A Proposition 65 notice at a hotel gift shop in California
Craig Webb A Proposition 65 notice at a hotel gift shop in California

Building material dealers in California are scratching their heads these days over two seemingly simple questions with potentially painful answers: What is a "Point of Sale" and a "Point of Display?"

The question matters because of changes coming to Proposition 65, an only-in-California regulation that requires dealers and other businesses in the state to post warnings that products displayed in sold in those stores contain potentially harmful chemicals. The changes are likely to have an impact outside the Golden State in how manufacturers label their products as well as how environmental groups--who put great stock in Prop 65--embrace the new regs.

Members of the West Coast Lumber & Building Material Association (WCLBMA) spent close to two hours on Nov. 9 learning and discussing the revised rule during their annual meeting in Rancho Mirage, Calif. Many left the session scratching their heads, concerned that the reg's language fails to recognize how business is conducted at their stores.

Approved by voters in 1986 and enacted in 1987, Proposition 65 requires the state to publish a list of chemicals known to cause cancer or birth defects. There are currently 900 chemicals on the list, according to Anthony Samson, an attorney for Arnold & Porter who has gotten deeply involved in the initiative. That list includes wood dust, exposure to which can cause cancer the state believes.

Businesses with 10 people or more must provide "clear and reasonable" warnings if their products or facilities can expose consumers to a listed chemical above certain threshold levels. WCLBMA Executive Director Ken Dunham says a typical lumberyard in the state has 80 to 100 items that could be on the list.

Worthy as the proposition's intentions may be, LBM dealers dislike how Proposition 65 has become a popular tool for "gotcha" lawsuits, because the penalty per violation can be as much as $2,500 plus attorney fees. "It's highly incentivized to bring lawsuits," said Tiffany Ikeda, another Arnold & Porter attorney who spoke to the group.

Many of the new warning regulations, which take effect Aug. 30, are fairly subtle. Current warnings typically say "this product contains" while the new requirement says "This product can expose you to." At least one chemical on the Prop 65 list needs to be included in the warning, and the warning now must show a triangle warning icon. The new warning needs to include a weblink to www.p65warnings.ca.gov. There are times when the warning must be in other languages besides English and a special warning has been created for raw wood products.

Where things get particularly complicated for dealers are requirements that warnings--particularly for raw wood products--need to be displayed at either the point of sale or point of display in a manner likely to be seen by the purchaser. They struggled over whether a single warning could be posted at the entrance to a shed and whether one warning suffices for a unit of lumber. (Yes if it's sold as a unit, no if the pieces in the unit are sold separately, Samson said.)

Depending on how the rules get interpreted, "we just lost half our shelf space," one dealer muttered.

Dealers also had issues with a part of the reg declaring that, for bulk sales of wood products, the Prop 65 warning must be provided in an invoice or receipt in no smaller than 12-point type.

For more on how businesses are affected by Prop 65, click here. And Samson recommended this link for news on recent developments.