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AVA rule change proposals

The U.S. TTB wants your comments on its proposed rules for the Calistoga AVA petition by March 20, 2007.

America (Country Appellation)

AVA Brouhaha May Be Costly
To Nation's Wineries

U. S. wine industry looks to engage U.S. TTB further and longer on the Feds' proposed rules changes.

by Alan Goldfarb
December 13, 2007

This is the next part of the continuing saga of the AVA petitioning process that the Tobacco, Trade, and Tax Bureau is attempting to reformulate. Read Alan Goldfarb’s first report, Calistoga And Other AVAs Move Closer To Approval at APPELLATION AMERICA.


DropCap L48 ooking for breathing room in the midst of the busy holiday season, U.S. vintners are pushing the government to extend to March the comment period on two TTB proposals regarding American Viticultural Area status.

The Tax and Trade Bureau is looking for comments on its proposals on AVA rule revisions. One, calling for public comments by March 20, concerns the grandfathering in of geographical brand names. While the other,also due by March 20, could turn on its ear the criteria for obtaining AVA status in general; this proposed rule accordingly runs the danger of watering down customer assurance of grape origins.

It is likely that the wine industry will be granted those extensions, due to a vociferous outcry from the wine industry, as well as a letter from California Congressman Mike Thompson (D-St. Helena), which presses TTB for the extensions.

The most vocal entity, of course, is the Napa Valley Vintners, which has two dogs in this fight. One relates to TTB’s proposal to grandfather-in napa vintners icon.jpgone of two Calistoga geographically named brands - a winery that apparently doesn’t use at least 85 percent of its grapes from the pending Calistoga AVA.

The other proposal from the government is to re-define future AVAs within AVAs, partially based upon the percentage of land in an area that is devoted to growing wine grapes. The NVV has cause for concern on the latter revision because the Napa Valley alone – which already has 14 sub-AVAs - has one pending (Calistoga) and at least two other petitions in some stage of completion (Pope Valley and Tulocay)

In a statement last week, the NVV voiced strong opposition to TTB’s rule changes. On the “grandfather” revision, the NVV wrote, “these regulations provide, for a select few wine brands [editor’s note: Calistoga Cellars and Calistoga Estates] a loophole through which to sell their misleading wines …”

As for the other proposal, the NVV stated that the rule, “threatens to eliminate the common and internationally understood practice of ‘nesting’ wine appellations within larger appellations and to eliminate the existing high standard of grape source requirements, providing additional channels for consumer deception …”

However, there is one observer of the AVA process, Ralph Carter, with first-hand experience working with TTB, who sees the brouhaha as an “opportunity” for the industry, the consumer, and even for TTB because “it’s pretty rare [that] the public even gets to comment on federal law before it’s enacted.” Furthermore he conjectured, “If it’s enacted, it’s a chance to mould American appellation consciousness.”

Carter has written a half-dozen California petitions to the TTB seeking AVA sanction, and has obtained approval thus far on the Dos Rios and Covelo areas of Mendocino County and Leona Valley, about 50 miles northeast of downtown Los Angeles.

Will the TTB actually listen to public comments, and act upon them accordingly?

“It seems like a fair opportunity to test the waters on their behalf,” Carter told APPELLATION AMERICA from the Big Island of Hawaii where he was vacationing. “It seems to be very economical and logical on their part … There will be quite a bit of feedback and they will weigh and pay attention to those comments that are well-founded and ignore the emotional ones.”

Carter believes that the so-called “grandfather” revision, which would allow Calistoga Cellars to keep its name, will be difficult to settle. “I would expect the
Ralph Carter AVA2-267.jpg
While Ralph Carter might be on vacation in Hawaii, he is still actively on the TTB’s case about its proposed AVA rule changes.
Calistoga situation will best be resolved by not entering into a grandfathering situation; those within the area should source their grapes from within the area and comply with the 85 percent rule.”

The other proposal he believes, if enacted, will be a nightmare both for the industry and the government because both sides will have to show that there’s a preponderance of land in vineyard in a proposed area before AVA status will be granted in the future.

“That would be quite an obstacle to the industry and it will not promote the vitality of the industry,” he surmised. Carter, who works exclusively with areas that heretofore were not known for grape growing and winemaking, regions which he calls “pioneering areas”, concludes that if TTB enacts the so-called “Percentage Rule”, those areas will be stymied in growing their wine industry.

They need the validation of being approved in order to propagate an industry with which to begin, he said. Further, in a letter to TTB on this matter, Carter wrote, “Pioneer growers need momentum at this early stage of development. This recognition can help the consumer and may actually encourage other growers to consider the area and thus further enhance the economy of the area …”

He also writes to TTB that large, natural geographic areas will “be unfairly burdened” if the “Percentage Rule” goes into effect because they may have to wait an inordinate time to get their areas approved.

The AVA process and the TTB rule system, Carter believes, “is at an historic junction when the American wine industry is competing globally at a time when a huge portion of worldwide wines are indistinguishable from one another.”

To survey an area, looking for certain percentages of viticultural land, will be highly costly to both the industry and TTB. Carter thinks the agency’s rule revisions may be at cross purposes. Considering, he said, that the reasons for the rule changes in the first place are mostly about cost cutting.

Carter said he spoke directly to Nancy Sutton, of TTB’s regulations and procedures division, who told him that her agency’s reasons for wishing to makes rules changes on this issue are because of “cost-cutting measures. She said they spend a lot of money and it seems they’re trying to reduce their expenses.”

Toward that end, Carter recommends that TTB begin charging a fee to anyone filing an AVA petition, something it currently does not do. He indicated that the agency might be receptive to that.

“With all my experiences with TTB, they are a very good, high-integrity department and I have great deal of respect for them,” he said. “I’m hoping they’ll take this opportunity to grow since they’re so young themselves (on these matters) compared to Europe.”

Apparently, those words are not mere platitudes. When pressed that he might have a vested interest in cozying up to TTB because he has to work directly with the agency in order to get his client’s petitions approved, Carter didn’t backtrack. “I haven’t had any reason to have a vested interest with them. I’m learning as I work with them, they seem to be quite professional,” he responded.

However, he did offer this: “I never know if people with TTB are clerical or scientific nerds. I’ve never met any of them personally. I’ve asked questions and didn’t have some of them answered. But the big thing is I think they’re interested in quality. I don’t think they’ll make the mistake they made in the early ‘80s, allowing AVAs with millions of acres, again.”

Carter said he has been busy the last few weeks alerting people “from one end of the state (California) to the other about the issues. He insisted that he “hasn’t met anyone who likes the percentage rule change.”

He also doesn’t think TTB is trying to push through legislation while the industry concerns itself with year-end business. “I don’t believe they’re (TTB) trying to slip one by us in this busy holiday season,” he concluded.

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Reader Feedback

Reader Comments... [2]

[1]
Robert Haas , partner
Tablas Creek Vineyard, Paso Robles, CA
I was surprised with how quickly the TTB published new draft rules to resolve the issues surrounding the approval of new AVAs that might conflict with existing brand names, or that are nested within other existing AVAs. A first reading of the new TTB proposals suggests an honest effort on their part to create more rigorous protections of the future use of place names as brands while redressing possible negative financial implication for brands created after 1986 who use a viticultural area as a part of their brand name.

However, we believe that it takes the wrong approach, would set United States regulations further at odds with our responsibilities under international law, and would set a dangerous precedent not just for the geographical labeling of wine, but also of other agricultural products.

The crux of the proposal suggests a rule whereby wineries that registered a brand name between 1986 and 2005 which later was adopted as a viticultural area may continue to use their brand name but must make a "statement which the appropriate TTB officer finds to be sufficient to dispel the impression that the geographic area suggested by the brand name is indicative of the origin of the wine". Labels approved after 2005 have no such protection, and wineries will be notified upon the approval of any new COLA (Certificate of Label Approval) if there is a chance that it may one day conflict with a place name.

In addition, the new regulations address the nesting of AVAs within other AVAs, which has been done for centuries in other countries and for decades in the United States. The rules proposed include a frightening warning for those who (like the Paso Robles AVA Committee) would propose AVAs of greater specificity within an existing AVA. The full paragraph is below: "In any case in which an AVA would be created entirely within another AVA, whether by the establishment of a new, larger AVA or by the establishment of a new AVA within an existing one, the petition must dispel any apparent inconsistency or explain why it is acceptable. When a smaller AVA has name recognition and features that so clearly distinguish it from a larger AVA that surrounds it, TTB may determine in the course of the rulemaking that it is not part of the larger AVA and that wine produced from grapes grown within the smaller AVA would not be entitled to use the name of the larger AVA as an appellation of origin or in a brand name." In letters to the other members of the Paso Robles AVA Committee and to the TTB, I proposed another solution that would strengthen, rather than weaken, place-name designations:

"If honest and accurate representations of the wine in the bottle to the consumer is the objective of the TTB then the problem of conflict that they are feeling is due not to the AVA system regulations but to the issuance of COLAs. The owner of a COLA that is issued with a geographic name should be required to source 85% or more of his grapes from that geographic location, whether or not it is an AVA. Installing such a rule would avoid all future conflicts between COLAs and AVAs. It would mean that the wine in the bottle was made from grapes of the same geographic origin as the label implies. It would inform the consumer reading a wine list or retailer solicitation without it being necessary for him to see a bottle disclaimer. It would also eliminate the need for a rolling grandfather amendment. As for AVAs within AVAs, the precedent has already been set in the USA, since they already exist. The larger AVA informs the consumer by determining the larger geographic location of the vineyard with which he will be more likely to be familiar. The smaller AVA determines the more exact location of the vineyard(s) and their distinctiveness within the larger AVA. That is the way all wine producing countries in the world regulate their identifications of geographic locations to best inform consumers. I am not for rolling grandfather exceptions. There is an established regulation for 1986 and prior. It should be followed. People who find themselves in conflict with new AVAs, who have COLAs approved after 1986 should be given a length of time, say 5 years, to bring their sourcing into line or change the brand name or/and label. After all, they are mis-representing the source of their grapes, and they know it. If I had my way, I would make people who have COLAs prior to 1986 that mis-represent the source of their grapes either conform by sourcing 85% from the geographic area or change their label and/or brand name in a delay of 10 years or so."

I believe that we have an opportunity to make a better system, and that the TTB's proposed new rules instead make a system even more riddled with exceptions, exemptions and disclaimers. The first order of business is making comments to the federal government on their proposed changes in rulemaking. To learn how to do so, visit Docket No. TTB-2007-0068 (at www.regulations.gov).


[2]
Carmine Indindoli , president
Indindoli Family Vineyards, Russian River Valley, Sonoma County, CA
AVA's and such! I am a 37 year winegrower in Sonoma County. My yard is my AVA. I farm it differently from my neighbors, only 20 feet away. I have my unique choice of rootstock, varieties, clones, trellising, training style, and cultural practices. My wines are very clearly wines from my "vineyard" (AVA).

In our many trips to France, we noted the same consciousness in Burgundy, one "(AVA)" Grand Cru vineyard 4 feet away from a Premier Cru vineyard and possibly the same spacing, 4 feet from the Premier Cru vineyard a vineyard designated "village".

We are so full of ourselves to allow applications for "AVA" to look like a "porcupine" body on a map. Pieces sticking on, or out from the main because someone with a big ego, a big marketing plan, and a pile of money can propose it. It violates the grape and the wine, it cheats the consumer and it makes the designation "AVA" a joke. And for myself, I tell everyone I cannot to buy the wine from the "stick out guys" or the "pile of money guys" because they make the "AVA" designation useless and the process ugly and obscene. If you cannot stop the distortion then you can as an individual stop those wines from selling.

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