Did a Texas Politician Help Sriracha Win its Battle With Irwindale, California?

After high-profile wooing by Texas GOP politicians and a visit from governor Jerry Brown’s office, Irwindale’s city council has voted to drop nuisance complaints against the sauce maker.

May 29, 2014 at 5:27PM

Sriracha fans can un-ruffle their feathers at last. The long legal battle appears to be finished between the California company that makes the wildly popular "rooster sauce" and the city where it's made. The Irwindale city council unanimously voted Wednesday night to drop its public nuisance claim against Huy Fong Foods. Council members voted to drop the city's lawsuit against Huy Fong as well.


Image: Mike Mozart

An abrupt end to a long-simmering dispute

For months, the city had been trying to reach an emissions-reduction agreement with Huy Fong, following complaints from residents near the plant about respiratory problems and headaches during the late-summer pepper-harvesting season. Sriracha's woes were a hot topic among foodies from the outset. And as the situation dragged on, civic leaders and politicians around the country began to take notice.

Last November, an LA Superior Court judge ordered Huy Fong to cease any operations that generated strong odors. The pepper harvest was already in for the year so Huy Fong was able to carry on with production. But city officials in Philadelphia and in Denton, Texas, publicly invited Huy Fong to relocate, despite the fact that Sriracha's peppers are grown just a few miles from the plant because they have to be processed the same day they're picked.

The situation got hotter in December, when California's health department ordered a 30-day hold on Huy Fong's products to comply with monitoring rules on uncooked foods. That threw a wrench into the supply chain that left distributors empty-handed. As word of the "Srirachapocalypse" spread, foodie fans started hoarding, trading recipes for homemade versions, and even trying other brands, like Trader Joe's version.

Texas Republicans generated political heat

In early January, Texas state representative Jason Villalba made a public invitation to David Tran to pack up and move Huy Fong to Texas. In his announcement, Villalba contrasted "excessive government interference" by "government bureaucrats" in California to Texas' "low regulations and limited government interference."

This could have come across as one-off political grandstanding, but Villalba didn't let go of the issue. His pitch later expanded to include the notion of Texas' Rio Grande Valley as a possible pepper-farm location—despite the fact that the valley and Dallas are 500 miles apart, which would hike Huy Fong's transport costs considerably. And on May 12, he brought a delegation of state legislators and Texas officials to Irwindale for a high-profile tour of Huy Fong's plant and a private meeting with Tran.

Whether or not Tran was seriously considering relocating or expanding to Texas, the visit and the publicity it generated gave him leverage in his conflict with the city. And it gave GOP leaders both in Texas and in California a national platform to criticize what they saw as shortcomings in the Golden State's business climate.

The dispute's endgame began Tuesday, when representatives from Democratic governor Jerry Brown's office held a private meeting with Tran and city officials. Wednesday night, Irwindale's council voted to drop the issues.

Whether that settles the matter for residents living near the plant won't be clear until this summer when the pepper harvest comes in for processing. But for now, it looks like Huy Fong will stay put and its most popular sauce will keep flowing.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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