A recent look-back at California Air Resource Board (CARB) case settlements highlights that cosmetic products remain a target for CARB enforcement of its General Consumer Products Regulation.

The General Consumer Products Regulation sets volatile organic compound (VOC) limits for specified consumer products, expressed as percent of VOC by weight. The Regulation prohibits the sale, supply, offer for sale, or manufacture for sale in California of covered product unless they comply with the VOC limits. Covered cosmetic products include hair styling products, personal fragrance products, body sprays, cologne/perfume, and nail care products (the Regulation also covers many other consumer products, including adhesives, air fresheners, laundry products, car cleaning products, household cleaners and repair items, and footwear/leather care products).

Enforcement

CARB is authorized to seek per unit civil penalties of up to $1,000 per day for strict liability violations and up to $25,000 per day for negligent violations. CARB typically seeks to settle violations through an administrative process, in which it purchases samples, tests them for VOC content, and requests sales data from the manufacturer or private/labeler if the testing yields non-compliance. Based on that information, CARB determines the tons of VOC emitted above the limit (excess VOC per unit x units sold) and calculates a proposed penalty based on that amount. For example, in some cases, CARB may use a penalty calculus of $20,000 per excess ton of VOC. But CARB maintains discretion to use other methods of calculating penalties, especially if there are other factors in play. These include the number of days a product was available for sale, past violations or other aggravating issues, remedial measures taken, cooperation, and ability to pay.

Settlement trends

Between 2016 and 2018, CARB settled 32 cases involving cosmetic products, with most involving hair styling products and nail polish removers. The alleged violations ranged from 0.0018 to 11.11 tons in excess VOC emissions (there are also a number of de minimis claims) and the penalties ranged from $2,000 to $199,500. In 25 out of the 32 settlements, CARB exercised its discretion to reduce penalties for first time violations in which the settling company made diligent efforts to comply and cooperate with the investigation.

CARB also considered a violator’s economic or financial hardship as a factor weighing in favor of reducing the penalty in three cases. In another case, CARB reduced the penalty in part because the company discontinued the product in question and committed to reformulate its other products to ensure compliance. This is an interesting wrinkle, since it suggests that the company had other non-compliant products for which it was not penalized, and that CARB reduced the penalty here because the company in effect agreed to comply with the regulation.

In contrast, it is our understanding that CARB does not reduce penalties in cases with repeat violators and/or significant excess VOC emissions. In one of the settlements, CARB sought and obtained a penalty of $199,500, including investigative costs, from a company that sold and manufactured hair styling products because there were 9.81 tons of excess VOC and it was not a first time violation.

Finally, an interesting takeaway is that nearly all of the settlements are with manufacturers of the products, and not with any of their downstream/retail customers even though the regulation prohibits sale of non-compliant products. CARB has only enforced directly against retailers for private label products. If you are a retailer seeking to triage compliance, it may be prudent to start with private label before addressing consumer products supplied by national/market brand manufacturers.