[Federal Register Volume 69, Number 37 (Wednesday, February 25, 2004)]
[Rules and Regulations]
[Pages 8562-8565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4087]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[T.D. TTB-9; Re: ATF Notice No. 947]
RIN 1513-AA48


Oak Knoll District of Napa Valley Viticultural Area (2002R-046P)

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

ACTION: Final rule; Treasury decision.

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SUMMARY: This final rule establishes the ``Oak Knoll District of Napa 
Valley'' viticultural area in Napa County, California. This new 
viticultural area is entirely within the established Napa Valley 
viticultural area and covers approximately 8,300 acres, of which about 
3,500 acres are plantable to vines. The establishment of viticultural 
areas allows wineries to describe more accurately where their wines 
come from and enables consumers to better identify the wines they 
purchase.

EFFECTIVE DATE: This final rule is effective on April 26, 2004.

FOR FURTHER INFORMATION CONTACT: Joanne C. Brady, Regulations and 
Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 
45797, Philadelphia, PA 19149; telephone (215) 333-7050.

SUPPLEMENTARY INFORMATION:

Impact of the Homeland Security Act on Rulemaking

    Effective January 24, 2003, the Homeland Security Act of 2002 
divided the Bureau of Alcohol, Tobacco and Firearms (ATF) into two new 
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 alcohol 
beverage labels, 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.

Background on Viticultural Areas

What Is TTB's Authority To Establish a Viticultural Area?

    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 identity and prohibits the 
use of deceptive information on such labels. The FAA Act also 
authorizes the Secretary of the Treasury to issue regulations to carry 
out the Act's 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. The 
regulations allow the name of an approved viticultural area to be used 
as an appellation of origin on wine labels and in wine advertisements. 
A list of approved viticultural areas is contained in 27 CFR part 9, 
American Viticultural Areas.

What Is the Definition of an American Viticultural Area?

    Section 4.25(e)(1), title 27 CFR, defines an American viticultural 
area as a delimited grape-growing region distinguishable by 
geographical features the boundaries of which have been delineated in 
subpart C of part 9. The establishment of viticultural areas allows the 
identification of regions where a given quality, reputation, or other 
characteristic of a wine is essentially attributable to its geographic 
origin. We believe that the establishment of viticultural areas allows 
wineries to describe more accurately the origin of their wines to 
consumers and helps consumers identify the wines they purchase. 
Establishment of a viticultural area is neither an approval nor 
endorsement by TTB of the wine produced there.

What Is Required To Establish a Viticultural Area?

    Section 4.25a(e)(2), title 27 CFR, outlines the procedure for 
proposing an American viticultural area. Any interested person may 
petition TTB to

[[Page 8563]]

establish a grape-growing region as a viticultural area. The petition 
must include:
     Evidence that the proposed viticultural area is 
locally and/or nationally known by the name specified in the petition;
     Historical or current evidence that the 
boundaries of the viticultural area are as specified in the petition;
     Evidence that the proposed area's growing 
conditions, such as climate, soils, elevation, physical features, etc., 
distinguish it from surrounding areas;
     A description of the specific boundaries of the 
viticultural area, based on features that can be found on United States 
Geological Survey (USGS)-approved maps; and
     A copy of the appropriate USGS-approved map(s) 
with the boundaries prominently marked.

Impact on Current Wine Labels

    With the establishment of this viticultural area, bottlers who use 
brand names similar to or containing part of the name of the 
viticultural area must ensure that their existing products are eligible 
to use the name of the viticultural area 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 named viticultural area. If the 
wine is not eligible to use the appellation, bottlers must change the 
brand name of that wine and obtain approval of a new label. Different 
rules apply if you label a wine in this category with a brand name 
approved before July 7, 1986. See 27 CFR 4.39(i) for details.

Rulemaking Proceeding

Oak Knoll District Petition

    The Oak Knoll District Committee petitioned ATF to establish the 
``Oak Knoll District'' viticultural area in the southern end of the 
Napa Valley in Napa County, California. Situated entirely within the 
established Napa Valley viticultural area, the Oak Knoll District area 
lies between the established Yountville viticultural area and the city 
of Napa. The petitioned viticultural area covers approximately 8,300 
acres, of which about 3,500 acres are plantable to vines.

Comments on the Notice of Proposed Rulemaking

    ATF published Notice No. 947, a notice of proposed rulemaking, in 
the Federal Register on July 9, 2002 (67 FR 45437). The comment period 
for the proposed rule closed on September 9, 2002. During this 60-day 
time period, ATF requested comments concerning the proposed Oak Knoll 
District viticultural area from all interested persons. ATF received 
seven written comments.
    Two commenters, Mary Ann Tsai, president of Luna Vineyards, and Mr. 
James Verhey, president of UCC Vineyards Group, supported the Oak Knoll 
District's establishment, but sought to expand the area to include a 
vineyard just outside its eastern boundary along the Silverado Trail. 
Both Mr. Verhey and Ms. Tsai, in second comments, withdrew their first 
comments and supported the area's proposed boundaries. Ms. Dawnine 
Dyer, president of the Napa Valley Vintners Association, also wrote to 
express the group's support of the viticultural area as originally 
proposed.
    Two comments opposed the area's establishment because the 
commenters believed the public would confuse the Oak Knoll District 
with the name and reputation of the Oak Knoll Winery in the Willamette 
Valley in Oregon. Mr. Ronald Vuylsteke and Ms. Marjorie Vuylsteke, 
founders of the Oak Knoll Winery, and Mr. Thomas Burton, the winery's 
general manager, expressed their opposition to the Oak Knoll District 
name in a jointly signed comment. They stated that use of this name 
would create significant consumer confusion, infringe upon their Oak 
Knoll brand name, and allow California winemakers to capitalize on 
their 30 years of work in the wine trade. They did suggest, however, 
that the alternative name ``Oak Knoll District of the Napa Valley'' 
might help differentiate the California wines from the Oregon wines.
    Mr. Hugh Thacher, president, and Mr. James Faber, vice president of 
the San Francisco Wine Exchange, the marketing and sales agent for the 
Oak Knoll Winery in Oregon, also opposed the Oak Knoll District's 
establishment. They stated that an Oak Knoll District viticultural area 
would impact their ability to effectively market the Oak Knoll brand as 
an Oregon winery.
    The petitioner recently advised TTB that they are willing to revise 
the name of the viticultural area to ``Oak Knoll District of Napa 
Valley.'' They have also corrected the amount of acreage in the 
petition from approximately 9,940 acres, of which 4,040 are plantable 
to vines, to approximately 8,300 acres, with 3,500 acres plantable to 
vines. This correction is to the amount of acres listed only. The 
boundaries in Notice No. 947 are accurate and have not changed.

TTB Decision

    The petitioner provided substantial historical and current name 
evidence for the proposed Oak Knoll District viticultural area. After 
evaluating the petition, and the comments received, TTB has decided 
that the name ``Napa Valley'' should be made a part of the viticultural 
area name in order to distinguish the name of this area from the Oak 
Knoll Winery located in Willamette Valley, Oregon, which must continue 
to comply with the provisions of 27 CFR 4.39(i). The regulatory text 
contained in this final rule has been modified accordingly, and the new 
viticultural area will be formally known as the ``Oak Knoll District of 
Napa Valley.''

Supporting Evidence for the Oak Knoll District of Napa Valley

What Name Evidence Has Been Provided?

    The petitioners supplied name evidence in the form of articles from 
various publications and trade magazines that make reference to the 
``Oak Knoll District'' in Napa Valley. An excerpt from the article 
``Dances with Cows'' by Richard Paul Hinkle in the Lifestyle section of 
the August/September 1999 issue of Wine News states that the Trefethen 
family bought the Eshcol estate, a 600-acre walnut, wheat, grape and 
prune ranch, ``in the Oak Knoll District of Napa'' in 1968. An article 
from the July 16, 1997, Los Angeles Times states, ``Trefethen's 600 
acres of vines are in the (not yet legally designated) Oak Knoll 
District at the cool southern end of Napa Valley, not far from the city 
of Napa.''
    The petition included historical evidence for the Oak Knoll name in 
a report submitted by historian Charles L. Sullivan, which included 
newspaper articles that extend back to the 1800s. According to the 
report, the viticultural area is the site of the historic Oak Knoll 
Ranch, which dates from the early days of American settlement in the 
Napa Valley. Also within the viticultural area are the former Oak Knoll 
School District, the historic Oak Knoll train station, the Oak Knoll 
Inn, and the Oak Knoll Cellars vineyard.
    The petitioner also offers some modern evidence of the area's name 
recognition, noting that Oak Knoll Avenue traverses the viticultural 
area from Highway 29 on its western side to the Silverado Trail on its 
eastern side.

What Boundary Evidence Has Been Provided?

    The Oak Knoll District of Napa Valley viticultural area is located 
in the southern end of Napa Valley in Napa County, California, and is 
completely within the established Napa Valley

[[Page 8564]]

viticultural area. The northern boundary of Oak Knoll District of Napa 
Valley is the same as the southern boundary of the Yountville 
viticultural area, and the Mt. Veeder viticultural area boundary line 
to Redwood Road defines part of its western boundary. Professor Deborah 
L. Elliott-Fisk, in her climate and soil report included with the 
petition, states that the area's southern boundary approximates the 
southern edge of the Dry Creek alluvial fan. She also concludes the 
most logical west-east line to follow for this boundary is Redwood 
Road, which becomes Trancas Road to the east of Highway 29, and states 
the area's logical eastern boundary is the Silverado Trail.
    The petitioner submitted two USGS maps. See the narrative boundary 
descriptions and the listing of maps for the viticultural area in the 
final rule published at the end of this notice.

What Evidence Relating to Growing Conditions Was Provided?

Soil
    According to the reports and studies cited by Dr. Elliott-Fisk, the 
soils in the Oak Knoll District of Napa Valley viticultural area are 
``more uniform than in other approved Napa Valley viticultural areas, 
due principally to the dominance of the large Dry Creek alluvial fan.'' 
Dr. Elliott-Fisk notes that across the large Dry Creek fan, soils 
include fine, gravelly clay loam, silt loam, and loam soils. The 
alluvial deposits from Dry Creek and the Napa River have buried the 
Diablo clays and Haire clay loams within this viticultural area. This 
contrasts with the land south of this viticultural area where Diablo 
and Haire soils are common at the surface.
    Bedrock, seen in the hillsides along the western edge of the Oak 
Knoll District of Napa Valley area is diverse and primarily volcanic in 
origin. Serpentine, sandstone and shale are found on the hillsides. The 
toeslope soils are unusually rich in clay and are found in many 
different colors.
Topography
    According to reports cited by Dr. Elliott-Fisk, the Oak Knoll 
District of Napa Valley viticultural area lies at relatively low 
elevations along the valley floor, with the Dry Creek Fan spreading out 
across the valley floor as sea-level dropped and San Pablo Bay 
regressed south and west many years ago. Valley floor elevations and 
the valley floor gradient increase just south of Yountville. This is 
the most abrupt topographic change along the entire Napa Valley floor.
Climate
    The petitioners state that, outside of the Los Carneros 
viticultural area, one of the coolest regions in the Napa Valley is the 
Oak Knoll District of Napa Valley viticultural area, which has a long 
cool growing season for grapevines lasting approximately eight months 
of the year. This uniform climate is due to the broad, flat valley 
floor's topography. Along the western and eastern edges of the Oak 
Knoll District of Napa Valley area, small pockets of an even cooler 
climate are found in the immediate Napa River floodplain and in the 
small stream tributaries on the lower foothills.
    The petitioner also states the proximity of this area to San Pablo 
Bay results in a maritime influence, with cool breezes coming off the 
bay. Coastal fog is common is the mornings, especially in the summer. 
The petitioner adds that the area is sub-humid and receives 
approximately 28 to 30 inches of precipitation in a normal year. Annual 
precipitation can reach 60 inches in an abnormally wet year.

Regulatory Analyses and Notices

Is This a Significant Regulatory Action as Defined by Executive Order 
12866?

    TTB has determined that this regulation is not a significant 
regulatory action as defined by Executive Order 12866. Therefore, a 
regulatory assessment is not required.

How Does the Regulatory Flexibility Act Apply to This Proposed Rule?

    TTB certifies 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 a viticultural area 
is neither an endorsement nor approval by TTB of the quality of wine 
produced in the area. Any benefit derived from the use of a 
viticultural area name is the result of a proprietor's own efforts and 
consumer acceptance of wines from that area. Accordingly, a regulatory 
flexibility analysis is not required.

Drafting Information

    The principal author of this document is Joanne Brady, Regulations 
and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau.

List of Subjects in 27 CFR Part 9

    Administrative practice and procedure, Alcohol and alcoholic 
beverages, Consumer protection, and Wine.

Authority and Issuance

0
For the reasons set forth in the preamble, Title 27, Code of Federal 
Regulations, part 9, American Viticultural Areas, is amended 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.

Subpart C--Approved American Viticultural Areas

0
2. Subpart C is amended by adding Sec.  9.161 to read as follows:


Sec.  9.161  Oak Knoll District of Napa Valley.

    (a) Name. The name of the viticultural area described in this 
section is ``Oak Knoll District of Napa Valley''.
    (b) Approved maps. The appropriate maps for determining the 
boundary of the Oak Knoll District of Napa Valley viticultural area are 
the following United States Geological Survey Quadrangle maps (7.5 
Minute Series):
    (1) Napa, California, 1951 (Photo revised 1980); and
    (2) Yountville, California, 1951 (Photo revised 1968).
    (c) Boundaries. The Oak Knoll District of Napa Valley viticultural 
area is located entirely within Napa County, California. The boundaries 
of the Oak Knoll District of Napa Valley viticultural area, using 
landmarks and points of reference found on the appropriate U.S.G.S. 
maps, are as follows:
    (1) Beginning at the intersection of State Highway 29 and Trancas 
Road in the city of Napa on the Napa, CA quadrangle map;
    (2) Proceed easterly along Trancas Road until it meets the Napa 
River;
    (3) Proceed southerly along the Napa River approximately 3,500 feet 
to its confluence with Milliken Creek;
    (4) Continue northerly up Milliken Creek to its intersection with 
Monticello Road;
    (5) Then proceed westerly along Monticello Road to its intersection 
with Silverado Trail;
    (6) Then proceed northerly and then northeasterly along Silverado 
Trail to its intersection with an unimproved dirt road located 
approximately 1,300 feet north of the intersection of Silverado Trail 
and Oak Knoll Avenue;
    (7) From that point, proceed west in a straight line to the 
confluence of Dry Creek and the Napa River;
    (8) Then proceed northwesterly along Dry Creek onto the Yountville 
map to

[[Page 8565]]

the fork in the creek; then northwesterly along the north fork of Dry 
Creek to its intersection with the easterly end of the light-duty road 
labeled Ragatz Lane;
    (9) Proceed southwesterly along Ragatz Lane to the west side of 
State Highway 29;
    (10) Then proceed southerly along the west side of State Highway 29 
for 982 feet to a point marking the easterly extension of the northern 
boundary of Napa County Assessor's parcel number 034-170-015 (marked in 
part by a fence along the southern edge of the orchard shown along the 
west side of State Highway 29 just above the bottom of the Yountville 
map);
    (11) Then proceed westerly for 3,550 feet along the northern 
boundary of Napa County Assessor's parcel number 034-170-015 and its 
westerly extension to the dividing line between Range 5 West and Range 
4 West on the Napa, CA map;
    (12) Then proceed southwest in a straight line to the peak marked 
with an elevation of 564 feet; then south-southwest in a straight line 
to the peak marked with an elevation of 835 feet;
    (13) Then proceed southwest in a straight line approximately 1,300 
feet to the reservoir gauging station located on Dry Creek; then 
proceed west in a straight line across Dry Creek to the 400 foot 
contour line;
    (14) Proceed along the 400-foot contour line in a generally 
southeasterly direction to its intersection with the line dividing 
Range 5 West and Range 4 West; then proceed south along that dividing 
line approximately 2,400 feet to the center of Redwood Road;
    (15) Then proceed southerly and then easterly along Redwood Road to 
the point of beginning at Highway 29.

    Dated: January 5, 2004.
Arthur J. Libertucci,
Administrator.
    Approved: January 28, 2004.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 04-4087 Filed 2-24-04; 8:45 am]
BILLING CODE 4810-31-P