[Federal Register Volume 77, Number 178 (Thursday, September 13, 2012)]
[Rules and Regulations]
[Pages 56539-56541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22598]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 4

[Docket No. TTB-2011-0008; T.D. TTB-105; Re: Notice No. 122]
RIN 1513-AB84


Revision to Vintage Date Requirements

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

ACTION: Final rule; Treasury decision.

-----------------------------------------------------------------------

SUMMARY: This document adopts, as a final rule, a proposal to amend the 
Alcohol and Tobacco Tax and Trade Bureau wine labeling regulations to 
allow a vintage date to appear on a wine that is labeled with a country 
as an appellation of origin. This amendment will provide greater grape 
sourcing and wine labeling flexibility to winemakers, both domestic and 
foreign, while still ensuring that consumers are provided with adequate 
information as to the identity and quality of the wines they purchase.

DATES: Effective Date: This final rule is effective November 13, 2012.

FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco 
Tax and Trade Bureau, Regulations and Rulings Division; telephone 202-
453-1039, ext. 275.

SUPPLEMENTARY INFORMATION:

Background on Wine Labeling

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 requires that these regulations, 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 FAA Act 
pursuant to section 1111(d) of the Homeland Security Act of 2002, 
codified at 6 U.S.C. 531(d). The Secretary has delegated various 
authorities through Treasury Department Order 120-01 (Revised), dated 
January 21, 2003, to the TTB Administrator to perform the functions and 
duties in the administration and enforcement of this law.

Current Vintage Date Requirements

    Part 4 of the TTB regulations (27 CFR part 4) sets forth the 
standards promulgated under the FAA Act for the labeling and 
advertising of wine. Section 4.27 of the TTB regulations (27 CFR 4.27) 
sets forth rules regarding the use of a vintage date on wine labels. 
Section 4.27(a) provides that vintage wine is wine labeled with the 
year of harvest of the grapes and that the wine ``must be labeled with 
an appellation of origin other than a country (which does not qualify 
for vintage labeling).'' Rules regarding appellation of origin labeling 
are contained in Sec.  4.25 of the TTB regulations (27 CFR 4.25).
    In addition, Sec.  4.27(a)(1) provides that for American or 
imported wines labeled with a viticultural area appellation of origin 
(or its foreign equivalent), at least 95 percent of the wine must have 
been derived from grapes harvested in the labeled calendar year. For 
American or imported wines labeled with an appellation of origin other 
than a country or viticultural area (or its foreign equivalent), Sec.  
4.27(a)(2) provides that at least 85 percent of the wine must have been 
derived from grapes harvested in the labeled calendar year.
    The requirement that vintage wine must be labeled with an 
appellation of origin other than a country derives from T.D. ATF-53, 
published in the Federal Register (43 FR 37672) by TTB's predecessor 
agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), on August 
23, 1978. Prior to that time the applicable regulations required that 
grapes used to make vintage wine must have been grown in the same 
``viticultural area,'' a term then undefined by the regulations.
    In amended Notice No. 304, a notice of proposed rulemaking 
preceding T.D. ATF-53 and published in the Federal Register (42 FR 
30517) on June 15, 1977, ATF noted that the wine industry advocated 
that the then current requirement that 95 percent of the grapes used to 
make vintage wine be grown in the labeled appellation area be reduced 
to 75 percent. This mirrored the requirement that to bear an 
appellation of origin, at least 75 percent of the grapes used to make a 
wine must be grown in the appellation area indicated on the label. The 
industry position, according to ATF, was that ``vintage means only that 
the grapes were grown in the specified year, and that the place in 
which the grapes were grown is unimportant.'' ATF stated in that notice 
that it did not agree, commenting as follows:

    A good year in one part of California, for example, does not 
necessarily mean a good year in another part, any more than a good 
year in Burgundy means a good year in Bordeaux. For a vintage to be 
meaningful to consumers, they must have assurance that the grapes 
were grown in the place stated on the label. We believe that a 95 
percent requirement provides greater assurance than a 75 percent 
requirement.

    However, in T.D. ATF-53, the agency modified its position somewhat 
stating that it concurred with the industry position that a vintage 
date should refer only to the year of harvest. Accordingly, a new 
regulatory provision regarding appellations of origin, also adopted in 
T.D. ATF-53, required that the percentage of grapes required to come 
from the labeled appellation area depended upon whether the appellation 
was a viticultural area (85 percent), a State, county or foreign 
equivalent (75 percent), or a multicounty or multistate appellation 
(100 percent), but in each case without reference to vintage date 
usage. The rulemaking record for T.D. ATF-53 does not explain why ATF 
decided that vintage wine must be labeled with an appellation other 
than a country, but it does indicate that the agency believed that a 
vintage date should provide consumers information about harvest 
conditions.
    In its most recent rulemaking action regarding vintage dating, TTB 
liberalized the requirements by reducing the percentage of wine derived 
from grapes required to be harvested in the labeled calendar year from 
95 percent to 85 percent for wine labeled with an appellation of origin 
other than a country or a viticultural area (or its foreign 
equivalent). See T.D. TTB-45, published in the Federal Register (71 FR 
25748) on May 2, 2006. The percentage remained at 95 for wines bearing 
a viticultural area (or its foreign equivalent) as an appellation of 
origin. Blending wine from different vintages could result in a more 
consistent product and provide a better value for consumers, according 
to the proponents of the earlier liberalization of vintage date 
labeling.

European Commission Petition

    The European Commission submitted a petition requesting TTB to 
amend Sec.  4.27(a) to allow the use of a country appellation for 
vintage labeling. The

[[Page 56540]]

petitioner stated that the current regulation prohibiting a country 
appellation presents a significant difficulty for its member countries.
    The petitioner noted that some of its member countries are much 
smaller in size than certain U.S. States, counties, and even certain 
American viticultural areas (AVAs). To illustrate this, it compared the 
areas of Malta (246 sq. km), Luxembourg (2,586 sq. km), and Austria 
(83,871 sq. km) with the Lodi AVA (2,230 sq. km) and the Ohio River 
Valley AVA (67,000 sq. km). The petitioner argued that there is no 
convincing rationale for a rule that allows vintage dating for a wine 
with an appellation of ``California'' (423,970 sq. km), but not for a 
wine labeled with the appellation ``Portugal'' (92,391 sq. km).
    The petitioner also contrasted the vintage date rule in question 
with the general varietal (grape type) labeling rule contained in 27 
CFR 4.23(a), under which the names of one or more grape varieties may 
be used as the type designation of a grape wine only if the wine is 
also labeled with an appellation of origin as defined in Sec.  4.25. 
Because Sec.  4.25 includes countries within the definition of an 
appellation of origin, a wine labeled with a varietal designation may 
be labeled with a country appellation. The petitioner contended that 
these regulatory rules are inconsistent and that it would seem more 
logical to apply a coherent approach and allow vintage labeling for 
wines labeled with a country appellation.
    Finally, the petitioner asserted that the language in Article 7(1) 
of the 2006 ``Agreement between the United States of America and the 
European Community on Trade in Wine'' supports the proposed change. 
(See http://www.ttb.gov/agreements/us_ec_wine_agreement.shtml.) TTB 
notes that Article 7 concerns names of origin, which include the 
country names of the Member States of the European Union. However, 
because the use of vintage dates is not specifically addressed in that 
provision, TTB does not consider this assertion to be particularly 
supportive of the proposed change.

Notice of Proposed Rulemaking

    On November 4, 2011, TTB published Notice No. 122 in the Federal 
Register (76 FR 68373) proposing to amend Sec.  4.27 to allow vintage 
labeling for wines labeled with a country as an appellation of origin. 
In addition, the proposed amendments to Sec.  4.27 required a 
conforming amendment in Sec.  4.34(b)(5) to remove the reference to the 
requirement that an appellation of origin for vintage wine shall be 
other than a country.

Comments Received

    TTB received 26 comments in response to Notice No. 122, of which 22 
comments favor the proposal, while 3 oppose it. One comment expresses 
no opinion on the proposal, but requests a revision that would permit 
wines to be labeled with multiple vintages, a suggestion which is 
beyond the scope of this rulemaking.

Supporting Comments

    Comments in support of the proposal were submitted by foreign 
wineries and trade associations, the government of Australia, the 
European Commission (the petitioner), WineAmerica, one U.S. winery, and 
two individuals. Nearly all of the supporting comments state that the 
proposed revisions will provide valuable information to consumers about 
the age of wines labeled with a country as an appellation of origin.
    Several comments contained very similar reasons for supporting the 
proposed rule. These comments assert that the 85% vintage labeling 
requirement for wines labeled with country appellations is consistent 
with EC and Australian rules. The comments also state that the proposal 
will provide consistency with TTB regulations at 27 CFR 4.23(a) and 27 
CFR 4.25, which permit a wine labeled with a country appellation to 
bear a grape varietal name. In addition, these comments argue that the 
proposed revisions will eliminate ``the discrepancies that arise from 
the nature of appellations.'' Some comments also contend that for the 
purpose of vintage dating, large States such as Texas or Alaska and a 
country such as Italy should be treated equally. The comments also 
assert that the existing rules ``could be deemed a breach to the 
spirit'' of the WTO Agreement on Technical Barriers to Trade.
    According to the supporting comment submitted by the U.S. winery, 
the winery's research found that more than 70 percent of wine drinkers 
consider the vintage date an indication of the wine's age and that a 
third of wine drinkers consider a wine without a vintage date to be of 
lower quality. The winery comments that it sometimes has to blend wine 
from different regions in order to maintain a consistent, high quality 
product, but that these wines are at a disadvantage in the marketplace 
because of these consumer attitudes towards vintage dating.
    In its comment, WineAmerica, a national association of American 
wineries, also states that the current rules put wines with American 
appellations at a competitive disadvantage because they may not use 
vintage dates. WineAmerica reports that this disadvantage is so great 
that, in years when its members have to use out-of-state fruit, they 
often choose to obtain Certificates of Label Exemption for intra-state 
commerce only in order to sell American appellation wines with vintage 
dates. WineAmerica argues that the proposal will place these wines on 
equal footing with wines labeled with multi-state, state, and county 
appellations and is ``sensible regulatory reform'' needed by its 
members, which it describes as family-owned businesses located 
throughout the United States. WineAmerica asserts that, ``(I)f adopted, 
Notice No. 122 would benefit thousands of American businesses, allowing 
wineries in every state to truthfully disclose information about their 
products that consumers find useful.''
    In its comment, the National Association of Beverage Importers 
(NABI), a U.S.-based trade group, states that the proposed revision may 
impact the market for bulk wine shipped to U.S. wineries from supplier 
nations. Allowing vintage dating on country appellation wines will 
elevate the value of these wines to their importers and to consumers. 
In addition, NABI states it disagrees with TTB's statement in Notice 
No. 122 that language in Article 7(1) of the 2006 agreement on trade in 
wine between the United States and the European Community (EC) is not 
particularly supportive of the proposal. According to NABI, the lack of 
a specific reference to vintage dates should not bar the powerful sense 
of fairness and equal treatment contained in the agreement. NABI states 
that it believes the agreement is significant for establishing the 
framework for accurately defining consumer information on wine imported 
from the EC and that ``[v]intage dating of country origin product is 
consistent with that framework.''

Opposing Comments

    Opposition to the proposal came from the California Association of 
Winegrape Growers (CAWG), the Lodi District Grape Growers Association, 
and one U.S. winery. Both associations state that vintage dates should 
not be allowed on wines labeled with a country for an appellation 
absent ``stricter standards of origin for wine labeled with the 
American appellation of origin.'' They note that wines labeled with an 
EU country name must consist entirely of wine from that country, while 
TTB regulations permit wine labeled with the American appellation of 
origin to

[[Page 56541]]

contain up to 25 percent wine from other countries. This, they state, 
misleads the consumer and places U.S. growers at a disadvantage. Both 
organizations note that California law requires a wine claiming a 
California appellation of origin to consist wholly of California wine, 
and CAWG notes that Oregon law requires that all grapes used in the 
production of a wine with an Oregon appellation be grown in Oregon. 
Both organizations urge TTB to act on a current petition submitted by 
CAWG and other grape growers associations which proposes that wines 
bearing American appellations of origin must contain only U.S. wine.
    The comment from the winery that does not support the proposed rule 
states that the proposal will dilute the vintage date standard and 
confuse consumers, stating, ``It makes a huge difference if the wine is 
from an AVA specifically, or if it would just say American. * * * Most 
people who are not avid wine drinkers, identify with AVAs. Most wine 
drinkers also identify with a year date. Let's not make more confusion 
to the general public than what is necessary. Let's keep the standards 
high.''

TTB Finding

    After careful review of the comments discussed above, TTB has 
determined that it is appropriate to adopt without change the proposed 
regulatory amendments contained in Notice No. 122. The majority of 
commenters expressed support for the proposed rule. While TTB 
understands the winery's argument that applying a vintage date to a 
large area could undermine the value of a vintage date statement, TTB 
believes that vintage dates can provide useful, truthful information to 
consumers. TTB considers the concerns expressed by CAWG and the Lodi 
District Grape Growers Association about the percentage of foreign wine 
permitted in wine labeled with the American appellation of origin to be 
a separate issue outside the scope of this rulemaking.

Regulatory Flexibility Act

    TTB certifies under the provisions of the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) that this final rule will not have a 
significant economic impact on a substantial number of small entities. 
These amendments merely provide optional, additional flexibility in 
wine labeling decisions. Accordingly, a regulatory flexibility analysis 
is not required.

Executive Order 12866

    This final rule is not a significant regulatory action as defined 
by Executive Order 12866. Therefore, it requires no regulatory 
assessment.

Drafting Information

    Jennifer Berry of the Regulations and Rulings Division, Alcohol and 
Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects in 27 CFR Part 4

    Administrative practice and procedure, Advertising, Customs duties 
and inspection, Imports, Labeling, Packaging and containers, Reporting 
and recordkeeping requirements, Trade practices, Wine.

Amendments to the Regulations

    For the reasons discussed in the preamble, TTB amends 27 CFR, 
chapter I, part 4 as set forth below:

PART 4--LABELING AND ADVERTISING OF WINE

0
1. The authority citation for 27 CFR part 4 continues to read as 
follows:

    Authority: 27 U.S.C. 205, unless otherwise noted.


Sec.  4.27  [Amended]

0
2. Section 4.27 is amended:
0
a. In the second sentence of the introductory text of paragraph (a), by 
removing the words ``other than a country (which does not qualify for 
vintage labeling)''; and
0
b. In paragraph (a)(2), by removing the words ``country or''.


Sec.  4.34  [Amended]

0
3. Section 4.34(b)(5) is amended by removing the last sentence.

    Signed: April 30, 2012.
John J. Manfreda,
Administrator.
    Approved: May 14, 2012.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. 2012-22598 Filed 9-12-12; 8:45 am]
BILLING CODE 4810-31-P