BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: AB 394 Hearing Date: 6/9/2015
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|Author: |Mark Stone |
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|Version: |3/19/2015 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Alcoholic beverage control: wine labels: Monterey
County
DIGEST: This bill requires any wine bottled on or after
January 1, 2019 and labeled with an American Vitcultural Area
(AVA) that is located entirely within the County of Monterey to
bear the designation "Monterey County" on the label.
ANALYSIS:
Existing law:
1)Establishes the Department of Alcoholic Beverage Control (ABC)
and grants it exclusive authority to regulate the licensing,
enforcement, and administration of the alcoholic beverage
control laws.
2)Requires any wine bottled on or after January 1, 2014 and
labeled with an AVA located entirely within a County of the
19th class (Sonoma County) to bear the designation "Sonoma
County" on the label, as specified.
3)Requires that, when the word "Napa" (or any federally
recognized viticultural region within Napa County) appears on
a brand label, at least 75% of the grapes used to make that
wine must be from Napa County.
4)Requires wines produced within the "Napa Valley" to be labeled
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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.
5)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% of the
grapes used to make the wine are from Sonoma County, as
specified.
6)Requires all wines produced within the current Paso Robles
appellation to be labeled with the designation "Paso Robles."
7)Requires all wines produced within the current Lodi
appellation to be labeled with the designation "Lodi."
8)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.
This bill:
1)Requires any wine bottled on or after January 1, 2019 and
labeled with an AVA that is located entirely within the County
of Monterey to bear the designation "Monterey County" on the
label in a type size as specified.
2)Stipulates that the requirement in item #1 above shall not
apply to any wine labeled with a vitcultural area appellation
of origin established pursuant to specified federal
regulations when the name of the appellation is "Monterey."
3)Authorizes the Department of ABC to suspend or revoke the
license of any person who violates the provisions of this
bill.
Background
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,
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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, 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 March 2015,
there were 230 recognized AVAs nationwide - 134 of which are
located in California. The California viticultural areas
recognized by the TTB include, among others, Alexander Valley,
Anderson Valley, Antelope Valley, Arroyo Seco, Carmel Valley,
Central Coast, Chalk Hill, Clarksburg, Cucamonga Valley, Fair
Play, Howell Mountain, Livermore Valley, Lodi, Los Carneros,
Malibu Coast, Mendocino, Napa Valley, North Coast, Paso Robles,
Rockpile, Russian River Valley, Rutherford, Santa Cruz
Mountains, Santa Lucia Highlands, Sierra Foothills, Sonoma
Valley, Sonoma Coast, Spring Mountain, Stags Leap, Temecula
Valley, Trinity Lakes, 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, Pinot Grigio, Syrah,
Souzao, Primitivo, and Zinfandel. The regulations mandate that
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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% 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% 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% 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% of the
wine must derive from grapes grown in the indicated area. Thus,
the appellation of origin "Napa Valley" signifies that at least
85% 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 be located in the
geographic area where the wine was made or the grapes were
grown.
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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.
Purpose of AB 394. This bill establishes a "conjunctive
labeling" provision in the ABC Act for all wines made from
grapes grown within recognized winegrowing areas, or AVAs, in
Monterey County. This bill mirrors existing conjunctive
labeling provisions for Napa, Lodi, Paso Robles and Sonoma.
Additionally, this bill makes it explicit that the provisions of
this act apply only to wines bottled on or after January 1, 2019
to enable wineries to redesign their labels and get regulatory
approval to use the new labels.
According to the author's office, the purpose of conjunctive
labeling is to build an association of quality in an
increasingly competitive global wine market for the delivery of
Monterey County wines.
The author's office states that there are currently eight AVAs
contained within the Monterey AVA: Arroyo Seco, Carmel Valley,
Chalone, Hames Valley, San Antonio Valley, San Bernabe, San
Lucas, and Santa Lucia Highlands.
Prior/Related Legislation
AB 1798 (Evans, Chapter 242, Statutes of 2010) required any wine
bottled on or after January 1, 2014 and labeled with an AVA
located entirely within a County of the 19th class (Sonoma
County) to bear the designation "Sonoma County" on the label, as
specified.
AB 2397 (Aghazarian, Chapter 75, Statutes of 2008) required any
wine bottled on or after January 1, 2009 and labeled with a
viticultural appellation of origin that is located entirely
within the Lodi viticultural area to bear the designation "Lodi"
on the label.
AB 87 (Blakeslee, Chapter 674, Statutes of 2007) required any
wine labeled with a viticultural area appellation of origin
established pursuant to federal law, other than the viticultural
area "Paso Robles," that is located entirely within the "Paso
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Robles" viticultural area name to bear the designation "Paso
Robles" on the label in conjunction with the area designation of
wine.
AB 892 (Evans, 2007) would have provided that a wine, as
described, is entitled to the appellation of origin
"California," or a geographical subdivision thereof, if the wine
meets specified criteria, including the requirement that 100% of
the wine's volume is derived as specified and described. (Held
in this Committee at author's request)
SB 1253 (Migden, 2006) would have established "Zinfandel" as the
historic wine of California. (Vetoed by Governor - message
stated, "Californians should be proud of all our California
Grown agricultural products? singling one out in special
recognition would be inappropriate.")
SB 1380 (Chesbro, Chapter 879, Statutes of 2006) prohibited 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% of the grapes used to make
the wine are from Sonoma County, as specified.
SB 1293 (Chesbro, Chapter 831, Statutes of 2000) added a
provision to the ABC Act for the stated purpose of eliminating
consumer confusion with respect to the origin of wine grapes and
protecting the value of the Napa Valley name. Essentially,
this measure made it explicit that when the word "Napa" appeared
on a brand label, at least 75% of the grapes used to make that
wine must be from Napa County.
SB 771 (Thompson, Chapter 588, Statutes of 1989) required 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. This requirement applied to all wines bottled on
or after January 1, 1990.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
SUPPORT:
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Monterey County Vintners & Growers Association (sponsor)
Family Winemakers of California
Monterey County Board of Supervisors
Monterey County Farm Bureau
Monterey County Hospital Association
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Writing in support, the Monterey County
Vintners & Growers Association emphasizes that consistent
representation of Monterey County on labels will: (a) enhance
brand equity and loyalty for Monterey County wines; (b) preserve
and strengthen the County's position in the world wine market;
(c) boost sales of wines produced from Monterey County grapes;
(d) increase recognition for every AVA within Monterey County
and ensure that consumers understand where they are located;
and, (e) enhance California's reputation as a premier
international wine region.
The Family Winemakers of California (FWC) indicates Monterey
County is one of the fastest growing premium vineyard and winery
regions in California, as well as one of the state's tourism
jewels. Wines produced from Monterey are becoming nationally
and internationally recognized for their distinctive qualities.
FWC asserts it is important for these smaller, separate AVAs to
benefit from and contribute to the affinity with Monterey County
labeling, and that AB 394 will accommodate the desired
specificity of sub-appellation labeling while linking wine to
the broader Monterey AVA.