What Electronics Companies Need to Know About Prop 65

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Although California's update to its Safe Drinking Water and Toxic Enforcement Act of 1986 -- Proposition 65--doesn't appear to impact electronics, experts warn the supply chain must revise its compliance practices or risk the consequences.

“Violations often ensnare everyone in that supply chain, and at that point you bring in the lawyers and the toxicologists, and the costs mount whether you win or not,” said Don Elario, vice president of Industry Practices at the Electronic Components Industry Association (ECIA). “A sound risk management strategy should focus on claim prevention, not simply claim defense.”

Prop 65 is about chemicals, which always have the potential to impact electronics. It requires any company doing business in California to warn consumers about significant exposure to chemicals that the state has linked to cancer, birth defects or reproductive harm. The rules apply to components or products containing these chemicals that expose workers to or are available to consumers. They require clear labelling if the product contains any covered substances that exceed safe harbor levels (defined by the Office of Environmental Health Hazard Assessment with complex and technical exposure criteria).

In 2016, the California Office of Environmental Health Hazard Assessment (OEHHA) declared new consumer warning regulations that apply to any products manufactured after August 30, 2018 (27 Cal. Code Reg. Section 25600 et seq.). As the law evolves, it’s important that any company selling, supplying, or distributing products in California re-evaluate their compliance responsibilities.

Since its inception, the proposition has evolved to include more than 900 substances and the list is updated annually. At least 100 of those materials are found in electronic components and products. “California is uniquely aggressive in requiring labeling and warnings for products that contain any of over 900 listed substances which exceed specific exposure levels,” said Elario. “California is also unique in the laws that allow for consumer complaints and the potential for financial penalties and the award of proceeds to consumers and their attorneys.”

The cost of litigation is significant and likely to increase. “The law has engendered a substantial increase in litigation among the tort bar in California,” the ECIA GIPC said. “Prop 65 has simple claim requirements and shifts the burden of proof to defending companies.”

Large organizations may be particularly at risk. “As the litigators target opportunities, they look for products containing listed substances, noncompliant labels, or warnings, and companies with deep pockets,” said Elario. “They do not have to prove damages, just label or warning violations. You can settle, you can fight, but either way it will be expensive.”

In 2017, $25 million in settlements were awarded, a figure that is likely to double this year. Compliance will also be time consuming as customers come looking for Prop 65 information. Manufacturers, for example, should identify any Prop 65 substance in their products, develop compliance position statements and create compliance and warning labels as appropriate.

The broader benefits of the legislation may be lost in the noise. “Unfortunately, the total impact may be more negative than positive,” Elario said. “The massive number of warnings, due to the size of the concerned substance list and the risk of litigation, are potentially making consumers numb to the warnings. It’s hard to focus on real health risks when everything is labeled as a risk.”

Although caution is warranted, electronics companies shouldn’t panic. “Electronic components are generally internal to consumer level products so the potential for consumer exposure to component surfaces is low, and potential to reach specified exposure levels for listed substances is even lower,” explained Elario.

“Exceptions might include cables, plugs, touch screens, key switches, enclosures and other outer surface items. Any components or low-level assemblies sold directly to consumers might also be at risk."

There's a general shift in the industry toward more attention to environmental compliance. In Europe, Restriction of Hazardous Substances (RoHS) directives moderate lead, cadmium, mercury and other substances. Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) directives require disclosure on a few hundred substances. “Similar initiatives are underway in Asia and other parts of the world,” Elario added.