[Federal Register Volume 71, Number 216 (Wednesday, November 8, 2006)]
[Rules and Regulations]
[Pages 65409-65412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18894]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[T.D. TTB-54; Re: Notice No. 54]
RIN 1513-AA89


Establishment of the Tracy Hills Viticultural Area (2003R-508P)

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

ACTION: Final rule; Treasury decision.

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SUMMARY: This Treasury decision establishes the 39,200-acre Tracy Hills 
viticultural area in San Joaquin and Stanislaus Counties, California, 
approximately 55 miles east-southeast 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.

DATES: Effective Dates: December 8, 2006.

FOR FURTHER INFORMATION CONTACT: N.A. Sutton, Regulations and Rulings 
Division, Alcohol and Tobacco Tax and Trade Bureau, 925 Lakeville St., 
No. 158, Petaluma, CA 94952; phone 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 consumers with adequate information regarding product identity 
and prohibits the use of misleading information on those 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 geographical 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.

Tracy Hills Petition and Rulemaking

General Background

    TTB received a petition from Sara Schorske of Compliance Service of 
America, Inc., filed on behalf of the Brown family, owners of a 
vineyard near Tracy, California. The petition proposed the 
establishment of the 39,200-acre ``Tracy Hills'' viticultural area 
south and southwest of the city of Tracy, California, in southern San 
Joaquin and northern Stanislaus Counties. Located approximately 55 
miles east-southeast of San Francisco, the proposed Tracy Hills 
viticultural area currently encompasses 1,005 acres of vineyards. The 
proposed area is not within, nor does it include, any other proposed or 
established viticultural area.
    Originally, the petitioner submitted the name ``Mt. Oso'' for this 
proposed viticultural area. However, after an initial review of the 
petition, TTB concluded and advised the petitioner that the submitted 
evidence did not demonstrate, as required by Sec.  9.3(b)(1) of the TTB 
regulations, that the proposed viticultural area is locally or 
nationally known as Mt. Oso. In response, the petitioner amended the 
petition to propose use of the name ``Tracy Hills'' for the proposed 
viticultural area. The petitioner also revised the proposed 
viticultural area's western boundary and submitted additional evidence 
to support the amended petition. We summarize below the information 
submitted in support of the petition.

Name Evidence

    The petitioner states that the name ``Tracy,'' which is used to 
identify the city of Tracy, California, and its surrounding 
agricultural land, together with the geographical modifier ``Hills,'' 
accurately describes and identifies the proposed Tracy Hills 
viticultural area. Stating that the name ``Tracy Hills'' is ``locally 
and nationally associated with the proposed area,'' the petition 
discusses the rationale for the Tracy Hills name and offers examples of 
its

[[Page 65410]]

use for the land within the proposed viticultural area.
    The petition includes copies of eight newspaper articles from the 
Tracy Press featuring petitioner Jeff Brown's Mt. Oso Vineyards or 
wines made from its grapes. The articles list the vineyard's location 
as Tracy, demonstrating, according to the petition, the close 
association between the proposed area's vineyards and the ``Tracy'' 
name.
    However, the petition states that the use of ``Tracy'' alone for 
the proposed viticultural area does not accurately describe the area 
and would mislead consumers about the specific location of the area. 
The proposed viticultural area includes only a small part of the land 
within the Tracy city limits, and it does not include all the land 
surrounding the city of Tracy. Due to differences in climate, soil, 
water table levels, and slope, the land north, east, and southeast of 
Tracy is excluded from the proposed viticultural area.
    Therefore, the petitioner emphasizes that it would be misleading 
and inaccurate to name the proposed viticultural area ``Tracy,'' 
without adding ``Hills'' as a modifier. In support of this usage, the 
petitioner cites the use of ``Valley'' as a modifier in the names of 
the Napa Valley viticultural area (27 CFR 9.23), which surrounds the 
city of Napa, and the Temecula Valley viticultural area (27 CFR 9.50), 
which lies outside the city of Temecula in southern California.
    To further support the use of the proposed ``Tracy Hills'' name, 
the petitioner notes that the foothills of the Coast Range southwest of 
the city of Tracy are informally called ``the Tracy Hills,'' the lower 
elevations of which are included within the proposed viticultural area. 
The petition provides examples of the name's association with the 
proposed area.
    The petition states that ``Tracy Hills'' is the name of a large 
real estate development located on the southwest side of the city of 
Tracy along either side of Interstate 580 (I-580). Part of the Tracy 
Hills development, the petition notes, is within the northern portion 
of the proposed Tracy Hills viticultural area. In 1998, the city of 
Tracy annexed the development, according to an article in the Stockton 
Record of July 7, 2004, ``Council Delays Tracy Hills Vote,'' included 
in the revised petition. The revised petition also included copies of, 
or statements from, Federal Government environmental reports from the 
early 1990's, a 1999 Sierra Club newsletter, and newspaper articles 
from the Sacramento Bee and the Tracy Press that all discuss the Tracy 
Hills real estate development and its location, growth, and impact on 
local water resources.
    Also, the petition includes evidence of other references to the 
Tracy Hills name. For example, the petition includes a map of the 
proposed Northern California Passenger Rail Network. This map shows a 
future high-speed railroad line running through Altamont Pass and, east 
of the pass, a ``Tracy Hills'' station within the Tracy Hills 
development. The petition also includes information about the ``Tracy 
Hills Ride,'' sponsored by the San Joaquin Valley Rangers, a family 
horse/mule club (http://www.sjvr.org). This horseback ride begins and 
ends within the proposed viticultural area along State Highway 132 
(Bird Road), according to club information included in the petition. A 
1995 NASCAR publication, the petition states, places the reopened 
Altamont Raceway ``in the Tracy hills,'' while a September 29, 2003, 
East Bay Business Times article titled ``Sutter, Kaiser Build Up Valley 
Presence,'' notes that a donor gave 20 acres ``in the Tracy hills'' for 
a hospital.

Boundary Evidence

    Located south and southwest of the city of Tracy in southern San 
Joaquin and northern Stanislaus Counties, California, the proposed 
Tracy Hills viticultural area largely lies between State Route 33 to 
the east and I-580 to the west, with a portion of the area reaching 
west of the interstate into the foothills of the Diablo Mountains. The 
proposed area is about 15 miles long northwest to southeast and about 5 
miles wide east to west.
    The portion of the Tracy Hills real estate development appropriate 
for viticulture, the petitioner explains, is included in the northern 
region of the proposed Tracy Hills viticultural area. Other parts of 
the proposed viticultural area lie within the San Joaquin Valley's 
rural agricultural lands to the southwest and south of the city of 
Tracy, according to the provided USGS maps and the California State 
Automobile Association Central California map of May 2001.

Distinguishing Features

    The boundary of the proposed Tracy Hills viticultural area, 
according to the petitioner, encompasses viticultural features that 
distinguish the proposed viticultural area from the regions north, 
east, and southeast of the city of Tracy. According to the petitioner, 
these distinguishing features include the proposed area's slope, soils, 
and microclimate.
Slope
    The proposed Tracy Hills viticultural area is nestled between the 
lower elevations of the floor of the San Joaquin River Valley to the 
east and the steeper terrain of the Diablo Range to the west; it has 
east-sloping terrain, as shown on the provided USGS maps. The proposed 
viticultural area boundary encompasses a 400-foot change in elevation 
and includes streams, most of a northern, east-sloping alluvial fan and 
part of a southern, east-sloping alluvial fan, and plains along the 
proposed southern boundary line, according to the petitioner and the 
provided USGS maps. The alluvial fans are between Lone Tree and 
Hospital Creeks and between Hospital Creek and Ingram Canyon Road, 
which parallels an unnamed intermittent creek.
    The petitioner notes that the 100-to 500-foot elevation within the 
proposed Tracy Hills viticultural area is distinct from the surrounding 
areas. To the west of the proposed boundary line are the significantly 
higher elevations and steep terrain of the Diablo Range, as noted on 
USGS maps of the area. To the north and east, nearly at sea level, are 
the flood plains along the San Joaquin River. The proposed southern 
boundary line, according to the written boundary description and the 
Solyo Quadrangle USGS map, includes a straight line connecting the 500-
foot elevation, to the southwest, with Hamilton Road on the valley 
floor. Hamilton Road eventually connects with McCracken Road at the 
proposed southeast corner.
Soils
    The petitioner states that soils in the proposed Tracy Hills 
viticultural area formed predominantly in alluvium washed from the 
higher areas in the Diablo Range, beyond the proposed boundary. 
Although similar to the soils to the south, the petitioner explains, 
the alluvial soils of the proposed viticultural area are distinct from 
the soils formed in sedimentary rocks of the mountains to the west, the 
organic, peat soils to the north, and the heavy clay soils to the east.
Microclimate
    The petitioner states that the proposed Tracy Hills viticultural 
area has a distinctive microclimate, contrasting with the climate of 
the surrounding region. The proposed viticultural area, the petition 
states, is located within the rain shadow of Mt. Oso, which is located 
southwest of the proposed area, in the Diablo Mountains. The effect of 
the rain shadow is to give the proposed viticultural area a drier

[[Page 65411]]

climate with less fog, dew, frost, and hail. Beyond the proposed 
boundary to the west, north, and south, the distinctive differences in 
geography and proximity to the Altamont Pass create a wetter, windier 
climate, according to the petition.

Notice of Proposed Rulemaking and Comments Received

    On December 7, 2005, TTB published in the Federal Register (70 FR 
72733) Notice No. 54 regarding the proposed establishment of the Tracy 
Hills viticultural area. We received one comment in response to that 
notice. The comment supported establishment of the Tracy Hills 
viticultural area, expressing potential increased value for wine grapes 
grown in the area and prevention of urban sprawl.

TTB Finding

    After review of the petition and the comment received, 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 ``Tracy Hills'' viticultural area in San Joaquin and Stanislaus 
Counties, California, effective 30 days from the publication date of 
this document.

Boundary Description

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

Maps

    The maps for determining the boundary of the viticultural area are 
listed below in the regulatory text.

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, ``Tracy 
Hills,'' is recognized under 27 CFR 4.39(i)(3) as a name of 
viticultural significance. The text of the new regulation clarifies 
this point. Consequently, wine bottlers using ``Tracy 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 a 
viticultural area name or other term specified as being viticulturally 
significant in part 9 of the TTB regulations, at least 85 percent of 
the wine must be derived from grapes grown within the area represented 
by that name or other term, 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 or other term as an appellation of origin and 
that name or term 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 or 
other term 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

    N.A. 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. Subpart C is amended by adding Sec.  9.204 to read as follows:


Sec.  9. 204  Tracy Hills.

    (a) Tracy Hills. The name of the viticultural area described in 
this section is ``Tracy Hills''. For purposes of part 4 of this 
chapter, ``Tracy Hills'' is a term of viticultural significance.
    (b) Approved maps. The appropriate maps for determining the 
boundary of the Tracy Hills viticultural area are five USGS 1:24,000-
scale, topographic maps. They are titled:
    (1) Tracy, Calif., 1954, photorevised 1981;
    (2) Vernalis, CA, 1991;
    (3) Solyo, Calif., 1953, photorevised 1971, photoinspected 1978;
    (4) Lone Tree Creek, Calif., 1955, photorevised 1971; and
    (5) Midway Calif., 1953, photorevised 1980.
    (c) Boundary. The Tracy Hills viticultural area is located in 
southwestern San Joaquin County and northwestern Stanislaus County in 
the State of California. The boundary of the Tracy Hills viticultural 
area is as described below.
    (1) The beginning point is on the Tracy map at the intersection of 
the Delta-Mendota Canal and Lammers Ferry Road, along the western 
boundary line of section 6, T3S/R5E. From the beginning point, proceed 
0.4 mile generally southeast along the Delta-Mendota Canal to its 
intersection with the Western Pacific Railway line along the southern 
boundary line of section 6, T3S/R5E (Tracy map); then
    (2) Proceed 5.6 miles straight east along the Western Pacific 
Railway line and then along Linne Road to the intersection of Linne 
Road and Lehman Road, along the northern boundary line of section 12, 
T3S/R5E (Vernalis map); then
    (3) Proceed 1.5 miles straight south and then east along Lehman 
Road to its intersection with Bird Road at the southeast corner of 
section 12, T3S/R5E (Vernalis map); then
    (4) Proceed 1 mile straight south along Bird Road to its 
intersection with Durham Ferry Road at the southeast corner of section 
13, T3S/R5E (Vernalis map); then
    (5) Proceed 1.9 miles straight east along Durham Ferry Road to its 
intersection with State Highway 33 along the northern boundary line of 
section 20, T3S/R6E (Vernalis map); then
    (6) Proceed 5.1 miles straight southeast along State Highway 33, 
passing the hamlet of Vernalis, to the highway's intersection with 
McCracken Road along the eastern boundary of section 2, T4S/R6E (Solyo 
map); then
    (7) Proceed 3.4 miles straight south along McCracken Road to its

[[Page 65412]]

intersection with Hamilton Road at the southeast corner of section 23, 
T4S/R6E (Solyo map); then
    (8) Proceed 2.4 miles straight west along the southern boundary 
lines of sections 23, 22, and 21, T4S/R6E, crossing the Delta-Mendota 
Canal and the California Aqueduct, to the junction of the southern 
boundary of section 21, the 500-foot elevation line, and the 
westernmost transmission line, (Solyo map); then
    (9) Proceed 4.2 miles generally northwest along the meandering 500-
foot elevation line to section 18, T4S/R6E, where the 500-foot 
elevation line crosses all the transmission lines and then continues 
northwest a short distance to the easternmost transmission line in the 
northwest quadrant of section 18, T4S/R6E, (Solyo map); then
    (10) Proceed 8.45 miles straight northwest along the easternmost 
transmission line, crossing from the Solyo map, over the Lone Tree 
Creek map, to the Tracy map, and continue to the transmission line's 
intersection with the western boundary of section 19, T3S/R5W, about 
0.7 mile north-northeast of Black Butte (Tracy map); then
    (11) Proceed in a straight line 2 miles northwest to this line's 
intersection with the 500-foot elevation line, immediately north of an 
unimproved dirt road, just north of the midpoint of the western 
boundary line of section 12, T3S/R4E (Tracy map); then
    (12) Proceed 0.65 mile straight north along the western boundaries 
of section 12 and then section 1 to the section 1 line's intersection 
with Interstate Highway 580 (I-580), section 1, T3S/R4E (Tracy map); 
then
    (13) Proceed 0.8 mile straight northwest along I-580 to its 
intersection with the Western Pacific Railway line in section 2, T3S/
R4E (Midway map); then
    (14) Proceed easterly 0.7 mile along the Western Pacific Railway 
line to its intersection with the eastern boundary line of section 2, 
T3S/R4E (Tracy map); and
    (15) Proceed east for 1 mile in a straight line, returning to the 
beginning point.

    Signed September 7, 2006.
John J. Manfreda,
Administrator.
    Approved: September 23, 2006.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
 [FR Doc. E6-18894 Filed 11-7-06; 8:45 am]
BILLING CODE 4810-31-P