The State Water Resources Control Board unanimously approved a new order last week that fits all wineries statewide under one regulatory framework for waste discharges. California wines have been recognized for having some of the most sustainable agricultural practices in the world, and the order surprised many in the industry.
Winery owners and industry advocates pleaded with the board at the meeting to allow more flexibility for smaller wineries and to reduce the order’s complexity. They argued the board presented no evidence to show such a need for the order, especially as the industry grapples with massive losses from natural disasters and the trade war with China.
Noelle Cremers, a policy director for the Wine Institute, said the industry is dealing with more than $4 billion in losses due to shutdowns during the pandemic and nearly as much in losses due to wildfire damage and smoke taint in 2020. Cremers explained that many wineries were unable to make a 2020 vintage, now leaving them with no wine to sell at the same time that the board will be rolling out the new regulation.
The cost to the Water Board for implementing the regulation, Cremers said, will be nearly $800 million and covered through winery fees. The coalition of wine groups she represented proposed a number of changes, including the limits on discharges of groundwater effluent.
“In longstanding wine regions, like Alexander Valley and Napa Valley, their wells are not showing high levels of nitrates,” she argued.
The coalition wanted more flexibility to allow the wineries in the upper tier to drop to a lower risk category if groundwater monitoring finds no further threats to water quality.
The changes in all would save the board nearly $600 million, money the wineries could instead use for sustainability efforts, said Cremers. State Senator Bill Dodd, who represents several counties in Wine Country, encouraged the board to adopt the Wine Institute’s changes. Many feared the steep costs on smaller wineries for complying with the regulation.
Mike Martini, the general manager of Taft Street Winery in Sebastopol, worried the cost of installing groundwater monitoring wells for the regulation could reach as high as $500,000, forcing owners to sell out to larger companies or quit the business entirely.
“While you're considering the adoption of this order, there are dozens of other state and federal agencies that are adding to the regulatory environment that is impacting all small businesses, not just small wineries,” said Martini. “I would urge that we work together to find ways to identify what the problem truly is at each individual site and address that problem, rather than a blanket solution for all.”
Billy Grant, who owns a couple of small wineries, added that mom and pop wineries come in all shapes and sizes and need “a more user-friendly presentation” of what the order is trying to accomplish. He said it often takes these businesses several years to finance even smaller improvements.
“We affectionately call ourselves a debtors club,” said Grant. “We have parties at our banks, our banks buy us wine, they buy us lunch, because we owe them a lot of money.”
He said the order is creating “a slippery slope” for outsourcing more wine production overseas.
Michelle Novi, the industry relations director for Napa Valley Vintners, gave an impassioned plea to the board to consider the lives they will be impacting.
“I'm feeling a sense of despair,” she said. “We are an industry on the brink.”
Novi said when policies like this are “layered upon each other” they have “real effects on real people,” and this order adds to that cycle even without a strong argument for the environmental need.
“It really defeats you and takes the wind out of your sails, especially in a place like Napa,” she said. “I have never seen a community that has always come together to consistently do the right thing, and do it ahead of any regulation being passed.”
Water Board Chair Joaquin Esquivel countered that the order does allow up to eight years for compliance and offers some flexibility in how businesses can make the necessary investments to meet the requirements. He said this flexibility is what makes the regulation more complex. Water Board Vice Chair Dorene D’Adamo charged staff with working with growers to clarify the technical language during the regulation’s implementation process.
“This is going to be challenging, and you're going to have to hire consultants, and that comes at a cost,” said D’Adamo. “But it's up to us to work with you all and with regional boards to simplify this, wherever possible, and I am certain that can be done.”
In responding to questions about the need for the order, Esquivel explained it came at the request of the industry.
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“The board undertook a statewide general permit to be able to actually provide some better consistency and standardized implementation throughout the state,” said Esquivel. “The years of discussion that have brought us to this moment have demonstrated a lot of flexibility and fine tuning and ensuring that this is a program that is implementable.”
Danny Merkley, a water policy advocate for the California Farm Bureau, appreciated that the Water Board has “come a long way to achieving significant improvements for a workable order” over the five years since staff first began exploring the regulatory proposal. The Farm Bureau supported Cremers’ proposals and recommended an appeal process before raising a low-level winery to a higher tier as well as more consideration for the cost-benefit ratio for some of the measures.
“We're not asking you to turn a blind eye on potential environmental impacts,” said Merkley. “Rather, are some of these costly measures aimed at real or perceived impacts?”
Bob Gore, representing various agricultural interests through the Gualco Group, noted that winegrape growers have been engaged on this issue for more than a decade already as they pioneered a sustainability certification program for groundwater management. He said the regulation could better reflect the investments that vineyard operations have already made.
“It is worth recalling that sustainability as a tenant includes economic sustainability,” said Gore. “At a time when rural communities and winegrape growers are hammered by a pandemic and adverse trade conditions as well as wildfires, a compassionate and cognizant regulatory hand is essential.”
Board member Tam Doduc, who felt uncomfortable with the many uncertainties that remained in the order, asked staff to reach out to stakeholders to explore other risk-based factors and potentially revisit the tier structure down the road.
Chief Deputy Director Jonathan Bishop, however, warned that refining the order would likely take 18 months or more to accomplish.
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