BILL ANALYSIS
Bill No: AB
2397
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Dean Florez, Chair
2007-2008 Regular Session
Staff Analysis
AB 2397 Author: Aghazarian
As Amended: March 28, 2008
Hearing Date: June 10, 2008
Consultant: Art Terzakis
SUBJECT
Alcoholic Beverages: wine labeling
DESCRIPTION
AB 2397 requires all wines produced or bottled within the
current Lodi appellation to be labeled with the designation
"Lodi." Specifically, this measure:
1. Provides that any wine labeled with a viticultural area
appellation of origin established pursuant to federal
law, which is located entirely within the "Lodi"
viticultural area shall bear the designation "Lodi" on
the label in direct conjunction therewith in a type size,
as specified.
2. Provides that the Department of Alcoholic Beverage
Control (ABC) may suspend or revoke the license of any
person who violates the provisions of this act.
3. Stipulates that the provisions of this act shall not
apply to any wine labeled with a viticultural area
appellation of origin established pursuant to federal law
when the name of the appellation includes the term
"Lodi."
4. Makes it explicit that the provisions of this act apply
only to wine that is bottled on or after January 1, 2009.
EXISTING LAW
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California law: Under existing law, the Department of
Alcoholic Beverage Control (ABC) regulates the licensing,
enforcement, and administration of the alcoholic beverage
control laws.
Existing law 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. In
2005, the State Supreme Court upheld the state's "Napa"
labeling law (Bronco Wine Co. v. Napa Valley Vintners) and
in early 2006 the U.S. Supreme Court declined to review the
State Supreme Court decision.
Existing law 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.
Existing law 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.
Existing law requires all wines produced or bottled within
the current Paso Robles appellation to be labeled with the
designation "Paso Robles."
Existing law 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.
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, 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.
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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 April
2007 there were 187 recognized AVAs nationwide - 107 of
which were 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.
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 and Pinot Grigio. The regulations mandate that 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
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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.
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.
BACKGROUND
Purpose of AB 2397: According to the author's office,
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wines produced in Lodi from grapes grown in the Lodi region
have national and international recognition. The author's
office states that the likely proliferation of smaller,
separate viticultural area designations, while highly
desirable within the developing Lodi region, has the
potential of diminishing the historical, agricultural, and
economic importance of the Lodi wine-growing area and
confusing consumers.
The author's office contends, it is necessary to require
wines produced within the boundaries of the existing Lodi
appellation to be labeled as being derived from that
region, if the wine label indicates that they are produced
within a separate viticultural area within Lodi wine
country, to preserve consumer identification and
understanding of the name "Lodi" and to protect this
important state agricultural resource and wine products
derived from that area.
This measure, sponsored by Lodi District Grape Growers
Association, has been introduced in order to preserve
consumer identification and understanding of the Lodi
region and protect wine products produced from this area.
The sponsor emphasizes that this bill is designed to
accommodate the desired specificity of sub-appellation
labeling, but link it to the broader Lodi American
Viticulture Area (AVA).
Proponents emphasize that this measure is mirrored after
existing conjunctive labeling laws that apply to Napa
Valley and Paso Robles produced wines.
Lodi AVA: The Lodi Appellation is a federally designated
AVA recognized for the distinctive quality of its wines.
Located directly east of San Francisco at the edge of the
Sacramento River Delta, the Lodi appellation is noted for
its classic Mediterranean climate and its distinctive sandy
soils that provide the perfect environment for the
production of world-class wines.
The federal government first approved the Lodi AVA in 1986,
and over the past two decades, the number of "Lodi" labeled
wines has skyrocketed. There are currently nearly 100,000
acres of vineyards and over 60 wineries within the Lodi
AVA.
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As the quality and recognition of Lodi wines spread, local
winegrowers began to recognize the wide variety of
ecological differences across the vastness of the Lodi AVA,
differences that began to show in the wines emerging from
their vineyards. These winegrowers sought to create
sub-appellations that better reflects the diversity of the
land. Their efforts resulted in the most extensive
historical and science-based document outlining the
diversity in climate, soil, topography, and elevation of
any appellation ever to be submitted for federal approval.
Their research concluded that seven distinct growing areas
exist and deserve recognition as individual appellations.
In August 2006, the federal government granted recognition
to seven separate sub-AVAs (Alta Mesa, Borden Ranch,
Clements Hills, Consumnes River, Jahant, Mokelumne River
and Sloughhouse) all within the Lodi AVA.
PRIOR/RELATED LEGISLATION
SJR 22 (Wiggins) Resolution Chapter 9 of 2008. Requests
the U.S. Department of the Treasury's Alcohol and Tobacco
Tax and Trade Bureau (TTB) to withdraw its Notice of
Proposed Rulemaking Number 77 relating to establishing a
"Calistoga" American Viticultural Area (AVA) and its Notice
of Proposed Rulemaking Number 78 relating to altering
regulations concerning the establishment of AVAs, because
they pose a threat to the state and national wine
industry's ability to fairly trade domestically and
internationally.
AB 87 (Blakeslee) Chapter 674, Statutes of 2007. Among
other things, 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 Robles" viticultural
area name bear the designation "Paso Robles" on the label
in conjunction with the area designation of wine.
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
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provision to the Business and Professions Code 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.
SUPPORT: as of June 6, 2008:
California Association of Winegrape Growers
Family Winemakers of California
Lodi District Grape Growers Association
Wine Institute
OPPOSE: None on file as of June 6, 2008.
FISCAL COMMITTEE: Senate Appropriations Committee
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