BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                        AB 227|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
                                    THIRD READING

          Bill No:  AB 227
          Author:   Gatto (D), et al
          Amended:  8/30/13 in Senate
          Vote:     27 - Urgency

          AYES:  Hill, Gaines, Calderon, Corbett, Fuller, Hancock,  
            Jackson, Leno, Pavley

           SENATE JUDICIARY COMMITTEE  :  7-0, 6/25/13
          AYES:  Evans, Walters, Anderson, Corbett, Jackson, Leno, Monning

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  72-0, 5/24/13 - See last page for vote

           SUBJECT  :    Proposition 65:  enforcement

           SOURCE  :     Author

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

           Senate Floor Amendments  of 8/30/13 shift the deadline for  
          calculating and publishing initial inflation-adjusted civil  
          penalty amount from January 1, 2019 to April 1, 2019.



                                                                     AB 227

           ANALYSIS  :    

          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  
            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 60 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 the Legislature may only amend Proposition 65  
            with a two-thirds vote of each house and the amendment must  
            further the purpose of the Proposition 65.

          This bill: 

          1.Requires a person filing an enforcement action in the public  
            interest for certain specified exposures to provide a notice  



                                                                     AB 227

            in a specified proof of compliance form.  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, under the following conditions:
             A.   The notice was served on or after the effective date of  
               the act amending this section during the 2013-14 Regular  
               Session and alleges that the alleged violator failed to  
               provide clear and reasonable warning as required under  
               Proposition 65 regarding:

               (1)    An exposure to alcoholic beverages that are consumed  
                 on the alleged violator's premises to the extent onsite  
                 consumption is permitted by law.

               (2)    An exposure to a chemical known to the state to  
                 cause cancer or reproductive toxicity in a food or  
                 beverage prepared and sold on the alleged violator's  
                 premises primarily intended for immediate consumption on  
                 or off premises, to the extent of both of the following:

                  (i)       The chemical was not intentionally added.

                  (ii)      The chemical was formed by cooking or similar  
                    preparation of food or beverage components necessary  
                    to render the food or beverage palatable or to avoid  
                    microbiological contamination.

               (1)    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.

               (2)    An exposure to chemicals known to the state 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.

             A.   Within 14 days after service of the notice, the alleged  
               violator has:

               (1)    Corrected the alleged violation;



                                                                     AB 227

               (2)    Paid a civil penalty for the alleged clear and  
                 reasonable warnings violation in the amount of $500, to  
                 be adjusted every five years, per facility or premises  
                 where the alleged violation occurred, of which 75% shall  
                 be deposited in the Safe Drinking Water and Toxic  
                 Enforcement Fund, and 25% shall be paid to the person  
                 that served the notice of violation.  Requires the  
                 Judicial Council, on April 1, 2019, and at each five-year  
                 interval thereafter, to adjust that civil penalty, as  
                 specified; and 

               (3)    Notified, in writing, the person that served the  
                 notice of the alleged violation, that the violation has  
                 been corrected.  The written notice must include the  
                 notice of special compliance procedure and proof of  
                 compliance form, as specified, which was provided by the  
                 person serving notice of the alleged violation and which  
                 shall be completed by the alleged violator as directed in  
                 the notice.

             A.   The alleged violator shall deliver the civil penalty to  
               the person that served the notice of the alleged violation  
               within 30 days of service of that notice, and the person  
               that served the notice of violation shall remit the portion  
               of the penalty due to the Safe Drinking Water and Toxic  
               Enforcement Fund within 30 days of receipt of the funds  
               from the alleged violator.

          1.Provides that nothing in this bill 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.

          2.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.

          3.Finds and declares, further, that the changes to the current  



                                                                     AB 227

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

           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. 

           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.

           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, "for 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  



                                                                     AB 227

          otherwise frustrate the manufacturer's reasonable efforts to  
          post, maintain, or periodically replace said materials."

           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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/30/13)

          Air Conditioning Trade Association
          American Chemistry Council
          American Coatings Association
          Apartment Association, California Southern Cities
          Association of Home Appliance Manufacturers
          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



                                                                     AB 227

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



                                                                     AB 227

          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
          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

           ARGUMENTS IN SUPPORT  :    According to the author, "This bill  
          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."

           ASSEMBLY FLOOR  :  72-0, 5/24/13
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,  
            Blumenfield, Bocanegra, Bonilla, Bradford, Brown, Buchanan,  
            Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,  
            Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,  



                                                                     AB 227

            Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,  
            Hagman, Hall, Harkey, Roger Hernández, Jones, Jones-Sawyer,  
            Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,  
            Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,  
            Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel  
            Pérez, Quirk, Quirk-Silva, Rendon, Salas, Stone, Ting, Wagner,  
            Weber, Wieckowski, Williams, Yamada, John A. Pérez
          NO VOTE RECORDED:  Bonta, Grove, Holden, Skinner, Waldron, Wilk,  
            Vacancy, Vacancy

          RM: ej  8/31/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****