BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 227
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          Date of Hearing:   April 16, 2013

           ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
                                  Luis Alejo, Chair
                     AB 227 (Gatto) - As Amended:  April 9, 2013
           
          SUBJECT  :   Safe Drinking Water and Toxic Enforcement Act of  
          1986.

           SUMMARY  :   This bill changes the enforcement provisions of the  
          Safe Drinking Water and Toxic Enforcement Act of 1986  
          (Proposition 65).  Specifically,  this bill  :

          1)Prohibits a Proposition 65 enforcement action by a person  
            acting in the public interest for a failure to provide clear  
            and reasonable warning of an exposure to a carcinogen or  
            reproductive hazard if the alleged violator has:

             a)   Corrected the violation within 14 days of the notice of  
               violation; and

             b)   Provides a written statement, signed under penalty of  
               perjury, that describes the corrective actions taken to  
               which is attached a copy of any posted warnings.

          2)Makes a legislative finding that this bill furthers the  
            purposes of Proposition 65. 

           EXISTING LAW:

          1)Provides, in accordance with Proposition 65, that no person in  
            the course of doing business shall knowingly and intentionally  
            expose any individual to a chemical known to the state to  
            cause cancer or reproductive toxicity without first giving  
            clear and reasonable warning.  It also provides that no person  
            shall knowingly discharge or release those same chemicals into  
            any source of drinking water.

          2)Provides certain exemptions from the requirements of  
            Proposition 65, including where the exposure or discharge  
            would pose no significant risk of cancer, or, for chemicals  
            that cause reproductive toxicity, would have no observable  
            effect at 1,000 times the level in question.

          3)Permits enforcement of Proposition 65 through civil actions  








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            brought by the Attorney General, District Attorneys', and  
            certain city attorneys'.  In addition, any person may bring an  
            action by first giving a notice to the alleged violator, the  
            Attorney General and any District Attorney in whose  
            jurisdiction the violation is alleged to have occurred.  If  
            none of the authorized public prosecutors file an action  
            within sixty days, the person can commence a public interest  
            lawsuit.  Persons filing actions in the public interest also  
            notify the Attorney General when they file a complaint, and  
            when the case reaches a settlement or judgment.

          4)Establishes criteria to guide a court in assessing any civil  
            penalty awarded as a result of violating Proposition 65, such  
            as the nature and extent of a violation or the willfulness of  
            the violator's misconduct.

          5)Provides that a public prosecutor, at his or her discretion,  
            may recover costs and attorney's fees on behalf of a private  
            party rendering assistance in a Proposition 65 case.

          6)Provides that the Legislature may only amend Proposition 65  
            with a 2/3 vote of each house and the amendment must further  
            the purpose of the Proposition 65.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :

           1)Need for the bill  .  According to the author, "This measure  
            intends to reduce or eliminate frivolous legal actions brought  
            under Proposition 65 where plaintiffs are seeking damages for  
            alleged violations that involve a retail business either  
            neglecting to have a sign posted, or posting in a manner that  
            isn't visible enough to the public.  There has been a recent  
            wave of violation notices sent to businesses like bars,  
            restaurants and coffee shops, (places that must post signs  
            because of alcohol or byproducts of coffee roasting) because  
            of improperly posted signs or signs that were not up due to an  
            honest oversight.  These are cases where the business owners  
            are not exposing customers to unknown, dangerous chemicals.   
            Rather, they are serving things like the aforementioned coffee  
            or alcohol and are more than happy to post the proper sign. "

           2)Proposition 65 warning notice requirements  .  Under the  
            provisions of Proposition 65 businesses are required to  








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            provide a "clear and reasonable" warning before knowingly and  
            intentionally exposing anyone to a Proposition 65 listed  
            chemical.  This warning can be given by a variety of means,  
            such as by labeling a consumer product, posting signs at the  
            workplace, distributing notices at a rental housing complex,  
            or publishing notices in a newspaper.

            Businesses with less than 10 employees and government agencies  
            are exempt from Proposition 65's warning requirements and  
            prohibitions on discharges into drinking water sources.   
            Businesses are also exempt from the warning requirement and  
            discharge prohibition if the exposures they cause are so low  
            as to create no significant risk of cancer or birth defects or  
            other reproductive harm.

           3)Effects of required Proposition 65 notice  .  According to the  
            California Office of Health Hazards Assessment, the agency  
            that oversees the listing of carcinogens and reproductive  
            toxicants, Proposition 65's warning requirement has provided  
            an incentive for manufacturers to remove listed chemicals from  
            their products.  For example, trichloroethylene, which causes  
            cancer, is no longer used in most correction fluids;  
            reformulated paint strippers do not contain the carcinogen  
            methylene chloride; and toluene, which causes birth defects or  
            other reproductive harm, has been removed from many nail care  
            products.  In addition, a Proposition 65 enforcement action  
            prompted manufacturers to decrease the lead content in ceramic  
            tableware and wineries to eliminate the use of lead-containing  
            foil caps on wine bottles.

           4)Proposition 65 warning requirements for alcohol  .  California  
            has adopted regulations to implement the provisions of  
            Proposition 65.  Among those regulations are special  
            provisions for public notices related to the hazards of  
            alcohol.  Specifically, the regulations protect retailers from  
            enforcement actions and instead place that responsibility on  
            the liquor manufactures or distributors.  The regulation  
            provides, "[f]or alcoholic beverages, the placement and  
            maintenance of the warning shall be the responsibility of the  
            manufacturer or its distributor at no cost to the retailer,  
            and any consequences for failure to do the same shall rest  
            solely with the manufacturer or its distributor, provided that  
            the retailer does not remove, deface, or obscure the requisite  
            signs or notices, or obstruct, interfere with, or otherwise  
            frustrate the manufacturer's reasonable efforts to post,  








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            maintain, or periodically replace said materials." 27 Cal.  
            Code Regs. 25603.3(e)(7).

           5)Proposition 65 enforcement-persons acting in the public  
            interest  .  The California Attorney General's Office enforces  
            Proposition 65.  Any district attorney or city attorney (for  
            cities whose population exceeds 750,000) may also enforce  
            Proposition 65.  In addition, any individual acting in the  
            public interest may enforce Proposition 65 by filing a lawsuit  
            against a business alleged to be in violation of this law.   
            Lawsuits have been filed by the Attorney General's Office,  
            district attorneys, consumer advocacy groups, and private  
            citizens and law firms.  Penalties for violating Proposition  
            65 by failing to provide notices can be as high as $2,500 per  
            violation per day.

            The proposed language of AB 227 may limit the general  
            effectiveness of Proposition 65 by limiting the potential for  
            enforcement actions by consumer advocacy groups and private  
            citizens.  The prohibition on taking enforcement action would  
            apply to any person or business that has violated Proposition  
            65 by failing to provide the required clear and reasonable  
            notice.  By effectively eliminating penalties or threat of  
            legal action, as currently provided by Proposition 65, by  
            persons in the public interest there may be less incentive for  
            businesses to prospectively comply with the warning  
            requirements of Proposition 65.

           6)Prior amendments to Proposition 65  .  Since that passage of  
            Proposition 65, the legislature has amended Proposition 65 to  
            address the concerns over private enforcement actions.  Those  
            changes have included:

             a)   SB 1269 (Alpert), Chapter 599, Statutes of 1999,  
               requires that private plaintiffs filing actions in the  
               public interest notify the Attorney General when they file  
               a complaint and when the case reaches a settlement or  
               judgment.  The Attorney General is required to collect  
               information on a reporting form that includes the amount of  
               settlement or civil penalty assessed, the financial terms  
               of settlement, and other information deemed appropriate by  
               the Attorney General.  Any private plaintiff bringing an  
               action that is subject to a settlement must report to the  
               Attorney General the corrective action being taken.  This  
               information is to be maintained by the Attorney General.








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             b)   SB 471 (Sher), Chapter 578, Statutes of 2001, requires  
               the notice in Proposition 65 cases challenging the adequacy  
               of warnings to include a certificate of merit which would  
               certify that the private plaintiff believes there is good  
               cause for the notice based on consultation with an  
               appropriate expert who has reviewed the information.  If  
               the court finds that there was no credible factual basis  
               for the certificate, the action would be deemed frivolous  
               and subject to sanctions.

             c)   SB 1572 (Sher), Chapter 323, Statutes of 2002, clarifies  
               that a person settling an action arising from Proposition  
               65 must file a form with the Attorney General that includes  
               the names of the parties.

           Arguments in Support  :  Among the supporters of AB 227, the  
          California Restaurant Association has provided an assessment of  
          the need for this bill.  Specifically they assert, "Recently,  
          and of greatest concern, is the increase in lawsuits faced by  
          restaurants that have been targeted for allegedly failing to  
          display "clear and reasonable" warnings to consumers.   
          Restaurants are required to post a number of signs to comply  
          with Proposition 65.  Each sign required under the regulation is  
          very prescriptive and may differ from one county to another.   
          For example, any establishment that allows smoking must post an  
          environmental exposure to substances such as tobacco smoke,  
          restaurants that serve distilled spirits, and other alcoholic  
          beverages must post a warning sign stating these beverages may  
          increase cancer risk, and during pregnancy can cause birth  
          defects.  Not to mention, in San Francisco County, restaurants  
          must post all of their Proposition 65 warnings in Chinese,  
          Spanish and English.

          Restaurants agree it is important to inform the public of  
          potential hazardous materials and post appropriate signage when  
          necessary.  However, our industry has seen an increase in  
          frivolous lawsuits for signs that may have fallen down or are  
          posted in an area that is not considered highly visible.  AB 227  
          will help reduce the inappropriate use of Proposition 65 and  
          restore it to its original intent of protecting consumers for  
          actual legit violations."

           Augments in opposition:   A coalition of environmentalists,  
          public health, and workplace safety groups, and consumer  








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          attorneys has voiced concerns over the provisions of AB 227.   
          Specifically they assert that, "by allowing violators an  
          opportunity to cure any violations without repercussion, the  
          bill will eliminate all incentives for businesses to comply with  
          Proposition 65.  Similarly, AB 227 will eliminate incentives for  
          businesses to comply with Proposition 65 and protect  
          Californians from toxic chemicals.  AB 227 would undermine the  
          protective and deterrent purposes of Proposition 65.  With that  
          in mind, the bill runs afoul of the statute's requirement that  
          any amendments be in furtherance of the voters' public health  
          intentions in support of Proposition 65.

          By barring enforcement action altogether, AB 227 also raises  
          serious separation-of-power and due-process issues.  In a time  
          when consumers are increasingly concerned about the presence of  
          toxic chemicals in their air, food, water, and consumer  
          products, the legislature should protect Californians' right to  
          petition the courts for relief from unlawful exposures to those  
          chemicals. AB 227 does the opposite."

          This bill is double referred to the Assembly Judiciary  
          Committee.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Air Conditioning Trade Association
          American Coatings Association
          Apartment Association, California Southern Cities
          BIOCOM
          California Apartment Association
          California Assisted Living Association
          California Association of Health Facilities
          California Automotive Business Coalition
          California Business Properties Association
          California Chamber of Commerce
          California Citizens Against Lawsuit Abuse
          California Construction & Industrial Materials Association
          California Craft Brewers Association
          California Dental Association
          California Framing Contractors Association
          California Grocers Association
          California Hotel and Lodging Association
          California Independent Grocers Association








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          California Independent Oil Marketers Association
          California Independent Petroleum Association
          California Metals Coalition
          California Restaurant Association
          California Retailers Association
          California Service Station & Auto Repair Association
          Civil Justice Association of California
          Clovis Chamber of Commerce
          Consumer Specialty Products Association
          Culver City Chamber of Commerce
          Duarte Chamber of Commerce
          East Bay Rental Housing Association
          National Association of Theatre Owners of CA/NV
          National Federation of Independent Business
          NOR CAL Rental Property Association
          Palm Desert Chamber of Commerce
          Plumbing-Heating-Cooling Contractors Association of California
          Rancho Cordova Chamber of Commerce
          San Fernando Valley Chamber of Commerce
          Simi Valley Chamber of Commerce
          United Chambers of San Fernando Valley
          Valley Industry & Commerce Association
          Visalia Chamber of Commerce
          Western Electrical Contractors Association
           
          Opposition 

           Breast Cancer Action 
          Breast Cancer Fund 
          Californians for a Healthy and Green Economy 
          Center for Environmental Health 
          Clean Water Action California 
          Coalition for Clean Air 
          Consumer Attorneys of California
          Consumer Federation of California  
           Environmental Law Foundation 
          Environmental Working Group 
          Pesticide Action Network North America 
          Sierra Club California 
           

          Analysis Prepared by  :    Bob Fredenburg / E.S. & T.M. / (916)  
          319-3965 










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