In a significant defeat for the business community, the California Court of Appeal for the First District has issued a decision that allows the Office of Environmental Health Hazard Assessment (OEHHA) to add many new chemicals to the Proposition 65 list of carcinogens and reproductive toxicants without first providing an opportunity for meaningful scientific or public review. The decision in Cal. Chamber of Commerce v. Brown1 upheld the trial court’s decision that OEHHA may automatically add to the Proposition 65 list those chemicals identified as "hazardous" under Labor Code Section 6382, subdivisions (b)(1) and (d). Those Labor Code sections reference substances identified as human or animal carcinogens by the International Agency for Research on Cancer (IARC) and substances within the "scope" of the federal Hazard Communication Standard (HCS).
The California Chamber of Commerce, which sued the Governor, the Secretary of Cal/EPA, and the Director of OEHHA in 2008, argued that Proposition 65’s plain language makes clear that OEHHA was to use those Labor Code sections only in developing the initial Proposition 65 list of carcinogens and reproductive toxicants when the statute was first being implemented in 1987 — nearly a quarter century ago. The Chamber argued that Proposition 65 provides three methods for OEHHA to update and add chemicals to the Proposition 65 list after 1987, and that chemicals the Labor Code subsequently identifies as "hazardous" are not subject to the more rigorous scientific review processes provided by those listing methods and thus cannot be used as a vehicle to expand the initial Proposition 65 list.2 The Chamber claimed that allowing OEHHA to add chemicals to the Proposition 65 list automatically without such additional scientific scrutiny improperly excludes OEHHA, the state’s experts and the public from evaluating the basis for listing the chemicals and is inconsistent with Proposition 65’s focus on "scientific evaluation and certainty of knowledge."3
By rejecting the Chamber’s claims, the Court of Appeal’s decision may have significant ramifications for companies doing business in California that manufacture, distribute, sell or use products containing substances that the relevant Labor Code provisions identify as "hazardous," but that were not previously listed under Proposition 65. This decision may expose these businesses to potential Proposition 65 liability for failing to warn consumers, workers and/or the general public of their exposure to these substances that are not generally considered to be carcinogens or reproductive toxicants, which in turn creates a risk of very substantial civil penalties of up to $2,500 per day per violation.4
Because this ruling is likely to expand greatly the Proposition 65 list of carcinogens and reproductive toxicants, and therefore could expand greatly the number of businesses that may be caught unaware, it is a good time for all companies doing business in California to review their practices for Proposition 65 compliance. This is especially important for companies located outside California with only limited contacts to the state, as those businesses are often the targets of Proposition 65 suits.
Proposition 65 Listing Methods
Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986,5 prohibits businesses from exposing the public to chemicals "known to the state to cause cancer or reproductive toxicity" without prior warning.6 The law also bars businesses from discharging such chemicals into drinking water.7 The Proposition 65 list of "chemicals known to the state to cause cancer or reproductive toxicity" must be "revised and republished in light of additional knowledge at least once per year."8 OEHHA is charged with implementing and enforcing Proposition 65.9
The Proposition 65 list includes "at a minimum those substances identified by reference in Labor Code Section 6382(b)(1) and those substances identified additionally by reference in Labor Code Section 6382(d)" (the Labor Code Mechanism).10 Proposition 65 provides three additional methods that may be used to add further chemicals to the list:
A chemical is known to the state to cause cancer or reproductive toxicity . . . if in the opinion of the state’s qualified experts it has been clearly shown through scientifically valid testing according to generally accepted principles to cause cancer or reproductive toxicity [the Expert Review Mechanism], or if a body considered to be authoritative by such experts has formally identified it as causing cancer or reproductive toxicity [the Authoritative Bodies Mechanism], or if an agency of the state or federal government has formally required it to be labeled or identified as causing cancer or reproductive toxicity [the Labeling Mechanism].11
Chamber of Commerce Requires OEHHA to List Chemicals Using the Labor Code Mechanism
The Chamber of Commerce decision has enlarged dramatically the scope of chemicals OEHHA may add to the Proposition 65 list of carcinogens and reproductive toxicants. Although OEHHA used the Labor Code Mechanism in 1987 to develop the initial Proposition 65 list, OEHHA has relied primarily on the Expert Review, Authoritative Bodies and Labeling Mechanisms to update and revise the list. In 2001, 15 years after the voters passed Proposition 65 by initiative, OEHHA for the first time used the Labor Code Mechanism to revise the Proposition 65 list and remove the chemical saccharin because IARC no longer considered the chemical to be a carcinogen. Thereafter, OEHHA periodically used the Labor Code Mechanism to revise the Proposition 65 list, which did not receive much scrutiny from the business community. However, in 2007, OEHHA invoked the Labor Code Mechanism in a proposal to add several commonly used chemicals to the Proposition 65 list as reproductive toxicants, including hexafluoroacetone (used in the production of polyesters for textile coating) and nitrous oxide (commonly used as an anesthetic in surgery and dentistry). On August 1, 2008, OEHHA added those chemicals to the Proposition 65 list.
Several business groups objected to OEHHA’s listing proposal during the administrative process and, on November 21, 2008, the Chamber filed a petition for writ of mandate and complaint for declaratory relief to "compel OEHHA to abandon its erroneous reinterpretation of Proposition 65 and return to its original, and obviously correct, procedures for adding new chemicals to the Proposition 65 list."12 Specifically, the Chamber sought a declaration that (1) Proposition 65’s directive to use the Labor Code Mechanism applied only to creating the initial Proposition 65 list in 1987, and (2) OEHHA cannot use the Labor Code Mechanism in the future to add new chemicals to the Proposition 65 list.13 The Chamber also sought a writ of mandate directing OEHHA to remove any chemicals it had added to the Proposition 65 list using the Labor Code Mechanism, and an order enjoining OEHHA from adding new chemicals to the list in the future except pursuant to the Expert Review, Authoritative Bodies or Labeling Mechanisms.14
The Superior Court ultimately entered judgment against the Chamber on all causes of action. The Chamber appealed the issues of (1) whether OEHHA can use the Labor Code Mechanism in annually revising and republishing the Proposition 65 list and, (2) if OEHHA can do so, whether chemicals identified by the Labor Code Mechanism include chemicals identified as hazardous in the latest edition of "Threshold Limit Values for Chemical Substances and Physical Agents in the Work Environment," authored by the American Conference of Governmental Industrial Hygienists (the ACGIH List).
After engaging in an exhaustive statutory construction analysis in a 37-page opinion, the Court of Appeal ultimately agreed with the Superior Court, and held that (1) OEHHA, at a minimum, must use the Labor Code Mechanism in annually revising and republishing the Proposition 65 list, and (2) chemicals identified by the Labor Code Mechanism must include chemicals on the ACGIH List.15 The Court of Appeal specifically recognized that Proposition 65 is a remedial statute that must be construed broadly, and noted that its holding ensures the Proposition 65 list "always includes ‘at a minimum’ those substances identified by reference to Labor Code section 6382, subdivisions (b)(1) and (d)."16 The court also noted that the Expert Review, Authoritative Bodies and Labeling Mechanisms for adding chemicals to the Proposition 65 list "are supplemental" to the mandatory requirements of the Labor Code Mechanism, and that as such, the provisions are "complementary."17
The Court of Appeal acknowledged the Chamber’s concern that "given the significant costs attendant to [Proposition 65] listing," it is important that listing is "based on solid science" and includes "only chemicals ‘known to the state to cause cancer or reproductive toxicity’ and not ‘only suspect.’"18 Nonetheless, the court reasoned that because "science has never been static, and what is ‘known’ is necessarily defined by the state of the art at the time," its decision is consistent with Proposition 65’s intent.19
As for the ACGIH List, the court reasoned that Labor Code Section 6382, subdivision (d), explicitly references substances "within the scope of the federal HCS," thereby providing "a clear roadmap as to the listing sources it embraces."20 As such, under the Labor Code Mechanism, the court concluded that OEHHA must add to the Proposition 65 list those chemicals that appear on the ACGIH List.21
Implications for Businesses Using Chemicals Identified As Carcinogens and Reproductive Toxicants Through the Labor Code
The Chamber of Commerce decision is likely to have significant implications for companies doing business in California that produce, use or otherwise engage in activities involving chemicals suspected of being carcinogens or reproductive toxicants that are identified as hazardous by the relevant Labor Code provisions. Because the Court of Appeal determined that the Labor Code Mechanism is mandatory, OEHHA is expected to use this mechanism to add a broader range of chemicals to the Proposition 65 list of carcinogens and reproductive toxicants in the future.22
Perhaps more importantly, the court’s decision suggests that affected businesses and interested parties may have very limited grounds to challenge a Proposition 65 listing decision made through the Labor Code Mechanism. Since the Labor Code Mechanism requires automatic listing of chemicals identified through it, arguably challengers may dispute only whether the subject chemical is referenced in Labor Code Section 6382, subdivisions (b)(1) and (d).23 Thus, businesses may not be able to challenge whether the scientific evidence supporting the identification of a chemical as a carcinogen or reproductive toxicant, and thus OEHHA’s listing decision itself, is sound.24
Businesses affected by the Chamber of Commerce decision’s broad sweep may face significant exposure and liability under Proposition 65. In order to fully assess the implications of the court’s decision, businesses that engage in activities involving chemicals identified as carcinogens or reproductive toxicants through Labor Code Section 6382, subdivisions (b)(1) and (d) should promptly evaluate their options with experienced counsel. Specifically, counsel can assist businesses in determining whether a particular chemical falls within Proposition 65’s scope, monitoring OEHHA’s listing decisions, and developing strategies to comply with Proposition 65.