Peanut growers and manufacturers in Virginia and other states are concerned about the impact a new California law requiring the placement of warning labels on all peanut products shipped into the state could have on consumers and sales.

The law, called Proposition 65, was passed by California voters in 1986. It is aimed at restricting the release into drinking water of toxic substances thought to cause cancer or birth defects.

If the provisions of Proposition 65 are carried out, every peanut product shipped into California will carry a warning label telling consumers about a naturally occurring toxin in peanuts that can cause cancer and birth defects.

Aflatoxin is a mold that develops on peanuts when they are not allowed to dry properly. It's on a list of 29 chemicals and toxins spelled out in California's new environmental law.

"We've known that some peanuts contain the mold that causes aflatoxin, but what has happened, technology has developed to the extent that you can monitor (its presence) down to such a low level, down to parts per billion," said Russell Schools Sr., executive secretary of the Virginia Peanut Growers Association.

Virginia ranks fifth among the peanut-growing states, which also include Georgia, Alabama, Texas, and North Carolina.

"The industry considers anything less than 20 parts per billion as being negative, just because it's such a minute amount in large quantities of peanuts," he said.

Because aflatoxin is a naturally occurring substance and because it is already regulated by the federal Food and Drug Administration, industry officials maintain the peanut should be exempt from the law.

They also say it is unconstitutional for state laws to supersede federal regulations involving intrastate commerce.

The peanut industry -- worried that warning labels on peanut products will scare consumers and drive down sales -- and dozens of other industries that would be affected by the law have organized to fight the proposal.

The labeling requirements were supposed to go into effect Feb. 27, but the industries got a temporary reprieve last week from the California Scientific Advisory Council that agreed to study the issue.

Gary Yingling, a Washington attorney, represents the Council for Labeling Uniformity, a group that represents about 70 trade associations.

Yingling warned that Proposition 65 could have far-reaching effects and has the potential to damage exports of peanuts and other affected products.