BILL ANALYSIS Ó
AB 2361
Page 1
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Luis Alejo, Chair
AB 2361 (Jones) - As Amended: March 28, 2014
SUBJECT : Safe Drinking Water and Toxic Enforcement Act of 1986
(Proposition 65): enforcement.
SUMMARY : Prohibits any person from bringing an enforcement
action against a company that employs 25 people or less for
failure to provide a warning for an exposure to a chemical known
to the state to cause cancer or reproductive toxicity, in
violation of Proposition 65, unless certain conditions are met.
Specifically, this bill :
1)Requires any person who serves a notice of alleged violation
of the clear and reasonable warning requirement of Proposition
65 upon a person who employs fewer than 25 employees to
complete and provide to the alleged violator a notice of the
special compliance procedure and proof of compliance form, as
specified.
2)Prohibits any person who serves a notice of alleged violation
upon a person who employs fewer than 25 employees from filing
an action for that exposure against the alleged violator, or
from recovering from the alleged violator in a settlement any
payment in lieu of penalties or any reimbursement for costs
and attorney's fees, if , within 14 days after service of the
notice, the alleged violator has done all of the following:
a) Corrected the alleged violation;
b) Agreed to pay a civil penalty for the alleged violation
of the clear and reasonable warning requirement of
Proposition 65 of $500; and,
c) Notified, in writing and as specified, the person that
served the notice of the alleged violation that the
violation has been corrected.
3)Requires the alleged violator to 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 to remit the portion of the
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penalty due to the Safe Drinking Water and Toxic Enforcement
Fund within 30 days of receipt of the funds from the alleged
violator.
4)Specifies, in detail, the requirements of the notice required
to be provided to an alleged violator.
5)Makes a legislative finding that this act furthers the
purposes of the Safe Drinking Water and Toxic Enforcement Act
of 1986.
EXISTING LAW : Under Proposition 65:
1)Prohibits a person in the course of doing business (defined as
a business of 10 or more, per Health and Safety Code [HSC]
Code §25249.11) from knowingly discharging or releasing a
chemical known to the state to cause cancer or reproductive
toxicity into water or onto or into land where such chemical
passes or probably will pass into any source of drinking
water. (HSC § 25249.5)
2)Prohibits a person in the course of doing business from
knowingly and intentionally exposing any individual to a
chemical known to the state to cause cancer or reproductive
toxicity without first giving clear and reasonable warning to
such individual. (HSC § 25249.6)
3)Provides that any person who violates the above provisions may
be enjoined in any court of competent jurisdiction and shall
be liable for a civil penalty not to exceed $2,500 per day for
each violation in addition to any other penalty established by
law. (HSC § 25249.7)
4)Provides for a specified course of remediation for lawsuits
alleging a violation of the clear and reasonable warning
requirement for four specified exposures (lawfully permitted
alcoholic beverages; chemicals resulting from food or beverage
preparation; environmental tobacco smoke on premises where
smoking is permitted; and, engine exhaust in parking
facilities, as specified). Prohibits the person who files an
action from exposure from doing so until 14 days after she or
he has served the alleged violator with a notice of alleged
violation. Authorizes the person who served the notice of
violation to file an action if the alleged violator failed to
correct the alleged violation or failed to pay a civil penalty
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of $500. (HSC § 25249.7)
5)Requires the Governor to cause a list to be published of those
chemicals known to the state to cause cancer or reproductive
toxicity, and to cause such list to be revised and republished
in light of additional knowledge at least once per year. (HSC
§ 25249.8)
6)Exempts a business from discharge and release prohibitions for
twenty months subsequent to the listing of the chemical in
question on the list. Exempts a business from discharge and
release prohibitions if the discharge or release is lawful and
will not cause any significant amount of the discharged or
released chemical to enter any source of drinking water. (HSC
§ 25249.9)
7)Exempts a business from the warning requirement in cases of
federal preemption, for 12 months subsequent to the listing of
the chemical in question on the list, and for an exposure for
which the person responsible can show poses no significant
risk, as specified. (HSC § 25249.6)
8)Authorizes amendments to Proposition 65, provided that they
are passed in each house of the Legislature by a two-thirds
vote and further the Proposition 65's purposes. (Initiative
Measure, Proposition 65, Sec. 7, Nov. 4, 1986.)
FISCAL EFFECT : Unknown.
COMMENTS :
Need for the bill : According to the author, "While AB 227
(Gatto) (Chapter 581, Statutes of 2013) provides some
Proposition 65 litigation relief to bars, restaurants in limited
cases, parking garages, and places where the public may be
exposed to environmental tobacco smoke, it provides no relief to
other small businesses or for other types of exposures that they
had no way of knowing about. Furthermore, small businesses are
often those least able to afford the threat of Proposition 65
litigation and associated settlements and would genuinely try to
comply with the law if given a chance.
"The intent underlying the exemption to businesses with fewer
than 10 employees applies equally to other small businesses with
25 or under who face the threat of litigation for innocent
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mistakes. Those businesses are trying to survive in today's
economic climate and are already struggling. They cannot hire
more workers or may even have to reduce their jobs because of
litigation over the placement of a sign. Unfortunately,
Proposition 65 provides a strong incentive for trial attorneys
to litigate even after the problem has been remedied upon
bringing the problem to the attention to the small business."
Proposition 65 : In 1986, California voters approved a ballot
initiative, Proposition 65, the Safe Drinking Water and Toxic
Enforcement Act of 1986, commonly referred to as Proposition 65,
to address their concern that "hazardous chemicals pose a
serious potential threat to their health and well-being, [and]
that state government agencies have failed to provide them with
adequate protection?" Proposition 65 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, currently includes approximately
800 chemicals. The Office of Environmental Health Hazard
Assessment (OEHHA) administers the Proposition 65 program,
including evaluating all currently available scientific
information on substances considered for placement on the
Proposition 65 list.
Under Proposition 65, businesses in California are required to
provide a "clear and reasonable" warning before knowingly and
intentionally exposing anyone to a Proposition 65-listed
chemical. Warnings can be made in many ways, including by
labeling a consumer product, posting signs, distributing
notices, or publishing notices in a newspaper. Once a chemical
is listed, businesses have 12 months to comply with warning
requirements.
Proposition 65 also prohibits companies that do business within
California from knowingly discharging listed chemicals into
sources of drinking water. Once a chemical is listed,
businesses have 20 months to comply with the discharge
prohibition.
Businesses with less than 10 employees and government agencies
are exempt from Proposition 65's warning requirements and
prohibition 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
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other reproductive harm.
For a violation of the clear and reasonable warning requirement
of Proposition 65 for four specified exposures (lawfully
permitted alcoholic beverages; chemicals resulting from food or
beverage preparation; environmental tobacco smoke on premises
where smoking is permitted; and, engine exhaust specific in
parking facilities), statute provides for a specified course of
remediation, which includes enabling the alleged violator to
correct the alleged violation within 14 days and pay a civil
penalty of $500 in order to avoid a lawsuit. This bill proposes
to extend this course of remediation for all business of 25 or
fewer employees who have violated the warning requirement of
Proposition 65.
How does Proposition 65 work to protect the public ? According
to the Office of the Attorney General (AG), the provisions of
Proposition 65 have been successful at protecting consumers from
toxic chemicals. The AG asserts that Proposition 65 has
motivated businesses to eliminate or reduce toxic chemicals in
numerous consumer products. Products that have been
reformulated as a result of notices of violation or litigation
include ceramic tableware, artificial turf, household faucets,
children's jewelry, potato chips, candy, and vitamin
supplements. Proposition 65 has also resulted in significant
reductions in toxic air pollution - both outdoor (diesel school
bus and grocery truck emissions) and indoor (salon worker
exposures to formaldehyde, toxic solvents in nail products, and
formaldehyde gas release from the building materials in portable
classrooms). Proposition 65 has induced "quiet compliance"
without the need for litigation, in which manufacturers
voluntarily take steps to comply by providing their suppliers
with specifications so that the ingredients in their products
avoid or significantly limit exposure to listed chemicals. The
law has also educated the general public about exposures to
specific toxic chemicals, creating both demand and market reward
for less-toxic products. Finally, Proposition 65 litigation has
identified specific chemical exposure concerns and led to
regulatory reforms to benefit public health at the state and
national level.
Proposed regulatory action on the Proposition 65 warning
requirement : After holding a public workshop on warning
regulations and considering other comments received, on March 7,
2014, OEHHA released a pre-regulatory package to reform
Proposition 65, which includes enhancements to the warning
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requirements and provides an opportunity for retailers, only,
with 25 or fewer employees to cure certain minor warning
violations, as specified, to avoid private enforcement. Minor
warning violations would include the short-term absence of a
sign or other warning materials that had been previously
provided, inadvertent obstruction of a warning label or sign, or
the interruption of an electronic device due to software
problems or internet connectivity issues. The regulations
specify that the opportunity to cure only exists where the
retail seller was previously in compliance with Proposition 65,
the violation is not the result of intentional neglect or
disregard for Proposition 65, unavoidable, corrected within 24
hours of discovery or notification, or within 14 days where
software or equipment must be repaired or replaced, and not
recurrent. On April 14, 2014, OEHHA will hold a public workshop
on the possible regulatory action. If a regulation is
eventually adopted, it would replace the existing OEHHA
regulation.
Are the provisions of this bill constitutional ? In order to
protect the initiative authority of the electorate, the
California Constitution prohibits the Legislature from amending
any statute that was passed by ballot initiative, except by the
specific conditions included in the initiative. Proposition 65
was passed by California voters in 1986 and specifically
prohibits the Legislature from making any amendments, except
upon at least two-thirds vote and only if such amendments
"further its purposes." The California Legislative Counsel
Bureau (Legislative Counsel) noted that, "The California Supreme
Court has held that Proposition 65 is to be construed broadly to
protect the public (People ex rel. Lungren v. Superior Court
(1996) 14 Cal. 4th 294, 306-307, 314)? A court may determine
that these proposed changes on the enforcement provisions of the
act, if enacted, do not further the purposes of the initiative,
notwithstanding the legislative findings in proposed Section 2
of the measure (see Amwest Surety Ins. Co. v. Wilson (1995) 11
Cal.4th 1243, 1249-1265)."
Do the provisions of this bill further the purposes of
Proposition 65, and are they constitutional?
Arguments in Support : Southwest California Legislative Council
argues that, "AB 2361 would provide our small businesses members
with relief from Proposition 65 litigation abuse. In
particular, it prohibits private enforcement actions against
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those entities with fewer than 25 employees. AB 2361 does NOT
alter any compliance obligations for those entities. Under AB
2361, if an entity with 10-24 employees violates Proposition 65,
they are still subject to civil penalties brought in actions
commenced by government prosecutors?
"Among the largest sectors still subject to Proposition 65
litigation abuse are the retail and manufacturing industries.
Furthermore, small businesses are often those least able to
afford the threat of Proposition 65 litigation and associated
settlements. While businesses with fewer than 10 employees are
already exempt from Proposition 65, many other small businesses
face the threat of litigation for innocent mistakes. Those
entities are often more than willing to simply fix the error and
move on, but Proposition 65 provides a strong incentive for
trial attorneys to litigate even after the problem has been
remedied."
Arguments in Opposition : The Center for Environmental Health
argues that, "The purpose of Proposition 65 is to prevent
exposures by workers and the public to toxic chemicals, not to
mitigate the harm once it is done. AB 2361 would do just the
opposite by allowing companies with fewer than 25 employees to
avoid serious consequences if, within 14 days, they have
'corrected the violation' that has already allowed people to be
exposed to chemicals that cause cancer and/or reproductive harm.
Not only does this bill undermine the fundamental purpose of
Proposition 65, but it also puts those working for small
businesses at particular risk of exposure to toxic materials and
the associated health problems?
"By allowing businesses with fewer than 25 employees to avoid
any significant consequences for violating Prop 65, AB 2361
would eliminate incentives for businesses to comply with the
statute? Just as the threat of speeding tickets is critical to
making our highways safer, the threat of Prop 65 enforcement is
critical to ensuring that companies comply with the law and keep
our children and families safer?
"AB 2361 would allow any company with fewer than 25 employees to
avoid serious consequences if, within 14 days, it has 'corrected
the violation.' Given the many scenarios that may require a
Prop 65 warning, this provision is so vague as to be
meaningless. What does it mean for a retailer to correct a
violation of Prop 65 when it has already sold a product to a
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consumer? How does a business that exposes people to a Prop 65
chemical on its premises correct that violation? More
importantly, who decides whether a violation has been
"corrected"? Rather than protecting companies with 10-24
employees from litigation, AB 2361 invites endless litigation on
these questions."
Recent related legislation :
1)AB 2738 (Committee on Environmental Safety and Toxic
Materials). Includes technical clean-up of the Proposition 65
provisions in AB 227 (Gatto, 2013). This bill is scheduled to
be heard on April 29, 2014, in the Assembly Environmental
Safety and Toxic Materials Committee.
2)AB 227 Gatto (Chapter 581, Statutes of 2013). For four
potential exposures (alcohol, food preparation, environmental
cigarette smoke, and vehicle exhaust, all in certain
contexts), provides for a specified course of remediation for
lawsuits alleging a violation of the clear and reasonable
warning requirement of Proposition 65.
3)AB 1026 (Quirk, 2013). Would have changed the process for
identifying carcinogens and reproductive toxicants under
Proposition 65 to require the listing of chemicals only if
there is "sufficient evidence" that the suspect material is
known to cause cancer or reproductive toxicity. The Assembly
Environmental Safety and Toxic Materials Committee hearing on
this bill was canceled twice at the request of author. The
bill subsequently died.
Double referral : This bill has been double referred to the
Assembly Judiciary Committee.
REGISTERED SUPPORT / OPPOSITION :
Support :
American Coatings Association
Association of California Egg Farmers
Automotive Specialty Products Association
Biocom
BOMA California
California Association of Realtors
California Business Properties Association
California Building Industry Association
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California Bus Association
California Chamber of Commerce
California Farm Bureau Federation
California Grain & Feed Association
California League of Food Producers
California Manufacturers & Technology Association
California Metals Coalition
California Paint Council
California Seed Association
California State Association of Florists
Civil Justice Association of California
Consumer Specialty Products Association
Ifra North America
International Council of Shopping Centers
International Fragrance Association, North America
Industrial Environmental Association
National Aerosol Association
National Association of Independent and Office Properties
National Federation of Independent Business
Paint Council Network
Southwest California Legislative Council
Opposition :
Alliance of Nurses for a Healthy Environment
As You Sow
Breast Cancer Action
California Baby
California Healthy Nail Salon Collaborative
California League of Food Processors
California Labor Federation
California Teamsters Public Affairs Council
Californians for a Healthy and Green Economy
Center for Environmental Health
Clean Water Action
Coalition for Clean Air
Communities for a Better Environment
Consumer Attorneys of California
Consumers Union
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Copabianco
Environmental Working Group
Friends of the Earth
Physicians for Social Responsibility - Los Angeles
Physicians for Social Responsibility - San Francisco
Sierra Club
Sustainable Business Alliance
Teamsters
Worksafe
David Roe (individual)
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965