Introduction
California recently enacted the California Food Safety Act, a new law that prohibits the use of four food additives commonly used in the United States, including red dye 3. This law aligns California with current restrictions that exist in most other major markets. However, it also presents new hurdles for food companies, which now must navigate how to approach a ban in California while the law remains unchanged in the remainder of the country. Below, we analyze the details of the Food Safety Act and the potential challenges facing companies and stakeholders selling into the U.S. market.
The Act
On October 7, 2023, California Governor Gavin Newsom signed Assembly Bill 418, titled the California Food Safety Act (the FSA). The FSA prohibits the manufacture, sale, and distribution of food products that contain brominated vegetable oil, potassium bromate, propylparaben, or red dye 3. The FSA permits the attorney general, a city attorney, a city counsel, or a district attorney to bring an action for violations of the statute. Penalties are capped at $5,000 for the first violation, but each subsequent violation carries a penalty of up to $10,000. The law will not be implemented until 2027.
All four ingredients are common food additives in the United States, but red dye 3 is the most heavily used, existing in nearly 3,000 products over a broad range of categories including candy, fruit juices, and cookies. The U.S. Food and Drug Administration (FDA) banned red dye 3 in cosmetics in 1990 after evidence showed it caused cancer in lab animals, but the government allowed its use in food. Other additives included in the FSA have been linked to cancer, reproductive issues, and developmental disorders.
The law brings California in line with regulations in the European Union, where these chemicals are already banned. The United Kingdom, Canada, Australia, China, and Japan also ban these four additives.
Implications
With this change comes some uncertainty for companies involved in the food sector. Several implications of the new law are of particular interest:
1. Will food companies change formulations nationally in response?
While the law will not be implemented until 2027, companies must begin planning now to prepare for the ban on these ingredients in an economy as large as California. It is highly unlikely any company would be willing to halt sales or distribution within such a large market, and the likely response is for companies to begin phasing out these ingredients from their products on a national scale, rather than offering a product specifically formulated for only the California consumer. Many of the products using the ingredients are already subject to the same restrictions in the global marketplace, which may help with the implementation of new formulations in the U.S. market.
2. Does California plan to offer guidance regarding some of the FSA’s broad language?
The language of the FSA is broad and lacks definitions for various important terms. Notably, the FSA fails to define what constitutes a “violation.” Without further clarity as to the unit of measurement the government hopes to employ when considering the number of violations, industry players will be left wondering how costly some of these penalties could truly be. We expect that many industry participants and stakeholders will seek clarification from California on some of these terms and the intended definitions before the FSA takes effect.
3. Will other states follow suit?
Similar action is already pending in New York, but it remains to be seen whether other states will follow suit with legislation of their own.
4. Will the FDA respond with action of its own?
A similar situation arose in 2008 when California banned artificial trans fat from foods. It wasn’t until 2015 that the FDA made a similar determination that partially hydrogenated oils were not safe for food use, and it could be some time before the FDA takes action of its own on the additives listed in the FSA.
5. Will this rule spark litigation from plaintiffs alleging harm from these ingredients?
While it is still too early to know for certain, the risk of litigation from plaintiffs alleging harm as a result of these food ingredients is heightened by the passage of the FSA. California is already a plaintiff-friendly forum for these types of consumer-protection lawsuits and careful monitoring of legal action related to these ingredients will be important.
Conclusion
There are significant questions related to the FSA and how it will impact companies in the coming months and years. Companies utilizing the listed ingredients in the FSA should implement a business plan for operations in 2027 and beyond. Additionally, they should carefully monitor: 1) the representations, warranties, and indemnification provisions in their commercial contracts or purchase orders to see whether any new risks are created or whether risks are shifted; 2) the California Office of Environmental Health Hazard Assessment – for purposes of monitoring how that agency views or will view potential replacement ingredients; 3) the litigation landscape for possible bellwether cases; and 4) pending legislation or regulations in other states.
As always, Reed Smith will continue to monitor and analyze developments related to this legislation to ensure clients are best positioned to adapt to the changing food safety environment.
Client Alert 2023-231
