Safer Consumer Products Act Overcoming Compliance Hurdles for - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Environmental Hazard Compliance in Sale of Goods: California's Prop 65 and Safer Consumer Products Act Overcoming Compliance Hurdles for Manufacturers, Distributors, Retailers and Others in the Chain of Business TUESDAY, JANUARY 19, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Melissa A. Jones, Partner, Stoel Rives , Sacramento, Calif. Lauren M. Michals, Counsel, Nixon Peabody , San Francisco Belynda S. Reck, Partner, Reed Smith , Los Angeles The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Trends and Developments Re: California Safer Consumer Products Act Belynda Reck, Partner Reed Smith – Los Angeles January 19, 2016

Background: SCPA  Governor Schwarzenegger signs twin bills into law in 2008 (“Green Chemistry Initiative”)  Laws require California Department of Toxic Substances Control (DTSC) to regulate “safer consumer products”  DTSC’s regulations released in October 2013 6

SCPA: Core Components  Step One: DTSC identifies chemicals and prioritizes products to subject to the regulatory process  Step Two: DTSC finalizes its Priority Products list  Step Three: Responsible Entities Must Take Action (Alternative Analysis)  Step Four: DTSC Regulatory Response 7

SCPA: Responsible Entities  Any company that manufactures, imports or sells a Priority Product  Responsible Entity Can: a) Remove product from the CA market; b) Replace chemical of concern in the product; or Undergo intensive “Alternatives Analysis” process c)  Responsible Entities Must Comply with the Act  Manufacturers  Importers, Retailers and Assemblers 8

Alternatives Analysis  Two stages: Preliminary AA and a Final AA  Prelim AA is six-step checklist  Final AA requires responsible entity to engage in factor-based comparison of alternatives and develop comprehensive plan to implement chosen alternative 9

After Final AA Report: DTSC Regulatory Response  DTSC publishes Final AA report on its website  Once AA report finalized, responsible entity must implement proposed plan  DTSC may elect to impose supplemental regulatory responses and assess penalties or refer violations to prosecutors 10

Compliance and Regulatory Timeframe  DTSC currently has a Proposed Priority Products list: (1) Children’s foam padded sleeping products, such as nap mats with polyurethane foam, that contain a flame retardant chemical called tris phosphate or TDCPP (2) Spray polyurethane foam containing unreacted diisocyanates, an insulation product that can cause severe asthma for installers and do-it-yourselfers when it is still wet (3) Paint and varnish strippers and surface cleaners with methylene chloride, used to remove old paint and varnish  Yet to finalize its Alternative Analysis Guide  However, DTSC already initiating the process for the next round of Priority Products 11

On the Regulatory Horizon  All manufacturers and retailers of consumer products in California, even those unaffected by the three proposed Priority Products, should monitor the regulatory process as it continues to unfold  The Priority Product Work Plan for 2015-2017 lays out seven new product categories. Also flags potential candidate chemicals that could be subject to regulations within this period 12

On the Regulatory Horizon (cont’d): New Product Categories  Beauty/Personal Care/Hygiene E.g., Skin, Hair and Personal Hygiene Products and Cosmetics and Fragrances  Building Products E.g., Adhesive and Glues, Roof Coatings, Paints and Primers, Vinyl Flooring  Household, Office Furniture and Furnishings with PFCs, FRs E.g., Bedding, Curtains, Household and Office Seating  Cleaning Products E.g., Cleaners, Laundry, Surface Care, Fresheners and Deodorizers  Clothing E.g., Sportswear, Sleepwear, Underwear, Full Body Wear  Fishing and Angling Equipment E.g., Fishing Weights  Office Machinery (Consumable Products) E.g., Inks and Toners and Thermal Paper 13

Advice for In-House Counsel a) Become a stakeholder, shape regulatory process b) Consider advising your company to conduct chemical analyses on its products c) Consider advising your company to implement manufacturing process controls to flag chemicals d) Consider advising your company to conduct internal analysis of cost and viability of reformulating products containing chemicals e) Determine feasibility of halting California sales of product 14

Advice for In- House Counsel (cont’d) f) Consider advising your company to conduct confidential internal alternatives analysis g) Consider challenging applicability of regulations h) Consider IP, toxic tort and public relations implications of AA reports i) Protect confidential communications that occur, ensure all documents and discussions are subject to attorney-client privilege 15

Questions?  Belynda Reck (213) 457-8060 breck@reedsmith.com http://www.reedsmith.com/belynda_reck 16

Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Presented by Melissa A. Jones 17 Environmental Hazard Compliance in Sale of Goods: Tuesday, January 19, 2016 • STRAFFORD WEBINAR California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR

Agenda • Overview of Prop 65 • Litigation & Defenses • Compliance Options (Warnings & Reformulation) 18 Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR

Overview of Prop 65 • “Safe Drinking Water and Toxic Enforcement Act of 1986.” • Provides penalties ($2,500 per violation) against businesses that knowingly expose consumers without warning to chemicals known to the state to cause cancer or reproductive harm. • Applies to businesses with 10 or more employees. 19 Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR

Two Components of Prop 65 1. The Warning 2. The Discharge Requirement : Prohibition: requires warning prohibits before exposure companies from to listed discharging listed chemicals chemicals into sources of drinking water 20 Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR

Prop 65: Bad for Businesses • Can be enforced by public or private enforcers – big $$ to “bounty hunters.” • List has a broad range of chemicals – over 850+ currently listed. • Compliance can be difficult. • Defending litigation is difficult (and costly). 21 Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR

Minimal Burden on Plaintiffs Plaintiff only needs evidence of a trace amount of the chemical in the product and then the burden of proof shifts to the defendant company. Defendant Chemical Plaintiff Burden of Trace Proof 22 Environmental Hazard Compliance in Sale of Goods: California’s Prop 65 and Safer Consumer Products Act Tuesday, January 19, 2016 • STRAFFORD W EBINAR