often times, out-of California companies are caught off-guard when they discover that they inadvertently have been violating a California environmental law that either is unique to the State or more stringent than the federal equivalent enforced in virtually every other state. There are several California traps for the unwary or unaware, but the two most prominent environmental laws often cited as problematic for out-of-state companies doing business in California are: (1) the Safe Drinking Water & Toxic Enforcement Act (commonly known as Proposition 65); and the (2) the upcoming Safer Consumer Product Regulations (Green Chemistry Initiative)—which, if adopted, will have significant and costly implications for the regulated community. These laws, because they are unique to California, have a disproportionate impact on out-of-state national or multi-national companies doing business in California.
Proposition 65 Casts A Wide Net
Proposition 65 is one of the most far-reaching statutes in the nation for addressing the presence of chemicals in a myriad of products ranging from flame-broiled hamburgers to cosmetic bags (and everything in between).
Under Proposition 65—which was adopted by the California voters in 1986–companies that manufacture, sell or distribute products in California containing one or more chemicals on the so-called Proposition 65 List may be required to provide a warning to consumers and others that the products contain a chemical known to the State of California to cause cancer, birth defects or reproductive harm.
The list of chemicals regulated under Proposition 65 has grown to include more than 850 chemicals, including some items that you would not expect to see on the List, such as Chinese-style salted fish, aspirin, and many ingredients that are found in common household and office products, toys, jewelry, food, and herbal health supplements. Further, the Act’s provisions allow private individuals to bring actions against alleged violators on behalf of the general public. This so called “bounty hunter” provision has spawned an entire industry of private plaintiffs who are constantly searching for any products that may be in violation, and who employ aggressive tactics in pursuing enforcement actions under the statute. In many cases, these citizen enforcers often demand that companies reformulate their product(s) to remove the chemicals all together or, at a minimum, severely curtail the concentrations of the chemical(s) in the products.
Accordingly, companies doing business in California have learned to take steps to evaluate all potential exposures to Proposition 65 chemicals in their products or in environmental releases (e.g., through a manufacturing process that occurs in California). Compliance can be achieved either by demonstrating that there is no actionable exposure or by providing a compliant warning.
California’s Green Chemistry Initiative May Cause Some Companies To See Red
However, a new initiative is on the horizon with the potential for even more significant implications than Prop 65. In September 2008, California’s Green Chemistry Initiative became law. Since then, California EPA’s Department of Toxic Substances Control (DTSC), which is charged with implementing the law, has been on a roller coaster in its efforts to adopt regulations that both industry stakeholders and environmental groups find acceptable. No easy task. On July 27, 2012, DTSC released its most recent proposed Safer Consumer Products (SCP) regulations for public notice and comment. These regulations are expected to be finalized in Spring 2013.
The SCP regulations – if adopted as presently drafted – will have a major impact on virtually all companies manufacturing, selling or distributing consumer products in California, regardless of where they are manufactured or produced. “Consumer product” is broadly defined to include (with a few exceptions for certain types of products already regulated) “a product or part of the product that is used, brought, or leased for use by a person for any purposes.”
The goal of the California regulations is, ultimately, to either cause the reformulation of products that are designated as “priority products” or ban their sale, manufacture, import or distribution in California. In its press release announcing the draft SCP regulations, DTSC said, “[t]he proposal requires manufacturers to seek alternative ingredients in widely used products, offering California industry the opportunity to lead the way in producing safer versions of goods already in demand around the world…[i]f an alternative is not feasible, DTSC will identify the steps the manufacturer must take to ensure the product is safely used, disposed of, or phased out.” (emphasis added).
The four-step SCP implementation process proposed by DTSC is expensive, time consuming, and cumbersome—especially for companies with a wide variety of products or many stock-keeping units. Further, one of the most significant issues facing the myriad companies that will be impacted by the SCP regulations is how the proposed SCP regulations will interface with the many other state, federal and international laws that have been implemented over the years to address chemicals in consumer products, such as Proposition 65, REACH, the Consumer Product Safety Improvement Act, the Toxic Substances Control Act and the Toxics in Packaging Act, to name a few.