Upcoming regulation will require online and catalog retailers to implement product warnings.
Enforcement of the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly known as Proposition 65 (Prop 65), will change significantly on August 30, 2018. Two years earlier, on August 30, 2016, California’s Office of Environmental Health Hazard Assessment (OEHHA), the agency responsible for implementing Prop 65, issued regulations that increased businesses’ responsibility to provide a “clear and reasonable” warning to consumers for products that contain carcinogens and/or reproductive toxicants. Among other requirements, under these new regulations (2016 Regulations) businesses must provide consumers in California with more specific information about potentially harmful chemicals in their consumer products. The 2016 Regulations also specify which entities in the stream of commerce are responsible for providing the Prop 65 warnings and the information that goes into the warnings.
Specifically, the 2016 Regulations will impact online retailers and upstream entities such as product manufacturers, suppliers, and distributers, who under the 2016 Regulations are primarily responsible for Prop 65 warning labels. See CAL. CODE. REGS. tit. 27, § 25600.2(a) (2016).
This blog post is the first in a series to consider several issues as the 2016 Regulations become effective on August 30, 2018. These regulations are only applicable to products manufactured on or after August 30, 2018. If you have further questions about the implementation of the 2016 Regulations, please contact one of the authors or the Latham lawyer with whom you usually consult.
Summary of Changes Related to Online and Catalog Warnings
The 2016 Regulations reflect consumers’ increased use of online shopping. Online warnings are required in addition to labels or other on-product warnings. See OEHHA, Questions and Answers for Businesses: Internet and Catalog Warnings (2018).
Under the 2016 Regulations, online retailers must now include Prop 65 warnings for all appropriate products before purchase. See CAL. CODE. REGS. tit. 27, § 25602(b) (2016). These warnings must be easy for potential customers to find, and need to be product-specific. Online retailers may provide Prop 65 warnings to California consumers in several ways, as specified in § 25602(a) of the 2016 Regulations, including:
1. The product display page can include the entire Prop 65 warning.
2. A hyperlink embedded on the product display page may show the Prop 65 warning.
3. Online shopping carts can include the product-specific Prop 65 warning as part of the check-out process.
The warnings provided should match the safe harbor language provided elsewhere in the 2016 regulations, including the requirement that the warning identify one or more listed chemicals present in the product that are listed by the State of California as potentially causing cancer or reproductive harm. Id. § 25601(b).
Although the online retailer is responsible for providing online warnings to California consumers, upstream entities (such as manufacturers and distributors) are still responsible for providing the Prop 65 warning to the online retailer. Id. § 25600.2(d) (2016). This obligation may be satisfied by either providing the warning on the product or by issuing a written notice to the online retailer. Id. § 25600.2(b−c).
The 2016 Regulations are less specific regarding print catalogs, and only require that the Prop 65 notice “clearly associate” the product and the warning. Id. § 25602(c). Catalog designers might include the full warning on each page, as needed, or might choose to place it on the order form for the products as needed. In either case, the warning must be product-specific and conveyed prior to purchase.
In 2017 alone, the California Attorney General reported 688 settlements, totaling more than US$225 million, involving allegations of non-compliance with Prop 65. See California Attorney General, Prop 65 Settlement Summary (2017).
For online retailers and catalog retailers, several traps could frustrate both retailers and upstream entities who have the best intentions of providing warnings to California consumers. For instance, upstream entities may seek to satisfy their obligations under Prop 65 by simply placing a warning on the product. Unless the online retailer or catalog retailer is vigilant or has implemented a system requiring advanced notice from the upstream manufacturer to the online retailer, products subject to Prop 65 may be inadvertently sold online or through a catalog without complying with the 2016 Regulations, even though the product itself contains a warning when it arrives to the consumer.
Conversely, upstream entities may be subject to allegations of non-compliance with Prop 65 in the event that an online retailer or catalog retailer sells a product without displaying an online or catalog warning. Upstream entities should take precautions to ensure that online and catalog retailers provide applicable warnings for the products upstream entities create.
The 2016 Regulations take effect on August 30, 2018, and apply to any product produced on or after August 30, 2018. See CAL. CODE. REGS. tit. 27, § 25600(b) (2016). To safeguard against potential claims of noncompliance with Prop 65, online retailers, catalog retailers, and upstream entities should prepare now for the implementation of the 2016 Regulations. Upstream entities whose products require a warning should work with online or catalog retailers selling their products to ensure the warning provided is displayed to customers before purchase. Online or catalog retailers should establish procedures to ensure they know which products require warnings, and that those warnings are being given before purchase.
This post was prepared with the assistance of Abby Timmons in the Orange County office of Latham & Watkins.