A review of how Napa County applies and enforces the 23-year-old Winery Definition Ordinance has created a rift between wine industry groups, and disagreement on how older wineries should show compliance with the ordinance if they seek to expand production.
At the heart of the dispute is the rights given to the so-called “grandfathered” wineries — those existing before the county adopted the ordinance in 1990 — and its cornerstone 75-percent rule, which requires new wineries to source their wines from 75 percent Napa grapes.
The grandfathered wineries, which include Napa Valley’s largest, have their pre-1990 production levels exempted from the 75-percent rule. That leaves a crucial question: If they apply to expand production, how should they demonstrate compliance with the 75-percent rule, and should the Napa grapes they crush under their current, WDO-exempt permits qualify as a source for the expanded production?
The Napa Valley Grapegrowers, the Napa Valley Vintners and the Napa County Farm Bureau agree that wineries should have to prove their compliance.
But on using current-permit Napa grapes for expansion, the Grapegrowers and the Farm Bureau argue that grandfathered wineries shouldn’t be able to do that.
“An application for expansion and development on agricultural land should include a plan to source Napa grapes that are additional to current production,” leaders of the Farm Bureau and the Grapegrowers wrote in a letter to the county earlier this month. “By definition, expansion means the crushing of additional fruit and it is this fruit that is subject to the 75-percent rule.”
The Napa Valley Vintners object. The purchase and source records of pre-1990 production were supposed to be anonymous, and have been kept anonymous for 23 years, said Richard Mendelson, a wine industry attorney with Dickenson Peatman & Fogarty.
The Vintners argue that this is not how the county has applied the ordinance throughout its existence, and would unfairly change the rules and restrict grandfathered wineries’ currently held rights. It also raises the issue of which year’s sourcing records should be used, as they can change over time, said Pat Stotesbery, a past president of the Vintners’ board of directors.
“Who says where you should look?” Stotesbery asked. “Your source of fruit was anonymous. To the extent that it’s not anonymous anymore, that’s clawed back our right.”
Jon Ruel, president of the Grapegrowers, said the wineries should show their sources. “All the wineries need to show where their grapes are coming from,” he said.
The Napa County Planning Commission is set to take up the issue Feb. 20, and county Planning Director Hillary Gitelman said Friday she hopes to find common ground in the dispute before then.
“No one here in the county wants to be caught in the middle of this,” Gitelman said. “I’m hopeful there’s a way we can address both sets of priorities.”
Ruel shared Gitelman’s optimism. “I am absolutely optimistic we’ll have a resolution within a reasonable timeframe,” he said last week.
This issue first cropped up last year when Reata Winery and Raymond Vineyards sought large expansions in their productions. Each application raised questions about where they would obtain enough Napa grapes to comply with the 75-percent rule.
In March, Reata sought to expand production from 200,000 gallons annually to 1.1 million gallons of on-site fermentation and bottling, and 2.4 million gallons of bulk wine bottling. It received approval for 800,000 gallons of production, including up to 350,000 gallons of bulk wine bottling.
In June, Raymond sought to double its production from 750,000 gallons to 1.5 million gallons, but withdrew its application before the Planning Commission could vote on it. Gitelman said she believes the applicants will return to the county with a similar application soon.
Out of fears there may be insufficient Napa grapes to support that level of expansion, planning staff recommended conditional approval — Raymond could expand so long as it proved it had a Napa grape source.
That’s a first in the history of the winery-definition ordinance, Jennifer Putnam, executive director of the Grapegrowers, said at the time.
“This has reached proportions that are somewhat of a problem,” said Volker Eisele of the Napa County Farm Bureau. “Reata and Raymond highlighted that. They could not show where the grapes would come from.”
Mendelson said the county’s approach with Raymond was a reasonable method to solving the sourcing dilemma. The county also audits production at 20 wineries annually, which includes compliance with the 75-percent rule, and member-wineries of the Vintners take the issue seriously, said Rex Stults, the organization’s government-relations director.
“We haven’t had a problem — what’s the problem?” Mendelson said. “That’s all part of enforcement and auditing, and that’s a reasonable approach.”