Amendments to the California Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65) could be beneficial for companies looking to pass labeling responsibilities downstream, but it comes with a catch.
In order to benefit from a transfer of warning obligation, the downstream company must provide an annual confirmation receipt of a warning notice, which becomes more likely the more influential the upstream company is.
On April 1, 2020, the California Office of Environmental Health Hazard Assessment (OEHHA) amended Proposition 65 to allow businesses to transfer the warning obligation on to an authorized retailer or next downstream agent, such as a distributor, provided that the entity has more than 10 employees and provides a confirmation receipt.
The notices, which must be renewed annually, have to include:
- The exact name and description of the product that may result in exposure.
- All necessary warning labels to satisfy Section 25249.6, including the chemical/substance present.
- Advice that the entity must forward the letter on to any downstream entity.
- The date and company letterhead.
- A valid signature.
Managing Non-Responsive Downstream Contacts
Not every entity will want to take legal responsibility for a warning obligation, and thus, may choose to ignore the request. If they don’t reply, confirming receipt of the written notice, the legal responsibility has not been transferred.
Smaller companies that sell to large online retailers can expect difficulties in transferring a warning obligation, particularly as many contracts stipulate that the responsibility is on the manufacturer or distributor.
Daniel Herling recently joined Bruce Jarnot, Assent’s Senior Product Compliance Manager, to discuss Proposition 65 best practices in a webinar. Download the webinar now.
However, larger companies selling to smaller distributors (common for industries such as automotive parts), can expect a large uptake on their request to transfer warning obligation. A large uptake doesn’t mean a 100 percent response rate, though. Even if companies are able to transfer the warning obligation onto the majority of the downstream retailers and distributors, unless they contractually require it, they will likely still have a subset of parts and/or products they need to label themselves.
For companies that are able to leverage their position in the supply chain and market size, transferring warning obligations can have benefits, including:
- Reduced liability.
- Decreases in the number of parts/products needing to be labeled, as only those destined to be sold in California require the labels.
- A reduction in the number of non-California bound products carrying a Proposition 65 warning label, which may cause reduced sales.
While there are many benefits to transferring warning obligations, companies in scope still need to do the preliminary work of collecting relevant supply chain data, either by themselves or using a solution such as Assent, and conducting necessary testing — the transfer isn’t a complete get out of jail free card.
Some questions still linger, such as who exactly can act as an authorized agent for a manufacturer, producer, packager, importer, supplier, or distributor of any product in alleged violation. The OEHHA is expected to address these types of questions later this month.
Mintz supports companies dealing with Notices of Violation, and other Proposition 65-related issues. To contact us, or to learn more, visit https://www.mintz.com/. To learn more about Assent’s solution for Proposition 65 data collection and management, book a live demo.