Proposition 65 & Hazardous Materials Disclosures

Proposition 65, officially the Safe Drinking Water and Toxic Enforcement Act of 1986 (Health & Safety Code §25249.5 et seq.), requires businesses with 10 or more employees to provide a "clear and reasonable warning" before knowingly and intentionally exposing anyone to a chemical listed as known to the State of California to cause cancer, birth defects, or other reproductive harm. The list, maintained by OEHHA, currently includes over 900 chemicals.

Proposition 65 is unique to California and has significant implications for commercial property owners, landlords, and tenants. The law applies to exposures, not just the presence of chemicals — but the threshold is extremely low, and the burden of proof falls on the business.

Commercial property owners and tenants must provide Prop 65 warnings when a listed chemical is present and may result in exposure. Common sources:

• Lead paint — Buildings constructed before 1978. Renovation and demolition can create lead dust exposure.
• Diesel exhaust — Parking garages, loading docks, truck yards, properties near freeways or rail corridors
• Chemicals in building materials — Formaldehyde in composite wood, asbestos in older insulation, arsenic in CCA-treated wood
• Dry cleaning solvents — PCE (perchloroethylene) at active or former dry cleaning sites
• Tobacco smoke — Residential and mixed-use buildings with shared common areas
• Naturally occurring chemicals — Arsenic in groundwater, naturally occurring asbestos in certain California geological zones

OEHHA regulations (27 CCR §§25600–25607.2) provide "safe harbor" warning formats. Since August 2018, warnings must include:

• The word "WARNING" in bold capital letters with a yellow triangle symbol
• Identification of at least one listed chemical by name
• Specification of whether the chemical causes cancer, reproductive harm, or both
• A URL to the Proposition 65 warnings website (www.P65Warnings.ca.gov)

Warnings may be provided through posted signage, product labels, website notices, or rental/lease agreement disclosures.

Prop 65 is enforced through private lawsuits — any individual acting in the public interest may bring a civil action. Penalties include:

• Civil penalties up to $2,500 per day per violation per person exposed
• Injunctive relief requiring warnings or product reformulation
• Attorney's fees and costs to prevailing plaintiffs
• Settlement payments — average settlements range from $10,000 to $100,000+

In 2023, California businesses paid over $35 million in Prop 65 settlements. Commercial property owners are increasingly targeted, particularly for parking facility diesel exhaust and lead paint in older buildings.

Separately from Proposition 65, Health & Safety Code §§25500–25520 requires businesses handling hazardous materials above threshold quantities to prepare a Hazardous Materials Business Plan (HMBP) submitted through CERS (cers.calepa.ca.gov). HMBPs include:

• Inventory of all hazardous materials stored on site
• Site map showing storage locations, emergency exits, and fire suppression
• Emergency response and contingency procedures
• Employee training documentation

HMBP data is publicly accessible through CERS and is a valuable due diligence resource for buyers evaluating hazardous materials exposure.

The Verity NHD report identifies environmental conditions that may trigger Proposition 65 concerns — proximity to contamination sites, naturally occurring asbestos zones, and other environmental hazards. While the NHD report does not constitute a Prop 65 warning, a positive environmental determination should prompt evaluation of Prop 65 obligations, particularly for commercial properties with public access.

• Health & Safety Code §25249.5 et seq. — Proposition 65
• 27 CCR §§25600–25607.2 — OEHHA safe harbor warning regulations
• Health & Safety Code §§25500–25520 — Hazardous Materials Business Plan requirements
• Government Code §65962.5 — Cortese List
• Health & Safety Code §25395.5 — Hazardous substance release reporting
• Civil Code §1102.6 — Seller environmental disclosure
• Labor Code §6382 — Employer Prop 65 notification requirements