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By: Colin C. Clark 

On August 30, 2018, the State of California enacted new regulations under the law commonly known as “Proposition 65” which create substantial liability risks and compliance burdens for certain businesses responsible for exposing Californians to any one of the more than 900 chemicals (known as “listed chemicals”) identified by the California Environmental Protection Agency as likely to cause cancer or reproductive harm. Despite being only a state law, Proposition 65 is increasingly affecting businesses in the Midwest.

What is Proposition 65?

Officially, Proposition 65 began as a California ballot initiative but became state law as part of the Safe Drinking Water and Toxic Enforcement Act of 1986. Proposition 65 requires businesses to provide “clear and reasonable” written warnings to Californians when they may be exposed to potentially unsafe levels of carcinogens or reproductive toxicants that are used in the manufacture of consumer goods, present in the workplace or discharged into the local environment. Technically, warnings are only required if the rate of exposure to a listed chemical exceeds the limits established under Proposition 65, but these limits assume daily exposure and are therefore relatively low. Warnings most often feature the “safe harbor” language set forth in the Proposition 65 regulations. Businesses properly utilizing the safe harbor language are presumed to be in compliance with Proposition 65. Prior to the August 2018 amendments to Proposition 65, safe harbor warnings could be used generically, allowing businesses to avoid Proposition 65 violations by blanketing their products with warnings, even if not technically required to do so based on listed chemical exposure rates.

As of August 2018, businesses seeking safe harbor protections must either provide tailored warnings that include the name of at least one listed chemical known to cause cancer or reproductive harm or place warning labels (like the one pictured above) directly on their products for consumers to see.

As a result of these efforts to protect consumers, Proposition 65 warnings have become commonplace in a variety of settings across California, from hotels and restaurants to parking garages and manufacturing facilities, and on countless consumer products, from pillowcases to hand tools. However, because the law broadly applies to all products and materials sold to Californians – not simply those originating in California – Proposition 65’s warning requirements can extend to out-of-state businesses responsible for providing finished goods, components or raw materials containing listed chemicals which make their way into California homes and workplaces.

Proposition 65’s broad scope is accompanied by equally broad enforcement provisions, which allow ordinary California residents to file suit against alleged violators, even when California officials decline to do so. This has created a cottage legal industry in California, in which citizen suits are typically pursued by plaintiff’s attorneys representing environmental or other public interest groups. Most commonly, citizen suits result in settlements, with a whopping 70 percent of total costs going straight to legal fees. Unfortunately, settlements are often the desirable alternative to fighting an enforcement case since proceedings are conducted in California and losing can result in penalties of up to $2,500 per day, per violation.

How are businesses outside of California affected by Proposition 65?

Although it may seem hard to believe, according to the Center for Accountability in Science, since 2010 approximately three-fourths of businesses that settled Proposition 65 enforcement actions were headquartered outside of California. Illinois ranks fourth in terms of total Proposition 65 settlement fees, with local businesses paying out $9.9 million between 2010 and 2017. Missouri ranks nineteenth at $2.3 million.

Generally, Proposition 65 applies to any business with 10 or more employees involved in the supply chain for a product sold in California which contains one or more listed chemicals at levels in excess of established thresholds. This applies whether or not the business is actually located in California or has any control over the end users to whom products are ultimately sold. Unfortunately, the newly amended Proposition 65 regulations only make compliance more burdensome for out of state businesses by requiring more tailored warning language, extending warning requirements to online and catalog sales and clarifying that the burden of compliance will normally fall upon those higher in the supply chain, like manufacturers, packagers and distributors. Often, however, such businesses are unfamiliar with Proposition 65, unaware of its strict requirements and unprepared to defend against alleged violations.

How can I protect my business from Proposition 65 liability?

If your business has 10 or more employees and manufactures, assembles, packages, converts, distributes or sells at retail any products containing one or more of the 900+ chemicals on this list, then carefully consider whether such products might be sold to California consumers. If so, your business may be obligated to provide written warnings under Proposition 65. Determining the appropriate content for warning materials may require examining safety data sheets, bills of materials or contacting suppliers. Additionally, it may be necessary to have formal arrangements in place with business associates to insure that your warnings are delivered to end users. If you need assistance with developing a Proposition 65 compliance plan or understanding the specific impact that Proposition 65 has on your business, the attorneys at Mathis, Marifian & Richter are here to help.

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