E6-8854. Establishment of the San Antonio Valley Viticultural Area (2004R-599P)

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION:

Final rule; Treasury decision.

SUMMARY:

This Treasury decision establishes the San Antonio Valley viticultural area in southwestern Monterey County, California, within the existing Central Coast viticultural area. We designate 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:

Effective Date: July 10, 2006.

FOR FURTHER INFORMATION CONTACT:

Jennifer Berry, Alcohol and Tobacco Tax and Trade Bureau, Regulations and Rulings Division, P.O. Box 18152, Roanoke, VA 24014; telephone [phone].

SUPPLEMENTARY INFORMATION:

Background on Viticultural Areas

TTB Authority

Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 et seq.) requires that alcohol beverage labels provide consumers with adequate information regarding product identity and prohibits the use of misleading information on such labels. The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers these regulations.

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and 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) contains the list of approved viticultural areas.

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 distinguishable by geographical features, the boundaries of which have been recognized and defined 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 its geographical origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area 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 outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include—

• Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition;
• Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies;
• Evidence relating to the geographical features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas;
• A description of the specific boundary of the proposed viticultural area, based on features shown on United States Geological Survey (USGS) maps; and
• A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked.

San Antonio Valley Petition and Rulemaking

General Background

Paul Getzelman, Paula Getzelman, and Steve Cobb of Lockwood, California, petitioned TTB to establish the “San Antonio Valley” viticultural area in southwestern Monterey County, California, in a valley situated in the Santa Lucia mountain range. The area is entirely within the existing multi-county Central Coast viticultural area (27 CFR 9.75). According to the petitioners, there are approximately 235 square miles, or 150,400 acres of land, within the San Antonio Valley viticultural area. Over 700 of these acres are planted to vines.

We summarize below the evidence presented in support of the petition.

Name Evidence

According to the petitioners, the name “San Antonio Valley” dates back to 1771, when a small party of Spanish missionaries headed by Father Junipero Serra entered the oak-mantled valley in what was to become southern Monterey County. Near the river that he christened “El Rio de San Antonio,” they established a mission and named it “San Antonio de Padua” in honor of Saint Anthony of Padua. They later moved the mission to a location a couple of miles north at the confluence of the San Miguel and San Antonio Rivers, which provided the missionaries a more suitable place to plant grape vines for making sacramental wine for the Mission.

The petitioners cite the following reference sources as evidence of the historical and current usage of the name “San Antonio Valley”:

• “Memories of the San Antonio Valley,” by Rachel Gillett, San Antonio Valley Historical Society, 1990. Ms. Gillet refers repeatedly to the area as “San Antonio Valley.” She states that the township of San Antonio was surveyed in 1865, near the El Camino Real or King's Highway (currently Jolon Road). She further notes that a San Antonio post office operated in the township from 1867 to 1887.
• “California Place Names; The Origin and Etymology of Current Geographical Names,” by Erwin G. Gudde and William Bright, University of California Press, Fourth Edition. The authors note that the name San Antonio, which appears in the titles of many land grants and claims, has survived in a number of places, including in the names of the San Antonio River, San Antonio Mission, San Antonio Creek, and San Antonio Valley.
• “Monterey County Place Names, a Geographical Dictionary,” by Donald Thomas Clark, Kestrel Press, 1991. The author writes of the San Antonio Valley, “this is the valley through which the San Antonio River flows.”
• Pelican Network Guide, an Internet travel site, states the following about the San Antonio Valley: “Nearly secret, San Antonio Valley is an intriguing * * * destination. About two and a half hours from Silicon Valley, yet far more remote in history, it provides environmental, literary, cultural, and historical rewards. San Antonio Valley is the setting for John Steinbeck's 'To an Unknown God', an early novel of his spiritual and ecological themes.” (See http://www.pelicannetwork.net/​getaways.sanantonio.valley.htm.)

The petitioners state that although the valley has been known by various names, often due to changes in ownership under the Spanish land grant system, the name San Antonio Valley has endured. According to the petitioners, local residents have long known the area as San Antonio Valley. The name “San Antonio” is used throughout the area-the San Antonio Union School, San Antonio Reservoir, and San Antonio River all can be found on the USGS map for Williams Hill, California. The petitioners note that while the southern portion of the proposed viticultural area is also known as Lockwood Valley, the name “Lockwood” is most accurately applied to a township in the southern portion of the San Antonio Valley.

Boundary Evidence

The boundaries for the proposed viticultural area are the natural geographical boundaries of the San Antonio Valley. The proposed area, which includes approximately 150,400 acres of flat land and gently rolling hills, extends to the surrounding hillsides that rise to an elevation of approximately 2,200 feet. This valley, formed by the watershed of the San Antonio River, is situated in the Santa Lucia mountain range between the Pacific coast and the Salinas Valley. The San Antonio River flows across the Santa Lucia range in a southeasterly direction, then turns to the east and flows into the Salinas River. A dam built in the 1950s on the river near the San Luis Obispo County line created the San Antonio Reservoir, which dominates the southeastern corner of the proposed San Antonio Valley viticultural area.

The proposed viticultural area's northwest boundary slices through part of the Fort Hunter Liggett Military Reservation. While the fort is currently under the jurisdiction of the United States Government, the petitioners note that it could be offered for sale to the public in the future. Because the military reservation encompasses much of the area in and around the boundary of the proposed San Antonio Valley viticultural area and shares the same growing conditions, the petitioners speculate that future uses of the land could include vineyards.

Distinguishing Features

According to the petitioners, the San Antonio Valley's basin shape, elevation, climate, and soils contribute to significantly different growing conditions from those found in the adjoining areas within the extensive Central Coast viticultural area. The petitioners note that the Spanish missionaries were the first to recognize the valley's unique grape growing conditions. This viewpoint is reflected in the Pelican Network Guide, which states: “The Spaniards, who liked the site for wine making because of its soil and climate, were right on the money.” The growing conditions found in the proposed San Antonio Valley viticultural area are described by the petitioners below.

Elevation

The elevation of the proposed San Antonio Valley viticultural area ranges from 850 feet to as high as 2,530 feet. The proposed area is surrounded by the higher Santa Lucia range to the west and south and a lower ridge averaging 1,500 feet in elevation to the north and east. According to the petitioners, the shape and elevation of the proposed area results in higher daytime and lower nighttime temperatures than in neighboring areas with lower elevations, such as the Monterey viticultural area (27 CFR 9.98) where the elevation ranges from 50 to 540 feet. The petitioners assert that the daily heating-cooling cycle produced by the proposed San Antonio Valley viticultural area's higher elevation allows grapes to achieve full, rich fruit flavor and color while retaining a crisp acidity.

Soils

Soil data submitted by the petitioners affirms that the San Antonio Valley has a distinctive soil profile comprised of nearly 40 different soil series, the majority of them alluvial in nature. The remaining soils found in the uplands consist of material from weathered sandstone and shale. Current vineyards are planted on flat to moderately sloping terrain. The principal soil series are Arbuckle gravelly loam, Chamise shaly loam, Lockwood loam and shaly loam, Placentia sandy loam, Placentia-Arbuckle complex, Rincon clay loam, Nacimiento silty clay loam, and Pinnacles coarse sandy loam. The submitted soil data for the area came from “Soil Survey of Monterey County, California,” published by the Soil Conservation Service of the U.S. Department of Agriculture.

The petitioners note that these soils differ from the soils of neighboring areas of Monterey County. In the San Bernabe viticultural area (27 CFR 9.171), for example, the soils, remnants of ancient sand dunes, are mostly of the eolian type. The adjacent Hames Valley viticultural area (27 CFR 9.147) has a very homogeneous soil profile with 75 percent of the soils derived from the Lockwood series. In contrast, the San Antonio Valley has a much more varied soil profile with the majority of the soil series being alluvial in nature.

Climate

The petitioners state that the San Antonio Valley's climate is much less affected by marine air than other areas of the Central Coast. A stable layer of marine air typically dominates coastal California weather causing higher humidity, cooler maximum temperatures, and warmer minimum temperatures. This effect occurs with greater duration in valleys close to the coast, such as Carmel Valley, Edna Valley, Santa Ynez Valley, and the lower Salinas Valley. Its influence decreases as one travels inland, especially in the upper areas of the Salinas Valley. According to the petitioners, the inland position of the San Antonio Valley and its basin shape act to block the intrusion of this marine air. Only when the upper level of atmospheric pressure allows the layer of marine air to expand to greater than its typical depth of 1,000—1,500 feet does the San Antonio Valley experience a marine air influence. This lack of a marine air influence creates a unique microclimate for the area, with drier, hotter days in summer and cooler nights in the spring and fall.

As evidence of this climatic distinction, the petitioners submitted temperature comparisons based on data from the National Weather Center. A comparison of growing season average monthly temperatures between San Antonio Valley and nearby areas (Carmel Valley, Gonzales, Arroyo Seco, King City, and Paso Robles) shows that San Antonio Valley is considerably cooler than the other areas during April. The petitioners state that this is due to the San Antonio Valley's basin shape and drier conditions, factors that they state also cause the San Antonio Valley to experience more frequent frost episodes. However, from June through September the proposed San Antonio viticultural area averages warmer temperatures than the other areas, with the exception of Paso Robles, an area further inland than the San Antonio Valley.

The petitioners also submitted a comparison of both total growing season degree days and monthly degree days for the same places. (A measurement of heat accumulation during the growing season, one degree day accumulates for each degree Fahrenheit that a day's mean temperature is above 50 degrees, which is the minimum temperature required for grapevine growth; see “General Viticulture,” by Albert J. Winkler, University of California Press, 1974.) These comparisons show that San Antonio Valley typically accumulates more than 3,000 degree days during the growing season. Paso Robles accumulates 3,600 degree days for the same period, while Carmel Valley, Gonzales, and Arroyo Seco all accumulate fewer than 2,400 degree days each. King City accumulates roughly as many degree days for the growing season as San Antonio Valley. However, the monthly comparison shows that in King City the degree days accumulate steadily through the months, while in the San Antonio Valley the increase and decrease in degree days is much more dramatic, with most of the increase occurring during the summer months.

In addition to the temperature comparisons described above, the petitioners also submitted a microclimate comparison of the proposed San Antonio Valley viticultural area and two adjacent existing viticultural areas, Paso Robles and Hames Valley (27 CFR 9.84 and 9.147, respectively). The data covered a two-week period from September 16-29, 2003, and was collected at sites located on the Fort Hunter Liggett Military Reservation within the proposed viticultural area, at Bradley in the Hames Valley viticultural area, and at the Paso Robles Airport within the Paso Robles viticultural area. The petitioners submitted the data in the form of graphs exhibiting differences in temperature, dew point, humidity, and wind speeds between the three areas.

According to the graphs, wind speeds for the period were significantly lower in San Antonio Valley than in Hames Valley or Paso Robles. The petitioners state that this is because the topography of the proposed viticultural area blocks the strongest daily afternoon winds created by marine air influence. Dew points for the period were shown to be at least 10 degrees lower in the proposed San Antonio Valley viticultural area than in the other viticultural areas, reflecting the proposed viticultural area's lower humidity. The temperature data, according to the petitioners, shows that the proposed San Antonio Valley viticultural area also has a temperature profile that differs markedly from that of the Hames Valley or Paso Robles viticultural areas. Generally, this data shows that the proposed area is less affected by marine air intrusions. The petitioners note that during times of marine air influence, the proposed San Antonio Valley viticultural area has a much greater temperature variance than the two existing viticultural areas where the marine air moderates the temperatures. They also note that on days with little marine air influence, the proposed area experiences less temperature variation than the two existing areas.

Thus, the data submitted by the petitioners shows the climate in the proposed San Antonio Valley viticultural area to be significantly different in regard to temperature, wind, humidity, and degree day accumulations from surrounding existing viticultural areas. These differences, they contend, are a reflection of the proposed area's basin geography, making the grape growing environment in the proposed San Antonio Valley viticultural area unique relative to other Central Coast viticultural areas.

Notice of Proposed Rulemaking and Comments Received

On May 19, 2005, TTB published a notice of proposed rulemaking regarding the establishment of the San Antonio Valley viticultural area in the Federal Register (70 FR 28865) as Notice No. 45. In that notice, TTB requested comments by July 18, 2005, from all interested persons. TTB received two comments in response to the notice.

The first comment, from the Monterey County Vintners & Growers Association, supported the establishment of the new area, stating that its designation provides consumers with a better tool for distinguishing between the wine producing areas of Monterey County. The second comment, from Anthony Riboli, owner of San Antonio Winery in Los Angeles, California, opposed the creation of the viticultural area. Mr. Riboli states that he believes consumers will confuse the viticultural area name with the name of his winery. He did not, however, submit any evidence to support this position. He also notes that he owns a trademark for the brand name “San Antonio Winery.”

TTB does not agree with the comment of Anthony Riboli that consumers will confuse the name of his winery, San Antonio Winery, with the name of the proposed viticultural area. The name “San Antonio” is a common place name that is used throughout the United States, most notably for the well-known city in Texas, and therefore we do not believe that consumers would specifically associate the name “San Antonio Valley” with Mr. Riboli's winery in Los Angeles. In addition, as we proposed in Notice No. 45, we will recognize only the entire name “San Antonio Valley” as a name of viticultural significance upon establishment of the proposed viticultural area. Thus, the establishment of this viticultural area will have no impact on the San Antonio Winery's ability to use its brand name on its wine labels (See the Impact on Current Wine Labels discussion below).

Furthermore, we do not believe that Mr. Riboli's trademark registration of the brand name “San Antonio Winery” has any bearing on this case. We believe the modifier “valley” within the name “San Antonio Valley” would sufficiently differentiate the viticultural area name from the San Antonio Winery name.

Additionally, it has long been the position of TTB and its predecessor, the Bureau of Alcohol, Tobacco, and Firearms (ATF), that trademark registration of a name does not limit our authority to establish a viticultural area with the same or similar name. In T.D. ATF-278, which established the Wild Horse Valley viticultural area, ATF stated:

It is not the policy of ATF to become involved in purely private disputes involving proprietary rights, such as trademark infringement suits. However, in the event a direct conflict arises between some or all of the rights granted by a registered trademark under the Lanham Act and the right to use the name of a viticultural area established under the FAA Act, it is the position of ATF that the rights applicable to the viticultural area should control. ATF believes that the evidence submitted by the petitioner establishes that the designation of the Wild Horse Valley viticultural area is in conformance with the laws and regulations. Accordingly, ATF finds that Federal registration of the term “Wild Horse” does not limit the Bureau's authority to establish a viticultural area known as “Wild Horse Valley.” (See 53 FR 48244, November 30, 1988.)

This policy on the relationship between trademarks and viticultural areas was upheld in Sociedad Anonima Vina Santa Rita v. Dept. of Treasury, 193F. Supp. 2nd 6 (D.D.C 2001). In that decision, the court held that “while the Lanham Act affords Plaintiff certain rights and causes of action with respect to the use of its marks, the ATF's decision to approve the Santa Rita Hills [viticultural area] does not impede those rights.” (See Santa Rita at 22.) In other words, by this rule, TTB is not creating a name but recognizing a pre-existing geographic fact.

TTB Finding

After careful review of the San Antonio Valley viticultural area petition and the comments received, TTB finds that the evidence submitted supports the establishment of the proposed viticultural area. Therefore, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we establish the “San Antonio Valley” viticultural area in Monterey County, California, effective 30 days from this document's publication date.

Boundary Description

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

Maps

The petitioners provided the required maps, and we list them below in the regulatory text.

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. With the establishment of this viticultural area and its inclusion in part 9 of the TTB regulations, its name, “San Antonio Valley,” is recognized as a name of viticultural significance. Consequently, wine bottlers using “San Antonio Valley” in a brand name, including a trademark, or in another label reference as to the origin of the wine, must ensure that the product is eligible to use the viticultural area's name as an appellation of origin.

For a wine to be eligible to use as an appellation of origin the name of a viticultural area specified in part 9 of the TTB regulations, at least 85 percent of the grapes used to make the wine must have been grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible to use the viticultural area name as an appellation of origin 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 viticultural area 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 a viticultural area name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

Regulatory Flexibility Act

We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is 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

This rule is not a significant regulatory action as defined by Executive Order 12866 (58 FR 51735). Therefore, it requires no regulatory assessment.

Drafting Information

Jennifer Berry of the Regulations and Rulings Division drafted this document.

List of Subjects in 27 CFR Part 9

• Wine

The Regulatory Amendment

For the reasons discussed in the preamble, we amend 27 CFR, chapter 1, part 9, as follows:

PART 9—AMERICAN VITICULTURAL AREAS

1. The authority citation for part 9 continues to read as follows:

Authority: 27 U.S.C. 205.

Subpart C—Approved American Viticultural Areas

2. Subpart C is amended by adding § 9.194 to read as follows:

§ 9.194

San Antonio Valley.

(a) Name. The name of the viticultural area described in this section is “San Antonio Valley”. For purposes of part 4 of this chapter, “San Antonio Valley” is a term of viticultural significance.

(b) Approved Maps. The appropriate maps for determining the boundary of the San Antonio Valley viticultural area are ten United States Geological Survey 1:24,000 scale topographic maps. They are titled:

(1) Hames Valley, California, 1949, photorevised 1978;

(2) Tierra Redonda Mountain, California, 1949, photorevised 1979;

(3) Bradley, California, 1949, photorevised 1979;

(4) Bryson, California, 1949, photorevised 1979;

(5) Williams Hill, California, 1949, photorevised 1979;

(6) Jolon, California, 1949;

(7) Alder Peak, California, 1995;

(8) Bear Canyon, California, 1949, photoinspected 1972;

(9) Cosio Knob, California, 1949, photorevised 1984; and

(10) Espinosa Canyon, California, 1949, photorevised 1979.

(c) Boundary. The San Antonio Valley viticultural area is located in Monterey County, California. The boundary of the San Antonio Valley viticultural area is as described below:

(1) The beginning point is at the southeast corner of section 14, T23S, R9E, on the Hames Valley map;

(2) From the beginning point, proceed southeast in a straight line for approximately 5 miles across sections 24 and 25, T23S, R9E, and sections 30, 31, and 32, T23S, R10E, and section 5, T24S, R10E, to the southeast corner of section 5, on the Tierra Redonda Mountain map; then

(3) Continue southeast in a straight line for approximately 3.25 miles through sections 9, 16, 15, and 22, T24S, R10E, to the mid-point of the eastern boundary of section 22 on the Bradley map; then

(4) Proceed straight south for approximately 2.5 miles along the eastern boundary line of sections 22, 27, and 34, T24S, R10E, to the Monterey-San Luis Obispo County line; then

(5) Follow the Monterey-San Luis Obispo County line west for approximately 7.0 miles, back onto the Tierra Redonda Mountain map, to the southwest corner of section 34, T24S, R9E; then

(6) Proceed northwest in a straight line for approximately 17 miles, crossing sections 33, 32, 29, 30, and 19, T24S, R9E, and sections 24, 13, 14, 10, 9, and 4, T24S, R8E, on the Bryson map, section 5, T24S, R8E in the southwest corner of the Williams Hill map, section 32, T23S, and sections 23, 22, 15, and 16, T23S, R7E, on the Jolon map, to an 1,890-foot peak located approximately 2,100 feet west of section 8, T23S, R7E; then

(7) Continue northwest in a straight line for approximately 9 miles, crossing the Alder Peak map between Milpitas Grant and Stony Valley, and sections 9, 4, and 5, T22S, R6E, on the Bear Canyon map, to a 2,713-foot peak located in section 5, T22S, R6E; then

(8) Proceed east-northeast in a straight line for approximately 3.9 miles, passing onto the Hunter Liggett Military Reservation and crossing the San Antonio River, to a 2,449-foot peak on the Hunter Liggett Military Reservation; then

(9) Proceed northeast in a straight line for approximately 2.5 miles, crossing Mission Creek, across sections 30 and 29, T21S, R7E, on the Cosio Knob map to the 2,530-foot peak of Cosio Knob; then

(10) From Cosio Knob, proceed east-southeast in a straight line for approximately 9.5 miles across sections 29, 28, 27, 26, 35, and 36, T21S, R7E, sections 31 and 32, T21S, R8E, and sections 5, 4, 3, and 2, T22S, R8E, on the Espinosa Canyon map, to a 1,811-foot peak located in section 2; then

(11) Proceed southeast in a straight line for approximately 10.4 miles across sections 2, 11, 12, and 13, T22S, R8E, and sections 18 and 19, T22S, R9E, on the Espinosa Canyon map, sections 19, 30, 29, 32, and 33, T22S, R9E, on the northwest corner of the Williams Hill map, and sections 4, 3, 10, 11, and 14, T23S, R9E, on the Hames Valley map, to the beginning point at the southeast corner of section 14, T23S, R9E.

Signed: March 6, 2006.

John J. Manfreda,

Administrator.

Approved: March 16, 2006.

Timothy E. Skud,

Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).