BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 227
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          AB 227 (Gatto)
          As Amended  September 5, 2013
          2/3 vote. Urgency
          |ASSEMBLY:  |72-0 |(May 24, 2013)  |SENATE: |37-0 |(September 10, |
          |           |     |                |        |     |2013)          |
           Original Committee Reference:    E.S. & T.M.  

           SUMMARY  :  Changes the enforcement provisions of the Safe  
          Drinking Water and Toxic Enforcement Act of 1986 (Proposition  
          65) by limiting recovery by private citizen enforcement action  
          for specified types of exposure to chemicals causing cancer or  
          birth defects or other reproductive harm in those circumstances  
          when the failure to provide clear and reasonable warnings has  
          been remedied and a penalty has been paid.

           The Senate amendments  added the following:

          1)Specify the form to be used to certify the compliance with the  
            public warnings and payment of penalties by the individual in  
            violation of the clear and reasonable warning requirement of  
            Proposition 65.

          2)Require the Judicial Council to adjust the penalty fee  
            provision of the newly created enforcement provision of  
            Proposition 65 every five-years based on the change in the  
            annual California Consumer Price Index.

           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  


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            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 must  
            notify the Attorney General when they file a complaint, and  
            when the case reaches a settlement or judgment.

          4)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 Proposition 65.

           AS PASSED BY THE ASSEMBLY  , this bill changed the enforcement  
          provisions of the Proposition 65.  Specifically, this bill:

          1)Prohibited any person who serves a notice of alleged violation  
            of Proposition 65 from filing an action for exposure against  
            the alleged violator under the following conditions:

             a)   The notice alleges that the alleged violator failed to  
               provide clear and reasonable warning as required under  
               Proposition 65 regarding:

               i)     An exposure to alcoholic beverages; 

               ii)    An exposure 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;

               iii)   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 

               iv)    An exposure to chemicals known to cause cancer or  
                 reproductive toxicity in engine exhaust, to the extent  


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                 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, 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; and

               iii)   Served on 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 notice  
               under Proposition 65 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)Provided that any notice subject to the subdivision above  
            shall include a clear and reasonable description of the terms  
            of the subdivision, and provides that the lead agency may  
            prescribe specific language for inclusion in the notice that  
            meets this requirement.

          3)Specified 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  


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          4)Specified that this act is an urgency statute.
            FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee this bill would result in minor non-reimbursable costs  
          to the extent the bill leads to allegations and convictions of  
          perjury.  The bill would also have minor General Fund savings  
          from a reduction in court caseloads, and minor revenue from  
          civil penalties, 75% of which would go to the Proposition 65  
          enforcement fund.

           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  
            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.


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           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,  
            maintain, or periodically replace said materials."

           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.


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

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