Sustainable Craft Brewing: The Legal Challenges

This past month, beer drinkers nationwide celebrated American Craft Beer Week with a variety of events: craft beer and food pairings, attending the unveiling of new beer labels, and/or meeting famous brewers who traveled throughout the United States to put a face with a name (or craft beer). No doubt, craft beer is experiencing a resurgence in the American marketplace despite the down economy as people seek to support local businesses and beer that contains more complex flavors than the usual  light, golden lager.

However, what few are discussing are the very important environmental law issues that will ultimately affect the long-term growth and market stability of craft beer and alcoholic beverage production in the United States. There are a number of issues that will sooner or later create a shakeout of the weaker market competition due to rising operation costs and potential legal liability.

While the issues below are not a comprehensive list these are some of the issues that will affect in the beer industry: 1. Water rights, consumption, and conservation; 2. Energy efficiency and consumption; and 3. Wastewater and Solid waste disposal.

These issues are likely to harm beer production in the near future especially in the western and southwestern parts of the United States. Water consumption issues already plague California because it operates under a “prior appropriation” water system that gives water use preference to the first owner in the area and then requires that the landowner consume the same amount of prescribed water every year whether he/she needs to use it or not. This makes it quite difficult to shift water provisions, as well as incentivize water conservation. Litigation is likely in the future.

Additionally, Texas experienced a record breaking drought last summer that has forced some city and county governments to consider xeriscaping incentives to conserve water usage during the extreme heat of summer months. Many rice farmers in Texas have already lost their businesses after being informed by Texas water authorities that they would not receive irrigated water to raise crops this year due to water conservation efforts.

Looming in the the background of beer production lies the issue of energy efficiency and higher prices. As the energy industry and environmentalists fight over the effects of hydraulic fracturing, the process of extracting natural gas from shale rock, and subsidies given to various energy industries, the price of energy continues to rise due to globalizing energy markets and the effects of climate change. Innovative craft brewers are finding ways to combat these issues by reclaiming heat, water, and CO2 commonly lost during the brewing process, implementing LEED building measures, using hop remains in local community garden compost, recycling aluminum cans, and/or turning spent brewing grains into other products such as dog biscuits.

One of the biggest issues that will affect the growth of the craft beer movement is the disposal of wastewater and solid waste. Water is the most important component in the creation of beer. It composes anywhere from 85% to 95% of many beers. Due to this fact, breweries use huge amounts of water while creating the finished product. Additionally, a number of chemical compounds and high amounts of organic, biodegradable matter in the brewery wastewater must be disposed of after the brewing process is complete. The failure of a small company to abide by local, state, and federal environmental laws could have disastrous effects on the short and long term growth of the company because the laws regulating waste disposal commonly carry huge fines. A brewery owner must understand what role environmental regulations can play in the disposal of any industrial waste before operations begin.

As you can see there are a variety of legal issues that may arise regarding brewery operations and construction. It is in the best interest of current and potential breweries to consider implementing sustainability measures that can reduce their overall cost of operations, maximize profits, and eliminate future legal liability.

RJ Alexander is an attorney at RJ Alexander Law PLLC in Houston,Texas. His general practice law firm specializes in Alcoholic Beverage Law and Business Law. Currently, he is completing a LL.M. degree at the University of Houston Law Center in Energy, Environmental, and Natural Resources Law. His twitter handle is CraftBeerLawyer and Facebook page is located here. He enjoys camping, fishing, gardening, and watching the Houston Texans and Seattle Seahawks.