DUE INFLUENCE

WELCOME TO THE GOLDEN RULE STATE: “Love thy consumer as thyself.”

California's activism does possess the spirit of the ancient moral principle. The state's long history of pro-consumer and environmental legislation influences everyday life here, from the quality of the water in the morning coffee to what type of seafood is served at dinner.

The rules and regulations on California's books are aggressive, and are enforced by the state attorney general and local prosecutors; a number of consumer advocacy agencies and private groups are also watching. What's interesting is how all the laws are connected, to some degree, by a thread of health and wellness. In this context they seem especially current, even prophetic.

What happens in California often makes the headlines and gets discussed around the country. For example, some of the chemicals removed from food products in the state ended up being eliminated from the same items across the United States as well, particularly if key marketers involved were national rather than regional.

“It's usually not feasible for a company to reformulate a product only for California,” explained Allan Hirsch, spokesman for the California Office of Environmental Health Hazard Assessment.

One of the most widespread consequences of a California regulation going national has been the now-ubiquitous warnings on alcoholic beverage labels aimed at pregnant women. A switch from lead- to non-lead-based foil caps on wine bottles also went coast-to-coast; the year after California marketers agreed to switch as a result of a settlement, the FDA banned leaded wine foils throughout the United States.

Retail Roles

While many consumer groups believe California's regulations — from food labeling to recycling — result in a better quality of life for residents, there is no question they also add to the costs and challenges facing retailers and whole-health marketers.

“It is more difficult to operate in California,” said Bill Dombrowski, president and chief executive officer of the California Retailers Association. “We have a term we use out here — ‘Legislating by press release.’” He believes that the state's term-limited legislators are willing to introduce just about any bill that “seems to have some sizzle to it,” often without thoroughly considering the ramifications.

“You can always count on California to be on the leading edge of these policy issues,” agreed Peter Larkin, president and CEO of the California Grocers Association. And it's not just food-related regulations; California's strong labor laws, worker's comp requirements and a host of environmental initiatives pressure retailers in the state. “It runs the gamut of rules and regulations, and they all affect supermarkets.”

One law that has had significant repercussions on consumers, retailers and manufacturers over the past two decades is Proposition 65. Of all of the state's rules, Prop 65 is considered the most far-reaching.

“Proposition 65 is basically a right-to-know law,” said Allan Hirsch, spokesman for the California Office of Environmental Health Hazard Assessment, which administers Prop 65. The law requires that consumers be warned, through package labeling or signage, about substances that can cause cancer or reproductive problems, so they can make informed choices about what to buy, Hirsch said.

While the law focuses on labeling, the ramifications have been wider, with many companies choosing to remove unsafe chemicals or reduce them to safe levels rather than succumbing to labeling requirements.

“The intent was to remove toxic substances in favor of nontoxic or less-toxic substances,” said Hirsch. In the food and beverage category — especially whole foods — Prop 65 warnings are likely to reduce sales. Thus, proponents say, many products have become safer over the last 20 years.

Yet many retailers believe that Prop 65 places unrealistic burdens on them. “Prop 65 is a very, very broad proposition that can be creatively expanded,” said Dombrowski.

Under Prop 65, individuals or groups have the right to bring lawsuits against manufacturers, retailers or distributors if they believe someone is being harmed by a hazardous chemical; the California attorney general's office has 60 days to decide whether it wants to take on or join the suit on behalf of the state. The process has led a group of organizations to become “Prop 65 mills,” whose full-time business is Prop 65 cases, according to Larkin.

“We commonly refer to them as ‘bounty hunters,’” he said, adding that since just about any product could lead to a lawsuit at any time, “We're always in a state of the unknown.”

“Retailers have been something like 19 of the top 20 defendants in Prop 65 cases,” added Dombrowski, explaining that there is some talk in the business community about potential reforms.

Larkin believes that the law could be changed so it would continue to provide consumers with the necessary information — perhaps even better information than under the current law — but in a way that's “less onerous and burdensome” to retailers. He admits, however, that in California's political climate it will be very difficult to make any alterations to Prop 65.

New Issues

Prop 65 actions over the years have focused primarily on the types of chemicals found in products such as solvents, dinnerware and nail polish that are sold in hardware, home furnishings or drug stores. Over the last two to three years, however, one of the highest-profile targets has been mercury in fish.

California's attorney general took supermarkets to court in a Proposition 65 case on this issue, and ultimately the two sides agreed that grocery chains would alert consumers to the dangers of mercury in frozen and fresh tuna, swordfish and mackerel. Retailers currently are posting signs or making information cards available at the point of sale, using warning language close to that recommended by the U.S. Food and Drug Administration — although the final wording hasn't been decided.

The attorney general also brought legal action against the leading purveyors of canned tuna in an attempt to require mercury warnings on their packaging as well. But in this case the courts ruled against the attorney general, declaring that the FDA's standards and educational programs relating to mercury in canned tuna were adequate. The courts noted that warnings might stop consumers — especially low-income shoppers — from eating fish, thereby preventing them from getting enough omega-3 fatty acids and low-fat protein in their diets. The ruling is currently under appeal.

Other foods and beverages also have been subject to scrutiny over the past 20 years. For example, most breads in California used to contain potassium bromate, a suspected carcinogen. Rather than displaying the Prop 65-required warning labels, bread makers removed the offending substance. A 2002 survey found no potassium bromate in breads sold in California, although the substance continued to be used in breads sold in other states. “So [Prop 65] is making a difference,” Hirsch said.

Some of the other outcomes of Prop 65 have included the removal of arsenic from bottled water and the reduction or elimination of lead in products such as imported Mexican candies, balsamic vinegar and wine-bottle cork foils.

Hirsch believes the next major Prop 65 issue connected to the food category will be acrylamide, another potential carcinogen that has been on the Prop 65 list of targeted substances since 1990. It traditionally has been considered an industrial chemical with little relevance to the consumer food industry. But in 2002 a Swedish study found dangerous levels of acrylamide in fried and baked foods, particularly french fries and potato chips. Prop 65 actions are currently in the works against fast food companies, but manufacturers are likely to face pressure on this issue as well. Some of the many foods that contain acrylamide include coffee, crackers, olives, pretzels, breads and prune juice.

“The potential for acrylamide is widespread,” said Larkin. “This could mushroom into one of the largest Prop 65 cases that we have ever seen.”

The fact that acrylamide is found in so many different sections of the grocery store illustrates another issue related to Prop 65. While restaurants can post a general warning stating that some of the foods served might contain substances that cause cancer or reproductive harm, “we do not have that luxury,” Larkin lamented. In a grocery setting, warning signs must be placed at the shelf where the product in question is displayed. For acrylamide, that could mean signs throughout the store.

Banning Bags

Prop 65 isn't the only vehicle used by lawmakers and regulators in California. It was just plain old lawmaking that brought about a statewide recycling program for plastic bags. Starting July 1 of this year, larger supermarket chains using them must provide recycling bins and recycle the bags collected. Those that use only paper bags would be exempt. The law is a compromise that had the backing of business groups, which felt it would be relatively easy for retailers to implement, especially large chains that already have the infrastructure in place.

Meanwhile, in San Francisco, the Board of Supervisors introduced a bill in January to outlaw plastic bags entirely at large supermarket and pharmacy chains; they will have to switch to paper, reusable or compostable plastic bags. The bill was passed in March and will take effect later this year. Companies such as Roplast Industries have already moved in with new offerings of compostable plastic grocery bags.

“Eliminating plastic bags will be a serious cost issue for us,” said Dave Bennett, co-owner of Mollie Stone's Markets, headquartered in Mill Valley, Calif., and which has two locations in San Francisco.

The San Francisco law became a reality despite a voluntary industry recycling initiative that retailers termed a success. The mayor and the grocery industry, through the California Grocers Association, had partnered in 2005 in an effort to reduce waste by encouraging reuse and recycling. Albertsons, Andronico's Markets, Bell Markets, Cal-Mart, Cala Foods, Foods Co., Mollie Stone's Markets and Safeway participated in the effort, representing 60% of the 57 grocery locations in the city. Stores were able to use a number of strategies to achieve reduction goals, including selling reusable bags, retraining baggers, reducing the amount of double-bagging and encouraging in-store recycling.

All told, the program resulted in a decrease of 7.6 million bags in its first year, according to CGA.

“I was really shocked and surprised to see how many millions of bags, in just the two stores in San Francisco, we were able to eliminate,” said Bennett, who focused on getting his shoppers to switch to reusable bags.

The new San Francisco law illustrates what can happen in California when a municipality votes to exceed state regulations. In the case of plastic bags, San Francisco and the state both have the same goal — to reduce waste — but their solutions are at odds. One potential headache is commingling. Compostable bags are not actually recyclable, but because they look identical to the latter, they may contaminate bags bound for the recycling facility. Thus, opponents say, the San Francisco law is likely to negate much of the good that could come from the statewide recycling effort.

“It's very frustrating from a public policy standpoint,” said Dombrowski of the CRA.

Larkin points out another potential consequence. There is a strong resale market for clean plastic film, as there is for cardboard, but the danger of contamination from compostable bags might result in companies not buying any plastic bags from Northern California.

“If that happens, it would really be damaging to plastic film recycling in San Francisco,” he said.

There is also some concern in the recycling community that not enough studies have been done to determine the long-term environmental impact of compostable bags, either.

Future Focus

There are many other bills pending in California that, while controversial, will further its reputation as a forward-looking, pro-consumer state. They include, among others, a wide-ranging health care reform bill supported by Gov. Arnold Schwarzenegger, as well as several other health care bills; a number of efforts to eliminate, reduce or label trans fats; a host of initiatives to address E. coli outbreaks in spinach and lettuce; and a bill to label cloned foods.

“It's too early to say how these will play out,” said Larkin. He doesn't expect legislation on trans fats or cloned foods this year, and said it's too soon to know what will occur on the E. coli front. He notes that the trans fat issue may work itself out without the need for legislation, since, with the recent national focus on trans fats, retailers and manufacturers are voluntarily altering their recipes.

“They're already looking for alternatives to eliminate trans fats,” he said. “If the industry continues to move in that direction, it won't be a regulatory issue as much as a retailer and manufacturer response to consumer demand.”

On the Prop 65 front, there have been instances where the U.S. government has tried to enact legislation that would dilute the law, on the theory that what is unsafe in one state should be unsafe in all 50. In 2006, the House introduced the National Uniformity in Food Act, which passed but didn't move to the Senate, while a similar Senate bill never came up for a vote. Opponents of these bills say each state should have the right to protect its own citizens, particularly when, as with Prop 65, they are authorized to do so by the voters.

California's impact on health and wellness has been felt beyond the nation's borders. Larkin said he's received press inquiries about the San Francisco plastic bag ban from the BBC in England. “That's bound to have an influence on legislation and regulations in other states and countries.”

About Prop 65

The Safe Drinking Water and Toxic Enforcement Act, usually known as Proposition 65, was approved by California voters in 1986. It requires the state to publish a list of chemicals — dyes, solvents, pesticides, drugs, food additives and byproducts, both natural and synthetic — known to cause cancer, birth defects or other reproductive harm. The list must be updated annually and currently includes about 775 chemicals.

The Act requires California businesses to give consumers a “clear and reasonable” warning when hazardous amounts of these chemicals are present, not only in products but in homes, offices and the environment. The Office of Environmental Health Hazards Assessment, a division of the California Environmental Protection Agency, administers Prop 65; its staff of toxicologists evaluate scientific information and decide what chemicals should be added to the list.

The attorney general of California, individuals and organizations can take retailers and food marketers to court under Prop 65 to compel them to either label products that contain dangerous chemicals, or remove or reduce those substances.
— KR

Above and Beyond

As illustrated by the current bag recycling issue, cities and counties in California often have their own regulations — sometimes contradicting statewide rules — that affect supermarkets doing business in those jurisdictions. Nowhere is this more true than in San Francisco.

One example: In addition to the ban on plastic bags that was approved in March, San Francisco has banned styrofoam containers for to-go food from restaurants and grocery stores, as of June 1.

In addition, within the past few years the San Francisco Department of Health started requiring Prop 65 warnings to be posted not only in English, but also in Spanish and Chinese, another costly demand.

“From a practical standpoint, that's nearly impossible,” said California Grocers Association President and Chief Executive Officer Peter Larkin.

The city has its own licensing requirements as well; for example, retailers must get San Francisco liquor and tobacco licenses in addition to state licenses if they're active in those categories. Dave Bennett, co-owner of Mill Valley, Calif.-based Mollie Stone's Markets, which has two stores in San Francisco, notes that the city has introduced new regulations on overtime, health care and domestic partner benefits.

“We're a unionized company, and some of the requirements from the city are more strict than the collective bargaining agreement,” he said. “It's just part of the culture of doing business in San Francisco.”
— KR

On the Horizon

Health and environmental issues currently pending in California include:

• Trans Fat: Legislators have introduced bills to study, restrict and/or ban trans fats in foods, with much of the focus on food service and takeout. Packaged goods could be next, unless retailers and manufacturers voluntarily take steps to reduce or eliminate trans fats.

• Cloning: Shortly after the FDA took the first step toward allowing cloned foods on the market, San Francisco state Sen. Carole Migdon introduced a bill that would require such products to be clearly labeled.

• E. Coli: State Sen. Dean Florez introduced three bills to reduce outbreaks of E. coli in California-grown spinach and lettuce. Gov. Arnold Schwarzenegger has said he favors the Leafy Greens Marketing Agreement, a voluntary industry program implemented on April 1 of this year. Peter Larkin, president and chief executive officer of the California Grocers Association, believes that the agreement is “a good first step in terms of dealing with this issue,” but wants to see more specifics, better enforcement and room for flexibility to account for future research.

  In the past decade, there have been nearly two dozen E. coli outbreaks involving California-origin greens. “There's a growing recognition that retailers have the most leverage over the agricultural community on this issue,” said Bill Dombrowski, president and CEO of the California Retailers Association.

• Health Care Reform: The governor's health care proposal, one of several in the works, includes three parts: prevention, health promotion and wellness; affordability and cost containment; and coverage for all Californians.

• Other Issues: Upcoming bills would require all nutritional information to be included on menu boards at restaurants and to-go departments; prohibit the sale of incandescent lightbulbs; require recyclable or compostable packaging for takeout facilities; and require labeling bottled water with the source of the water.
  — KR