California's Proposition 65 is notorious for its duty-to-warn requirement, which states that a business must give a clear and reasonable warning prior to exposing people to certain levels of any listed chemical. The warning requirement applies to consumer product, occupational and environmental exposures. However, Proposition 65 contains another key provision, the duty to avoid the discharge of any one of more than 900 listed chemicals that could potentially make their way into sources of drinking water.
This "discharge prohibition" is a broad limitation against the discharge of listed chemicals into surface water, groundwater, or onto land, that could "probably" pass into a source of drinking water. In the late 1990s and again in 2003/2004, certain oil companies and gas station owner/operators were targeted for the discharge prohibition based on gasoline leaks from Underground Storage Tanks. Since that time, the discharge prohibition claims have been dormant, thanks in part to the ease with which the duty to warn provisions can be used to force relatively excessive settlements from businesses that find it more expedient to settle rather than defend the merits, or lack thereof, of plaintiffs' claims. It now appears that Prop 65 civil enforcer plaintiffs have resurrected the discharge prohibition claims, aiming them at companies involved with injection well operations in the state of California. Prop 65 Penalties are steep – up to $2,500 per violation/per day.
Recent Activity on Prop 65 and Discharge Prohibition
On July 1, 2015 new regulations from the Division of Oil, Gas and Geothermal Resources (DOGGR) went into effect, creating new requirements for the permitting of reinjection well operations, public notice obligations and groundwater monitoring. Prior to that time the reinjection of produced water from oil and gas operations was exempt from most permitting requirements. Now, entities that discharge water such that it probably will pass into a source of drinking water may find themselves faced with a Prop 65 claim, and thousands of dollars in civil penalties. They can also be held liable for the plaintiff's attorney fees.
Since this June, there have been three new "discharge prohibition" Prop 65 Notices served on companies whose business involves work with injection wells in California. At least one Notice was served right after an admission by DOGGR that it had erroneously approved a request by private companies for the injection of produced water into federally protected aquifers that it (DOGGR) had misclassified.
Evaluating Your Legal Exposure
Companies concerned about the increased use of Proposition 65's discharge prohibition can protect themselves so long as they meet both of the following criteria:
- The discharge will not cause a "significant amount" (i.e., a detectable amount) of a listed chemical to enter a source of drinking water; and
- The discharge conforms with every applicable regulation, permit, requirement and order applicable to the operation at issue.
Unfortunately, meeting the exemption does not automatically prevent a plaintiff from serving a Prop 65 Notice of Violation, as defendant has the burden to prove up the exemption.
For More Information
Polsinelli's professionals have extensive experience with Prop 65 regulatory compliance consulting and litigation defense. For questions regarding whether your company is in compliance, what steps it may have to take to ensure compliance and minimize any risks, or if you have any other questions regarding the Prop 65 regulatory framework, please contact the authors or your Polsinelli attorney.