Wine Labeling Amendments (88F-221P)

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 4 and 9

[T.D. ATF-355; Re: Notice No. 742 & 745]

RIN 1512-AA31

Wine Labeling Amendments (88F-221P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of

the Treasury.

ACTION: Treasury decision, final rule.

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SUMMARY: This final rule amends the wine labeling regulations to allow

the use of multicounty or multistate appellations of origin for other

than grape wine; allow the use of the designation ``other than

standard'' on a wine label; allow the use of a vineyard, orchard, farm

or ranch name on a wine label; allow more than three grape varieties on

a wine label; and revise the mailing address for obtaining U.S.G.S.

maps.

EFFECTIVE DATE: April 28, 1994.

FOR FURTHER INFORMATION CONTACT: James A. Hunt, Wine and Beer Branch,

Bureau of Alcohol, Tobacco and Firearms, 650 Massachusetts Avenue NW,

Washington, DC 20226, (202) 927-8230.

SUPPLEMENTARY INFORMATION:

Background

Section 105(e) of the Federal Alcohol Administration Act (FAA Act),

27 U.S.C. 205(e), vests broad authority in the Director of ATF, as a

delegate of the Secretary of the Treasury, to prescribe regulations

intended to prevent deception of the consumer, and to provide the

consumer with adequate information as to the identity and quality of

the product. Regulations which implement the provisions of section

105(e), as they relate to wine, are set forth in title 27, Code of

Federal Regulations (CFR), parts 4 and 9. The last multiple issue

revision of the wine labeling regulations was Treasury Decision ATF-53,

43 FR 37672 (August 23, 1978), which was effective September 22, 1978.

On June 19, 1992, ATF published Notice No. 742 (57 FR 27401)

proposing wine labeling issues which were brought to our attention over

a period of several years by industry members or other groups. The

original 30 day comment period was extended an additional 30 days by

the publication of Notice No. 745 (57 FR 33139).

Wine Labeling Amendments Proposed in Notice 742

1. Broadened Use of the ``Estate Bottled'' Designation

The proposed revision of 27 CFR 4.26 would (1) allow a bonded wine

premises proprietor located outside of a viticultural area to use the

``Estate bottled'' designation for wine derived from primary winemaking

material produced on land owned or controlled by the proprietor which

is located contiguous to the proprietor's bonded wine premises, (2)

allow proprietors producing wine from fruit and agricultural products

other than grapes to use the ``Estate bottled'' designation on their

wines, and (3) allow proprietors who have more than one bonded wine

premises in the same viticultural area to use the ``Estate bottled''

designation for wine which prior to bottling was transferred in bond

between their bonded wine premises located in the same viticultural

area.

2. Harvest Year Designations for Fruit, Berry and Agricultural Wines

The proposed addition of 27 CFR 4.28 would allow a harvest year

designation for citrus fruit wines, other fruit and berry wines, and

agricultural wines made in accordance with the standards prescribed in

classes 4, 5 and 6 of 27 CFR 4.21.

3. Expanded Use of a Viticultural Area Designation

The proposed amendment of section 4.25a(e)(3)(iv) would allow wine

fully finished outside a viticultural area from where the grapes were

grown to be labeled with a viticultural area designation as long as

such wine was finished within the United States.

4. Multicounty or Multistate Appellations of Origin for Other Than

Grape Wine

The proposed revision of 27 CFR 4.25a(c) and (d) would allow

proprietors to use multicounty and multistate appellations on fruit or

other agricultural product wine labels instead of just being allowed

for grape wines.

5. Designation ``Other Than Standard Wine'' on a Wine Label

The proposed amendment of 27 CFR 4.21 would allow either the label

designation ``Other than Standard'' or ``Substandard'' on a wine label

for wines with the current standard of identity for ``substandard''

wine.

6. Use of a Vineyard, Orchard, Farm or Ranch Name on a Wine Label

The proposed amendment to 27 CFR 4.39 would allow the use of a

vineyard, orchard, farm or ranch name on a wine label if 95 percent of

the primary winemaking material used to produce the wine came from such

named place.

7. Brand Names With a Varietal (Grape Type) Name

The proposed revision of 27 CFR 4.23a. would allow a proprietor to

use a grape variety name in a brand name if such wine meets the

varietal (grape type) labeling requirements.

8. More Than Three Grape Varieties on a Wine Label

The proposed revision of 27 CFR 4.23(a) would allow for more than

three grape variety names on a wine label.

9. Geographic Brand Names of Viticultural Area Significance

The proposed revision of 27 CFR 4.39 would provide that a brand

name of viticultural area significance, which cannot meet the

appellation of origin requirements for the geographic area named, may

continue to be used if the brand name was approved by a certificate of

label approval prior to the regulatory establishment of the

viticultural area bearing that name.

10. Changing the Address of Where To Obtain U.S.G.S. Maps for

Viticultural Areas

U.S.G.S. maps for describing the boundaries of viticultural areas

are now obtained only from the Denver, Colorado office of the U.S.

Geological Survey. Sections in 27 CFR parts 4 and 9 would be amended to

reflect the change in where U.S.G.S. maps may be obtained.

Comments on Notice No. 742

ATF received 42 written comments on Notice No 742. Three of the

comments were from wine industry trade associations; Wine Institute

writing on behalf of 475 California winery members, Association of

American Vintners writing on behalf of approximately 300 wineries

located in 33 States, and Federation des Exportateurs de Vins et

Spiritueux de France (FEVS), a French national trade association

representing exporters of wine and spirits.

Estate Bottled Designation, Harvest Dates, Varietal Brand Names,

Viticultural Area Designations, and Geographical Brand Names

The Wine Institute and FEVS, and a few other commenters, strongly

opposed the five wine labeling amendments proposed in Notice No. 742

which would: (1) Broaden use of the ``Estate bottled'' designation, (2)

allow the use of a harvest year designation for fruit, berry and

agricultural wines, (3) allow the use of a brand name with a varietal

(grape type) name, (4) expand the use of a viticultural area

designation, and (5) address the use of a geographic brand name which

has a viticultural area significance. The primary reason for the Wine

Institute's opposition was the lack of information available for their

members to fully consider the impact of these major proposals. They

concluded that after more information on the complex proposals is

obtained additional time and public hearings will be necessary to allow

all interested parties to participate in the rulemaking process. The

Wine Institute requested a public hearing on the proposed amendment on

geographic brand names as well as ATF's procedures to revoke

certificates of label approval. The question of ATF's procedures on

revoking label approvals is the subject of a separate rulemaking

project. The FEVS opposition centered on the impact the proposals might

have on the European Community wine negotiations with the United

States. Other than the Association of American Vintners general

support, there were only a few favorable comments for the five major

proposals.

While the comments indicate both pro and con views, ATF agrees that

more information on the five wine labeling issues should be obtained

and presented for comment before making any final decisions. Therefore,

we have decided to include these issues along with the comments

received concerning these issues and other issues raised in the

comments in a forthcoming major project to review and revise all of the

FAA Act labeling and advertising regulations.

Designation ``Other Than Standard Wine'' on a Wine Label

There were 30 comments received in favor of allowing the use of the

designation ``other than standard'' as an alternative to the

designation ``substandard'' on a wine label. There was one comment from

a wine industry member opposed to the proposal. This proposal was in

response to a petition from a winemaker in Michigan who produces

quality wines from high acid fruit. Currently, the designation ``other

than standard wine'' may be used on wine labels where such wine is sold

intrastate only. Due to a very high acid level in the winemaking

material used to produce some wines, ameliorating material in excess of

limitations allowed for standard wine is sometimes necessary. Such

wines are permitted in the Internal Revenue Code to be produced as

other than standard wine, but these wines are required to be labeled as

substandard wine under 27 CFR part 4. The commenter opposed to the

proposal believed that the term ``other than standard'' would not

convey to the consumer that the wine is below the quality level of a

standard wine. The petitioner and others in favor of the proposal

wanted the revision because ``substandard'' was too derogatory a

designation for quality wines produced from high acid fruit.

Additionally, the commenters in favor wanted the designation

``substandard'' to apply to wines that have a volatile acidity in

excess of the maximum prescribed by regulation. ATF is not adopting

this suggestion because we have not experienced any interest by the

wine industry in producing a wine with an excess volatile acidity. ATF

is adopting the use of ``other than standard wine'' on a wine label as

proposed because we do not believe such a change will result in a

jeopardy to the revenue or cause consumer deception or consumer

confusion.

Vineyard, Orchard, Farm or Ranch Names

Section 4.39(m) proposed that the name of a vineyard, orchard, farm

or ranch may be used on a wine label if at least 95 percent of the wine

in the container was produced from primary winemaking material grown on

the named vineyard, orchard, farm or ranch. While the Wine Institute

commented in favor of this proposal, they were concerned about adequate

safeguards to protect trademark rights to such brand names. They

questioned the proposals effect on the requirements and conditions for

the use of a brand name that contains a named vineyard, orchard, farm

or ranch, particularly when the brand name has no known or approved

geographical or viticultural area significance. They also asked about

instances when a brand name that may start out with no ``viticultural

significance'' may later acquire ``viticultural significance'' long

after it has been a recognized brand name and trademark. Section

4.39(i)(3) provides that a name has viticultural significance if the

Director so finds. Thus a brand name containing the name of a vineyard,

orchard, farm or ranch is subject to scrutiny under Sec. 4.39(i)(1)

only in cases where the Director determines that the particular name of

the vineyard, orchard, farm or ranch has viticultural significance.

A clarifying phrase was added to the proposed Sec. 4.39(m) to state

that brand name requirements of sections Secs. 4.33(b) and 4.39(i)

apply if the name of a vineyard, orchard, farm or ranch is used in the

brand name and not when such name is used as additional information.

Other Proposals

There were few comments concerning the other proposals, allowing

the use of multicounty or multistate appellations of origin for other

than grape wine, revising the mailing address for obtaining U.S.G.S.

maps, and allowing more than three grape varieties on a wine label. ATF

is adopting these 3 changes in 27 CFR Part 4 as proposed because we do

not believe that the changes result in a jeopardy to the revenue or

cause consumer deception or consumer confusion.

Executive Order 12866

It has been determined that this document is not a significant

regulatory action as defined by Executive Order 12866. Accordingly,

this Treasury decision is not subject to the analysis required by this

Executive Order.

Regulatory Flexibility Act

The provisions of the Regulatory Flexibility Act relating to an

initial and final regulatory flexibility analysis (5 U.S.C. 604) are

not applicable to this final rule because it will not have a

significant economic impact on a substantial number of small entities.

This final rule will not impose, or otherwise cause, a significant

increase in reporting, recordkeeping, or other compliance burdens on a

substantial number of small entities.

The final rule is not expected to have significant secondary or

incidental effects on a substantial number of small entities. Any

benefit derived by a small winemaker using the new options provided by

this rule will be the result of the winemaker's own promotional efforts

and consumer acceptance of the specific product. Accordingly, it is

hereby certified under the provisions of Section 3 of the Regulatory

Flexibility Act (5 U.S.C. 605(b)) that this final rule will not have a

significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

The collection of information contained in this final rule was

submitted to the Office of Management and Budget (OMB) for review in

accordance with the Paperwork Reduction Act of 1980, (44 U.S.C.

3504(h)).

The estimated average burden associated with this collection of

information is 0 hours per respondent or recordkeeper because this

requirement is usual and customary for wine producers.

Drafting Information

The author of this document is Coordinator James A. Hunt, Wine and

Beer Branch, Bureau of Alcohol, Tobacco and Firearms.

List of Subjects

27 CFR Part 4

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Packaging and containers, and Wine.

27 CFR Part 9

Administrative practice and procedure, Consumer protection,

Viticultural areas, Wine.

Authority and Issuance

Part 4--Labeling and Advertising of Wine and Part 9--American

Viticultural Areas are amended as follows:

PART 4--[AMENDED]

Paragraph 1. The authority citation for 27 CFR part 4 continues to

read as follows:

Authority: 27 U.S.C. 205.

Par. 2. The heading of Sec. 4.21(h) is revised to read as set forth

below and paragraph (h)(2) of the section is amended by adding the

phrase ``or `Other than standard wine''' immediately after the phrase

```Substandard wine''':

Sec. 4.21 The standards of identity.

* * * * *

(h) Class 8; imitation and substandard or other than standard wine.

* * * * *

Par. 3. In the heading and the first sentence of Sec. 4.23a(d)

introductory text remove the word ``three'' and add, in its place, the

word ``more.''

Par. 4. Section 4.25a is amended by revising paragraphs (c), (d)(1)

and (e)(2)(v) as follows:

Sec. 4.25a Appellations of origin.

* * * * *

(c) Multicounty appellations. An appellation of origin comprising

two or no more than three counties in the same State may be used if all

of the fruit or other agricultural products were grown in the counties

indicated, and the percentage of the wine derived from fruit or other

agricultural products grown in each county is shown on the label with a

tolerance of plus or minus two percent.

(d) Multistate appellations. * * *

(1) All of the fruit or other agricultural products were grown in

the States indicated, and the percentage of the wine derived from fruit

or other agricultural products grown in each State is shown on the

label with a tolerance of plus or minus two percent;

* * * * *

(e) Viticultural area. * * *

(2) Establishment of American viticultural areas. * * * (v) a copy

of the appropriate U.S.G.S. map(s) with the boundaries prominently

marked. (For U.S.G.S. maps, write the U.S. Geological Survey, Branch of

Distribution, Box 25286, Federal Center, Denver, Colorado 80225. If the

map name is not known, request a map index by State.)

* * * * *

Par. 5. Section 4.39 is amended by adding a new paragraph (m) to

read as follows:

Sec. 4.39 Prohibited practices.

* * * * *

(m) Use of a vineyard, orchard, farm or ranch name. When used in a

brand name, a vineyard, orchard, farm or ranch name having geographical

or viticultural significance is subject to the requirements of

Secs. 4.33(b) and 4.39(i) of this part. Additionally, the name of a

vineyard, orchard, farm or ranch shall not be used on a wine label,

unless 95 percent of the wine in the container was produced from

primary winemaking material grown on the named vineyard, orchard, farm

or ranch.

PART 9--[AMENDED]

Par. 6. The authority citation for 27 CFR part 9 continues to read

as follows:

Authority: 27 U.S.C. 205.

Par. 7. Section 9.3(b)(5) is revised to read as follows:

Sec. 9.3 Relation to Parts 4 and 71 of this chapter.

* * * * *

(b) * * *

* * * * *

(5) A copy of the appropriate U.S.G.S. map(s) with the boundaries

prominently marked. (For U.S.G.S. maps, write the U.S. Geological

Survey, Branch of Distribution, Box 25286, Federal Center, Denver,

Colorado 80225. If the map name is not known, request a map index by

State.)

Signed: February 24, 1994.

Daniel R. Black,

Acting Director.

Approved: March 15, 1994.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 94-7275 Filed 3-28-94; 8:45 am]

BILLING CODE 4810-31-M