BILL ANALYSIS Ó AB 227 Page 1 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 AB 227 Page 2 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 AB 227 Page 3 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, AB 227 Page 4 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. AB 227 Page 5 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 AB 227 Page 6 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 AB 227 Page 7 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 AB 227 Page 8