California Proposition 65

1. California Proposition 65 History and Current Developments

2. WHAT IS PROPOSITION 65? • Safe Drinking Water and Toxic Enforcement Act of 1986. Initiative written by Environmental Defense Fund’s legal counsel to address the growing concern about exposures to toxic chemicals. Public referendum rather than the more balanced “legislative review” process. ICF Meeting - 10/26/07

3. WHAT IS PROPOSITION 65? • “Spirit of the law” is to prevent the contamination of water sources, to help consumers make informed choices about products, and to enable residents or workers to protect themselves from exposures to the listed harmful chemicals. ICF Meeting - 10/26/07

4. WHAT DOES PROPOSITION 65 REQUIRE? • The “Governor’s List” of chemicals that are “known to the State of California” to cause cancer, birth defects, or other reproductive harm must be published at least once per year. More than 750 chemicals are currently on the “Governor’s List”. Only chemicals on this list are regulated under Proposition 65. ICF Meeting - 10/26/07

5. WHAT DOES PROPOSITION 65 REQUIRE? • “Clear and reasonable warnings” A business is required to warn a person before “knowingly and intentionally” exposing that person to a listed chemical. The warning given must be “clear and reasonable”: 1) clearly make known that the chemical involved is known to cause cancer, birth defects, or other reproductive harm and 2) be given in such a way that it will effectively reach the person before they are exposed. ICF Meeting - 10/26/07

6. WHAT DOES PROPOSITION 65 REQUIRE? • Prohibition from discharges into drinking water. A business must not knowingly discharge or release a listed chemical into water or onto land where it passes or probably will pass into a source of drinking water. ICF Meeting - 10/26/07

7. WHAT KIND OF CHEMICALS ARE ON THE LIST? • A chemical is listed if the “state’s qualified experts” or a recognized “authoritative” organization finds that the chemical has been clearly shown to cause cancer, birth defects or other reproductive harm. • A chemical can also be listed if it is required to be labeled as a carcinogen or as a reproductive toxicant by the State or federal government. ICF Meeting - 10/26/07

8. ARE THERE EXEMPTIONS? • Yes, there are several exemptions to the law: *Governmental agencies and public water utilities. *Businesses with 9 or fewer employees. *Exposures that pose no significant risk of cancer. *Exposures that will produce no observable reproductive effects at 1000 times the level in question. *Discharges that do not result in a “detectable amount” of the listed chemical. *Federally preempted (OSHA, CPSC, etc.) ICF Meeting - 10/26/07

9. HOW IS PROPOSITION 65 ENFORCED? • Enforcement is carried out through civil lawsuits: These lawsuits may be brought by the Attorney General, any district attorney, or certain (large) city attorneys. Lawsuits may also be brought by private parties acting in the public interest (after providing notice to the offices listed above of the alleged violation). This is the “60 Day Letter”. ICF Meeting - 10/26/07

10. WHAT HAPPENS TO VIOLATORS? • A business found to be in violation of Proposition 65 is subject to civil penalties of up to $2,500 per day for each violation and may be ordered to stop committing the violation by a court. *The accused must prove themselves innocent under Proposition 65 and this is time consuming and expensive. *In most cases a “settlement” is reached in which the alleged violators must stop violating, pay a civil penalty and pay attorney fees. ICF Meeting - 10/26/07

11. CRYSTAL INDUSTRY “SETTLEMENTS” • “Mangini” settlements (1993 &2001): Mangini I – Case filed in 1991 was settled in 1993 with the crystal industry agreeing to warn consumers: “Consuming food or beverages that have been kept or served in leaded crystal will expose you to lead, a chemical known to the State of California to cause birth defects or other reproductive harm.” More than 100 companies (135 brand names) were parties to the Mangini I settlement. ICF Meeting - 10/26/07

12. CRYSTAL INDUSTRY “SETTLEMENTS” Mangini II – The second case was filed against major retailers in 2000 for their failure to warn consumers as required under “Mangini I”: Bloomingdales Ross Simons Dillard’s Saks Fifth Avenue Gottschalks Target J. C. Penney Things Remembered Macy’s TJX (T J Maxx & Marshall’s) Neiman Marcus Tuesday Morning Nordstrom Zale (Bailey Banks & Biddle) ICF Meeting - 10/26/07

13. CRYSTAL INDUSTRY “SETTLEMENTS” Mangini II requires the settling defendants to issue annual warning “reminders” to the aforementioned retailers (ICF General Counsel does this) and to all existing distributors and retailers of leaded crystal products (settling defendants are required to do this for their own customers who sell California residents). The annual “reminder” letters were required beginning in September, 2002. In addition, simpler signs (without brand names) and smaller (4” X 6”) signs were authorized at this time. ICF Meeting - 10/26/07

14. CRYSTAL INDUSTRY SETTLEMENTS • “Decorated Glass” Settlements: These cases involved alleged “Hand to Mouth” exposures from lead/cadmium paint or decals on ordinary glass products or glass containers. The settlements required warnings on the “violating” products and an agreement to “reformulate” the paint and decal decorations to remove detectable lead and cadmium within one year. ICF Meeting - 10/26/07

15. New Warning Language Approved • In late 2005, the California Attorney General approved a request by the ICF to change the Proposition 65 warning language to incorporate the “handling” of leaded crystal: Consuming food or beverages that have been kept or served in leaded crystal products or handling productsmade of leaded crystal will expose you to lead – a chemical known to the State of California to cause birth defects or other reproductive harm. This was done to discourage “hand to mouth” cases from being filed against leaded crystal retailers, restaurants and wineries. ICF Meeting - 10/26/07

16. Prevention • New Retailers/Distributors: “Proposition 65” Warning materials must be distributed to all new customers as part of their “authorization process”. *Virtually all retailers sell through the internet and they must know what is required under California’s “Proposition 65” law. *Large new retailers or retailers for whom crystal is a minor part of their total business are prime targets for “bounty hunters” in California. ICF Meeting - 10/26/07

17. Prevention • Employee/Retailer Education: “Bounty hunters” count on employee turnover and the failure of companies to train their new employees in the requirements of “Proposition 65”. Unfortunately, the only way to prevent new “Proposition 65” cases is to constantly remind our employees and customers of the requirements of this “unique” State law. ICF Meeting - 10/26/07

18. Prevention • “Point of Sale” Audits: The most effective step in any “prevention” program is to conduct ongoing “audits” at the retail level to determine if your customers are doing what is required under “Proposition 65”. If a retailer is not complying with the warning requirements, you can notify Tim Maher and the ICF will contact the retailer or their legal counsel. This provides a solution without negative consequences for the ICF distributor or factory.. ICF Meeting - 10/26/07

19. Prevention • Investing in the prevention of the “next case” is a very good use of time and money. The cost of the average “uncontested settlement” is between $50,000 and $100,000 and this does not include attorney’s fees. ICF Meeting - 10/26/07

20. ICF Meeting - 10/26/07