[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Rules and Regulations]
[Pages 64274-64276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27014]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[Docket No. TTB-2018-0003; T.D. TTB-153; Ref: Notice No. 172]
RIN 1513-AC36


Expansion of the Arroyo Seco Viticultural Area

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

ACTION: Final rule; Treasury decision.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is 
expanding the approximately 18,240-acre ``Arroyo Seco'' viticultural 
area in Monterey County, California, by approximately 90 acres. The 
established Arroyo Seco viticultural area and the expansion area both 
lie within the established Monterey viticultural area and the larger, 
multi-county Central Coast viticultural area. TTB designates 
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: This final rule is effective January 14, 2019.

FOR FURTHER INFORMATION CONTACT: Christopher Forster-Smith, Alcohol and 
Tobacco Tax and Trade Bureau, Regulations and Rulings Division, 1310 G 
Street NW, Box 12, Washington, DC 20005; phone 202-453-1039, ext. 150.

SUPPLEMENTARY INFORMATION: 

[[Page 64275]]

Background on Viticultural Areas

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 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, dated December 
10, 2013 (superseding Treasury Order 120-01, dated January 24, 2003), 
to the TTB Administrator to perform the functions and duties in the 
administration and enforcement of this law.
    Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to 
establish definitive viticultural areas and regulate 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 the preparation and submission of petitions for the 
establishment or modification of American viticultural areas (AVAs) and 
lists the approved AVAs.

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 having distinguishing features, as described in part 9 
of the regulations, and a name and a delineated boundary, as 
established 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 the 
wine's geographic origin. The establishment of AVAs allows vintners to 
describe more accurately the origin of their wines to consumers and 
helps consumers to identify wines they may purchase. Establishment of 
an AVA 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 (27 CFR 4.25(e)(2)) 
outlines the procedure for proposing an AVA and provides that any 
interested party may petition TTB to establish a grape-growing region 
as an AVA. Petitioners may use the same process to request changes 
involving established AVAs. Section 9.12 of the TTB regulations (27 CFR 
9.12) prescribes standards for petitions for modifying established 
AVAs. Petitions to expand an established AVA must include the 
following:
     Evidence that the area within the proposed expansion area 
boundary is nationally or locally known by the name of the established 
AVA;
     An explanation of the basis for defining the boundary of 
the proposed expansion area;
     A narrative description of the features of the proposed 
expansion area that affect viticulture, such as climate, geology, 
soils, physical features, and elevation, that make the proposed 
expansion area similar to the established AVA and distinguish it from 
adjacent areas outside the established AVA boundary;
     The appropriate United States Geological Survey (USGS) 
map(s) showing the location of the proposed expansion area, with the 
boundary of the proposed expansion area clearly drawn thereon; and
     A detailed narrative description of the proposed expansion 
area boundary based on USGS map markings.

Petition To Expand the Arroyo Seco AVA

    TTB received a petition from Ann Hougham, owner of the Mesa del Sol 
Vineyards, proposing to expand the established ``Arroyo Seco'' AVA. The 
Arroyo Seco AVA (27 CFR 9.59) was established by T.D. ATF-131, which 
was published in the Federal Register on April 15, 1983 (48 FR 16245). 
The Arroyo Seco AVA covers approximately 18,240 acres in Monterey 
County, California. The proposed expansion area and the established AVA 
are both located within the Monterey AVA (27 CFR 9.98) and the larger, 
multi-county Central Coast AVA (27 CFR 9.75).
    The proposed expansion area contains approximately 90 acres and is 
adjacent to the far southwestern corner of the established Arroyo Seco 
AVA. The proposed expansion area is located on an upland terrace on the 
northern bank of a creek known as the Arroyo Seco, which is Spanish for 
``dry creek.'' There is one vineyard covering approximately 14 acres 
within the proposed expansion area. The petition included a copy of an 
email from the Arroyo Seco Winegrowers, stating that the proposed 
expansion was shared with its members and received no objections. 
Unless otherwise noted, all information and data pertaining to the 
proposed expansion area contained in this document come from the 
petition and its supporting exhibits.
    According to the petition, the soils and topography of the proposed 
expansion area are similar to those of the established Arroyo Seco AVA. 
The soils of the proposed expansion area and the established AVA are 
gravelly and fine sandy loams with low lime and salt content and pH 
levels between 5.1 and 8.4. The proposed expansion area contains soils 
primarily from the Lockwood, Elder, and Mocho series, which are all 
principal soil series within the established Arroyo Seco AVA. Finally, 
the proposed expansion area and the established AVA are both regions of 
terraces and alluvial fans with elevations from approximately 600 to 
700 feet, and slope angles between 0 and 9 percent.
    Although the proposed expansion area is more similar to the Arroyo 
Seco AVA than the surrounding regions, the proposed expansion area 
still shares some of the features of the surrounding Monterey and 
Central Coast AVAs. For example, the proposed Arroyo Seco AVA expansion 
area has moderate elevations and soils with lime, salt, and pH levels 
similar to the Monterey AVA and shares the marine climate influence of 
the larger Central Coast AVA due to its proximity to the Pacific Ocean. 
However, the soils of the proposed expansion area have medium-to-high 
levels of organic matter, compared to the very low levels of organic 
matter that characterize the Monterey AVA. Additionally, due to its 
location east of the Santa Lucas Mountains, the proposed expansion area 
is not as exposed to the marine air and fog as the more western regions 
of the Central Coast AVA that are closer to the ocean. Finally, because 
of its much smaller size, the topographical features of the proposed 
expansion area are more uniform than the diverse features of the large 
multicounty Central Coast AVA, and are more similar to the 
topographical features of the Arroyo Seco AVA, which is located on the 
same sloping bench lands and terraces along the Arroyo Seco as the 
proposed expansion area.

Notice of Proposed Rulemaking and Comments Received

    TTB published Notice No. 172 in the Federal Register on Friday, 
April 6, 2018 (83 FR 14791), proposing to expand the Arroyo Seco AVA. 
In the notice, TTB summarized the evidence from the petition regarding 
the name,

[[Page 64276]]

boundary, and distinguishing features for the proposed expansion area. 
For a detailed description of the evidence relating to the name, 
boundary, and distinguishing features of the proposed expansion area, 
and for a comparison of the distinguishing features of the proposed 
expansion area to the surrounding areas and to the established Arroyo 
Seco AVA, see Notice No. 172.
    In Notice No. 172, TTB solicited comments on the accuracy of the 
name, boundary, climatic, and other required information submitted in 
support of the petition. The comment period closed on June 5, 2018.
    TTB received no comments in response to Notice No. 172.

TTB Determination

    After careful review of the petition, TTB finds that the evidence 
provided by the petitioner sufficiently demonstrates that although the 
proposed expansion area shares some of the broader characteristics of 
the larger Monterey and Central Coast AVAs, it is also similar to the 
established Arroyo Seco AVA and should also be recognized as part of 
that AVA. Accordingly, under the authority of the FAA Act, section 
1111(d) of the Homeland Security Act of 2002, and part 4 of the TTB 
regulations, TTB expands the 18,240 acre ``Arroyo Seco'' AVA to include 
the approximately 90-acre expansion area as described in Notice No. 
172, effective 30 days from the publication date of this document.

Boundary Description

    See the narrative description of the boundary of the AVA expansion 
in the regulatory text published at the end of this final rule.

Maps

    The petitioner provided the required maps, and they are listed in 
the regulatory text of 27 CFR 9.59.

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. For a wine to be labeled with an AVA name or with a 
brand name that includes an AVA name, at least 85 percent of the wine 
must be derived from grapes grown within the area represented by that 
name, and the wine must meet the other conditions listed in Sec.  
4.25(e)(3) of the TTB regulations (27 CFR 4.25(e)(3)). If the wine is 
not eligible for labeling with an AVA name 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 AVA 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 an AVA name 
that was used as a brand name on a label approved before July 7, 1986. 
See Sec.  4.39(i)(2) of the TTB regulations (27 CFR 4.39(i)(2)) for 
details.
    The expansion of the Arroyo Seco AVA will not affect any other 
existing AVA, and bottlers using ``Arroyo Seco,'' ``Monterey,'' or 
``Central Coast'' as an appellation of origin or in a brand name for 
wines made from grapes within the ``Arroyo Seco,'' ``Monterey,'' or 
``Central Coast'' AVAs will not be affected by this expansion of the 
Arroyo Seco AVA. The expansion of the Arroyo Seco AVA will allow 
vintners to use ``Arroyo Seco,'' ``Monterey,'' or ``Central Coast'' as 
an appellation of origin for wines made primarily from grapes grown 
within the expansion area if the wines meet the eligibility 
requirements for the appellation.

Regulatory Flexibility Act

    TTB certifies that this regulation will not have a significant 
economic impact on a substantial number of small entities. The 
regulation imposes no new reporting, recordkeeping, or other 
administrative requirement. Any benefit derived from the use of an AVA 
name would be 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

    It has been determined that this rule is not a significant 
regulatory action as defined by Executive Order 12866 of September 30, 
1993. Therefore, no regulatory assessment is required.

Drafting Information

    Christopher Forster-Smith of the Regulations and Rulings Division 
drafted this final rule.

List of Subjects in 27 CFR Part 9

    Wine.

The Regulatory Amendment

    For the reasons discussed in the preamble, TTB amends title 27, 
chapter I, part 9, Code of Federal Regulations, 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. Section 9.59 is amended by revising paragraphs (c) introductory text 
and (c)(1), redesignating paragraphs (c)(2) through (c)(21) as 
paragraphs (c)(3) through (c)(22), and adding new paragraph (c)(2) to 
read as follows:


Sec.  9.59   Arroyo Seco.

* * * * *
    (c) Boundaries. The Arroyo Seco viticultural area is located in 
Monterey County, California. The beginning point is found on the 
``Sycamore Flat'' U.S.G.S. map at the intersection of Jamesburg Road 
(known locally as Carmel Valley Road) and Arroyo Seco Road, near the 
intersection of sections 21, 22, 28, and 27, T.19 S., R. 5 E. From the 
beginning point, proceed southwesterly along Arroyo Seco Road to its 
intersection with Piney Creek.
    (1) Then southeasterly along Piney Creek to its confluence with the 
Arroyo Seco in section 27, T. 19 S., R. 5 E.
    (2) Then northerly along the Arroyo Seco to its intersection with 
the southern boundary of section 22, T. 19 S., R 5 E.
* * * * *

    Signed: September 19, 2018.
John J. Manfreda,
Administrator.
    Approved: December 4, 2018.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2018-27014 Filed 12-13-18; 8:45 am]
 BILLING CODE P