BILL ANALYSIS                                                                                                                                                                                                    



                                                                AB 227
                                                                       

                       SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                               Senator Jerry Hill, Chair
                               2013-2014 Regular Session
                                            
           BILL NO:    AB 227
           AUTHOR:     Gatto
           AMENDED:    May 8, 2013
           FISCAL:     Yes               HEARING DATE:     June 19, 2013
           URGENCY:    Yes               CONSULTANT:        Rachel Machi 
                                                           Wagoner
            SUBJECT  :    PROPOSITION 65: ENFORCMENT

            SUMMARY  :    
           

            Existing law  , under the Safe Drinking Water and Toxic Enforcement  
           Act of 1986 (Proposition 65):


            1) Requires the State to publish a list of chemicals known to  
              cause cancer or birth defects or other reproductive harm.   
              This list, which must be updated at least once a year, has  
              grown to include approximately 800 chemicals since it was  
              first published in 1987.

            2) Requires businesses to notify Californians about significant  
              amounts of chemicals in the products they purchase, in their  
              homes or workplaces, or that are released into the  
              environment. 


            3) Prohibits California businesses from knowingly discharging  
              significant amounts of listed chemicals into sources of  
              drinking water.


            4) Authorizes the Office of Environmental Health Hazard  
              Assessment (OEHHA) to administer the Proposition 65 program  
              and evaluate all currently available scientific information on  
              substances considered for placement on the Proposition 65  
              list. 


            This bill  :  Changes the enforcement provisions of Proposition.   








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           Specifically,  this bill  :

           1)Prohibits any person who serves a notice of alleged violation,  
             as specified, from filing an action for exposure against the  
             alleged violator, or recovering from the alleged violator in a  
             settlement any payment in lieu of penalties or any  
             reimbursement for costs and attorney's fees, if ALL the  
             following conditions are met:

              a)   The notice was served on or after the effective date of  
                this statute and alleges that the alleged violator failed to  
                provide clear and reasonable warning as required under  
                Proposition 65 regarding:

                i)     An exposure to alcoholic beverages, or to a chemical  
                  known to cause cancer or reproductive toxicity to the  
                  extent the chemical is formed on the alleged violator's  
                  premises by necessary preparation of food or beverages  
                  which are sold on the alleged violator's premises for  
                  immediate consumption;

                ii)    An exposure to environmental tobacco smoke caused by  
                  entry of persons (other than employees) on premises owned  
                  or operated by the alleged violator where smoking is  
                  permitted at any location on the premises; or 

                iii)   An exposure to chemicals known to cause cancer or  
                  reproductive toxicity in engine exhaust, to the extent the  
                  exposure occurs inside a facility owned or operated by the  
                  alleged violator and primarily intended for parking  
                  noncommercial vehicles.

              b)   Within 14 days after service of the notice, the alleged  
                violator has:

                i)     Corrected the alleged violation;

                ii)    Paid a civil penalty for the alleged clear and  
                  reasonable warnings violation in the amount of $500, to be  
                  adjusted annually to reflect any increases in the cost of  
                  living in California, as indicated by the annual average  
                  of the California Consumer Price Index, per facility or  
                  premises where the alleged violation occurred, of which  
                  75% shall be deposited in the Safe Drinking Water and  








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                  Toxic Enforcement Fund, and 25% shall be paid to the  
                  person that served the notice of violation; and

                iii)   Provided the person that served the notice a written  
                  statement, signed under penalty of perjury, that fully  
                  describes the actions taken to correct the alleged  
                  violation and attaches a true and correct copy of any  
                  warning provided as part of such actions.

              c)   The alleged violator has not been served with a  
                Proposition 65 notice for failure to provide clear and  
                reasonable warning within the previous five years for  
                failure to provide clear and reasonable warning about the  
                same exposure in the same facility or on the same premises.

           2)Provides that any such notice subject shall include a clear and  
             reasonable description of the terms in #1, and provides that  
             the lead agency may prescribe specific language for inclusion  
             in the notice that meets this requirement.

           3)Specifies that in the event of a dispute over whether a  
             Proposition 65 enforcement action is barred by this statute the  
             alleged violator shall bear the burden of proving the  
             applicability of the new protections from liability.  Upon the  
             conclusion of an enforcement action, if the trial court  
             determines that the alleged violator has prevailed on the  
             affirmative defense, the court may, upon motion of that alleged  
             violator or upon the court's own motion, review the basis for  
             the belief of the plaintiff that the action was allowable.

           4)Provides that nothing in the act shall prevent the Attorney  
             General, a district attorney, a city attorney, or a prosecutor  
             in whose jurisdiction the violation is alleged to have occurred  
             from filing an action against an alleged violator.  In any such  
             action, the amount of any civil penalty for a violation shall  
             be reduced to reflect any payment made by the alleged violator  
             for the same alleged violation.

           5)Finds and declares that the newly created limitation on  
             Proposition 65 enforcement actions are necessary to further the  
             purposes of Proposition 65 in terms of speed of compliance and  
             reasonableness as contemplated by Proposition 65. 

           6)Finds and declares, further, that the changes to the current  








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             statutes are necessary to further the purposes of the intent of  
             fairness contemplated by Proposition 65 as evinced by the  
             fairness factors.

           7)Specifies that this act is an urgency statute, allowing this  
             bill to take effect immediately.

            COMMENTS  :
                 
             1)Purpose of 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 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 OEHHA,  
             the agency that oversees the listing of carcinogens and  
             reproductive toxicants, Proposition 65's warning requirement  








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             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 manufacturers 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,  
             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.

            6)Prior amendments to Proposition 65  .  Since passage of  
             Proposition 65, the Legislature has amended Proposition 65 to  








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             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.

              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.

            7)Conflicting measure  .  The provisions of this measure conflict  
             with SB 650 (Lieu).  An amendment adding double-jointing  
             language is necessary to avoid chaptering out of one of the  
             measures. 

            8) Double Referral to Senate Judiciary Committee  .  If this  
              measure is approved by this committee, the do pass motion must  
              include the action to re-refer the bill to the Senate  
              Judiciary Committee.

            SOURCE  :        Author
            
           SUPPORT  :       Air Conditioning Trade Association








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                          American Chemistry Council
                          American Coatings Association
                          Apartment Association, California Southern Cities
                          Association of Home Appliance Manufacturers
                          BIOCOM
                          California Apartment Association
                          California Assisted Living Association
                          California Association of Health Facilities
                          California Association of Winegrape Growers
                          California Automotive Business Coalition
                          California Bus Association
                          California Business Properties Association
                          California Chamber of Commerce
                          California Citizens Against Lawsuit Abuse
                          California Construction & Industrial Materials  
                          Association
                          California Craft Brewers Association
                          California Framing Contractors Association
                          California Grocers Association
                          California Healthcare Institute
                          California Hotel and Lodging Association
                          California Independent Grocers Association
                          California Independent Oil Marketers Association
                          California Independent Petroleum Association
                          California League of Food Processors
                          California Manufacturers and Technology  
                          Association
                          California Metals Coalition
                          California Restaurant Association
                          California Retailers Association
                          California Service Station & Auto Repair  
                          Association
                          California Travel Association
                          Camarillo Chamber of Commerce
                          Carpentaria Valley Chamber of Commerce
                          Carson Chamber of Commerce
                          Chambers of Commerce Alliance of Ventura and Santa  

                                Barbara Counties
                          Civil Justice Association of California
                          Clovis Chamber of Commerce
                          Consumer Healthcare Products Association
                          Consumer Specialty Products Association
                          Culver City Chamber of Commerce








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                          Duarte Chamber of Commerce
                          East Bay Rental Housing Association
                          El Segundo Chamber of Commerce
                          Family Winemakers of California
                          Fresno Chamber of Commerce
                          Fullerton Chamber of Commerce
                          Garden Grove Chamber of Commerce
                          Goleta Valley Chamber of Commerce
                          Greater Conejo Valley Chamber of Commerce
                          Greater Riverside Chamber of Commerce
                          Harbor City/Harbor Gateway Chamber of Commerce
                          Hawthorne Chamber of Commerce
                          Hermosa Beach Chamber of Commerce
                          Irwindale Chamber of Commerce
                          Lawndale Chamber of Commerce
                          LAX Coastal Chamber of Commerce
                          Lomita Chamber of Commerce
                          Manhattan Beach Chamber of Commerce
                          Moorpark Chamber of Commerce
                          National Association of Theatre Owners of CA/NV
                          National Federation of Independent Business
                          NOR CAL Rental Property Association
                          Ojai Chamber of Commerce
                          Orange County Business Council
                          Oxnard Chamber of Commerce
                          Palm Desert Chamber of Commerce
                          Palo Verdes Peninsula Chamber of Commerce
                          Plumbing-Heating-Cooling Contractors Association  
                          of 
                               California
                          Port Hueneme Chamber of Commerce
                          Rancho Cordova Chamber of Commerce
                          Redondo Beach Chamber of Commerce
                          San Fernando Valley Chamber of Commerce
                          San Gabriel Valley Legislative Coalition of  
                          Chambers
                          San Gabriel Valley Regional Chamber of Commerce
                          San Pedro Chamber of Commerce
                          Santa Barbara Chamber of Commerce
                          Santa Clarita Chamber of Commerce
                          Santa Paula Chamber of Commerce
                          Simi Valley Chamber of Commerce
                          South Bay Association of Chambers of Commerce
                          Thousand Oaks Chamber of Commerce








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                          Torrance Chamber of Commerce
                          United Chambers of San Fernando Valley
                          Valley Industry & Commerce Association
                          Ventura Chamber of Commerce
                          Visalia Chamber of Commerce
                          West Coast Lumber and Building Material  
                          Association
                          Western Electrical Contractors Association
                          Wilmington Chamber of Commerce
            

           OPPOSITION  :    None on file