2010-27736. Labeling Imported Wines With Multistate Appellations (2008R-265P)

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Alcohol and Tobacco Tax and Trade Bureau proposes to amend the wine labeling regulations to allow the labeling of imported wines with multistate appellations of origin. This amendment would provide treatment for imported wines similar to that currently available to domestic wines bearing multistate appellations. It would also provide consumers with additional information regarding the origin of these wines.

DATES:

We must receive written comments on or before January 3, 2011.

ADDRESSES:

You may send comments on this notice to one of the following addresses:

• http://www.regulations.gov (via the online comment form for this notice as posted within Docket No. TTB-2010-0007 at “Regulations.gov,” the Federal e-rulemaking portal);
• Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 14412, Washington, DC 20044-4412; or
• Hand delivery/courier in lieu of mail: Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street, NW., Suite 200-E, Washington, DC 20005.

See the Public Participation section of this notice for specific instructions and requirements for submitting comments, and for information on how to request a public hearing.

You may view copies of this notice, selected supporting materials, and any comments we receive about this proposal within Docket No. TTB-2010-0007 at http://www.regulations.gov. A direct link to this docket is posted on the TTB Web site at http://www.ttb.gov/​wine/​wine-rulemaking.shtml under Notice No. 110. You also may view copies of this notice, all supporting materials, and any comments we receive about this proposal by appointment at the TTB Information Resource Center, 1310 G Street, NW., Washington, DC 20220. Please call 202-453-2270 to make an appointment.

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 Wine Labeling

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 requires that these regulations, 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 regulations promulgated under the FAA Act.

Use of Appellations of Origin on Wine Labels

Part 4 of the TTB regulations (27 CFR part 4) sets forth standards promulgated under the FAA Act for the labeling and advertising of wine. Section 4.25 of the TTB regulations (27 CFR 4.25) sets forth rules regarding the use of appellations of origin. An appellation of origin for an American wine is defined in § 4.25(a)(1) as:

• The United States;
• A State;
• Two or no more than three States which are all contiguous;
• A county;
• Two or no more than three counties in the same States; or
• A viticultural area as defined in § 4.25(e)(1)(i).

Section 4.25(b)(1) provides that an American wine is entitled to an appellation of origin other than a multicounty or multistate appellation, or a viticultural area, if, among other requirements, at least 75 percent of the wine is derived from fruit or agricultural products grown in the appellation area indicated. Use of an appellation of origin comprising two or no more than three contiguous States is allowed under § 4.25(d) if:

• 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 2 percent;
• The wine has been fully finished (except for cellar treatment pursuant to 27 CFR 4.22(c) and blending that does not result in an alteration of class or type under 27 CFR 4.22(b)) in one of the labeled appellation States; and
• The wine conforms to the laws and regulations governing the composition, method of manufacture, and designation of wines in all the States listed in the appellation.

An appellation of origin for imported wine is defined in § 4.25(a)(2) as:

• A country;
• A state, province, territory, or similar political subdivision of a country equivalent to a state or county; or
• A viticultural area (which is defined in § 4.25(e)(1)(ii) in the case of imported wine).

Section 4.25(b)(2) provides that an imported wine is entitled to an appellation of origin other than a viticultural area if: “(1) At least 75 percent of the wine is derived from fruit or agricultural products grown in the area indicated by the appellation of origin; and (2) the wine conforms to the requirements of the foreign laws and regulations governing the composition, method of production, and designation of wines available for consumption within the country of origin.” There is no provision in the current TTB regulations for the use of multistate appellations on imported wines.

The existing regulations regarding appellations of origin, including the provisions permitting multistate appellations for American wines, were promulgated by our predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), in T.D. ATF-53 (43 FR 37675), published August 23, 1978. The preamble of T.D. ATF-53 noted that the regulations provided “a comprehensive scheme for appellation of origin labeling” resulting in “more accurate information being provided to consumers about wine origin.” According to T.D. ATF-53, multistate appellations were suggested by domestic wine industry members. ATF decided to allow multistate appellations “in order to permit greater flexibility in appellation of origin labeling,” provided that all the grapes come from the named States, that the percentage of grapes from each State be shown on the label, and that the wine conform to the laws and regulations governing the composition, method of manufacture, and designation of wines in all of the States listed in the appellation. There was no discussion in T.D. ATF-53 regarding multistate appellations for foreign wines, including why multistate appellations were limited to American wines.

Australian Petition

The Australian Wine and Brandy Corporation (AWBC), a quasi-governmental authority responsible for, among other activities, regulating the exportation of Australian wine, submitted a petition to TTB to amend § 4.25(a)(2) to permit the labeling of Australian wines with multistate appellations. This proposal would allow an Australian wine imported into the United States to bear an appellation comprised of two or three Australian States, such as “Victoria-New South Wales-South Australia.” According to the AWBC petition, Australian regulations allow wines to be labeled with up to three Geographical Indications (officially defined wine regions) provided that 95 percent of the product is from the listed regions, the regions are listed in descending order of their proportions in the blend, and a minimum of 5 percent of the wine is from each listed region. Australian Geographical Indications include the Australian States, which are roughly equivalent to American States.

TTB Analysis

TTB believes that the considerations that led to the adoption of multistate appellations for American wines expressed in T.D ATF-53, namely greater information for the consumer and greater flexibility to the winemaker, also apply to the use of multistate appellations for imported wines. Further, as noted above, § 4.25(a)(2) already recognizes political subdivisions of a country equivalent to a State as qualifying as appellations of origin.

TTB therefore proposes to amend § 4.25 to permit the use of multistate appellations for imported wines. The proposed amendments reflect the following considerations:

• TTB notes that other wine-producing countries do not necessarily have political subdivisions that are called “states” and § 4.25(a)(2) already recognizes that there are “similar” political subdivisions equivalent to a State that qualify as appellations of origin for imported wine. Consistent with the current regulatory approach, TTB believes it is appropriate to refer to similar political subdivisions of a country that are equivalent to a State in the new texts covering multistate appellations. As a practical matter, before approving any certificate of label approval (COLA) for imported wine that contains a multistate appellation, TTB must be able to conclude that: (1) The entities named in the appellation are states, provinces, territories, or political subdivisions of the country equivalent to a State; and (2) the entities named in the appellation are contiguous. To assist TTB in reaching these conclusions, TTB may request, under the authority of 27 CFR 4.38(h), that COLA applicants provide documentation that supports these necessary conclusions. Such documentation may take the form of maps which delineate the entities named and are highlighted to show the entities' contiguity, or statements from officials within the country of origin which provide factual information in support of these conclusions.
• TTB is proposing to require that all (100 percent) of the wine be derived from fruit or other agricultural products grown in the political subdivisions shown on the label and that the percentage of the wine derived from fruit or other agricultural products grown in each political subdivision be shown on the label. This amendment would mirror the current requirement for multistate appellations on American wines, which we believe provides the consumer with useful information regarding the identity and quality of the wine.
• TTB is also proposing to specify that imported wine labeled with a multistate appellation must conform to the requirements of the foreign laws and regulations governing the composition, method of production, and designation of wines available for consumption within the country of origin. This amendment would parallel the requirement applicable to imported wine with a single state (or similar political subdivision) appellation under § 4.25(b)(2)(ii).

The amendments to § 4.25 proposed in this document entail revisions of paragraph (a)(2), the introductory text of paragraph (b)(2), and paragraph (d), as well as a conforming change in paragraph (e)(1)(ii). The revision of paragraph (a)(2) involves the addition of a subparagraph covering multistate appellations; the entire paragraph (a)(2) appears in the proposed regulatory text for clarity. The change to paragraph (b)(2) involves the addition of the words “other than a multistate appellation” similar to the wording of the introductory text of paragraph (b)(1) in regard to American wine. The revisions of paragraph (d) involve redesignation of the existing text as subparagraph (1) and adding a new subparagraph (2) to cover multistate appellations for imported wine. Finally, a number of nonsubstantive editorial-type organizational and wording changes have been made to the revised texts for clarity and readability purposes.

Public Participation

Comments Sought

We request comments from interested members of the public. We are particularly interested in whether the proposed changes will result in treatment for imported wines comparable to that currently available to domestic wines bearing a multistate appellation of origin. We are interested in comments regarding subdivisions of foreign political systems, including the various political subdivisions that might be considered equivalents of U.S. States. In addition, we are interested in comments concerning the requirements for the use of multistate appellations for imported wine. We also are interested in receiving comments on whether this additional information is helpful to the consumer. Please provide specific information in support of your comments.

Submitting Comments

You may submit comments on this notice by using one of the following three methods:

• Federal e-Rulemaking Portal: You may send comments via the online comment form linked to this notice in Docket No. TTB-2010-0007 on “Regulations.gov,” the Federal e-rulemaking portal, at http://www.regulations.gov. A link to the docket is available under Notice No. 110 on the TTB Web site at http://www.ttb.gov/​wine/​wine-rulemaking.shtml. Supplemental files may be attached to comments submitted via Regulations.gov. For information on how to use Regulations.gov, click on the site's Help or FAQ tabs.
• U.S. Mail: You may send comments via postal mail to the Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, P.O. Box 14412, Washington, DC 20044-4412.
• Hand Delivery/Courier: You may hand-carry your comments or have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street, NW., Suite 200-E, Washington, DC 20005.

Please submit your comments by the closing date shown above in this notice. Your comments must reference Notice No. 110 and include your name and mailing address. Your comments also must be made in English, be legible, and be written in language acceptable for public disclosure. We do not acknowledge receipt of comments, and we consider all comments as originals.

If you are commenting on behalf of an association, business, or other entity, your comment must include the entity's name as well as your name and position title. If you comment via Regulations.gov, please include the entity's name in the “Organization” blank of the comment form. If you comment via postal mail, please submit your entity's comment on letterhead.

You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing.

Confidentiality

All submitted comments and attachments are part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider to be confidential or that is inappropriate for public disclosure.

Public Disclosure

On the Federal e-rulemaking portal, Regulations.gov, we will post, and the public may view, copies of this notice, selected supporting materials, and any electronic or mailed comments we receive about this proposal. A direct link to the Regulations.gov docket containing this notice and the posted comments received on it is available on the TTB Web site at http://www.ttb.gov/​wine/​wine-rulemaking.shtml under Notice No. 110. You may also reach the docket containing this notice and the posted comments received on it through the Regulations.gov search page at http://www.regulations.gov. All posted comments will display the commenter's name, organization (if any), city, and State, and, in the case of mailed comments, all address information, including e-mail addresses. We may omit voluminous attachments or material that we consider unsuitable for posting.

You and other members of the public may view copies of this notice, all related petitions, maps and other supporting materials, and any electronic or mailed comments we receive about this proposal by appointment at the TTB Information Resource Center, 1310 G Street, NW., Washington, DC 20220. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact our information specialist at the above address or by telephone at 202-453-2270 to schedule an appointment or to request copies of comments or other materials.

Regulatory Flexibility Act

We certify under the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that this proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed amendments merely provide optional, additional flexibility in wine labeling decisions. Accordingly, a regulatory flexibility analysis is not required.

Executive Order 12866

This proposed rule is not a significant regulatory action as defined by Executive Order 12866. Therefore, it requires no regulatory assessment.

Drafting Information

Jennifer Berry of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects in 27 CFR Part 4

• Administrative practice and procedure
• Advertising
• Customs duties and inspection
• Imports
• Labeling,

Proposed Amendments to the Regulations

For the reasons discussed in the preamble, TTB proposes to amend 27 CFR part 4, Labeling and Advertising of Wine, as set forth below:

PART 4—LABELING AND ADVERTISING OF WINE

1. The authority citation for 27 CFR part 4 continues to read as follows:

Authority: 27 U.S.C. 205, unless otherwise noted.

2. Section 4.25 is amended:

a. By revising paragraph (a)(2), the introductory text of paragraph (b)(2), and paragraph (d); and

b. In paragraph (e)(1)(ii), by removing the words “(other than an appellation defined in paragraph (a)(2)(i) or (a)(2)(ii))” and adding, in their place, the words “(other than an appellation defined in paragraph (a)(2)(i), (a)(2)(ii), or (a)(2)(iii))”.

The revisions read as follows:

§ 4.25

Appellations of origin.

(a) * * *

(2) Imported wine. An appellation of origin for imported wine is:

(i) A country;

(ii) A state, province, territory, or similar political subdivision of a country equivalent to a State or county;

(iii) Two or no more than three states, provinces, territories, or similar political subdivisions of a country equivalent to a State which are all contiguous; or

(iv) A viticultural area (as defined in paragraph (e) of this section).

(b) * * *

(2) Imported wine. An imported wine is entitled to an appellation of origin other than a multistate appellation, or a viticultural area, if:

* * * * *

(d) Multistate appellations. (1) American wine. An appellation of origin comprising two or no more than three States which are all contiguous may be used, if:

(i) 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 2 percent;

(ii) The wine has been fully finished (except for cellar treatment pursuant to § 4.22(c), and blending that does not result in an alteration of class or type under § 4.22(b)) in one of the labeled appellation States; and

(iii) The wine conforms to the laws and regulations governing the composition, method of manufacture, and designation of wines in all of the States listed in the appellation.

(2) Imported wine. An appellation of origin comprising two or no more than three states, provinces, territories, or similar political subdivisions of a country equivalent to a State which are all contiguous may be used if:

(i) All of the fruit or other agricultural products were grown in the states, provinces, territories, or similar political subdivisions of a country equivalent to a State indicated, and the percentage of the wine derived from fruit or other agricultural products grown in each state, province, territory, or political subdivision equivalent to a State is shown on the label with a tolerance of plus or minus 2 percent; and

(ii) The wine conforms to the requirements of the foreign laws and regulations governing the composition, method of production, and designation of wines available for consumption within the country of origin.

* * * * *

Signed: June 2, 2010.

John J. Manfreda,

Administrator.

Approved: June 30, 2010.

Timothy E. Skud,

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