Venture capitalist’s winery fined $3.7m for destroying wetlands

California’s Rhys Vineyards, owned by prominent venture capitalist Kevin Harvey, has been fined US$3.7 million for illegally destroying wetlands and streams while constructing a vineyard in Mendocino County.

Image: Rhys Vineyards

The investigation and settlement process, which lasted four years, found that Rhys Vineyards had committed “multiple violations” of the federal Clean Water Act while constructing a 20-acre, hillside vineyard between the South Fork Eel River and the North Fork Ten Mile River in Mendocino.

Commenting on the settlement result, Josh Curtis, assistant executive officer of the North Coast Regional Water Quality Control Board, said: “The illegal and permanent loss of wetlands and streams caused by the vineyard construction was an egregious violation of state and federal law.

“This settlement demonstrates our commitment to protecting and restoring our region’s waters and maintaining a level playing field for the vast majority of the region’s vineyard operations who work proactively to meet or exceed environmental regulations.”

During the site construction, a half-acre of wetlands had been destroyed and a 2,148ft stream channel had been buried under the property. Roads and stream crossings were also “improperly constructed” causing damage to wetlands, while the required permits for such work were not obtained.

In addition to the Clean Water Act, the investigation found that Rhys Vineyards also violated the state’s Water Code, North Coast Water Quality Control Plan and the Fish and Game Code.

Rhys Vineyards has been fined $3.7m and must pay around $1.89m of this sum to fund two restoration projects. One aims to restore the aquatic habitat of the South Fork Ten Mile River while the other aims to conserve the stream habitat of Dutch Charlie Creek.

The wine producer must also put right its road network to ensure that it does not impact on the environment in the future and contribute to soil erosion.

A statement from the authorities noted that soil erosion “impacts the migration, spawning and reproduction of salmonid species, such as endangered Chinook and Coho salmon and steelhead trout”.

Julé Rizzardo, assistant deputy director of the State Water Board’s Division of Water Rights, added: “The extraordinary coordination of enforcement actions among the agencies was instrumental in bringing Rhys Vineyards into compliance and results in significant downstream fisheries restoration.

“We believe the extent of the cooperation is a road map for future joint actions that will protect California’s precious environmental resources.”

In a statement, attorney Tina Wallis, who is working on behalf of Rhys Vineyards, said: “Rhys Vineyards, LLC deeply regrets the mistakes made. They want to thank the agencies involved for their diligence in working with them to resolve this matter and reaching an agreement.”

In an interview with Bloomberg, Harvey noted how he made his first wine in his garage in 1995 after planting vines in his garden in the foothills of the Santa Cruz Mountains. He later decided to scale up his project and founded Rhys Vineyards which had its first harvest in 2004.

Rhys Vineyards has seven vineyards spread across the the Santa Cruz Mountains AVA and the Anderson Valley AVA. It produces Pinot Noir, Chardonnay and Syrah.

Harvey is a founding member and general partner of Silicon Valley venture capital firm Benchmark. He has previously sold companies and technology to the likes of Apple and Microsoft.