[Federal Register Volume 77, Number 56 (Thursday, March 22, 2012)]
[Rules and Regulations]
[Pages 16671-16674]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6930]
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Part 4
[Docket No. TTB-2010-0007; T.D. TTB-101; Re: Notice No. 110]
RIN 1513-AB58
Labeling Imported Wines With Multistate Appellations
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Final rule; Treasury decision.
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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau is amending the
wine labeling regulations to allow the labeling of imported wines with
multistate appellations of origin. This amendment provides treatment
for imported wines similar to that currently available to domestic
wines bearing multistate appellations. It also provides consumers with
additional information regarding the origin of these wines.
DATES: Effective Date: This final rule is effective April 23, 2012.
FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco
Tax and Trade Bureau, Regulations and Rulings Division; telephone (202)
453-1039 ext. 275, or email WineRegs@ttb.gov.
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 Sec. 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 State; or
A viticultural area as defined in Sec. 4.25(e).
Section 4.25(b)(1) states 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 States which are all
contiguous is allowed under Sec. 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 Sec.
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 Sec.
4.25(e)(1)(ii) in the case of imported wine).
Section 4.25(b)(2) states 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
[[Page 16672]]
promulgated by TTB's predecessor agency, the Bureau of Alcohol, Tobacco
and Firearms (ATF), in T.D. ATF-53 (43 FR 37672), published August 23,
1978. The preamble of T.D. ATF-53 stated 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 Sec. 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 Australian States, which are roughly
equivalent to American States.
Notice of Proposed Rulemaking and Comments Received
On November 3, 2010, TTB published Notice No. 110 in the Federal
Register at 75 FR 67663 proposing to amend Sec. 4.25 to permit the use
of multistate appellations for imported wines. The notice proposed,
among other requirements, that the regions named in multistate
appellations be contiguous and that 100 percent of the wine be derived
from fruit or other agricultural products grown in those regions. These
requirements mirror the current requirements, discussed above, for
multistate appellations on American wines.
TTB received four comments in response to Notice No. 110. The
commenters were: (1) An Australian winery; (2) the Australian
Department of Foreign Affairs and Trade; (3) New Zealand Winegrowers, a
trade organization; and (4) the Government of New Zealand. All four
commenters generally support the proposal to allow multistate
appellation labeling on imported wines. However, three of the
commenters express concerns about certain aspects of the proposal.
The Australian Department of Foreign Affairs and Trade expresses
concern about the requirement that all the named areas be contiguous, a
requirement that duplicates that for American wine contained in 27 CFR
4.25(d). The commenter states that this requirement would preclude
Tasmania, an island, from being included in a multistate appellation.
Further, in contrast to the 100 percent rule proposed by TTB, the
commenter notes that Australian regulations allow up to three
Australian States and Territories to be included on a label so long as
95 percent of the product is from the listed regions and at least 5
percent of the wine is from each listed region. This commenter suggests
that the United States engage in further discussion on this issue.
The New Zealander Winegrowers states that contiguity would be a
difficult requirement for them due to their geography because large
islands constitute most of the country.
Finally, the Government of New Zealand notes the absence of a
``contiguous'' requirement in New Zealand law and also points out that
its rules for appellations of more than one region require that only 85
percent of the wine be from the named regions rather than 100 percent
as proposed by TTB. The commenter states that their preferred approach
is that foreign wines with multistate appellations be labeled according
to the rules of the country of origin.
TTB Analysis
In Notice 110, TTB stated its intention to provide treatment for
imported wines bearing multistate appellations similar to that which is
currently available for domestic wines bearing multistate appellations.
The Bureau believes that the proposed regulatory amendments would
achieve that goal and provide for fair and equitable treatment of
imported and domestic wines, including the requirement questioned by
some commenters that multistate appellations be contiguous for foreign
wines. Contiguity is already required for domestic wines; therefore TTB
is requiring it for foreign wines in this rule as well.
The Bureau and its predecessor have long interpreted the term
``contiguous,'' as it appears in 27 CFR 4.25(a)(1)(iii), to include two
States which actually touch at a point along a common boundary, or
three States which are connected throughout in an unbroken sequence.
See ATF Ruling 91-1 (1991), http://www.ttb.gov/rulings/2001-2.htm. For
example, North Dakota and South Dakota are contiguous, as are South
Dakota and Nebraska. North Dakota, South Dakota and Nebraska are also
contiguous for the purpose of using three States in a multistate
appellation on a wine label, even though North Dakota and Nebraska,
without South Dakota, are not contiguous with one another and could not
be used together on a wine label. A similar interpretation of the term
contiguous will be applied to foreign appellations, where two states,
territories or other applicable political subdivisions should actually
touch at a point along a common boundary and where three such
subdivisions are connected throughout in an unbroken sequence.
For land boundaries, TTB expects the contiguous requirement to
operate equally for foreign and domestic wines. However, as some
commenters point out, island geography and maritime borders present
additional considerations for determining whether or not two states,
territories or other applicable political subdivisions are contiguous.
In the domestic context under existing regulations, TTB still looks
for the two States separated by water to actually touch at a point
along their common maritime border. For example, the States of Rhode
Island and New York are considered contiguous (although separated by
water and sharing no common land boundary), because they actually touch
at a point along a common maritime border in Block Island Sound;
whereas the States of Indiana and Wisconsin are not considered
contiguous, even though also separated by a body of water common to
both (Lake Michigan). In the latter example, Indiana and Wisconsin are
not contiguous because they do not actually touch at a point along a
common maritime border within Lake Michigan, as the maritime borders of
the
[[Page 16673]]
States of Illinois and Michigan intervene instead.
In the international context, after consultation with the U.S.
Department of State, TTB recognizes that maritime borders within the
territorial seas of a nation are determined by the domestic laws of
that nation and that subnational (e.g., state) borders are delineated
by other nations in myriad ways or for a variety of purposes that may
differ from how maritime borders are delineated in the United States.
(The United States grants to its coastal States a right to the
territorial seas of the United States to a certain limit, thereby
establishing common maritime borders between States similar to those on
land). TTB believes it would be inappropriate to strictly apply its
interpretation of the term contiguous for domestic wines, particularly
as to the issue as to what constitutes a common maritime border, to
foreign wines without considering the position of the foreign nation
concerning its own subnational maritime borders. Therefore, foreign
states, territories, or other applicable political subdivisions may be
considered contiguous, for purposes of this rule, so long as the label
applicant, in conjunction with the government of the country of origin,
can demonstrate to TTB that the political subdivisions sharing a common
maritime border actually touch at a point along such border for a
nationally- and/or internationally-recognized purpose (e.g., a common
maritime border for fishing or mineral rights jurisdiction).
TTB will consider the facts and evidence submitted by the label
applicant and government of the country of origin on a case-by-case
basis to establish whether the multiple appellations are contiguous.
Foreign governments are also encouraged to provide TTB with information
demonstrating the contiguity of their various states, territories, or
other applicable political subdivisions, in order to assist TTB with
its label review in advance of TTB's receipt of label applications that
would be subject to this requirement. Lack of information supporting
the contiguity of a multistate appellation could result in TTB having
to reject a label application.
TTB Finding
For the reasons set forth above, TTB believes it would be
appropriate to adopt the proposed regulatory changes contained in
Notice 110. In addition, TTB has noted a technical error in Sec.
4.25(a)(1)(v): The word ``States'' should be singular, not plural.
Accordingly, this document removes the second ``s'' from ``States'' to
correct the error.
Regulatory Flexibility Act
TTB certifies under the provisions of the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.) that this final rule will not have a
significant economic impact on a substantial number of small entities.
The amendments merely provide optional, additional flexibility in wine
labeling decisions. Accordingly, a regulatory flexibility analysis is
not required.
Executive Order 12866
This final 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, Packaging and containers, Reporting
and recordkeeping requirements, Trade practices, Wine.
Amendments to the Regulations
For the reasons discussed in the preamble, TTB amends 27 CFR part
4, Labeling and Advertising of Wine, as set forth below:
PART 4--LABELING AND ADVERTISING OF WINE
0
1. The authority citation for 27 CFR part 4 continues to read as
follows:
Authority: 27 U.S.C. 205, unless otherwise noted.
0
2. Section 4.25 is amended:
0
a. In paragraph (a)(1)(v), by removing the word ``States'' and adding
in its place the word ``State'';
0
b. By revising paragraph (a)(2), the introductory text of paragraph
(b)(2), and paragraph (d); and
0
c. 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:
Sec. 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 Sec. 4.22(c), and blending that does not result in an
alteration of class or type under Sec. 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.
* * * * *
[[Page 16674]]
Signed: July 27, 2011.
John J. Manfreda,
Administrator.
Approved: September 29, 2011.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. 2012-6930 Filed 3-21-12; 8:45 am]
BILLING CODE 4810-31-P