[Federal Register Volume 62, Number 109 (Friday, June 6, 1997)]
[Notices]
[Pages 31159-31181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14723]


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DEPARTMENT OF LABOR

Occupational Safety and Health Administration


Supplement to California State Plan; Approval

AGENCY: Occupational Safety and Health Administration, Labor.

ACTION: Approval; California State Standard on Hazard Communication 
Incorporating Proposition 65.

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SUMMARY: This notice approves, subject to certain conditions, the 
California Hazard Communication Standard, including its incorporation 
of the occupational applications of the California Safe Drinking Water 
and Toxic Enforcement Act (Proposition 65). Where a State standard 
adopted pursuant to an OSHA-approved State plan differs substantially 
from a comparable Federal standard, the Occupational Safety and Health 
Act of 1970 (the OSH Act) requires that the State standard be ``at 
least as effective'' in providing safe and healthful places of 
employment. In addition, if the standard is applicable to a product 
distributed or used in interstate commerce, it must be required by 
compelling local conditions and not pose an undue burden on commerce.
    After consideration of public comments and review of the record, 
OSHA is approving the California standard, with the following 
conditions, which are applicable to all enforcement actions brought 
under the authority of the State plan, whether by California agencies 
or private plaintiffs:
    (1) Employers covered by Proposition 65 may comply with the 
occupational requirements of that law by complying with the OSHA or 
Cal/OSHA Hazard Communication provisions, as explicitly provided in the 
State's regulations.
    (2) The designated State agency, Cal/OSHA, is responsible for 
assuring that enforcement of its general Hazard Communication Standard 
and Proposition 65 results in ``at least as effective'' worker 
protection; the agency must take appropriate action to assure that 
court decisions in supplemental enforcement actions do not result in a 
less effective standard or in inconsistencies with the conditions under 
which the standard is Federally approved.
    (3) The State standard, including Proposition 65 in its 
occupational aspects, may not be enforced against out-of-state 
manufacturers because a State plan may not regulate conduct occurring 
outside the State.
    These conditions are based on OSHA's understanding of the State's 
regulations and on general State plan law. Finally, Proposition 65 also 
is applicable to non-occupational (i.e. consumer and environmental) 
exposures. OSHA has no authority to address Proposition 65's non-
occupational applications; consequently, they are not at issue in this 
decision and will be unaffected by it.

EFFECTIVE DATE: June 6, 1997.

FOR FURTHER INFORMATION CONTACT: Bonnie Friedman, Director, Office of 
Information and Consumer Affairs, Occupational Safety and Health 
Administration, U.S. Department of Labor, Room N-3647, 200 Constitution 
Avenue, N.W., Washington, DC 20210. Telephone: (202) 219-8148.

SUPPLEMENTARY INFORMATION:

Contents of OSHA'S Decision

I. Background
    A. Pertinent Legal Authority
    B. Description of the California State Plan Supplement
    1. Federal and State Hazard Communication Standards
    2. Proposition 65
    3. OSHA Review and Public Comment
II. Summary and Explanation of Legal Issues
    A. Applicability of Product Clause to Proposition 65 
Requirements
    B. Overview: OSHA Review of State Standards Under the Product 
Clause
    C. Burden of Proof
    D. Application of the California Standard to Out-of-State 
Manufacturers and Distributors
    E. Designated State Agency
    F. Exemption for Public Sector Employers
III. Summary and Explanation of Remaining Issues Under Section 18
    A. Compelling Local Conditions
    1. Overview
    2. Commentor Rebuttal Arguments
    B. Remaining 18(c)(2) Issues
    1. Overview
    2. Businesses Can Comply With Proposition 65 by Using Methods 
Prescribed by the Federal Hazard Communication Standard
    3. Comparison of Coverage Under Federal Standard and Proposition 
65
      Overview
      Mixtures
      Articles
      Pesticides
      Aflatoxins
      California Non-Chemical Manufacturers
    4. Substantive Differences Between the Federal and General 
California Standards
      Trade Secrets
      California's Omission of Federal Exemptions and Exclusions

[[Page 31160]]

      California's Requirement for Use of Lay Terminology on MSDSs
    5. Supplemental Enforcement
      Effectiveness
      Product Clause
    C. Inspections, Employer/Employee Rights
    D. Qualified Personnel
IV. Decision
V. Location of Supplement for Inspection and Copying
    References to the record are made in the text of this decision. The 
docket number in this case is T-032. References to exhibits in the 
docket appear as ``Ex. ________.'' Exhibit 18 contains all of the 
public comments filed. Each individual comment has been assigned a 
number and this notice will refer to individual comments by these 
numbers--``Ex. 18-________.''

I. Background

A. Pertinent Legal Authority

    The Occupational Safety and Health Act generally preempts any State 
occupational safety and health standard that addresses an issue covered 
by an OSHA standard, unless a State plan has been submitted and 
approved. See Gade v. National Solid Wastes Management Association, 505 
U.S. 88 (1992). Once a State plan is approved, the bar of preemption is 
removed and the State is then able to adopt and enforce standards under 
its own legislative and administrative authority. As a consequence, any 
State standard or policy promulgated under an approved State plan 
becomes enforceable upon State promulgation. Newly-adopted State 
standards must be submitted for OSHA review and subsequent approval 
under procedures set forth in 29 CFR Part 1953 and OSHA Directive STP 
2-1.117, but are enforceable by the State prior to Federal review and 
approval. See Florida Citrus Packers v. California, 549 F. Supp. 213 
(N.D. Cal. 1982); Chemical Manufacturers Association v. California 
Health and Welfare Agency, No. CIV. S-88-1615 LKK (E. D. Cal. 1994). On 
May 1, 1973, OSHA published its initial approval of the California 
State plan in the Federal Register. 38 FR 10717, 29 CFR Part 1952, 
Subpart K.
    The requirements for adoption and enforcement of safety and health 
standards by a State with an approved State plan are set forth in 
Section 18(c) of the OSH Act and in 29 CFR Parts 1902, 1952 and 1953. 
OSHA regulations require States to respond to the adoption of new or 
revised permanent Federal standards by promulgating comparable 
standards. As explained in more detail in section B, OSHA adopted a 
hazard communication standard in November 1983. California adopted its 
own hazard communication standard in 1981 and revised it, in response 
to the Federal standard, in November 1985. California submitted its 
Hazard Communication Standard to OSHA for approval on January 30, 1986. 
On January 30, 1992, the State submitted changes to this standard by 
incorporating relevant provisions of the Safe Drinking Water and Toxic 
Enforcement Act (Proposition 65). See California Health and Welfare 
Code Secs. 25249.5-25249.13.
    Under Section 18(c) of the Act and OSHA's regulations, State plans 
and plan changes must meet certain criteria before they are approved. 
The principal criteria are:
     The State must designate a State agency or agencies which 
is responsible for administering the plan throughout the State. 29 
U.S.C. Sec. 667(c)(1).
     If a State standard is not identical to Federal standards, 
the State standard (and its enforcement) must be at least as effective 
as the comparable Federal standard. Moreover, if a non-identical State 
standard is applicable to products distributed or used in interstate 
commerce, it must be required by compelling local conditions and must 
not unduly burden interstate commerce. (This latter requirement is 
commonly referred to as the ``product clause.'') 29 U.S.C. 
Sec. 667(c)(2).
     The State must provide for a right of entry and inspection 
of all workplaces which is at least as effective as that provided in 
section 8 of the Act and must prohibit advance notice of inspections. 
29 U.S.C. Sec. 667(c)(3).
     The responsible State agency or agencies must have ``the 
legal authority and qualified personnel necessary for the enforcement 
of such standards and adequate funding.'' 29 U.S.C. Sec. 667(c) (4)-
(5).
     To the extent the State's constitutional law permits, it 
must establish a comprehensive occupational safety and health program 
for employees of public agencies of the State and its political 
subdivisions which is at least as effective as the standards contained 
in an approved plan. 29 CFR Sec. 1952.11.
    In enacting the State plan system, Congress' intention was to 
encourage the States ``to assume the fullest responsibility for the 
administration and enforcement of their occupational safety and health 
laws.'' 29 U.S.C. Sec. 651(b)(11); 29 CFR Sec. 1902.1. Consistent with 
this Congressional declaration, OSHA has interpreted the OSH Act to 
recognize that States with approved State plans retain broad power to 
fashion State standards. As President Reagan noted in Executive Order 
12612 (October 26, 1987), ``[t]he nature of our constitutional system 
encourages a healthy diversity in the public policies adopted by the 
people of the several States according to their own conditions, needs, 
and desires. In the search for enlightened public policy, individual 
States and communities are free to experiment with a variety of 
approaches to public issues.'' Section 18 of the OSH Act reflects this 
``search for enlightened public policy'' not by delegating Federal 
authority to the States but by removing the bar of preemption through 
plan approval and, thus, allowing States to administer their own 
workers' protection laws so long as they meet the floor established by 
the Federal OSHA program.

B. Description of the California State Plan Supplement

1. Federal and State Hazard Communication Standards
    On September 10, 1980, the Governor of California signed the 
Hazardous Information and Training Act. California Labor Code, 
Secs. 6360-6399. This Act instructed the Director of Industrial 
Relations, the State's designee responsible for operation of the OSHA-
approved State plan (known as Cal/OSHA) to establish a list of 
hazardous substances and to issue a standard setting forth employers' 
duties toward their employees under that Act. The standard, General 
Industry Safety Order 5194 (8 CCR Sec. 5194), was adopted by the State 
in 1981. Both the Director's initial list and the standard became 
effective on February 21, 1983.
    Federal OSHA promulgated a hazard communication standard (29 CFR 
Sec. 1910.1200) in November 1983. The State amended its law in 1985, 
and, after a period for public review and comment, the California 
Standards Board adopted a revised standard for hazard communication on 
October 24, 1985. The standard became effective on November 22, 1985. 
By letter dated January 30, 1986, with attachments, from Dorothy H. 
Fowler, Assistant Program Manager, to then Regional Administrator, 
Russell B. Swanson, the State submitted the standard and incorporated 
the standard as part of its occupational safety and health plan.
    In addition to the supplemental provisions of Proposition 65, the 
State Hazard Communication Standard differs from the Federal standard 
in a few minor respects:
    (1) The State standard requires that each Material Safety Data 
Sheet contain certain information including Chemical Abstracts Service 
(CAS) name (unless its disclosure could reveal a trade secret),

[[Page 31161]]

while the Federal standard does not require inclusion of the CAS;
    (2) The State standard specifically requires a description in lay 
terms of the particular potential health risks posed by the hazardous 
substance, while the Federal standard more broadly requires 
``appropriate'' hazard warnings;
    (3) While the Federal standard allows for release of trade secret 
information to health professionals who enter into confidentiality 
agreements, the California standard allows access to such information 
to safety professionals as well; and
    (4) The State standard does not include some of the exemptions and 
exceptions added to the Federal standard in 1994.

See Section II.B.4.
    Cal/OSHA enforces the California Hazard Communication Standard, 
like its other standards, under approved procedures similar to those of 
Federal OSHA. Safety and health inspectors from the Division of 
Occupational Safety and Health conduct on-site inspections in response 
to complaints of workplace hazards or when the establishment is 
selected for a programmed inspection based on objective criteria, etc. 
Employer and employee representatives may accompany the inspector. If 
violations are noted, a citation and proposed penalties are issued to 
the employer, who has the right of appeal to the California 
Occupational Safety and Health Appeals Board and thereafter to the 
courts.
2. Proposition 65
    In a 1986 referendum, voters of the State of California adopted 
Proposition 65, the ``Safe Drinking Water and Toxic Enforcement Act.'' 
Proposition 65 and implementing regulations require any business with 
ten or more employees that ``knowingly and intentionally'' exposes an 
individual to a chemical known to the State to cause cancer or 
reproductive toxicity to provide the individual with a ``clear and 
reasonable'' warning. California Health and Safety Code sections 
25249.5 through 25249.13; 22 CCR Secs. 12000 et seq. In accordance with 
Proposition 65, the State annually publishes a list of chemicals known 
to cause cancer or reproductive toxicity. 22 CCR Sec. 12000. 
Proposition 65 applies broadly to all exposures to listed chemicals; 
consequently, the law has consumer and environmental applications, as 
well as the occupational exposures relevant here. Under the Office of 
Environmental Health Hazard Assessment (OEHHA) regulations, a 
``consumer product'' exposure is ``an exposure which results from a 
person's acquisition, purchase, storage, consumption, or other 
reasonably foreseeable use of a consumer good, or any exposure that 
results from receiving a consumer service.'' 22 CCR Sec. 12601(b). An 
``occupational exposure'' is ``an exposure, in the workplace of the 
employer causing the exposure, to any employee.'' 22 CCR Sec. 12601(c). 
``Environmental exposures'' include exposures resulting from contact 
with environmental media such as air, water, soil, vegetation, or 
natural or artificial substances. 22 CCR Sec. 12601(d). OSHA has no 
authority to address Proposition 65's consumer and environmental 
applications; consequently, they are not at issue in this decision and 
will be unaffected by it.
    Proposition 65 was passed by referendum of the voters of California 
in 1986. On January 23, 1991, the California Court of Appeal ordered 
the California Occupational Safety and Health Standards Board to amend 
the State's Hazard Communication standard to incorporate the 
occupational warning protections of Proposition 65. See California 
Labor Federation, AFL-CIO v. California Occupational Safety and Health 
Standards Board, 221 Cal. App. 3d 1547 (1990).1 These 
changes were adopted on an emergency basis on May 16, 1991, and became 
effective on May 31, 1991. A permanent standard became effective on 
December 17, 1991. On January 30, 1992, the State submitted amendments 
to its Hazard Communication Standard, adapting both the substantive 
requirements and enforcement mechanism of Proposition 65 and OEHHA's 
implementing regulations, for application to the workplace. Ex. 4.
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    \1\ In 1988, the Chemical Manufacturers Association (and other 
plaintiffs) challenged the applicability of Proposition 65 in the 
workplace, arguing that the law was preempted because it was not a 
part of the approved State plan. In 1994, the U.S. District Court 
for the Eastern District of California ruled that the plaintiffs, as 
a result of the State's incorporation of Proposition 65 into the 
State plan, did not have standing to pursue their action and that 
the issues were not ripe for review. Chemical Manufacturers 
Association v. California Health and Welfare Agency, slip op. at 15-
25.
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    Two State agencies have been authorized to issue regulations 
interpreting and implementing Proposition 65's occupational aspects. As 
discussed in greater detail in Section III.B.2, Cal/OSHA and OEHHA 
regulations governing occupational exposures provide three alternative 
methods of complying with Proposition 65:
    (1) Warnings may be given through the label of a product;
    (2) Warnings may be given via a workplace sign; or
    (3) The general California or Federal Hazard Communication Standard 
may be followed.
    See 8 CCR Secs. 5194(b)(6) (B)-(C) and 22 CCR Sec. 12601(c). 
Compliance with Section 12601(c)--which allows use of California or 
Federal hazard communication methods--is a defense to supplemental 
enforcement actions brought under Proposition 65. 8 CCR 
Sec. 5194(b)(6)(E). The regulations also provide sample language for 
the label and sign warnings. 2 The sample label and sign 
language, however, represents a ``safe harbor'' method of providing 
Proposition 65 warnings. Again, compliance with either the Federal or 
general State hazard communication procedures constitutes compliance 
with Proposition 65 and is a defense to any enforcement action. 8 CCR 
Sec. 5194(b)(6) (B), (C), (E); 22 CCR Sec. 12601(c)(1)(C).
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    \2\ For labels, the warnings which are deemed to meet the 
requirements of Proposition 65 are: ``WARNING: This product contains 
a chemical known to the State of California to cause cancer,'' or 
``WARNING: This product contains a chemical known to the State of 
California to cause birth defects or other reproductive harm.'' For 
signs, the language deemed to meet the requirements is: ``WARNING: 
This area contains a chemical known to the State of California to 
cause cancer,'' or ``WARNING: This area contains a chemical known to 
the State of California to cause birth defects or other reproductive 
harm.''
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    The Proposition 65 requirements of the California standard are 
enforceable with regard to occupational hazards through the usual 
California State plan system of inspections, citations and proposed 
penalties which has been determined to be at least as effective as 
Federal OSHA enforcement. 38 FR 10717 (May 1, 1973). The Cal/OSHA 
enforcement directive on hazard communication (Policy and Procedure C-
43) provides that a covered employer may comply with the incorporated 
Proposition 65 requirements by including the substance in the 
employer's Hazard Communication Program. In addition, the Cal/OSHA 
standard incorporates the enforcement mechanism of Proposition 65, 
which provides for supplemental judicial enforcement by allowing the 
State Attorney General, district attorneys, city attorneys, city 
prosecutors, or ``any person in the public interest'' to file civil 
lawsuits against alleged violators. Private plaintiffs bringing actions 
must first give notice to the Attorney General and appropriate local 
prosecutors, and may proceed if those officials do not bring an action 
in court within sixty days.
    Proposition 65 provides for penalties of up to $2500 per day, per 
violation. A

[[Page 31162]]

private plaintiff may obtain up to 25% of penalties levied against a 
company found in violation of Proposition 65 for failing to provide 
required warnings. Private actions with regard to occupational 
exposures have been brought in California courts, and many more have 
been settled on varying bases prior to trial or prior to initiation of 
formal court action.
3. OSHA Review and Public Comment
    On April 18, 1995, the Coalition of Manufacturers for the 
Responsible Administration of Proposition 65 (the Coalition), filed a 
petition with OSHA requesting that the Plan change submitting the 
California Hazard Communication Standard with its incorporation of 
Proposition 65 be rejected. Ex. 8. The Coalition argued that the 
substantive and enforcement aspects of Proposition 65 unduly burden 
interstate commerce. Various parties wrote to OSHA to express support 
for, or opposition to, the Coalition's petition. Exs. 9-16. Other 
parties expressed concern to OSHA about the continued enforceability of 
the private right of action provisions of Proposition 65 in the 
workplace during the pendency of the OSHA review process.
    On September 13, 1996, OSHA requested public comment (61 FR 48443) 
as to whether to approve the California Hazard Communication Standard 
incorporating Proposition 65 pursuant to 29 CFR parts 1902 and 1953. 
OSHA had preliminarily determined that the California plan change was 
at least as effective as the Federal standard and was applicable to 
products used or distributed in interstate commerce. OSHA sought 
comment on these determinations as well as the ``product clause'' 
requirements for standards which differ from the relevant Federal 
standard--i.e. whether the State standard is required by compelling 
local conditions or poses any undue burden on interstate commerce. (As 
discussed in Section II.B, in its Directive STP 2-1.117 governing the 
review of different State standards, OSHA specifically stated that 
public comment would constitute its initial means of assessing the 
product clause implications of a State standard and that absent record 
evidence to the contrary a State standard would be presumed to meet the 
test.)
    Following OSHA's September 13, 1996 request for comment on the 
proposed standard, 207 commentors submitted statements. Many of the 
commentors opposing the standard are companies which have experienced, 
or fear experiencing, private enforcement lawsuits under Proposition 
65. In a number of these cases, the commentor did not make it clear 
whether the company involved had been sued under Proposition 65's 
occupational, consumer or environmental applications. E.g., Ex. 18-2, 
18-23, 18-127, 18-130, 18-133. As noted previously, OSHA's decision can 
have no effect upon enforcement actions alleging consumer or 
environmental exposures.

II. Summary and Explanation of Legal Issues

    The comments filed with OSHA presented a variety of issues, each of 
which will be discussed below. Section III of this notice discusses the 
more specific provisions of the California standard in light of the 
requirements of Section 18 of the OSH Act, particularly the product 
clause. In this Section, however, OSHA will discuss several general 
legal questions at issue here.
    Some commentors have raised issues involving application of the OSH 
Act's ``product clause'' to the Proposition 65 elements of the 
California standard. First, several commentors have questioned whether 
OSHA should apply the product clause to Proposition 65's substantive 
requirements and enforcement methods. See Section II.A. Second, OSHA 
provides an overview of the product clause and outlines the principles 
OSHA will apply in analyzing product clause issues. See Section II.B. 
Third, OSHA historically has treated State standards as presumptively 
compliant with the product clause. OSHA Instruction STP 2-1.117 (August 
31, 1984); see, e.g., 62 FR 3312 (January 22, 1997) (approval of 
Washington State standard amendments for acrylonitrile, 1,2-dibromo-3-
chloropropane, and confined space). A few commentors maintain that 
California must bear the burden of proof on this issue under the 
Administrative Procedure Act (APA). See Section II.C. Section II.D 
discusses a jurisdictional issue: whether California may, under the 
auspices of its OSHA-approved State plan, apply its standard to out-of-
state manufacturers. Some commentors argue that Proposition 65's 
supplemental enforcement mechanism violates Section 18's requirement 
that a ``designated State agency'' bear responsibility for 
administering a State plan. See Section II.E. Finally, Section II.F 
addresses Proposition 65's exemption for public sector employers.

A. Applicability of Product Clause to Proposition 65 Requirements

    Cal/OSHA, writing on behalf of itself, the State Attorney General, 
and OEHHA, maintains that the product clause does not apply to the 
substantive requirements imposed by Proposition 65. Ex. 6; see also 
Exs. 18-61, 18-62, 18-111, 18-155. Some commentors (e.g. Ex. 18-155) 
also have argued that, even assuming the product clause applies to the 
substantive provisions of Proposition 65, it does not apply to the 
law's supplemental enforcement provisions. 3 Because OSHA 
finds that Proposition 65's supplemental enforcement provisions do not 
violate the product clause (see Section III.B.5, below), it is not 
necessary for OSHA to decide whether State enforcement may, in some 
cases, be subject to the product clause. Accordingly, the remainder of 
this section will address only Cal/OSHA's argument about the product 
clause's applicability to Proposition 65's substantive provisions.
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    \3\ This argument rests upon the language of Section 18(c)(2):
    [T]he text of the Occupational Safety and Health Act is clear 
that the product clause and its two-part test do not even apply to 
enforcement. Rather, Sec. 667(c)(2) requires ``standards (and 
the[ir] enforcement)'' to be at least as effective as Federal 
standards, but the product clause applies only to ``standards,'' and 
makes no mention of enforcement. Thus, OSHA need only consider 
whether the enforcement of California's HCS and Prop 65 is ``at 
least as effective'' as Federal OSHA, and OSHA need not concern 
itself with whether the private right of action in any way burdens 
interstate commerce.
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Ex. 18-155, page 9.
    Relying upon statements made in Congressional debate leading to 
enactment of the OSH Act in 1970, California argues that the product 
clause was intended only ``to limit states from imposing different 
product design standards for the safety of products,'' specifically 
machinery products. Ex. 6, pages 21-22. In contrast,

    Far from requiring changes to equipment or products moving in 
interstate commerce, Proposition 65's warning requirement only 
requires that warnings be given somehow. They need not be given by a 
product label, or even through the [Hazard Communication Standard]. 
Compliance may be obtained where the employer posts an appropriate 
sign meeting all of the requirements set forth in 22 CCR 
Sec. 12601(c). This could be accomplished without making any change 
to the MSDS, and results in complete compliance with Proposition 65.

Ex. 6, pages 21-22. Other supporters of the proposed standard argue, 
more generally, that the product clause does not apply to warning 
requirements because warnings (e.g. labels, signs, material safety data 
sheets, training) do not affect product design. E.g. Exs. 18-61, 18-62.
    As other commentors (e.g. Exs. 18-58, 18-148, 18-153, 18-154, 18-
156) point out, however, in its Hazard Communication Standard 
rulemakings,

[[Page 31163]]

OSHA determined that the product clause is applicable to substantive 
State hazard communication requirements ``[b]ecause the Hazard 
Communication Standard is `applicable to products' in the sense that it 
permits the distribution and use of hazardous chemicals in commerce 
only if they are in labeled containers accompanied by material safety 
data sheets[.]'' 48 FR 53280, 53323 (November 25, 1983). Similarly, in 
its decision approving California's ethylene dibromide standard, OSHA 
found the product clause applicable because ``the standard establishes 
conditions and procedures which restrict the `manufacture, reaction, 
packaging, repackaging, storage, transportation, sale, handling and 
use' of the chemical product, ethylene dibromide (EDB), as well as the 
handling and exposures which may result after EDB has been applied as a 
fumigant to fruit products.'' 48 FR 8610, 8611 (March 1, 1983).
    OSHA continues to believe that the product clause applies to 
substantive State hazard communication requirements. As several 
commentors note (e.g. Exs. 18-41, 18-153), Section 18(c) is phrased 
broadly. On its face, the statute says simply that the product clause 
applies to all standards which are ``applicable to products which are 
distributed or used in interstate commerce[.]'' 29 U.S.C. 
Sec. 667(c)(2). It is undisputed that the California standard may, in 
certain circumstances, apply to products ``distributed or used in 
interstate commerce'' because California employers may receive goods 
from out-of-state suppliers. Thus, the standard comes within the plain 
language of Section 18(c). OSHA's current interpretation of the product 
clause is most consistent with this statutory language. See generally 
Sutherland Statutory Construction, Secs. 45.02, 46.01 (4th ed. 1984). 
4
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    \4\ As discussed in Section II.B, however, the legislative 
history of the product clause is a helpful aid in understanding the 
somewhat ambiguous structure of the product clause ``test,'' which 
requires an examination of compelling local conditions and the 
extent of any burden on commerce.
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B. Overview: OSHA Review of State Standards Under the Product 
Clause

    OSHA's decision on the approvability of the California standard 
involves the relationship between the State police power to regulate 
health and safety and the Federal power to regulate commerce. 
Throughout the history of the United States, the States and localities 
traditionally have used their police powers to protect the health and 
safety of their citizens. Medtronic v. Lohr, Inc., ______ U.S. ______, 
116 S. Ct. 2240, 2245 (1996). At the same time, the Commerce Clause of 
the U.S. Constitution provides that ``Congress shall have power * * * 
to regulate commerce with foreign nations, and among the several 
states[.]'' Article I, section 8.
    In the absence of a Federal statute specifically addressing the 
issue, the Federal courts have interpreted the Commerce Clause to 
limit, implicitly, the power of the States to regulate interstate 
commerce. Under this ``dormant commerce clause,'' the courts have 
``distinguished between State statutes that burden interstate 
transactions only incidentally, and those that affirmatively 
discriminate against such transactions.'' Maine v. Taylor, 477 U.S. 
131, 138 (1986). As the Court stated in Taylor, ``[t]he limitation 
imposed by the Commerce Clause on State regulatory power `is by no 
means absolute,' and `the States retain authority under their general 
police powers to regulate matters of ``legitimate local concern,'' even 
though interstate commerce may be affected.'.'' Id., citing Lewis v. BT 
Investment Managers, Inc., 447 U.S. 27, 36 (1980); see also Brown-
Forman Distillers Corp. v. New York State Liquor Authority, 476 U.S. 
573, 579 (1986); Kleenwell Biohazard Waste v. Nelson, 48 F.2d 391, 398 
(9th Cir.), cert denied 115 S. Ct. 2580 (1995) (footnote omitted). In 
reviewing State legislation under the dormant commerce clause, courts 
consider both the nature and importance of the local interest and any 
burden on commerce. The case law recognizes that a State has an 
important stake in promoting the health of its citizens through 
measures that do not discriminate against or impermissibly restrict 
interstate commerce. Id.; see also Taylor, 477 U.S. 131.
    In the OSH Act, Congress has enacted a statute, and the preemptive 
effect of that statute turns on Congressional intent. See generally 
Medtronic; Gade, 505 U.S. 88. The language of the product clause must 
be read against the backdrop of longstanding judicial deference to 
State sovereignty in the area of health protection. Medtronic, 116 S. 
Ct. at 2250. In Gade, the Court held that the OSH Act preempts States 
without State plans from enforcing occupational safety and health 
standards on issues addressed by Federal standard; laws of general 
applicability are not preempted. 505 U.S. at 97, 107-108.
    As discussed in Section I.A, Section 18 of the OSH Act removes the 
bar of Federal preemption for approved State plans, restoring to the 
States the police power to protect occupational safety and health, 
provided that the requirements of Section 18 are met. See also Gade, 
505 U.S. at 102 (describing Section 18 as giving ``States the option of 
pre-empting Federal regulations by developing their own occupational 
safety and health programs'').
    The ability of the States to devise and develop occupational safety 
or health approaches is limited by the requirements of Section 18(c), 
including the product clause, which requires that State standards 
applicable to products not unduly burden interstate commerce, and that 
they be justified by ``compelling local conditions.'' At the same time, 
however, Section 18 specifically allows States to adopt and enforce 
standards and enforcement procedures which are more stringent in 
protecting worker safety and health than those of Federal OSHA. The 
Act's drafters clearly envisioned the ``at least as effective'' 
requirement as providing a floor, not a ceiling, for future worker 
protections efforts by State plan States. See Senate Committee on Labor 
and Public Welfare, Legislative History of the Occupational Safety and 
Health Act of 1970 at 297, 1035 (92d Congress, 1st Session, June 1971) 
(Legislative History). Thus, State standards must pass the ``product 
clause'' test, but the States also are free to devise not only more 
stringent substantive standards but also supplementary enforcement 
procedures. See Legislative History at 1035 (OSH act does ``not 
envision a complete takeover of the field by the Federal government''; 
OSHA's responsibility is ``merely to see to it that certain minimum 
requirements were met and that beyond those the health and safety of 
most workers would be left to [the] states''). The flexibility granted 
the States under Section 18 also is in keeping with Congress' stated 
purpose of ``encouraging the States to assume the fullest 
responsibility for the administration and enforcement of their 
occupational safety and health laws' and its intent to allow the States 
``to conduct experimental and demonstration projects in connection 
therewith[.]'' 29 USC Sec. 651(b)(11).
    The OSH Act's product clause reflects in substantial part 
terminology and principles developed by the Federal courts in applying 
the dormant aspects of the Commerce Clause. Notwithstanding the limits 
of the dormant commerce clause, Congress may grant to the States 
greater powers to regulate commerce than they otherwise would possess. 
Maine v. Taylor, 477 U.S. at 138-39; citing Southern Pacific Co. v. 
Arizona ex rel. Sullivan, 325 U.S. 761, 769 (1945); see also Florida 
Citrus Packers v. California, 549 F. Supp. at 215. In Citrus Packers,

[[Page 31164]]

the court found that Section 18 of the OSH Act represents ``a broad 
grant of regulatory power to the states'' and, thus, ``an attack based 
upon unduly burdening commerce is limited to those situations where the 
product standard applies.'' 549 F. Supp. at 216. The similarity in 
language between Section 18(c)(2) and dormant commerce clause 
principles, then, suggests that a principal function of the product 
clause is to ensure that Section 18 is not read as a grant of power to 
violate normal Commerce Clause restrictions.
    Thus, OSHA agrees with those commentors (e.g., Exs. 18-40, 18-160, 
18-163, 18-164, 18-167, 18-174) who have argued that dormant commerce 
clause case law is relevant to analysis of issues under the product 
clause. That said, however, OSHA concludes that Congress authorized the 
agency to give somewhat more strict review under Section 18(c)(2) to 
State standards that address issues covered by a Federal standard than 
a court would give under the dormant commerce clause. This conclusion 
is supported by the limited legislative history of the product clause 
and the different structural positions presented. In dormant commerce 
clause cases, courts are considering State attempts to promote health 
and safety or other local interests in the absence of Federal 
regulation. Under Section 18(c)(2), on the other hand, the Federal 
standard provides a uniform floor of protection.
    Although there is no committee report explaining the language, the 
limited Congressional floor discussion concerning the product clause 
focused on possible State design requirements for machinery products 
and the possible economic waste resulting from non-uniform State 
requirements. See, e.g., Legislative History at 500-501, 1042 
(statements of Representative Railsback and Senator Saxbe). Absent some 
indication of protectionist discrimination, it is doubtful that a court 
would reject a State safety requirement because it led to ``economic 
waste.'' See, e.g., South Carolina State Highway Dep't v. Barnwell 
Bros., 303 U.S. 177 (1938) (upholding State regulation of weight and 
width of trucks); compare Kassel v. Consolidated Freightways Corp., 450 
U.S. 662 (1981) (rejecting similar statute where majority of justices 
found that the State statute either created a disproportionate burden 
for out-of-state interests or was protectionist in intent); National 
Paint & Coatings Ass'n v. City of Chicago, 45 F.3d 1124, (7th Cir. 
1995) (sustaining city ban on spray paint, despite possibility that it 
was ``economic folly''). The examples considered by Congress suggest 
that it envisioned OSHA's disapproval of State standards under some 
circumstances in which the courts would uphold a State law against a 
dormant commerce clause challenge.
    At the same time, the Congressional intent to allow States the 
flexibility to develop their own occupational safety and health plans, 
with the Federal standards as a ``floor'' rather than a ``ceiling,'' 
must be kept in mind. OSHA's interpretation of the product clause 
should be ``consistent with both federalism concerns and the historic 
primacy of State regulation of matters of health and safety,'' see 
Medtronic, 116 S. Ct. at 2250, and with Congress' use of terminology 
which harkens back to dormant commerce clause principles.
    Accordingly, in analyzing differences between Federal and State 
standards under the product clause, OSHA will first determine whether 
the State standard is required by compelling local conditions. 
Consistent with the State historic power to regulate health and safety, 
a State standard that advances the health and safety of the State's 
workforce meets this test, provided that the standard does not promote 
or result in economic protectionism. As discussed in the next section, 
OSHA will accept the State's determination on this point, in the 
absence of evidence to the contrary. Thus, OSHA will not simply defer 
to the State's determination, but will consider ``rebuttal'' evidence 
and arguments. In addition, even if a State standard is required by 
compelling local conditions, OSHA must determine whether the standard 
imposes an undue burden upon commerce. The burden of establishing an 
undue burden will be upon the opponents of a State standard (see also 
Section D); OSHA will consider any alleged burdens in light of the 
importance of the State interest involved.
    OSHA will consider the specific ``compelling local conditions'' 
underlying the California standard in Section III.A. Here, however, 
OSHA notes that many commentors opposing the standard interpret the 
phrase ``compelling local conditions'' to be limited to interests which 
are ``unique'' to California.5 E.g. Exs. 18-41, 18-58. OSHA 
disagrees. Conditions unique to a given State are a sufficient, but not 
a necessary, basis for a finding of compelling local conditions. 
Although its focus in past State plan supplement decisions has been on 
the conditions prevailing in the State involved [see, e.g., 48 FR 8610 
(decision approving California ethylene dibromide standard)], OSHA has 
never said that a State must establish that the conditions of concern 
to the State's lawmakers are not prevalent in any other State as well. 
Such an interpretation would be inconsistent with the plain meaning of 
``compelling''; more than one State may have a compelling interest in 
regulating particular safety issues. Simply put, ``compelling local 
conditions'' are compelling conditions which exist locally.
---------------------------------------------------------------------------

    \5\ Industry commentors also have maintained that Proposition 
65's exemption for public sector and some small employers 
demonstrates that there is no compelling need for the law. OSHA 
discusses this argument in Section II.A.2.
---------------------------------------------------------------------------

    Requiring a State to establish unique local conditions also would 
be inconsistent with the courts' treatment of this issue under the 
dormant commerce clause. Under the dormant commerce clause, courts look 
for ``local'' conditions which may be, but frequently are not, unique 
to the State involved. E.g. Maine v. Taylor, 477 U.S. 131 (upholding 
discriminatory Maine statute banning importation of baitfish); 
Kleenwell Biohazard Waste, 48 F.3d at 396 (upholding State concern with 
ensuring safe disposal of solid waste).

C. Burden of Proof

    A few commentors assert that California should bear the burden of 
proving that its proposed standard is at least as effective as the 
Federal standard and does not violate the product clause. E.g. Ex. 18-
160 6 at pages 2-4 and 18-174 at pages 4-5. This argument 
relies upon Section 556(d) of the Administrative Procedure Act (APA), 5 
USC Sec. 556(d), and the Supreme Court's decision in Director, OWCP v. 
Greenwich Collieries, 512 U.S. 267, 114 S. Ct. 2251 (1994). California, 
in response, argues that Section 556(d) is not applicable to these 
proceedings because no formal hearing is involved. Ex. 22. The AFL-CIO 
(Ex. 18-155) points out that the applicable OSHA Instruction, STP 2-
1.117 (August 31, 1984) effectively places the burden of proof upon 
opponents of a State standard for purposes of the effectiveness and 
product clause tests:

    \6\ Shell Oil and Elf Atochem further assert that California 
must meet its burden of proof by ``more than a mere preponderance of 
the evidence.'' Ex. 18-160, pages 7-8. The burden of proof under the 
APA is preponderance of the evidence. Greenwich Collieries, 114 S. 
Ct. at 2257; Steadman v. SEC, 450 U.S. 91, 95 (1981). OSHA has not 
changed that test by regulation or policy.
---------------------------------------------------------------------------

    In the absence of record evidence to the contrary (including 
evidence developed by or submitted to OSHA during its review of the 
standard), the State standard shall be presumed to be 'at least as 
effective' as the Federal standard and shall be presumed to be in 
compliance with the product clause test of section 18(c)(2) of the 
Act.


[[Page 31165]]


STP 2-1.117, page 2.
    Initially, OSHA notes its agreement with California that Section 
556(d) of the APA does not apply to this decision to approve the State 
standard. Section 556(d) applies only ``to hearings required by section 
553 or 554 of this title to be conducted in accordance with this 
section.'' This decision involves no hearing, and Sections 553 and 554 
do not apply. Section 553 applies only to rulemakings. This decision is 
not a rulemaking, but rather an ``order'' within the nomenclature of 
the APA. The decision is a final disposition in an agency process 
respecting the ``grant'' or ``conditioning'' of an agency ``approval'' 
or ``other form of permission.'' 5 U.S.C. Secs. 551 (6)-(9).
    Section 554 does not apply because that section applies only to 
adjudications ``required by statute to be determined on the record 
after opportunity for agency hearing.'' The OSH Act requires ``due 
notice and opportunity for a hearing'' before OSHA rejects a State plan 
or plan modification, but requires no hearing before OSHA approves a 
plan or modification. 29 USC Sec. 667(d). The statutory language quoted 
above regarding plan rejection proceedings may be insufficient, by 
itself, to trigger application of Section 554 or 556. See Chemical 
Waste Management v. EPA, 873 F.2d 1477, 1480-82 (D.C. Cir. 1989); U.S. 
Lines v. FMC, 584 F.2d 519, 536 (D.C. Cir. 1978). OSHA, however, has by 
regulation made Section 556 applicable to rejection proceedings. 29 CFR 
Secs. 1902.17-18, 1953.41(d)(2). The regulations expressly authorize, 
on the other hand, a decision to approve a State plan or modification 
without a formal hearing. 29 CFR Secs. 1902.11, 1902.13. It is 
therefore abundantly clear that Section 556(d) does not apply here.
    The formal distinction between the process for approving or 
rejecting a State standard under an approved State plan reflects the 
real difference between these decisions under the framework of Section 
18 and the Federal system. A modification to an approved State plan 
takes effect prior to and pending OSHA review of the modification. A 
decision to reject the modification works an abrupt change in the 
status quo and overrides the determination of a sovereign State. A 
decision to approve, on the other hand, leaves the status quo and the 
State's determination unchanged. In effect the decision is not to 
institute the formal trial-type proceedings required for rejection.
    OSHA's historic placement of the burden of proof upon parties 
opposing a State standard is consistent with Section 18(c)(2), the 
applicable regulations, the APA, and the case law. As was discussed in 
the preceding section, the product clause reflects in substantial part 
dormant commerce clause case law. Under that case law, the burden of 
persuasion rests upon the party claiming that a State regulation 
violates the dormant commerce clause (unless there is evidence of 
protectionist discrimination by the State). Pacific Northwest Venison 
Producers v. Smitch, 20 F.3d 1008, 1012 (9th Cir.), cert denied ______ 
U.S. ______, 115 S. Ct. 297 (1994), citing Northwest Central Pipeline 
Corp. v. State Corp. Comm'n of Kansas, 489 U.S. 493, 525-26 (1989); 
Maine v. Taylor, 477 U.S. at 138; Minnesota v. Clover Leaf Creamery 
Co., 449 U.S. 456, 471 (1981).
    In addition, under the dormant commerce clause, the judgments of 
State lawmakers about the necessity or wisdom of non-discriminatory 
laws are entitled to considerable, and perhaps total, deference from 
the courts: if a State articulates a legitimate, non-discriminatory 
local interest to support an enacted law, ``courts should not `second-
guess the empirical judgments of lawmakers concerning the utility of 
legislation.' '' CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 
92 (1987), citing Justice Brennan's concurring opinion in Kassel, 450 
U.S. at 679; Pacific Northwest Venison Producers, 20 F.3d at 1012.
    Because of the similarities between dormant commerce clause 
principles and the product clause, OSHA believes it is appropriate to 
apply the same burdens of proof and persuasion as are applied under the 
dormant commerce clause. Nevertheless, because OSHA also concludes that 
Congress intended State standards to be subject to somewhat greater 
scrutiny than they might receive by the courts applying the dormant 
commerce clause (see Section II.B, above), OSHA will not defer to a 
State's legislative judgment regarding local conditions to the extent a 
court might. The agency will presume that a State standard meets the 
requirements of Section 18(c)(2), but that presumption may be rebutted 
with appropriate evidence.
    This overall approach is in harmony with the idea that Congress, by 
enacting the product clause, intended to recognize that States adopting 
State plans retain broad regulatory power over workplace safety and 
health, but not to allow the States to engage in regulation which 
otherwise would violate the dormant commerce clause. Imposing the 
burden of persuasion upon parties opposing a State regulation also is 
consistent with the basic nature of the ``defense'' available under the 
dormant commerce clause or product clause; these are affirmative 
defenses. See, e.g., NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 
25 (1937) (treating constitutional challenge to National Labor 
Relations Act as affirmative defense). Under the APA, the party 
presenting an affirmative defense bears the burden of persuasion. 
Greenwich Collieries, 114 S. Ct. at 2257-58; NLRB v. Transportation 
Management Corp., 462 U.S. 393 (1983).
    In keeping with the principles applied under the dormant commerce 
clause and the nature of the product clause ``defense,'' parties 
opposing a State standard should bear the burden of proving violations 
of Section 18(c)(2), unless there is evidence that the standard is 
linked to economic protectionism. Here, there is no evidence that the 
voters of California were motivated by economic protectionism in 
passing Proposition 65.7 The law, as enacted, applies with 
equal force to in-state and out-of-state businesses. In addition, 
although several commentors rely upon dormant commerce clause case law 
involving discriminatory statutes (e.g., Exs. 18-40, 18-160), they 
presented no evidence suggesting the statute is discriminatory. See 
also Ex. 22 (Attachment B, description of ballot initiative). Opponents 
of the California standard, therefore, bear the burden of proving that 
it does not satisfy Section 18(c)(2).
---------------------------------------------------------------------------

    \7\ As discussed in Section II.D, Proposition 65 as incorporated 
into the State plan can apply only to California employers. When 
determining whether the statute was motivated by economic 
protectionism, however, it is appropriate to examine the intent 
behind the statute as a whole, not simply its occupational 
applications. The remaining discussion in this section, therefore, 
should be understood in this light.
---------------------------------------------------------------------------

D. Application of the California Standard to Out-of-State Manufacturers 
and Distributors

    Several commentors raised the issue of whether supplemental 
enforcement of Proposition 65 against out-of-state manufacturers and 
distributors 8 is in accordance with Federal and State 
requirements. Section 18(b) of the Act provides that ``[a]ny State 
which * * * desires to assume responsibility for development and 
enforcement therein of occupational safety and health standards * * * 
shall submit a State plan[.]'' Section 18(c)(1) of the Act and 29 CFR 
Sec. 1902.3(b) require that a State plan designate the agency or 
agencies responsible for administering the plan throughout the State.
---------------------------------------------------------------------------

    \8\ Whenever this decision uses the word ``manufacturers'' or 
``vendors,'' it is intended to include distributors.

---------------------------------------------------------------------------

[[Page 31166]]

    To date, Cal/OSHA itself has not enforced its Hazard Communication 
Standard, including Proposition 65, against out-of-state vendors. 
However, private parties have instituted enforcement actions against 
out-of-state manufacturers in their role as vendors of products to 
which employees of other employers are exposed in California.
    Several commentors cite statements by various California officials 
which appear to indicate that Proposition 65 as incorporated into the 
State plan may not be enforced against out-of-state vendors. Exs. 18-
153, 18-154, 18-162, 18-174. While Proposition 65 itself applies to any 
``business'' exposing an individual to a hazardous substance, the 
regulation incorporating Proposition 65 into California's Hazard 
Communication Standard states that an ``employer which is a person in 
the course of doing business . . . is subject to [Proposition 65].'' 8 
CCR Sec. 5194(b)(6)(A). The Initial Statement of Reasons issued by the 
Cal/OSHA Standards Board in adopting Proposition 65 said that the 
purpose of the incorporation was so ``employers in California who come 
within the scope of Proposition 65 will be prohibited from knowingly 
and intentionally exposing their employees[.]'' Ex. 18-156.
    In addition, some commentors cite an October 1, 1992 letter from 
Steve Jablonsky, Executive Officer of the Cal/OSHA Standards Board, to 
OSHA, which states that employers need not rely on suppliers in order 
to comply with Proposition 65 as incorporated into the State plan. Mr. 
Jablonsky stated that employers could comply with Proposition 65 in 
various ways, including compliance with the general hazard 
communication provisions and posting of signs in the workplace. Exs. 
18-156, 18-162, 18-174. Similarly, a February 16, 1996 letter from John 
Howard, Chief, Division of Occupational Safety and Health, to OSHA 
indicated that there should be no effect on out-of-state employers 
because signs in the workplace, which are the responsibility of the 
California employer of the exposed employees, would be sufficient 
warnings. Ex. 6. In addition, in October 1992, when moving to dismiss 
Chemical Manufacturers Association, et al. v. California Health and 
Welfare Agency, the California Attorney General noted that Proposition 
65 does not place any burdens on out-of-state suppliers. Ex. 18-174.
    Commentors claim that private enforcement appears to place full 
responsibility for warning California employees upon out-of-state 
manufacturers and that application of the standard against out-of-state 
manufacturers is inconsistent with California's past statements on this 
subject. Exs. 18-81, 18-153, 18-154, 18-162. Organization Resource 
Counselors maintains that product manufacturers who distribute signs 
for workplace postings are sued despite providing the signs. Ex. 18-
150. Others note that the California Attorney General argued, in 
Industrial Truck Association, Inc. v. Henry, that the State standard 
authorizes enforcement of Proposition 65 against out-of-state 
manufacturers who supply their products to California employers. Exs. 
18-153, 18-154, 18-162, 18-174.
    Some commentors assert that Proposition 65 as incorporated into the 
State standard should not be enforced against out-of-state 
manufacturers because a State plan by definition can only be enforced 
against in-State employers. Shell Oil Company and Elf Atochem North 
America maintain that a State plan cannot reach beyond its own borders 
to bring enforcement actions against employers for conduct that 
occurred in workplaces in other States covered by their own State 
programs or Federal OSHA. Ex. 18-160. Melvin B. Young notes that this 
is the only part of any State plan which provides for enforcement 
against businesses outside of the State. Ex. 18-142.
    California's response relies upon the fact that Federal OSHA also 
imposes duties on manufacturers and that the courts have upheld such 
requirements. Ex. 22. See General Carbon Company v. Occupational Safety 
and Health Review Commission, 860 F.2d 479 (D.C. Cir. 1988). Others who 
support enforcement of the standards against out-of-state employers 
maintain that manufacturers are in the best position to assess the 
hazards and effectively communicate them. In these commentors' views, 
if manufacturers are not held responsible for exposures to their 
products, the burden will fall on tens of thousands of California 
employers. E.g., Ex. 18-167.
    OSHA finds that under its requirements governing State plans, a 
State plan may only enforce its standards within its borders. This 
conclusion is based upon the language of Section 18 of the OSH Act. 
Section 18(b) provides that a State may ``assume responsibility for 
development and enforcement therein of occupational safety and health 
standards'' (emphasis added). 29 U.S.C. Sec. 667(b). Similarly, Section 
18(c)(1)'s requirement for a designated State agency assigns 
responsibility to that agency for enforcing the State plan ``throughout 
the State[.]'' 29 U.S.C. Sec. 667(c)(1); see also 29 CFR 
Sec. 1902.3(b). Clearly, although Congress provided broad powers to the 
States under Section 18, these powers did not extend to enforcing State 
laws outside of the State's boundaries.
    OSHA's conclusion on this point also is consistent with the 
practical aspects of the State plan system. No other State plans 
enforce their occupational safety and health standards against 
employers who do not have workplaces in the State. Some States have 
adopted standards which differ from Federal standards and which 
indirectly affect (but do not regulate) out-of-state manufacturers, and 
these standards have been reviewed and approved under the product 
clause requirements of Section 18(c)(2) of the Act. See, e.g., 51 FR 
17684 (approval of Arizona's short-handled hoe standard); see also OSHA 
Directive STP 2-1.117. However, in these cases, the State does not take 
action against out-of-state manufacturers but against those in-state 
employers who use the affected product. Although, as noted in 
California's response, the Federal and other State-plan Hazard 
Communication Standards do impose responsibilities on manufacturers, 
State plans do not issue citations against out-of-state manufacturers 
for incomplete or inaccurate Material Safety Data Sheets (MSDS) used by 
in-state employers. Rather, the State would refer the matter to the 
Federal Area Office or other State plan in whose jurisdiction the 
manufacturer operates. Similarly, if Federal OSHA finds during an 
inspection that an MSDS used by an employer is incomplete or inaccurate 
and the manufacturer or supplier is located in a State with an approved 
State plan, OSHA would refer the matter to the State plan. OSHA 
Instruction CPL 2-2.38C, page 18 (October 22, 1990).
    Out-of-state chemical manufacturers and distributors are subject to 
the Federal Hazard Communication Standard, or to the State plan 
standard for the State in which they are located. Allowing application 
of the California standard out-of-state would mean that out-of-state 
manufacturers are subject to duplicative regulation. As the Supreme 
Court noted in Gade, ``the OSH Act as a whole evidences Congress' 
intent to avoid subjecting workers and employers to duplicative 
regulation[.]'' 505 U.S. at 100.
    Based upon the information in the record, it is unclear to OSHA 
whether the State, by its incorporation of Proposition 65 into the 
State plan, intended to apply Proposition 65 to out-of-state employers 
in their role as vendors. On the one hand, a facial understanding of 
the regulatory language suggests, as some commentors argue, that the 
State standard applies only to ``employers'' who expose their own 
``employees,'' in the employer's

[[Page 31167]]

own workplace, to Proposition 65 chemicals. 8 CCR Sec. 5194(b), 22 CCR 
Sec. 12601(c). On the other hand, some statements from California 
agencies, especially the Attorney General's statements in the 
Industrial Truck Association case, appear to endorse the idea of out-
of-state application of the State plan.
    Whatever the truth may be about the State's intentions here, the 
OSH Act does not permit out-of-state enforcement of a State's laws 
under the auspices of an approved State plan. Therefore, Proposition 65 
as incorporated into the State plan may only be enforced against in-
State employers. The State may, of course, apply its laws to all 
workplaces within California, including those maintained by 
manufacturers or distributors incorporated in other States; in that 
situation, the ``out-of-state'' business also would be an ``in-state'' 
employer. Additionally, OSHA is addressing only the State's authority 
under the State plan. This decision leaves open the possibility that 
the State may have other legal authority under which it can apply 
Proposition 65 to out-of-state businesses. OSHA has no authority to 
resolve that question. Most important, as OSHA has noted previously, 
Proposition 65 applies to consumer and environmental exposures. This 
decision does not affect actions brought under these aspects of the 
law.

E. Designated State Agency

    Several commentors addressed the issue of whether Proposition 65's 
provision for supplemental enforcement violates the OSH Act's criteria 
for a designated State agency. Section 18(c)(1) of the OSH Act and 
regulations at 29 CFR Sec. 1902.3(b) require that a plan designate a 
State agency or agencies as the agency or agencies responsible for 
administering the plan throughout the State. Although Section 
1902.3(b)(3) allows an agency to delegate its authority through an 
interagency agreement, the State designee must retain legal authority 
to assure that standards and enforcement provided by the second agency 
meet Federal effectiveness criteria.
    Commentors raised two issues regarding the relation of Proposition 
65 to these criteria. The first issue involves the diversity of 
agencies involved in the enforcement of Proposition 65, including the 
OEHHA, the State Attorney General and local prosecutors. The 
Proposition 65 regulations which were incorporated into the California 
Hazard Communication Standard were originally promulgated by OEHHA. The 
State Attorney General has interpreted Proposition 65 when representing 
the State in lawsuits in filed against it. The Attorney General and 
District Attorneys may also initiate enforcement actions under 
Proposition 65. Some commentors contend that because these agencies may 
take action independently of Cal/OSHA, their role does not meet the 
criteria in Section 18(c)(1) of the Act and 29 CFR Sec. 1902.3(b). Exs. 
18-41, 18-88, 18-127, 18-156, 18-164, 18-174, 18-191, 18-201.
    Some commentors allege that these agencies have not issued 
appropriate guidance to employers on complying with Proposition 65. For 
example, Ashland Chemical Company comments that it sought confirmation 
from the Attorney General that its warnings were acceptable under 
Proposition 65 and did not receive a reply. Ex. 18-191. Commentors have 
also pointed out that California agencies have issued conflicting 
interpretations about Proposition 65 in its workplace application. The 
Coalition notes that an October 1, 1992 letter from Steve Jablonsky, 
Executive Officer of the Cal/OSHA Standards Board, to OSHA states that 
employers need not rely on suppliers in order to comply with 
Proposition 65 as incorporated into the State plan. However, the 
Attorney General argued in Industrial Truck Association, Inc. v. Henry 
that Proposition 65 does apply to out-of-state manufacturers who supply 
their products to California employers. Ex. 18-174.
    Some commentors also maintain that the private right of action 
authorized by Proposition 65 as included in the California Hazard 
Communication Standard violates the requirement for a designated agency 
because the designee does not retain authority over private enforcement 
actions. Exs. 18-81, 18-96, 18-121, 18-144, 18-147, 18-150, 18-160, 18-
164, 18-169, 18-173, 18-174, 18-191, 18-201, 18-204. These commentors 
assert that the negotiation of settlements between plaintiffs and 
employers results in different requirements for different employers, so 
that employers cannot be aware in advance of the requirements placed 
upon them. According to these comments, no California agency has, or is 
willing to exercise, an oversight role of private litigation which 
would provide consistent and coherent interpretations. Some commentors 
also claim that the absence of a private right of action under the 
Federal OSH Act indicates that Congress did not favor occupational 
safety and health enforcement by private parties. Therefore, according 
to these commentors, OSHA should not approve a private right of action 
in a State plan.
    Other commentors maintain that nothing in the OSH Act precludes a 
State from allowing private rights of enforcement under a State plan, 
and as long as the basic plan meets the criteria for a designated 
agency, any additional enforcement would only increase effectiveness. 
Exs. 18-155, 18-168.
    In response to the comments, the State of California (Ex. 22) notes 
that Cal/OSHA remains responsible for the administration and 
enforcement of standards set forth in the plan. OEHHA does not have 
authority to make changes to the State plan; any change in the 
Proposition 65 regulations would have to be adopted by the Standards 
Board. On the issue of private litigation, the State asserts that since 
private enforcement only applies to Proposition 65, the standard 
remains as effective as the Federal. Cal/OSHA also points out that 
courts have the authority to stay litigation of some Proposition 65 
occupational exposure claims, pending resolution by Cal/OSHA of issues 
within its expertise. This has been done in As You Sow v. Turco 
Products. The State contends that Cal/OSHA should not be held 
responsible for suits of private parties or settlements reached without 
court involvement.
    OSHA finds that neither a distribution of functions among agencies 
nor private rights of action are prohibited under State plan 
provisions. OSHA has approved a provision for court prosecution of 
occupational safety and health cases by local prosecutors under the 
Virginia State plan (see 41 FR 42655; September 28, 1976). Although the 
Federal Occupational Safety and Health Act does not authorize private 
enforcement, OSHA State plans do not operate under a delegation of 
Federal authority but under a system which allows them to enact and 
enforce their own laws and standards under State authority. Therefore, 
nothing in the Act prevents States with approved plans from legislating 
such a supplemental private right of action in their own programs. In 
fact, other State plans include OSHA-approved provisions for private 
rights of action in cases of alleged discrimination against employees 
for exercising their rights under the plans.
    In the case of Proposition 65, private enforcement is supplemental 
to, not a substitute for, enforcement by Cal/OSHA. Private enforcement, 
therefore, should not detract from Cal/OSHA's responsibilities to 
enforce State standards. In addition, OSHA notes that California is 
required under Proposition 97 to ``take all steps necessary to prevent 
withdrawal of approval for the

[[Page 31168]]

State plan by the Federal government.'' California Labor Code 
Sec. 50.7(d).
    However, under the Act and OSHA regulations, the designated agency 
must retain overall authority for administration of all aspects of the 
State plan. State designees are required to take appropriate and 
necessary administrative, legislative or judicial action to correct any 
deficiencies in their enforcement programs resulting from adverse 
administrative or judicial determinations. See 29 CFR 
Sec. 1902.37(b)(14).) Therefore, OSHA expects Cal/OSHA to ensure that 
enforcement of the standard remains at least as effective as the 
Federal Hazard Communication Standard and consistent with the 
conditions under which the standard is Federally approved by taking 
appropriate action when necessary to address adverse court decisions in 
private party suits, Cal/OSHA enforcement actions or State Attorney 
General or local prosecutors' actions. Failure to pursue necessary 
remedies would result in OSHA's reconsideration of its approval of the 
standard.

F. Exemption for Public Sector Employers

    Section 18(c)(6) of the Act and regulations at 29 CFR 
Sec. 1902.3(l) require that a State plan must, to the extent permitted 
by its constitutional law, establish and maintain an effective and 
comprehensive occupational safety and health program applicable to all 
employees of public agencies of the State and its political 
subdivisions, which is as effective as the standards contained in the 
plan.
    The Coalition asserts that the exemption of public sector agencies 
from providing Proposition 65 warnings violates this criterion. Ex. 18-
174. In its response, the State of California maintains that since 
State and local government employees are covered by the other hazard 
communication provisions, their lack of coverage under the supplemental 
provisions should not pose a problem. The State also notes that 
government employees would receive warnings from other businesses which 
supply products to public agencies. In addition, the State contends 
that because government officials are accountable to the public in 
other ways, it is not necessary for them to be subject to the 
requirements of Proposition 65 as well. Ex. 22.
    The basic warning requirements of the Hazard Communication Standard 
and Cal/OSHA's enforcement of the standard do apply to public sector 
employers. As discussed below, the chemicals covered by, and the 
warning requirements of, Proposition 65 do not differ significantly 
from, and thus are not significantly more protective than, California's 
other hazard communication requirements. Moreover, because compliance 
with Proposition 65 can be achieved via use of the measures provided in 
the Cal/OSHA or Federal Hazard Communication Standard (see Section 
III.B.2), public sector employers will, in fact, be in compliance with 
Proposition 65 for all substances covered by the general California 
standard if they comply with the general standard. As a practical 
matter, this means that public sector employers will only be exempt 
from Proposition 65 warning requirements relating to a few substances 
(e.g. aflatoxins, discussed in Section III.B.3, below). Therefore, OSHA 
finds that California's protection of these employees is as effective 
as its protection of private sector employees, meeting the criterion in 
section 18(c)(6) of the Act.
    OSHA has never required States to use the same enforcement methods 
in the public sector as they do in the private sector. Nevada, among 
other States, imposes penalties upon public sector employers only for 
serious violations. 46 FR 42843 (August 25, 1981). California itself 
does not have financial penalties for public sector employers. See 
California Labor Code Sec. 6434. OSHA also has approved other State 
plans which lack public sector penalties. E.g. 44 FR 44 28327 (May 15, 
1979) (Maryland). Therefore, OSHA finds that the exemption of public 
agencies from suits under Proposition 65 is not in violation of OSHA 
requirements for public sector programs, particularly as public sector 
employers are subject to enforcement actions by Cal/OSHA for non-
compliance with the general State Hazard Communication Standard. In 
addition, Federal requirements which would force a State to submit to 
private suit raise issues under the Eleventh Amendment. See Seminole 
Tribe of Florida v. Florida, 116 S. Ct 1114 (1996).

III. Summary and Explanation of Remaining Issues Under Section 18

    In this Section, OSHA will analyze the remaining issues, which 
involve combined legal and factual questions arising under the various 
provisions of Section 18(c)(2). Initially, OSHA notes that although 
many comments assume significant differences between the substantive 
provisions of Proposition 65 and the Federal standard, OSHA's detailed 
analysis of the California regulations and the record discloses that 
most of these alleged differences do not, in fact, exist. With a few 
exceptions, Proposition 65 and the Federal standard cover the same 
chemicals and the same concentrations of chemicals. See Section 
III.B.3.
    Whenever chemicals are covered by both Proposition 65 and the 
Federal standard, they will be covered by the general State standard. 
In that situation, employers must comply with the State standard's 
general (i.e. non-Proposition 65) hazard communication requirements, 
which are virtually identical to the Federal standard's requirements. 
In those relatively few cases where a chemical is not covered by 
Federal or State hazard communication requirements, businesses can 
comply with Proposition 65's occupational aspects by applying Federal 
hazard communication methods to those chemicals. Consequently, 
Proposition 65, in practice, should impose only minor additional 
requirements. See Section III.B.3.
    Procedurally, there are several differences between the Federal and 
State standards. Most obviously, the State standard provides for 
supplemental enforcement by private parties; the Federal standard does 
not. OSHA concludes, however, that these procedural differences do not 
require rejection of the California standard. See Section III.B.5.
    Accordingly, and as set forth below, OSHA is approving the 
California standard, including Proposition 65. This approval, though, 
is contingent upon OSHA's understanding of Proposition 65's compliance 
provisions and the conclusion that the State cannot apply Proposition 
65 to out-of-state businesses under the auspices of the State plan. 
OSHA also expects Cal/OSHA to exercise its role as the designated State 
agency to ensure that Proposition 65's enforcement comports with these 
understandings and does not result in a less effective standard.

A. Compelling Local Conditions

1. Overview
    As outlined in Section II.B, OSHA's analysis under the product 
clause first requires it to consider whether ``compelling local 
conditions'' support the California standard. OSHA finds that the State 
plan requirements presently under review, including the general 
California Hazard Communication Standard and the occupational aspects 
of Proposition 65, are justified by compelling local health and safety 
concerns.
    When Proposition 65 was adopted by the voters of the State of 
California in 1986, the law's public-health objectives

[[Page 31169]]

were succinctly set forth in the ballot initiative and in the law's 
preamble, which found that the ``lives of innocent people are being 
jeopardized'' by the lack of information about toxins; that ``hazardous 
chemicals pose a serious threat to their well-being;'' and that 
conventional enforcement efforts by public agencies ``have failed to 
provide them with adequate protection.'' Ex. 22, Attachment B.
    ``Right to know'' laws like Proposition 65 promote the general 
public's knowledge about safety and health issues. By ensuring that 
people have information about hazards and risks associated with 
chemicals, these laws allow workers and other persons to protect 
themselves against hazardous exposures and resulting illnesses. Right-
to-know laws also encourage the market to reformulate hazardous 
products to reduce or eliminate the risks associated with a product's 
use. Absent access to relevant information about chemical hazards and 
risks, workers cannot protect themselves or the public at large from 
potentially devastating exposures.
    Access by workers and their representatives to information about 
toxic substances in the workplace is an issue recognized by OSHA, by 
Congress, and generally by the occupational safety and health community 
as a central element in any effort to provide for safe and healthful 
workplaces throughout the nation. Congress included in OSHA's standard-
setting authority an explicit requirement to ``prescribe the use of 
labels or other appropriate forms of warning'' for the protection of 
workers from the hazards of chemicals in their workplaces. 29 U.S.C. 
Sec. 655(b)(7). In promulgating the Federal HCS in 1983, OSHA 
extensively reviewed available statistics and documented an 
unacceptably high incidence of chemically-related illnesses and 
injuries. 48 FR 53282 (1983). OSHA also found--with substantial support 
not only from workers, other government agencies and public interest 
groups, but from many industry members and trade associations--that 
implementation of appropriate hazard communication in the nation's 
workplaces ``would serve to decrease the number of such incidents by 
providing employees with the information they need to help protect 
themselves, and ensure that their employers are providing them with the 
proper protection.'' Id. The crucial importance of hazard communication 
was well-recognized in OSHA's 1989 Safety and Health Program Management 
Guidelines, which provide that one of the cornerstones of effective 
protection of worker safety and health is ensuring that workers have 
adequate information to protect themselves and others:

    The commitment and cooperation of employees in preventing and 
controlling exposure to hazards is critical, not only for their own 
safety and health but for that of others as well. That commitment 
and cooperation depends on their understanding what hazards they may 
be exposed to, why the hazards pose a threat, and how they can 
protect themselves and others from the hazards.

See 59 FR 3904.
    Right-to-know laws also enhance the ability of the public and 
individuals to ensure that their government (Federal, State or local) 
acts appropriately to protect their interests. Committee on Risk 
Perception and Communication, National Research Council,9 
Improving Risk Communication 111 (National Academy Press, 1989) (``[a] 
central premise of democratic government--the existence of an informed 
electorate--implies a free flow of information''). By enacting 
Proposition 65, the voters sought to exercise their right and 
responsibility to oversee the functioning of their government. Thus, 
the principles which led California voters to enact Proposition 65 in 
1986--the perceived threat to the ``lives of innocent people'' and 
their well-being, the lack of information about hazardous chemicals, 
and the failure of ``conventional enforcement efforts by public 
agencies'' (Ex. 22, Attachment B)--are widely known and accepted.
---------------------------------------------------------------------------

    \9\ The National Research Council comprises councils of the 
National Academy of Sciences, the National Academy of Engineering, 
and the Institute of Medicine.
---------------------------------------------------------------------------

    One factor OSHA has historically considered in determining whether 
a State's interest is a compelling one is the extent to which the 
industrial hazard sought to be addressed is prevalent within the State. 
Here, the standard at issue relates not to a particular trade but to 
the hazard posed by toxic chemicals used throughout industry. Although 
the commentors raise some arguments against a finding of compelling 
local conditions (see discussion in Section III.A.2 and discussion 
below), none question the State's interest in hazard communication or 
the extent of hazardous exposures in California. Moreover, it is 
obvious that California, with an economy larger than that of most of 
the world's nations, has within its jurisdiction a significant portion 
of the toxic exposures occurring daily in the United States. See also 
48 FR 8610 (decision approving California ethylene dibromide standard 
and noting extent of relevant exposure within State). The number of 
out-of-state businesses responding to OSHA's request for comments, and 
the volume of chemical shipments to California suggested in their 
submissions, also attest to the number of occupational chemical 
exposures likely to occur within the State.
    California's interest in protecting the public's ``right to know'' 
is particularly compelling here because it is acting not only to 
protect the general public health and safety, but to protect the rights 
of individual citizens to make informed decisions about matters 
affecting their own health and welfare. Just as a patient has the right 
to consent to, or refuse, medical treatment, see Cruzan v. Director, 
Missouri Dep't of Health, 497 U.S. 261, 269 1990) citing Schloendorff 
v. Society of New York Hospital, 105 N. E. 92, 93 (1914) (``Every human 
being of adult years and sound mind has a right to determine what shall 
be done with his own body''), so, more generally, persons have a right 
to understand the hazards to which they are exposed and determine 
whether they wish to take any risk involved.
    Dormant commerce clause case law also supports OSHA's analysis. As 
OSHA discussed in Section III.A., there is no evidence that the 
California voters harbored any intent to discriminate against out-of-
state employers or manufacturers; to the contrary, the law on its face 
is fully applicable to all private sector businesses which meet the 
ten-employee size limit. Instead, California voters appear to have been 
exclusively concerned with public health and safety, which undeniably 
constitutes a ``legitimate'' or ``compelling'' objective within the 
meaning of dormant commerce clause decisions. See, e.g. Kleenwell 
Biohazard Waste v. Nelson, 48 F.3d 391, 397 (9th Cir. 1995) 
(``[r]egulations that touch on safety are those that the Court has been 
most reluctant to invalidate''), citing Raymond Motor Trans. Co. v. 
Rice, 434 U.S. 429 (1978); see generally Goehring v. Brophy, 94 F.3d 
1294, 1300 (9th Cir. 1996) (``Public health and well-being have been 
recognized as compelling governmental interests in a variety of 
contexts''). Consequently, under the dormant commerce clause, 
California's non-discriminatory intent would lead the courts to uphold 
Proposition 65.
    Finally, the primary difference between the California and Federal 
standards is the California standard's incorporation of Proposition 
65's provision for citizen enforcement of disclosure laws to augment 
the scarce resources available to regulatory agencies and public 
prosecutors. Thus, California may reasonably conclude that enactment of 
Proposition 65 should lead

[[Page 31170]]

to more effective enforcement of the measures prescribed in the Federal 
standard and improved dissemination of information about hazardous 
chemicals. (By way of example, in Section III.B.5, OSHA discusses an 
instance in which an employer who was not in compliance with the 
general California (or Federal) standard was brought into compliance as 
a result of a private enforcement action.) This additional enforcement 
mechanism also is entirely consistent with the employee-protection 
concerns that motivated Congress in 1970 and that remain relevant 
today. In 1970, Congress found safety and health inspectors in 
``critically short supply[.]'' Legislative History at 161. Today, there 
are two thousand Federal and State plan inspectors, who must cover more 
than six million workplaces. Neither OSHA nor Cal/OSHA has ``the 
resources to find every violation of every law,'' Carnation Co. v. 
Sec'y., 641 F.2d 801, 805 (9th Cir. 1981).
    OSHA emphasizes that private suits under Proposition 65 form a 
supplement, not a substitute, to conventional enforcement of the 
State's Hazard Communication Standard already being provided by Cal/
OSHA. Indeed, the California standard reflects OSHA's previous findings 
in its hazard communication rulemakings because the primary focus of 
the State standard is a close adaptation of the Federal standard. Under 
the applicable regulations, compliance with the measures prescribed by 
the Federal standard is an acceptable means of compliance with 
Proposition 65. See Section III.B.2. Accordingly, the State's further 
incorporation of Proposition 65 into the standard simply provides a 
supplemental method of ensuring that the standard, as a whole, 
functions effectively.
    Other State plans approved by OSHA contain private rights of action 
intended to supplement the anti-discrimination provisions of the State 
plan. North Carolina Code Sec. 95-243; California Labor Code 
Sec. 98.7(f). Whether such supplements are a useful or appropriate 
addition to State plan authority is a matter for the State to decide. 
In the present case, OSHA accepts the judgment of California voters 
that compelling local conditions justify the inclusion of Proposition 
65's additional enforcement remedies into the State plan.
    It is true, as several industry commentors point out, that the 
Federal OSH Act contains no private rights of action or citizen suit 
provisions. Exs. 18-41, 58, 65, 96, 139, 150, 160, 162, 165. As OSHA 
explained in Section I.A, however, the OSH Act specifically allows 
States to adopt and enforce standards and enforcement procedures which 
are more stringent in protecting worker safety and health than those of 
Federal OSHA. The OSH Act, therefore, does not bar the States from 
adopting supplemental enforcement mechanisms.
    As OSHA noted at the outset, the voters of California have a 
compelling interest in protecting their right to information about 
possible risks to their safety and health. Id.; compare C & A Carbone 
v. Town of Clarkstown, 511 U.S. 383, 409 (1994) (rejecting a 
discriminatory town regulation governing solid waste disposal because 
the town had ``any number of nondiscriminatory alternatives * * * 
[including] uniform safety regulations enacted without the object to 
discriminate''). There is no indication in the statutory language of 
Section 18(c)(2) or the legislative history of the Act that Congress 
intended to bar a State's voters from determining how to best protect 
their right to make informed decisions. Rather, the limited legislative 
history shows that Congress simply wanted ``to prevent States from 
making unreasonable limitations[.]'' Legislative History at 501 
(statement of Senator Saxbe).
2. Commentor Rebuttal Arguments
    As discussed in Sections II.B and II.C, OSHA will presume in the 
absence of evidence to the contrary that a State's law enacted to 
foster its workers' safety and health meets the product clause's 
requirement for compelling local conditions. Industry commentors raised 
two arguments to rebut the idea that Proposition 65 is supported by 
compelling local conditions. First, as OSHA outlined and rejected in 
Section II.B, industry commentors have alleged that California must 
establish conditions unique to California in order to support approval 
of the standard. Second, the commentors also assert that the State's 
failure to apply Proposition 65 to public sector employers (and small 
businesses) constitutes evidence that California has no compelling 
local need for Proposition 65. E.g., Exs. 18-150, 18-174. Organization 
Resource Counselors (ORC) (Ex. 18-150) states that these exemptions 
effectively exclude 50% of California employees from coverage. 
California, in response, says that ``while the exemption for small 
businesses may cover a large number of businesses, such businesses are 
responsible for a relatively small share of the handling of hazardous 
chemicals.'' Ex. 22, pages 11-12. California maintains that the law 
applies ``to the big businesses that produce more than 90% of all 
hazardous waste in California.'' Id., citing Proposition 65 ballot 
argument, Attachment B to Exhibit 22.
    Proposition 65's exemptions do not provide evidence of 
discriminatory intent, and do not undermine California's putative 
interest in protecting its workers' safety and health. The exemption 
for businesses employing ten persons or fewer applies to all such 
businesses, regardless of whether they are located inside or outside of 
the State. Moreover, even assuming that ORC has correctly estimated the 
percentage of employees covered, its comment does not address the 
percentage of employees exposed to covered chemicals. No inference, 
then, can be drawn regarding the intent of California's voters in 
passing Proposition 65, or the effect of the exemptions.
    Finally, as outlined in Section C, there are, in fact, few 
differences between the occupational aspects of Proposition 65 and the 
Federal or general State standard. As a practical matter, the effect of 
the public sector and small business exemptions is to free these 
entities from the threat of supplemental enforcement. OSHA concludes 
that it is within the voters' discretion to conclude that small 
businesses should not be subject to the penalties available under 
Proposition 65. Employees working for these businesses will still be 
protected by the general California standard.

B. Remaining Section 18(c)(2) Issues

1. Overview
    The following sections of OSHA's decision analyze the remaining 
issues arising under Section 18(c)(2) of the Act: whether the 
California standard is at least as effective as the Federal standard, 
and whether the California standard imposes an undue burden upon 
commerce.
    Commentors have argued that the Proposition 65 components of the 
California standard require warnings for chemicals not covered by the 
Federal Hazard Communication Standard and that Proposition 65's warning 
requirements are in addition to those required by the Federal standard. 
Section II.B.2 addresses OSHA's reasons for concluding that use of the 
measures prescribed by the Federal or general California Hazard 
Communication Standard will constitute compliance with Proposition 65. 
Section III.B.3 discusses coverage issues. First, OSHA addresses its 
reasons for concluding that almost all of the chemicals and 
concentrations of chemicals covered by Proposition 65 are covered by 
the Federal standard as well. Second, the

[[Page 31171]]

decision addresses Proposition 65's applicability to California 
manufacturers other than chemical manufacturers. Section III.B.4 
discusses the substantive differences between the Federal and general 
California hazard communication standards, including the argument by 
some commentors that the California standard does not protect trade 
secrets as effectively as the Federal standard. Section III.B.5 
discusses Proposition 65's supplemental enforcement provision.
2. Businesses Can Comply With Proposition 65 by Using Methods 
Prescribed by the Federal Hazard Communication Standard
    Although there are minor differences, discussed in the next 
section, between the coverage of the Proposition 65 elements of the 
State plan and the Federal standard, the requirements for compliance 
are the same. Some commentors have argued that the Proposition 65 
elements of the California standard require businesses to provide 
warnings which are not required by the Federal Hazard Communication 
Standard. The particular focus of these comments is upon the 
possibility that Proposition 65 requires a ``safe harbor'' label where 
the Federal standard would not, or where the Federal standard would 
require only Material Safety Data Sheet. E.g. Exs. 18-3, 18-149, 18-
162.
    Other commentors point out that the California standard, as 
discussed in Section III, permits businesses to comply with Proposition 
65 by complying with the general State or Federal standards. Exs. 18-
61, 18-143, 18-155. OSHA agrees with the latter commentors and is 
noting this understanding as a basis for its approval of the standard. 
OSHA's analysis of the California standard is as follows.
    Section 5194(b)(6) of the standard, 8 CCR Sec. 5194(b)(6), 
incorporates Proposition 65 and outlines the various permutations 
possible between the remainder of the California standard and its 
Proposition 65 elements. Admittedly, Section 5194(b)(6) is not a model 
of clarity. As OSHA's analysis of the regulations shows (see below), 
however, when a chemical is covered solely by the Proposition 65 list, 
businesses may comply with Proposition 65 by complying with the Federal 
Hazard Communication Standard. And when a chemical is covered both by 
Proposition 65 and the general State standard, businesses must comply 
with Proposition 65 by complying with the general State standard, which 
is virtually identical to the Federal Hazard Communication Standard. 
(For the minor differences, see Sections III.B.3 and 4.)
    Section 5194(b)(6) divides exposures into three types:
    (1) Section 5194(b)(6)(B) covers exposures to chemicals which 
appear on the Proposition 65 list and which are subject to general 
State hazard communication requirements. For these exposures, 
businesses must comply with the general State hazard communication 
requirements.
    (2) Section 5194(b)(6)(C) covers exposures to chemicals which 
appear on the Proposition 65 list but which would not otherwise be 
subject to general State hazard communication requirements. For these 
exposures, businesses have a choice between several alternative methods 
of compliance, one of which is compliance with the information, 
training and labeling requirements of the Federal Hazard Communication 
Standard.
    (3) Section 5194(b)(6)(D) covers exposures to chemicals which do 
not appear on the Proposition 65 list. These exposures are not relevant 
to OSHA's analysis here.
    As a practical matter, almost all chemicals covered by Proposition 
65 will be covered by the Federal and general State hazard 
communication requirements and, therefore, will be subject to Section 
5194(b)(6)(B). For these exposures, compliance with subsections (d) 
through (k) of the California standard [8 CCR Secs. 5194 (d)-(k)] is 
``deemed compliance with the Act.'' 8 CCR Sec. 5194(b)(6)(B). With some 
slight variations discussed elsewhere in this decision (see Section 
III.B.4), Sections 5194(d) through (I) track the provisions of the 
Federal Hazard Communication standard at 29 CFR Sec. 1910.1200(d)-(I). 
Section 5194(k) sets forth five appendices. Appendices A-D appear to be 
identical to Appendices A-D to 29 CFR Sec. 1910.1200, the Federal 
standard.10
---------------------------------------------------------------------------

    \10\ There is no Section 5194(j). Appendix E consists of 
Proposition 65 regulations from Title 22 of the California Code of 
Regulations, which ``are printed in this Appendix because they 
provide terms and provisions referred to in subsection (b)(6) 
(emphasis added). Appendix E also includes all of the regulations 
governing warnings for consumer and environmental exposures. 22 CCR 
Secs. 12601(b), (d). OSHA interprets the California standard to 
include these provisions solely for the purpose of providing easy 
access to code sections referenced in the Standard.
---------------------------------------------------------------------------

    In those rare situations involving exposures to chemicals which 
appear on the Proposition 65 list but which are not covered by the 
Federal or general State standards, Section 5194(b)(6)(C) will govern. 
Under that regulation, employers must provide ``a warning to employees 
in compliance with California Code of Regulations Title 22 (22 CCR) 
Section 12601(c)'' (the OEHHA regulations implementing Proposition 65) 
or comply with the requirements of Sections 5194(d)-(k). 8 CCR 
Secs. 5194(b)(6)(C). Under Section 12601(c), compliance with 
Proposition 65 can be achieved via compliance with the Federal (or, if 
the business so chooses, the general State) Hazard Communication 
Standard. 22 CCR Sec. 12601(C)(1)(c).
    Section 12601(c) begins with the statement:
    Warnings for occupational exposures which include the methods of 
transmission and the warning messages as specified by this subdivision 
shall be deemed clear and reasonable.
    The remainder of Section 12601(c) sets forth three alternative 
methods of providing acceptable warnings:
    1. The business may place on the product's or substance's label a 
warning which complies with the criteria for consumer product warnings 
[see 22 CCR Secs. 12601 (b)(1)(A), (b) (3)-(4), (c)(1)(A), (c)(2)]; or
    2. The business may post a clear and conspicuous workplace sign 
[see 22 CCR Secs. 12601(c)(1)(B)]; or
    3. The business may comply with the information, training, and 
labeling requirements of the Federal Hazard Communication Standard, the 
California Hazard Communication Standard, or (in cases involving 
pesticides) California's Pesticides and Worker Safety requirements [see 
22 CCR Sec. 12601(c)(1)(C)].

Except in the case of pesticides (discussed in Section III.B.3), then, 
Section 12601(c) provides that compliance with the measures provided by 
the Federal Hazard Communication Standard constitutes compliance with 
Proposition 65.
    Although California's statements about the proper interpretation of 
its standard have been ambiguous, OSHA believes the foregoing 
understanding is consistent with the State's interpretations. In its 
February 16, 1996 submission (Ex. 6), Cal/OSHA (on behalf of itself, 
OEHHA and the Attorney General), stated that:

    [T]he Cal-HCS allows compliance to be achieved either through 
compliance with subsections (d) through (k) of the HCS, or, where 
the HCS would not require a warning, either through the methods set 
forth in subsections (d) through (k) or the alternative warning 
methods in 22 CCR Sec. 12601(c).

Under the ``HCS Method,'' ``a company may simply give the Proposition 
65 warning through a method that complies with the HCS.'' Ex. 6, page 
6; see also Ex. 6, pages 7-9; Ex. 18-174A,

[[Page 31172]]

Attachment 5, page 3) (Letter from California DOSH to parties in AYS v. 
Turco). Such methods generally would include providing relevant 
material safety data sheets, labels, and (for employers) training. 
Similarly, California states that if a business chooses to comply with 
Section 12601(c),

    Sec. 12601(c) itself refers back to the HCS warning methods by 
providing that compliance may be achieved through `a warning to the 
exposed employee about the chemical in question that fully complies 
with all information, training and labeling requirements of the 
Federal Hazard Communication Standard'' * * *. However, the 
regulation does not provide specific safe harbor warning language 
where the HCS method is used to give the warning.

Ex. 6, page 11; see also Cal/OSHA Enforcement Directive, Policy and 
Procedure C-43. Similarly, Section 5194(b)(6)(E) provides that 
compliance with the Federal Hazard Communication Standard ``shall be 
deemed a defense'' in any enforcement action brought under Proposition 
65. Id., incorporating 22 CCR Sec. 12601(C)(1)(c).
    California does point out that while the language of any ``hazard 
warning'' ``need satisfy only the more general standard of 
Sec. 5194(c)''--i.e. ``Any words, pictures, symbols or combination 
thereof appearing on a label or other appropriate form of warning which 
convey the health hazards and physical hazards of the substance(s) in 
the container(s)--such a warning must be ``clear and reasonable'' to 
meet the requirements of Proposition 65. See Ex. 6 page 9; see also 29 
CFR Sec. 1910.1200(c).
    One commentor, Dow Chemical (Ex. 18-162, page 9), seizes upon a 
similar statement by OEHHA in its promulgation of 22 CCR Sec. 12601(c) 
(see Ex. 18-174A, Attachment 2 at page 37) to argue that California 
will not, in fact, recognize compliance with the Federal standard as 
compliance with Proposition 65. In its statement however, OEHHA's focus 
was upon the fact that the Federal standard requires only an 
``appropriate'' warning and does not prescribe specific warning 
language; 11 thus, OEHHA believed that California would have 
to independently evaluate Federal label or MSDS warnings to determine 
if they were ``clear and reasonable'' in accordance with Proposition 
65's requirements. In OSHA's view, Dow's comment misses a central 
point. The Federal standard does not prescribe specific warning 
language. That fact, however, is not a license for businesses to create 
unclear or unreasonable warnings. An unclear or unreasonable warning 
would not meet Federal requirements. Thus, there is no substantive 
distinction between the Proposition 65's requirement of a ``clear and 
reasonable'' warning and the Federal (and State) requirement of an 
``appropriate'' warning. Compliance with the Federal standard, then, 
constitutes compliance with the Proposition 65.12 As stated 
previously, however, in most cases chemicals on the Proposition 65 list 
will be subject to the general State Hazard Communication Standard and, 
therefore, employers will have to comply with the State standard. No 
commentor has pointed to any significant differences between the 
labeling and MSDS requirements of the two standards. Compare 29 CFR 
Secs. 1910.1200 (f)-(g) with 8 CCR Secs. 5194 (f)-(g); see also 
discussion of trade secrets (California requirement of CAS numbers) in 
Section III.B.4. Proposition 65, therefore, does not undermine 
effectiveness or result in an undue burden on commerce.13
---------------------------------------------------------------------------

    \11\ OEHHA also noted that there might be situations in which 
the Federal standard would not apply to particular employees, but 
Proposition 65 would. OEHHA did not want Section 12601(c) to be 
understood to relieve businesses of the duty of providing warnings 
to these additional employees. Ex. 18-174A, Attachment 2 at page 37.
    \12\ For example, it appears that several businesses have been 
sued because the warnings they provided were phrased in ``and/or'' 
terms and, thus, did not specify whether the chemical involved was a 
carcinogen or a reproductive toxicant. E.g. Ex. 18-39. An ``and/or'' 
warning also would fail to meet the requirements of the Federal 
standard because it does not ``convey the specific physical and 
health hazard(s)[.]'' 29 CFR Sec. 1910.1200(c) (emphasis added).
    \13\ Assuming, for purposes of argument, that the California 
standard did require businesses to add a consumer ``safe harbor'' 
label warning to a product for which the Federal standard would 
require only an MSDS, OSHA finds that such a requirement neither 
undermines effectiveness nor constitutes a violation of the product 
clause. Although some commentors asserted that these labels result 
in ``over warning,'' the record contains no copies of labels which 
would undermine the effectiveness of the Federal standard and there 
is no evidence demonstrating the burden on commerce which has 
resulted. Most of the commentors' complaints, in any case, focus on 
the requirements imposed by voluntary settlements, a subject we 
discuss below.
---------------------------------------------------------------------------

3. Comparison of Coverage Under Federal Standard and Proposition 65
    Overview: OSHA has identified three general areas in which the 
California standard, including Proposition 65, differs from the Federal 
standard. In sections three through five, OSHA will discuss these 
differences and analyze them in light of the requirements of Section 18 
of the OSH Act.
    Before proceeding to these differences, however, it is important to 
recognize the overall similarities between the State and Federal 
standards. In particular, many commentors maintain that the chemicals 
and concentrations of chemicals covered by Proposition 65 and the 
Federal standard differ significantly. See, for example, Exs. 18-153, 
18-154, 18-162, 18-164, 18-165, 18-166. This is understandable, 
particularly in light of the fact that the California standard's 
incorporation of Proposition 65 specifically provides for ``Exposures 
Subject to Proposition 65 Only.'' 8 CCR Sec. 5194(b)(6)(B). However, 
once the Federal and State standards are analyzed, it becomes apparent 
that they are, in fact, quite similar. Most important, both standards 
require appropriate warnings whenever there is reliable scientific 
evidence to support the view that a particular chemical is hazardous. 
As a consequence, both standards, with a few exceptions, cover the same 
chemicals and concentrations of chemicals.
    Under the Federal standard, covered businesses must take 
appropriate steps to communicate possible chemical health hazards 
(including carcinogens and reproductive toxins) whenever

    a. A chemical appears on certain ``floor'' lists referenced in 
the standard; or
    b. ``There is statistically significant evidence based on at 
least one study conducted in accordance with established scientific 
principles that acute or chronic health effects may occur in exposed 
employees'' [see 29 CFR Sec. 1910.1200(c)]

See 29 CFR Sec. 1910.1200(c), (d) (3)-(4). The general California 
standard is equally specific. 8 CCR Secs. 5194(c), (d) (3)-(4). 
Accordingly, Federal and State hazard communication coverage is not 
limited to specific lists of chemicals but is broad and flexible enough 
to take into account any chemical which, whether listed or not, meets 
the ``one study'' test.
    Proposition 65 relies upon a list of chemicals. The Proposition 65 
``list'' is based in part upon the ``floor'' lists used in the Federal 
standard and in part upon the State's evaluation of scientific 
evidence. See generally California Health and Welfare Code 
Secs. 25249.8 (a)-(b).
    Much of the confusion in the comments over the chemical coverage 
issue appears to reflect an undue focus upon comparing the floor lists 
referenced in the Federal standard with the Proposition 65 
list.14 Although there

[[Page 31173]]

is a great deal of overlap between these Federal and Proposition 65 
lists, preoccupation with them overlooks the fact that even if a 
chemical is not on the Federal floor list, it must be classified as a 
hazardous chemical under the Federal standard if there is at least one 
scientifically valid study to support a finding that the chemical poses 
a health hazard to employees. Similarly, chemicals are placed on the 
Proposition 65 list only after a finding by the State (or another 
Federal agency) that valid scientific evidence supports their 
classification as a carcinogen or reproductive hazard.15
---------------------------------------------------------------------------

    \14\ The existence of the Proposition 65 list represents another 
difference between the California and Federal standard, but the list 
itself does not violate the product clause. There is no evidence 
that California's preparation of a list of hazardous chemicals 
results in a less effective standard or imposes a burden upon 
commerce. Indeed, the list as a supplement to the general hazard 
communication requirements should benefit both workers and 
businesses by providing another, comprehensive resource for 
obtaining information about certain substances.
    \15\ For example, Dow Chemical Company cites fifteen substances 
which, it states, ``are treated as carcinogens by Prop. 65 but are 
not similarly classified by OSHA/NTP/IARC[.]'' Ex. 18-162, page 14 
footnote 6. Although it is not entirely clear, this statement 
suggests that Dow believes hazard communication about cancer risk is 
unnecessary unless a chemical is specifically recognized as a 
carcinogen by IARC, NTP or an OSHA standard. This focus misses the 
``one study'' requirement of Section 1910.1200(c). The flaw in Dow's 
analysis is apparent when at least one of its sample chemicals, 
captan, is considered. Captan's primary use is as a pesticide and 
that use generally would be regulated by the U.S. Environmental 
Protection Agency rather than OSHA. See OSHA's 1994 preamble to the 
Hazard Communication Standard, 59 FR 6126, page 6143 (February 9, 
1994). OSHA, however, would regulate the manufacture and formulation 
of captan and its non-pesticidal uses and recognized the possibility 
that it is a carcinogen in its 1992 proposed rule on air 
contaminants, noting that animal studies have been contradictory but 
that ``high doses caused significant incidences of'' cancer in mice. 
See 57 FR 26002 (June 12, 1992). Thus, there appears to be 
``statistically significant evidence based on at least one study'' 
that captan is a carcinogen and subject to OSHA hazard communication 
requirements.
---------------------------------------------------------------------------

    Proposition 65 requires the California Governor to compose (and 
regularly update) a list of chemicals known to be carcinogens or 
reproductive toxins. The statute established four mechanisms for 
including a particular chemical on this list. First, Proposition 65 
created an initial list, which consisted of chemicals automatically 
included by virtue of their recognition as carcinogens or reproductive 
toxins by the International Agency for Research on Cancer (IARC) or 
OSHA. See California Health and Safety Code Sec. 25249.8(a), 
incorporating California Labor Code Secs. 6382 (b)(1), (d); see also 
AFL-CIO v. Deukmejian, No. C002364 (California Court of Appeals, 1989). 
As the court in AFL-CIO recognized, the initial Proposition 65 list 
simply mirrored the Federal floor listing references to carcinogens 
identified by the National Toxicology Program (NTP) or IARC and to 
carcinogens or reproductive toxins otherwise covered by OSHA (under 29 
CFR Part 1910 subpart Z). See 29 CFR Secs. 1910.1200(d) (3)-(4) and 
Appendix A. Consequently, the initial Proposition 65 list represented 
chemicals which would be covered under the Federal standard.
    Proposition 65 also provides three methods of supplementing the 
initial list. These three methods rely upon scientific evidence that a 
chemical causes cancer or reproductive toxicity and, thus, again mirror 
the Federal standard. Under California Health and Safety Code Section 
25249.8(b), a chemical is listed if, ``in the opinion of the state's 
qualified experts''

    a. ``Scientifically valid testing'' shows that the chemical 
causes cancer or reproductive toxicity;
    b. ``A body considered to be authoritative by'' the State's 
experts formally identifies the chemical as a carcinogen or 
reproductive toxin [hereafter, ``authoritative bodies mechanism'']; 
or
    c. A State or Federal agency has ``formally required'' the 
chemical to be labeled or identified as a carcinogen or reproductive 
toxin [hereafter, ``formally required to be labeled mechanism''].

The California Code of Regulations, see 22 CCR Secs. 12301-12306, 
implements these provisions by creating a ``Science Advisory Board'' 
(SAB) which, in turn, comprises two committees: the ``Carcinogen 
Identification Committee'' and the ``Developmental and Reproductive 
Toxicant (DART) Identification Committee.'' 22 CCR Sec. 12302(a). The 
committee members are the ``State's qualified experts'' in their 
relevant fields for purposes of Proposition 65. See 22 CCR Sec. 12301-
2. They advise and assist the California lead agency, the Office of 
Environmental Health Hazard Assessment (OEHHA), in implementing 
Proposition 65. 22 CCR Sec. 12305.
    As is clear from the statute, when the committees themselves 
determine that a particular chemical causes cancer or reproductive 
toxicity, they must rely upon ``scientifically valid testing.'' 
California Health and Welfare Code Sec. 25249.8(b); 8 CCR Secs. 12305 
(a)(1), (b)(1). This same ``scientifically valid testing'' would 
trigger the Federal standard's requirement for hazard communication 
when ``there is statistically significant evidence based on at least 
one study conducted in accordance with established scientific 
principles'' of a potential health hazard. Here again, then, 
Proposition 65 would not apply to chemicals not covered by the Federal 
standard.
    The committees similarly must rely upon valid scientific evidence 
when they identify a chemical through Proposition 65's authoritative 
bodies mechanism.16 To rely upon an authoritative body's 
identification of a chemical as hazardous, the committees must find 
``sufficient evidence'' of carcinogenicity or reproductive toxicity 
from studies in humans or in experimental animals. 22 CCR Sec. 12306 
(e)-(g). Moreover, OEHHA can reject a chemical ``if scientifically 
valid data which were not considered by the authoritative body clearly 
establish that the chemical does not satisfy the criteria'' of 
subsections (e) and (g). 22 CCR Sec. 12306 (f), (h). OEHHA also affords 
all interested persons an opportunity to object to a chemical's listing 
on ``the basis * * * that there is no substantial evidence that the 
criteria identified in subsection (e) or in subsection (g) have been 
satisfied.'' 22 CCR Sec. 12306(I). The ``scientifically valid data'' 
required when the committees identify a chemical for listing under the 
authoritative bodies mechanism would activate hazard communication 
requirements under the Federal standard as well.
---------------------------------------------------------------------------

    \16\ As of September 1996, California had identified five 
``authoritative bodies'': IARC; the National Institute for 
Occupational Safety and Health (NIOSH); the National Toxicology 
Program (NTP); the U.S. Environmental Protection Agency (USEPA); and 
the U.S. Food and Drug Administration (USFDA). 22 CCR Sec. 12306(l). 
Here again, there is considerable overlap between the Federal and 
State standards: the Federal standard similarly explicitly 
recognizes IARC and NTP as authoritative sources for identifying 
hazardous chemicals. See 29 CFR Secs. 1910.1200(d)(4)(I)-(ii) and 
Appendix A. In addition, OSHA has consistently relied upon 
information provided by NIOSH in promulgating hazard communication 
requirements. See, for example, the preamble to the 1994 amendments 
to the Federal standard, 59 FR 6126, 6150-51, 6154 (February 9, 
1994). The Federal standard does not similarly require reliance upon 
``lists'' compiled by USEPA or USFDA. However, because those 
agencies base their determinations upon scientific evidence, it is 
highly likely that the Federal standard would treat a chemical as 
hazardous if those agencies determined it to be so. (As a practical 
matter, however, such chemicals might be exempted under 29 CFR 
Sec. 1910.1200(b)(6), a question addressed below).
---------------------------------------------------------------------------

    Finally, under 22 CCR Sec. 12902, OEHHA can identify a chemical 
pursuant to Proposition 65's ``formally required to be labeled'' 
mechanism when ``substantial evidence exists to support a finding that 
the chemical meets the requirements of this section.'' Labeling 
requirements imposed by a State or Federal agency would have to be 
based upon at least some scientific evidence; thus, the Federal 
standard would cover these chemicals if they were not excluded for 
other reasons.
    Thus, regardless of the mechanism used to list a chemical under 
Proposition 65, the ultimate question is whether there is scientific 
evidence to support a finding that a chemical is a carcinogen or 
reproductive toxin.

[[Page 31174]]

Because the Federal standard requires hazard communication so long as 
there is one reliable scientific study to support the requirement, it 
is no less expansive than Proposition 65 with regard to cancer and 
reproductive hazards. 29 CFR Secs. 1910.1200(c) (definition of ``health 
hazard''), 1910.1200(d).
    Indeed, the Federal standard may, if anything, encompass more 
chemicals than Proposition 65:

    The results of any studies which are designed and conducted 
according to established scientific principles, and which report 
statistically significant conclusions regarding the health effects 
of a chemical, shall be a sufficient basis for a hazard 
determination and reported on any material safety data sheet. 29 CFR 
Sec. 1910.1200, Appendix B, paragraph 4. Businesses also may report 
``other scientifically valid studies which tend to refute the 
findings of hazard,'' but the existence of refuting studies does not 
dissolve the obligation to report the hazard. Id. In contrast, it 
appears that, except for its initial listing mechanism, Proposition 
65 requires that the weight of the evidence support the placement of 
a substance on the statutory list.17

    \17\ Under the non-Proposition 65 elements of the California 
standard, of course, businesses would be required to educate workers 
about hazards covered by the Federal standard, regardless of 
Proposition 65's applicability.
---------------------------------------------------------------------------

    The only exceptions to this general principle involve certain 
chemicals or concentrations of chemicals which are exempted from 
coverage under the Federal standard in some circumstances. OSHA will 
discuss these in the next sections and analyze them in light of 
``effectiveness'' and ``undue burden'' requirements of Section 
18(c)(2).
    Mixtures: Under the Federal standard, chemicals present at certain 
low concentration levels in ``mixtures'' may not be subject to hazard 
communication requirements. Some commentors (e.g. 18-65, 18-96) allege 
that Proposition 65 requires businesses to provide a warning for such 
chemicals when the Federal standard would not. To some degree, these 
commentors misunderstand the Federal requirements; they are correct, 
however, to the extent that Proposition 65 allocates the burden of 
proof differently than the Federal standard does. This different 
allocation of burden of proof, however, does not violate Section 18 of 
the Act. See below.
    A ``mixture,'' under the Federal standard, is ``any combination of 
two or more chemicals if the combination is not, in whole or in part, 
the result of a chemical reaction.'' 29 CFR Sec. 1910.1200(c). Section 
1910.1200(d) requires businesses to determine the hazards of chemical 
mixtures. It further provides, with respect to health hazards 
associated with untested mixtures, that ``the mixture shall be assumed 
to present the same health hazards as do the components which comprise 
one percent (by weight or volume) or greater of the mixture, except 
that the mixture shall be assumed to present a carcinogenic hazard if 
it contains a component in concentrations of 0.1 percent or greater 
which is considered to be a carcinogen under paragraph (d)(4) of this 
section[.]'' 29 CFR Sec. 1910.1200(d)(5)(ii). In the case of mixtures 
containing chemicals in concentrations of less than one percent (or in 
the case of carcinogens, less than 0.1 percent), businesses must 
communicate hazards if they have evidence that the chemical involved 
``could be released in concentrations which would exceed an established 
OSHA permissible exposure limit or ACGIH Threshold Limit Value, or 
could present a health risk to employees in those concentrations[.]'' 
29 CFR Sec. 1910.1200(d)(5)(ii) (emphasis added).
    Thus, under the Federal standard, a business must follow hazard 
communication requirements a) whenever a reproductive toxin is present 
in a mixture at a concentration of one percent; b) whenever a 
carcinogen is present at a concentration of 0.1% or greater; or c) 
whenever either hazard is present at any concentration and there is 
evidence that an exposure limit will be exceeded or a possible health 
risk posed.
    Proposition 65 similarly exempts certain chemical mixtures from 
coverage, but the relevant exemption is phrased differently: a chemical 
exposure is exempted from coverage if ``the person responsible'' for 
the exposure can show that:

    a. ``The exposure poses no significant risk assuming lifetime 
exposure at the level in question for substances known to the state 
to cause cancer'' and
    b. ``That the exposure will have no observable effect assuming 
exposure at one thousand (1,000) times the level in question for 
substances known to the state to cause reproductive toxicity[.]''

California Health and Welfare Code Sec. 25249.10(c); see also 8 CCR 
Sec. 5194(b)(6)(D).
    Some commentors appear to interpret the Federal standard's 
reference to ``a concentration of one percent'' (or .1%) as a ``cut 
off'' point at which no hazard communication warning is required. E.g. 
18-106. This understanding is not quite correct. Both the Federal 
standard and Proposition 65 require hazard communication whenever a 
chemical poses a health risk, regardless of its concentration in a 
mixture. Similarly, both provide an exemption from coverage for 
chemicals which do not pose a health risk to workers. The central 
difference between the two standards is in the allocation of burden of 
proof: the California standard imposes the burden of proof upon the 
business causing the exposure; the Federal standard does not. In 
essence, the substance of the two standards is the same but the 
procedures used to apply them differ.
    The contrasting burdens of proof under the Federal and California 
standards do not provide any basis for OSHA to reject the California 
supplement. It cannot logically be argued that imposing the burden of 
proof upon business will result in less effective protection for 
workers. If anything, reversal of the burden of proof should result in 
more effective protection by requiring employers to provide a warning 
unless they have some affirmative proof that a substance is not 
hazardous in a particular concentration.
    This difference between the standards also does not create an undue 
burden on commerce. First, the Supreme Court has held that a State 
statute's creation of a presumption which may be rebutted by a 
defendant does not offend the dormant commerce clause. See Atlantic 
Coast Line R. Co. v. Ford, 287 U.S. 502, 509 (1933). In keeping with 
OSHA's earlier statements (see Section II.B) about the importance of 
dormant commerce clause case law in analyzing OSH Act product clause 
issues, OSHA finds that California's decision to shift the initial 
burden of proof to defendants does not impose an undue burden on 
commerce.18
---------------------------------------------------------------------------

    \18\ Shell Oil also maintains that Proposition 65's rebuttable 
presumption offends Federal APA and the due process clause of the 
fourteenth amendment to the U.S. Constitution. 18-160, page 21. The 
Federal APA does not apply to State proceedings. See 5 U.S.C. 
Sec. 551; Day v. Shalala, 23 F.3d 1052, 1064 (6th Cir. 1994). 
Rebuttable statutory presumptions do not offend due process, when 
there is a rational connection between ``the fact proved and the 
fact inferred.'' Atlantic Coast Line, 287 U.S. at 508-9 (upholding 
presumption of negligence where railroad company failed to give 
prescribed warning signals); see also Usery v. Turner-Elkhorn Mining 
Company, 428 U.S. 1, 28 (1976) (upholding various presumptions under 
Federal Black Lung Benefits Act). The presumption created by 
Proposition 65 is rational because there is a logical connection 
between the fact that a particular substance is hazardous (the fact 
proved by the substance's presence on the Proposition 65 list) and 
``the fact inferred''--that the substance is hazardous in a 
particular mixture. Id.
---------------------------------------------------------------------------

    Second, even assuming this statutory presumption theoretically 
could impose an undue burden on commerce, there is no evidence to 
support such a burden in this case. Although many commentors

[[Page 31175]]

complained generally about the burden imposed by Proposition 65's ``no 
significant risk'' option, none provided sufficient information 
addressing the specific point at issue here--that is, whether any 
business producing a mixture with a chemical which would not require 
hazard communication under the Federal standard was required by 
Proposition 65 to provide a warning. Rather, the examples provided by 
the commentors tend to bolster the opposite point of view.
    One commentor, Chemspec, for example, stated that it was ``sued by 
a private bounty-hunter under California's Proposition 65 for our 
products that contain nitrilotriacetic acid and its salt (NTA), which 
appear on the Proposition 65 chemical list'' as a carcinogen. In 
response to the threatened suit, the Chemspec states, it produced two 
consultant reports demonstrating that not ``only did both risk 
assessments predict exposures well below any warning threshold, both 
independent risk assessments cross-correlated. The bounty-hunter, 
however, simply dismissed the results out of hand, and threatened to 
leave the question to a `battle of experts' trial.'' Ex. 18-127; see 
also Ex. 18-174, page 47.
    The lawsuit against Chemspec involved nitrilotriacetic acid (NTA), 
trisodium nitrilotriacetate (NTA-Na3) and 1, 4-Dioxane. Ex. 
18-174B, Attachment 25, Exhibit 3 (settlement agreement). One 
consultant's report (18-127A) addresses NTA-Na3 and 
indicates that Chemspec primarily sells two carpet cleaning agents in 
California, ``powdered Formula 90 and liquid Formula 77,'' which 
``typically contain 4.6 percent NTA-Na3 and 6.5 percent NTA-
Na3 respectively.'' The second consultant's report addresses 
NTA, with respect to a variety of both consumer and occupational 
products.19 The consultant's analysis indicates that NTA's 
concentration in all of these products is .1% or greater. See 18-127B, 
pages 14-20.
---------------------------------------------------------------------------

    \19\ Neither consultant's report addresses 1, 4-Dioxane and 
neither Chemspec nor the Coalition mention this chemical in their 
comments. Consequently, even assuming that the private plaintiff's 
complaints about NTA and NTA-Na3 were without merit under 
Proposition 65, OSHA could not conclude that the lawsuit, as a 
whole, had no legal basis. Similarly, to the extent the private 
lawsuit was based upon consumer product exposure, OSHA's review of 
the California standard could have no effect.
---------------------------------------------------------------------------

    Given the fact that NTA and NTA-Na3 are present in these 
products at concentrations of 0.1% or greater, the Federal Hazard 
Communication Standard requires appropriate hazard warnings regardless 
of the consultant's predictions about ultimate exposure. See General 
Carbon Co. v. Occupational Safety & Health Review Comm'n, 860 F.2d 479, 
483-85 (D.C. Cir. 1988) (accepting OSHA's interpretation of standard as 
requiring manufacturer to label product, even where product, as 
ultimately used by worker, might not pose a hazard). Although it is not 
entirely clear from Chemspec's comments or the remaining material in 
the record,20 it is possible that Chemspec believes the low 
concentrations and exposure assessments relieve it of any burden to 
provide hazard warnings. This, if true, would be an incorrect 
assumption.
---------------------------------------------------------------------------

    \20\ Although the Coalition maintains that Chemspec ``labeled 
their products and distributed MSDSs in full compliance with the 
Federal standard'' (Ex. 18-174, page 47), the Coalition does not 
state whether ``full compliance'' included labeling and MSDSs for 
all of the chemicals and products involved in this lawsuit. Chemspec 
itself does not address this issue and there is no indication that 
it ever attempted to argue that, because it was in ``full 
compliance'' with the Federal standard, it was in compliance with 
Proposition 65. As discussed in Section III.B.2, where, as here, a 
chemical is covered by both Proposition 65 and general State--and 
Federal--hazard communication requirements, compliance with the 
general State standard constitutes compliance with Proposition 65, 
and the compliance requirements of the State and Federal standards 
are virtually identical. The omission of this issue from Chemspec's 
or the Coalition's discussion suggests that Chemspec might have 
believed the Federal standard imposed no obligations for the 
particular products in question. On the other hand, the record 
contains MSDSs for two, and a label for one, of Chemspec's products, 
all of which contain what appear to be hazard communication warnings 
for the chemicals involved here. Ex. 18-127, 18-127A. Because the 
lawsuit involved twenty-one other products, however, OSHA cannot 
determine whether Chemspec believes it was in compliance with the 
Federal standard.
---------------------------------------------------------------------------

    Articles: The Coalition (Ex. 18-174) alleges that Proposition 65 
treats ``articles'' differently than the Federal standard. OSHA 
concludes that this is a distinction without a difference.
    The Federal standard defines an ``article'' as:

a manufactured item other than a fluid or particle: (I) Which is 
formed to a specific shape or design during manufacture; (ii) which 
has end use function(s) dependent in whole or in part upon its shape 
or design during end use; and (iii) which under normal conditions of 
use does not release more than very small quantities, e.g., minute 
or trace amounts of a hazardous chemical (as determined under 
paragraph (d) of this section), and does not pose a physical hazard 
or health risk to employees.

29 CFR Sec. 1910.1200(c). Articles are specifically exempt from 
coverage under the Federal standard; however, manufacturers bear the 
burden of proving that the product is an article as defined in Section 
1910.1200(c). 29 CFR Sec. 1910.1200(b)(6)(iv). Establishing exemption 
requires the manufacturer to show, inter alia, that the product poses 
no health risk. Sec'y of Labor v. Holly Springs, 16 BNA OSHC 1856 (June 
16, 1984).
    Proposition 65 does not have a similarly explicit exemption for 
``articles''; however, as a practical matter, a manufacturer can 
establish a California exemption for a product which is a Federal 
``article'' by showing that the product poses no significant risk (or 
no observable effect, in the case of reproductive toxins). Under both 
the Federal and California standards, then, the manufacturer bears the 
burden of proving that the product poses no health risk and the 
distinction, as initially noted, is one without a 
difference.21
---------------------------------------------------------------------------

    \21\ It is true that the California standard outlines specific 
requirements for proving ``no significant risk'' and the Federal 
does not. See 22 CCR Secs. 12705-12821. OSHA, however, has never 
dictated to the States exactly how they must interpret phrases such 
as ``no significant risk.'' In any case, no commentor has come 
forward with evidence comparing the burdens of proving ``no 
significant risk'' under the State and Federal standards.
---------------------------------------------------------------------------

    Pesticides: The Federal standard exempts from labeling requirements 
``[a]ny pesticide as such term is defined in the Federal Insecticide, 
Fungicide, and Rodenticide Act (7 U.S.C. Sec. 136 et seq.), when 
subject to the labeling requirements of that act and labeling 
regulations issued under that Act by the Environmental Protection 
Agency.'' 29 CFR Sec. 1910.1200(b)(5)(I). In its 1994 amendment of the 
Federal standard, OSHA further indicated that, following EPA's 
promulgation of its Worker Protection Standard for Agricultural 
Pesticides, OSHA agreed ``not to cite employers who are covered under 
EPA's final rule with regard to hazard communication requirements for 
pesticides.'' 59 FR 6126, 6143 (February 9, 1994).
    The Western Wood Preservers Institute (Ex. 18-2) objects to 
Proposition 65's application to arsenically-treated wood 
products.22 The Institute also outlined a settlement 
agreement it reached with a private plaintiff, under which members of 
the industry provide Proposition 65 warnings via ink stamps or end 
tags. In this context, arsenic is a pesticide and thus would be subject 
to regulation by EPA rather than OSHA. The National Cotton Council (Ex. 
18-159) objected

[[Page 31176]]

more broadly to Proposition 65's application to pesticides, noting that 
``the Federal HCS does not require labeling of pesticides[], which are 
covered by U.S. EPA regulations, whereas the CA Governor's List[] * * * 
includes many pesticides.'' [footnotes omitted].
---------------------------------------------------------------------------

    \22\ In terms of product clause analysis, WWPI's comments focus 
solely on an alleged burden placed upon out-of-state manufacturers 
shipping treated wood into California. OSHA's finding that 
California may not apply its State plan standards to out-of-state 
manufacturers should ameliorate WWPI's concern. In addition, these 
products have consumer uses which are not addressed by this 
decision.
---------------------------------------------------------------------------

    OSHA finds that neither comment provides a basis for rejecting the 
State standard. First, where pesticides are concerned, compliance with 
Proposition 65 in the occupational setting is based upon compliance 
with California's Pesticides and Worker Safety Requirements. See 3 CCR 
Secs. 6701-6761, as incorporated into the State plan by 8 CCR 
Sec. 5194(b)(6)(C) and 22 CCR Sec. 12601(c)(1)(C). Neither the Western 
Wood Preservers nor the Cotton Council alleges that compliance with 
California's worker pesticide regulations has proven burdensome in the 
past.23 With respect to the settlement outlined by the Wood 
Preservers, the comment provides insufficient information for OSHA to 
determine whether occupational exposures were involved; assuming they 
were, however, Section 12601(c) of OEHHA's occupational regulations 
provides that compliance with California's worker pesticide regulations 
constitutes compliance with Proposition 65. The Institute's member 
companies, therefore, faced no additional compliance burden under 
Proposition 65 which they did not face as a result of the worker 
pesticide regulations. The voluntary settlement reached by the 
Institute does not negate the defense available through Section 
12601(c). The industry simply failed to avail itself of that defense.
---------------------------------------------------------------------------

    \23\ California promulgated the regulations referenced in 
Section 12601(c) in 1988.
---------------------------------------------------------------------------

    Second, to the extent these commentors object to ``labeling'' 
requirements allegedly imposed by Proposition 65, they overlook the 
Ninth Circuit's decision in Chemical Specialties Manufacturers Ass'n v. 
Allenby, 958 F.2d 941 (9th Cir. 1992), cert. denied 506 U.S. 825 
(1992). In CSMA, the court found that Proposition 65 does not require 
labeling and that, if it did, the law would be preempted by the Federal 
Insecticide, Fungicide and Rodenticide Act (FIFRA). 958 F.2d at 945. 
Consequently, pesticide manufacturers and users cannot be required by 
private plaintiffs enforcing Proposition 65 to provide particular 
labeling.
    Aflatoxins: The National Cotton Council (18-154) argues that 
Proposition 65 covers aflatoxins, a biological hazard, whereas the 
Federal standard does not. The Council is correct. The Federal Hazard 
Communication Standard does not require warnings for aflatoxins or 
other biological hazards. This is because aflatoxins do not come within 
the scope of the Federal standard, which was ``intended to address 
comprehensively the issue of evaluating the potential hazards of 
chemicals, and communicating information concerning hazards'' (emphasis 
added). 29 CFR Sec. 1910.1200(a)(2). In 1994, OSHA specifically amended 
the standard to reflect this fact, adding Section 1910.1200(b)(6)(xii), 
which exempts biological hazards. 29 CFR Sec. 1910.1200(b)(6)(xii). 
OSHA then explained that:

    Although OSHA has never considered either radioactivity or 
biological hazards to be covered by the HCS, OSHA has received 
inquiries regarding such coverage, and therefore added specific 
exemptions for these types of hazards in the NPRM. * * * OSHA 
believes that this particular rulemaking is more appropriately 
limited to chemical hazards, although OSHA does not discourage 
employers from including coverage of such agents in their hazard 
communication programs.

59 FR 6126, 6155 (February 9, 1994).
    It is unclear whether Cal/OSH's incorporation of Proposition 65 
into the State plan was intended in bring aflatoxins (and other 
biological hazards) within the scope of the State plan. In practical 
terms, aflatoxins would be unlikely to present an occupational hazard; 
their presence on the Proposition 65 most likely relates to the hazard 
they present in consumer products which, as stated previously, will not 
be affected by OSHA's decision. If the State does not intend to bring 
aflatoxins within the scope of the State plan, California need not 
establish that Proposition 65's coverage of biological hazards meets 
the requirements of Section 18(c)(2).
    If the State does intend to apply its Hazard Communication Standard 
to biological occupational hazards, OSHA finds that Section 18(c)(2) 
does not prohibit the State from doing so. As OSHA stated in the 1994 
preamble, the Federal exclusion of biological hazards was not intended 
to discourage employers from including these hazards in their hazard 
communication programs. A State standard covering biological hazards is 
more effective than a Federal standard which does not cover such 
hazards. In addition, there is no evidence that coverage of biological 
hazards would impose an undue burden on commerce. Only one commentor 
(the Cotton Council) raised this issue and it presented no evidence of 
Proposition 65 enforcement actions involving occupational biological 
hazards.
    California Non-Chemical Manufacturers: The Coalition argues that 
the California standard increases the kinds of products to which hazard 
communication requirements apply by requiring manufacturers other than 
chemical manufacturers (e.g. truck manufacturers) to provide warnings. 
Ex. 18-174, page 28. Based upon OSHA's findings on the out-of-state 
manufacturers issue (see Section II.D), the State plan will not 
regulate out-of-state vendors; this finding may moot the bulk of the 
Coalition's objections. The question remains, however, whether the 
California standard covers in-state manufacturers other than chemical 
manufacturers (hereafter ``non-chemical'' manufacturers), which would 
make its coverage more expansive than the Federal standard, which 
applies only to chemical manufacturers as manufacturers. As discussed 
in Section II.D, above, California's position on application of its 
standard to non-chemical manufacturers is unclear. On the one hand, 
California's incorporation of Proposition 65 imposes the law's 
obligations upon ``employers'' (8 CCR Sec. 5194(b)(6)) and defines an 
``occupational exposure'' as one occurring ``in the workplace of the 
employer causing the exposure, to any employee.'' 22 CCR Sec. 12601(c), 
as incorporated into the California standard by 8 CCR 
Sec. 5194(b)(6)(C). This regulatory language suggests that the State 
plan would subject a manufacturer to Proposition 65 requirements only 
if the manufacturer was an ``employer'' within the meaning of the State 
plan and only with respect to the manufacturers' particular employees.
    On the other hand, the California Attorney General has argued that 
the State plan's Proposition 65 requirements also apply to 
manufacturers other than chemical manufacturers (hereafter ``non-
chemical manufacturers''). The Attorney General's position appears to 
be based upon the fact that some products of non-chemical manufacturers 
may be combined with a chemical to produce a hazardous chemical. For 
example, an industrial truck uses diesel fuel, which produces exhaust 
which is a hazardous chemical. See Ex. 18-156. The Attorney General 
also has taken the position that Section 12601(c)'s definition of an 
``occupational exposure'' does not limit the State plan's Proposition 
65 coverage to the duties owed by manufacturers to their own employees. 
Rather, the Attorney General has maintained that the State plan imposes 
obligations upon manufacturers in their relation to the employees of 
other businesses.

[[Page 31177]]

Consequently, it appears that California may extend hazard 
communication requirements to non-chemical manufacturers in their role 
as manufacturers, which exceeds the scope of the Federal 
standard.24 Ex. 18-174, Attachment 31.
---------------------------------------------------------------------------

    \24\ California has the power to impose hazard communication 
requirements obligations upon all employers (in their role as 
employers) located within the State. The California standard does 
not exceed the Federal in this respect. Equally clearly, and as 
discussed above, it cannot impose such obligations upon out-of-state 
employers under the State plan.
---------------------------------------------------------------------------

    OSHA finds that this potential difference in coverage between the 
Federal and State standards does not violate Section 18(c). Facially, 
application of hazard communication requirements to non-chemical 
manufacturers should lead to more, not less, effective protection for 
employees and there is no evidence suggesting otherwise. Accordingly, 
OSHA finds that this requirement does not result in less effective 
protection. Application of Proposition 65 to California non-chemical 
manufacturers also does not violate the product clause.
    Proposition 65, by its terms, applies only to exposures occurring 
within California. Goods which are manufactured in California by 
California employers and which remain in that State do not enter 
interstate commerce, and requirements applicable to such products do 
not constitute a burden on interstate commerce. Although some 
manufacturers maintain that they cannot distinguish between goods that 
will be shipped to points in California and goods that will be shipped 
elsewhere (and they therefore may elect to apply Proposition 65 
warnings to all products regardless of destination), the manufacturer's 
voluntary assumption of such a task is not imposed by Proposition 65's 
terms. Finally, even assuming that non-chemical manufacturers are 
induced by Proposition 65 to provide labeling not otherwise required by 
hazard communication requirements, they have submitted no concrete 
evidence establishing the extent of the burden imposed.
    4. Substantive Differences Between the Federal and General 
California Standards
    In addition to the objections raised to the Proposition 65 elements 
of the California standard, commentors have objected to several parts 
of the general (i.e. non-Proposition 65) California standard. These 
objections relate to trade secret issues; the failure of the State 
standard to exclude all substances excluded by the Federal standard; 
and a requirement in the State standard that potential health risks be 
described ``in lay terms.''
    Trade Secrets: Some commentors allege that the California Hazard 
Communication Standard does not provide adequate protection for trade 
secrets, as required by OSHA. OSHA's general State plan regulations at 
29 CFR Sec. 1902.4(c)(viii) require that a State plan provide adequate 
safeguards to protect trade secrets, by such means as limiting access 
to such trade secrets to authorized State officers or employees and by 
providing for the issuance of appropriate orders to protect the 
confidentiality of trade secrets.
    Shell Oil Company and Elf Atochem North America, Inc., maintain 
that the California standard does not meet this criterion because it 
allows access to trade secrets by safety professionals who are not 
State officials or employers. Ex. 18-160. Other commentors assert that 
the California requirement that Material Safety Data Sheets (MSDS) 
contain the Chemical Abstract Service number will jeopardize trade 
secrets by allowing outsiders to determine the composition of products. 
Exs. 18-40, 18-154. The Federal standard does not require inclusion of 
the CAS number. The Color Pigments Manufacturers Association alleges 
that the California standard fails to require health and safety 
professionals to treat trade secrets confidentially. Ex. 18-40.
    The California Hazard Communication Standard allows disclosure of 
information to both safety and health professionals, while the Federal 
Hazard Communication Standard requires disclosure only to health 
professionals. The inclusion of health professionals in the Federal 
standard extends trade secret access beyond State officials and 
employers, the groups previously listed in the general State plan 
regulation. The State argues that its provision further broadening 
access to safety professionals is more protective of worker safety, 
because many safety and health programs are managed by safety 
professionals who have both safety and health expertise. Importantly, 
the State requires all persons receiving such trade secret information 
to treat it confidentially 8 CCR Sec. 5194(I)(3)(E). OSHA finds that 
California has adequate reason to extend disclosure to safety 
professionals and that this extension of access does not result in less 
effective protection of trade secrets. In addition, while requiring 
that CAS numbers be included on a MSDS, the standard also provides an 
exemption for trade secrets. 8 CCR Sec. 5194(I)(1). Therefore, OSHA 
finds that the State standard's protection of trade secrets is in 
accordance with State plan requirements.
    California's Omission of Federal Exemptions and Exclusions: The 
Chemical Manufacturers Association (CMA) generally protests that the 
California standard does not include ``the exemptions and exception 
added to the Federal HCS in 1994.'' Ex. 18-154, page 12. One of these 
differences, the Federal exclusion of biological hazards, is discussed 
above (see ``Aflatoxins''). In any case, however, CMA does not explain 
how this difference results in a less effective standard or produces a 
burden on commerce and, in fact, states that the differences between 
the Federal and general California standard ``in practice * * * have 
not presented significant problems for employers and manufacturers.'' 
Id., page 4. Logically, if California's standard is stricter than the 
Federal standard, it should result in more effective protection for 
workers. OSHA therefore concludes that California's failure to adopt 
all of the exemptions or exceptions added to the Federal standard in 
1994 does not require rejection of the standard.
    California's Requirement for Use of Lay Terminology on MSDSs: The 
general California standard requires that an MSDS include ``[a] 
description in lay terms, if not otherwise provided, * * * of the 
specific potential health risks posed by the hazardous substance 
intended to alert any person reading the information.'' 8 CCR 
Sec. 5194(g)(2)(M). The Federal standard does not include this 
language, but does require that the MSDS describe ``[t]he health 
hazards of the hazardous chemical, including signs and symptoms of 
exposure, and any medical conditions which are generally recognized as 
being aggravated by exposure to the chemical.'' 29 CFR 
Sec. 1910.1200(g)(2)(iv). The Chemical Manufacturers Association 
objects to the California requirement but, again, does not explain how 
it could result in less effective protection or impose an undue burden 
upon commerce. Ex. 18-154, page 12. See also Ex. 18-121. California's 
requirement for the use of lay terminology on MSDSs does not appear to 
undermine the potential effectiveness of its standard. Indeed, in a 
1990 grant program announcement, OSHA recognized that the use of lay 
language on MSDSs may enhance worker understanding of hazards. 55 FR 
18195 (May 1, 1990). There also is no evidence that a requirement for 
the use of lay terminology would pose an undue burden on commerce. As 
similarly discussed in the context of Proposition 65 (see Section 
III.B.2), ``appropriate'' hazard warnings should be ``clear and 
reasonable'; warnings which use lay

[[Page 31178]]

terminology should meet both requirements.
5. Supplemental Enforcement
    The most extensive comments to OSHA about Proposition 65 have come 
from businesses concerned about their vulnerability to lawsuits brought 
by private plaintiffs under Proposition 65. Commentors also have raised 
some objections to the participation of the California Attorney General 
and local prosecutors in Proposition 65 actions, which are discussed in 
Section II.E.
    Proposition 65's supplemental enforcement provisions are the one 
area where the California standard does differ, clearly and 
significantly, from the Federal standard. OSHA nevertheless finds that 
this private right of action does not render the California standard 
unapprovable. The OSH Act does not prohibit the States from fashioning 
their own enforcement strategies and the private right of enforcement, 
as a supplement to standard Cal/OSHA enforcement, violates none of the 
provisions of Section 18. OSHA notes that Cal/OSHA continues to enforce 
its Hazard Communication Standard, issuing, for example, citations for 
almost 1000 violations of the standard during Fiscal Year 1996.
    Before outlining its decision on this issue in more detail, OSHA 
notes initially that most of the anecdotal evidence supplied by 
commentors about the burdens created by this private right of 
enforcement involved consumer or environmental (either in addition to, 
or instead of, occupational) exposures to chemicals. E.g. Exs. 18-133, 
18-137, 18-149, 18-162. Again, OSHA's decision on the approvability of 
the State occupational standard cannot affect Proposition 65's consumer 
and environmental applications.
    Effectiveness: Industry commentors generally maintain that 
Proposition 65's supplemental enforcement provision does not enhance 
the California standard's effectiveness and may, in fact, render the 
standard less effective. E.g. Exs. 18-65, 18-143, 18-150, 18-160, 18-
162, 18-174. Most of the comments also involve other allegations of 
Section 18 violations. For example, some commentors believe that 
Proposition 65 enforcement is less effective because Cal/OSHA generally 
is not involved in the suits or because private plaintiffs do not meet 
the OSH Act's requirement for ``qualified personnel.'' These issues are 
discussed separately, above.
    The remaining general allegation of ineffectiveness involves some 
commentors' beliefs that most lawsuits brought by private plaintiffs 
under Proposition 65 are frivolous. As noted previously, much of this 
anecdotal evidence appears to concern lawsuits involving consumer or 
environmental exposures, which are beyond OSHA's jurisdiction. In 
addition, OSHA's review was made more difficult by a general failure to 
the commentors to provide specific information. In many cases, 
commentors alleged that they were in compliance with the Federal 
standard and were unfairly sued by private plaintiffs. Their comments, 
however, did not provide sufficient information for OSHA to determine 
whether they were, in fact, in compliance with the Federal standard. 
Moreover, based upon the evidence in the comments, none of the 
commentors alleging that Proposition 65 supplemental lawsuits are 
frivolous has ever actually moved a California court to dismiss a 
lawsuit as frivolous. Many have accepted settlements that imposed 
requirements equal to or beyond those asked by the California Hazard 
Communication Standard and Proposition 65.25
---------------------------------------------------------------------------

    \25\ The only commenter to address this issue states that no 
defendant has ever moved to dismiss a suit he filed as frivolous. 
The record contains no evidence contradicting this assertion. Ex. 
18-167.
---------------------------------------------------------------------------

    On its face, a supplemental enforcement provision should make a 
State standard more, not less, effective because it provides an 
additional method of ensuring that a standard is followed. If a 
defendant subject to a Proposition 65 lawsuit believes that the 
complaint is frivolous, it should bring that complaint to the attention 
of the court considering the lawsuit. In any case, given the absence of 
specific information about the lawsuits involved, OSHA cannot determine 
that private lawsuits filed under Proposition 65 have resulted in less 
effective worker protection.
    On the other hand, there does appear to be some evidence that 
Proposition 65's supplemental enforcement provision has led to better 
enforcement of California's Hazard Communication Standard generally. 
For example, the Environmental Defense Fund et al. (Ex. 18-163) note 
the case of Gonzalez v. Rubber Stampede, Alameda Superior Court No. 
714908-3), in which a company which initially had no hazard 
communication program was sued by one of its workers. Settlement of the 
lawsuit led to the company's agreement to hire a hazard communication 
consultant and to implement the consultant's recommendations within 
ninety days. See Exs. 18-163 (page 10, note 15) and 18-155C (page 30).
    Similarly, in Badenell v. Zurn Industries et al., No. 92-2993 (C.D. 
Cal.), Wilkinson Regulator, a manufacturer of brass parts, was sued 
under Proposition 65 by four workers, two of whom had elevated blood 
lead levels requiring medical intervention. The company was not 
following the Cal/OSHA lead standard and its hazard communication 
program apparently did not include information about lead. The Federal 
court ordered Wilkinson to request inspections by Cal/OSHA and the 
company ultimately agreed to comply with all OSHA-recommended 
procedures and to adhere to the lead standard. Wilkinson also was 
charged with violating Proposition 65's environmental exposure 
provisions by dumping lead-laden rinse water; the court ordered the 
company to clean up any lead contamination that resulted from that 
activity. Ex. 18-163, page 10 n. 15; see also Ex. 18-155C, page 24.
    Cal/OSHA's resources, like those of any government agency, are 
necessarily limited. Accord Carnation Co. v. Sec'y., 641 F.2d 801, 805 
(9th Cir. 1981). Given this fact, both Federal and State laws provide 
an incentive for voluntary compliance. The State may reasonably 
determine that supplemental private enforcement will produce Hazard 
Communication Standard compliance at more workplaces than Cal/OSHA 
could expect to visit, as it apparently did in the cases involving 
Wilkinson and Rubber Stampede.
    In sum, commentors opposing the standard have produced no reliable 
evidence showing that Proposition 65's supplemental enforcement option 
has resulted in less effective protection for workers, and the 
available evidence indicates that California could reasonably conclude 
that this enforcement method has resulted in increased protection for 
some workers.
    Product Clause: The primary objection raised by industry commentors 
to Proposition 65's supplemental enforcement mechanism is an alleged 
burden on commerce created by the burden of litigating cases in 
California. See, e.g. Exs. 18-23, 18-40, 18-41, 18-58, 18-65, 18-75. 
Many of these comments relate to the burden imposed upon out-of-state 
businesses. OSHA's finding that supplemental lawsuits cannot be brought 
against out-of-state businesses under the auspices of the State plan 
(see Section II.D, above), therefore, moots many of these comments.
    None of the comments establish a violation of the product clause. 
The commentors generally cite two competing burdens in this respect: 
they either may settle cases brought by private plaintiffs and avoid 
the costs of litigation, or they may litigate cases (and

[[Page 31179]]

possibly avoid any award of damages). OSHA finds that any burden 
imposed by voluntary settlements reached between businesses and private 
plaintiffs in individual cases is not an undue burden on commerce for 
purposes of the product clause. Although some commentors attempt to 
characterize such settlements as ``extortion'' (Exs. 18-92, 18-145, 18-
162), there is no evidence to support the idea that these settlements 
have been involuntary. Nor can OSHA assume, in the absence of specific 
information, that cases that are voluntarily settled are without merit.
    The litigation costs cited by the commentors (e.g. Exs. 18-23, 18-
40, 18-41, 18-58, 18-65, 18-75, 18-164) also do not establish an undue 
burden on commerce. To begin with, it seems questionable whether the 
burden of litigating a case could constitute a burden on ``commerce,'' 
if the substantive requirements at issue in the litigation are 
legitimate State requirements. In fact, no commentor cited, and OSHA 
could not locate, any cases specifically addressing the general 
question of whether a law's enforcement provisions can burden commerce 
if its substantive provisions do not. The Supreme Court has rejected 
the argument that a State statute shifting attorney fees violates the 
dormant commerce clause. Missouri, Kansas & Texas Railway Co. of Texas 
v. Harris, 234 U.S. 412, 416 (1914). Proposition 65's provision for 
attorney's fees, therefore, does not constitute an undue burden on 
commerce. The only other relevant cases are two decisions addressing 
the question of whether an award of punitive damages could create an 
undue burden on commerce. Both courts rejected this idea. Daugherty v. 
Firestone Tire & Rubber Co., 85 F.R.D. 693 (U.S. District Court for the 
Northern District of Georgia, 1980); Brotherton v. Celotex Corp., 493 
A.2d 1337 (Superior Court of New Jersey, Law Division, March 15, 1985). 
These decisions suggest that the penalties available under Proposition 
65 also do not constitute an undue burden on commerce.
    The dearth of relevant case law on this enforcement issue reflects 
the fact that the courts, in considering cases under the Commerce 
Clause, do not consider the enforcement provisions of particular laws. 
Rather, these decisions focus on burdens posed by the substantive 
aspects of particular laws. The courts' focus on the substantive 
aspects of laws is logical because the burden of litigating a case is 
not a burden on ``commerce.'' The product clause, like the Commerce 
Clause, ``protects the interstate market, not particular interstate 
firms[.] '' Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 127-28 
(1978); Kleenwell Biohazard Waste, 48 F.3d at 397.
    Although burdens on individual businesses could, in some 
circumstances, add up to a burden on the interstate market, the purely 
anecdotal evidence in this record does not support such a finding. OSHA 
received 156 comments from opponents of the standard, but only about 
fifteen provided specific information about particular lawsuits and the 
burdens allegedly imposed. Most of these lawsuits involved out-of-state 
businesses, many of whom should be exempt from enforcement under the 
auspices of the State plan, as discussed in Section II.D. Almost all of 
these lawsuits, as stated before, involved voluntary settlements, which 
have limited relevance to OSHA's consideration of product clause 
issues. Many cases involved consumer and environmental exposures; the 
expenses associated with settlements or litigation of such cases are 
not imposed by Proposition 65's occupational applications.
    For example, one lawsuit brought to OSHA's attention was As You Sow 
v. Shell Oil, Inc. This case is now pending before the San Francisco 
Superior Court. Although this suit appears to have occupational 
aspects, the plaintiff's arguments also focus on potential exposure to 
consumers. See Ex. 18-174A, Attachment 3 (plaintiff's pleading), pages 
3, 5, 14-15, 26. Furthermore, several of the issues pending before the 
court appear to turn on the proper interpretation of Proposition 65 and 
OEHHA regulations--e.g. what does it mean to ``knowingly and 
intentionally'' expose someone to a Proposition 65 chemical? Issues 
relating to consumer exposures are beyond OSHA's jurisdiction. Some 
additional issues do involve the intersection between Proposition 65 
and the Federal Hazard Communication Standard--i.e. As You Sow argues 
that Shell's warning system does not comply with the Federal standard 
(and therefore does not comply with Proposition 65); Shell argues that 
it does. See Ex. 18-174A, Attachment 3, pages 18, 27-28 and Ex. 18-
174B, Attachment 12 (defendant's pleading), pages 20-31. However, OSHA 
has no evidence showing that the California court is not capable of 
resolving the contested issues fairly and reasonably.
    Finally, even where the commentors do provide information about 
expenses associated with lawsuits which were, at least in part, related 
to occupational exposures, the evidence is insufficient to allow OSHA 
to judge the quality and extent of any burden imposed. For example, one 
of the few cases about which information is available is As You Sow's 
lawsuit against Chemspec. See Exs. 18-127, 18-174 (pages 47-48). 
Chemspec itself provided no specific information about the financial 
burden imposed by the settlement. However, the Coalition states that 
Chemspec paid $12,000 in `` [d]irect costs of settlement'' and $40,000 
``to rework labels, MSDSs, and reformulated [sic] products[.] '' 
Neither Chemspec nor the Coalition provided information regarding 
Chemspec's financial condition or the extent to which Chemspec 
manufactured or sold listed chemicals, which makes it impossible for 
OSHA to determine the relative burden imposed. In addition, it is 
unclear whether Chemspec was in compliance with the Federal standard 
for the chemicals in question prior to the settlement of the lawsuit. 
See Section III.B.2. Finally, as noted in Section III.B.3, some of the 
products involved in the lawsuit were consumer products; to the extent 
the settlement and other expenses reflect costs attributable to 
Proposition 65's consumer applications, those expenses are not relevant 
to OSHA's consideration under the product clause.
    Accordingly, there is insufficient evidence in the record to allow 
OSHA to find that the occupational aspects of Proposition 65 have 
created an undue burden on interstate commerce.

C. Inspections, Employer/Employee Rights

    Some commentors also addressed whether Proposition 65's private 
enforcement mechanism, as incorporated into the State plan, meets OSHA 
requirements for enforcement under a State plan, including employer and 
employee rights. Section 18(c)(3) of the OSH Act requires State plans 
to provide for a ``right of entry and inspection of all workplaces'' 
which is at least as effective as the provisions of the Act. OSHA 
regulations require that a State plan: provide for inspection of 
covered workplaces in the State where there are reasonable grounds to 
believe a hazard exists (29 CFR Sec. 1902.4(c)(2)(I)); provide an 
opportunity for employees and their representatives to bring possible 
violations to the attention of the State agency with enforcement 
responsibility (29 CFR 1902.4(c)(2)(ii)); provide for an employer to 
have the right of review of violations alleged by the State, abatement 
periods, and proposed penalties (29 CFR 1902.4(c)(2)(xii)); and for 
employees or their representatives to

[[Page 31180]]

have an opportunity to participate in review proceedings (29 CFR 
1902.4(c)(2)(xii)).
    Several industry commentors allege that because the Proposition 65 
supplemental enforcement provisions do not involve on-site inspections, 
walkaround by employer and employee representatives, and administrative 
review, they do not meet these criteria and should not be approved. 
Exs. 18-41, 18-58, 18-59, 18-65, 18-81, 18-96, 18-121, 18-134, 18-142, 
18-144, 18-148, 18-150, 18-152, 18-153, 18-154, 18-160, 18-164, 18-169, 
18-174. (No workers or organizations representing their interest 
complained about the rights afforded employees, however.) Some 
commentors believe that businesses are not given adequate notice of 
alleged Proposition 65 violations and a reasonable amount of time to 
abate them. The Industrial Truck Association asserted that OSHA cannot 
enforce without conducting an inspection and that the agency therefore 
cannot authorize such enforcement by a State plan. Ex. 18-160.
    Cal/OSHA in its response asserts that as long as it continues to 
enforce the Hazard Communication Standard in accordance with its 
approved inspection procedures, supplemental private enforcement does 
not need to meet the criteria. (Ex. 22)
    As discussed in Section I.A, State plans do not operate under a 
delegation of Federal authority but under their own authority, and 
therefore they may use methods of enforcement not included in the 
Federal Act. OSHA finds that the private enforcement mechanism of 
Proposition 65 incorporated into the State plan serves only to 
supplement the enforcement provided by Cal/OSHA and therefore does not 
need to include the same enforcement mechanisms used by Cal/OSHA. 
Regular State plan enforcement of the Hazard Communication Standard, 
including Proposition 65, is still available. Employees continue to 
have the right to file complaints with Cal/OSHA regarding alleged 
hazard communication violations, including violations of Proposition 
65, and to participate in inspections and review proceedings. In 
addition, employees have the right to file suits under Proposition 65 
and may file amicus briefs in third-party actions. Significantly, 
neither workers nor organizations representing their interests 
complained of the rights afforded to employees under Proposition 65's 
supplemental enforcement provision.
    While Proposition 65 does not provide for the setting of specific 
abatement dates, employers must be served with a ``Notice of Intent to 
Sue'' before a private suit is filed. Some commentors have stated that 
these notices have been inadequate in the past. E.g. 18-133, 18-144, 
18-164, 18-207. Employers, of course, have all rights available under 
the judicial system in enforcement proceedings and may bring any 
inadequacies in the notices of intent to sue to the attention of the 
courts. Moreover, California recently adopted regulations which clarify 
the notice requirements and require greater specificity than some 
previous notices of intent contained. See 22 CCR Sec. 12903 (effective 
April 22, 1997). These new regulations should alleviate the concerns 
raised in the comments.

D. Qualified Personnel

    Some commentors have questioned whether Proposition 65 as 
incorporated into the California Hazard Communication Standard complies 
with the OSHA requirement that State plans be enforced by qualified 
personnel. Section 18(c)(4) of the OSH Act and 29 CFR Sec. 1902.3(h) 
require that the designated agency or agencies have a sufficient number 
of adequately trained and qualified personnel necessary for the 
enforcement of standards. Several commentors pointed out that the 
prosecutors and private citizens bringing enforcement actions under 
Proposition 65 need not have specific training or expertise in 
occupational safety and health. Ex 18-63, 18-150, 18-160, 18-162, 18-
166, 18-174. In its response, California maintains that as long as the 
basic hazard communication requirements are enforced by qualified Cal/
OSHA personnel, the supplemental enforcement need not meet these 
criteria.
    OSHA finds that since the designated agency, which enforces hazard 
communication requirements comparable to those of Federal OSHA, does 
have qualified personnel to enforce those requirements, there is no 
violation of this requirement. In addition, while actions under 
Proposition 65 may be brought by prosecutors or private citizens, the 
decisions in these cases are made by State courts, which are also the 
final arbiters in contested Cal/OSHA enforcement actions.

IV. Decision

    Based upon the analysis set forth in Sections II and III, OSHA 
approves the California standard, including Proposition 65 and its 
supplemental enforcement provision, but subject to the following 
conditions, which are applicable to all enforcement actions brought 
under the authority of the State plan, whether by California agencies 
or private plaintiffs:
     Employers covered by Proposition 65 may comply with the 
occupational requirements of that law by complying with the measures 
provided by the OSHA or Cal/OSHA Hazard Communication Standard, as 
provided in the State's regulations.
     The designated State agency, Cal/OSHA, is responsible for 
assuring that enforcement of its general Hazard Communication Standard 
and Proposition 65 results in ``at least as effective'' worker 
protection; the agency must take appropriate action to assure that 
court decisions in supplemental enforcement actions do not result in a 
less effective standard or in inconsistencies with the conditions under 
which the standard is federally approved.
     The State standard, including Proposition 65 in its 
occupational aspects, may not be enforced against out-of-state 
manufacturers because a State plan may not regulate conduct occurring 
outside the State.

With these conditions in mind, OSHA has determined that:
    (1) The California standard is at least as effective as Federal 
OSHA's Hazard Communication Standard. With a few additions which do not 
undermine (and may enhance) protection of employees' rights to know 
about workplace hazards, the standard covers the same chemicals and 
concentration of chemicals as are covered by the Federal standard. 
Similarly, the California standard, like the Federal standard, requires 
clear and reasonable communication of hazard information. The standard 
also adequately protects business trade secrets. Finally, the evidence 
available to OSHA does not show that supplemental enforcement of 
Proposition 65 has resulted in less effective enforcement of hazard 
communication requirements.
    (2) The substantive hazard communication requirements contained in 
the California standard are applicable to products which are 
distributed or used in interstate commerce. Consistent with the 
principle set forth in the 1983 Federal Hazard Communication Standard, 
OSHA finds that the standard is applicable to products in the sense 
that it permits the distribution and use of hazardous chemicals in 
commerce only if they are in labeled containers accompanied by material 
safety data sheets.
    (3) The California standard does not pose an undue burden on 
interstate commerce. The substantive differences

[[Page 31181]]

between the general hazard communication requirements and the Federal 
hazard communication standard have not been shown to pose a burden on 
commerce. In addition, the substantive requirements of Proposition 65 
may be met by compliance with the general Federal and State hazard 
communication requirements, thus not posing any additional burden on 
employers. Finally, based on the evidence in this record, neither 
financial burdens associated with voluntary settlement of Proposition 
65 cases nor the burden of litigating cases has been shown to create an 
undue burden on interstate commerce within the meaning of the product 
clause.
    (4) The California standard is required by compelling local 
conditions. The voters of California have a legitimate and compelling 
local interest in determining how their right to hazard information can 
best be protected.
    (5) The California standard also complies with the remaining 
requirements of Section 18 of the Act. Cal/OSHA, as the designated 
State agency, is responsible for the effective administration of the 
plan throughout the State. This designation meets the requirements of 
Section 18(c)(1). The State also has adequately trained personnel for 
the enforcement of the standard, pursuant to Section 18(c)(4). Finally, 
both the administrative system available under the general California 
standard and the judicial enforcement available under Proposition 65's 
supplemental enforcement mechanism adequately protect the rights of 
employers and employees.
    OSHA, accordingly, approves the California Hazard Communication 
Standard, including its incorporation of Proposition 65, subject to the 
stated conditions. Finally, as noted at the outset of this decision, 
OSHA has no authority to address Proposition 65's consumer and 
environmental applications, and this decision does not affect those 
applications.

V. Location of Supplement for Inspection and Copying

    A copy of the California Hazard Communication standard may be 
inspected and copied during normal business hours at the following 
locations: Office of the Regional Administrator, OSHA, 71 Stevenson 
Street, Suite 415, San Francisco, California 94105; and California 
Division of Occupational Safety and Health, Department of Industrial 
Relations, 45 Fremont Street, Room 1200, San Francisco, California 
94105; Office of the Director, Federal-State Operations, OSHA, U.S. 
Department of Labor, Room N-3700, 200 Constitution Avenue, NW, 
Washington, DC 20210.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); 29 CFR part 
1902, Secretary of Labor's Order No. 1-90 (55 FR 9033).

    Signed in Washington, D.C., this 2nd day of June, 1997.
Greg Watchman,
Acting Assistant Secretary.
[FR Doc. 97-14723 Filed 6-5-97; 8:45 am]
BILLING CODE 4510-26-P