CA Bill Takes Aim At Wineries Who Fail To Pay Growers

This week California Assembly Speaker pro Tempore Fiona Ma (D-San Francisco) amended AB 907 with legislative language to better protect winegrape growers from the relatively small number of wineries that fail to pay for purchased grapes. The bill amends language in the Processors Law, which protects growers from nonpayment by processors, including wineries.
The Processors Law is administered by the California Department of Food and Agriculture’s (CDFA) Market Enforcement Branch (MEB). Currently, if MEB finds that a winery failed to pay a grower, or otherwise violated the Processors Law, then MEB can suspend or revoke that winery’s processors license.
“Suspension or license revocation is not the right solution for a violation under the law,” said Bill Pauli, chairman of CAWG’s Board of Directors. “License revocation could put a winery out of business, which is often the least attractive remedy, so it makes sense to provide MEB the opportunity to levy less severe penalties, such as administrative fines.”
If passed, AB 907 would provide MEB limited authority to levy an administrative fine, not to exceed $10,000, if a winery fails to pay a grower for delivered winegrapes or obstructs an investigation by MEB. The bill would also allow for fines of up to $6,000 if a winery that is required to have a processors license knowingly fails to obtain such a license.
Finally, under AB 907, if MEB determines after an investigation and administrative hearing that a winery has failed to pay for delivered grapes, then a winery can be required to post a surety bond to ensure payment to those growers for the amounts owed. This surety bond provision expands upon existing authority which allows MEB to require a winery, with a history of failure to pay, to post a surety bond to ensure payment to growers for future purchases.
Nonpayment for delivered winegrapes is not a widespread problem, but when it occurs the amounts involved can be a very significant issue for the affected growers. From 2009-2011, MEB received complaints against 68 wineries alleging more than $10 million in nonpayment to growers.
“We applaud Assemblywoman Ma for authoring AB 907,” said Pauli. “The bill takes careful aim at the few predatory operators who refuse to pay for delivered winegrapes. This is why we need AB 907.”