Seller Beware

California’s notorious Prop 65 has cost wood product manufacturers around the country millions of dollars, and an upcoming requirement could exacerbate the issue.
By Anna Simet | July 17, 2018

Those waiting in line for their morning coffee may not even notice the Prop 65 warning signs anymore. After all, they’re everywhere, on everything, informing Californians about the potential risks of cancer that, nowadays, it seems nearly anything can cause. To date, over 900 “chemicals” have been added to California’s list of known carcinogens, under Prop 65.

Labeled by the Los Angeles Times as being “so broad, its warnings may actually make it harder for Californians to assess the real dangers they encounter,” Prop 65, formally known as the Safe Drinking Water and Toxic Enforcement Act, requires businesses with 10 or more employees “to provide a clear and reasonable warning before knowingly and intentionally exposing anyone to a listed chemical.”

That warning might be a sign in a coffee shop or restaurant, a notice at a rental complex or hotel, or a label on food packaging. If in any instance a business is found to be in violation, intentional or not, it is liable to be sued for up to $2,500 per day, per violation, by any California citizen.

 Prop 65’s most powerful opponent to date has been big coffee, whose powerful lobby has been disputing the claim that coffee may cause cancer due its acrylamide content, a naturally occurring chemical formed in coffee when it’s roasted—and in many other foods, such as potatoes, cereal and bread—because acrylamide is on the Prop 65 list.

Seizing opportunity, a small army of law firms and have been filing—and mostly settling—lawsuits against companies caught selling coffee without the required Prop 65 warning labels, while big names such as Starbucks, Dunkin’ Donuts and Whole Foods have taken the matters to court, with plenty of ammunition under their belts.For example, in 2016, the World Health Organization released guidelines that indicated drinking coffee may actually prevent cancer. More recently, WHO announced that, after reviewing 1,000 studies, it concludes that there is no proof that coffee causes cancer. And, some scientists have said, to reach dangerous acrylamide levels, a consumer would have to drink 100-plus cups of coffee each day.

All that considered, in late March—with massive liability at stake—a judge maintained coffeemakers and sellers should have complied with, and must continue to meet Prop 65 requirements. However, coffee may have finally gotten its break in mid-June when  California's Office of Environmental Health Hazard Assessment proposed to  modify the rule, stating that, “exposures to Prop 65-listed chemicals in coffee that are produced as part of, and inherent in, the processes of roasting coffee beans and brewing coffee pose no significant risk of cancer.”

Still unbeknownst to many in the industry, the regulation applies to wood pellets and other wood products sold in California. Not only does it require a warning about the risks of wood combustion and carbon monoxide inhalation, but wood dust was added to the list in late 2009, mandating an additional warning about the dangers of wood dust inhalation by 2011. And, on Aug. 30, the warning requirements will change yet again.

But unlike big coffee, most pellet, animal bedding, wood chip, mulch and other related wood product producers don’t have the financial capabilities to fight these lawsuits. Many have taken hits—some, more than once—via bounty hunter-type lawsuits that target smaller companies, many out-of-state, that are taken by surprise and pressured to settle out of court.

Burden on Small Business
One particular organization—the same attorney, almost always the same plaintiff—has brought dozens of lawsuits to pellet and other wood product manufacturers. The Pacific Justice Center and California attorney Robert Hancock have filed claims against companies including American Wood Fibers, Pacific Coast Fuels, West Oregon Wood Products, Traeger, Lignetics, Bear Mountain Forest Products, Greene Team and the list goes on. “I would describe this as legalized extortion,” says Stephen Faehner, president of American Wood Fibers. “Not a whole lot can be done, other than to put a warning on everything that you make.”

AWF was slapped with a lawsuit in 2015, for unlabeled pet bedding, and settled out of court for upward of $100,000. “We got a warning letter, and then it was broadcast to public record and the Prop 65 system,” Faehner says. “Two-thirds of the settlement went to the lawyer. About 15 percent went to the plaintiff, and the rest went to the attorney general. In these instances, the plaintiff has likely never even used the product—it’s someone who partners up [with attorneys]. These are smart people who have found this wonderful loophole in the law, and are extorting it.”

According to the Center for Accountability in Science, an organization staunchly opposed to Prop 65 lawsuit abuse, there are heavy incentives for citizens to file as many lawsuits as possible, especially because there is no requirement that organizations or individuals prove that they have been injured in any way by whatever violation of Prop 65 they are claiming. Some of the most active bounty hunters have brought in more than $1 million per year in collected enforcement fees, according to the CAS. In 2017, there were a total of 688 settlements with multiple plaintiffs bringing dozens of lawsuits, resulting in $25 million, nearly $19.5 million of which went to attorney fees. Out of those, the Pacific Justice Center brought a total of 22 lawsuits against wood product manufacturers for wood dust warning violations, all between two plaintiffs.

In 2016, Pacific Coast Pellets received a notice it was in violation of Prop 65. “When we got nailed, the first thing we did was let everyone in the industry know what was going on,” says Stan Elliot, president of PCP. “We got a letter in the mail, and it was a complete surprise. Nobody had any idea what it was, so we forwarded it to our owner, who had practiced law in Sacramento a few years prior, and his lawyer friends confirmed that it was absolutely real. We hired California counsel, agreed to make corrections to our packaging and pay a $50,000 fine, so long as all three of our brands were listed in the same complaint, rather than separate claims.”

West Oregon Wood Products, which is no longer in business, was sued twice via Prop 65, the instances decades apart. And like Pacific Coast Pellets and American Wood Fibers, it was an out-of-state company simply unaware of the requirements. “The first time was back in the late ‘90s—we didn’t have the combustion warning on our fuel pellets,” says founder Chris Sharron. “That was painful—we ended up paying about $30,000, but we got over it, and thought we learned our lesson. Everything was quiet until about 2014, when we got served the second lawsuit, relative to the fact that wood dust, unbeknownst to us, was listed as a carcinogen in 2009.”

WOWP had lots of product in the California market at the time, Sharron says, and adding a label to bags wouldn’t have been a big deal. “What’s frustrating is not knowing,” he says. “How do you know when these chemicals are listed, or that the rules have changed? We went through trying to negotiate a settlement, and though I really didn’t feel it was going to happen—I more so used it as a negotiation tool—I told them that my company was in financial dire straits, that we may not be around a year from now. They were going after $60,000. I said I could scrape together $10,000 to make it go away, but they held their ground, and we did end up going out of business, and they didn’t get anything.”

Sharron admits that instances like these come with the cost of doing business, but change is needed regarding to how those affected by Prop 65 are notified. Or, perhaps more accurately, how they aren’t notified. “Small companies deal with all kinds of challenges, and this is just one more—the ridiculousness of it is what is so emotionally frustrating, on top of the time and money,” he says. “California should do a better job of alerting people who are sending products into the state. I don’t know how, but some kind of campaign to bring this front and center to the public and the businesses throughout the world shipping to California.”

And, Sharron points out, there is no clear definition of what wood dust is, or how much inhalation can cause problems. “So you can’t go get some lab analysis done and use it in your defense, because it’s so general,” he says. “It’s so obvious that it’s a moneymaking scheme—this money is extorted out of you; the law’s true intent has been overridden for the sake of making people money.”

Faehner warns that, regardless of point of origin, a manufacturer with product on Amazon could get hit with a lawsuit if the product is ordered into California. “It’s an unfortunate scenario where a bad law is affecting some decent people,” he says. “These are products that have no business being in the net that they cast.”

The net Faehner refers to is that while the wood dust addition may have been aimed at cautioning those who work every day with wood dust in factory or industrial settings, all heating and grilling pellets, fire logs, animal bedding and other wood products are all swept into the same category, as no safe harbor levels have been set for wood dust. Safe harbor levels, or No Significant Risk Levels for cancer-causing chemicals, and Maximum Allowable Dose Levels for chemicals causing reproductive toxicity, have been established for many of the chemicals listed under Proposition 65, but not wood dust, and when it comes to establishing one, there is a laundry list of chemicals ahead of it.

“In 2012, we prioritized chemicals for potential NSRL development, and wood dust was placed in the third priority level,” says Sam Delson, deputy director for external and legislative affairs at the California Office of Environmental Health Hazard Assessment. “Ahead of wood dust, there were 40 chemicals in the first priority level, and 45 in the second priority group.”

As to when an NSRL will be developed for wood dust—which could potentially relieve wood pellet and other wood product manufactures of their Prop 65 requirements—or whether one will be developed at all, Delson says it depends on several factors. “Prioritization is one factor. Wood dust is in the third priority level, and there are dozens of substances currently in the first and second priority groups.”

Another factor, Delson says, is if OEHHA receives a specific request to develop an NSRL for a specific substance, it will consider the request, which could potentially result in a safe harbor level for that substance before others that are currently in a higher priority group. “The determination would be based in part on an assessment of the available research and data to determine whether there is sufficient information of sufficient quality to develop a reliable number,” he adds. “This would include information on the types and levels of exposure to the substance, as well as its inherent chemical properties.”

But for now, wood and grill pellets used at home by consumers will be categorized as just as dangerous as all other potential sources of wood dust, including daily occupational exposure in industrial settings. “You might pour a 40-pound bag of pellets in your hopper during the winter, and the amount of dust that billows out—it’s minute,” says Sharron. But it’s all lumped together.”

So for now, manufacturers selling into California, and those with even a slight chance of product ending up there, should  ensure they are up-to-date on their Prop 65 requirements, which are set to change at the end of August.

How to Comply
There are no specific wording guidelines on either of the warnings currently required for wood pellets, leaving manufactures responsible for ensuring their warnings are sufficient, however, they should have some variation of the following statements:

California Proposition 65 WARNING: Drilling, sawing, sanding or machining wood products can expose you to wood dust, a substance known to the State of California to cause cancer.  Avoid inhaling wood dust or use a dust mask or other safeguards for personal protection. 

WARNING: Burning wood pellets results in the emission of carbon monoxide, soot and other combustion byproducts that are known by the state of California to cause cancer, birth defects or reproductive harm.

And, as of Aug. 30, numerous changes will take effect, including clarifying responsibilities for manufacturers, distributors and retailers to provide warnings, adding the Prop 65 website address to warnings, specifying at least one Prop 65-listed chemical in the product, and, next to the required wording, all products subject to Prop 65 will have to include a yellow warning triangle with a centered exclamation point, which may catch many by surprise and prompt a new wave of lawsuits. Elliot says his company found out about the warning sign addition only a couple of months before it is set to take effect. “I have 12,000 tons of product on the ground, and by the time I get a packaging change, I’m already August,” he says. “It’s such a waste of time, money and effort—how much does it cost to print these labels for everything, and what’s the carbon footprint of that?”

Delson confirms with Pellet Mill Magazine that any product manufactured prior to Aug. 30 will not be required to have the new warnings format.

Currently selling product into California or not, Elliot says some producers have decided to put the warnings on their bags as a safeguard. “These Midwest and East producers don’t want to risk that $40,000 penalty,” he says. “They only have to find one bag that doesn’t have it, and they will go through inventory until they find something. For this latest requirement, we’ll make immediate changes on our printing, and possibly delay some shipments into California.

Those who really need to know about the Prop 65 requirements are the BBQ pellet manufacturers, Elliot adds. “They can ship really small bags, and there are a lot more retailers. I have no doubt there will be another round of citations for this low-margin industry that can’t afford to take these blows.”

Faehner agrees. “It would have been wonderful, if a few years ago when this started to happen, we passed the hat and said, ‘let’s make sure this doesn’t catch us.’ We would have likely put in as much as it’s cost us so far. But in the meantime, we have elected to put a lot of these on our packages, and we’re not taking any chances.”

Faehner says he believes the intentions behind Prop 65 were right. “It’s rare for a person not to be affected by cancer,” he adds. “But wood dust, in this case, isn’t one of the things that do it. If you go to court, the defense is $1 million, and that’s just stepping into the fray.  I’m not sure how to fix this, except a coalition of manufacturers coming together and saying enough is enough.”

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Key Changes to Proposition 65
(Effective Aug. 30)

New OEHHA regulations, adopted in August 2016 and that will take full effect in August 2018, change the safe harbor warnings that are deemed to comply with the law in several important ways. For example, the new warnings for consumer products will say the product “can expose you to” a Proposition 65 chemical rather than saying the product “contains” the chemical. They will also include:

• The name of at least one listed chemical that prompted the warning.

• The internet address for OEHHA’s new Proposition 65 warnings website, www.P65Warnings.ca.gov.

• A triangular yellow warning symbol on most warnings.


The new warning regulation also:

• Adds new “tailored” warnings that provide more specific information for certain kinds of exposures, products, and places.

• Provides for website warnings for products purchased over the internet.

• Provides for warnings in languages other than English, in some cases.

• Clarifies the roles and responsibilities of manufacturers and retailers in providing warnings.


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Author: Anna Simet
Editor, Pellet Mill Magazine
asimet@bbiinternational.com
701-738-4961