[Federal Register Volume 69, Number 229 (Tuesday, November 30, 2004)]
[Rules and Regulations]
[Pages 69524-69527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26330]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[TTB T.D.-18; Re: Notice No. 14]
RIN: 1513-AA50


Establishment of the Dundee Hills Viticultural Area (2002R-218P)

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

ACTION: Final rule; Treasury decision.

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SUMMARY: This Treasury decision establishes the Dundee Hills 
viticultural area in Yamhill County, Oregon. This new area is entirely 
within the existing Willamette Valley viticultural area. We designate 
viticultural areas to allow vintners to better describe the origin of 
their wines and to allow consumers to better identify wines they may 
purchase.

EFFECTIVE DATES: January 31, 2005.

FOR FURTHER INFORMATION CONTACT: N. A. Sutton, Regulations and 
Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, 925 
Lakeville St., 158, Petaluma, CA 94952; telephone 415-271-
1254.

SUPPLEMENTARY INFORMATION:

Background on Viticultural Areas

TTB Authority

    Section 105(e) of the Federal Alcohol Administration Act (the FAA 
Act, 27 U.S.C. 201 et seq.) requires that alcohol beverage labels 
provide the consumer with adequate information regarding a product's 
identity and prohibits 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 Alcohol and Tobacco 
Tax and Trade Bureau (TTB) administers these regulations.
    Part 4 of the TTB regulations (27 CFR part 4) allows the 
establishment of definitive viticultural areas and the use of their 
names as appellations of origin on wine labels and in wine 
advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains 
the list of approved viticultural areas.

Definition

    Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) 
defines a viticultural area for American wine as a delimited grape-
growing region distinguishable by geographical features, the boundaries 
of which have been recognized and defined in part 9 of the regulations. 
These designations allow vintners and consumers to attribute a given 
quality, reputation, or other characteristic of a wine made from grapes 
grown in an area to its geographic origin. The establishment of 
viticultural areas allows vintners to describe more accurately the 
origin of their wines to consumers and helps consumers to identify 
wines they may purchase. Establishment of a viticultural area is 
neither an approval nor an endorsement by TTB of the wine produced in 
that area.

Requirements

    Section 4.25(e)(2) of the TTB regulations outlines the procedure 
for proposing an American viticultural area and provides that any 
interested party may petition TTB to establish a grape-growing region 
as a viticultural area. Section 9.3(b) of the TTB regulations requires 
the petition to 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 supports setting the 
boundary of the proposed viticultural area as the petition specifies;
     Evidence relating to the geographical features, such as 
climate, soils, elevation, and physical features, that distinguish the 
proposed viticultural area from surrounding areas;
     A description of the specific boundary of the proposed 
viticultural area, based on features found on United States Geological 
Survey (USGS) maps; and
     A copy of the appropriate USGS map(s) with the proposed 
viticultural area's boundary prominently marked.

Dundee Hills Petition

General Background

    In 2002, TTB received a petition from Alex Sokol Blosser, secretary 
of the North Willamette Valley AVA Group, proposing the establishment 
of the 6,490-acre ``Red Hills'' viticultural area in Yamhill County, 
Oregon. As explained below, the petitioner subsequently amended the 
area's name to ``Dundee Hills.'' Located in northwest Oregon near the 
town of Newberg, the Dundee Hills viticultural area is about 28 miles 
southwest of Portland and 40 miles inland from the Pacific Ocean. The 
Dundee Hills area is entirely within the established Willamette Valley 
viticultural area (27 CFR 9.90). At the time of the petition, the 
Dundee area had 1,264 acres planted to grapes, with another 800 acres 
available for future vineyard use.
    The Dundee Hills rise above the low, flat floors of the surrounding 
Willamette and Chehalem Valleys. These hills generally have peaks above 
700 feet, with the highest peak rising to 1,067 feet. In addition to 
their higher elevation, warmer nighttime temperatures and less low-
elevation fog and frost distinguish the Dundee Hills area from the 
surrounding valleys.
    Below, we summarize the evidence presented in the petition.

Name Evidence

    The North Willamette Valley AVA Group originally proposed the name 
``Red Hills,'' for this area, but after learning of other petitioners 
proposing the same (or a similar) name for other viticultural areas, 
the Group amended its petitioned name to ``Red Hills of Dundee.'' The 
Group later amended its petitioned name to ``Dundee Hills'' to avoid 
possible confusion with other domestic and international ``Red Hill'' 
or ``Red Hills'' viticultural regions.
    The amended petition included evidence showing that local 
residents, vintners, and others know the region as the ``Dundee 
Hills.'' The October 2002 Yamhill County, Oregon, Verizon Super Pages 
telephone book includes ``Dundee Hills Estate,'' while the ``Shop 
Newberg'' Web site lists ``Dundee Hills Farm.'' Ellen McCornack's March 
1912, Oregon Historical Society Quarterly article, ``A Glimpse into 
Prehistoric Oregon,'' explains the Willamette Valley was a large, 
prehistoric body of water, and that ``[a]cross a narrow straight from 
Chehalem was the island of the Dundee Hills * * *.''
    ``In with the New World,'' an article in the fall/winter 1998 issue 
of Wine Press Northwest, lists several pioneer Oregon wine growers, 
including David Lett, who arrived in 1965 with:

a degree in viticulture from the University of California-Davis and 
a plan to find a cool climate suitable for planting pinot noir and 
other varieties from Burgundy. Lett decided on the Dundee Hills in 
the Willamette Valley * * *. Another early pioneer is Dick Erath of 
Erath Vineyards, also still producing great wine in the Dundee Hills 
near Newberg.

    Fred Delkin, in a 2002 Oregon Magazine article, ``Papa Pinot Still 
Preaching Gospel That Created an Industry,'' also notes that, in 1966, 
Lett planted ``Pinot Noir and its cousin, Pinot Gris, in the Dundee 
hills area.'' A

[[Page 69525]]

November 14, 2002, Seattle Times article, ``Wine Is the Main Course 
this Thanksgiving Celebration,'' adds, ``Erath Vineyards, high in the 
Dundee hills, is one of the Willamette Valley's pioneer wineries.''
    The 1989 Parker's Wine Buyer's Guide explains, ``Pinot Noir from 
the Dundee Hills, a subregion of the Willamette Valley, has a more 
herbaceous, bing-cherry fruitiness'' (page 814). In Marne Coggan's 
Vineyards and Winery Management article, ``Vineyard Land Values Part 2: 
What's Happening Beyond the North Coast'' (Vol. 27, No. 4, 2001), 
states:

The premier Oregon wine growing area is called the Dundee Hills * * 
*. Vacant land values in the Dundee Hills have climbed from $8,000-
$10,000 to $10,000-$15,000 per acre. But those prices drop 
dramatically as you head south toward Salem and the Polk County 
area, where values are probably half of the Dundee Hills levels.

    The October 2001 Oregon Wine Magazine article (page 20) describes a 
French-owned gravity-fed winery, Domaine Drouhin, which ``clings to the 
heights of the Dundee Hills.''

Boundary Evidence

    The Dundee Hills viticultural area's boundaries are based on a 
number of distinguishing features, including elevation, terrain, 
climate, and soils, as well as the modern viticultural history of the 
area.
    The Dundee Hills viticultural area consists of a single, continuous 
uplifted landmass that rises above the surrounding valley floors. The 
lower and flatter land along the Willamette River and its tributary, 
the Yamhill River, defines the Dundee Hills viticultural area to the 
east and south. Millican Creek, a southward flowing tributary of the 
Yamhill River, and a smaller drainage flowing north into Chehalem 
Creek, which empties into the Willamette River, border the hills to the 
west. The Chehalem Valley defines the northern limits of Dundee Hills.
    The viticultural area's boundary is an irregular circle 
encompassing the Dundee Hills. The 200-foot contour line constitutes 
most of the boundary, which divides the base of the hills' slopes from 
the surrounding valley floors. On much of the area's western side, a 
roadway that varies between 200 and 300 feet in elevation is used in 
lieu of the 200-foot elevation line, which meanders far from the 
logical perimeter of the Dundee Hills viticultural area.
    Portions of the towns of Dundee and Lafayette, where the Dundee 
Hills area's 200-foot elevation boundary crosses the towns' boundaries, 
are included within the viticultural area. Oregon State Route 99W, a 
heavy-duty road to the east and south of Dundee Hills, and State Route 
240, a medium-duty road to the north, are generally outside the 
established boundary line, but occasionally cross into the viticultural 
area. The town of Dundee straddles the area's eastern border, the 
Yamhill River runs near its southern boundary, Millican Creek and the 
Trappist Abbey of Our Lady of Guadalupe anchor its west side, and the 
Chehalem Valley lies beyond its northern boundary.

Viticultural Growth

    Wine grapes planted in 1969 at Erath Vineyards produced 216 cases 
of Pinot noir in 1972, and, in 1971, five acres of Pinot noir grapes 
were planted at the Sokol Blosser vineyard. Statistics from the 
petition show the viticultural growth of the proposed Dundee Hills 
area:

                                    Viticultural Growth in Dundee Hills Area
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                                                  Decade  ending  Decade  ending  Decade  ending
                                                        1980            1990            2000        As of 2002
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Acreage.........................................             299             577           1,161           1,264
Vineyards.......................................              13              22              38              44
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Distinguishing Features

    Elevation, terrain, climate, and soil factors distinguish the 
Dundee Hills viticultural area from the grape-growing regions found on 
the surrounding valley floors. As noted earlier, the 200-foot contour 
line is used for most of the boundary between the Dundee Hills 
viticultural area and the surrounding, lower and flatter valley floors.
Elevation and Terrain
    The Dundee Hills viticultural area elevation rises from the 200-
foot contour line to the highest hill's peak of 1,067 feet. These 
heights contrast with the lower elevation Chehalem and Willamette 
Valleys, which flank the north, east, and south sides of the 
viticultural area. The area's western boundary, along Abbey and Kuehne 
Roads, is marked by a natural depression with drainage south to the 
Yamhill River via Millican Creek, while a smaller unnamed drainage 
flows north into the Chehalem Valley.
    The Dundee Hills viticultural area's topography consists of a 
north-south spine with ridges and small valleys on the east, south and 
west sides of the landmass. This hilly area is above the Willamette and 
Chehalem Valleys' flood plains. Numerous small streams originate in the 
Dundee area's higher elevations and the area is dotted with small 
reservoirs. Light-duty and unimproved roads service the Dundee Hills 
area.
    The 5th edition of the ``Geology of Oregon'' by Elizabeth and 
William Orr explains that the geological history of the Dundee Hills 
area dates back 66 million years with the uplifting of the North 
American tectonic plate, which formed the Coast Range mountains and the 
inland ridges and valleys. Lava flows, dating back 15 million years, 
pushed into the area from northeast Oregon, depositing Columbia River 
basalts and restructuring the landscape with hills and broken ridges.
    To the west, the huge uplifted mass of the Coast Range parallels 
the Pacific Ocean coastline. Between the Coast Range on the west, and 
the Dundee Hills to the east, is the inland Yamhill-Carlton region, 
which is also a proposed viticultural area. The Yamhill-Carlton area 
has small uplifted slopes that drain entirely into the Yamhill River 
system, while only the west side of the Dundee Hills area drains into 
this watershed.
    To the north, the Chehalem Mountains, with an east to west 
orientation, have a large footprint and cover more surface area than 
Dundee Hills. These taller mountains provide the Dundee Hills 
viticultural area with some protection from the climatic extremes found 
further to the north.
    To the east and immediate south of the Dundee Hills viticultural 
area, the lower-elevation Willamette Valley floor has different soils 
and growing conditions, and is subject to standing water in the winter 
and spring. The Eola Hills, 20 miles south of the Dundee area, have a 
north-south orientation, a large footprint, and a strongly marine-
influenced climate.

[[Page 69526]]

Climate
    The Dundee Hills viticultural area, with warmer nights and less 
frost than the adjacent valley floors, is protected from great climatic 
variations by surrounding geographic features. To the north, the tall 
Chehalem Mountains buffer the climatic influence of the Columbia River 
Gorge, which funnels cold air in the winter and warm air in the summer 
into the Willamette Valley from the interior of northern Oregon. In 
addition, the Willamette Valley, located to the east and south of the 
Dundee Hills area, has spring and fall fog and frost, which is created 
as cool night air drains from the hillsides onto the valley floor.
    The Coast Range, to the west of the Dundee Hills area, lessens the 
harsh effects of the Pacific Ocean's heavy rains and windstorms, and 
causes a rain shadow effect in the Dundee Hills area. Annually, the 
Coast Range receives 90 to 135 inches of rain, while the Dundee Hills 
area gets about a third that much--30 to 45 inches of rain annually.
    The proposed Yamhill-Carlton viticultural area, located between the 
Coast Range and the Dundee Hills area, has a stronger marine-influenced 
climate, with more wind and rainfall, than the Dundee Hills 
viticultural area. The Yamhill-Carlton region averages 60 inches of 
annual precipitation and has 150 fewer degree-growing days than the 
Dundee area.
    The Eola Hills, 20 miles to the south of the Dundee Hills, receive 
a strong cooling marine influence that pushes inland from the Pacific 
Ocean through the Van Duzer Corridor, an opening in the Coast Range. 
This marine effect loses most of its cooling benefit before reaching 
the Dundee Hills viticultural area.
Soils
    The ``Soil Survey of the Yamhill Area, Oregon,'' issued by the U.S. 
Department of Agriculture's Soil Conservation Service in January 1974, 
documents that the reddish color in the Dundee Hills area's soil is 
derived from the Columbia River basalt lavas, including the Jory soil 
series, which cover approximately 80 percent of the area. These lava-
based soils decompose quickly with the high rain amounts found in 
northwestern Oregon, which helps produce the area's Jory series of 
reddish silt, clay, and loam soils. This soil series, found 
predominantly on the Dundee Hills' eastern side, is moderately fertile 
and well drained, with slight to moderate erosion levels.
    The sedimentary Willakenzie soil series covers the steeper slopes 
of the Dundee Hills area's western side. This soil series is 
categorized as well drained with moderate to high erosion levels. A 
smaller amount of the Jory soil series exists on the area's western 
side where the Columbia River lava flows cover the sedimentary 
formations.
    Outside the Dundee Hills viticultural area's boundary, the soils of 
the Coast Range, the Yamhill-Carlton area, the Chehalem Mountains, the 
Willamette Valley floor, and the Eola Hills contrast with the soils 
found within the Dundee Hills area. The Coast Range to the west has 
marine volcanic and sedimentary soils, with high water holding capacity 
silts and basalt layers sandwiched between marine sediments.
    The Yamhill-Carlton region, to the Dundee area's west and 
northwest, has soils derived from marine sediments and ocean floor 
volcanic basalt with high water holding capacity. The Chehalem 
Mountains, to the north and northeast, have the Columbia River basalt, 
ocean sedimentation, and wind-blown loess derivation soil types. The 
Willamette Valley floor, to the east and south, has deep, alluvial 
soils with high water holding capacity. In the Eola Hills region to the 
south, low water holding capacity, slow permeability, and moderate 
erosion levels characterize the predominant Gelderman and Ritner basalt 
soil series found there.

Boundary Description

    See the narrative boundary description of the viticultural area in 
the regulatory text published at the end of this notice.

Maps

    The petitioner(s) provided the required maps, and we list them 
below in the regulatory text.

Notice of Proposed Rulemaking and TTB Finding

    TTB published a notice of proposed rulemaking regarding the 
establishment of the Dundee Hills viticultural area in the August 15, 
2003, Federal Register as Notice No. 14 (68 FR 48839). In that notice, 
TTB requested comments by October 14, 2003, from all interested 
persons. TTB received 13 comments in response. All comments supported 
the Dundee Hills area's establishment, and most noted its distinctive 
geography, climate, and soils.
    After careful review, TTB finds that the evidence submitted with 
the petition supports the establishment of the proposed viticultural 
area. Therefore, under the authority of the Federal Alcohol 
Administration Act and part 4 of our regulations, we establish the 
``Dundee Hills'' viticultural area in Yamhill County, Oregon, effective 
60-days from this document's publication date.

Impact on Current Wine Labels

    Part 4 of the TTB regulations prohibits any label reference on a 
wine that indicates or implies an origin other than the wine's true 
place of origin. With the establishment of this viticultural area and 
its inclusion in part 9 of the TTB regulations, its name, ``Dundee 
Hills,'' is recognized as a name of viticultural significance. 
Consequently, wine bottlers using ``Dundee Hills'' in a brand name, 
including a trademark, or in another label reference as to the origin 
of the wine, must ensure that the product is eligible to use the 
viticultural area's name as an appellation of origin.
    For a wine to be eligible to use as an appellation of origin the 
name of a viticultural area specified in part 9 of the TTB regulations, 
at least 85 percent of the grapes used to make the wine must have been 
grown within the area represented by that name, and the wine must meet 
the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not 
eligible to use the viticultural area name as an appellation of origin 
and that name appears in the brand name, then the label is not in 
compliance and the bottler must change the brand name and obtain 
approval of a new label. Similarly, if the viticultural area name 
appears in another reference on the label in a misleading manner, the 
bottler would have to obtain approval of a new label.
    Different rules apply if a wine has a brand name containing a 
viticultural area name that was used as a brand name on a label 
approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

Regulatory Analyses and Notices

Regulatory Flexibility Act

    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 requirement. Any benefit derived from the use of a 
viticultural area name is the result of a proprietor's 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.

[[Page 69527]]

Drafting Information

    N.A. Sutton of the Regulations and Procedures Division drafted this 
document.

List of Subjects in 27 CFR Part 9

    Wine.

The Final Rule

0
For the reasons discussed in the preamble, we amend 27 CFR, chapter I, 
part 9 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. Amend subpart C by adding Sec.  9.180 to read as follows:


Sec.  9.180  Dundee Hills.

    (a) Name. The name of the viticultural area described in this 
section is ``Dundee Hills''.
    (b) Approved maps. The appropriate maps for determining the 
boundaries of the Dundee Hills viticultural area are three United 
States Geological Survey (USGS) 1:24,000 scale maps. They are titled:
    (1) Dundee Quadrangle, Oregon, 1956, revised 1993;
    (2) Newberg Quadrangle, Oregon, 1961, photorevised 1985; and
    (3) Dayton Quadrangle, Oregon, 1957, revised 1992.
    (c) Boundary. The Dundee Hills viticultural area is located in 
Yamhill County, Oregon, near the town of Newberg, and is entirely 
within the Willamette Valley viticultural area. The boundary of the 
Dundee Hills viticultural area is as described below:
    (1) The beginning point is on the Dundee map at the intersection of 
the 200-foot contour line with Kuehne Road at the common boundary line 
of sections 47 and 48, T3S, R3W;
    (2) From the beginning point, proceed east then south along the 
meandering 200-foot contour line, crossing over to and back off the 
Newberg map, and then cutting diagonally southwest through the town of 
Dundee to the 200-foot contour line's intersection with Hess Creek, 
section 34, T3S, R3W (Dundee Quadrangle); then
    (3) Proceed south, then west, and then northeast, along the 
meandering 200-foot contour line, twice crossing over to and back off 
the Dayton map, to the contour line's intersection with Abbey Road 
after the line passes a quarry and crosses the two forks of Millican 
Creek in section 52, T3S, R3W (Dundee Quadrangle); then
    (4) Proceed generally north on Abbey Road to Kuehne Road and then 
follow Kuehne Road northeasterly to the beginning point.

    Signed: October 21, 2004.
Arthur J. Libertucci,
Administrator.
    Approved: November 9, 2004.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
[FR Doc. 04-26330 Filed 11-29-04; 8:45 am]
BILLING CODE 4810-31-P