Vineyard of Silicon Valley investor hit with $3.7 million in penalties after bulldozing Mendocino County wetland

A Silicon Valley tech entrepreneur and winemaker has agreed to pay $3.76 million in penalties after his company bulldozed a protected wetland and filled in a stream bed to build a vineyard in Mendocino County, North Coast water regulators announced Friday.

The settlement - one of the largest ever involving water quality on the North Coast - stems from a litany of environmental violations tied to unpermitted work by Rhys Vineyards starting as far back as 2015 on owner Kevin Harvey’s ?4,500-acre ranch west of Highway 101 near Laytonville.

The company covered half an acre of protected wetlands with 2,178 cubic yards of fill in the North Fork Ten Mile River watershed, state officials said. It also filled a half-mile of ephemeral stream with 537 cubic yards of dirt and other material.

“The illegal and permanent loss of wetlands and streams caused by the vineyard construction was an egregious violation of state and federal law,” Josh Curtis, North Coast Regional Water Quality Control Board assistant executive ?officer, said in a written statement.

Rhys’ Santa Rosa-based lawyer Tina Wallis said in a Thursday news release the company “deeply regrets the mistakes made.” Harvey, a Bay Area venture capitalist, could not be reached for an interview. An associate of Wallis’ said he was out of the country.

Authorities said Rhys Vineyards officials made no attempt to obtain permits or contact relevant agencies before building a vineyard on top of a stream and wetland. Further, the company constructed a farm reservoir and operated two others using unauthorized diversions of water, according to the settlement.

The work was so extensive, including grading and installation of tile drains, that officials said it would be nearly impossible to restore the area to its natural state. Instead, the new vineyard will remain in place and the company will pay a fine amounting to about half of the penalties - $1.89 million - to fund two stream restoration projects in Mendocino County.

Officials say the settlement amount reflects the damage done and represents the full weight of the state’s approved formula for meting out fines.

“For the North Coast, this is a very large penalty,” said Ken Petruzzelli, an attorney with the State Water Board’s Office of Enforcement. “It’s one of, if not the largest penalty they’ve ever issued.”

Curtis said in a prepared statement the settlement demonstrates the Santa Rosa-based board’s commitment to protecting and restoring the region’s waters, as well as maintaining a level playing field for other vineyard operations.

In addition to the North Coast and state water boards, the settlement involved the California Department of Fish and Wildlife.

Rhys Vineyards was founded about 15 years ago by Harvey, who has been listed on Forbes’ Midas List of top tech investors and dealmakers. Rhys Vineyards has been praised in publications ranging from the San Francisco Chronicle to the New York Times for its pinot noir, which the Times called among the best in the nation.

In news stories and on its website, Rhys Vineyards has been described as taking great care in site selection for vineyards.

Not so in this case, state officials said.

The unpermitted vineyard “involved the improper construction of roads and stream crossings, causing irreparable harm to already fragile wetlands,” according to the North Coast water board’s release.

As part of the settlement, the company will stop operating one of the involved reservoirs and work to obtain proper permits for the other two. The settlement further requires the vineyard to fix the entire road network on the property to eliminate future impacts to streams.

The sediment discharge into streams, officials said, posed potential harm to imperiled runs of Chinook and coho salmon and steelhead trout within the Ten Mile River watershed, which empties into the Pacific south of Newport on the Mendocino Coast.

Half of the settlement amount will go toward operations of the North Coast Regional Water Quality Control Board.

The other half will support the pair of Mendocino County habitat projects, one overseen by the Nature Conservancy in the nearby South Fork Ten Mile River, and the other managed by the National Fish and Wildlife Foundation in Dutch Charlie Creek, a tributary of the South Fork Eel River.

Wallis, Rhys Vineyards’ attorney, said the company is committed to implementing all required actions.

The company also is exploring options to set aside a majority of the property for conservation, she said.

You can reach Staff Writer Tyler Silvy at 707-526-8667 or at tyler.silvy@pressdemocrat.com. On Twitter @tylersilvy.