Takeaways

Proposed revisions provide further clarity on the phrase “actual knowledge” and how it can be imputed to retailers for their warning responsibilities.
Proposed revisions create procedure for upstream manufacturers and distributors to shift warning responsibilities to downstream distributors and ultimately retailers.

On October 4, 2019, revisions were proposed to California Proposition 65 that seek to delineate further the phrase “actual knowledge” and how it can be imputed to retailers to dilute their recently gained protections under the new warning regulations. Changes were also proposed that clarify the procedures on how upstream manufacturers and distributors can effectively shift warning responsibilities onto downstream distributors and ultimately retailers. Comments on the proposed changes are due by October 21, 2019.

Proposition 65’s new warning regulations, which became effective on August 30, 2018, were implemented with a number of goals in mind.  One of those goals was “to the extent practicable place the obligation to provide any warning materials…on the producer or packager rather than on the retail seller…”  according to the California Office of Environmental Health Hazard Assessment’s (OEHHA) Initial Statement of Reasons for the new warning regulations.  To that end, the new warning regulations made clear that retailers would be responsible for providing warnings only if the retailer fell into one of five enumerated circumstances.  Of those five enumerated circumstances, only one has proven to be controversial—the fifth circumstance dealing with “actual knowledge.”  (27 C.C.R. § 25600.2(e)(5).) 

“Actual knowledge” is currently defined in Proposition 65 as “specific knowledge of the consumer product exposure received by the retail seller from any reliable source.”  (27 C.C.R. § 25600.2(f).)  The newly proposed definition of “actual knowledge” is when “the retail seller receives information from any reliable source that allows it to identify the specific product or products that cause the consumer product exposure.”  The changes in definitions may appear slight, but they are significant. 

Under the newly proposed definition, a retailer could only be imputed to have actual knowledge of a potential consumer product exposure to listed chemicals when a “specific product or products” is identified.  This qualifying language, which is not present in the current definition, could prove significant to retailers.  This is because under the proposed revisions, retailers should no longer be subject to the argument that they are imputed to have “actual knowledge” for entire categories of products.    

Separately, OEHHA’s proposed revisions to Proposition 65 that allow entities upstream in the chain of commerce, such as product manufacturers and distributors, to provide a warning or written notice to any entity in the chain of commerce for the product at issue effectively shifts the warning responsibility downstream.  Previously, notice and warnings for a product could only be provided to the retailer.  This too could prove to be significant, particularly for those entities in the chain of commerce that previously had no mechanism to shift the burden of providing a Proposition 65 warning.