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American companies selling products in, or to customers in, the state of California must ensure compliance with California Proposition 65. This law regulates more than 800 substances in all consumer products. Yet, many American start ups and small businesses importing from China, and other Asian countries, are largely unaware how California Proposition 65 applies to their products.
That’s why we decided to reach out to Daniel Herling, Member at Mintz Levin, a general practice law firm with more than 450 attorneys. Daniel, based on San Francisco, focuses on commercial litigation representing U.S, and international clients in the Americas, Europe and Asia. In this interview, he explains what American importers must know about California Proposition 65 – and what the consequences are of selling non-compliant items. But before we look into details, let’s begin with a brief introduction.
Introduction to California Proposition 65 and Mintz Levin’s practice
Over the past 25 years, (California) Proposition 65 litigation has become a real threat to businesses providing goods and services in California. The potential costs faced by corporate defendants exposed to Proposition 65 compliance issues are high—massive civil penalties, compulsory warnings on their products, and damage to a company’s brand. Staying in compliance with this statute and responding appropriately when there’s a potential hazard can help you avoid these costly fines and penalties as well as safeguard your organization’s reputation with consumers.
Mintz Levin’s California Proposition 65 Practice is known for its capabilities and knowledge of the statute, regulations, and policies. Practice leaders Dan Herling and Michelle Gillette have represented a wide variety of clients in the consumer product arena, including manufacturers, distributors, retailers, and trade associations. We have deep experience counseling both US based entities and foreign consumer product importers and manufacturers.
We also have a wealth of experience working with the State of California’s Attorney General’s office and the various private enforcers of Proposition 65. We know there goals and tactics and have been successful in countering them. Furthermore, our team members have strong litigation defense experience involving consumer product liability claims, including successfully defending class actions both in California and throughout the US.
Proposition 65 claims can be brought against companies in a number of industries—from cosmetics companies, to food manufacturers, to apparel companies, to fuel and energy companies—and our team has the broad industry knowledge to help avoid Proposition 65 claims and defend them should a claim be brought against your company.
Could you explain what California Proposition 65 is?
The 1986 voter-approved Safe Drinking Water & Toxic Enforcement Act (Prop 65) requires the Governor to publish a list of Chemicals known to the State of California to cause cancer and/or reproductive toxicity. If a product contains a listed chemical, then the product must contain a “clear and reasonable” warning label informing consumers of the presence of the chemical and stating the chemical is known to cause cancer, birth defects, or other reproductive harm.
If a product is found to contain a chemical without the required warning, then Prop 65 allows enforcement lawsuits to be brought by California governmental officials, non-profit organizations, law firms, and private individuals. Retailers whose products may contain a listed chemical are often the target of these types of lawsuits.
Generally, the lawsuits demand a recall of products sold; warnings to be placed on the product or at or near the point of sale or a reformulation of the product; payment of civil penalties up to $2,500 per violation per day; and payment of the plaintiff’s attorney fees. It is important to note that Prop 65 applies more broadly than just consumer products. Prop 65 regulates consumer exposure to listed chemicals. For example, a landlord may be required to provide Prop 65 warnings to tenants if a listed chemical is present in housing construction materials or pesticides used on the property.
Is California Proposition 65 applicable to all consumer products sold in California, or are there any exceptions?
Prop 65 is applicable to all consumer products with two exceptions. First, Prop 65 does not apply to products sold by businesses with less than 10 employees. Second, Prop 65 does not apply if human exposure levels fall below certain risk thresholds.
What are the human exposure levels that fall below the risk thresholds and are therefore exempt from Prop 65?
In general, Prop 65 sets a very low threshold of exposure for triggering the warning requirements. Products are violative if they result in human exposure that would cause one additional cancer in 100,000 people. Unfortunately, the California Office of Environmental Health Hazard Assessment (OEHHA) has not determined the safety threshold levels for many of the Prop 65 listed chemicals. OEHHA has published one document outlining the “no significant risk levels” and “maximum allowable dose levels” for some of the listed chemicals that could be useful if attempting to rely on this exemption.
Companies do often utilize this exemption as a defense in litigation. In order to use the exemption as a defense, companies must first determine the threshold (safe) level for exposure of the chemical to humans (usually denominated in micro grams of the chemical per day). Next, companies must determine the level of consumer exposure to the chemical by examining how consumers typically interact with the product. If the exposure level is less than the threshold risk level, then a company can make the argument that the exemption applies.
Unlike CPSIA, is California Proposition 65 also applicable to products primarily intended to adults, and not only children?
Assuming I don’t want to attach a warning label, do I need to ensure that my items don’t contain any regulated substance?
Yes. In a situation where a warning label would adversely impact the marketing of a product (e.g. personal care products), the alternative is to reformulate the product without use of the alleged violating chemical.
But, what If I’m not sure which substances my items may contain? Can I tell a laboratory to check all of the 800+ substances regulated by California Proposition 65?
What kind of documents do importers need to present in order to prove compliance?
Because Prop 65 is enforced by California, importers do not need to present documentation to U.S. Customs officials to prove compliance. Documentation may be required to prove compliance with FDA, EPA, or CPSC regulations.
I understand, but is this saying that third party testing, proving Prop 65 compliance, is not required at all?
A company can represent that it is compliant with Prop 65 if it conducts its own testing. Third party testing is not required to make a representation that a company’s product is Prop 65 compliant. Third party testing usually arises in the response to a 60 day Notice and/or ensuing litigation.
Would it be safe to assume that a California Proposition 65 compliant product is also compliant with all other US Federal Regulations, such as FHSA?
No. The FHSA contains labeling requirements for potential hazards that are different and may fall outside the scope of Prop 65. Examples include products that are flammable, combustible, corrosive, toxic, irritants, or strong sensitizers. In fact, California Prop 65 compliance is not a guarantee of compliance with any other state or federal statutes.
What about American companies in other states, are they required to ensure compliance or attach a warning label if they sell to customers in California?
Prop 65 requires a warning at the point of sale. If a product is sold into California, then Prop 65 applies.
I’ve read that businesses with less than 10 employees are exempt from California Proposition 65. Does this exemption really apply to consumer products imported from China, assuming that the importer has less than 10 employees?
If all imports and retail sales are through businesses with less than 10 employees, then the exemption applies. If a small importer sells a violative product to a retailer with more than 10 employees, however, the retailer could receive a notice of violation. In these circumstances, retailers usually rely on clauses within their contacts with importers that require the importer take responsibility for the violation.
Most Prop 65 cases are actually brought against the retailer, who typically brings in the manufacturer or importer to handle and ultimately pay for the resolution of the case. In this type of situation, it is important for importers to make sure the consent agreement between the retailer and the plaintiff contains “downstream releases” that protect all parties in the supply chain from further claims.
What are the consequences of selling items that are non-compliant with California Proposition 65?
A plaintiff may seek injunctive relief requiring a company caught selling a violative product to suspend sales, conduct a recall, or reformulate the product. Plaintiffs can also obtain penalties of up to $2,500 per violation per day. A more general California statute allows most successful plaintiffs to recover their attorneys’ fees as well.
How is the State of California currently enforcing compliance?
Proposition 65 may be enforced by the California Attorney General, other California public enforcers such as district attorneys, non-profit organizations, and private plaintiffs. A private plaintiff that seeks to file a lawsuit must first issue a pre-litigation notice letter. If no California public enforcer files suit as to that notice letter within a 60-day waiting period, the private plaintiff may proceed to file a lawsuit.
Do you think we will see similar consumer product regulations in other states, or perhaps even on a national level, in the future?
Yes. The states of Washington, Vermont, California, Connecticut, Maine, and Minnesota have already passed what are being called “green chemistry” laws that also regulate the use of certain chemicals in consumer products. Similar laws have been proposed in other states and there is also a movement at the national level to reform the Toxic Substances Control Act (TSCA) in a manner that would give the EPA enhanced authorities to regulate these types of
Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
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