Category: Legal

Will Crop Insurance Cover Losses to My Vines?

Cyndi
man on cell phone inspecting grapes in vineyard

By: Trevor Troyer, 
Vice-President of Operations 
for Agricultural Risk Management

Does crop insurance cover losses to my vines? What can I do about vine loss or damage?  Half of my vineyard got burned due to wildfires.  I have major freeze damage on half my vineyard.  What can you do?  Crop insurance only covers losses to your grape crop not your vines.  Is there any vine coverage or assistance for that?

  Yes there is! I get a lot of questions on this so thought to address it in this article.

  Grapevine crop insurance coverage is available for the 2025 crop year. The sign-up deadline is November 1st in all states where it is available.

  The states where you can obtain this coverage are: California, Idaho, Michigan, New York, Ohio, Oregon, Pennsylvania, Texas and Washington.  It is not available in all counties though.  The counties that are listed in the actuarial documents are not the same as the Grape crop insurance program.  This  program is available for grafted grapevines only.

  What is covered with this insurance product?  The Causes of Loss that are listed in the Grapevine Crop Provisions are below:

11. Causes of Loss

(a) In accordance with the provisions of section 12 of the Basic Provisions, insurance is provided only against the following causes of loss that occur within the insurance period:

(1) Freeze;

(2) Hail;

(3) Flood;

(4) Fire, unless weeds and other forms of undergrowth have not been controlled or pruning debris has not been removed from the vineyard;

(5) Insects, diseases, and other pathogens if allowed in the Special Provisions; and

(6) Failure of the irrigation water supply if caused by an unavoidable, naturally occurring event that occurs during the insurance period.

(b) In addition to the causes of loss excluded in section 12 of the Basic Provisions, we will not insure against damage other than actual damage to the vine from an insurable cause specified in this section

  The vine needs to be completely destroyed, or is damaged to the extent that it will not recover in the 12-month insurance period from November 30th.

  Any damage other than damage to the grapevine from an insured cause is not covered.  For example, chemical drift, terrorism etc. are not covered.  Failure to follow good farming practices or the breakdown of irrigation equipment are also not covered.

  For the grapevines to be insurable they must be adapted to the area they are being grown in.  They must be being grown and sold for fruit, wine or juice for human consumption.  The vines must be grafted to be insurable as well.  The Crop Year begins December 1 and extends through to November 30 of the following year. You must have a minimum of 600 vines per acre to be insurable also.

  Vines are classified into 3 stages of growth for the policy.  Here are the exact definitions:

(a) Stage I, from when the vines are set out through 12 months after set out;

(b) Stage II, vines that are 13 through 48 months old after set out; and

(c) Stage III, vines that are more than 48 months old after set out.

  Values are determined by the Stage (age) of the vine and the county they are located in.  Obviously Stage III vines are worth more than Stage I vines.  These prices are set by the USDA Risk Management Agency.

  You can choose coverage levels for your Grapevine insurance from CAT (Catastrophic) to 75%.  CAT insurance is 50% coverage but you only get 55% of that 50% value per vine. Coverage increments are 5%, so you have 50%, 55%, 60%, 65%, 70% and 75%.   There is a sort of a double deductible with Grapevine insurance.  You have a damage deductible and a value/price deductible.  For example, if you choose 75% coverage you would have a 25% damage deductible.  That means that the first 25% of damage is not payable.  So, if you had 30% of your vines killed because of a freeze you would have a payable claim of 5% (30% minus 25% deductible).  There is also a value deductible as well. Again, if you have 75% coverage you would have a grapevine value deductible of 25%. For example, if the grapevine is Stage III in California in Napa County it would be worth $39.  At the 75% coverage level the dollar amount for that vine would be $29.25.

  There is an optional endorsement that changes the damage deductible.  This endorsement does cost a little more but is worth it, in my opinion.  This is called the Occurrence Loss Option or OLO for short.  It changes the damage deductible to a 5% damage trigger.  If your loss is 5% or more of the total value of the vines in a unit you would have a payable loss.  Plus, you are paid on the full value percentage of the loss.  So, if you had a 30% loss, you would get paid on the full 30%.  This does not change the value percentage of the coverage level, if you choose 50% you get that amount.  You cannot exceed the total insured value, Liability, of the vines in any case. 

  Once you sign up and complete all the forms with your agent, they are then submitted to the underwriter.  The underwriter will open an inspection and an adjuster will come and take a look at your vineyard.  The adjuster will determine if the grapevines in your vineyard are insurable.  The vines could be uninsurable for any of the following reasons.  The vines are unsound, diseased or in someway unhealthy.  They could have been grafted within a 12-month period before the beginning of the insurance period. Or they could have been damaged prior to the beginning of the insurance period.  Once the adjuster has completed the inspection, it is sent to the underwriter and then on to the USDA Risk Management Agency for final approval. 

  If you have damage from an insured Cause of Loss, you should contact your agent to get a claim opened.  It is always best to get a claim opened up sooner rather than later.  48 – 72 hours after discovering damage is best.  I know that a lot of growers want to wait and see how much damage there is before they do anything.  It is always better to get a claim opened up rather than wait and see.  If there is not enough damage, then you just let the adjuster know.  After you open up a claim an adjuster should be out within 10 days to inspect the vineyard.  Do not remove any damaged vines until it has been inspected!   In my opinion this is a good program, and it will provide protection to vineyards.  It will help to mitigate losses from Freeze, Hail, Flood, Fire et

CBMA: A Short Guide to the Rules of the Road

Cyndi

By: Brad Berkman and Louis J. Terminello, Greenspoon Marder

As is said, the only thing certain is death and taxes. As it applies to beverage alcohol, the tax at issue addressed in this article is an excise tax which is based on volume and alcohol-proof gallons. There are two levels of excise taxes collected for alcoholic beverages: one at the state and the other at the federal level. As the reader likely knows, state excise tax, in most instances, is paid by the distributor. This article will examine federal alcohol beverage excise tax rates established by the U.S. Internal Revenue Code and the changes to these rates under the Craft Beverage Modernization Act (the “CBMA”).

  First, a little history, the CBMA was initially meant to be a temporary measure, however, Congress, in 2020 made the CBMA a permanent law and transferred the administration of the CBMA to the Alcohol Tax and Trade Bureau (TTB) on December 31, 2022. As virtually all industry members know, TTB is tasked with administering excise tax collections for domestic and foreign producers of alcoholic beverages, among many other things. In 2017, as part of the Tax Cuts and Jobs Act, the CBMA came into effect reducing excise taxes imposed on wine, beer, and spirits at certain volume levels, produced in the U.S. and those items produced abroad and imported into the U.S. 

  At the introduction of the CBMA, TTB was tasked with administering the domestic component of the CBMA, (that is for wine, beer and spirits produced in the U.S.), and U.S. Customs and Border Protection, (CBP), was responsible for the administration and collection of taxes for imported alcoholic beverages (as they had always done for imported alcohol). Excise tax for imports was due at the time of entry of the product into the U.S. stream of commerce, (once it cleared U.S. customs). This required thorough and accurate reporting by importers and/or their customs brokers at that time to CBP. Incorrect or incomplete reporting to CPB led to the loss of importer revenue for many wine industry members. CPB reporting requirements were, and arguably still are an arcane process.

  Under the CBMA, importers are still required to pay excise tax to CBP upon entry of the product but the administration of the CBMA for importers is now carried out by TTB. TTB has created a reasonably friendly system or portal where licensed importers can register and file their claims to receive the reduced tax benefit.

  The process requires that the foreign producer must first register with TTB, using the portal at myttb.com, and disclose certain basic information such as ownership information, email address and phone number and key contact information including key personnel. After registering, the foreign producer, through the online system, may then assign all or a portion of available CBMA credits to an appointed importer. It is worth noting here that foreign producers are allocated the same tax credit benefits as U.S. manufacturers of beverage alcohol.

  After supplying the importer information (using the importer TTB issued Basic Permit number), the foreign producer must identify the commodity (wine, beer and/or spirits), the tax rate or credit, the quantities of proof gallons or beer barrels and the tax quantities being assigned to the specific importer. Foreign producers can assign all of their credits to one importer or allocate in any way they choose to their various importers, should they have more than one.

  As a side note, it is strongly recommended that the allocation of tax credits is addressed in the negotiating process between the importer and foreign supplier and memorialized in any import agreement that may come into being between the parties. Obviously, this will help avoid future confusion and potential strains on the business relationship.

  Importers are also required to register on my.ttb.com on the importer interface and submit their refund claims electronically, which they may be eligible for as a result of the reduced rate. All that said, below is a quick and dirty reference guide for importers to refer to when navigating the CBMA process, which will assist both the foreign supplier and the importer.

For the Foreign Producer

•   Foreign producers must assign tax benefits to the US importer for importer to be eligible for the benefit.

•   Foreign producers may assign all or a limited tax benefit based on commodity type.

•   Foreign producers must first register with TTB using the link: ohttps://my.ttb.gov/.    

•   Producer will receive a foreign producer ID.

•   After the producer receives the ID, they will be able to assign the benefit to the importer on the on-line portal with TTB.

•   The foreign producer will need to provide TTB with the following information:

            o Calander year for which the benefit is being assigned.

            o The importer to whom it is being assigned using the importers TTB permit number.

            o Commodity type (wine, beer, spirits).

            o The reduced tax rate being assigned.

            o Total proof gallons that the benefit is being assigned to.

 The Importer

•   Importers pay full tax rate to Customs and Border Protection (CPB) at the time of importation.

•   To use the CBMA reduced rate, the importer must:

            o File a refund claim (online) with TTB at the close of each calendar quarter covering the entries made in that quarter.

•   At the time of entry (likely using your customs broker), importer must submit in their customs entry filings, the identity of the products that will be subject to the claim which includes:

            o Commodity type.

            o TTB Foreign Producer ID

            o The rate or credit assigned to the

             imported quantity.

            o The above information is submitted on CBP ACE system.

            **The authors advise trying to use a customs broker that is familiar with the above process.

            o Importer or its broker must file the TTB “Message Set” electronically in the ACE system.

•   Once again, the importer files its claim with TTB on a quarterly basis and once processed, TTB will pay the difference between the tax paid at entry and the credits assigned by the foreign producer.

  The CBMA offers an opportunity for importers to take advantage of reduced tax rates under the CBMA. Navigating the process is challenging and will greatly assist importers to understand the reporting processes up front so as not to leave valuable tax dollars on the table.

Basic Mechanics & Benefits of the Alternating Proprietorship Arrangement

Cyndi
2 men looking at wine bottles on a table with a country map

By:  Louis J. Terminello, Esq. and Bradley Berkman, Esq.

Brand owners and wineries have options available when negotiating a wine packaging arrangement. This article will focus on the mechanics of an alternative to the standard contract packaging relationship. As a jumping-off point, contract packaging arrangements are one in which a winery will contract with a brand owner to produce and bottle wine for the brand owner. In the world of wine production, this is commonly referred to as a custom crush arrangement.

   It is a relationship of independent contractors, memorialized in an agreement where the brand owner pays a fee for the bottling services of the winery, and the winery, in most instances, delivers the final bottled product to the brand owner. The beverage alcohol licenses required are both federal and state production/winery licenses held by the winery, and almost always a federal wholesales license issued by the Alcohol Tax and Trade Bureau (TTB) – which is held by the brand owner – and other state licenses are required.

  All production reporting prepared and submitted by the winery and excise taxes, though almost always charged to the account of the brand owner, are reported, and paid by the winery. For all intents and purposes, the brand owner acts as both brand owner and distributor within the three-tier system and reports and pays excise tax at the state level, if required. Both parties benefit from this type of bottling arrangement. For the winery, this arrangement is an additional revenue stream. For the brand owner, a product can be brought to market without the high costs of investing in a production facility.

  Separate from the above arrangement, TTB has a unique licensing scheme available that may be more advantageous to wineries and brand owners for numerous reasons and is referred to as an alternating proprietorship arrangement.

Alternating Proprietorship Defined

  In the alternating proprietor relationship, an existing winery agrees to lease its winery premises to another party for the production of the “lessees” wine. The parlance typically used is “host” and “tenant.” The established winery acts as the host of the premises (think landlord) while the tenant “leases” the winemaking premises to produce its wine. There is an actual and permissible operational shift. Responsibility for, and the activities of, production may be taken over by the tenant operator. The relationship should be memorialized in an agreement between the parties, but the relationship requires application and approval by TTB before commencing production. 27 USC 24.136 (the Federal Code of Regulations) establishes the terms and requirements of the arrangement and is reprinted here for the reader’s review.

27 USC 24.136

§ 24.136 Procedure for alternating proprietors.

(a) General. Wine premises, or parts thereof, may be operated alternately by proprietors who have each filed and received approval of the necessary applications and bonds and have qualified under the provisions of this part. Where operations by alternating proprietors are limited to parts of the wine premises, the application will describe areas, buildings, floors, or rooms which will be alternated and will be accompanied by a diagram delineating the parts of the wine premises to be alternated. A separate diagram will be submitted to depict each arrangement under which the wine premises will be operated. Once the qualifying documents have been approved, and operations initiated, the wine premises, or parts thereof, may be alternated. Any transfer of wine, spirits, or other accountable materials from one proprietor to the other proprietor will be indicated in the records and reports of each proprietor. Operation of a bonded winery engaged in the production of wine by an alternate proprietor will be at least one calendar day in length.

(b) Alternation. All operations in any area, building, floor, or room to be alternated will be completely finished and all wine, spirits, and other accountable materials will be removed from the alternated wine premises or transferred to the incoming proprietor. However, wine, spirits, and other accountable materials may be retained in locked tanks at wine premises to be alternated and remain in the custody of the outgoing proprietor.

(c) Bonds. The outgoing proprietor who has filed bond as required under § 24.146 and intends to resume operation of the alternated areas, buildings, floors, or rooms following suspension of operations by an alternating proprietor shall execute a consent of surety to continue in effect all bonds. Where wine, spirits, or other accountable materials subject to tax under 26 U.S.C. chapter 51 are to be retained in tanks on the wine premises to be alternated, an outgoing proprietor who has filed bond as required under § 24.146 shall also execute a consent of surety to continue the liability of all bonds for the tax on the materials, notwithstanding the change in proprietorship.

(d) Records. Each proprietor shall maintain separate records and submit a separate TTB F 5120.17, Report of Bonded Wine Premises Operations. All transfers of wine, spirits, and other accountable materials will be reflected in the records of each proprietor. Each proprietor shall maintain a record showing the name and registry number of the incoming or outgoing proprietor, the effective date and hour of alternation, and the quantity in gallons and the percent alcohol by volume or proof of any wine, spirits, or other accountable materials transferred or received.

Summation of Basic Requirements:

  An examination of the code helps us parse out the basic requirements and responsibilities of the proprietor under the alternating relationship. Foremost, bear in mind that under this production paradigm, both entities, while conducting their respective operation, are treated as  proprietors under the law. Focusing on the requirements of the tenant proprietor, TTB requires that:

•    The alternating tenant proprietor must qualify as a bonded winery and obtain a Federal basic permit as a wine producer to conduct operations at the host’s location. 

•    The tenant proprietor must comply with record and reporting requirements of its operations by preparing and submitting its own operational reports to TTB just as any other fully functioning wine operation must do.

•    The tenant proprietor must obtain TTB approval of an application for a Certificate of Label Approval (COLA) before bottling the wine at the host’s location.

•    The tenant alternating proprietor must pay the excise tax for wine bottled and removed from the host’s location.

•    By extension, the tenant proprietor must hold an adequate bond to conduct its operations.

  There are a variety of benefits to the tenant producer under this production relationship. Perhaps the most significant, depending on the production levels of the host, is the availability of the reduced excise tax rates under the Craft Beverage Modernization Act (CBMA). The tenant’s own production levels are considered exclusive of the host’s production levels. The reduced tax rate, which may not be available under a standard custom crush arrangement, may now be available to the tenant winery contingent upon its own production levels which is an attractive benefit to the tenant proprietor.

  Note that TTB will scrutinize applications of alternating proprietorship to be sure the arrangement is not jeopardizing tax revenue, among other issues. Some of those additional areas of concern include an applicant’s attempt to qualify as a producer to take advantage of state tasting room regulations or to engage in direct-to-consumer (DTC) sales.

   Although these options may be available to a tenant proprietor, the spirit of the intent of this bottling relationship should be the guiding principle. All other benefits may be available and are certainly worth exploring. Experienced counsel should be consulted if any uncertainty is present as to the permissibility, processes, and procedures of structuring an alternating proprietorship arrangement.

Drinks Development, Initial Legal Concerns and Protections

Cyndi

By:  Louis J. Terminello, Esq. and Bradley Berkman, Esq.

It’s invigorating to be in the presence of a creative. A glance at the dictionary reminds us that the definition of creative is one who is capable of creating original things. The drinks business has no dearth of creatives. The industry is replete with driven and creative people who generally take the form of winemakers, brewers, distillers, and brand developers/owners. Their palette is in fact their palate and their medium is a must, mash and/or unique package design. Praise the beverage entrepreneur – they take our tastebuds to new and exciting places. But, as the poet Robert Burns instructed in 1785, the best laid schemes o’ Mice an’ Men Gang aft agley (Scottish for often go wrong). In more contemporary words, without proper planning, and a bit of luck, all original ideas risk plummeting from the lofty perch where creatives reside.

  Enter stage left; The drinks lawyers who can assist with legal issues surrounding brand creation and launch.  Careful business planning coupled with a punch list of the legal issues likely to be encountered during the process of drink creation is a harbinger of success. What follows are the first few legal concerns that should be considered and sorted through prior to a project launch.

The Novel Idea and the Need to Protect It

  For the entrepreneurial brand developer, creative inspiration can come from anywhere and at any time. Ideas for beverage flavor profiles may come while preparing a unique meal or from stumbling on an accidental blend of flavors while creating a cocktail at home. Brand names may be inspired by a song, or book, or emerge from the ether like an apparition. But the apparition must take physical form if it is to ever end up on the shelves or back bars of saloons everywhere. For the brand developer, without their own means of production, a manufacturer is required. Choosing the right producer is a complicated process with many sub-parts. 

  The first step of course, which may seem obvious, is discussing formulation and taste profile with potential brewers, distillers, or wineries, but how do we protect the novel idea from being misappropriated by a dishonest party. Clearly, the process requires the brand developer to share his secret idea with others to determine if, in fact, the producer can make the stuff.  The dangers of disclosure are obvious – the producer has the ability to take your idea and bring it to market on his own leaving the brand developer out in the cold. In fact, this could happen with anyone the brand developer discusses their new concoction with.

Nondisclosure Agreements-Protecting the Secret

  Prior to engaging in any discussions with any potential producer, it is incumbent on the brand developer/owner to have a well-drafted nondisclosure and confidentiality agreement (“NDA”). The core function of the NDA is to prevent a producer, or any other party, from disclosing the developer’s idea to another or independently producing the product without remuneration to the brand developer. The NDA should call for injunctive relief in order to stop the activity complained of as well as other damages, including money, should that be an available remedy. Commencing good faith negotiations with an honest opposite party is what we all expect and want. However, the developer’s next million, maybe even billion-dollar idea should be protected from the outset with a well-crafted NDA and should be entered into with any party prior to discussing the novel idea.

Intellectual Property Including Trademark

  More importantly, there is a greater area of concern related to protecting one’s brand ownership. The next area of concern and of paramount importance is that the brand name and associated designs and logos be protected. The reader is likely aware that the next item on our brand launch checklist is protecting one’s intellectual property through a trademark (TM). For the uninitiated, trademark applications are submitted to the United States Patent and Trademark Office (USPTO), which once granted, identifies the brand owner of the product, and protects ownership of the name, design, logo, or symbol. A trademark allows the holder of the TM to pursue legal action against a party who may try to use the mark as its own and without the consent of the true trademark holder.

  The first step in the TM process, once the brand developer has come up with a name and/or logo, is to search the USPTO database to be sure the mark is not held by another person or entity, and that the name is available for use. There are only a few more disheartening things than investing resources in brand name development only to find out that it has been trademarked by another party. It should be noted here that all is not lost if the mark is already held by another party.

  These issues are best explored in another article but suffice it to say, there may be ways to gain control and ownership of the TM. Also, as brand sales grow and the brand increases in value significant equity will reside in the brand name. Protecting that equity is paramount particularly if an interested and significant buyer knocks on the door and desires to purchase the brand for enough money which allows the brand developer to retire to their own Caribbean island for the remainder of their days.  It’s important to note that there are various legal mechanisms available to trademark holders that protect their ownership rights to the mark while allowing other parties to use the mark to fulfill contracted obligations.

  Generally, trademarks can be licensed to another party for any use whatsoever but generally, in the world of beverage alcohol, nonexclusive licensing agreements are often used in production and distribution agreements granting limited rights to the non-mark holder. Note that licensing agreements can be complex and are discussed here only to point out their existence and present the option. Any licensing agreement must be carefully drafted to protect the rights of the parties and all trademark matters should be handled by a competent Intellectual Property attorney.

Formula Protection & Production Agreements

  After sourcing a reliable producer for the drink idea, the next crucial step is negotiating and entering a formulation and packaging agreement. It is highly probable that the producer selected will assist in developing the formulation. It is also not uncommon to secure the services of a third-party formula service provider to create the liquid beverage. Whichever avenue is pursued, the brand owner must be sure that they will have ownership rights to the finished product, particularly if the formulation is unique, and that no other party shall have the right to the formula absent the brand owner’s consent. An agreement memorializing all terms of formula ownership must be drafted and executed by the interested parties.

  Well-crafted supply and bottling agreements are the next integral part of the brand development process. In a nutshell, once a partner producer is identified, the brand owner and producer will commence negotiating the essential terms of the business relationship. Essential terms will include items such as production and purchase quantities, pricing and payment terms and delivery terms. Issues such as how to deal with adulterated products and recalls should be memorialized also. In sum, this agreement will memorialize the rights and duties of the parties and ideally will allow for the smoother production of the finished goods allowing the brand owner to focus on securing distribution, selling and marketing to consumers and other brand-building activities.

  In conclusion, the areas above are the first few items that should be addressed when launching a new brand. Protecting the developer/brand owners’ rights in all aspects of product introduction is essential and working with seasoned beverage law professionals should be seriously considered. Experience tells us that brand launch problems can be avoided upfront with proper and competent Beverage Law and business law guidance.

The Producers’ Blind Spot

Cyndi

The Role of the Municipality and Local Ordinances and the Producers’ Operational Goals

picture entitled zoning ordinance zoning and land use planning

By:  Louis J. Terminello, Esq. and Bradley Berkman, Esq.

Let’s face it, many of us, likely including the writer(s) and readers alike, find the making of wine, beer, and spirits not only to be a labor of love that allows oneself to create artistic expressions in bottles, but we also find the trade and its finished products to be pretty darn exciting. It’s very much a lifestyle industry, that, simply put, is fun.

  Even in the arena that this writer operates in – that is, alcohol beverage law – the romance of the trade is far from lost. There is, however, one especially important regulatory area that is often overlooked by beverage alcohol producers and even legal practitioners in the field: the role of municipal ordinances and zoning regulations and its impact on beverage alcohol sales, service, and for the purposes of this article, production. It is doubtful that many winemakers, distillers, and brewers find this topic engrossing but without proper guidance and planning, a misstep at the local level could lead to disastrous consequences.

  Briefly, most in the trade understand the role of the federal and state governments, particularly those who produce beverages. Licensing schemes, reporting requirements, excise taxing structures, and trade practice issues (as in tied house) are all federal and state concerns. In fact, some local jurisdictions, namely cities and counties, do enforce local alcohol licensure and regulatory schemes that some readers may be aware of, but that is not the focus of this article. The issues that require parsing out in the limited space here are land use concerns and the various local administrative processes and procedures that affect all actors in the alcohol industry. Put another way, package stores, bars, restaurants, wineries, breweries, and distilleries alike must comport themselves and comply with local ordinances and zoning regulations.

Advent of Craft

  And along came the craft producer, and the spider sat down beside her. The rise of craft wineries, distilleries, and breweries has brought about a nuanced set of local challenges, encompassing aspects such as production facilities, warehousing for potential distribution, and the popular tasting room –often referred to as the bar. Not to be overlooked at the craft venue, are food sales in the various forms that they could take, including a restaurant on the premises or the ubiquitous food truck.

Zoning Districts-What are they?

  With the municipal jurisdiction in mind, i.e., a city or county, one must carefully analyze the zoning district within the city or county that is the site of the proposed operation, prior to commencing any real investment in building out the facility. Of course, an essential part of this process is having a detailed business plan that outlines all operational issues of the facility. A full understanding of the contemplated uses is essential. In land use terms, a use can be best described as the economic activity permitted in the zoning district. Sticking to our theme, as applied to a typical craft operation, “uses” may include activities such as “manufacturing” and “retail” operations, as examples.

  With the above in mind, many counties and cities are delineated into zoning districts. A zoning district, in simplified terms, is a local subdivision of a municipality where certain activities or uses are permitted within the subdivision, and by extension, some activities or uses may be precluded. Staying with the craft production analysis, some zoning districts may permit manufacturing uses and not retail, while in others, retail may be permitted but not manufacturing and, in some districts, neither may be permitted at all. By now, the prospective manufacturer should realize that aligning all desired operational uses with the zoning district is essential before build-out. Imagine investing significantly in a wine production facility where the contemplated revenue stream is to come from tasting room sampling and sales, only to discover late in the build-out process that the retail sales of alcohol are not permitted within the zoning district. Someone is about to lose their job!

  Other considerations that the readers are likely familiar with, as applied to alcohol, are distance requirements. Virtually every municipality and the zoning district within has distance separation requirements from alcohol businesses and certain other types of venues such as schools, religious establishments, and other alcohol beverage licensees. Being aware of these requirements is mandatory prior to commencing any construction on a sort of alcohol facility. As stated, lack of knowledge of the foregoing will lead to problems.

Available Remedies to Certain Land Use Problems

  In certain instances, contemplated producer operational uses are not permitted by right. That is to say, and using this as one example, the retail sales of alcohol from a tasting room may not be automatically permitted in a zoning district. However, certain administrative procedures may be available to the producer that will allow for specific uses within the zoning district only after process and approval.

  These exceptions generally take the form of conditional use permits or special exceptions. These administrative remedies may be available depending on local ordinances. These exceptions usually require an extensive application process and public hearings before zoning boards and city commissions where the public generally can attend and offer support, or criticism and objection, to a desired operation. These procedures are quasi-judicial in nature, where arguments are heard and made by the producer and the producer’s counsel to board members and the commission. As noted, the commission may approve the proposed operation and issue a conditional use permit. As the name suggests, these permits come with conditions affixed that must be complied with. If they are not, the holder then risks cancellation of the permit. Negotiating conditions is an integral part of the process between the local government and the producer. Clearly, the goal is to not include conditions that adversely affect operational objectives. It is worth noting that these are quasi-judicial proceedings. Records of the proceedings are established, and should the commission deny the issuance of a permit for a stated and unsubstantiated reason, the applicant has the ability to take the matter to state court and appeal the decision.

  Other remedies to zoning restrictions include perhaps the familiar “variance.” Back to our craft operation… imagine that you’ve located the perfect wine-making facility. All the stainless steel tanks fit nicely in the plant space, the layout allows for the contemplated bottling line, and just by chance, there’s a perfect space that can be the dedicated tasting room. The only problem is that the Church of the Sacred (pick your deity), is within 100 feet of the tasting room and as such, retail sales of alcohol are not ordinarily permitted. Well, if available, a variance could be the solution. In essence, a variance is a request to deviate from the specific zoning requirements within the zoning district. The process generally includes public notice and hearing but is a potential solution to all sorts of distance separation requirements.

  The above is merely a basic primer on zoning and land use issues that may affect wine, spirits, and beer production and sales issues. Municipal matters and zoning issues are complex areas of alcohol beverage law that are often overlooked by producers of beverage alcohol. In the contemporary production environment, particularly in the craft area with its complex and mixed-use environment, a producer would be well served by doing their land use homework or working with experienced counsel prior to groundbreaking. After all, the goal is to sell the drink produced, not to drink it to numb the pain of poor land use planning.

The 21st Amendment Enforcement Act & Retail Sales in Interstate Commerce

Cyndi
man holding gavel

By:  Brad Berkman and Louis Terminello, Greenspoon Marder

Direct to consumer (“DTC”) sales of wine and other beverage alcohol from out of state shippers is presumably here to stay, at least from the perspective of retail shippers. The Granholm decisions, as most readers are familiar with, burst open the door to DTC sales by suppliers and in particular winemakers. Wineries, with and without distribution in the various states, took advantage of the new opportunity and began shipping direct to consumers outside the sacrosanct three tier system.  In addition to winemakers, other business types began to sell their beverage alcohol wares in interstate commerce, directly to consumers in states other than their home markets. Retailers, in particular, have grown substantial sales revenue streams from selling to consumers outside of their home markets via the internet. Of course, third party e-commerce platforms have turned the three-tier system and interstate sales on its head through highly creative and not always beverage law compliant sales strategies often at the disdain of state regulators. Recently, some states have turned to legislation passed in October of 2000 to bring enforcement actions against out-of-state entities that seemingly violate their laws on the importation and shipment of beverage alcohol across their borders. The purpose of this article is to introduce the reader to this twenty-three-year-old piece of legislation known as the 21st Amendment Enforcement Act, some of its key provisions and its recent use by certain states.

The Act-What is it?

  The 21st Amendment Enforcement Act, (the “Act”), became law in 2000 and effectively amended the Webb Kenyon Act of 1913. The act allows for states attorneys general to bring civil actions in federal court against parties that import or transport beverage alcohol into a state in violation of the Act and the states laws.  Certain provisions of the law are printed below that are worth looking at, however, it is not necessary to reprint the full Act to understand its effect and implications, In a nutshell, the Act permits a state’s attorney general, to move for an injunction against the offending party to force cessation of the activity complained of that is in violation of a state’s beverage law. It is worth noting that relief in federal court takes the form of injunctive relief. The Act, as drafted, does not allow for states to bring actions, or impose monetary fines for violations brought under it. Further, nothing in the Act prevents states from bringing actions in state courts for violations of its beverage laws.

Certain Provisions of the Act Are:

      SEC. 2004. TWENTY-FIRST AMENDMENT ENFORCEMENT.

      (a) SHIPMENT OF INTOXICATING LIQUOR IN VIOLATION OF STATE LAW.—The Act entitled ‘‘An Act divesting intoxicating liquors of their interstate character in certain cases”, approved March 1, 1913 (commonly known as the ‘‘Webb-Kenyon Act”) (27 U.S.C. 122) is amended by adding at the end the following:

      SEC. 2. INJUNCTIVE RELIEF IN FEDERAL DISTRICT COURT.

(a) DEFINITIONS.—In this section

(1) the term ‘attorney general’ means the attorney general or other chief law enforcement officer of a State or the designee thereof;

(2) the term ‘intoxicating liquor’ means any spirituous, vinous, malted, fermented, or other intoxicating liquor of any kind;

(3) the term ‘person’ means any individual and any partnership, corporation, company, firm, society, association, joint stock company, trust, or other entity capable of holding a legal or beneficial interest in property, but does not include a State or agency thereof; and

(4) the term ‘State’ means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or possession of the United States.

(b) ACTION BY STATE ATTORNEY GENERAL.—If the attorney general has reasonable cause to believe that a person is engaged in, or has engaged in, any act that would constitute a violation of a State law regulating the importation or transportation of any intoxicating liquor, the attorney general may bring a civil action in accordance with this section for injunctive relief (including a preliminary or permanent injunction) against the person, as the attorney general determines to be necessary to—

(1) restrain the person from engaging, or continuing to engage, in the violation; and

(2) enforce compliance with the State law.

(c) FEDERAL JURISDICTION.

(1) IN GENERAL.—The district courts of the United States shall have jurisdiction over any action brought under this section by an attorney general against any person, except one licensed or otherwise authorized to produce, sell, or store intoxicating liquor in such State.

(2) VENUE.—An action under this section may be brought only in accordance with section 1391 of title 28, United States Code, or in the district in which the recipient of the intoxicating liquor resides or is found.

(3) FORM OF RELIEF.—An action under this section is limited to actions seeking injunctive relief (a preliminary and/ or permanent injunction).

(4) NO RIGHT TO JURY TRIAL.—An action under this section shall be tried before the court.

(d) REQUIREMENTS FOR INJUNCTIONS AND ORDERS.

(1) IN GENERAL.—In any action brought under this section, upon a proper showing by the attorney general of the State, the court may issue a preliminary or permanent injunction to restrain a violation of this section. A proper showing under this paragraph shall require that a State prove by a preponderance of the evidence that a violation of State law as described in subsection (b) has taken place or is taking place.

  Over the past few years some states have brought actions under the Act aimed at perceived violators. It is indeed worth taking note of these actions and to bring them to the attention of readers who may be sending alcohol beverage products into these states. Emphasis should be added that states have not often relied on the Act to enforce its laws against allegedly illegal transport and shipment of beverage alcohol but we are likely to see more actions by states brought under it.

Tennessee and Ohio

  This past July, Tennessee’s Attorney General brought an action for an injunction in federal court against six out of state retailers. These retailers were shipping distilled spirits, not wine, to Tennessee consumers in violation of that state’s beverage laws. It should be noted that those sued were out-of-state internet retailers, that allegedly sold distilled spirits without a license and were untaxed by the state. The retailers included Bottle Buzz, Cask Cartel, and others.

Ohio

  Ohio was the first state to make use of the Act. Its Attorney General filed a complaint and motion for a preliminary injunction in federal court in the Southern District of Ohio against several out-of-state retailers including Wine.com and Ace Spirits. The attorney general argued that the illegal shipment by out of state retailers takes business aways from licensed Ohio retailers and the alcoholic beverage were not properly taxed. Though, as noted above, the Act did not include monetary fines, the action against Ace Spirits ended with a consent order that called for financial penalties of $150.00 per violation should the activity complained of continue.

  As noted, the 21st Amendment Enforcement Act has not been often used. It is clear that the Act provides an additional tool for the states to use to enforce its beverage laws. Retailers that engage in interstate sales to consumers should carefully review state laws prior to shipping to remain in compliance. This caveat holds true for e-commerce sellers of alcohol that act under an agent for consumer model. E-commerce sales of alcohol have led to creative routes to market for brand owners as well. As we move forward, state laws may indeed carve out certain exceptions from their legislative floors. For the time being, state and federal courts will remain the arbiter of disputes of this sort. Consumer demands and technology are changing the face of alcohol sales. Until exceptions are carved out at the state level, retailers are well advised to remain in compliance with the beverage laws of receiving states shipping laws.

Uncorking Accessibility

Cyndi

Ensuring Your Website Complies with the ADA

PICTURE OF KEYBOARD SHOWING ADA ICONS IN BLUE

 By: Vanessa Ing, Farella Braun + Martel

In today’s digital age, having an online presence is crucial for businesses, including wineries, breweries, and other beverage companies. Accordingly, it’s essential to ensure that your beverage website meets federal standards for accessibility to avoid lawsuits and fines. In this article, we will help beverage companies understand how to comply with federal law and implement accessible features on their websites.

Why is Web Accessibility Important?

  In 1990, Congress enacted the Americans with Disabilities Act (ADA). It prohibits businesses open to the public (otherwise known as “public accommodations”) from discriminating against people with disabilities in everyday activities. These everyday activities can include purchasing goods and services, or offering employment opportunities. 

  In March 2022, the U.S. Department of Justice issued web accessibility guidance, reiterating that ensuring web accessibility for people with disabilities is a priority for the Department. Relying on the ADA’s prohibition against discrimination and its mandate to provide equal access, Department of Justice emphasized that the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web. The Department of Justice’s guidance was particularly timely given that many services moved online during the pandemic. 

  In its guidance, the Department of Justice explained that people with disabilities navigate the web in different ways: for example, those with visual impairments might require a screen reader that reads aloud text to the audience.  Those with auditory impairments might require closed-captioning software, while those with impaired motor skills might require voice recognition software.  A website, therefore, should be compatible with the full range of such software. 

Is Your Beverage Company a “Public Accommodation” Business?

  Public accommodations include businesses that sell goods and services, establishments serving food and drink, and places of recreation or public gathering.  Companies that sell drinks, wineries that offer a tasting room, or breweries that host events are all considered public accommodations.  Thus, those businesses’ websites must comply with the ADA by being accessible to people with disabilities. 

  It is an open question whether beverage companies without a physical location open to the public must still have ADA-compliant websites. Some jurisdictions, like the Ninth Circuit (which has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), have tied the necessity of ADA-compliant websites to the existence of a brick-and-mortar location (Robles v. Domino’s Pizza, LLC). However, the Department of Justice, along with several federal circuit courts of appeals, has taken the position that even a public accommodation business without a physical location must have an ADA-compliant website. 

  Given the increased prevalence of online-only services open to the public, it is very likely that litigation over the next few years may resolve this open question.  In the meantime, it is wise for beverage companies to take preventative caution and ensure that their websites are accessible. 

What are some Website Accessibility Barriers?

  To ensure ADA compliance, beverage companies must be aware of common website accessibility barriers.  These include poor color contrast, lack of descriptive text on images and videos, mouse-only navigation, and more.  By addressing these barriers, beverage companies can enhance the user experience for people with disabilities.

  Six examples of website accessibility barriers highlighted in the DOJ’s accessibility guidance include:

Poor Color Contrast: Ensure sufficient color contrast between text and background to aid individuals with visual impairments or color blindness. Use color combinations that are easy to distinguish.

Use of Color Alone to Give Information:  Avoid using color alone to provide information.  Using color alone can be very disorienting for someone who is visually impaired or colorblind.  Someone who is colorblind might not be able to distinguish between shades of gray.  One solution might be to ensure that symbols conveying information are differently shaped.    

Lack of Descriptive Alternative Text for Images and Videos: Provide descriptive text (alt text) for images and videos, allowing screen readers to convey the information to visually impaired users. This makes your content more accessible and inclusive.

No Closed Captions on Videos: Include closed captions for videos to accommodate individuals with hearing impairments. Utilize manual or automatic captioning options and review the captions for accuracy.  Free options are available on the web.

Inaccessible Online Forms: Make online forms user-friendly for people with disabilities. Provide clear instructions before the form, ensure that a screen reader could recognize required fields and fields with special formatting, ensure keyboard-only navigation, use accessible labels for inputs, and display clear error messages.  Note that an image-based CAPTCHA is not a fully accessible way to secure your form; your CAPTCHA should offer users who are visually impaired an audio alternative.

Mouse-Only Navigation: Enable keyboard-only navigation on your website to assist individuals with motor skill impairments or those who cannot use a mouse or see a mouse pointer on the screen.  Make sure all interactive elements can be accessed using the tab, enter, spacebar, or arrow keys.  Use a “Skip to Main Content” link to ensure that users employing only a keyboard can easily navigate the website’s primary content. 

  To implement these features, beverage companies should discuss accessibility concerns upfront with the web developer.  Beverage companies should keep in mind that posting a phone number on a website to call for assistance, as commonly utilized by businesses, does not sufficiently provide equal access to the website and the services or goods provided.

Who can Sue Beverage Companies?

  Non-compliance with ADA standards can lead to potential lawsuits.  Although some courts have held that a nexus must exist between a private plaintiff’s disability and the web accessibility barrier claimed, a private plaintiff may easily surf the web for websites that are inaccessible.  A private plaintiff may then file a lawsuit in federal court without first notifying the business.  Further, liability under the ADA is strict, which means that the intent of the business to comply is immaterial.  Thus, it is prudent for beverage companies to proactively address accessibility issues to avoid potential legal troubles. 

  Private lawsuits under the ADA can result in injunctive relief (a court order to comply with the ADA) and attorney fees.  And in some states, like California, the state law version of the ADA may enable plaintiffs to demand monetary damages ($4,000 per violation of the ADA). 

  Government involvement, while less frequent, is possible in cases involving national retailers.  If the Department of Justice observes a pattern or practice of discrimination, the Department will attempt to negotiate a settlement, and may bring suit on behalf of the United States. At stake are fines of up to $75,000 for the first ADA violation, and up to $150,000 for each subsequent violation.

What are the Rules for Website Accessibility?

  Although the ADA itself does not spell out the rules for website accessibility, several sources provide detailed rules that can aid beverage companies in building accessible websites. 

  First, the ADA authorizes the Department of Justice to enforce the statute.  Accordingly, the Department develops and issues regulations explaining how businesses must comply.  Specifically, § 36.303 of the Electronic Code of Federal Regulations specifies that a public accommodation shall provide auxiliary aids and services when necessary to ensure effective communication with people with disabilities, and that a public accommodation should consult with people with disabilities whenever possible.  The Department also issues administrative guidance, such as its March 2022 guidance described above.  

  Second, Section 508 of the Rehabilitation Act of 1973, which requires federal agencies to make their electronic and information technology accessible to people with disabilities, provides detailed guidance concerning the display screen ratios, status indicators, audio signals, and other accessibility features. 

  Third, the Web Content Accessibility Guidelines 2.1 (WCAG 2.1), which were originally designed by a consortium of four universities, provide highly specific web accessibility guidelines grounded on the idea that information on the web must be perceivable, operable, understandable, and robust.  These guidelines are widely referenced in court cases and settlements with the Department of Justice, as the guidelines address numerous aspects of web accessibility and offer three different levels of conformance (A, AA, AAA). Beverage companies can consult the WCAG 2.1 guidelines (including a customizable quick reference guide, at https://www.w3.org/WAI/WCAG21/quickref/) to ensure their websites meet ADA compliance. 

Looking Ahead

  Web accessibility standards evolve over time, with updates being released periodically. Beverage companies should stay informed about changes and updates to ADA compliance regulations. For example, the WCAG 3.0 is scheduled for release in the latter half of 2023, further refining accessibility guidelines.

  In sum, by understanding and identifying web accessibility barriers, and implementing necessary accessibility features, beverage companies can enhance user experiences and minimize the risk of legal repercussions. Embracing web accessibility is not only legally required but economically prudent in the long run, as it enables beverage companies to cater to a broad and varied audience, and demonstrates a commitment to inclusivity in the digital realm.

  Vanessa Ing is a litigation associate with Farella Braun + Martel and can be reached at ving@fbm.com. Farella is a Northern California law firm representing corporate and private clients in sophisticated business and real estate transactions and complex commercial, civil and criminal litigation. The firm is headquartered in San Francisco with an office in the Napa Valley that is focused on the wine industry.

Uncorking Accessibility

Cyndi

Ensuring Your Website Complies With the ADA

Americans with disabilities act

By: Vanessa Ing, Farella Braun + Martel

In today’s digital age, having an online presence is crucial for businesses, including wineries, breweries, and other beverage companies. Accordingly, it’s essential to ensure that your beverage website meets federal standards for accessibility to avoid lawsuits and fines. In this article, we will help beverage companies understand how to comply with federal law and implement accessible features on their websites.

Why is Web Accessibility Important?

  In 1990, Congress enacted the Americans with Disabilities Act (ADA). It prohibits businesses open to the public (otherwise known as “public accommodations”) from discriminating against people with disabilities in everyday activities. These everyday activities can include purchasing goods and services, or offering employment opportunities. 

  In March 2022, the U.S. Department of Justice issued web accessibility guidance, reiterating that ensuring web accessibility for people with disabilities is a priority for the Department. Relying on the ADA’s prohibition against discrimination and its mandate to provide equal access, Department of Justice emphasized that the ADA’s requirements apply to all the goods, services, privileges, or activities offered by public accommodations, including those offered on the web. The Department of Justice’s guidance was particularly timely given that many services moved online during the pandemic. 

  In its guidance, the Department of Justice explained that people with disabilities navigate the web in different ways: for example, those with visual impairments might require a screen reader that reads aloud text to the audience.  Those with auditory impairments might require closed-captioning software, while those with impaired motor skills might require voice recognition software.  A website, therefore, should be compatible with the full range of such software. 

Is Your Beverage Company a “Public Accommodation” Business?

  Public accommodations include businesses that sell goods and services, establishments serving food and drink, and places of recreation or public gathering.  Companies that sell drinks, wineries that offer a tasting room, or breweries that host events are all considered public accommodations.  Thus, those businesses’ websites must comply with the ADA by being accessible to people with disabilities. 

  It is an open question whether beverage companies without a physical location open to the public must still have ADA-compliant websites. Some jurisdictions, like the Ninth Circuit (which has jurisdiction over Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington), have tied the necessity of ADA-compliant websites to the existence of a brick-and-mortar location (Robles v. Domino’s Pizza, LLC). However, the Department of Justice, along with several federal circuit courts of appeals, has taken the position that even a public accommodation business without a physical location must have an ADA-compliant website. 

  Given the increased prevalence of online-only services open to the public, it is very likely that litigation over the next few years may resolve this open question.  In the meantime, it is wise for beverage companies to take preventative caution and ensure that their websites are accessible. 

What are some Website Accessibility Barriers?

  To ensure ADA compliance, beverage companies must be aware of common website accessibility barriers.  These include poor color contrast, lack of descriptive text on images and videos, mouse-only navigation, and more.  By addressing these barriers, beverage companies can enhance the user experience for people with disabilities.

  Six examples of website accessibility barriers highlighted in the DOJ’s accessibility guidance include:

•    Poor Color Contrast: Ensure sufficient color contrast between text and background to aid individuals with visual impairments or color blindness. Use color combinations that are easy to distinguish.

•    Use of Color Alone to Give Information:  Avoid using color alone to provide information.  Using color alone can be very disorienting for someone who is visually impaired or colorblind.  Someone who is colorblind might not be able to distinguish between shades of gray.  One solution might be to ensure that symbols conveying information are differently shaped.    

•    Lack of Descriptive Alternative Text for Images and Videos: Provide descriptive text (alt text) for images and videos, allowing screen readers to convey the information to visually impaired users. This makes your content more accessible and inclusive.

•    No Closed Captions on Videos: Include closed captions for videos to accommodate individuals with hearing impairments. Utilize manual or automatic captioning options and review the captions for accuracy.  Free options are available on the web.

•    Inaccessible Online Forms: Make online forms user-friendly for people with disabilities. Provide clear instructions before the form, ensure that a screen reader could recognize required fields and fields with special formatting, ensure keyboard-only navigation, use accessible labels for inputs, and display clear error messages.  Note that an image-based CAPTCHA is not a fully accessible way to secure your form; your CAPTCHA should offer users who are visually impaired an audio alternative.

•    Mouse-Only Navigation: Enable keyboard-only navigation on your website to assist individuals with motor skill impairments or those who cannot use a mouse or see a mouse pointer on the screen.  Make sure all interactive elements can be accessed using the tab, enter, spacebar, or arrow keys.  Use a “Skip to Main Content” link to ensure that users employing only a keyboard can easily navigate the website’s primary content. 

  To implement these features, beverage companies should discuss accessibility concerns upfront with the web developer.  Beverage companies should keep in mind that posting a phone number on a website to call for assistance, as commonly utilized by businesses, does not sufficiently provide equal access to the website and the services or goods provided.

Who can Sue Beverage Companies?

  Non-compliance with ADA standards can lead to potential lawsuits.  Although some courts have held that a nexus must exist between a private plaintiff’s disability and the web accessibility barrier claimed, a private plaintiff may easily surf the web for websites that are inaccessible.  A private plaintiff may then file a lawsuit in federal court without first notifying the business.  Further, liability under the ADA is strict, which means that the intent of the business to comply is immaterial.  Thus, it is prudent for beverage companies to proactively address accessibility issues to avoid potential legal troubles. 

  Private lawsuits under the ADA can result in injunctive relief (a court order to comply with the ADA) and attorney fees.  And in some states, like California, the state law version of the ADA may enable plaintiffs to demand monetary damages ($4,000 per violation of the ADA). 

  Government involvement, while less frequent, is possible in cases involving national retailers.  If the Department of Justice observes a pattern or practice of discrimination, the Department will attempt to negotiate a settlement, and may bring suit on behalf of the United States. At stake are fines of up to $75,000 for the first ADA violation, and up to $150,000 for each subsequent violation.

What are the Rules for Website Accessibility?

  Although the ADA itself does not spell out the rules for website accessibility, several sources provide detailed rules that can aid beverage companies in building accessible websites. 

  First, the ADA authorizes the Department of Justice to enforce the statute.  Accordingly, the Department develops and issues regulations explaining how businesses must comply.  Specifically, § 36.303 of the Electronic Code of Federal Regulations specifies that a public accommodation shall provide auxiliary aids and services when necessary to ensure effective communication with people with disabilities, and that a public accommodation should consult with people with disabilities whenever possible.  The Department also issues administrative guidance, such as its March 2022 guidance described above.  

  Second, Section 508 of the Rehabilitation Act of 1973, which requires federal agencies to make their electronic and information technology accessible to people with disabilities, provides detailed guidance concerning the display screen ratios, status indicators, audio signals, and other accessibility features. 

  Third, the Web Content Accessibility Guidelines 2.1 (WCAG 2.1), which were originally designed by a consortium of four universities, provide highly specific web accessibility guidelines grounded on the idea that information on the web must be perceivable, operable, understandable, and robust.  These guidelines are widely referenced in court cases and settlements with the Department of Justice, as the guidelines address numerous aspects of web accessibility and offer three different levels of conformance (A, AA, AAA). Beverage companies can consult the WCAG 2.1 guidelines (including a customizable quick reference guide, at https://www.w3.org/WAI/WCAG21/quickref/) to ensure their websites meet ADA compliance. 

Looking Ahead

  Web accessibility standards evolve over time, with updates being released periodically. Beverage companies should stay informed about changes and updates to ADA compliance regulations. For example, the WCAG 3.0 is scheduled for release in the latter half of 2023, further refining accessibility guidelines.

  In sum, by understanding and identifying web accessibility barriers, and implementing necessary accessibility features, beverage companies can enhance user experiences and minimize the risk of legal repercussions. Embracing web accessibility is not only legally required but economically prudent in the long run, as it enables beverage companies to cater to a broad and varied audience, and demonstrates a commitment to inclusivity in the digital realm.

  Vanessa Ing is a litigation associate with Farella Braun + Martel and can be reached at ving@fbm.com. Farella is a Northern California law firm representing corporate and private clients in sophisticated business and real estate transactions and complex commercial, civil and criminal litigation. The firm is headquartered in San Francisco with an office in the Napa Valley that is focused on the wine industry.

Should I Open Up a Claim?

Cyndi
close-up of a plant crop

By: Trevor Troyer, Agricultural Risk Management

When to open up a claim on your grape crop insurance is important.  A lot of growers say that don’t know if they have a payable loss early in the season.  With grape crop insurance you are covering an average of your production per grape variety. Depending on what coverage level you have chosen this could mean you have a large deductible or small one.  I agree it is hard to tell how much early season damage will affect tons harvested.

  Mid May this year there was a bad freeze/frost event in the Finger Lakes region of New York.  While late spring frosts are not uncommon, this one was really bad.  There was widespread damage to grape vines across the Finger Lakes.   The extent of the damage is not fully known at this time.  But there will be a reduction in the tons harvested this year for sure.

  In a situation like the above a claim should be opened immediately.  More than likely, due to the severity of the frost, an adjuster will come out and inspect the vineyard.  I always tell growers that they should take pictures of the frost damage that morning.  It is always good to document damage as close to the time it occurred as possible.

  It may be that some varieties of grapes show more damage than others.  This is to be expected as some are more resistant to cold.  And from what I have seen over the years with frost and freezes is that it doesn’t affect a vineyard or field evenly.  You might have more damage on one side of the vineyard or more damage on the lowest part of the blocks etc.  Damage varies but just because one variety or one area looks better than others doesn’t mean that you should not open a claim on that variety or block.

  I know that secondary and tertiary buds will emerge in the next few days or weeks after a freeze.  You should open up a claim now regardless.  The damage may be less than you think and you don’t end up having a payable claim.  But it is still best to get one opened up right away.  Don’t wait to see how many tons you harvest before opening a claim! 

  Here is an excerpt from the “How to File a Crop Insurance Claim” Fact Sheet from the USDA:

  Most policies state that you (the insured) should notify your agent within 72 hours of discovery of crop damage.  As a practical matter, you should always contact your agent immediately when you discover crop damage.

  That same night in May, that saw the frost/freeze in the Finger Lakes region, also saw damage to vineyards along the coast of Lake Erie.  I received calls and emails from growers stating that they had had frost as well.  Obviously, the damage was not as bad as the Finger Lakes, but frost on new buds is not something any vineyard owner wants to see.  I opened claims for all of them even though the extent of the damage was not known.

  I cannot stress enough the importance of opening up a claim early. 

  A lot of claims with grapes are relatively routine.  Once the claim is opened an adjuster will come out and document the damage.  You will continue to grow your crop and try to mitigate any damage received. Once you harvest grapes you will meet with the adjuster and give him your production records that show your tonnage per variety.  He will then adjust the claim based your guarantee (average tons per acre per variety and the price for that variety in the county.)

  In some circumstances you will need to get direction from the adjuster before doing anything.

What are your responsibilities after damage if the grapes have not matured properly and will not?  What if they have been rendered unusable (smoke-taint has been a major cause of this in California)? 

  Here is a section from the Grape Crop Provisions that goes over this:

11. Duties in the Event of Damage or Loss.

In addition to the requirements of section 14 of the Basic Provisions, the following will apply:

(a) You must notify us within 3 days of the date harvest should have started if the crop will not be harvested.

(b) If the crop has been damaged during the growing season and you previously gave notice in accordance with section 14 of the Basic Provisions, you must also provide notice at least 15 days prior to the beginning of harvest if you intend to claim an indemnity as a result of the damage previously reported. You must not destroy the damaged crop that is marketed in normal commercial channels, until after we have given you written consent to do so. If you fail to meet the requirements of this section, all such production will be considered undamaged and included as production to count.

  It is important to stay in contact with your adjuster during a claim.

  A lot of things can happen to your vines that could cause them not to produce a full crop.  The insurance period is long and it is important to report everything that may reduce your crop.

  When you sign up for crop insurance, coverage for grapes starts on February 1 in Arizona and California.  It begins on November 21 in all other states.  The end of insurance unless it is otherwise specified by the USDA RMA, is October 10th in Mississippi and Texas, November 10 in Arizona, California, Idaho, Oregon and Washington.  In all other states the end of insurance is November 20th.  Crop insurance is continuously in force, once signed up for, unless cancelled or terminated.  Your coverage for following years, will be the day after the end of the insurance period for the prior year.

Here are the Causes of Loss per the Grape crop provisions:

(1)   Adverse weather conditions;

(2)   Fire, unless weeds and other forms of undergrowth have not been controlled or pruning

       debris has not been removed from the vineyard;

(3)   Insects, except as excluded in 10(b)(1), but not damage due to insufficient or improper

       application of pest control measures;

(4)   Plant disease, but not damage due to insufficient or improper application of disease control

       measures;

(5)   Wildlife;

(6)   Earthquake;

(7)   Volcanic eruption; or

(8)   Failure of irrigation water supply, if caused by an insured peril that occurs during the

       insurance period.

  Adverse weather conditions could be anything that could cause damage to your grapes. For

example; drought, frost, freeze, excess moisture etc. Wildlife could be bird damage, deer etc.

Fire would also include smoke taint as that is a result of a fire.

  Crop insurance does not cover, the inability to sell your grapes because of a buyer’s refusal or contract breakage. It also doesn’t cover losses from boycotts or pandemics. Phylloxera is not covered, regardless of the cause. Overspray or chemical damage from a neighboring farm is not covered either.

  So, get those claims opened up early and stay in contact with your agent and adjuster.

Permit-Required Confined Spaces

Cyndi
Occupation Safety and Health Act

By: Steven R. Sawyer, ARM, MS, CSP

As many employers have learned over the last few years, employees are a valuable resource.  The ability to find and keep employees has become a challenge for many employers in a variety of industries, including food and beverage agriculture.  Therefore, keeping employees safe is a top priority.

  Employers in the food and beverage agriculture industry, like vineyards and wineries, may have multiple confined spaces in which employees encounter in their daily job tasks.  These include vats, tanks, storage bins, tunnels, duct work, pits, drain systems, and liquid tanks and containers.  Many industry employees are required to enter these spaces as part of their jobs.

  Occupational Safety and Health Administration (OSHA), in their Permit-Required Confined Spaces standard 29 CFR 1910.146, describes a confined space as a space that is large enough for an employee to bodily enter and perform assigned work tasks, has a limited or restricted means of entry or exit, and is not designed for continuous employee occupancy.  Additionally, OSHA defines a Permit-Required Confined Space as a confined space with one or more of the following characteristics:  the confined space contains or has the potential to contain a hazardous atmosphere; the confined space contains a material that has the potential for engulfing the entrant; the confined space has an internal configuration with inwardly converging walls or a floor that slopes downward and tapers to a smaller cross section which could trap or asphyxiate an entrant; and contains any other recognized serious safety or health hazard. (OSHA.gov)

  The first step in protecting employees from the hazards of confined spaces is to evaluate the workplace to determine if the workplace contains permit-required confined spaces.  An initial survey or workplace evaluation should be conducted to locate and identify all confined spaces.  This initial workplace evaluation should be conducted by a qualified person who is familiar with the hazards and types of confined spaces.  Although this is the initial step, workplace evaluation must be ongoing for confined spaces which may change over time with the addition of new processes, equipment, or facilities.

  Once a confined space is identified in the workplace, the confined space should be treated as a hazardous area until a qualified person can determine the specific hazards.  Additionally, the qualified person will determine if the confined space is a permit-required confined space or a non-permit confined space.  Hazards an evaluator will look for include atmospheric hazards such as oxygen deficient or toxic atmosphere, biological hazards, mechanical hazards, physical hazards, and chemical hazards.

  If the qualified person has found permit-required confined spaces at the workplace, the employer must notify the employees.  Employees must know their workplace contains permit-required confined spaces, where the spaces are located and the hazards associated with those spaces.  Then, the employer must post signage to inform the employees of the permit spaces.  This signage can read “Danger – Permit-Required Confined Space, Do Not Enter” or a similar statement.  The signs should be posted on the entrance or in close proximity to the entrance of the permit space.

  At this point, an employer has a decision to make about their Permit-Required Confined Spaces:  either allow employees to enter or do not allow employees to enter.  If the employer makes a decision to not allow employees to enter permit spaces, then the employer should take effective measures to secure the spaces.  Some examples of securing permit spaces to prevent entry are padlocks, bolts, chains, and wire cables.

  If entry is necessary for employees to service or clean permit-required confined spaces, the employer must develop and implement a written permit-required confined space program and make the program available for employee inspection.  This written program should include written entry procedures for the permit-required confined spaces along with the hazards present, and how to eliminate or control the hazards. 

  The written permit-required confined space program should include an entry permit.  The entry permit is a document to be used for all permit-required confined space entries.  The entry permit should include the date of entry and authorized duration of the entry, the location of the entry, the names of all entrants, and the work that is being conducted in the confined space.  Additionally, the permit must include the names of attendants, the name of the entry supervisor, the hazards present in the space to be entered, how the hazards will be eliminated or controlled before entry, acceptable entry conditions, results of initial and periodic tests performed along with the names of the testers and when tests were performed, rescue and emergency services to contact in the event of an emergency, communication procedures between the entrant and the attendant, equipment necessary including personal protective equipment, testing equipment, communication equipment, alarm systems, and rescue equipment, other information deemed necessary for safe entry, and any additional permits such as hot work permits.  Lastly, the permit should have a signature line for the entry supervisor to authorize the entry, including the date and time of the entry.  The entry supervisor should communicate the contents of the entry permit to the authorized entry personnel and may wish to post the entry permit in a designated location.

  OSHA requires that employers provide training for all employees who must work in permit-required confined spaces.  The training should occur before the initial work assignment, when job duties change, employee performance deficiencies occur, or when the permit-required confined space program changes or operations change.  Although it is not required to train all employees to the extent of the authorized entrants training, it is a best practice to inform all employees of the confined spaces present in the workplace and the hazards that accompany the confined spaces.  

  If entry is required in a permit-required confined space, the employer must provide an authorized entrant (the person who enters the space and conducts maintenance or cleaning operations), an attendant (a person who remains outside of the confined space), and an entry supervisor (the person who oversees the entry operations and ensures the entrants follow the permit and are safe).  These personnel have specific duties that must occur to ensure safe entry into permit spaces.  Their duties must be followed in order to comply with the OSHA Permit-Required Confined Spaces standard.

  When the entry into the permit space is complete, the entry supervisor terminates the confined space entry.  The entry supervisor can also cancel the entry of the confined space if the conditions within the space are no longer safe for the entrant.  As a best practice, when the entry is complete, a debrief should be conducted with the entry personnel to determine if any changes are needed for future entry procedures.  Employers are required to keep canceled entry permits for one year.  Any deviations or problems with the entry should be noted on the canceled permits.

  Even with a permit-required confined space program in place, emergencies can happen.  It is important that local emergency responders are aware of the specific hazards associated with confined spaces in the workplace.  Invite local emergency agencies to the workplace and evaluate their knowledge of confined space rescue, their rescue equipment, and their capabilities. 

  Having a permit-required confined space program in place will help vineyards and wineries avoid catastrophic incidents and costly OSHA citations.  To learn more about Permit-Required Confined Spaces, go to osha.gov or ansi.org.

  Steven R. Sawyer, ARM, MS, CSP, is the owner/operator of LSW & Associates Safety Consulting Services, LLC.  Sawyer has been active in the safety industry since 1999, much of that time working with multi-faceted, high-hazard agribusinesses, developing a special expertise in grain bin engulfment and prevention; OSHA grain handling standards; lockout/tagout (LOTO); machine guarding; confined spaces; heavy equipment and specialized equipment operations; and safety program development and training.

Website:  sawyersafetysolutions.com