Cal Biz Lit

Regulations Did In Fact Increase the Cost to Resolve Proposition 65 Claims

The price of settling a Proposition 65 case has increased significantly since October of 2016. The reason why October of 2016 is notable enough to be a measuring point, is because that is when the Attorney General’s change to regulations on private enforcement took effect. Before diving deeper into this, a quick background on the types of payments that are part of Proposition 65 settlements or consent judgments is in order. To resolve a matter a defendant has to typically pay the enforcer’s attorney fees and investigation costs, a civil penalty (25% of which is kept by the enforcer and 75% of which is paid to the California Office of Environmental Health Hazard Assessment), and common prior to October of 2016, a “payment in lieu of penalty” (which the enforcer would keep 100% of). The Attorney General astutely observed that amounts that would have otherwise been penalties were diverted into payments in lieu of penalty, depriving the state of its 75% cut of those funds, and all an enforcer needed to vouch for to do that was that the monies would be used to enforce Proposition 65. In other words, the enforcer would have funds to purchase many products and pay for the lab testing of them, looking for something else in violation, thereby continuing to move the gears of the litigation machine.

The October 2016 regulation that has likely driven up the cost of resolving a Proposition 65 notice of violation the most is a provision that required that payments made directly to a private enforcer, now called “additional settlement payments,” be used in a way that has a nexus with the subject of the notice of violation. So now rather than being able to use that money to fund continued Proposition 65 investigation costs and testing for anything and everything, the money would have to be used to address an issue relating to that particular chemical, product, or impacted group. Whatever the use of the funds, the use now has to be explained to either a judge approving a consent judgment and the State Attorney General, or if an out of court settlement, the State Attorney General. The State Attorney General will ask the enforcer what the funds are to be used for and may go after an enforcer not properly using funds. Rather than trouble themselves with coming up with programming or causes connected to the notice of violation, with limited exceptions, enforcers have largely ditched the additional settlement payment. They now just demand a much heftier civil penalty payment, so their 25% cut of that amount is substantial enough to keep moving the gears of the litigation machine. Even for those that develop programming or a connected use of the funds, the “additional settlement payment” cannot exceed 75% of the civil penalty, also likely pushing civil penalty amounts higher.

While blog posts by their nature may be more anecdotal, I decided to secure some, though also admittedly anecdotal, empirical evidence to support my experience in defending and resolving Proposition 65 cases. One enforcer’s average civil penalty was $6,435 in 2015 (the last full year before the new regulations took effect), and in 2016 there was a small uptick to $6,521 (the regulations took effect in October 2016). It was then off to the races, with that enforcer's average civil penalty amount ballooning to $11,466 in 2017, and $16,838 in 2018. The amount of civil penalties demanded by an enforcer is largely dependent on who that enforcer is. So numbers in the foregoing range are not always the end result, but it has clearly become a more costly proposition to settle a Proposition 65 case since October of 2016.

Be Careful With Those Short Form Warnings!

On August 31, 2018, the State of California enacted new regulations regarding the “Safe Harbor” warnings required of companies that sell products in California that contain chemicals that can expose consumers to chemicals at levels that can increase the risk of cancer, or of causing birth defects or other reproductive harm.

The changes generally required the warnings to be more specific, that a warnings include both the name of the chemical(s) in the product that would cause an exposure, as well as the particular risk (cancer or reproductive harm) that would result from the exposure. For example, that a warning state:

“⚠️WARNING: This product can expose you to chemicals, including[specific chemical], that is known to the State of California to cause birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov”.

One notable exception to the more onerous warning requirements in the  2018 amendments was the “short form” warning, found at This Short Form was first authorized in 2018, in Health and Safety Regulations, specifically 27 Cal.Code of Regs, Article 6, CRC 25603.  (All references to Regulations hereinafter refer to 27 Cal.Code of Regs.)

.  The “short form” requires only, for example:

⚠️WARNING: Reproductive Harm: www.P65Warnings.ca.gov.

The problem is that I have seen companies selling, for instance, food products, using the “short form” warning. This is not permitted by statute. 

The relevant Regulation authorizes the use of this Short Form warning starts with the phrase “Unless otherwise specified in Section 25607.1 et seq…”

When we go to Section 25607.1, it provides that the seller/manufacturer of food products must use the language from Section 25607.2.

 Section 25607.2 says that the warning must say:

⚠️WARNING: Consuming this product can expose you to [chemical], which is known to the State of California to cause [for example]cancer and birth defects or other reproductive harm. For more information go to WARNING: Cancer- www.P65Warnings.ca.gov”. (The warning is to be adjusted, of course, based on the chemical involved and the hazards to be addressed.) 

So, while regular consumer goods can use a “short form” warning, looking at Sections 25607.1 and 25607.2, it is clear that food products require a long form warning.  Or, as clear as these Regulations get, anyway.

One significant down side is that if a company uses a short form warning on a food product, it serves as an admission that a Proposition 65 warning is required for that product.  Doing that and then using the wrong warning form is, simply, an invitation to litigation. 

Finally, as noted in a prior post on this site, in January OEHHA proposed adoption of a short form warning for food products, but that has not been adopted as yet.  If it is adopted, it will allow such warnings only on products for which:

(A) The total surface area of the product label available for consumer information is 5 square inches or less, and;

(B) the package shape or size cannot accommodate the full-length warning described in Section 25603(a).

In conclusion: Not all warnings are equal in terms of their effectiveness in satisfying the obligations of a company under Proposition 65.  Read the Regulations carefully!