[Federal Register Volume 68, Number 231 (Tuesday, December 2, 2003)]
[Rules and Regulations]
[Pages 67367-67371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29906]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[T.D. TTB-7; Re Notice No. 965]
RIN: 1513-AA68


Expansion of the Russian River Valley Viticultural Area (2002R-
421P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau (TTB), Treasury.

ACTION: Final rule (Treasury decision).

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SUMMARY: This final rule expands by 767 acres the eastern boundary of 
the Russian River Valley viticultural area in Sonoma County, 
California. The Alcohol and Tobacco Tax and Trade Bureau believes the 
use of viticultural area names as appellations of origin in wine 
labeling and advertising helps consumers identify the wines they may 
purchase. It also allows wineries to better designate the specific 
grape-growing area in which their wine grapes were grown.

EFFECTIVE DATE: This final rule is effective on February 2, 2004.

FOR FURTHER INFORMATION CONTACT:
N.A. Sutton, Specialist, Regulations and Procedures Division, Alcohol 
and Tobacco Tax and Trade Bureau (TTB), 6660 Delmonico Drive, 
D422, Colorado Springs, CO 80919; telephone 415-271-1254.

SUPPLEMENTARY INFORMATION: 

Homeland Security Act Impact on Rule Making

    Effective January 24, 2003, the Homeland Security Act of 2002 
divided the Bureau of Alcohol, Tobacco and Firearms (ATF) into two 
agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB) in the 
Department of the Treasury and the Bureau of Alcohol, Tobacco, Firearms 
and Explosives in the Department of Justice. Regulation of wine 
labeling, including viticultural area designations, is the 
responsibility of the new TTB. References to ATF in this document 
relate to events that occurred prior to January 24, 2003, or to 
functions that the Bureau of Alcohol, Tobacco, Firearms and Explosives 
continues to perform.

Background on Viticultural Areas

TTB Authority

    The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C. 
205(e) requires that alcohol beverage labels provide the consumer with 
adequate information regarding a product's

[[Page 67368]]

identity, while prohibiting the use of misleading information on such 
labels. The FAA Act also authorizes the Secretary of the Treasury to 
issue regulations to carry out its provisions. The Secretary has 
delegated this authority to the Alcohol and Tobacco Tax and Trade 
Bureau.
    Regulations in 27 CFR Part 4, Labeling and Advertising of Wine, 
allow the establishment of definitive viticultural areas and the use of 
their names as appellations of origin on wine labels and in wine 
advertisements. Title 27 CFR part 9, American Viticultural Areas, 
contains the list of approved viticultural areas for American wines.

Definition

    Title 27 CFR 4.25a(e)(1) defines an American viticultural area as a 
delimited grape-growing region distinguishable by geographic features 
whose boundaries have been delineated in subpart C of part 9. These 
designations allow consumers and vintners to attribute a given quality, 
reputation, or other characteristic of wine made from grapes grown in 
an area to its geographic origin.

Requirements

    Section 4.25(e)(2) outlines the procedure for proposing an American 
viticultural area. Anyone interested may petition TTB to establish a 
grape-growing region as a viticultural area. The petition must 
include--
    [sbull] Evidence that the proposed viticultural area is locally 
and/or nationally known by the name specified in the petition;
    [sbull] Historical or current evidence that the boundaries of the 
proposed viticultural area are as specified in the petition;
    [sbull] Evidence that the proposed area's growing conditions, such 
as climate, soils, elevation, physical features, etc., distinguish it 
from surrounding areas;
    [sbull] A description of the proposed viticultural area's specific 
boundaries, based on features found on United States Geological Survey 
(USGS)-approved maps; and
    [sbull] Copies of the appropriate USGS-approved map(s) with the 
boundaries prominently marked.

Impact on Current Wine Labels

    As appellations of origin, viticultural area names have geographic 
significance and, under the FAA Act, may not be used in a misleading 
manner on wine labels. Our 27 CFR part 4 label regulations prohibit the 
use of brand names with geographic significance on a wine unless the 
wine meets the appellation of origin requirements for the named area. 
The FAA Act and our regulations also prohibit the misleading use of a 
viticultural area name on a wine label in a context other than an 
appellation of origin. (See 27 CFR 4.33(b), 4.39(i), and 4.39(j).
    Bottlers who use brand names, including trademarked names, similar 
to ``Russian River Valley'' must ensure that their existing products 
are eligible to use the viticultural area's name as an appellation of 
origin. For a wine to be eligible, at least 85 percent of the grapes in 
the wine must have been grown within the viticultural area, and the 
wine must meet the other requirements of 27 CFR 4.25(e)(3). If a wine 
is not eligible for the appellation, the bottler must change the brand 
name or other label reference and obtain approval of a new label. 
Different rules apply if a wine in this category has a brand name used 
prior to July 7, 1986. See 27 CFR 4.39(i) for details.

Russian River Valley Expansion Petition

    ATF received a petition from Donald L. Carano of the Ferrari-Carano 
Vineyards and Winery in Healdsburg, California, in August 2002, 
proposing a 767-acre expansion of the established 96,000-acre Russian 
River Valley viticultural area (see 27 CFR 9.66). On January 8, 2003, 
ATF published a Notice of Proposed Rulemaking requesting comments on 
the expansion of the Russian River area. (See Notice No. 965, 68 FR 
1020). TTB received six comments, which are described and evaluated in 
the Notice of Proposed Rulemaking section of this document.
    Located approximately 55 miles north of San Francisco, the Russian 
River Valley expansion area fits into a 90[deg] angle in the original 
eastern boundary at the village of Fulton, which is just northwest of 
the city of Santa Rosa in Sonoma County, California. The expansion area 
has the same climate and other characteristics as the originally 
established Russian River Valley viticultural area. The added land 
accounts for less than a one percent increase in the original size of 
the viticultural area. In the past, some winegrape growers in the 
expansion area erroneously believed their vineyards to be within the 
boundaries of the Russian River Valley viticultural area. The newly 
expanded boundaries include Fulton Road on the west, River Road on the 
north, U.S. Highway 101 on the east, and two locally known streets, 
Dennis Lane and Francisco Avenue, on the south. Within these boundaries 
approximately 365 acres are currently planted to grapes.

Name Evidence

    The 767-acre expansion area was commonly considered to be part of 
the original Russian River Valley viticultural area. A Wine Country 
Living magazine map of viticultural areas, dated July 2002, shows the 
expansion area as being within the established Russian River Valley 
viticultural area's borders. A June 2002, Wine Spectator Online article 
states that the Vintners Inn hotel, which lies in the expansion area, 
is within the originally established boundaries. The Russian River Wine 
Road Web site (1998-2002) locates the Vintners Inn and Siduri Wines 
inside the Russian River viticultural area, although both are in the 
expansion area. In August 2002, the Russian River Valley Winegrape 
Growers Association Web site listed several members who are in the 
expansion area. Also, road signs indicate that the expanded boundary 
area is locally associated with the Russian River area.

Boundary Evidence

    Historically, according to Mr. John Marcucci, whose family has 
owned thirty acres in the area for four generations, the land in the 
expansion area was used for prune orchards and vineyards. He recalls 
that, prior to 1918, the acreage was planted to Petite Syrah, 
Zinfandel, and Pinot Noir wine grapes. Mr. Marcucci and Mr. Henry 
Bisordi, both life long residents of the area, also recollect that 
years ago prune orchards were more profitable than vineyards, but when 
the market changed, some orchards were replaced with vineyards. The 
previous owner of the Vintners Inn land claims that approximately 50 
acres were devoted to French Colombard wine grapes and orchards. The 
orchards were removed about 25 years ago for Chardonnay, Pinot Blanc, 
and Sauvignon Blanc wine grape plantings. Currently, 48 percent, or 
almost half of the 767-acre expansion area, is used for viticulture.

Growing Conditions

    Treasury Decision ATF-159 of October 21, 1983, 48 FR 48813, 
established the Russian River Valley as a viticultural area. This 
Treasury Decision stated:

    The Russian River viticultural area includes those areas through 
which flow the Russian River or some of its tributaries and where 
there is a significant climate effect from coastal fogs. The 
specific growing climate is the principal distinctive characteristic 
of the Russian River Valley viticultural area. The area designated 
is a cool growing coastal area because of fog intruding up the 
Russian River and its tributaries during the early morning hours.

[[Page 67369]]

Climate
    The term ``Russian River,'' as it applies to viticulture, refers to 
the cool temperatures and coastal fog that influence portions of the 
Russian River Valley. The expansion area has heavy fog, as noted on an 
undated map titled ``Lines of Heaviest and Average Maximum Fog 
Intrusion for Sonoma County.''
    The petition and Treasury Decision ATF-159, which established the 
Russian River Valley viticultural area, both refer to the Winkler 
degree-day (accumulated heat units) system used to classify grape-
growing climatic regions (see ``General Viticulture,'' Albert J. 
Winkler, University of California Press, 1975). As noted in Treasury 
Decision ATF-159, ``The Russian River Valley viticultural area is 
termed `coastal cool' with a range of 2000 to 2800 accumulated heat 
units.''
    The 767-acre expansion petition documented a degree-day study of 
three vineyards from April 2001 through October 2001, which coincides 
with Winkler's growing season. Two of these vineyards are within the 
original Russian River Valley viticultural area, while the other is in 
the newly approved expansion area. This study measured air temperature, 
wind speed, precipitation, and humidity at the three area vineyards. 
Documentation is provided in the following table:

------------------------------------------------------------------------
                                                           Degree-Days
                       Vineyard                           (accumulated
                                                           heat units)
------------------------------------------------------------------------
In the established viticultural area:
  Vino Farms Vineyard.................................             2,477
  Storey Creek Vineyard...............................             2,736
In the proposed expansion area:
  LeCarrefour Vineyards...............................             2,636
------------------------------------------------------------------------

    The results from the three vineyards studied show that all three 
are within the 2,000 to 2,800 accumulated heat units range found in the 
Russian River Valley viticultural area, as stated in Treasury Decision 
ATF-159. We independently confirmed that LeCarrefour Vineyards, at 4350 
Barnes Road, Santa Rosa, California, is within the approved expansion.
Elevation
    Elevations in the expansion area range from 130 feet to 160 feet, 
with a gentle rise from southwest to northeast, according to the two 
USGS topographic maps covering the expansion area. These elevations are 
similar to those found in the portion of the established Russian River 
Valley viticultural area immediately adjacent to the expansion area.
Soil
    The predominant soils of the expanded Russian River Valley 
viticultural area are Huichica Loam, Yolo Clay Loam, and Yolo Silt 
Loam, as depicted on the Sonoma County Soil Survey map (USDA, 1972), 
sheet 74. These soils are also found within the originally-established 
Russian River Valley viticultural area in vineyards to the north of the 
expansion area, as noted on pages 57 and 66 of the maps developed by 
the USDA's, Forest Service and Soil Conservation Service in May 1972. 
Treasury Decision ATF-159, which established the Russian River Valley 
viticultural area, does not identify any predominant soils or indicate 
unique soils of the viticultural area.
Watershed
    Both the original Russian River Valley viticultural area and the 
expanded area are in the large Russian River Valley watershed, as noted 
on the (California) Department of Fish and Game Inland Fisheries 
Division's ``Russian River Watershed'' map of April 1, 1997. This 
watershed includes the Russian River and the tributaries noted in 
Treasury Decision ATF-159.

Notice of Proposed Rulemaking

Comments

    The Notice of Proposed Rulemaking, Notice No. 965, requested 
comments from all interested persons concerning the expansion of the 
Russian River Valley viticultural area by March 10, 2003. TTB received 
six comments. Two comments supported the petitioned expansion, three 
opposed the expansion as petitioned, and one stated that this type of 
Government ruling is not in the public interest. These comments are 
posted on the TTB Web site under Notice No. 965 at http://www.ttb.gov/alcohol/rules/index.htm.
    After careful evaluation of each comment, TTB has approved the 767-
acre expansion of the Russian River Valley viticultural area in 
accordance with the August 2002 petition's proposed boundaries.
    The first supporting comment, from a winemaker with 18 years of 
experience, states ``the area between Fulton road and Hwy 101, proposed 
for inclusion in the RRV [Russian River Valley] in Notice 965 is very 
true-to-type for the RRV [Russian River Valley].'' The commenter 
explains that the quality of grapes grown in the expansion area is on 
par with the nearby vineyards inside the boundaries of the originally 
established Russian River Valley viticultural area. This commenter 
notes that in the future he will not hesitate to buy winegrapes from 
the expansion area and include them in his Russian River Valley-labeled 
wines.
    The second favorable comment requested approval of the proposed 
expansion and notes that the expansion area ``satisfies all the 
criteria outlined in Title 27 CFR 4.25a(e)(2) for proposing an American 
viticultural area (AVA).'' The commenter states that the expansion area 
satisfies the principal distinctive characteristic of the Russian River 
Valley viticultural area with its ``significant climatic effect from 
coastal fogs.''
    A comment, neither in favor or opposed to the Russian River Valley 
viticultural area expansion petition, states that this type of ruling 
is ``not in the public interest and the government has no business in 
this.'' The comment continues that such rulings are for commercial 
purposes, do not directly benefit the public, and argues that the wine 
industry should be responsible for this action.
    The FAA Act requires that alcohol beverage labels provide the 
consumer with adequate information regarding, among other things, a 
product's identity. TTB believes the use of viticultural area names as 
appellations of origin in wine labeling and advertising helps consumers 
identify the wines they may purchase.
    The first opposing comment states, ``If anything, the Russian River 
Valley AVA should be made smaller to reflect the uniqueness of that 
area.'' The commenter adds that since the 767-acre

[[Page 67370]]

expansion area falls outside the original Russian River Valley 
viticultural area, the expansion's approval will mislead wine buyers. 
The commenter concludes that the petitioning winery should not be 
allowed to purchase land outside the established viticultural area's 
boundaries and then propose the area's expansion to include its 
purchased land.
    In response, TTB notes that its 27 CFR part 9 regulations state 
that TTB shall receive and process petitions to establish viticultural 
areas and that such areas are found with the territorial extent of the 
entire United States, including the Russian River Valley. There is no 
regulatory provision to prohibit petitioners, who have purchased 
property outside the boundaries of an established American viticultural 
area, from proposing an expansion of the viticultural area's boundary 
line to include their property. We have also determined that the 
petition supports the requirements in 4.25a(e)(2) for the expansion of 
this viticultural area.
    Two commenters oppose the Carano petition to expand the Russian 
River Valley viticultural area. Both argue that the expansion area does 
not comply with the American Viticultural Area regulations in 27 CFR 
part 9 because there is ``substantial acreage outside the proposed 
expanded boundaries that is not significantly different, and in many 
cases is identical, to land within the proposed area of addition.'' 
Also, they explain there is no difference in climate, soils, or 
elevation in the areas immediately beyond the Carano boundary line 
expansion. One of the commenters separately states the Carano petition 
is ``incomplete.''
    Both comment letters indicate that on January 17, 2003, the Russian 
River Valley Winegrowers group submitted a petition to expand the 
Russian River Valley viticultural area boundaries by 30,200 acres. This 
group's expansion petition includes the subject area of this final rule 
and, as discussed in the two comments, other areas with similar 
climate, soil and elevation. Both commenters requested that Carano's 
August 2002 petition for the 767-acre expansion of the Russian River 
Valley viticultural area, which is approved by this ruling, be joined 
with the January 2003 expansion petition of the Russian River Valley 
Winegrowers group.
    In response to the opposition to the Carano petition, TTB notes 
that the two comments do not disagree with the petitioned 767-acre 
expansion, but believe that the expansion should be larger. The 
petitioner provided convincing evidence that the expansion area 
complies with the 27 CFR part 9 and is similar to the established 
Russian River Valley area, with the same distinguishing cool, foggy 
climate. The Russian River Valley Winegrowers' January 2003 petition to 
expand the Russian River Valley viticultural area by 30,200 acres 
includes the 767-acre expansion area approved in this rule. Because of 
the five months between receipt of the 767-acre expansion petition in 
August 2002 and the winegrowers' expansion petition in January 2003, we 
will continue to process the January 2003 petition separately.
    Therefore, through this final ruling, TTB incorporates the 767-acre 
expansion area into 27 CFR 9.66, Russian River Valley.

Regulatory Analyses and Notices

Paperwork Reduction Act

    This rule imposes no requirement to collect information. Therefore, 
the provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507, 
and its implementing regulations, 5 CFR part 1320, do not apply.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., requires an 
agency to conduct a regulatory flexibility analysis on any proposed 
rule that may have a significant economic impact on a substantial 
number of small entities. We certify that this regulation will not have 
a significant economic impact on a substantial number of small 
entities. This regulation imposes no new reporting, recordkeeping, or 
other administrative requirements.
    The establishment of viticultural areas represents neither our 
endorsement nor approval of the quality of wine made from grapes grown 
in the areas. The use of viticultural names as appellations of origin 
merely allow vintners to better describe the origin of their wines to 
consumers and helps consumers identify the wines they purchase. Thus, 
any benefit derived from using a viticultural area name results from a 
proprietor's own efforts and consumer acceptance of wines from that 
area. Therefore, no regulatory flexibility analysis is required.

Executive Order 12866

    This rule is not a significant regulatory action as defined by 
Executive Order 12866, 58 FR 51735. Therefore, it requires no 
regulatory assessment.

Drafting Information

    The principal author of this document is N.A. Sutton (Oregon), 
Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade 
Bureau.

List of Subjects in 27 CFR Part 9

    Wine.

Authority and Issuance

0
For the reasons discussed in the preamble, we amend title 27, chapter 
I, part 9, Code of Federal Regulations, as follows:

PART 9--AMERICAN VITICULTURAL AREAS

0
1. The authority citation for part 9 continues to read as follows:

    Authority: 27 U.S.C. 205.

0
2. Amend Sec.  9.66, Russian River Valley viticultural area by removing 
``Road'' and adding in its place ``Avenue'' at the end of paragraph 
(c)(9), by redesignating paragraphs (c)(12) through (c)(24) as (c)(14) 
through (c)(26), by revising paragraphs (c)(10) and (c)(11), and by 
adding new paragraphs (c)(12) and (c)(13) to read as follows:

Subpart C--Approved American Viticultural Areas


Sec.  9.66  Russian River Valley.

* * * * *
    (c) * * *
    (10) Proceed north on Wright Avenue, which becomes Fulton Road, for 
approximately 3.8 miles to an unnamed unimproved road running to the 
east in Section 5 of T7W, R8W, which becomes a light duty road locally 
known as Francisco Avenue, and continue generally east on Francisco 
Avenue for about 0.6 mile to its intersection with the eastern boundary 
line of Section 5 in T7W, R8W, at a point where Francisco Avenue makes 
a 90[deg] turn to the south.
    (11) Proceed north along that section line for about 500 feet to a 
point due west of the intersection of Barnes Road and an unnamed light 
duty road locally known as Dennis Lane.
    (12) Proceed straight east 1.2 miles, following Dennis Lane to its 
end, and continuing straight east to U.S. Highway 101, passing onto the 
Santa Rosa map in the process.
    (13) Proceed 1.3 miles straight northwest along U.S. Highway 101, 
passing onto the Sebastopol map, to its intersection with an unnamed 
medium duty road locally known as River Road west of U.S. Highway 101 
and as Mark West Springs Road east of U.S. Highway 101.
* * * * *


[[Page 67371]]


    Signed: September 3, 2003.
John J. Manfreda,
Acting Administrator.
    Approved: September 24, 2003.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 03-29906 Filed 12-1-03; 8:45 am]
BILLING CODE 4810-31-P