Hunton Retail Law Resource

As we previously reported, the Prop 65 statute prohibits businesses from exposing people in California to any of the over 800 listed chemicals without first providing a “clear and reasonable” warning. Currently, California’s Office of Environmental Health Hazard Assessment is working to repeal existing Prop 65 warning regulations and adopt new requirements. However, the proposed regulations contain several problematic provisions regarding the content and method of transmission for required warnings. Retailers need to be aware of proposed provisions which clearly apportion responsibility for providing warnings throughout the chain of commerce. Though purportedly aimed at reducing retailers’ Prop 65 warning burden, if implemented as written, the provisions will actually increase retailers’ risks and allow manufacturers to insulate themselves from liability at retailers’ expense.

The proposed regulations delineate several scenarios in which the burden to provide a warning would be shouldered by retailers. Perhaps most problematic is the fact that, under the proposed regulations, a manufacturer may shift the burden to retailers by providing both a written notice stating that a warning is required, and the necessary warning materials. Once these have been provided to retailers, manufacturers would be absolved of liability if the retailer fails to post the required notice. Contrary to Prop 65’s clear intent to place the bulk of the responsibility to provide a warning on manufacturers, the proposed regulation would let manufacturers offload liability and responsibility onto retailers. This proposal is further convoluted by unclear drafting, which suggests that retailers will be responsible for providing warnings for products sold over the internet, even if the manufacturer has included an on-product warning.

Retailers will also be responsible for providing warnings when a product is supplied by a foreign or exempt vendor where the retailer has “actual knowledge” of the potential exposure. If “actual knowledge” comes from a citizen enforcer in the form of a 60-day notice of violation, retailers will only have five business days to implement warnings or remove the product from their shelves. This short time-frame to correct an alleged violation is exacerbated by the proposed regulation’s requirement that a 60-day notice only need identify a product with “sufficient specificity” to comply with notice regulations. However, courts often find that notices identifying a broad class of products (e.g., handbags or footwear) meet the notice regulations. The question then becomes: are retailers supposed to stop sales of an entire product category? Broad notices, should the proposed rules be adopted, would create a dreadful dilemma for retailers who would have to decide between the risk of potentially extending non-compliance by not removing enough stock keeping units (“SKUs”) or not removing the correct SKUs, or removing the entire product category and suffering significant and material economic harm.

The deadline to submit comments regarding the proposed regulations is April 26, 2016.

Download our client alert for more information on the proposed regulations.