BILL ANALYSIS Ó AB 394 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 394 (Mark Stone and Alejo) As Amended June 15, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |78-0 |(April 23, |SENATE: |39-0 |(July 09, 2015) | | | |2015) | | | | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: G.O. SUMMARY: Requires any wine bottled on or after January 1, 2019, and labeled with an American Viticultural Area (AVA) that is located entirely within the County of Monterey to bear the designation "Monterey County" on the label. Specifically, 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 1) above, shall not apply to any wine labeled with a viticultural area appellation of origin established pursuant to specified federal regulations when the name of the appellation is "Monterey." AB 394 Page 2 3)Authorizes Alcoholic Beverage Control (ABC) to suspend or revoke the license of any person who violates the provisions of this bill. The Senate amendments: 1)Authorize the Department of ABC to suspend or revoke the license of any person who violates the provisions of this bill. 2)Make technical change. 3)Add co-authors. EXISTING LAW: 1)Establishes 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 as being derived from that valley, if the wine label indicates AB 394 Page 3 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. AS PASSED BY THE ASSEMBLY, this bill, on or after January 1, 2019, requires any wine bottled and labeled with an AVA, established pursuant to federal law, which is located entirely within Monterey County to include the designation "Monterey County" on the label, unless the federal AVA is "Monterey." FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS: This bill, as amended in the Senate is consistent with Assembly actions. AB 394 Page 4 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), 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 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 Code of Federal Regulations Title 27, Part 9. 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 2014, there were more than 220 recognized AVAs nationwide - 135 of which are located in California. The 135 California viticultural areas recognized by the TTB include, among others, Alexander Valley, Anderson Valley, Chalk Hill, Clarksburg, Fair Play, Hames Valley, Lodi, Los Carneros, Monterey, 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 AB 394 Page 5 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. The regulations do not require disclosure of the place of origin of the remaining portion of the wine. Purpose of this bill: This bill establishes a "conjunctive labeling" provision in the ABC Act for wines made from grapes grown within recognized winegrowing areas, or American Viticultural Areas, in Monterey County. This provision mirrors existing labeling provisions for Sonoma, Napa, Lodi, and Paso Robles. According to the author's office, California is a global leader in viticulture and wine grape cultivation, and its many wine-producing regions are known specifically by their local appellation due to their high quality products and labeling requirements. Monterey County wine producers, which are leaders in the California wine industry, provide a variety of jobs in the wine growing and supply chain, and contribute immensely to the County's economy. Monterey County is unique among wine regions because it rates very high in value, quality and awareness. The author's office contends this bill will insure that consumers recognize every bottle of wine produced from Monterey County grapes. In addition, this bill will build brand equity for Monterey County wines and preserve and strengthen the county's position as a recognized world-class wine region while increasing sales of wines produced from the region's grapes. Consistent inclusion of Monterey County on wine labels will AB 394 Page 6 strengthen the county's brand over time while strengthening the diversity of AVAs within the county and the quality wines each produces. This bill provides a three-year phase-in period to enable wineries to redesign their labels and get regulatory approval to use the new labels. In support: In support of this measure, the Family Winemakers of California states "the Monterey appellation 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. As the Monterey wine region continues its growth and development, it is important that smaller, separate sub-appellations benefit from and contribute to the linkage that comes with conjunctive labeling. AB 394 is designed to accommodate the desired specificity of sub-appellation labeling, but link it to the broader Monterey AVA." There is no opposition on file. Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531 FN: 0001194