ENVIRONMENTAL LEGAL BLOGS

California proposes to exempt coffee from Prop 65 warning requirement

    Just a short time after a California court ruled in Council for Education etc. v. Starbucks, et al., Los Angeles Superior Court Case # BC435759 that coffee requires a Proposition 65 warning, California regulators are seeking effectively to reverse the decision.

   The Office of Environmental Health Hazard Assessment ("OEHHA") has announced a proposed new regulation (Title 27, CCR Section 25704), which provides:

Exposures in listed chemicals in coffee created by and inherent in the process of roasting coffee beans or brewing coffee do not pose a significant risk of cancer.

 

OEHHA has concluded that coffee consumption does not increase cancer risk and, at least for some cancers, may actually lower risk.  You can find the new proposed rule, along with the explanation by OEHHA of the reasons underlying the proposed rule, at https://oehha.ca.gov/media/downloads/crnr/coffeeisor061418.pdf.

Interested parties have until August 30, 2018 to comment on the proposed rule.The referenced website gives more details about the public-comment period and about where to send comments.

 

 

Court’s Prop 65 Ruling a Great “Brewhaha” for Coffee Retailers

In 2010, a nonprofit group called The Council for Education and Research on Toxics (CERT) brought a lawsuit against 91 commercial coffee roasters, retailers and distributors. 

CERT claimed the defendants failed to provide warnings regarding high levels of acrylamide, thus violating the Safe Drinking Water and Toxic Enforcement Act of 1986, more commonly known as California’s Proposition 65. The law requires companies with 10 or more employees warn consumers and others of any exposure to more than 900 confirmed or suspected carcinogens, including acrylamide, at the point of sale.

In late March, Los Angeles Superior Court Judge Elihu Berle tentatively decided in favor of CERT. The Court ruled that Starbucks and other companies failed to show there was no significant risk from acrylamide produced in the coffee roasting process and that cancer warning labels must be placed on their products in California.

That ruling has now been finalized. Barring a successful appeal, it appears that the law will force retailers either to post the Prop 65 warnings, or find ways to remove acrylamide from the coffee.

Prop 65: Signs of the Times

Businesses in California should take note: New compliance rules for Prop 65 take effect as of August 30, 2018. That leaves just a few months to ensure your signage or product packaging is complete and accurate. Generic warnings will no longer suffice.

Some of the new rules include the following requirements (for more details, see 27 California Code of Regulations [“CCR” §25603, Consumer Product Exposure Warnings – Content]:

1. “WARNING” must appear in the sign in bold and with all capital letters.
2. The sign must also generally include a yellow equilateral triangle outlined in black, with a black exclamation point in the center. This symbol must be at least as high as the word “WARNING.”
3. Premises signage must contain the specific name of the toxic substance found in the product sold.
4. Product labels do not need the chemical name, but must include requirements 1 and 2, above.
5. If warning labels and signs are given in another language, businesses must also provide them in English.

commonly asked questions and answers re warnings required by Proposition 65

https://www.p65warnings.ca.gov/sites/default/files/art_6_business_qa.pdf

 

 

Old Grounds: A Lack of Prop 65 Warnings Brew Trouble for Coffee Franchisors

This article was recently published on our law firm's blog, www.lewitthackman.com

California Prop 65 warnings – many residents barely notice these anymore, as we’ve lived with Safe Drinking Water and Toxic Enforcement Act notices for over 30 years now. They appear at gas pumps; in apartment and office buildings; on packaging for food, toys and other products; and in retail establishments all over the state.

The ubiquitous but largely ignored warnings are clear, generally stating that a consumer may be exposed to certain chemicals that may cause cancer or reproductive harm.

But if the average citizen of California no longer notices the signs, who does? Bounty hunters. More specifically, an opportunistic group of consumers and lawyers who notice the lack of Prop 65 signs and labels. They then file lawsuits on behalf of the public good. Most businesses settle the claims rather than engage in expensive litigation.

This leads to a whole new trend in tort litigation aimed at restaurants, though Starbucks and Dunkin’ Donuts were named (along with approximately 80 other coffee co-defendants) in a suit brought by the Council for Education and Research on Toxics (CERT) back in 2010. CERT's complaint is that these businesses failed to warn customers of potentially harmful, carcinogenic chemicals in coffee, specifically acrylamide.

In the latest news on this particular CERT suit, Dunkin’ lost its argument for summary judgment. The franchisor claimed it needn’t put warning labels on its coffee because technically, the franchisor doesn’t sell coffee in California. Dunkin’ Brands Inc. oversees a corporation – it doesn’t buy, sell, roast, distribute or even possess coffee.

A Los Angeles Superior Court Judge found that argument weak, and so to court will Dunkin’ go, along with its codefendants.

More Acrylamide and Other Chemically-Based Acrimony

The chemical acrylamide isn't just found in coffee. It forms on starchy foods as they cook, so toast, French fries and a host of other popular menu items carry trace amounts. So really, just about any one operating a restaurant in California can become a target.

But environmental plaintiffs worry about other chemicals too.

According to the Mercury News, plaintiffs filed lawsuits last year because of Bisphenol A (BPA) found in receipt paper and bottled water.

Sugar is also on the chemical hit list, though not considered a Prop 65 chemical.

California lawmakers introduced Senate Bill 300, the Sugar-Sweetened Beverage Health Warning Act, which could require anyone selling closed container beverages to add warnings to their containers, and any business with vending or beverage dispensing machines to add signage to those machines.

The warning as written now, would state: STATE OF CALIFORNIA SAFETY WARNING: Drinking beverages with added sugar(s) contributes to obesity, type 2 diabetes, and tooth decay.

Some franchisors have already stated an intention to remove food dyes from the ingredients of their menu items, Dunkin' Donuts and Baskin Robins among them. But California has a bill targeting products with these chemicals too.

Senate Bill 504 would amend the state's Health and Safety Code to direct the Office of Environmental Health Hazard Assessment (OEHHA) to review literature regarding the potential risks to children who may be consuming these chemicals.

A report from the OEHHA would be due in 2019. Chances are good the chemicals in food dyes will make their way to the hundreds of chemicals already flagged on California's Prop 65 list of potentially toxic agents.

Prop 65 Compliance

So what should restaurant owners know about Prop 65, and more importantly, what should they do?

1. Size Matters: Understand that the law affects businesses employing 10 or more people. Small café and food truck owners are probably safe if they employ a skeleton staff. In fact, that was another argument Dunkin' Brands Inc. attempted when it tried to get out of the coffee labeling suit.
2. The List is Long: There are about 900 chemicals cited as dangerous on the OEHHA list as of January (there are 1,000 rows on the Excel sheet – some of the data contains delisted chemicals, some are header information rows, etc.). Chances are good every business should be posting a warning of some sort.
3. Prop 65 Has Evolved: The rules regarding this law changed recently. Warning labels and signs gave general warnings in the past, now businesses must name the specific chemical present on the premises or in the product. That could get rather daunting, e.g. "This establishment sells products for consumption that may contain acrylamide, BPA, benzidene (found in food dyes), ethanol (found in alcoholic beverages), etc. The new rules will be enforced as of August 30, 2018.
4. Violation Penalties: Up to $2,500 per day, per violation.
5. Some Good News: Businesses could argue that the levels of the chemicals present in food or other products are so low, there is little risk of harm. This type of defense requires expert, scientific testimony however, and may be financially out of reach for many businesses.

Franchisors and franchisees should beware and be diligent.

History tells us that when a contingency fee attorney finds one unit in a franchise system in potential violation of these types of consumer-protection laws, litigation on the claims spreads through the franchise system and company-owned units like wildfire. Since the franchisor generally establishes operating standards, specifications and procedures with which the franchisees must follow, both are at risk if they fail to comply with these measures once they become law.

 

Steve Holzer is the Chair of our Environmental Practice Group. Barry Kurtz is the Chair of our Franchise and Distribution Practice Group.

 

COURT UPHOLDS OEHHA DEFERENCE TO IARC

        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.

 

 

 

 

 

Prop 65 Update: The Rules They Are a Changin’

        Proposition 65, known as the Safe Drinking Water and Toxic Enforcement Act of 1986, among other things requires businesses employing ten or more people to warn consumers if the business’ products contain a chemical scientifically shown to cause cancer or reproductive toxicity.

        The State maintains a list of such chemicals: http://oehha.ca.gov/proposition-65/proposition-65-list. Such warnings are delivered by placing “clear and reasonable” warning statements on the products, on product packaging, or on signs at retail establishments selling the products. Historically, the warnings were usually sufficient even if they were somewhat generic – e.g., “This product contains a chemical [my emphasis, for illustrative purposes only] known to the State of California to cause cancer or reproductive toxicity.”

        New Prop 65 Rules

        After 30 years of living under regulations implementing Proposition 65, the Office of Emergency Health Hazard Assessment (“OEHHA”) has promulgated a whole new set of regulations re clear and reasonable warnings designed in part to “make warnings more meaningful to the public.”

        The new regulations (http://oehha.ca.gov/media/downloads/crnr/art6fsor090116.pdf and http://oehha.ca.gov/media/downloads/crnr/art6suppfsor090116.pdf) require, among other things, the warning specifically to identify the chemical(s) in question – e.g., “This product can expose you to lead [my emphasis] which is known to the State of California to cause cancer or reproductive toxicity.” The new regulations also provide for specialized warnings for certain industries. The specific warning language listed in the new regulations need not be used if affected businesses can show other language provides a “clear and reasonable” warning; but the safest thing for a business to do is to adopt the language in the regulations.

        Businesses have until August 30, 2018 until the new regulations become effective but can operate under the new regulations immediately if desired.

        Enforcement Actions

        Proposition 65 can be enforced by the government, but if the state chooses not to take action after being notified that adequate warnings were not given, individuals may do so by acting as “private attorneys generals.” Businesses in violation of the warning requirements may face a civil penalty of up to $2,500 a day for the period of violation. Typically though, settlements are much smaller than this draconian amount.

        A Prop 65 claim is a particularly difficult claim for a business to defend. The most common defense is to show that people exposed during a course of a lifetime to the chemical(s) at issue would not become ill because the levels of the chemical(s) are too low to do any harm. It is expensive to mount such a scientific defense, requiring the testimony of experts. Small to medium-sized businesses generally choose to settle because the financial burden of litigation is too great.

        Although case law suggested that a litigation settlement would protect a party from further Prop 65 claims re the same products and associated chemicals placed at issue by the claim, the law was arguably not completely settled in this regard. The new regulations specify that court-approved warnings will shield the businesses involved in a particular claim from future claims over the same issues.

        OEHHA provides extensive information about Proposition 65: http://oehha.ca.gov/proposition-65.

NEW PROP 65 WARNING REGULATIONS GET FINAL APPROVAL

    The Office of Emergency Health Hazard Assessment (California) has announced that the Office of Administrative Law has given final approval to the extensive revisions of what constitutes clear and reasonable warning under Proposition 65.  You can find OEHHA's announcement here:  http://oehha.ca.gov/proposition-65/crnr/notice-adoption-article-6-clear-and-reasonable-warnings.

Importantly, the announcement notes:  "The regulation will be operative on August 30, 2018.  In the interim, businesses may comply with the regulation in effect on August 30, 2016, or the provisions of the new regulation. This will allow for a reasonable transition period for businesses to begin providing warnings under the new provisions."

 

 

 

 

California Legislature passes Prop 65 amendment

Proposition 65 was passed by the voters in 1986.  The Proposition requires, among other things, any business employing 10 or more people to give a warning whenever those employees, the consumer or the general public may be exposed to a chemical that causes cancer or reproductive toxicity.  Failure to provide the warning subjects the business to fines.

            Since, under certain circumstances,a private individual can bring suit for alleged violation of the Proposition and keep a portion of the fines, the business community has long complained that the law is subject to abuse by “bounty hunters”.  Given the expense of defending against claims and the potential for large fines (as much as $2,500 per day), many businesses quickly settle with these bounty hunters, despite the businesses’ position that the claims are often unjustified.

            In a rare show of bipartisan consensus, the Legislature has as of this past Monday unanimously passed Assembly Bill 227 (Assemb. Memb. Mike Gatto, D-43^rd District; Burbank-Glendale).  AB 227 would give certain business activities some relief from these bounty-hunter liabilities (the legislation passed on May 24, 2013 with a vote of 72-0 in the Assembly and passed on September 10, 2013 in the Senate with a vote of 37-0).

            The businesses getting a modicum of relief include, under prescribed circumstances, restaurants and bars where patrons may be exposed to food or alcoholic beverages which include chemicals that can cause cancer or reproductive toxicity; property owners where occupants may be exposed to tobacco smoke; and owners and operators of parking structures where exhaust fumes can subject people to cancer-causing constituents, provided the parking is intended for noncommercial vehicles.  Upon being notified of a failure to have a required warning re the just-mentioned exposure pathways, these businesses would have 14 days in which to correct the violation and pay a $500 fine as opposed to the otherwise daily fines (which, as noted above, could be as much
as $2,500 per day).

            AB 227 contains an urgency clause which makes the legislation effective as soon as the Governor signs the bill
(as presumably he will).

This article first appeared as part of my weekly column for the Valley News Group (San Fernando Valley, California) group of newspapers.