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USA regulatory compliance

California Proposition 65: What do companies preparing for the US market need to know?

If our company or its customers sell products in the United States, there is a good chance that some of these products will also enter the California market, which is the largest economy in the country. In such cases, local businesses must comply with the applicable California Proposition 65 requirements.

There are, however, certain exemptions. For example, businesses with fewer than 10 employees and government agencies are generally exempt from the requirements of the law.

— Regulatory mechanism

Drinking water protection and safe harbor levels

The legislation was introduced to prevent substances known to cause cancer or birth defects from contaminating drinking water. However, its scope extends beyond products that come into direct contact with drinking water or surface water and, in practice, covers a wide range of consumer products placed on the market.

Accordingly, exposure to listed carcinogens or substances known to cause developmental or reproductive toxicity must be disclosed on the product label when exposure exceeds the applicable Safe Harbor Level. It is important to note that these levels refer to exposure rather than to the concentration of a substance in the product. Therefore, if the substance in question is not released from the product and does not result in relevant exposure, a warning may not be required. It should be kept in mind, however, that the applicable Safe Harbor Levels can be extremely low, often in the range of micrograms per day (µg/day).

Financial risks

Why is compliance critical?

$2 500

penalty per day

$450 000

fine in case of an exposure of 6 months

Labeling

requirement instead of a ban

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• Practical challenges

Criticism and overwarning

But why is this law so important? Violations of California Proposition 65 can result in civil penalties of up to $2,500 per violation per day. Thus, even six months of non-compliance could potentially result in penalties of up to $450,000. However, the law does not prohibit the sale of products containing listed substances; rather, it requires businesses to provide a warning when exposure exceeds the applicable Safe Harbor Level. Where a warning is required, the product must be labelled in the prescribed format to inform consumers about the presence of chemicals known to cause cancer and/or developmental or reproductive harm. In short, California Proposition 65 is not a ban, but a right-to-know law.

The law has attracted considerable criticism from both industry and consumer advocacy groups. One concern is that the authorities have not established a single, universally applicable methodology for determining exposure in every situation, which can leave considerable room for interpretation in legal proceedings. Moreover, because the relevant exposure levels can be extremely low—even at trace levels of impurities—obtaining a sufficient number of reliable laboratory measurements can be challenging. As a result, many businesses resort to so-called overwarning, placing Proposition 65 warnings on their products even when they may not be strictly necessary. This practice can, in turn, reduce the informational value of the warnings and potentially mislead consumers.