A year-end review of the California Air Resource Board’s published enforcement settlements highlights that cosmetics remain a priority for ARB under the General Consumer Products Regulation, which limits the amount of volatile organic compounds (VOC) in consumer products.
The General Consumer Products Regulation
The ARB General Consumer Products Regulation sets VOC limits (percent by weight) for a variety of consumer products, including hair styling products, personal fragrance products, and nail care products. Covered consumer products may not be sold, supplied, offered for sale, or manufactured for sale in California unless they meet the applicable limit.
For strict liability offenses, penalties can be assessed at up to $5,000 per day, or up to $10,000 per day, but at this higher maximum, the alleged violator may assert an affirmative defense that the violation was not the result of intentional or negligent conduct. Generally, ARB seems to pursue the $5,000 threshold for strict liability violations. Negligent violations are subject to $25,000 per day per violation.
(As a quick aside, the Legislature recently amended the Health and Safety Code to increase the maximum for strict liability violations from $1,000 to 5,000 per day, effective January 1, 2018).
ARB’s process for enforcement starts with market surveillance, in which it purchases products, tests them for VOC content, and upon finding a violation, initiates an informal investigation. This includes requesting sales data from the domestic manufacturer, importer, or private labeler, as well as any mitigating information. ARB will then propose a penalty settlement amount based on the following formula, and this proposal serves as the starting point for negotiations.
For first time violations, ARB has developed an administrative penalty formula based on excess tons of VOC emitted from the offending product. Under this approach, ARB seeks a penalty of $22,000 per excess ton of VOC. The floor for de minimis violations tends to be $3,000. For repeat violations or first time violations with aggravating circumstances, ARB will use the “per day” penalty scheme set forth above, seeking penalties for each day the product was available for sale in California. ARB will base the per day penalty amount on a sliding scale, taking into account various penalty factors, including past violations, remedial measures, and economic hardship. ARB has published an enforcement policy document outlining its approach to enforcement.
Since 2016 (we are fudging the “year in review” concept a little bit to provide more meaningful data), ARB has settled 23 cases involving cosmetic products, primarily for hair styling products and nail polish removers. The alleged violations ranged from 0.078 to 9.81 tons in excess VOC emissions (there was one de minimis violation, which we assigned a tonnage of 0.001), and the penalties ranged from $3,000 to $199,500:
In 17 out of the 23 settlements, ARB reduced the penalties for first time violators who cooperated in ARB’s investigation. ARB also factored in economic or financial hardship to reduce penalties in three settlements.
All told, ARB collected nearly $650,000 from cosmetics manufacturers and private labelers during that span (for reference, ARB collected a total of $1.3 million in 2016 from all Consumer Product regulation settlements combined).