By Jana Adkins April 1, 2016
SCVBJ SPECIAL REPORT: Wine Industry
Known for its fine wines, California has become a major player in the wine market worldwide, generating billions of dollars in economic benefits to areas like San Luis Obispo, Santa Barbara, Napa Valley and Sonoma County.
Decades-long burdensome rules imposed on wineries in Los Angeles County by the Department of Environmental Health, however, have literally placed a chokehold on the local industry.
But, some of the rules which have been crushing the wine industry – pun intended – may all change soon thanks to a group of persistent wine growers and makers in the Santa Clarita Valley.
After countless meetings with officials over the years and an in depth review by the county, wineries may soon be as exempt as breweries from burdensome, redundant regulations that have had the wine industry in a vise grip, preventing the industry from flourishing as it has in other counties throughout the state.
“By 1900 we were the largest wine growing region in the United States,” said Juan Alonso of Alonso Family Vineyards and Le Chêne French Cuisine in Santa Clarita. “This was the birth of the wine industry in the United States by the Spaniards. Now we have rules going back to prohibition and the early 1950s.”
Production of wine in Los Angeles County became classified as a food and milk plant, causing crush facilities to be treated as food processing plants and imposing very expensive, undue regulations on crush plants, which resulted in very few such facilities in Los Angeles County.
The misclassification also forced professional and home-grown winemakers to leave Los Angeles County for production and storage – keeping the area dry in terms of options for producing wine.
A group of Santa Clarita Valley vintners, however, were persistence in their efforts by meeting with past and present regulators for more than a decade.
They wanted the classification changed and costly burdens removed to accurately reflect wine production and all that it entails. And, they were very clear that they did not want to be treated differently than the major mega-producing brewers in the county such as Anheuser-Busch in Van Nuys, which wine producers felt were being given unfair advantages.
After years of meeting with former health department and county officials to no avail, some of the original group of professional lobbyist-vintners even moved on to greener pastures. But a local group stuck by their goal to make the region a friendly wine-producing county, allowing the industry to flourish.
While economic studies show the industry generates billions of dollars in economic activity in other California counties, not a single report could be found documenting the health of the wine industry in Los Angeles County.
Efforts of the group, however, finally paid off when they caught the attention of a health department manager who listened to their reasoned arguments that fermenting wine is vastly different than the food processing industry which brings the risk of sickening the public.
“I worked for Cisco Foods and understand the need for the health department to make sure food is processed and stored correctly,” said wine producer Steven Hemmert with Stephen Hemmert Wines. “When food is stored incorrectly, it can sicken people. But, wine is one of the oldest products in the world. When it goes bad, it just turns to vinegar.”
As costly as it is for the wine growers and producers in the region, the cost of setting up a crush facility in the county is astronomical for a small vintner, making it an industry only for the wealthy, the group contends. Just ask a local facility owner in Santa Clarita.
Producing wines originally in Paso Robles, Steve Lemley and Nate Hasper joined forces and built a crush facility in the Valencia Industrial Center in early 2012.
Producing wine under their own label, Pulchella Winery, the pair also opened a tasting room in historic downtown Newhall on Main Street, helping to revive one end of Main Street that had fallen into disrepair as the city grew up around it and the masterplanned community of Valencia was developed.
“It cost us over $100,000 more than it should have to open the winery just to meet health department standards that were redundant and unnecessary,” Lemley said. “Yet, some of the largest brewery plants in Los Angeles County since the 1960s have been exempt from the same regulations that strangle us. That makes no sense; beer has only half the alcohol content of wine.”
Lemley points out that there are multiple wineries in Ventura County, right outside the boundary of Los Angeles, 80 percent of which he says are owned by people who live in Los Angeles County.
Pulchella, on the other hand, had to pay $35,000 for blueprints and architectural drawings of an empty warehouse to place its fermenting tanks and wine barrels in. Another $4,500 was spent in fees for a plan check.
Then they had to install equipment needed for a food or milk processing plant – neither of which they were producing – such as air curtains costing some $6,000 to hang over doorways; special sealants for the concrete floor; and special tiles – all dictated by the health department – and a janitorial sink to let grapes soak in large vats. The owners also had to install special three-compartment sinks – one to rinse, one to wash, and one to sanitize – which they didn’t need since they weren’t processing food.
And then there was the concrete floor.
Pulchella’s owners were forced to bust out all of the concrete floor and install special drainage, then re-cement the floor with a specified slope to the tune of another $25,000.
To finish the job, a special eight-hour water permeable paint at the cost of $275 a gallon was required to paint the warehouse just in case a hose or pipe burst so it wouldn’t affect their wine – except their wine wasn’t sitting out in the open, it was all encased in containers as the grapes fermented.
All of these requirements, and expense, came on top of the costs to purchase the equipment to produce wine in their crush facility.
“As a result, we are one of the few wineries in Los Angeles County,” Lemley said, who once spent three months creating a 75-page report documenting wine industry standards throughout the state – few of which place wineries under the supervision of their county health departments.
And many of the multitude of regulations are redundant, he said. The wine industry is already regulated by the federal government’s Department of Agriculture, for instance. The only difference, he points out, is that while the USDA requires wineries to maintain sanitary conditions at all times, they don’t tell vintners how to achieve it in minute detail. For instance, the USDA doesn’t hand out detailed, specific rules for installing a three-compartment sink.
“The rules really impact how we work and how competitive we can be with everybody else in the state,” he said.
Robert Reyes of Reyes Winery in Agua Dulce agrees. He explained the three-compartment sink is useless because their wine barrels don’t even fit in the sinks. And he was required to get a 100-gallon water heater – which he doesn’t use.
Acquiring his winery in 2002, and planting his vineyard in 2004, the winery finally was able to open for business in 2011 – nearly a decade after first buying the property.
He spent four-and-a-half years creating the infrastructure and cultivating the vineyard to the tune of around $1.5 million, he said. Even smaller permitting issues such as getting clearance from the Fish and Wildlife (formerly Fish and Game) was an extra burden, adding he is 60 miles from the ocean.
Without a healthy industry in the county, it’s very difficult for local vintners to promote their wines, Reyes said. One way the vintners find to promote their wine and the industry is by joining forces for wine tasting events, which also benefits local SCV charities – as is the case in counties throughout the state. The fourth annual Sierra Pelona Valley Wine Festival is again being held at the Reyes Winery in Agua Dulce April 10 from 12 to 4 p.m. It benefits the SCV Senior Center.
“We promote the viticulture ourselves in this county, but it’s been a difficult process,” Reyes said. “To promote wine in this region of Los Angeles County requires the help of cities like Santa Clarita and Palmdale to promote the industry as a destination.”
Promoting the wine industry locally would keep tax dollars local, as well, said Beth Heiserman, sales and marketing director for Reyes Winery. “Why let residents leave the valley and go to Santa Barbara or other parts of the state on wine tours when there are over 100 tasting rooms, or vineyards, or wineries in the greater county region?”she asked.
For the economic health of the region and the wine industry – it should be promoted to keep tourism and sales taxes local, not send the money to neighboring counties.
Alonso Family Vineyards
A group of wine producers first began appealing to the county 14 or 15 years ago, Alonso said. Between costly conditional use permits, annual inspection fees, equipment that’s not needed or practical – on top of federal and state regulations – it’s an added layer of regulation. And conditional use permits can be revoked every ten years, forcing wine growers to jump back through the same hoops they went through to get up and running after investing all that time and money in a small business, he said.
While permits may generate revenue for the county, they really amount to lost revenue opportunities, he said. The spending that would be generated from wine sales, tourism, labor wages and more would far exceed that of the permits.
The wine industry could be a very successful micro-economy in the county, Alonso pointed out, if only it were helped to flourish and not crushed by regulation.
Last year Alonso approached Rosalind Wayman with Supervisor Antonovich’s office in Santa Clarita. From there, the local vintners were able to meet with one of the higher-ups at the health department, who finally agreed to review the regulations and look at changing some of the regulations.
“Wine has been drunk since the dawn of civilization; it’s not a danger to anyone’s health, it even has proven health benefits,” Alonso said.
A member of a loosely formed group of vintners, Alonso has campaigned along with others in the Santa Clarita Valley to change regulations that don’t make sense in their industry, and all of their efforts may be about to pay off.
Dinner and a dream
There is a glimmer of hope, winemaker Hemmert said. The health department changed the head of their department; the original head had been unfriendly to the industry.
After meeting with the new head, reviews of the industry began in 2014. Later the local winemakers met with an official at Le Chêne one night for dinner and explained how arcane the regulations are; so unfitting for the process of winemaking.
The high alcohol content in wine combined with the fermenting process destroys any pathogens or bacteria in the process, he said. There’s an industry that’s taking off out here with a lot of good wines being made by people who have to produce their wines in crush facilities, and store them, in specially approved plants outside of Los Angeles County because the rules are so burdensome inside the county that wine makers don’t have access to local resources.
And, “I’ve never seen a cow make some wine,” Hemmert said, referring to wineries being classified as a food or dairy plant.
“When you think about wine making – the small French, Spanish and U.S. wineries started small and grew,” Hemmert said. “But it’s a rich man’s game in L.A. County because of the regulations and cost. It’s killing the wine industry.”
But, after years of effort, the winemakers finally got a receptive audience with someone who listened to the logic of the very frustrated vintners. And slowly, changes are being put in place.
Anything a person would ingest is considered food in L.A. County, said Freddie Agyin, Environmental Health Services Manager for the county. That’s why wineries fell under food and milk by county code.
While it still does, applying food processing requirements to the industry are hopefully about to change.
“We looked at the industry and did an assessment,” Agyin said. “We considered everything that went into making wine or beer and asked what the difference was; we asked why a brewery was exempt and not a winemaking facility. We decided a winery should be no different.”
So, currently his department is in the process of exempting wineries as well, he said. That means,they would not need to meet the costly plan check requirements.
In doing his research, Agyin found only two counties who placed oversight of the wineries in Southern California under the health department – one being Los Angeles and the second being Orange County. The department felt confident, by the very nature of how wineries operate, that they could exempt wineries as well as breweries, ending a two-tiered system that has been in place for decades.
“Anything we can do to make the public safe and work with our partners to not only protect the public but to be fair, is important,” Agyin said. “That’s why we conducted extensive reviews.”
With new regulations drafted, Agyin’s department will present its recommendations to the L.A. County Board of Supervisors for review approval. Among them, wine crushing facilities will be treated similar to breweries, and will no longer have to undergo plan check approvals or annual inspections. Wine storage facilities, however, will still need a permit just as breweries are required to secure one.
The goal, he said, is to have the new regulations become effective July 1, the start of the county’s fiscal year.
And in an effort to be consistent with other statewide counties, wineries are no longer being inspected as if they were processing food or milk, said a spokesperson for the health department.
However, if they store wine, permits would still be required.
And that poses a problem, Lemley said, as that permit currently requires many of the same unnecessary pieces of equipment they had to install, such as the three-compartment sinks.
“Taking wine out of the particular category that is imposing all sorts of extra requirements that make no sense for wine is good,” said Holly Schroeder, president and CEO with the Santa Clarita Valley Economic Development Corp. “The cottage wine industry in SCV could get a big boost by changes in classifications and regulations that would recognize the uniqueness of these facilities.”