California's AB 2577 will let judges cut the attorney's fees in a Prop 65 settlement, but never raise them

AB 2577 changes the approval process on January 1, 2027

Governor Gavin Newsom signed California AB 2577 on September 27, 2026. The bill changes what a court must find before approving a private party's settlement under Proposition 65.

From January 1, 2027, the court must find that the settlement is in the public interest and provides a public benefit. It must also find that the attorney's fee award is appropriate under California law, in addition to finding that the award is reasonable under California law.

The bill was sponsored by Attorney General Rob Bonta and introduced by Assemblymember Damon Connolly. The Assembly floor vote was 77 to 0. The committee analysis listed no opposition received by the Senate Judiciary Committee.

The desk read the seven-page Senate Judiciary Committee analysis in full. It describes the June 8, 2026 version of the bill, not the signed text. Because of that, the desk confirmed the bill's title and the September 27 signing against the Governor's September 27 legislative update, and checked the operative provisions against alerts from DLA Piper dated September 8, 2026, Blank Rome dated September 28, 2026, and Pillsbury dated October 8, 2026, instead of relying on the committee version alone. The desk could not open the chaptered bill text directly from the Legislature's site. The description of the final provisions therefore rests on those sources, and you should read the chaptered text before relying on a detail.

Courts previously had three required findings

Proposition 65, formally the Safe Drinking Water and Toxic Enforcement Act of 1986, was approved by voters on November 4, 1986, and took effect January 1, 1987. Health and Safety Code section 25249.6 bars a business from knowingly and intentionally exposing a person to a chemical known to the state to cause cancer or reproductive toxicity without first giving a clear and reasonable warning.

A violation can bring a civil penalty of up to $2,500 per day per violation under section 25249.7(b)(1). Businesses with fewer than 10 employees and most governmental entities are exempt.

The Attorney General, certain district attorneys and city attorneys, or a private individual acting in the public interest may bring an action. A private plaintiff may proceed if no public prosecutor is already diligently prosecuting the matter, but must notify the Attorney General that the action was filed.

Under existing section 25249.7(f)(4), a private plaintiff's settlement, other than a voluntary dismissal with no consideration, must be submitted to the court on a noticed motion. The court may approve it only if it finds three things: the warning required by the settlement complies with Proposition 65, the attorney's fee award is reasonable under California law, and the penalties reflect the statutory criteria.

The Attorney General reviews private settlements and may object. The Senate Judiciary analysis says the Attorney General identified an all-or-nothing problem. If the Attorney General objected to an unreasonable fee award and the court sustained the objection, the court could not approve the settlement while the parties renegotiated the fee. That delayed the injunctive terms.

The Attorney General also said some settlements did not adequately warn consumers or reduce exposure.

The public benefit finding creates a new presumption

AB 2577 adds a public interest and public benefit finding to the existing approval requirements.

A settlement is presumed to be in the public interest and to provide a public benefit if it reduces exposure to the listed chemical from the level that existed before the settlement. The same presumption applies if the settlement provides the section 25249.6 warning when that warning was not provided previously.

That means a settlement that does neither of those things does not receive the new presumption. The court still must make the public interest and public benefit finding before approving the settlement.

The requirement reflects the stated aim described in the legislative analysis: strengthen judicial oversight of private Proposition 65 settlements, promote public trust in Proposition 65, and protect public health and the environment. The Attorney General's sponsorship statement said courts could only approve or reject a settlement as a whole.

Fee objections now move on a separate track

If the Attorney General objects to the fee award but the court finds that all other required findings are met, the court approves the settlement except for the fee award.

The court then sets a schedule. The plaintiff submits additional briefing and evidence supporting the proposed fee. The defendant, the Attorney General, or both may respond or object. After reviewing the submissions, the court may order a fee award. That award may not under any circumstances exceed the fee stated in the settlement.

The practical result is specific. The injunctive terms can proceed while the fee dispute continues. Plaintiff-side counsel can expect the proposed fee to be supported through a separate briefing and evidence process. The court can set the fee below the stipulated amount, but cannot set it higher.

Defense counsel also faces a separate question at the approval stage. A settlement that neither reduces exposure nor adds a warning does not receive the new presumption of public interest and public benefit.

How law firms read the change

DLA Piper reads AB 2577 as allowing judges to reduce stipulated fees over the settling parties' objection. The firm says that reading reverses the effect of Leeman v. Adams Extract & Spice (2015) 236 Cal.App.4th 1367.

In Leeman, the First District Court of Appeal held that a trial court committed reversible error by unilaterally modifying the fee provision of a stipulated Proposition 65 consent judgment. The opinion was filed April 28, 2015.

Pillsbury describes the bill differently. Its October 8 alert says businesses' commitments to make changes are essentially unchanged because AB 2577 largely codifies existing practice. Pillsbury expects Proposition 65 notices to continue and says plaintiffs will be more strategic about settlement structure, fee demands, and fee documentation. It also says the Attorney General's office was already scrutinizing settlements before the bill.

Blank Rome identifies questions that remain open. Its September 28 alert says the new requirements apply to consent judgments submitted to a court on or after January 1, 2027. It says it is not yet clear how courts will apply the public benefit standard, whether the fee procedure reaches out-of-court settlements, or whether the Office of Environmental Health Hazard Assessment will update its regulations.

DLA Piper says AB 2577 does not affect out-of-court settlements.

The Blue Water Cosaint case the Attorney General cited

The Senate Judiciary analysis identifies Blue Water Cosaint, LLC v. Bumble Bee Foods, LLC, San Diego County Superior Court No. 24CU003388C, 2024, as an example cited in support of the bill.

The Attorney General argued that the settlement allowed exposure to the chemical to increase significantly without requiring a consumer warning. DLA Piper says the court approved the consent judgment over the Attorney General's objection, that the Attorney General objected only to fees, and that the judgment is under appeal. DLA Piper also says Assemblymember Connolly cited the case as motivation for AB 2577.

The existing warning and penalty findings remain part of the approval process. The new public benefit finding and separate fee procedure are added to those requirements.

A firm handling consumer-protection inquiries can have an after-hours caller answered and intake taken in English or Spanish through Archivar, an AI operating system for a law firm. The details the caller gives, such as what product was involved, what the caller was told, and when, can be kept on the matter record.

The January 1, 2027 start date and the first courts' treatment of the public benefit finding are the next points to watch.