By W. Blake Gray | Wine Searcher | Sep 6, 2024 |
Three wineries have come together to sue Napa County in federal court over where they can grow grapes.
Since 1990, Napa County has required local wineries to use at least 75 percent Napa-grown grapes in its total wine production, regardless of what AVAs they list on the label.
A new lawsuit filed this week seeks, among other things, to eliminate this 75 percent rule. It would not affect wines labeled as Napa Valley AVA. But if successful, it would allow big wineries in the county to produce more California AVA wines with fruit from other areas than they have for years.
The case is the latest development in an ongoing feud between three small wineries – Hoopes Vineyard, Smith-Madrone Winery and Summit Lake Vineyard – and the county. Hoopes is currently being sued by the county over alleged permit violations; the other two wineries tried to join owner Lindsay Hoopes in her cross-complaint but were denied by the presiding judge. This new lawsuit ups the ante by hitting the county where its regulations appear most vulnerable.
I’m not a lawyer, but I have been following dormant commerce clause cases involving wine shipping for years. It’s hard for me to see how Napa County will prevail on the 75 percent rule because it discriminates against farmers who grow grapes in other counties.
“A state can’t enact a law that protects its own businesses to the detriment of businesses in other states,” said Joseph Infante, lead attorney for the wineries suing the county. “We call it economic protectionism. It doesn’t have anything to do with AVA regulations because that’s a voluntary restriction.”
In other words, Caymus Vineyards can be required to use at least 85 percent grapes to make a wine labeled Napa Valley AVA because using Napa Valley AVA on the label is optional. Caymus could make a wine with 83 percent Napa Valley grapes and simply put California AVA on the label instead.
But the county requires Caymus, if it wants to crush 100,000 tons of grapes total in its Napa winery, to ensure that at least 75,000 tons of those grapes come from Napa, regardless of the AVAs that ends up on the labels.
I didn’t choose Caymus as an example at random. In 2013, Caymus agreed to a $1 million settlement with Napa County for bottling 20 times more wine in Napa than its permit allowed. The rest of that story is that Caymus opened a new facility in neighboring Solano County, thus bringing more jobs and economic activity – and, to be fair, truck traffic – to Solano.
“Sounds like Caymus should call me,” said Infante, an alcohol regulatory lawyer who is based in Michigan.
Rules for a reason
Pete Richmond, president of Silverado Farming Company and also Napa Valley Grapegrowers, said that losing the 75 percent rule would be bad for the Napa wine industry.
“We created a preserve in 1968 which said the highest and best use of land is agriculture,” Richmond told Wine-Searcher. “We’ve capped out on development of vineyards in the valley since 2015. By doing that, we have driven grape prices up and wine prices up, which has allowed us to survive while the rest of the state is struggling. Where is the best Cabernet in America grown? Napa Valley. Why is that happening? Yields in Napa Valley have not changed since the 1960s. They’re still three and a quarter tons per acre. You can look at the records. If you tell that to an economist, they’ll say we’re crazy.
“All the wines coming out of Napa are good. We’ve got to protect that.”
Recent court cases in other parts of the country – which will not serve as precedent in this case, to be clear, because they are in other court districts – show that protecting this particular rule might be difficult.
In 2020, a federal judge in Minnesota struck down a similar law that required wineries in that state to use at least 51 percent Minnesota grapes. A different judge struck down a Peninsula Township, Michigan rule that requires local wineries to use at least 85 percent Peninsula Township grapes. That Michigan case is still ongoing on other regulatory issues – some of which were also raised by the three Napa wineries in their new lawsuit.
The main complaint by the three Napa wineries is about limiting visitation rights. Napa County gives strict visitor limits to small wineries. The plaintiffs allege that their rights to host visitors and events, and to serve samples of wine to their customers, are protected by the First Amendment and California law. They also allege that Napa County violates the First Amendment when it requires wineries to get prior approval before hosting events, and when it regulates “cultural events” at wineries based upon the message delivered at those events.
“Our wineries and vineyards sit on beautiful agricultural properties with stunning views,” Heather Brakesman-Griffin, a partner at Summit Lake Vineyard, said in a press release. “We want to share that with wine lovers. But Napa County prohibits us from allowing customers to come onto our properties and it allows our neighboring wineries to welcome customers. If our wineries are going to survive, we need the ability to sell our wines to customers on-site.”
These issues have also been argued in Michigan but not yet decided, but the town lost the grape issue almost right away.
“One of the issues we had in Michigan is it’s a small township,” Infante said. “There were only so many grapes. A lot of the wineries, because they were stuck with this 85 percent rule, they just couldn’t make enough wine. A lot of varieties of grapes just don’t grow here. It limited the type of wines these wineries could produce. Napa has the same rule. It will likely be struck down as a violation of the dormant commerce clause.”
Richmond said that Napa’s business success, based on its agricultural preserve law and the 1990 Winery Definition Ordinance that includes the 75 percent grape rule, have led to what even he calls a “Disneyland of farming” – except perhaps Disneyland employees aren’t as well taken care of.
“Higher grape prices have led us to being able to pay the highest farmworker wages in the country. With health benefits and 401Ks,” Richmond said. “We can’t just turn into some place else or we can’t do all that stuff.”
Smith-Madrone co-owner Stu Smith said that small Napa wineries will ultimately benefit from this lawsuit.
“We’re doing this not only for ourselves but for all other small wineries in Napa County who are in similar situations and afraid to do anything because of the county’s history of retaliation” Smith said in a press release.
“By getting rid of these oppressive and unconstitutional regulations, small family wineries will be able to thrive again. It will also allow us to compete on a more equal footing with other California winegrowing areas.”
