Updates to California’s Proposition 65 Warnings Will Affect Oil Industry Nationwide

Despite recent regulatory reforms relieving the oil industry of certain federal requirements, many oil and gas companies, refineries, and pipeline facilities operating in California are not immune from state regulatory requirements, including some new regulations that become effective August 30, 2018. Even if companies think they are in compliance, they should check again to make sure certain warnings, if any, are up to date.

California has a requirement that a company must warn a person prior to being exposed to a chemical "known to the State of California to cause cancer or reproductive harm," which came about by a 1986 voter-initiated proposition, Proposition 65, codified as the Safe Drinking Water and Toxic Enforcement Act. "Exposure" can be from a consumer product, workplace area, or the environment, if a process or object is emitting the chemical to the environment. Proposition 65 requires a "clear and reasonable" warning. The regulations offer sample warning language, wording that has been in place since 1988.

California's Office of Environmental Health Hazard Assessment (OEHHA), the agency that administers Proposition 65, recently updated the regulations that suggested sample language for warnings, requiring companies to use greater specificity in their warnings to consumers and employees, including identifying the chemicals known to cause cancer, birth defects, or other reproductive harm.

Previously, the warnings could refer to "a chemical" and be fairly general. The new regulations provide specific wording, tailored to specific products, such as gasoline, diesel fuel, and lubricants for automobiles, airplanes, trains, snowmobiles, cooking stoves, generators, and furnaces, or other items used to make chemicals, plastics, and synthetic materials. Although businesses may use alternative warnings so long as they are deemed "clear and reasonable," the safest thing for a business to do is adopt the suggested language in the regulations, as it is presumed clear and reasonable.

The new regulations affect certain industries' facilities as well. Under the newly adopted changes, oil and gas companies, refineries, and pipeline facilities will need to make their environmental and occupational warnings regarding petroleum products much more specific to meet the suggested language. This applies to manufacturing and retail. Failure to provide the new Proposition 65 compliant warnings will expose companies to significant liability and monetary penalties of up to $2,500 per violation per day.

The amendments directly affect the energy industry-the warning language is now much more specific for environmental and occupational exposures to petroleum products from industrial operations and facilities, and for gas stations and vehicle repair facilities. The new amendments also change the warnings for environmental exposures to listed chemicals at service stations and vehicle repair facilities. The warnings must now be placed at each gas pump at a service station, and at each public entrance of a vehicle repair facility.

The warning language must include a black exclamation point in a yellow equilateral triangle with a bold, black outline and be worded as follows:

WARNING:Breathing the air in this area or skin contact with petroleum products can expose you to chemicals including benzene, motor vehicle exhaust, and carbon monoxide, which are known to the State of California to cause cancer and birth defects or other reproductive harm. Do not stay in this area longer than necessary. For more information go to [www.P65Warnings.ca.gov/service-station or www.P65Warnings.ca.gov/vehicle-repair].

WARNING: Crude oil, gasoline, diesel fuel and other petroleum products can expose you to chemicals including toluene and benzene, which are known to the State of California to cause cancer and birth defects or other reproductive harm. These exposures can occur in and around oil fields, refineries, chemical plants, transport and storage operations such as pipelines, marine terminals, tank trucks and other facilities and equipment. For more information go to: www.P65Warnings.ca.gov/petroleum.

The rules provide an exception for court-approved consent judgments. Warnings containing the older Proposition 65 language will always be deemed "clear and reasonable" and thus compliant, so long as they were approved by a judge in a consent judgment before August 30, 2018.

Many businesses are already anticipating their regulatory obligations and updating their warnings to be consistent with the new warning language for changes to their products, operations, and facilities.

California's regulatory changes in Proposition 65 come at a time when states are becoming more active in the regulation and enforcement of certain industries. Any time regulations change, the regulated marketplace must adapt. One chemical manufacturer, however, is taking issue with California's administration of Proposition 65. Just this month, it sued the State of California, disputing how and why OEHHA had added a chemical to its list of cancer-causing substances under Proposition 65. It remains to be seen how this federal court or the federal government will address Proposition 65's updates and its far-reaching impact on industries across the country. a-

-Tahiya Sultanis an associate at Davis Wright Tremaine in the practice's San Francisco office.

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