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ACA Fights Customer Disclosure Plan

Thursday, May 9, 2013

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What's more important: the privacy of a customer list or the possible need to reach those customers about product dangers?

That is the heart of a debate now underway in California, where paint manufacturers are raising concerns over a plan that would require them to divulge customer information for some chemical purchases.

Unenforceable, intrusive and unnecessary are just a few of the words that manufacturers are using to describe the newly revived California plan, SB 193, "Hazard Evaluation System and Information Service," which was approved April 23 by a State Senate committee.

The plan would amend the so-called HESIS system to require chemical manufacturers, formulators, suppliers, distributors, and importers to provide the state with “the names and addresses of their customers who have purchased specified chemicals or commercial products containing those chemicals, and certain other information related to those shipments.”

The information would remain confidential, the state says.

Bill signing

The bill would allow the state to demand customer names, addresses and unspecified shipment information from formulators, distributors and other firms.

The information could be requested by the state’s Department of Industrial Relations (DIR) and Department of Public Health (DPH), which maintain the Hazardous Evaluation System and Information Service (HESIS), a repository of current data on toxic materials and harmful physical agents in use (or potentially in use) in workplaces in the state.

Early Warnings

One purpose of the repository is to issue early warnings to various industries concerning potential workplace hazards. The bill’s backers say the current system leaves officials unable to marshal sufficient information quickly enough to issue these warnings.

At present, sponsors say, when HESIS is considering mailing a hazard alert, it must identify each business likely to use the targeted chemical by searching commercial databases using standard industry codes.

Last year, for example, when the state wanted to issue a hazard alert on the use of methylene chloride-containing paint stripper, it first had to search commercial databases for businesses classified as furniture refinishers, furniture strippers, or bathtub refinishers.

Meanwhile, the state was receiving reports of painters, refinishers and other individuals dying from the product.

‘Limited Use’

The database maintained by California's Occupational Health Branch, which includes HESIS, is of “limited use,” since agencies are essentially guessing at the potential relevance of a business to the toxic material in question, rather than reaching out directly to those who are using the product, authorities say.

Paint stripper alert

The state says that lack of easily obtainable, comprehensive data about users of toxic chemicals slowed its public warning last year about deaths caused by methylene chloride-containing paint strippers.

OHB requested the mandatory customer reporting in 2004, noting that hazardous materials inventories are “not computerized, easily accessed, nor compiled on a statewide business” and that “direct request to manufacturers and importers to voluntarily submit their client lists for the test chemicals was unsuccessful.”

A bill similar to the current proposal passed the state Legislature in 2005, but was vetoed by then-Gov. Schwarzenegger “because he believed the bill was unnecessary and an invasion of privacy,” the current bill notes.

ACA: ‘Questions and Concerns’

The American Coatings Association, which represents paint and coating manufacturers, and the California Paint Council are fighting the bill, which was introduced Feb. 7 by State Sen. Bill Monning (D-Carmel). The groups sent a letter April 16 to Monning, saying the measure “raised implementation questions and concerns for industry.”

In its letter, ACA noted that California employers were already required to comply with a variety of state and federal laws to protect employees who come into contact with chemicals in the workplace.

It noted, for example, that the U.S. Occupational Safety and Health Administration (OSHA) issued a final rule March 26 to the §1910.1200 Hazard Communication standard, aimed at improving the quality and consistency of information provided to employers and employees regarding chemical hazards in the workplace and associated protective measures.

HazCom labels

Paint makers say some of the concerns will be addressed by state rules now being realigned to comply with new federal Hazard Communication regulations.

That new standard also requires manufacturers and importers to evaluate the downstream uses of their products, and to disseminate potential hazards to their users. The new rule will be fully implemented by 2016, and California OSHA is now aligning state rules with the federal regulation.

Thousands of Businesses

“However,” ACA says, under the new bill, the state “could theoretically issue requests on Jan. 1, 2014, to thousands of businesses, requesting customer information on thousands of chemicals, without any clear indication as to how this information would be used and to what extent the information will help address a potential public health threat in the workplace.”

In addition, the bill does not define what other “information related to those shipments” may be requested.

“[D]epending upon the products in question and industries targeted, SB 193 could result in an enormous cascade of information and data that could easily overwhelm [the Department of Industrial Relations], raising the question of how DIR could put this information to meaningful use in actually enhancing workplace safety,” ACA said.

Reining it In

ACA and CPC are urging lawmakers to tighten the measure's scope and requirements. The groups propose that the state be required to:

  • Provide a detailed written request for each notification, detailing which chemical it is examining, why that chemical has been identified, the “specific public health concern” at issue, how the requested customer list will address those concerns, and why the information cannot be obtained any other way;
  • "Consult with manufacturers, formulators, suppliers, distributors, importers, and respective trade associations” so that DIR can obtain privately held, relevant information; and
  • Allow companies to contact their own customers first regarding DIR requests, to see if this will provide adequate information. If, after 30 days, DIR is unsatisfied with the information, it may then request customer lists, paint makers say.
State Sen. Bill Monning Arnold Schwarzenegger

The bill, introduced by State Sen. Bill Monning (left), is similar to one vetoed in 2005 by then-Gov. Schwarzenegger. Schwarzenegger called the bill an invasion of privacy.

‘Extremely Sensitive'

“As the bill correctly notes, customer information is often of great competitive significance and must be held as highly confidential,” ACA contends. “A list of current and past customers is an extremely sensitive piece of information for businesses.”ACA and the Paint Council contend that the bill:

  •     Gives DIR “open-ended authority” to seek confidential business information;
  •     Lacks language governing how and when the information will be requested;
  •     Does not indicate how other agencies may access the information;
  •     Does not assure that the information will be used strictly as stated; and
  •     Does not guarantee that the departments will protect the information.

Also opposing the bill are the American Chemistry Council, California Chamber of Commerce, California League of Food Processors, California Manufacturers and Technology Association, Chemical Industry Council of California, and Consumer Specialty Products Association.

After a hearing and 5-2 approval April 23 by the Senate Judiciary Committee, the bill has been referred to the state’s Appropriations Committee.

“To further ensure the protection of sensitive information, ACA and CPC recommended that DIR should only be granted access to customer lists through a clearly defined process and under very specific circumstances,” ACA said.


Tagged categories: American Coatings Association (ACA); Business matters; Business operations; Coatings manufacturers; Government; Hazard Communication Standard (HCS); Laws and litigation; OSHA; Paint and Coating Sales

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