Napa’s New Winery Compliance Rules Preceding Strict Enforcement

Earlier this month, the Napa County Board of Supervisors completed their review of the Agricultural Protection Advisory Committee’s (APAC) recommendations to improve agricultural protection, primarily by imposing new restrictions and limitations on wineries (See approved list of Board actions on APAC recommendations). One of the recommendations approved by the Board was to implement a phased, self-certification compliance program in order to assure wineries are complying with the terms of their use permits and provide greater consistency in how the County enforces code compliance. The Board still needs to formally approve the specifics, but staff anticipates the new three-phase program would go into effect in early 2018.

Phase One: This phase will require all wineries to report their annual production and grape sourcing data to the County. To properly ascertain this data the County will evaluate a winery’s production reports to the Alcohol and Tobacco Tax and Trade Bureau and California Department of Food and Agriculture. The County has taken the position that production related information is confidential and not subject to Public Records Act requests; however, it is likely that certain members of the public will continue their cries for greater code compliance and transparency and seek access to any available data.

In preparation for Phase One, wineries should review the County’s definition of “Production” and its own operations to determine whether they are in compliance with their use permit production limits (See Napa County worksheet regarding interpretation of winery production) and, if applicable, the 75% grape sourcing rule (See Napa County Code § 18.104.250 [“at least 75% of the grapes used to make the winery’s wine . . . shall be grown in Napa County”]). It is important to note that these production calculations are not based on maximum allowed production, but rather on the actual amount of wine made.

Phase Two: The second phase would encourage wineries to meet with County officials for a voluntary review of their use permit. According to the County, the purported purpose of the review is to: “(1) streamline existing use permit conditions of approval; (2) determine existing vested rights; (3) clarify the scope of permitted activities; and (4) consider alternative measures to accommodate marketing activities.” The exact meanings of the stated purposes are difficult to understand right now and the County has not defined any of the terms. However, officials have stated that the reviews would not involve any change to a winery’s legally established vested rights.

How one defines “vested right” could potentially result in disagreement between winery owners and County staff.  For example, staff could take the position that if a winery has not fully utilized its permitted production the winery would have vested rights only to that amount actually produced.  Determinations of vested rights is highly fact-specific so it is difficult to make any general conclusions, but this could be a significant issue for some wineries that currently feel they are not at risk because they have not reached their visitation or production limits. We also anticipate other issues will arise related to interpreting a winery’s historic use permits as the County’s forms and standards have changed over time.

During Phases One and Two, the County will continue to its current practice of randomly auditing 20 wineries per year. Each year the County audits wineries and reports the results of those audits to the Board of Supervisors at the end of each year.  Again, it is unclear how the County the audit may evolve based on the new compliance process.

Phase Three: County officials plan to transition to a practice of strict code enforcement whereby the County will require violators to immediately comply with all applicable requirements. In the past, the County has allowed wineries not operating within the conditions of their use permit to continue such activities if that winery seeks a use permit modification to come into compliance. But now some decision makers have stated that those days “of forgiveness” are over.

While the proposed self-certification program may not go into effect until 2018, Napa County’s wineries should understand the terms of their use permit and any applicable vested rights.

For more information about this and other land use issues, please contact Tom Adams or Jeff Dodd from DP&F’s Land Use Group.