SALEM — Oregon lawmakers will consider several proposals during the 2019 Legislature to protect the state's $5.6 billion wine industry, including a measure aimed at preventing out-of-state winemakers from hijacking the names and reputations of certain growing areas.
The issue stems from a dispute last year between several Willamette Valley wineries and Copper Cane LLC, a California wine producer that purchases grapes from about 50 Oregon vineyards to make Pinot noir and rosé. Two brands in particular — Elouan and Willametter Journal — were accused of having deceptive labels and packaging that suggested the wines came from one or more of Oregon's federally designated American Viticultural Areas, or AVAs.
State and federal laws tightly regulate how and when AVAs can be used to market wine. Copper Cane ultimately surrendered seven previously approved labels to the Alcohol and Tobacco Tax and Trade Bureau, and the Oregon Liquor Control Commission has moved to revoke the company's license to do business in the state.
At a December 2018 hearing before the Oregon House Interim Committee on Economic Development and Trade, Jim Bernau, CEO of Willamette Valley Vineyards in Turner, Ore., and Rep. David Gomberg, a Democrat representing the central coast, both testified about proposed legislation to safeguard Oregon wine.
"We simply cannot compete with unlawful behavior allowed to happen in California," said Bernau, an outspoken critic of Copper Cane's labeling practices.
The industry is pursuing new bills in the Legislature to give regulators more teeth in enforcing wine labeling and content laws.
Senate Bill 591 would make mislabeling wine a violation of the state's Unfair Trade Practices Act, while Senate Bill 111 and House Bill 2176 would impose fines of up to $25,000 for wineries that falsely imply their wines come from an Oregon AVA — such as the Willamette, Rogue or Umpqua valleys. Oregon laws prohibit referencing an AVA unless at least 95 percent of the grapes come from that area.
Under the bills, a wine may be considered deceptive if it claims more than one AVA, or suggests an AVA as part of the brand name. Out-of-state wineries would be required to submit annual statements to the OLCC to ensure compliance.
Tom Danowski, CEO of the Oregon Winegrowers Association, said Oregon is now home to 19 AVAs, after the government's recent approval of the Van Duzer Corridor AVA in the Willamette Valley.
"Protections of AVAs are absolutely critical," Danowski said. "These geographic protections in wine especially are important, because they underpin the quality reputation that Oregon is being recognized for."
House Bill 2301 would allow the OLCC to work with neighboring states and enter into agreements to make sure their rules are enforced.
Finally, Senate Bill 112 would target out-of-state wineries to make sure they are paying a $25 per ton tax on wine grapes, requiring the Oregon Department of Transportation to provide the OLCC with information about grapes being trucked in and across state lines.
About 20 percent of Oregon wine grapes, or 18,000 tons, left the state in 2017, which was an increase over 12,000 tons in 2016, Danowski said.
Copper Cane has appealed the OLCC's ruling to revoke its certificate of approval, setting up a hearing before an administrative law judge. In a previous interview, Jim Blumling, the company's vice president of operations, said the violations are based on labels that had been approved by the TTB at the time, and have since been voluntarily surrendered.
Still, Danowski said the Oregon Wine Association remains concerned about Copper Cane's Oregon brands and asked the TTB to conduct a field integrity audit at the winery, which is in Rutherford, Calif., to check that labels conform to the standard.
"We want them to succeed, just within the same rules that everyone else is meant to follow," Danowski said.
The Oregon Legislature convenes on Jan. 22.