Tuesday, May 26, 2009

The World of New York Wines : Is Winemaking "Agriculture" as a Matter of Law? What is Legal Zoning with respect to the Wine Industry?

Uncork New York! is the website of the New York Wine & Grape Foundation, headquartered in Canandaigua, New York State, USA. If you think you know the wine world, but are not familiar with New York State wines or wineries, you are in for a surprise.

In a region sometimes known better for its severe winter snow blizzards, New York State is home to the largest wine producer in the world, Constellation Brands, headquartered in the Finger Lakes District at Victor, New York, about 10 miles northwest of Canandaigua, the town (and lake) which in the year 1945 gave the company its original corporate name, Canandaigua Industries Company.


Its current name, Constellation Brands (NYSE: STZ, STZ.B), was a renaming from the later names Canandaigua Wine Company and Canandaigua Brands. At the Constellation Brands website we can read:
"Constellation is the largest wine company in the world; the largest multi-category supplier of beverage alcohol in the United States; a leading producer and exporter of wine from Australia, New Zealand and Canada; and both a major producer and independent drinks wholesaler in the United Kingdom."
Constellation began business as Canandaigua Industries Co. in the year 1945 by selling bulk wine in barrels to bottlers in the Eastern United States. 60 years later, in 2004, Constellation Brands bought the famous California winemaker Robert Mondavi Corp. for $1 billion - in cash.

The bulk wine origin of Constellation Brands in the Finger Lakes District was possible because the area was favorable for winegrowing and a lot of grapes were grown there (including also many of the grapes used in the famous Welch's brands of grape juice).

Indeed, the largest wine-producing region in New York State today is the Finger Lakes District, a development enabled in part by the 1976 Farm Winery Act, which permitted small wineries to sell wine directly to the public (as is customary in Europe). As written at "Finger Lakes winemaking industry matures, produces world-class wines", CNY Business Journal (1996+), FindArticles.com, 26 May, 2009 :
"Grapes have been grown in New York State for as long as there have been farmers here. There are four wine regions today: Lake Erie, Finger Lakes, Hudson River, and Long Island....

[T]he soil and climate of the Finger Lakes region are especially favorable for growing many of the European grape stocks. The lakes are deep and usually do not freeze over in the winter, so that winds coming across the lakes bring humidity and warmth to the vineyards.

[I]n 1976, the New York State Legislature passed the Farm Winery Act. This act made it economically feasible for farmers to have small wineries, because it allowed them to sell directly to consumers, liquor stores, and restaurants, instead of through a wholesaler or distributor.

Shortly after the passage of this bill, the largest of the wineries around the Finger Lake-Taylor, Widmer, and Great Western--were absorbed by the Canandaigua Wine Company...."
In 1976 there were only 19 wineries in all of New York State. Today that number is around 250, with many of those wineries on the shores of the Finger Lakes.

As written in the reply affidavit of Robert Ransom (Index No. 08-275) to the Supreme Court of the State of New York, County of Ulster in a recent matter involving Rivendell Winery, LLC in the Hudson Valley ("1." is missing since paragraphs are numbered from the beginning of the affidavit and not from the "A"):
"A. THE FARM WINERY AS A BUSINESS

2. The sale of wine and other products in a winery tasting room are fundamental and foundational to the entire winery business. Like so many farms in different industries, without direct sales, there would be no business. Petitioner Rivendell relies on its direct-to-consumer sales for more than 99.2% of its sales. We have virtually no wholesale business.

3. The farm winery industry was founded on the concept of direct sales.Thirty years ago there were no farm wineries. In those days to be a winery in New York State legally required the sale of wine produced to be made through a series of distributors – what is commonly referred to as the “three tiered system” (producer sells to distributor who sells to retailer who sells to consumer). It was not legal for a wine producer to sell directly to the public. Also, a winery was allowed to procure grapes from any source, not restricted to the use of New York State-grown grapes.

4. In the early 1970’s a large upstate winery moved its production to California, effectively stranding several hundred grape growers for whom they were the largest customer. After several years of watching their grapes literally die on the vine, a number of grape growers got legislation enacted in New York State which allowed them to make wine and sell their wine directly to consumers. The NYS Farm Winery Act of 1976 was the enabling legislation that has since been emulated by virtually every State and is the basis for the Farm Winery or “boutique winery” industry that we belong to. N.Y. Unconsolidated Laws § 71, et seq. In 1985, the New York State
legislation was broadened to allow additional privileges to Farm Wineries and to further define allowable sources of raw materials. In that legislation it was clearly established that NYS Farm Wineries were required to utilize 100% New York State grown grapes to produce their wines, but were not required to grow the grapes themselves.

5. Without the ability to sell wine directly – through a tasting room or retail shop on the premises, virtually no farm winery in New York State would be able to economically survive....

24. The New York Farm Winery Act has become a model for winery legislation all over the country. Today, there are farm wineries, selling from their own tasting rooms, in every state of the United States. In New York today there are more than 250 farm winery licenses and every one located in an agricultural zone is permitted a tasting room (through which it makes its sales)."
That reply affidavit supplies us with a lot of information about wine in New York, but the Rivendell Winery has thus far lost that case and has closed its doors because of the cost of the contested and bizarre zoning decision by the already infamous Hudson Valley town of New Paltz (see New Paltz in fiction), a decision confirmed in an unconvincing opinion by Gerald W. Connolly of the New York Supreme Court, County of Ulster, the lowest court in the New York Court system, which declared absurdly that winemaking was NOT agriculture. As written at the Wine Spectator:
"Does processing and producing wine count as agriculture? Apparently in a small town in New York state it doesn’t. For nearly two years, Hudson Valley-based Rivendell winery fought a legal battle to build a mixed-use winery in the town of New Paltz, N.Y., but a recent court ruling, coupled with the rising costs of legal fees, has forced the winery to close. The winery’s founders, Robert Ransom and Susan Wine, were planning to move their 20-year-old winery to a property in New Paltz, with the intent of renovating an existing building into a winery and tasting room. Their plans came to an abrupt halt when a New Paltz building inspector determined that the proposed plan was not permitted under local agricultural zoning laws. When the town’s Zoning Board of Appeals supported the inspector’s ruling, the couple appealed their case to the New York Supreme Court. But Ulster County Supreme Court Judge Gerald Connolly recently ruled that the couple’s proposed farm winery was not permitted agricultural use. According to the Hudson Valley's Daily Freeman, New Paltz resident David Porter applauded the decision. "Rivendell doesn't even grow its own grapes," he said. "They're not agriculture, they're commercial." Unfiltered can only wonder how the n├ęgociants and cooperatives of Burgundy feel about this." [LawPundit: emphasis added - in Europe, wine is agriculture, and in most cases, wine is agriculture also in the U.S.A. - with the exception of New Paltz]
Given the judicial opinion by Gerald W. Connolly in the Rivendell case, it would, by the logic of the reasoning in that case, be nearly impossible to put up a winery anywhere, because you can't farm grapes on residentially zoned property, and you can't process them on agricultural land. The New Paltz zoning interpretation essentially makes it impossible to have a winery in their jurisdiction and that can not be the law now can it?

See also the comment about this matter at Hudson River Valley Wineries.

Thankfully, the Finger Lakes District presents us with a much more positive picture of the New York State wine world. For a longer version of this post in this regard, see WinePundit.

What are the Best Blogs for Law Librarians? Online University Lowdown Focuses on the Importance of the Law Librarian in its Selection of the Best 50

We taught legal research in the Trier Law School FFA program for a number of years and remain convinced that research is the bread and butter of the legal profession. You have to know or be able to find the law. Often it is the latter.

Understandably, law libraries and law librarians remain as indispensable as ever.

Online University Lowdown has published its list of the 50 Best Blogs for Law Librarians.

Covered in that list of 50 are:
  • University Law Library Blogs
  • Law Librarian Blogs
  • Legal Research Blogs

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