[Federal Register Volume 77, Number 56 (Thursday, March 22, 2012)]
[Rules and Regulations]
[Pages 16671-16674]
From the Federal Register Online via the Government Publishing 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 [email protected].

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