Court Upholds San Diego County's Winery Ordinance

Posted by Jake W. Storms on May 03, 2011

On April 15th, a California Superior Court Judge denied a challenge to San Diego County’s new Winery Ordinance. The Ordinance, passed in 2010 and available here, eases restrictions on tasting rooms and sales for smaller producers and allows others to essentially “fast-track” registration as a “small winery” with such designation allowing for pre-approved events, such as weddings.

The challengers claimed that the Ordinance’s Environmental Impact Report (“EIR”) under the California Environmental Quality Act (“CEQA”) was inadequate. Judge Timothy Taylor disagreed, stating “[t]he Board of Supervisors was, by the EIR, adequately informed about the consequences of its decisions. The public (including petitioner) was provided with adequate information regarding the decisions of their elected leaders.”

The challengers have 30 days from the issuance of the ruling to appeal.

State Water Board Moves on Frost Protection Program

Posted by Jake W. Storms on April 14, 2011

iStock_000007254832Small.jpgThe State Water Resources Control Board (“Board”) held a workshop last week on a proposed regulation designed to assess and mitigate water use from the Russian River by growers in Mendocino and Sonoma Counties during frost season. Though no formal action took place, the Board received numerous comments on the proposed regulation. 

The regulation would add Section 862 to the California Code of Regulations establishing that any water diversion from the subject area from March 15 to May 15 not in accordance with a Board-approved Water Demand Management Program (“WDMP”) would be deemed unreasonable. This includes the pumping of hydraulically connected groundwater, but excludes diversions upstream of the Warm Springs and Coyote Dams.

In addition, the new regulation would require the WDMP to include:

  • An inventory of the frost diversion systems within the area subject to the WDMP
  • A stream stage monitoring program
  • Annual assessment of potential risks to salmonids from frost diversions
  • Identification and implementation of any corrective actions deemed necessary to protect salmonids
  • Annual reporting of the WDMP

The workshop was heavily attended by stakeholders from both government and industry and included a presentation of the projected cost of the proposed regulation. The draft economic report, available here, states that the average cost for those diverters in Mendocino County not requiring corrective actions would be $105.86 per acre in initial capital outlay and $28.50 per acre in annual costs; for Sonoma County, those numbers would be $59.98 and $18.74, respectively. For a 40-acre vineyard in Mendocino, this puts the total cost at $4,234 for initial capital outlay and $1,140 in annual costs; for Sonoma County, these numbers would be $2,399 and $749, respectively.

A common theme from the Board and the audience was that several important terms in the proposed regulation had yet to be satisfactorily defined. Chairman Hoppin, himself a farmer, repeatedly stated his hope that both sides would strive for a balance between protecting species and the water needs of farmers.

Several commentators expressed a need for the Board to address the permitting of offstream storage (i.e., storage ponds) as a tool to help address Russian River overdraft. Chairman Hoppin assured the audience that steps needed to be taken in this arena and that it was on the Board’s radar.

Formal rulemaking and the program’s environmental report are expected in mid-May, with final regulations in place by March 2012.

Stoel Rives Attorneys Speak at Wine Conference

Posted by Jake W. Storms on March 18, 2011

This past week, Stoel Rives partners Chris Hermann and John McKinsey and associate Jake Storms all participated as panel speakers at the Best Practices for Owning and Operating a Winery conference, held at the Hyatt Vineyard Creek in Santa Rosa, CA. John also acted as co-host of the conference, which covered a wide variety of topics affecting wineries and vineyards, from siting and permitting and valuation to how to build a brand and protect trademarks.

Chris, Chair of Stoel’s Winery and Vineyard Management group, spoke on custom crush agreements and the pitfalls that can affect those who do not adequately protect themselves. John, California Co-Chair of Stoel’s Winery and Vineyard Management group, educated attendees on energy use and utilizing renewable electricity sources. Jake, an associate in the group, spoke on industry trends and California-specific legislative and project actions, including AB 605 and the California High-speed Rail.

The event was well attended, with over 40 stakeholders present at the two-day event. This marks the fifth year of the event, which was sponsored by Stoel Rives and Kennedy/Jenks Consultants, along with industry mainstay, Wines & Vines.

Forum For Water Users In Napa County

Posted by Jake W. Storms on March 15, 2011

The Napa County Farm Bureau held its first water forum in five or six years on March 9, in St. Helena, California. Kicked off by Bureau President Jim Lincoln, the event was well attended, with over 100 concerned stakeholders listening to the most recent updates in California water issues.

Phillip Miller, the Deputy Director of Napa County Public Works, discussed a recent study by the County designed to compile countywide data, establish a framework for reporting, and provide recommendations related to any future groundwater permitting and monitoring program.

Of most interest was the presentation by Paula Whealen, a principal at the engineering firm of Wagner & Bonsignore. Ms. Whealen gave a general overview of new requirements  for surface water users from the California State Water Resources Control Board (“SWRCB”), including:

  • All reports of licensees and progress reports by permittees and pre-1914 water right diverters are now due annually by July 1;
  • Reports must provide the monthly amount taken from the source;
  • They must state the monthly amount beneficially used;
  • They must be filed electronically as of this year; and
  • Filings will require high-speed internet access.

Because all new reports must be filed electronically, the prior “fudge factor” regarding timelines for reporting will no longer exist. The SWRCB will be able to tell on July 2 who hasn’t filed the necessary reports. Failure to file all necessary reports constitutes non-compliance with the underlying water license/permit and can lead to fines and/or other administrative actions. It was also stated that, given the increase in the number of enforcement officers (25) and the establishment of a water rights enforcement office in Santa Rosa, California, there will be a significant increase in site inspections in the North Coast region.

A bit of sage advice to be taken from the Forum is for all vineyard and winery owners operating under a license/permit to take it out, read it, and understand it. If you don’t understand your water right permit, find someone who does, and most importantly, make sure you are in compliance. In addition, even for those sources that are not required to be reported (i.e., reclaimed water), it behooves vineyards and wineries to keep records of all water that is used on the property.

Frost Protection Program Sets Fees in Sonoma County

Posted by Jake W. Storms on March 09, 2011

The Sonoma County Board of Supervisors recently adopted the final measures for moving ahead with the County’s Frost Protection Program (the “Program”). This final act was merely a carry-over from the February 8  meeting where the Board adopted the fee structure for the Program and extended the time frame for implementation of the Program until 2012, citing unforeseen difficulties in negotiations with certain stakeholders.

Under the new Section 11B of the County Code, the Program will be used to gather information on vineyard and orchard water usage in the Russian River Watershed. Creation of the program started after complaints were made by the U.S. Fish and Wildlife Service that frost protection measures that use water from the Russian River Watershed were causing the death of certain protected salmonid species. The federal agency threatened to take action under the Endangered Species Act if the County did nothing. The County moved to create the Program ahead of State action, which is expected to occur in the next 12-18 months.

The Program will use over 100 gages to measure water levels at certain points in the watershed. Implementation of the Program was originally designed to take place in time for the 2011 frost season. However, County staff informed the Board at the February 8 meeting that two hurdles had sprung up that would delay actual implementation until the frost season of 2012. The first was a seemingly 11th-hour move by certain vineyard stakeholders to not back the program due to concerns of the public nature of the information gathered. The second was the negotiations over the issue of indemnification between the County and the non-profit organization created to assist in the implementation.

While a delay in implementation to the 2012 frost season was acceptable to the U.S. Fish and Wildlife Service, it was stated that any further delay would require action on the part of the agency. One Board member suggested that, due to the delay, the Board consider scrapping the Program and creating a fully voluntary concept. This idea was not acceptable to the U.S. Fish and Wildlife Service and was quickly discarded. 

Vineyards and orchards within the Program’s umbrella must register with the County Agricultural Commission annually between January 1 and March 1. This year’s registration must occur by June 1. The fee set for the Program is $64.00 per site. This fee will be assessed annually with the required registration. The County estimates there are some 360 sites within the Program’s boundaries.

The Program will have to conform to any future State action regarding the Russian River Watershed. However, the Board was confident that the Program would meet with acceptance at the State level.