Prop. 65 Reform on California’s Agenda.

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Last month, California Governor Jerry Brown unveiled his proposed reforms to Proposition 65, the 27-year-old law passed by voter initiative to protect Californians from harmful chemicals. Gov. Brown directed the California Environmental Protection Agency (“Cal/EPA”) to work with the legislature to improve the law and put an end to the proliferation of abusive “shakedown” lawsuits. Prop. 65 is best known for requiring clear warnings about chemicals known to the state to cause cancer or reproductive harm, often seen in retail stores and restaurants and on many consumer products. Like several other landmark environmental laws, Prop. 65 permits private citizens acting in the public interest to enforce the law by suing violators. Under the current law, unscrupulous lawyers are incentivized to bring Prop. 65 lawsuits because they may be able to recover all attorneys’ fees plus damages of up to $2,500 per day, or otherwise extract settlements with little proof of a meritorious claim.

The governor’s reform package includes:

  • capping attorney’s fees;
  • requiring plaintiffs to make a stronger showing of a violation before bringing suit, as well as other disclosures;
  • limiting the amount of money from an enforcement action that can go into settlement funds (as opposed to penalties);
  • authorizing the state to adjust the level at which warnings about reproductive harm are required; and
  • making more useful information available to the public on chemical exposure and protection.

The governor’s announcement adds to growing momentum in the legislature to reform Prop. 65. Assemblyman Mike Gatto introduced legislation this session which would allow business owners to avoid a costly lawsuit or settlement by paying a $500 fine and correcting the violation within 14 days after receiving a notice of violation. The bill, AB 227, has passed the state Assembly and this week was approved by the Senate committee on environmental quality; the Senate judiciary committee will consider it on Tuesday, June 25.

Nearly 3,000 Substances Registered by REACH Deadline.

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REACH passed its second registration deadline on May 31, with over 9,000 dossiers for almost 3,000 “phase-in” substances submitted to the European Chemicals Agency (“ECHA”). The deadline applies to those substances which have long been on the European market and which are manufactured or imported in the EU at a rate ranging from 100 to 1,000 tons per year. 2,344 of the substances have already been successfully registered, while pending cases are mostly awaiting collection of registration fees. Substances were registered by 3,215 companies, with 82% of substances registered as joint submissions.

Chemical Watch (sub. req’d) quotes Christel Musset, director of registration at ECHA, as noting discrepancies between the final number of registrations and the projected number as reported in a 2011 survey. The survey found that industry intended to register 3,103 substances in 2013, but 984 registrations were not pursued and a different set of 804 substances were registered. Musset said ECHA would investigate and determine “the reason for non-registration of those [984] substances.”

ECHA’s next steps will be to evaluate all testing proposals as well as 5% of dossiers in each tonnage band by June 2016.

More detailed statistics and other non-confidential information on the registration submissions will be available on ECHA’s website after all the dossiers are processed, which the agency projects will be in September. The final REACH deadline, for substances made or imported in the EU at a minimum of 1 ton per year, is scheduled for May 31, 2018.

Chemical Watch reports the chemical industry’s reaction to the deadline as “mixed” (sub. req’d). Industry representatives voiced general support for the REACH program, while also describing it as particularly burdensome for the growing portion of registrants that are small- and medium-sized businesses.

EPA Proposes Rules to Limit Formaldehyde in Wood Products.

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Last week, EPA released two new proposed rules to set and certify formaldehyde emissions standards in wood products. EPA developed the rules to implement the Formaldehyde Standards for Composite Wood Products Act (“the Act”), which added Title VI to the Toxic Substances Control Act (“TSCA”). The proposed rules would apply to domestic and imported hardwood plywood, medium-density fiberboard, particleboard, and finished goods – such as furniture – containing such products.

The emissions standards are established by the Act and match the limits already in place in California for wood products sold in the state. EPA’s proposed rules are designed to align with California’s program, but differ in how laminated products are defined and regulated. The proposal exempts laminated products “in which a wood veneer is attached to a compliant and certified platform using a [no-added formaldehyde-based] resin.”

The first proposed rule [PDF] requires that all wood products made in or imported into the U.S. be certified by a third party as compliant with the formaldehyde emission standards. The proposal imposes testing and product labeling requirements, a prohibition on product stockpiling, and provisions related to chain-of-custody documentation, recordkeeping, and enforcement. The proposed rule also provides incentives similar to the ones in place in California for the use of ultra low-emitting formaldehyde (“ULEF”) resins and no-added formaldehyde (“NAF”) resins.

The second proposed rule establishes a framework for third-party certification of compliant wood products, and is also meant to align with California’s existing requirements. Under the proposed rule, EPA-recognized accreditation bodies would evaluate and approve third-party certifiers (“TPCs”). Both the accreditation bodies and TPCs would be required to follow “voluntary consensus standards” established by the International Organization for Standardization (“ISO”) and International Electrotechnical Commission (“IEC”) related to assessing conformity, performing investigations, etc. The proposed rule requires that accreditation bodies conduct certain oversight activities, including recordkeeping, reporting to EPA, and auditing of TPCs and their testing laboratories. EPA could also independently oversee accreditation bodies and TPCs.

The proposed rules were released in pre-publication format and have yet to appear in the Federal Register. Once they are published, the proposed rules will also be accessible on Regulations.gov under the following docket numbers: EPA-HQ-OPPT-2012-0018 and EPA-HQ-OPPT-2011-0380.

DTSC: Cost of Safer Consumer Products Rules Is Unknowable.

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The agency charged with implementing California’s Safer Consumer Products (“SCP”) regulations has concluded that the program’s costs cannot be determined until the rules are in place.

The Department of Toxic Substances Control (“DTSC”) released its Economic and Fiscal Impact Statement [PDF] for its proposed SCP regulations on May 22. DTSC cited the SCP program’s “number of unknowable factors” in explaining why the agency could not estimate the number of businesses affected or the total costs to the private sector.

The agency characterized the proposed rules as “process regulations” which would not directly affect any products or chemicals, and thus would not have any significant impacts on the private sector.

As we have previously discussed, the proposed SCP regulations create a system for prioritizing and evaluating chemicals in products with the goal of limiting exposure or reducing hazards posed by a chemical of concern.

DTSC noted that an Economic and Fiscal Impact Statement – along with other standard elements of the rulemaking process – would be completed for each product-chemical combination that the agency proposes to list as a Priority Product. Thus, specific costs and benefits would be identified and evaluated in a piecemeal, product-by-product manner.

The agency also argued that impacts could not be accurately estimated in part because of the flexibility built into the SCP program, which offers many options to both the regulator and the regulated community. For example, if a certain product is listed as a Priority Product, the manufacturer (or other responsible entity) may choose whether to conduct an Alternatives Assessment, stop using the chemical of concern, replace the product, or remove it entirely from the California market. DTSC will not be able to determine its own regulatory response – with its attendant costs – until after the manufacturer makes its “selection decision.”

The DTSC’s Economic and Fiscal Impact Statement did not provide an estimate for the number or percentage of impacted businesses which constitute small businesses; the agency explained that it had not determined the extent of information it needs to request from companies in order to implement the SCP regulations. Nevertheless, DTSC concluded that only “insignificant” costs would be incurred by those companies which choose to provide information requested by the agency.

Likewise, DTSC claims that no businesses or jobs would be created or eliminated by the proposed rules since they are “process regulations.” DTSC also asserts that the rules will not negatively impact California businesses’ competitiveness because the “process regulations” would not by themselves directly increase the cost of producing any particular product.

The 15-day comment period for the Economic and Fiscal Impact Statement is open through June 6, 2013. The agency’s public notice, containing additional details on commenting, is available online [PDF].