BILL ANALYSIS
AB 1798
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1798 (Evans, Chesbro and Huffman)
As Amended August 18, 2010
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: | |(May 13, 2010) |SENATE: |36-0 |(August 23, |
| | | | | |2010) |
-----------------------------------------------------------------
(vote not relevant)
Original Committee Reference: G.O.
SUMMARY : Establishes a "conjunctive labeling" provision in the
Alcoholic Beverage Control Act (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. Specifically, 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."
The Senate amendments :
1)Deletes provision which would have retained the requirement
that the winegrower, or the officer, director, or agent of the
winegrower meet the specified conditions regarding the sale or
furnishing of wine under the circumstances described above,
but would eliminate the requirement that statements describing
these conditions be made pursuant to an undertaking approved
by ABC.
2)Deletes a provision which would have increased 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.
AB 1798
Page 2
3)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.
4)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."
5)Provides that the ABC may suspend or revoke the license of any
person who violates this requirement.
EXISTING LAW :
1)Existing provisions of the Act, known as "tied-house"
restrictions, generally prohibit a winegrower from having an
ownership interest in an on-sale alcoholic beverage license,
with limited exceptions. Among other exemptions, existing law
exempts from the tied-house restrictions any licensed
winegrower who meets specified conditions, including that the
winegrower, or his or her officer, director, or agent, enters
into an undertaking, approved by the Department of Alcoholic
Beverage Control, that makes specified statements regarding
the sale or furnishing of wine by the winegrower, or any
officer, director, or agent of the winegrower.
2)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.
3)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.
4)Prohibits the sale of wine produced, bottled, or labeled after
December 31, 2008, in this state that 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.
AB 1798
Page 3
5)Requires all wines produced or bottled within the current Paso
Robles appellation to be labeled with the designation "Paso
Robles."
6)Requires all wines produced or bottled within the current Lodi
appellation to be labeled with the designation "Lodi."
7)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.
FISCAL EFFECT : Unknown.
COMMENTS :
Purpose of this bill: This bill 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.
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.
Background : 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),
AB 1798
Page 4
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, 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.
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
AB 1798
Page 5
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 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.
Prior legislation : AB 87 (Blakeslee), Chapter 674, Statutes of
2007, requires all wines produced or bottled from any
sub-appellation located within the current Paso Robles
appellation to carry the designation Paso Robles" on the label.
AB 1798
Page 6
SB 1380 (Chesbro) Chapter 879, Statutes of 2006, prohibits the
sale of wine, produced, bottled, or labeled after December 31,
2008, that identifies, in a brand name or otherwise, on any
label, packaging material, or advertising, the name "Sonoma",
unless at least 75% of the grapes used to make the wine are from
Sonoma County, as specified.
SB 1293 (Chesbro), Chapter 831, Statutes of 2000, prohibits the
use of the word "Napa" on a brand label unless at least 75% of
the grapes used to make that wine came from Napa County. One of
the stated purposes of this law was to minimize consumer
confusion because consumers assume brand names of wines suggest
the origin of the grapes. The law essentially prohibited Bronco
from marketing the three labels referenced above using non-Napa
grapes. Bronco challenged the law in court arguing that state
law could not preempt federal law, which also provides a 75%
requirement, but exempts brands established before July 7, 1986.
Bronco also argued that its labels were not deceptive since the
origin of the grapes was spelled out, although in smaller print.
Bronco also challenged the law on other claims including free
speech rights, but the California Court of Appeals rejected
those arguments.
Analysis Prepared by : Eric Johnson / G. O. / (916) 319-2531
FN: 0006348