[Federal Register Volume 73, Number 119 (Thursday, June 19, 2008)]
[Proposed Rules]
[Pages 34902-34905]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13858]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[Notice No. 84; Re: Notice No. 68]
RIN 1513-AB26


Proposed Establishment of the Tulocay Viticultural Area (2006R-
009P)

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

ACTION: Withdrawal of notice of proposed rulemaking.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau announces the 
withdrawal of its proposal to establish the Tulocay viticultural area 
in southern Napa County, California. We take this action because of 
questions regarding the actual name of the proposed viticultural area 
and to avoid the use of potentially misleading statements on wine 
labels.

DATES: The withdrawal of the proposal to establish the Tulocay 
viticultural area is effective on June 19, 2008.

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

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 
27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe 
regulations for the labeling of wine, distilled spirits, and malt 
beverages. The FAA Act provides that these regulations should, among 
other things, prohibit consumer deception and the use of misleading 
statements on labels, and ensure that labels provide the consumer with 
adequate information as to the identity and quality of the product. The 
Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the 
regulations promulgated under the FAA Act.
    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) sets 
forth standards for petitions for the establishment of viticultural 
areas and 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 name of the viticultural area is locally 
and/or nationally known as referring to the area specified in the 
application;
     Historical or current evidence that the boundaries of the 
viticultural area are as specified in the application;
     Evidence relating to the geographical features (climate, 
soil, elevation, physical features, etc.) which distinguish the 
viticultural features of the proposed area from surrounding areas;
     The specific boundaries of the viticultural area, based on 
features which can be found on United States Geological Survey (USGS) 
maps of the largest applicable scale; and
     A copy of the appropriate USGS map(s) with boundaries 
prominently marked.

Publication of Notice No. 68

    On November 8, 2006, TTB published in the Federal Register (71 FR 
65432), as Notice No. 68, a notice of proposed rulemaking to establish 
the ``Tulocay'' American viticultural area in southern Napa County, 
California. We undertook that action in response to a petition filed by 
Aaron Pott, a winemaker, and Marshall Newman of Newman Communications, 
on behalf of vintners and grape growers in the Tulocay region of Napa 
County, California. As explained in Notice No.68, the proposed Tulocay 
viticultural area lies entirely within Napa County and also entirely 
within the existing Napa Valley viticultural area (27 CFR 9.23), which 
in turn is entirely within the existing, multi-county North Coast 
viticultural area (27 CFR 9.30). Notice No. 68 invited comments from 
the public on the proposal, and the comment period closed on January 8, 
2007.

Comments Received in Response to Notice No. 68

    TTB received 20 comments in response to Notice No. 68 during the 
comment period. Of those, 8 comments supported the petition and 12 
comments requested that the proposed Tulocay

[[Page 34903]]

viticultural area's name be changed to ``Coombsville,'' or 
``Coombsville District,'' while maintaining the proposed boundary line. 
After the close of the comment period, TTB received one comment 
supporting the petition and two comments opposing the establishment of 
the proposed Tulocay viticultural area.

Comments Fully in Support

    The supportive commenters stated that the Tulocay region is a 
unique grape-growing region with different seasonal changes, climatic 
conditions, topography, soils, and growing season, as compared to the 
rest of the Napa Valley. Also, one supporting commenter explained that 
the Tulocay Land Grant is an important part of Napa Valley history. The 
Napa Valley Vintners Association, in a letter submitted after the close 
of the comment period, supported the establishment of the Tulocay 
viticultural area, explaining that its Appellation Committee reviewed 
the Tulocay viticultural area petition and found it to be comprehensive 
and deserving of endorsement.

Name Change Comments

    Tom Farella, owner of a vineyard and winery located within the 
proposed Tulocay viticultural area, qualified his support for the 
proposed viticultural area's establishment by disagreeing with the 
``Tulocay'' name and stating a preference for the name ``Coombsville.'' 
He stated that Coombsville is the common neighborhood description used 
for real estate, in references to the area by the main local newspaper 
(the Napa Register), and by the greater local public. Mr. Farella also 
noted that a recent article in Wine and Spirits magazine referred to 
the area as Coombsville, and that the Coombsville name ``has been cited 
in wine books and publications for years.'' He added that the 
petitioners chose to ignore use of the Coombsville name because they 
did not like its sound and that they would not discuss the matter when 
he brought the issue up during informal meetings. Finally, if TTB were 
to proceed with the name ``Tulocay,'' he strongly endorsed the addition 
of ``District'' to the name in order to avoid confusion with the long-
established ``Tulocay'' brand name used by Tulocay Winery. In this 
regard, he stated, ``Our vineyard and winery are located at the very 
heart of the proposed viticultural area and I would be disinclined to 
add simply ``Tulocay'' to our label. I find that it would be very 
confusing for the consumer to see our brand and Bill Cadman's Tulocay 
brand on the same label.''
    A comment from Michael L. Turner, also expressed a preference for 
the name ``Coombsville'' or ``Coombsville District'' and included 
historical information about Nathan Coombs, an early American settler 
of Napa County regarded as the founder of the city of Napa. Mr. Coombs 
is memorialized by Coombs Street, located in downtown Napa to the west 
of the proposed viticultural area boundary line, and by Coombsville 
Road, which runs east to west through the southern part of the proposed 
viticultural area. Other commenters supporting the use of the 
``Coombsville'' name echoed the comments of Mr. Farella and Mr. Turner 
regarding the use of the Coombsville name in southern Napa County and 
Nathan Coombs' role in the settlement of Napa County.

Comments From Tulocay Winery

    After the close of the Notice No. 68 public comment period, TTB 
received a letter from Bill Cadman, the owner of Tulocay Winery, which 
is located on Coombsville Road in Napa. Noting that he has used the 
Tulocay brand name since his first vintage in 1975, Mr. Cadman 
strenuously objected to the establishment of the proposed Tulocay 
viticultural area since this would cause ``inestimable economic 
damage'' to a label and wine reputation that he has worked over 30 
years to create. Mr. Cadman stated that he grows no grapes, but buys 
them from independent growers in Napa, Sonoma, Amador, and El Dorado 
Counties, California. Stating that his Tulocay brand Amador County 
Zinfandel wine vintages date from 1975 to the present, Mr. Cadman 
argued that if the proposed Tulocay viticultural area were approved, 
California State law would then prohibit production of his Tulocay 
brand name wines from grapes grown outside of Napa County. Mr. Cadman 
further stated that the State of California could seize and dispose of 
his Tulocay wines made from non-Napa County grapes and produced after 
January 1, 2001.
    TTB was also contacted by Kristen Techel, attorney for Mr. Cadman, 
who submitted a memorandum that included additional information in 
support of Mr. Cadman's assertions. Ms. Techel explained that in August 
2004, the California Supreme Court issued an opinion in Bronco Wine 
Company v. Jolly, 33 Cal. 4th 943 (2004), cert. denied, 544 U.S. 922 
(2005), supporting section 25241 of the California Business & 
Professions Code (CB&PC), which allows the use of specified 
viticulturally significant names (that is, ``Napa,'' or any 
viticultural area appellation of origin established under part 9 of the 
TTB regulations and located entirely within Napa County, or any name 
similar to the foregoing that is likely to cause confusion as to the 
origin of the wine) only if at least 75 percent of the wine was derived 
from grapes grown in Napa County.
    Ms. Techel further stated that the Bronco decision made it clear 
that the Federal grandfather clause (27 CFR 4.39(i)(2)) regarding the 
use of viticultural area names cannot be used to save Mr. Cadman's 
Tulocay brand labels which would be in conflict with section 25241 of 
the CB&PC (that is, Tulocay brand labels that are used on wines, more 
than 25 percent of which were created from grapes grown outside of Napa 
County). She asserted that if the Tulocay viticultural area were 
established by TTB, Tulocay Winery might have to destroy existing wines 
and stop production of its most popular wines. Ms. Techel then urged 
TTB to use extreme caution in granting viticultural area petitions 
within Napa because of the dire effects of this State law.
    Ms. Techel also asserted that the Tulocay petition must be rejected 
because the area described in the petition is known as Coombsville. She 
stated that local residents most often refer to the area as 
Coombsville, that local real estate listings generally refer to 
Coombsville, and that the Napa County General Plan refers to the region 
within the proposed viticultural area as Coombsville. She also cited 
articles from the July 2001 issue of Wine Spectator (``Putting 
Coombsville on the Map for Napa Cabernet'') and from the December 2006 
issue of Wine & Spirits Magazine (``The Future of Napa Cabernet'') as 
evidence that the area is known as Coombsville. She concluded that 
Coombsville is what the wine industry already calls this area.

Analysis of Comments

Name Dispute

    The proposed Tulocay viticultural area petition and supporting 
documentation focused on the Tulocay name as used for a historical land 
grant, an in-use cemetery, and several other Napa County sites. The 
Tulocay viticultural area petitioners included an 1859 plat map that 
labels the area as ``Tulocay Rancho,'' and an 1876 Napa County map 
which labeled the area as ``Rancho Tulucay.'' Further, a publication, 
``The Past is Father of the Present, a Spanish California History and 
Family Legends 1737-1973,'' by Viviene Juarez Rose, included the 
article ``Days of Old on Rancho Tulucay,'' which features personal 
accounts of

[[Page 34904]]

several members of the Juarez family. However, evidence of the current 
use of ``Tulocay'' to refer to the proposed area is rather limited. The 
USGS 1980 photorevised Napa and the 1968 photorevised Mt. George 
quadrangle maps included with the petition show Tulucay Creek flowing 
through the proposed viticultural area, and two USGS topographic maps 
label the general region as ``Tulocay.'' However, TTB conducted 
research through the on-line Geographic Names Information System (GNIS) 
maintained by the USGS, and for ``Tulocay'' there were only three 
references-the cemetery, a creek, and Tulocay Winery. Thus, other than 
the USGS maps with a reference to Tulocay, there is little evidence 
that the area in question is currently locally and/or nationally known 
as ``Tulocay.''
    The comments in support of ``Coombsville'' and ``Coombsville 
District'' include historical references to Nathan Coombs, as well as 
fairly recent references to the region as ``Coombsville.'' These 
current references include references in Napa County documents as well 
as specific references to the area known as ``Coombsville'' appearing 
in wine related publications. However, TTB's own review of maps of the 
general area (the Napa Valley Communities map, published in March of 
1999 by the American Automobile Association, and the USGS 1980 
photorevised Napa and 1968 photorevised Mt. George quadrangle maps) 
revealed the name ``Coombsville'' only in connection with ``Coombsville 
Road,'' which runs east-west in the southern portion of the proposed 
Tulocay viticultural area. TTB's research through GNIS found no hits 
for ``Coombsville'' or ``Coombsville District'' anywhere in California.
    In sum, the comments received on changing the proposed Tulocay 
viticultural area's name to ``Coombsville'' or ``Coombsville District'' 
had some current evidence of the use of the name ``Coombsville'' but 
lacked sufficient substantiating evidence in the form of map references 
or GNIS hits to support the use of either of those names for the 
proposed viticultural area. Further, though the commenters suggest 
``Coombsville'' or ``Coombsville District'' would be their preferred 
name for the proposed viticultural area, it should be noted that TTB 
has not received a petition proposing the establishment of a 
viticultural area named ``Coombsville'' or ``Coombsville District''; 
the petition received by TTB proposed the name ``Tulocay'' as the name 
of the viticultural area.
    In regard to Mr. Farella's comment that the name ``Tulocay 
District'' should be considered, neither the current Tulocay 
viticultural area petition nor Mr. Farella's letter contained any 
documentation or other substantiating evidence in favor of the name 
``Tulocay District.'' Further TTB found no hits for ``Tulocay 
District'' through GNIS.
    After careful consideration of all the name evidence, TTB believes 
that the limited documentation evidencing that the area in question is 
currently known as Tulocay and the significant number of commenters in 
favor of the names ``Coombsville'' and ``Coombsville District,'' along 
with the documentation they included with their comments, cast doubt on 
the advisability of recognizing ``Tulocay'' standing alone as the name 
of the petitioned-for viticultural area. In particular, the petition 
name evidence and the commenters' evidence in support of Coombsville 
and Coombsville District, taken together, demonstrate a lack of unity 
among the region's industry members as to what the name of the 
petitioned-for viticultural area is locally and/or nationally known as, 
thus drawing into question whether there is, in fact, a viticultural 
area known as ``Tulocay'' that TTB should recognize in its regulations.

Effect on Tulocay Winery

    Under the TTB regulations, for a wine to be labeled with a 
viticultural area name or with a brand name that includes a 
viticultural area name or other term identified 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 for labeling 
with the viticultural area name or other viticulturally significant 
term 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.
    The TTB regulations in 27 CFR 4.39(i)(2) contain a ``grandfather'' 
clause exception to the 85 percent rule described above. Under this 
exception, for brand names used in existing certificates of label 
approval issued prior to July 7, 1986, the labels may continue to be 
used even though the brand name includes a viticultural area name or 
other term of viticultural significance and the wine does not meet the 
85 percent rule, provided that:
     The wine is labeled with an appellation of origin as 
specified in Sec.  4.39(i)(2)(ii); or
     The wine is labeled with some other statement that TTB 
finds ``sufficient to dispel the impression that the geographic area 
suggested by the brand name is indicative of the origin of the wine'' 
(Sec.  4.39(i)(2)(iii)).
    It is clear that Mr. Cadman's Tulocay wine labels would be 
``grandfathered'' under the TTB regulations if the proposed Tulocay 
viticultural area were established, and, accordingly, he could continue 
to use those grandfathered ``Tulocay Winery'' labels for TTB purposes 
provided that the labels meet the requirements of Sec.  4.39(i)(2)(ii) 
or (iii).
    However, based on the terms of section 25241 of the CB&PC and the 
California State Supreme Court's ruling in the Bronco case that the 
provisions of the California statute are not preempted by the Sec.  
4.39(i) grandfather provision, it is clear that the TTB regulatory 
provisions would afford no effective label use protection to Tulocay 
Winery once the proposed Tulocay viticultural area were established. 
This is because under section 25241(c)(2) of the CB&PC, ``Tulocay'' 
would be a name of viticultural significance, thus allowing Mr. Cadman 
to continue to use the name of his winery on his labels only if his 
wine qualifies for use of the Napa County appellation of origin under 
Federal regulations (that is, at least 75 percent of the wine must be 
derived from grapes grown within Napa County). Under section 25241 of 
the CB&PC, operations in contravention of that provision could result 
in suspension or revocation of a license and seizure and disposal of 
the wine by the State of California.

TTB Finding

    After careful consideration TTB has determined that it would not be 
appropriate to proceed with the establishment of the proposed Tulocay 
American viticultural area for the following reasons:
     The comments submitted, and the evidence and other 
information available, raise a substantial question as to whether there 
is a sufficient basis to conclude that the geographical area described 
in the petition is locally or nationally known as ``Tulocay.'' While 
evidence suggesting the name ``Coombsville'' is a factor in this 
regard, the evidence currently available would not, standing alone, 
support the establishment of a viticultural area under the names 
``Coombsville'' or ``Coombsville District.'' Moreover, the evidence 
does not support the name

[[Page 34905]]

``Tulocay District,'' and currently there is no petition requesting the 
establishment of a viticultural area in the subject area using a 
variation of Tulocay, such as Tulocay District, or any other name, such 
as Coombsville or Coombsville District. It is noted that these findings 
do not preclude future consideration of a petition, supported by 
sufficient name evidence, proposing the establishment of a viticultural 
area in the subject area using a name other than ``Tulocay.''
     Consumer confusion could ensue regarding the identity and 
quality of wines bearing the term ``Tulocay'' if that term, which for 
more than 30 years has been identified with wines produced by Tulocay 
Winery from grapes grown in multiple California counties, were suddenly 
to disappear as a brand name of Tulocay Winery products and be used on 
labels for wines produced by other wineries primarily from grapes grown 
within a small portion of Napa County. Such consumer confusion 
resulting from the approval of the proposed Tulocay AVA is contrary to 
the purpose of the FAA Act.
    For the reasons stated above, the proposal to establish the Tulocay 
viticultural area is withdrawn.

    Signed: March 17, 2008.
John J. Manfreda,
Administrator.
    Approved: June 13, 2008.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
 [FR Doc. E8-13858 Filed 6-18-08; 8:45 am]
BILLING CODE 4810-31-P