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Volume XI, Number 259

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Second Prop 65 Amendment Effective April 1, 2021: New Warnings Required

The Safe Drinking Water and Toxic Enforcement Act of 1986, also known as Proposition 65 (Prop 65), was enacted as a ballot initiative and requires businesses to inform Californians about exposures to chemicals that are known to cause cancer, birth defects or other reproductive harm. The regulation prohibits knowing or intentional exposure of any individual to a “chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual.” (See: 27 CCR § 25249.6.)

The state maintains and updates a list of chemicals known to cause cancer or reproductive toxicity, with alcoholic beverages being added to the list April 29, 2011, and requiring suppliers to comply with Prop 65’s “clear and reasonable warning” mandate. (Click here for more information.) This includes, without limitation, beer, malt beverages, wine and distilled spirits. (See: 27 CCR § 25607.4(a).) Generally speaking, for alcoholic beverages, it is the responsibility of the manufacturer or its distributors to ensure proper compliance with Prop 65. (See: 27 CCR § 25600.2(a).) Further, any consequences for failure to comply with Prop 65 typically rests with the manufacturer or its distributor, provided that the retailer has not frustrated the manufacturer’s reasonable efforts to properly display the warning.

The warning provided must read: “WARNING Drinking distilled spirits, beer, coolers, wine and other alcoholic beverages may increase cancer risk, and, during pregnancy, can cause birth defects. For more information go to www.P65Warnings.ca.gov/alcohol.” (Id. at § 25607.4(a)(1)-(2).) To comply with Section 25607.3, among other specific requirements, the warning must be made at either point of sale (for off-premises consumption) or on a menu or list identifying the alcoholic beverages sold on-premises. (See: 27 CCR § 25607.4.) Note, however, that a supplier who is a party to a “court-ordered settlement or final judgment, establishing a warning method or content is deemed to be providing a “clear and reasonable” warning for that exposure if the warning complies with the order or judgment,” even if the requirements set forth in the order or judgment differ from the specific requirements set forth in the regulations. (See: 27 CCR § 25600(e).)

Prop 65 is enforced by the California attorney general, any district attorney or city attorney for cities whose population exceeds 750,000 and/or any private individual or group acting in the public interest. (See: 27 CCR § 25249.7.) Penalties for violating Prop 65 can be as high as $2,500 per day. (Id.) The fine is paid to the party that brought the litigation, including individuals or groups acting in the public interest, which creates a powerful incentive for private parties to enforce Prop 65. (Id.)

Prop 65 has undergone multiple amendments, two of which are in direct response to the ever-growing e-commerce market for alcoholic beverages. The first amendment, effective August 30, 2018, required the Prop 65 warning language be displayed on websites and on or in packages containing direct-to-consumer orders sent to California addresses. (Click here for more information.) The second amendment, effective April 1, 2021, requires the following: For alcoholic beverages sold over the internet or through a catalog, in addition to the warnings provided on the internet or in the catalog, a warning must also be provided to the purchaser or delivery recipient either prior to or contemporaneously with the delivery of the product. (See: 27 CCR 25607.3(3)(A).) The warning must be provided either (1) on or in the shipping container or delivery package or (2) by email or text message as part of an electronically delivered receipt or purchase confirmation. (Id. at 25607.3(3)(A)(1).)

A consent judgment (the Consent Judgment) entered between the State of California and several large retailers and alcohol delivery services (the Settling Defendants) sheds some light on how the state expects those subject to the requirements to comply with the latest additions to Prop 65. The Settling Defendants could sell or facilitate the sale of the alcoholic beverage products to California consumers “only if they provide warnings to consumers…” (See: Consent Judgment, California v. 1800Flowers, Inc., et al., No. 37-2020-00009417-CU-TT-CTL (Superior Court County of San Diego).) The Consent Judgment indicates it is the seller or those facilitating a sale to a consumer that must comply with this requirement, not necessarily the manufacturer or supplier of the products being sold.

The Consent Judgment makes clear that the requirements imposed on product manufacturers are in addition to those established by the amendment to Section 25607.3. The Consent Judgment states, “The warnings required by section 4.2-4.4 above, shall be in addition to any warnings present on the containers of Alcoholic Beverage Products whose sales were made or facilitated by Settling Defendants, and the fact that such warnings are present on those containers shall not relieve Settling Defendants of the obligation to provide the warnings required by Sections 4.2 through 4.4 of this Consent Judgment.” (Id.) Practically speaking, the party both in the best position to ensure that the warning is actually delivered in compliance with Section 25607.3, as amended, and likely on the hook for failure to comply is the party selling or facilitating the sale to the consumer in the case of alcohol delivery. It’s not the producer of the product, who in many instances may have no control over the packaging or point of sale documentation for products delivered from a retailer to a consumer (e.g., those suppliers who are generally not permitted to ship their products directly to consumers).

Another Prop 65 issue relevant to alcoholic beverage suppliers relates to other ingredients within alcoholic beverages or its packaging, like bisphenol A (BPA), which may be used in cans, bottle caps or lid liners. BPA is included on California’s list of products known to cause cancer or reproductive toxicity and therefore requires a warning in accordance with Prop 65. To date, the general industry position on this issue appears to be that the point of sale warning adequately covers all ingredients in an alcoholic beverage except BPA in a container, which requires a separate warning. Note, however, that this position has not been challenged. California could argue that the alcoholic beverage warning does not adequately cover any additional listed chemical that appears as an ingredient in the product.

In sum, we advise businesses operating in this space be aware of the following key points with regard to Prop 65 compliance:

  • Suppliers should have a clear Prop 65 compliance policy

  • Prop 65 warnings should be made at point of sale, with the onus on manufacturers to comply

  • Suppliers shipping direct-to-consumer should provide Prop 65 warnings in or on shipment boxes and via an electronic receipt to ensure compliance with the new Prop 65 amendment, taking effect April 1, 2021

  • A BPA warning, if necessary, must be offered in addition to the alcoholic beverage warning made to consumers

© 2021 McDermott Will & EmeryNational Law Review, Volume XI, Number 85
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About this Author

Partner

Alva Mather* focuses her practice on alcohol beverage and cannabis regulatory and commercial matters. She represents companies in the alcohol beverage industry, including brewers, distillers, wineries, importers and retailers. Additionally, she works with clients in the growing cannabis space and has in-depth knowledge of the evolving legal and regulatory issues facing this industry.

A nationally recognized lawyer, Alva combines her extensive knowledge of the commercial and legal landscape as well as deep understanding of the beverage industry to help clients mitigate risk, respond...

202 756 8940
Nichole D. Shustack Alcohol Industry Attorney McDermott Will & Emery Washington, DC
Counsel

Nichole D. Shustack* focuses her practice on alcohol trade practice, regulatory, commercial agreements and distribution matters. She represents companies in the alcohol beverage industry, including brewers, distillers and wineries and has in-depth knowledge of the legal, regulatory and distribution issues facing the industry.

*Not admitted to practice in the District of Columbia; admitted only in New Jersey and Pennsylvania. Supervised by principals of the Firm who are members of the District of Columbia Bar.

202-756-8023
Staff Attorney

Isabelle R. Cunningham* focuses her practice on regulatory matters, particularly in the area of alcohol and distribution.

Isabelle concentrates her work on franchise law related to new product launches, transfers of brand rights, supplier rights in a distributor transaction and has experience drafting, reviewing and negotiating contracts. Additionally, Isabelle advises in-house teams on general contract risks and risk mitigation as well as providing legal support on trade practice issues and wholesaler relations. As an in-house attorney, Isabelle advised senior leadership on...

617-535-4415
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