BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1798|
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                                 THIRD READING


          Bill No:  AB 1798
          Author:   Evans (D), Chesbro (D) and Huffman (D), et al
          Amended:  8/11/10 in Senate
          Vote:     21

           
           SENATE GOVERNMENTAL ORG. COMMITTEE  :  9-0, 6/22/10
          AYES:  Wright, Harman, Calderon, Denham, Florez, Negrete  
            McLeod, Padilla, Price, Yee
          NO VOTE RECORDED:  Oropeza, Wyland

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  76-0, 5/13/10 (Consent) - See last page  
            for vote


           SUBJECT  :    Alcoholic Beverage Control Appeals Board:   
          viticulture area 
                      designation:  Sonoma County

           SOURCE  :     Author


           DIGEST  :    This bill increases from 60 to 75 days, the  
          length of time that the Alcoholic Beverage Control Appeals  
          Board has to enter an order after an appeal is filed.  This  
          bill also contains provisions that require all wines  
          bottled or produced from any viticultural area of  
          appellation located within Sonoma County to bear the  
          designation "Sonoma County" on the label.

           Senate Floor Amendments  of 8/11/10 add a provision that  
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          establishes a "conjunctive labeling" provision in the  
          Alcoholic Beverage Control Act for all wines made from  
          grapes grown within recognized winegrowing areas, or  
          American Viticultural Areas, in Sonoma County.  This  
          provision mirrors existing conjunctive labeling provisions  
          for Napa, Lodi and Paso Robles.

           ANALYSIS  :      Existing law establishes in state government  
          an Alcoholic Beverage Control (ABC) Appeals Board, of which  
          the members are appointed and serve as provided in the  
          Constitution, and receive an annual salary.  Existing law  
          provides that an appeal must be filed at the Appeals Board  
          office within 40 days from the date of the ABC decision.   
          However, if ABC's decision states it is to be "effective  
          immediately," an appeal must be filed within 10 days after  
          the date of ABC's decision.  Documents not filed within the  
          time limits are untimely and cannot be accepted by the  
          Appeals Board.  Existing law specifies that no decision of  
          the ABC shall become effective during the period in which  
          an appeal may be filed and the filing of an appeal shall  
          stay the effect of the decision until such time as a final  
          order is made by the Appeals Board.  Existing law provides  
          that the review by the Appeals Board of a decision by ABC  
          shall be limited to specified questions.  The Appeals Board  
          is also required to enter its order within 60 days after  
          the filing of an appeal.

          This bill requires the Appeals Board to issue an order  
          within 75 days after an appeal is filed.  

          Existing law requires that, when the word "Napa" (or any  
          federally recognized viticultural region within Napa  
          County) appears on a brand label, at least 75 percent of  
          the grapes used to make that wine must be from Napa County.  
           

          Existing law requires wines produced within the "Napa  
          Valley" to be labeled as being derived from that valley, if  
          the wine label indicates that they are produced within a  
          separate viticultural area within the Napa Valley, in order  
          to preserve consumer identification and understanding.  

          Existing law prohibits the sale of wine produced, bottled,  
          or labeled after December 31, 2008, in this state that  

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          identifies, in a brand name or otherwise, on any label,  
          packaging material, or advertising, the name "Sonoma,"  
          unless at least 75 percent of the grapes used to make the  
          wine are from Sonoma County, as specified. 

          Existing law requires all wines produced or bottled within  
          the current Paso Robles appellation to be labeled with the  
          designation "Paso Robles."

          Existing law requires all wines produced or bottled within  
          the current Lodi appellation to be labeled with the  
          designation "Lodi."  

          Existing law stipulates that every person who, with intent  
          to defraud, either falsely makes, alters, forges, or  
          counterfeits the label for any wine or uses the label or  
          bottle of any wine belonging to another, without his or her  
          consent, is guilty of a misdemeanor.  

           Federal law  . The Federal Alcohol Administration Act  
          establishes broad federal regulatory authority over the  
          interstate trade in alcohol beverage products.  The  
          Secretary of the Treasury, through the Alcohol and Tobacco  
          Tax and Trade Bureau (TTB), administers an extensive code  
          of regulations governing, among other things, the contents  
          of wine labels, including brand names, the name and address  
          of the bottling winery, and indications of the wine's  
          origin, as well as the use of such information in  
          advertising.

          Under federal regulations, an "appellation of origin" is a  
          geographic designation referring to the place where the  
          grapes used to make a specified percentage of the wine were  
          grown.  For American wines, an appellation of origin  
          includes the names of states (e.g., "California") and  
          counties identified with the word "county" (e.g., "Napa  
          County," "Monterey County," "Sonoma County," "Eldorado  
          County," etc.) as well as all designated American  
          "viticultural areas."  An American Viticultural Area (AVA)  
          is a grape growing region distinguishable by geographical  
          area features, as recognized by the TTB pursuant to  
          specified criteria and procedures.  

          These criteria and procedures, and a complete list of AVAs,  

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          are set forth in Part 9 of Title 27 of the Code of Federal  
          Regulations.  In brief, TTB may recognize an AVA area if it  
          is locally or nationally known for grape-growing, has  
          particular and definable boundaries, and has geographic  
          features distinguishing it as a grape-growing area.  As of  
          2007, there were 190 recognized AVAs nationwide - 107 of  
          which are located in California.  The 107 California  
          viticultural areas recognized by the TTB include, among  
          others, Alexander Valley, Anderson Valley, Chalk Hill,  
          Clarksburg, Fair Play, Howell Mountain, Lodi, Los Carneros,  
          Napa Valley, Paso Robles, Rockpile, Russian River Valley,  
          Santa Lucia Highlands, Sonoma Valley, Spring Mountain,  
          Stags Leap, and Wild Horse Valley. 

          In certain circumstances, wine labels must bear an  
          appellation of origin.  For example, a label must bear an  
          appellation of origin if the label states either the grape  
          type ("varietal") used in the wine or the year in which the  
          grapes were harvested ("vintage").  Recognized varietals  
          include, among others, Cabernet Sauvignon, Pinot Noir,  
          Merlot, Zinfandel, Malbec, Sauvignon Blanc, Chardonnay,  
          Riesling and Pinot Grigio. The regulations mandate that the  
          appellation appear in direct conjunction with and in  
          lettering substantially as conspicuous as the varietal or  
          other class or type designation.

          The regulations specify the conditions for use of each type  
          of appellation of origin.  A wine qualifies for a state or  
          county appellation of origin if at least 75 percent of the  
          volume derives from grapes grown in the area indicated by  
          the appellation of origin.  Thus, under TTB regulations the  
          appellation of origin "California" signifies that at least  
          75 percent of the wine in the bottle was made from grapes  
          grown anywhere in the state of California.  Similarly, the  
          appellation of origin "Napa County" or "Sonoma County" or  
          "Mendocino County" signifies that at least 75 percent of  
          the wine in the bottle was made from grapes grown anywhere  
          in that particular County.  To qualify for an appellation  
          of origin consisting of an AVA, at least 85 percent of the  
          wine must derive from grapes grown in the indicated area.   
          Thus, the appellation of origin "Napa Valley" signifies  
          that at least 85 percent of the wine in the bottle was made  
          from grapes grown anywhere in Napa Valley.  The regulations  
          do not require disclosure of the place of origin of the  

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          remaining portion of the wine.

          Federal regulations require the wine label to bear a "brand  
          name."  The regulations provide that, in general, "a brand  
          name of viticultural significance may not be used unless  
          the wine meets the appellation of origin requirements for  
          the geographic area named."  This prohibition is subject to  
          an exception.  If a brand name was in use before July 7,  
          1986, it is considered grandfathered.  Grandfathered brand  
          names of viticultural significance may be used for wines  
          that do not meet the appellation of origin requirements for  
          the geographic area named, provided the wine is labeled  
          with a true appellation of origin consisting of a county or  
          viticultural area (if the brand name refers to a geographic  
          area smaller than a state) or a state or lesser appellation  
          (if the brand name refers to a state).

          Federal regulations require that the name and address of  
          the "bottling winery" appear on the wine label,  
          accompanied, in certain circumstances, by a phrase such as  
          "bottled by."  There is no requirement that the bottling  
          winery is located in the geographic area where the wine was  
          made or the grapes were grown.

          Federal law also provides that wine may not be sold or  
          shipped in interstate commerce unless it bears a label that  
          TTB has previously approved.  A certificate of label  
          approval ("COLA") is obtained by submitting an application  
          to the TTB.  The application must include an exact replica  
          of the label as well as other information regarding the  
          wine covered by the label.

          This bill:

          1. Requires, beginning on or after January 1, 2014, that  
             any wine labeled with an AVA located entirely within a  
             County of the 19th class (Sonoma County) must display  
             the designation "Sonoma County" on the label, as  
             specified.  

          2. Makes it explicit that this provision shall not apply to  
             any wine labeled with a viticultural area appellation of  
             origin when the name of the appellation includes the  
             term "Sonoma County."

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          3. Provides that the ABC may suspend or revoke the license  
             of any person who violates this requirement.   

           NOTE:  Please refer to the Senate Governmental  
                 Organization Committee analysis for background  
                 information.

            Comments
            
          According to the author's office, the Sonoma County  
          Vintners along with the Sonoma County Winegrape Commission  
          (representing over 170 wineries and 1,800 growers combined)  
          recently reached consensus on a framework to standardize  
          regional wine product labeling (the wine industry term is  
          conjunctive labeling) for all wines made from grapes grown  
          within recognized AVAs in Sonoma County.  There are 13 AVAs  
          located in Sonoma County (e.g., Dry Creek Valley, Russian  
          River Valley, and Sonoma Valley).  The purpose of  
          conjunctive labeling is to build an association of quality  
          in an increasingly competitive global wine market for the  
          delivery of Sonoma County wines.  The proposed language  
          provides a three-year phase-in period to enable wineries to  
          redesign their labels and get regulatory approval to use  
          the new labels.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/11/10)

          Alexander Valley Winegrowers
          Bennett Valley Grape Growers
          Family Winemakers of California
          Russian River Valley Winegrowers
          Sonoma County Vintners
          Sonoma County Winegrape Commission
          Sonoma Valley Vintners and Growers Alliance
          The Petaluma Group
          Winegrape Growers of Dry Creek Valley


           ASSEMBLY FLOOR : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Bass, Beall,  

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            Bill Berryhill, Tom Berryhill, Blakeslee, Block,  
            Blumenfield, Bradford, Brownley, Buchanan, Charles  
            Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De  
            La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer,  
            Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines,  
            Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey,  
            Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries,  
            Jones, Knight, Lieu, Logue, Bonnie Lowenthal, Ma,  
            Mendoza, Miller, Monning, Nava, Nestande, Niello,  
            Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,  
            Saldana, Silva, Smyth, Solorio, Audra Strickland,  
            Swanson, Torlakson, Torres, Torrico, Tran, Villines,  
            Yamada, John A. Perez
          NO VOTE RECORDED:  Caballero, Norby, Skinner, Vacancy


          TSM:do  8/11/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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