[Federal Register Volume 71, Number 32 (Thursday, February 16, 2006)]
[Rules and Regulations]
[Pages 8202-8206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1457]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[T.D. TTB-42; Re: Notice No. 32]
RIN 1513-AA90


Establishment of the Covelo Viticultural Area (2003R-412P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Final rule; Treasury decision.

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SUMMARY: This Treasury decision establishes the 38,000-acre ``Covelo'' 
viticultural area in northern Mendocino County, California, about 150 
miles north of San Francisco. 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 DATE: March 20, 2006.

FOR FURTHER INFORMATION CONTACT: Nancy Sutton, Regulations and Rulings 
Division, Alcohol and Tobacco Tax and Trade Bureau, 925 Lakeville St., 
No. 158, Petaluma, California 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

[[Page 8203]]

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.

Covelo Petition and Rulemaking

General Background

    Mr. Ralph Carter of Sonoma, California, submitted a petition to 
establish the ``Covelo'' viticultural area in northern Mendocino 
County, California. The Covelo area is about 150 miles north of San 
Francisco and 45 miles north of Ukiah. The proposed Covelo viticultural 
area boundary line encompasses Round Valley, Williams Valley, and the 
surrounding foothills. The small, rural town of Covelo lies within 
Round Valley, and a portion of the Round Valley Indian Reservation 
overlaps with the northern end of the proposed Covelo viticultural 
area.
    This 38,000-acre proposed viticultural area has 2 acres of planted 
grape vines, with the potential for more vineyard development in the 
valley and on the surrounding hillsides. The petition did not document 
a history of grape growing in the Covelo area.
    The bowl-shaped basin of Round Valley, which lies within the 
proposed Covelo viticultural area, is distinctly different from the 
long, narrow valleys more commonly found in Mendocino County. In 
addition, the soils in the Covelo area are, for the most part, very 
deep, nearly level loam, which differ significantly from the soils in 
the surrounding areas. The proposed Covelo viticultural area has a 
shorter growing season when compared with other Mendocino County 
viticultural areas and comparatively high annual rain levels with some 
snow.
    Below, we summarize the evidence presented in the petition and the 
comments received in response to the notice for public comment.

Name Evidence

    Covelo is the name of a small, rural town within Round Valley in 
Mendocino County, California. The town appears on the USGS quadrangle 
maps of Covelo East and Covelo West, and on the 2002 Rand McNally 
California map. The California State Automobile Association Mendocino 
and Sonoma Coast map identifies Covelo as a rural township in northwest 
California. The 1988 DeLorme Northern California map displays the town 
of Covelo and ``Covelo Road'' (State Highway 162), which runs through 
the proposed viticultural area.
    The National Oceanic and Atmospheric Administration California 
Climatological Data report of October 1999 includes temperature data 
for the Covelo weather station. The Covelo East USGS quadrangle map 
shows that the Covelo Ranger Station is situated about a mile north of 
the town.

Boundary Evidence

    Distinctive elements of the proposed Covelo viticultural area 
include its geography, climate, and growing season. The Covelo area's 
geography, as noted on USGS maps, is largely a round, flat valley 
isolated from surrounding regions by a ring of foothills and mountains. 
The boundary line includes the foothills immediately adjacent to the 
valley floor because of the hillsides' viticultural potential, but 
excludes the higher and steeper mountainous terrain, which is less 
suitable for commercial viticulture.
    The proposed Covelo area's microclimate is distinct from 
surrounding areas due to its geographic self-containment and inland 
location. The area's climate has significant day and night temperature 
differences, and a short grape-growing season. This isolated valley 
microclimate differs from the marine-influenced climates found in most 
of the surrounding regions of Mendocino County.
    The boundary line of the proposed Covelo viticultural area connects 
a series of peaks and benchmarks in the hills surrounding the Round and 
Williams Valleys. These elevation points vary from a low of 1,762 feet 
on the southern boundary to a high of 2,792 feet on its northern 
boundary.

Distinguishing Features

Geography
    The proposed Covelo viticultural area boundary surrounds Round 
Valley, a bowl-shaped basin that includes the town of Covelo. This 
broad, round, and flat-floored valley differs from the long, narrow 
valleys commonly found in mountainous areas of Mendocino County. The 
proposed boundary area also includes the smaller Williams Valley, 
located to Round Valley's northeast, and the hillsides that surround 
the two valleys. The USGS maps note that Round Valley's floor varies 
from 1,310 feet in elevation in the southeast to 1,480 feet in 
elevation in the northwest, while the surrounding hillsides within the 
proposed boundaries are less than 2,800 feet high.
    The elevations of the proposed area vary between 1,310 feet and 
approximately 2,800 feet, contrasting with the 4,000-foot to 7,000-foot 
mountain elevations around the Covelo area. These higher mountains 
geographically and climatically isolate the proposed Covelo 
viticultural area from surrounding regions.
Climate
    The mountains surrounding Round Valley, together with the Coast 
Range to the valley's west, block the inland flow of climate-moderating 
Pacific marine air into the proposed Covelo viticultural area. Given 
this geographic isolation, the proposed Covelo viticultural area has a 
continental climate, which has greater temperature swings and a shorter 
growing season than the marine-influenced climate commonly found in the 
surrounding regions of Mendocino County.
    The short growing season may be the most distinguishing 
characteristic of the proposed Covelo viticultural area. The frost-free 
growing season is commonly 125 days, or about 4 months long. Covelo's 
average growing season minimum temperature is also significantly lower 
than that of the Potter Valley viticultural area (27 CFR 9.82), which 
is about 33 miles south of Covelo.
    The proposed Covelo viticultural area, with its annual 3,000 
degree-days, marginally falls into Region 3, of Winkler's climate 
classification system. (Each degree of a day's mean temperature that is 
above 50 degrees F, which is the minimum temperature required for 
grapevine growth, is counted as one degree-day; see ``General 
Viticulture,'' Albert J. Winkler, University of California Press, 
1975). The table below shows a comparison of degree-days for grape-
growing regions near the proposed Covelo viticultural area.

------------------------------------------------------------------------
                                                           Summation of
                                                          growing season
            Mendocino grape-growing  regions                degree-day
                                                               units
------------------------------------------------------------------------
Covelo..................................................           3,000
Hopland.................................................           3,313
Potter Valley viticultural area (27 CFR 9.82)...........           3,341
Redwood Valley viticultural area (27 CFR 9.153).........           2,914
Ukiah...................................................           3,460
Willits.................................................           2,224
------------------------------------------------------------------------

    The proposed Covelo viticultural area summer temperatures have 
greater day-

[[Page 8204]]

to-night variations (between 40 and 66 degrees in the valley) than the 
areas surrounding it. Also, in October (the final month of the summer 
growing season) the valley has 90 fewer degree-day units of heat than 
other Region 3 viticultural areas in the Mendocino region.
    The Covelo area receives an average of 40 inches of rain a year, 
which is the highest average of any valley in northern Mendocino 
County. Annual rainfall varies widely in the Covelo area. In 1998, the 
area received 65 inches of rain, while in 2000 it received 36 inches, 
according to the National Oceanic and Atmospheric Administration's 
Climatological Data Annual Summary reports of California for 1997 
through 2001. In addition, the Covelo valley basin receives about 7 
inches of snow annually, with higher amounts falling on the surrounding 
hillsides.
Geology and Soils
    The proposed Covelo viticultural area is composed of alluvial 
plains, alluvial fans, and a valley basin, which are geologically 
younger than the surrounding higher elevations. While the alluvial 
deposits on the valley floor share the mineralogy of the Franciscan 
rocks of the surrounding hills, the soils differ distinctly from the 
foothill soils surrounding the valley.
    Feliz-Russian-Cole soils cover about 50 percent of the proposed 
Covelo viticultural area. These soils, which are found in the Round 
Valley basin, have neutral-to-alkaline soil pH chemistry, in contrast 
with the acidity found in the hillside soils.
    The Sanhedren-Speaker-Kekawaka association, which is a deep to very 
deep, well-drained loam and gravelly loam, predominates in the 
northern, eastern, and western foothills surrounding Round Valley. In 
the southern foothills, the Dingman-Beaughton-Henneke association (a 
well-drained, gravelly loam and cobbly clay loam) and the Hopland-
Yorktree-Witherell association (a well-drained loam and sandy loam) 
predominate.
    The soils of the Franciscan Formation, a blue schist and semi-
schist of Franciscan Complex, cover the mountainous terrain above 
proposed Covelo viticultural area boundary line.

Notice of Proposed Rulemaking and Comments Received

    TTB published a notice of proposed rulemaking regarding the 
establishment of the Covelo viticultural area in the Federal Register 
as Notice No. 32 on February 2, 2005 (70 FR 5393). In that notice, TTB 
requested comments by April 4, 2005, from all interested persons. TTB 
received six comments in response to the notice with three supporting 
and three opposing the Covelo petition.
    The three supporting comments focused on Covelo's unique climate, 
grape-growing conditions, and the lack of summer fog. A commenting 
winery owner agrees that Covelo should be recognized as a unique grape-
growing region and that consumers should have a choice between 
Mendocino County and Covelo wines. The opposing issues are discussed 
below.
    One opposing commenter suggested a public hearing, stating concerns 
about the impact on farms and the introduction or encouragement of 
significant viticulture activity in the proposed area. A second 
commenter questioned the ability of the Covelo area to support 
commercial viticulture due to the area's early and late frost-prone 
climate, poor hillside soils, Round Valley's high water table, and its 
isolation from markets.
    A third commenter opposed the establishment of the Covelo 
viticultural area due to his concern over the possible negative effects 
of viticulture on the Round Valley Indian Tribes. Noting Round Valley's 
name, this commenter also expressed opposition to the ``Covelo'' name, 
and, while acknowledging that grapes can grow in the area, expressed 
doubt that commercial viticulture in the area would be economically 
feasible. In addition, this commenter also requested a 90-day extension 
of the comment period, but did not explain why this extension was 
required.
    Holding a hearing during the rulemaking rarely takes place unless 
specifically required by a statute. Hearings to establish a 
viticultural area are not required under the FAA Act. TTB has 
consistently used the informal rulemaking process, such as it is doing 
in this matter, when considering establishing a viticultural area. In 
addition, both supportive and contrary comments have been substantive 
and thoughtful, and holding a public hearing would provide little, if 
any, additional value in the petitioning process. Also, based on a lack 
of compelling justification, TTB did not grant the request for an 
extension of the comment period for Notice No. 32.
    In response to the opposition comments, the petitioner provided 
additional information and comments in a rebuttal. In response to 
comments questioning the legitimacy of the proposed viticultural area's 
name, the petitioner notes that he did consider the ``Round Valley'' 
name, among others, but found that the name is used for many other 
places in the United States. Thus, the petitioner notes, ``Round 
Valley'' would not be an appropriate geographical name for this 
viticultural area. TTB agrees and notes that a search of the United 
States Geological Survey's Geographic Names Information System shows 
``Round Valley'' is the name of 95 geographical places in 9 states, 
including places in 13 different California counties. On the other 
hand, according to the geographic names system, the name ``Covelo'' is 
associated only with the town of Covelo and the nearby ranger station. 
In light of the evidence presented, we believe the Covelo name is 
appropriate for the proposed viticultural area.
    In response to commenters who question the ability of the proposed 
Covelo area to support commercial viticulture due to its climate, poor 
soil, high water table, and isolation, the petitioner notes that one 
commercial winery is currently using Covelo grapes in its production, 
and that several Covelo area vineyards produce wine and table grapes 
for non-commercial use. In addition, while the petitioner acknowledges 
that the proposed area has a short growing season climate, he quotes an 
Oregon wine industry member who notes, ``The pinnacle of wine quality 
always comes from grapes grown in marginal climates.'' The petitioner 
also notes that other Mendocino County viticultural areas, such as 
Anderson Valley (27 CFR 9.86), Potter Valley (27 CFR 9.82), and Redwood 
Valley (27 CFR 9.153), have short growing seasons similar to Covelo, 
and that select varietals, including pinot noir and chardonnay, do well 
in shorter growing seasons.
    The petitioner notes some growers prefer the thinner soils and 
increased drainage of hillside locations, which naturally devigor the 
vine and improve the quality while decreasing labor intensity. As for 
the high water table found on the valley floor, the petitioner states 
that the water table is lower during the growing season, and states 
that successful vineyards result from the selection of proper varietals 
and rootstock, as well as proper irrigation management.
    As for the proposed area's isolation from the market, the 
petitioner states that the distance from the proposed Covelo 
viticultural area to some of the grape-buying wineries of Mendocino 
County is not excessive. The Covelo area, the petitioner states, is 
within an hour's driving time of the wineries in Potter Valley, Redwood 
Valley, and Ukiah, and that the Vin De Tevis winery is only 12 miles 
from Covelo.

[[Page 8205]]

    TTB agrees that while the proposed Covelo viticultural area has a 
number of potentially stressful growing conditions, many winemakers 
prefer grapes grown in more stressful conditions. The success of 
commercial viticulture with the proposed area will be determined by 
climatic and market conditions and by the efforts of vineyard 
proprietors, not by the designation or non-designation of Covelo as an 
American viticultural area.
    In response to the concern over the impact of viticulture on Round 
Valley's Native American residents, the petitioner states that vineyard 
operations will offer employment opportunities to the area's residents, 
including Native Americans, who often must leave the region to find 
work. Although this information is noteworthy, it has no bearing on 
whether a viticultural area should be established. In addition, TTB 
notes that the viticultural area's designation does not impose any 
requirements on the Round Valley tribes, and the tribes are under no 
obligation to lease or sell any land for vineyard development. Retail 
alcohol sales within the Round Valley reservation and within the Covelo 
region remain under the control of their respective local officials and 
voters.

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 provided the required maps, and we list them below 
in the regulatory text.

TTB Finding

    After careful review of the petition, TTB finds that the evidence 
submitted 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 ``Covelo'' 
viticultural area in Mendocino County, California, effective 30 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, ``Covelo,'' 
is recognized as a name of viticultural significance. Consequently, 
wine bottlers using ``Covelo'' 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 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.

Drafting Information

    Nancy Sutton of the Regulations and Rulings Division drafted this 
document.

List of Subjects in 27 CFR Part 9

    Wine.

The Regulatory Amendment

0
For the reasons discussed in the preamble, we amend 27 CFR, chapter 1, 
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.  9.187 to read as follows:


Sec.  9.187  Covelo.

    (a) Name. The name of the viticultural area described in this 
section is ``Covelo''. For purposes of part 4 of this chapter, 
``Covelo'' is a term of viticultural significance.
    (b) Approved Maps. The appropriate maps for determining the 
boundaries of the Covelo viticultural area are four United States 
Geological Survey 1:24,000 scale topographic maps. They are titled:
    (1) Dos Rios, California Quadrangle,--Mendocino Co., 7.5 Minute 
Series, edition of 1967, revised 1994;
    (2) Covelo West, California Quadrangle,--Mendocino Co., 7.5 Minute 
Series, edition of 1967, photoinspected 1973;
    (3) Covelo East, California Quadrangle,--Mendocino Co., 7.5 Minute 
Series, edition of 1967, revised 1994; and
    (4) Jamison Ridge, California Quadrangle,--Mendocino Co., 7.5 
Minute Series, edition of 1967, revised 1994.
    (c) Boundary. The Covelo viticultural area surrounds the town of 
Covelo in northern Mendocino County, California. The area's boundaries 
are defined as follows--
    (1) Beginning on the Dos Rios map at the intersection of State 
Highway 162 and the southern boundary of section 25, T22N, R13W 
(labeled Inspiration Point on the map), proceed west 0.3 miles on 
Highway 162 to BM 2006 in section 36, T22N, R13W; then
    (2) Proceed straight west-northwest 1.5 miles to the 2,537-foot 
elevation point in the northwest quadrant of section 26, T22N, R13W, 
Dos Rios map; then
    (3) Proceed straight northwest 1.6 miles to the 2,488-foot peak in 
the northwest quadrant of section 22, T22N, R13W, Covelo West map; then
    (4) Proceed straight north-northwest 0.75 miles to the 2,262-foot 
peak on the section 15 and 16 boundary line, T22N, R13W, and continue 
straight north 1.6 miles to the 2,247-foot peak on the section 3 and 4 
boundary line, T22N, R13W, Covelo West map; then
    (5) Proceed straight northerly 1 mile to the 1,974-foot peak on the 
T22N/T23N boundary line, and continue straight north 1.6 miles to the 
2,290-foot peak in the northwest quadrant of section 27, T23N, R13W, 
Covelo West map; then
    (6) Proceed straight northeast 1.2 miles to the 2,397-foot peak in 
the

[[Page 8206]]

northeast quadrant of section 22, and continue straight northeast 1.5 
miles to BM 2210 in the northeast quadrant of section 14, T23N, R13W, 
Covelo West map; then
    (7) Proceed straight east-southeast 1.75 miles to the 2,792-foot 
peak in the southwest quadrant of section 18, T23, R12W, Covelo East 
map; then
    (8) Proceed straight north-northeasterly 0.9 mile to the 2,430-foot 
elevation point in the southeast quadrant of section 7, T23N, R12W, 
Covelo East map; then
    (9) Proceed straight east-northeast 1.6 miles to the peak of Coyote 
Rock in section 9, T23N, R12W, Covelo East map; then
    (10) Proceed straight east-southeast 1.55 miles to the 2,435-foot 
elevation point in the northern half of section 15, and continue 
straight southeast 2.3 miles to the 2,066-foot peak in the southwest 
quadrant of section 24, T23N, R12W, Covelo East map; then
    (11) Proceed straight south-southwest 0.6 mile to the 2,024-foot 
peak near the section 26 eastern boundary line, T23N, R12W, Covelo East 
map; then
    (12) Proceed straight west-southwest 1.9 miles to the 2,183-foot 
peak in the northwest quadrant of section 34, T23N, R12W, Covelo East 
map; then
    (13) Proceed straight south-southeast 1.2 miles to the 1,953-foot 
peak in the northeast quadrant of section 3, T22N, R12W, Covelo East 
map; then
    (14) Proceed straight southerly 0.9 mile to the 2,012-foot peak in 
the northeast quadrant of section 10, T22N, R12W, Covelo East map; then
    (15) Proceed straight south-southeast 1.4 miles along Dingman Ridge 
to the 2,228-foot peak along the section 14 and 15 boundary line, T22N, 
R12W, Covelo East map; then
    (16) Proceed straight southeast 0.95 mile to the 2,398-foot peak in 
the northeast quadrant of section 23, T22N, R12W, Covelo East map; then
    (17) Proceed straight south-southeast 1.75 miles to the 2,474-foot 
elevation point along the section 25 and 26 boundary line, T22N, R12W, 
Jamison Ridge map; then
    (18) Proceed straight west-southwest 0.9 mile to BM 2217 in the 
southwest quadrant of section 26, and continue straight westerly 1.5 
miles to the 2,230-foot peak northwest of Iron Spring, in the southeast 
quadrant of section 28, T22N, R12W, Jamison Ridge map; then
    (19) Proceed straight southwest 0.65 mile to the 2,022-foot peak 
very near an unimproved road in section 33, T22N, R12W, Jamison Ridge 
map; then
    (20) Proceed straight west-northwest 1.5 miles to the 1,762-foot 
peak in the northeast quadrant of section 31, T22N, R12W, Jamison Ridge 
map, and continue in the same line of direction 1.1 miles to the 
beginning point at the intersection of State Highway 162 and the 
southern boundary of section 25, T22N, R13W (labeled Inspiration 
Point), on the Dos Rios map.

    Signed: December 15, 2005.
John J. Manfreda,
Administrator.
    Approved: January 19, 2006.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
[FR Doc. 06-1457 Filed 2-15-06; 8:45 am]
BILLING CODE 4810-31-P