[Federal Register Volume 86, Number 162 (Wednesday, August 25, 2021)]
[Rules and Regulations]
[Pages 47377-47380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-18208]



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 Rules and Regulations
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 This section of the FEDERAL REGISTER contains regulatory documents 
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  Federal Register / Vol. 86, No. 162 / Wednesday, August 25, 2021 / 
Rules and Regulations  

[[Page 47377]]



DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 9

[Docket No. TTB-2020-0007; T.D. TTB-172; Ref: Notice No. 192]
RIN 1513-AC55


Modification of the Boundaries of the Santa Lucia Highlands and 
Arroyo Seco Viticultural Areas

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

ACTION: Final rule; Treasury decision.

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

SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is 
modifying the boundaries of the ``Santa Lucia Highlands'' viticultural 
area and the adjacent ``Arroyo Seco'' viticultural area in Monterey 
County, California. The boundary modifications include two separate 
actions--removing approximately 376 acres from the Santa Lucia 
Highlands viticultural area, and removing 148 acres from the Arroyo 
Seco viticultural area and placing them entirely within the Santa Lucia 
Highlands viticultural area. The Santa Lucia Highlands and Arroyo Seco 
viticultural areas and the modification areas are located entirely 
within the existing Monterey and Central Coast viticultural areas. 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 September 24, 2021.

FOR FURTHER INFORMATION CONTACT: Karen A. Thornton, Regulations and 
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G 
Street NW, Box 12, Washington, DC 20005; phone 202-453-1039, ext. 175.

SUPPLEMENTARY INFORMATION:

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 the functions 
and duties in the administration and enforcement of these provisions to 
the TTB Administrator through Treasury Order 120-01, dated December 10, 
2013 (superseding Treasury Order 120-01, dated January 24, 2003).
    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 to TTB 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. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes 
standards for petitions for the establishment or modification of AVAs. 
Petitions to modify an AVA must include the following:
     In the case of an expansion in size of an AVA, evidence 
that the proposed expansion area is nationally or locally known by the 
name of the AVA into which it would be placed;
     In the case of a reduction in size of an AVA, an 
explanation of the extent to which the current AVA name does not apply 
to the excluded area;
     An explanation of the basis for defining the boundary of 
the proposed areas to be realigned, including an explanation of how the 
boundary of the existing AVA was incorrectly or incompletely defined or 
is no longer accurate due to new evidence or changed circumstances;
     In the case of an expansion of an AVA, a narrative 
description of the features of the proposed AVA affecting viticulture, 
such as climate, geology, soils, physical features, and elevation, that 
make the proposed expansion area similar to the AVA into which it would 
be placed and distinguish it from adjacent areas outside the 
established AVA;
     In the case of a reduction of an AVA, a narrative 
description of the features of the proposed AVA affecting viticulture, 
such as climate, geology, soils, physical features, and elevation, that 
differentiate the proposed reduction area from the established AVA and 
demonstrate a greater similarity to the features of adjacent areas 
outside the established AVA;
     The appropriate United States Geological Survey (USGS) 
map(s) showing the location of the proposed AVA boundary modifications, 
with the proposed boundary modifications clearly drawn thereon; and
     A detailed narrative description of the proposed AVA 
boundary modifications based on USGS map markings.

[[Page 47378]]

Santa Lucia Highlands-Arroyo Seco Boundary Modification Petition

    TTB received a petition from Patrick Shabram on behalf of the Santa 
Lucia Highlands Wine Artisans, proposing to modify the boundary of the 
Santa Lucia Highlands AVA (27 CFR 9.139) and the adjacent Arroyo Seco 
AVA (27 CFR 9.59). The Santa Lucia Highlands AVA and the Arroyo Seco 
AVA are both located within Monterey County, California, and are both 
located entirely within the established Monterey AVA (27 CFR 9.98) and 
the Central Coast AVA (27 CFR 9.75). The proposed boundary 
modifications include two separate actions--removing approximately 376 
acres from the Santa Lucia Highlands viticultural area, and removing 
148 acres from the Arroyo Seco viticultural area and placing them 
entirely within the Santa Lucia Highlands viticultural area.
    The first proposal would remove approximately 376 acres from the 
northern part of the Santa Lucia Highlands AVA. The petition states 
that the proposed reduction area is within the floodplain of the 
Salinas River and that no vineyards are planted or proposed in this 
location. The land removed from the Santa Lucia Highlands AVA would 
remain within the Monterey AVA and the Central Coast AVA.
    According to the petition, the topography and soils within the 
proposed reduction area are more similar to those of the Monterey and 
Central Coast AVAs than to the Santa Lucia Highlands AVA. For example, 
the proposed reduction area is located in the floodplain of the Salinas 
River, has little-to-no slope, and does not have a clear easterly 
orientation. By contrast, the majority of the established Santa Lucia 
Highlands AVA is located on a series of alluvial fans and terraces that 
have a predominately eastern orientation and slope angles ranging from 
5 to 30 percent. Additionally, the soils in the proposed reduction area 
are primarily Psamments and Fluvents, which are suborders of Entisols 
that are sandy and have little organic material. These soils are 
uncommon in the remainder of the Santa Lucia Highlands AVA, where 
Chualar loams are the most common soil, comprising almost 32 percent of 
the total soils. Chualar loams are described as very deep, well-drained 
soils formed in alluvial material from mixed rock sources.
    The second proposed modification affects a portion of the shared 
Santa Lucia Highlands-Arroyo Seco AVA boundary. The modification would 
remove 148 acres of foothills terrain from the western side of the 
Arroyo Seco AVA and place them entirely within the southeastern region 
of the Santa Lucia Highlands. One vineyard containing approximately 135 
acres of vines would be affected by this boundary realignment, and the 
vineyard owner included a letter of support in the petition. The 
modification would reduce the size of the Arroyo Seco AVA by less than 
1 percent and would not have any impact on the boundaries of the 
Monterey AVA or the Central Coast AVA.
    The proposed realignment area is located on an alluvial fan with an 
easterly orientation and slope angles above 5 percent. The petition 
states that these topographic features are similar to the alluvial fans 
found in the Santa Lucia Highlands AVA, whereas the majority of the 
Arroyo Seco AVA has a gentler slope that gradually becomes nearly flat 
and lacks an eastern orientation. The soils in the proposed realignment 
area are mostly Placentia sandy loam, Chualar, and Arroyo Seco soils. 
All three soils are found in both the Santa Lucia Highlands and Arroyo 
Seco AVAs. However, the petition states that this combination of soils 
is more commonly found within the Santa Lucia Highlands AVA, and 
Placentia sandy loams are not common in the Arroyo Seco AVA outside of 
the proposed realignment area.

Notice of Proposed Rulemaking and Comments Received

    TTB published Notice No. 192 in the Federal Register on July 20, 
2020 (85 FR 43754), proposing to modify the boundaries of the Santa 
Lucia Highlands and Arroyo Seco AVAs. In the notice, TTB summarized the 
evidence from the petition regarding the name, boundary, and 
distinguishing features for the proposed reduction area and the 
proposed realignment area. For a detailed description of the evidence 
relating to the name, boundary, and distinguishing features of the 
proposed boundary modification areas, see Notice No. 192.
    The comment period for Notice No. 192 closed September 18, 2020. In 
response to Notice No. 192, TTB received a total of eight comments. 
However, two of the comments did not contain information related to the 
proposed boundary modifications, or to the AVA program in general, and 
were not posted to the public docket. All six comments that were posted 
to the public docket supported the proposed boundary modifications to 
the Santa Lucia Highlands and Arroyo Seco AVAs.

TTB Determination

    After careful review of the petition and the comments received in 
response to Notice No. 192, TTB finds that the evidence provided by the 
petitioner supports the modifications of the boundaries of the Santa 
Lucia Highlands and Arroyo Seco AVAs. Accordingly, under the authority 
of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, 
and parts 4 and 9 of the TTB regulations, TTB modifies the boundaries 
of both AVAs effective 30 days from the publication date of this 
document.

Boundary Description

    See the narrative description of the boundary modifications of the 
Santa Lucia Highlands and Arroyo Seco AVAs in the regulatory text 
published at the end of this final rule.

Maps

    The petitioners provided the required maps, and they are listed 
below in the regulatory text. The modified Santa Lucia Highlands and 
Arroyo Seco AVA boundaries may also be viewed on the AVA Map Explorer 
on the TTB website, at https://www.ttb.gov/wine/ava-map-explorer.

Impact on Current Wine Labels and Transition Period

    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 approval of the boundary realignments does not affect the 
Monterey AVA or the Central Coast AVA. Bottlers using ``Monterey'' or 
``Central Coast'' as an appellation of origin or in a brand name for 
wines

[[Page 47379]]

made from grapes grown within the reduction area or the proposed 
realignment area may continue to use those appellations of origin if 
the wines meet the eligibility requirements for the appellation.
    The modification of the northern Santa Lucia Highlands AVA boundary 
means that wines produced mainly from grapes grown in the reduction 
area may no longer be labeled with ``Santa Lucia Highlands'' as an 
appellation of origin. However, TTB does not believe any label holders 
will be affected by this boundary modification because the petition 
states that no vineyards exist within the reduction area.
    The realignment of the shared Santa Lucia Highlands-Arroyo Seco AVA 
boundary allows vintners to use ``Santa Lucia Highlands,'' 
``Monterey,'' and ``Central Coast'' as appellations of origin for wines 
made primarily from grapes grown within the realignment area if the 
wines meet the eligibility requirements for these appellations. For 
wines whose eligibility for the Arroyo Seco AVA designation depends on 
the use of grapes grown in the realignment area, a label containing the 
words ``Arroyo Seco'' may be used on wine bottled within 2 years from 
the effective date of the final rule, provided that such label was 
approved before the effective date of this final rule and that the wine 
conforms to the standards for use of the label set forth in 27 CFR 4.25 
or 4.39(i) in effect prior to this final rule. At the end of this 2-
year transition period, if the wine is produced primarily from grapes 
grown in the realignment area, then a label containing the words 
``Arroyo Seco'' in the brand name or as an appellation of origin would 
not be permitted on the label. This transition period is described in 
the regulatory text of this final rule. TTB believes that the 2-year 
transition period should provide affected label holders with adequate 
time to use up any old labels.

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 final 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

    Karen A. Thornton 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:
0
a. Removing paragraphs (c)(12) and (13);
0
b. Redesignating paragraphs (c)(14) through (21) as paragraphs (c)(17) 
through (24); and
0
c. Adding new paragraphs (c)(12) through (16) and (d).
    The additions read as follows:


Sec.  9.59   Arroyo Seco.

* * * * *
    (c) * * *
    (12) Then south following Paraiso Road to its intersection with an 
unnamed, light-duty road north of Clark Road in Section 20, T18S/R6E.
    (13) Then east-southeast along the unnamed road for 0.3 mile to its 
intersection with an intermittent stream.
    (14) Then southwesterly along the intermittent stream for 0.2 mile 
to its intersection with the western boundary of Section 21, T18S/R6E.
    (15) Then south-southwest in a straight line for approximately 0.3 
mile to the intersection of Clark Road and the southern boundary of 
Section 21, T18S/R6E.
    (16) Then west-southwest along Clark Road for 0.2 mile to its 
intersection with an unnamed, light-duty road.
* * * * *
    (d) Transition period. A label containing the words ``Arroyo Seco'' 
in the brand name or as an appellation of origin approved prior to 
September 24, 2021 may be used on wine bottled before August 25, 2023, 
if the wine conforms to the standards for use of the label set forth in 
Sec.  4.25 or Sec.  4.39(i) of this chapter in effect prior to 
September 24, 2021.

0
3. Section 9.139 is amended by:
0
a. Redesignating paragraphs (c)(10) through (22) as paragraphs (c)(18) 
through (30);
0
b. Revising paragraphs (c)(1) through (9); and
0
c. Adding new paragraphs (c)(10) through (17).
    The revisions and additions read as follows:


Sec.  9.139  Santa Lucia Highlands.

* * * * *
    (c) * * *
    (1) From the beginning point, the boundary follows Limekiln Creek 
for approximately 1.2 miles northeast to the 120-foot elevation 
contour.
    (2) Then following the 120-foot elevation contour in a general 
southeasterly direction for approximately 0.9 mile to where it 
intersects with River Road.
    (3) Then following River Road in a southeasterly direction for 0.3 
mile to its intersection with an unimproved road near the marked 130-
foot elevation.
    (4) Then follow a straight line southeast to the terminus of the 
110-foot elevation contour.
    (5) Then follow a straight line southeast 0.9 mile, crossing onto 
the Gonzales map, to the Salinas River.
    (6) Then follow the Salinas River in a south-southeast direction 
0.7 mile, crossing onto the Palo Escrito map, to the intersection of 
the Salinas River and the 120-foot elevation contour.
    (7) Then follow the 120-foot contour south for 1 mile, then 
southeast to its intersection with River Road.
    (8) Then follow River Road east for 0.1 mile to its intersection 
with an unnamed, light-duty road.
    (9) Then follow the unnamed road southeast for 0.2 mile to its 
intersection with the 160-foot elevation contour.
    (10) Then follow the 160-foot elevation contour southeasterly for 
approximately 5.9 miles to its intersection with River Road.
    (11) Then follow River Road southeasterly for approximately 1 mile 
to the intersection of River, Fort Romie, and Foothill Roads.
    (12) Then following Foothill Road in a southeasterly direction for 
approximately 4 miles to the junction of Foothill Road and Paraiso 
Roads on the Soledad map.
    (13) Then follow Paraiso Road in a southerly direction, crossing 
onto the Paraiso Springs map, to its intersection with an unnamed, 
light-duty road north of Clark Road in Section 20, T18S/R6E.
    (14) Then follow the unnamed road east-southeast for 0.3 mile to 
its intersection with an intermittent stream.
    (15) Then follow the intermittent stream in a southwesterly 
direction for

[[Page 47380]]

0.2 mile to its intersection with the western boundary of Section 21, 
T18S/R6E.
    (16) Then follow a straight line south-southwest for 0.3 mile to 
the intersection of Clark Road and the southern boundary of Section 21, 
T18S/R6E.
    (17) Then follow Clark Road west-southwest for 0.2 mile to its 
intersection with an unnamed, light-duty road.
* * * * *

    Signed: May 24, 2021.
Mary G. Ryan,
Administrator.

    Approved: May 28, 2021.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2021-18208 Filed 8-24-21; 8:45 am]
BILLING CODE 4810-31-P