Vintners want to put cork on wine fee proposal

YAKIMA – Among its three brands, Apex Cellars produces as many as 25 wines. But if the Sunnyside winery chooses to change the labels on those wines, it could prove to be an expensive proposition under new fees proposed by the Bush administration.

The fees are intended to raise an estimated $29 million to help cover regulatory functions of the federal Alcohol, Tax and Trade Bureau. Northwest lawmakers and wine industry leaders contend they are an unfair imposition on an industry that already pays its fair share to the federal government and is largely composed of small, family-owned businesses.

Lawmakers killed the proposal last year, but it has resurfaced again in the Bush administration’s budget proposal. Details of the new fees have not yet been released, but industry leaders expect they will be similar to those fees suggested last year, including up to $100 to garner approval for each label change, $200 to register changed wine formulas and $500 to apply for special permits.

Wineries are required to get federal approval of their wine labels each time there is a significant change, such as the region the grapes came from.

“It seems very unfair. They’re saying that you not only have to get the label approvals, but you have to meet all these standards we set for you, as to typeface, spacing … then they’re going to punish us by putting a fee on the whole thing,” Tom Cottrell, Apex Cellars marketing director, said in a telephone interview Friday. “Insult to injury, I guess is the old saying.”

Bill Nelson, president of Wine America, agreed.

“Smaller wineries operate close to the bone,” he said. “Our concern is that the federal government is mandating label approvals and then also wants to charge for them, which does seem unfair.”

Washington is the nation’s No. 2 producer of premium wine, behind California, with more than 400 wineries, 350 wine grape growers and 30,000 vineyard acres.

In a letter Thursday to Treasury Secretary John Snow, a bipartisan group of Northwest lawmakers again urged the administration to drop the proposal, saying it would disproportionately impact small wineries in the region.

“The wine industry in Washington and Oregon is growing rapidly, providing new economic development opportunities for agriculture producers and rural communities,” the letter said. “However, most of our states’ wineries are family-owned operations that can ill-afford a heavier tax burden on top of what they already pay now through federal and state excise taxes.”

Eleven members of Congress signed the letter.

The previous proposal also would have imposed a $3,000 fee on each application for appellation recognition.

The federal government awards appellation status to regions, also known as American Viticultural Areas, to recognize their distinct climate and soil features. Washington state has eight recognized appellations. At least two other regions are in the process of seeking appellation status: the Chelan area in north-central Washington and the Rattlesnake Hills south of Yakima near Zillah.

If and when appellation status is granted, many wineries will look to change their labels to reflect that they use grapes from those areas – which amounts to nothing more than a double hit to small businesses, said Tim Hightower, president of the Washington Wine Institute, a group that tracks regulatory and legislative issues for the state’s wine industry.

Apex Cellars, for one, produces several wines with grapes from its own vineyards in the Rattlesnake Hills and may change its labels if appellation status is granted, Cottrell said.

That may not be an easy thing to do for some wineries, he said.

“It’s a pretty onerous burden,” he said. “It’s not like we’re corporately driven. Most of these wineries are family operated, and they’re tiny production.”