In 1986, California voters passed Proposition 65, generally requiring warnings when a business of 10 or more employees exposes someone (consumer, worker, neighbor) to a chemical which can cause cancer or reproductive toxicity. Since then the California Office of Emergency Health Hazard Assessment ("OEHHA") has been in charge of administering the law, including making decisions about which chemicals require the giving of such warnings.
Among other criteria, OEHHA has decided to require warnings whenever the International Agency for Research on Cancer ("IARC") identifies a chemical which is a carcinogen. Two organizations, Monsanto Company and California Citrus Mutual, took exception to OEHHA relying on a third-party, private organization to dictate when and where warnings must be given; and the two organizations maintained a lawsuit to invalidate such reliance. See Monsanto Company v. Office of Environmental Health Hazard Assessment, Fresno County California Superior Court, Case No. 16CECG00183 (Kristi Culver Kapetan, Judge). https://assets.documentcloud.org/documents/3516536/2017-3-10-Order-Sustaining-Motion-for-Judgment.pdf.
OEHHA sought to dismiss the Monsanto/Citrus complaint on the basis that OEHHA acted within tis authority in deferring to IARC. Judge Kapetan agreed, rejecting a number of Monsanto/Citrus' arguments:
Monsanto/Citrus argued that the deference was an unconstitutional delegation of authority. The Court, however, ruled that allowing IARC to decide what chemicals should be designated as carcinogens "does not constitute an unconstitutional delegation of authority to an outside agency, since the voters and the legislature have established the basic legislative scheme and made the fundamental policy decision with regard to listing possible carcinogens under Proposition 65, and then allowed the IARC to make the highly technical fact-finding decisions with regard to which specific chemicals would be added to the list. As noted by the California Supreme Court..., this is not a “delegation of authority", since the state did not delegate the fundamental policy decision regarding the question of whether to create a list of possibly carcinogenic chemicals ....The voters and the legislature then used the list independently created by the IARC, an outside agency, to 'fill in the blanks' with regard to which chemicals were potential carcinogens."
Monsanto/Citrus also argued that OEHHA's deference to IARC "violates the due process clauses of the California and United States Constitutions because Monsanto's property interest in its Roundup® trademark, its business goodwill, and its reputation will be damaged if glyphosate [the chemical at issue]is listed as a possible cause of cancer based on lARC's decision. Monsanto claims that there are no procedural safeguards in place to protect against an arbitrary decision by lARC, and lARC is not accountable to voters or any government body." In response, the Court said:
"OEHHA’s decision here is not subject to procedural due process claims because it is a quasi-legislative act. ...'[l]t is well established law that once an action is characterized as legislative, procedural due process requirements do not apply.' "
Monsanto/Citrus raised a number of other arguments seeking to convince the Court that a governmental body should not be allowed to have citizens governed by the decisions of a third-party, private entity such as IARC. The Court rejected all of such contentions and granted OEHHA's request to dismiss the complaint.
The Monsanto case illustrates that, at least in California, Courts are going to continue to allow administrative agencies extremely broad latitude in implementing regulations, even if that means upholding an agency's decision to "outsource" determinations to third-party, nongovernmental organizations. Business beware.