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Dated: December 3, 2009. prescribed by the Secretary. The name or term appears in the brand Jayson P. Ahern, Alcohol and Tobacco Tax and Trade name, then the label is not in Acting Commissioner, U.S. Customs and Bureau (TTB) administers the compliance and the bottler must change Border Protection. regulations promulgated under the FAA the brand name (and have an approved [FR Doc. E9–29190 Filed 12–7–09; 8:45 am] Act. COLA for that brand name). Similarly, BILLING CODE 9111–14–P Part 4 of the TTB regulations (27 CFR if the viticultural area name or other part 4) allows the establishment of viticulturally significant term appears in definitive viticultural areas and the use another reference on the label in a DEPARTMENT OF THE TREASURY of their names as appellations of origin misleading manner, the bottler would on wine labels and in wine have to relabel the product in order to Alcohol and Tobacco Tax and Trade advertisements. market it. Bureau Viticultural Areas Designation Viticultural Area Petitions 27 CFR Part 9 Section 4.25(e)(1)(i) of the TTB Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines regulations outlines the procedure for [Docket No. TTB–2007–0067; T.D. TTB–83; a viticultural area for American wine as proposing an American viticultural area Ref: Notice Nos. 36 and 77] a delimited grape-growing region and provides that any interested party RIN 1513–AA92 distinguishable by geographical may petition TTB to establish a grape- features, the boundaries of which have growing region as a viticultural area. Establishment of the Calistoga been recognized and defined in part 9 Section 9.3(b) of the TTB regulations Viticultural Area (2003R–496P) of the regulations (27 CFR part 9). The requires the petition to include— establishment of viticultural areas • Evidence that the proposed AGENCY: Alcohol and Tobacco Tax and allows vintners to describe more viticultural area is locally and/or Trade Bureau, Treasury. specifically the origin of their wines to nationally known by the name specified ACTION: Final rule; Treasury decision. consumers and allows consumers to in the petition; attribute a given quality, reputation, or • Historical or current evidence that SUMMARY: This Treasury decision other characteristic of a wine made from establishes the Calistoga viticultural supports setting the boundary of the grapes grown in an area to its proposed viticultural area as the area in Napa County, California. The geographic origin. Establishment of a viticultural area is entirely within the petition specifies; viticultural area is neither an approval • Evidence relating to the existing Napa Valley viticultural area. nor an endorsement by TTB of the wine geographical features, such as climate, We designate viticultural areas to allow produced in that area. soils, elevation, and physical features, vintners to better describe the origin of that distinguish the proposed their wines and to allow consumers to Use of Viticultural Area Names on Wine viticultural area from surrounding areas; better identify wines they may Labels • A description of the specific purchase. For a wine to be labeled with a boundary of the proposed viticultural DATES: Effective Date: January 7, 2010. viticultural area name or with a brand area, based on features found on United FOR FURTHER INFORMATION CONTACT: name that includes a viticultural area States Geological Survey (USGS) maps; Amy R. Greenberg, Regulations and name or other term identified as being and Rulings Division, Alcohol and Tobacco viticulturally significant in part 9 of the • A copy of the appropriate USGS Tax and Trade Bureau, 1310 G Street, TTB regulations, at least 85 percent of map(s) with the proposed viticultural NW., Washington, DC 20220; telephone the wine must be derived from grapes area boundary prominently marked. 202–453–2265. grown within the area represented by that name or other term, and the wine I. Calistoga Petition SUPPLEMENTARY INFORMATION: must meet the other conditions listed in On behalf of interested parties in the Background 27 CFR 4.25(e)(3). Under the provisions Calistoga viticultural community, James of 27 CFR 4.39(i), a wine may not be TTB Authority P. ‘‘Bo’’ Barrett of Chateau Montelena, a labeled with a brand name that contains Calistoga, California, winery and Section 105(e) of the Federal Alcohol a geographic name having viticultural vineyard, petitioned TTB to establish Administration Act (FAA Act), 27 significance unless the wine meets the ‘‘Calistoga’’ as an American viticultural U.S.C. 205(e), authorizes the Secretary appellation of origin requirements for area. Located in northwestern Napa of the Treasury to prescribe regulations the geographic area named. There is an County, California, the proposed area for the labeling of wine, distilled spirits, exception for brand names used in surrounds the town of Calistoga and is and malt beverages. The FAA Act existing certificates of label approval entirely within the existing Napa Valley requires that these regulations, among issued prior to July 7, 1986, which meet viticultural area described in 27 CFR other things, prohibit consumer certain criteria set forth in that 9.23. Below, we summarize the deception and the use of misleading paragraph (see 27 CFR 4.39(i)(2)). Under evidence presented in the petition. statements on labels, and ensure that 27 CFR 4.39(i)(3), a name has labels provide the consumer with viticultural significance when it is the Name Evidence adequate information as to the identity name of a state or county (or the foreign The petitioner submitted the and quality of the product. Section equivalents), when approved as a following as evidence that the proposed 105(e) of the FAA Act also requires that viticultural area in part 9 of the TTB viticultural area described in the a person obtain a certificate of label regulations or by a foreign government, petition is locally and nationally known approval (COLA) or a certificate of or when found to have viticultural as Calistoga: exemption, as appropriate, covering significance by the appropriate TTB • Excerpts from Charles L. Sullivan’s wine, distilled spirits, and malt officer. book, ‘‘Napa Wine: A History from beverages before bottling the product or If the wine is not eligible for labeling Mission Days to Present,’’ explaining removing the product from customs with the viticultural area name or other that Sam Brannan founded the town of custody, in accordance with regulations viticulturally significant term and that Calistoga in 1857 and established

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vineyards there in 1862. Sullivan’s book Boundary Evidence a short distance. The upland soils are includes viticultural and winery census dominantly excessively drained, gravelly The established viticultural areas loams, very stony loams, and loams, on steep data circa 1880, which all report surrounding the proposed Calistoga Calistoga separately from other Napa slopes. Most of the breakdown products of viticultural area define a portion of its weathering have been transported by streams County grape-growing regions. boundaries. The existing St. Helena into the valley; much of the finer material has Sullivan’s map of Napa wineries in 1893 viticultural area (27 CFR 9.149) been transported from the area by the Napa shows a significant clustering of northwestern boundary defines the River, leaving coarser sediments behind wineries near Calistoga distinctly Calistoga southeastern boundary, while throughout much of the proposed viticultural separate from the wineries found in the existing Diamond Mountain District area. Alluvial fans have formed at the mouths of surrounding areas. area (27 CFR 9.166) northeastern • most of the drainages, particularly along the Excerpts from ‘‘The University of boundary defines the Calistoga northeast side of the valley at Dutch Henry California/Sotheby Book of California southwestern boundary. The Napa- Canyon, Simmons Canyon, Jericho Canyon, Wine,’’ which note Sam Brannan’s first Sonoma county line, which forms the and north of Tubbs Lane at the headwaters vineyard planting in Calistoga. Napa Valley viticultural area boundary of the Napa River in Kimball Canyon. At all • Excerpts from an 1881 book, in the northwestern corner of Napa these locations, cobbly and gravelly loams extend well out onto the valley floor, mixed ‘‘History of Napa and Lake Counties,’’ County, defines the Calistoga western and northern boundaries. The 880-foot here and there with finer-grained sediments. showing three Napa County viticultural On the southwest side, small fans occur at districts—Calistoga, St. Helena, and elevation line, beyond which lies the mouths of Diamond Creek, Nash Creek, Napa. rugged, unplantable terrain, defines and Ritchie Creek. These locations are Calistoga’s eastern limit and returns the • Excerpts from Leon Adams’ 1973 characterized by cobbly and gravelly loams. boundary line to its starting point. Coarse sediments characterize the valley book, ‘‘The Wines of America,’’ referring floor throughout the extent of the proposed to Calistoga as a specific grape-growing Distinguishing Features viticultural area, the finer-grained materials area. The petition included, as evidence of having been transported out of the region by • Excerpts from Hugh Johnson’s 1983 the proposed Calistoga viticultural the waters of the Napa River. Soils book, ‘‘Hugh Johnson’s Modern area’s unique growing conditions, a throughout the proposed viticultural area are Encyclopedia of Wine,’’ listing Calistoga report written by Jonathan Swinchatt, loams, gravelly loams, cobbly loams, often with boulders, some with admixtures of silt among his list of ‘‘unofficially PhD, of EarthVision, Inc. and clay—clay-rich soils are of limited recognized appellations or sub-areas.’’ Geologic and Geographic Features distribution. These sediments are well The petitioner explains that 10 of the 12 drained, with admixtures of clay providing defined sub-areas listed in this book are Dr. Swinchatt’s report indicated that water-holding capacity. Further south in the now designated as American viticultural the proposed Calistoga viticultural area Napa Valley, gravelly loams and loams are areas. is distinguished from surrounding areas characteristic only of the upper reaches of the by its geographic and geologic features. alluvial fans that line the valley, while the • Excerpts from Andre´ Domine´’s Dr. Swinchatt explained: valley center is often covered by much finer, book, ‘‘Wine,’’ recognizing Calistoga as clay-rich, material. a distinct region within Napa Valley and The entirety of the proposed viticultural noting that ‘‘the bay influences the area is underlain by volcanic bedrock, part of Climatic Features weather less as the valley rises up the more widespread Sonoma Volcanics that occur in the Vaca Mountains, in the northern In addition to the unique geographic toward Calistoga, which is classified as Mayacama Mountains, bordering the lower and geologic features of the proposed a Region III area.’’ slopes of the southern Mayacamas Calistoga viticultural area, Dr. • Excerpts from James Laube’s 1989 Mountains, and in Sonoma County. All the Swinchatt’s report indicated that its book, ‘‘California’s Great Cabernets,’’ rock materials in the proposed viticultural unique climatic features further which explain that for the purposes of area—bedrock and sediments—are part of, or distinguish the proposed Calistoga derived from, the Sonoma Volcanics. These the book, ‘‘a ‘commune’ system within viticultural area from surrounding areas. rocks comprise lava flows, ash-fall tuffs, Dr. Swinchatt explained: Napa Valley is utilized to differentiate welded tuffs, pyroclastic flows, mudflows, where grapes are grown within the and ignimbrites. Their composition is largely Climatic information in our report for the valley as well as to analyze regional andesitic with some rhyolitic rocks admixed. Napa Valley Vintners’ Association is based styles of wines.’’ In his list, Laube AVAs [American Viticultural Areas] farther on data from DAYMET.org, a website that includes Calistoga equally among the to the south—St. Helena, Rutherford, and provides climatic information throughout the other nine Napa Valley ‘‘communes.’’ Oakville, in particular—exhibit significantly United States. DAYMET data is based on a computer algorithm that allows the extension The petition notes that 9 of the 10 greater geologic diversity across their width, being underlain primarily by marine of data from scattered weather stations into communes listed are now TTB- sedimentary rocks on the west side of the areas of complex topography. The algorithm approved viticultural areas. valley but by volcanic rocks on the east. In was tested over 400,000 square kilometers in • An excerpt from James Halliday’s addition, these AVAs contain alluvial fan Washington State and found to be accurate book, ‘‘Wine Atlas of California,’’ environments on their edges, and fluvial within 1.2 degrees centigrade for temperature which, the petitioner states, ‘‘so (river) environments in their more central prediction and to be able to predict rainfall with an 83 percent accuracy. definitively covers the Calistoga area parts. The proposed Calistoga AVA is topographically more diverse but geologically Heat summation in degree days, defined as that the chapter in his book could more uniform than these other AVAs that the total number of hours above 50 degrees provide most of the evidential include valley floor environments. The Fahrenheit, is the accepted general measure requirements for this entire petition.’’ mineralogy and chemistry of the substrate of temperature and solar insolation in the • A brief summary of ‘‘Calistoga’s throughout the proposed viticultural area wine industry. While heat summation is only Wine History’’ by Calistoga Winery reflects the common source of the granular a general indicator of regional temperature, it provides a more useful view than the limited proprietor Jim Summers, which, the materials in the Sonoma Volcanics. In the mountains, vineyards are planted in temperature data from one or two available petitioner states, ‘‘includes a more colluvium-sedimentary particles that have weather stations. Temperature—climate in historical perspective in the long been transformed from the parent bedrock general—can vary over distances of a few recognition of Calistoga as a viticultural through weathering processes and have hundred feet or less, so that temperature area.’’ accumulated either in place or moved only measurements at one or two locations mean

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little within a regional context. Under these slopes facing mainly northeast and entities in question are Calistoga conditions, DAYMET heat summation data southwest, modified by the drainages that cut Partners, L.P., d.b.a. Calistoga Cellars, provides as good a measure of regional the slopes that add diversity to the aspect and Chateau Calistoga LLC, which uses conditions as is available. presented by vineyards to the sun. In its ‘‘Calistoga Estate’’ as its trade name, and Examination of DAYMET data indicates northern portions, however, the trend of the that most of the proposed viticultural area— valley is closer to west-east, with the major they are referred to in this preamble as mountain slopes and valley floor alike—lies slopes facing just east of north (in the ‘‘Calistoga Cellars’’ and ‘‘Calistoga within Region III, defined as the range of Mayacamas Mountains) and just west of Estate,’’ respectively. 3,000 to 3,500 degree days. Only a small area south (in the Vaca Mountains). A slope In a written submission to TTB, of the valley floor in the proposed aspect map indicates also that the valley floor representatives of Calistoga Cellars viticultural district—east of the restriction in has very little flat ground, most of it reflects expressed opposition to the the valley formed by the ridge just west of the slopes of alluvial fans, gentle on the north establishment of the Calistoga the mouth of Dutch Henry Creek—lies within (such as at Dutch Henry Canyon) and steeper viticultural area due to the impact the low region IV. The difference is well within on the south. Slope aspect and exposure to establishment of an area named the limits of accuracy of the data, indicating the sun in the Calistoga region thus is quite ‘‘Calistoga’’ would have on the winery that the entire proposed viticultural area has distinct from that in any other AVA within a similar temperature profile. Farther south, the Napa Valley region. and its existing wine labels. In valley floor vineyards are exposed to Rainfall in the Calistoga region is typically particular, Calistoga Cellars noted that it significantly different temperature conditions higher than elsewhere in the area, with the has been using the ‘‘Calistoga Cellars’’ than those in the hills; in the Calistoga highest rainfall recorded just outside the name on wine labels since 1998. The region, valley floor and hills appear to be part northern perimeter of the proposed letter also stated that Calistoga Cellars of a single climatic regime. This regime is viticultural area, on Mount St. Helena. had invested millions of dollars and characterized by hot days and cool nights, Precipitation is highest in the mountains, up years of effort in building the trade conditions ideal for a combination of to 60 plus inches per year, and lowest in the name, trademark, and brand name ripening grapes but maintaining good acid valley, but year-to-year variation is large, as ‘‘Calistoga Cellars,’’ and that losing the balance. it is elsewhere in the Napa Valley region. One of the long-standing climatic DAYMET data for the years 1990 to 1997 use of the name or being restricted in its assumptions in the Napa Valley is that indicate that precipitation ranged from just use would materially impact the winery. Calistoga has the highest temperatures of any over 20 inches to over 55 inches on the valley According to the letter, Calistoga Cellars location within the valley. Temperature data floor, and from about 25 inches to over 65 produced about 8,500 cases of wine a and anecdotal evidence, however, dispute inches in the surrounding mountains. year and sold in about 10 states. As to this assumption, both indicating that the Measures of average rainfall thus have little the merits of a ‘‘Calistoga’’ viticultural hottest part of the valley is a small region just meaning. area, Calistoga Cellars argued that the west closer of Bale Lane. Hottest average II. Notice No. 36 term ‘‘Calistoga’’ is most often temperatures in August (over the 18 year associated with the town of Calistoga period from 1980 ton 1997) occur from Stags On March 31, 2005, TTB published in and that the town is known as a tourist Leap District to south of Dutch Henry the Federal Register (70 FR 16451) as Canyon, along the base of the Vaca destination rather than a specific Notice No. 36 a notice of proposed viticultural area. Mountains. rulemaking regarding the establishment The Calistoga AVA is cooled by air For these reasons, Calistoga Cellars currents drawn in from the Russian River of a ‘‘Calistoga’’ viticultural area. In that requested that TTB: (1) Reopen the through the northwestern corner of the notice, we requested comments from all public comment period to allow it and mountain heights. These are drawn in to interested persons by May 31, 2005. others to provide additional comment replace hot air rising from the valley, TTB received two brief comments on alternative solutions that would currents that used to support sailplanes regarding Notice No. 36 before the close protect Calistoga brand names; (2) headquartered at the Gliderport at Calistoga. of the comment period. Both comments exempt Calistoga Cellars from any In addition, cooling breezes flow down the fully supported the establishment of the restrictive consequences resulting from slopes of both the Vaca and Mayacamas Calistoga viticultural area. the establishment of the Calistoga Mountains in the later afternoon. Daytime After the close of the comment period, viticultural area, by providing a specific peak temperatures reach about 100 degrees at we received representations on behalf of mid-day. The heated air rises by convection, ‘‘grandfather’’ provision for that brand drawing in cooler air form the Russian River, two entities opposing the establishment name; (3) delay approval of the the breezes continuing after sunset, cooling of the Calistoga viticultural area as viticultural area until an industry-wide the valley floor to about 65 degrees. Further proposed because the brand names used solution is implemented to protect cooling occurs, on fog free nights, driven by by these entities contain the name Calistoga Cellars; or (4) allow Calistoga cool air moving downslope from the ‘‘Calistoga’’ and, upon establishment of Cellars to continue to use its existing mountains providing additional cooling of 12 the Calistoga viticultural area, a brand labels with a TTB-approved notice on to 15 degrees. name that included the ‘‘Calistoga’’ the back label. Minimum nighttime temperatures often name could be used on a label only if Also in a written submission to TTB, average about 50 degrees, giving a diurnal the wine in the bottle met the representatives of Calistoga Estate temperature range that sometimes is greater than 50 degrees. Vintners in the proposed appellation of origin requirements for opposed the establishment of the viticultural areas hold that this large diurnal that viticultural area, or the brand name Calistoga viticultural area. According to variation is one of the main influences on the were used on certificates of label the letter, in 2005 Chateau Calistoga character of wines from the region. The hot approval issued prior to July 7, 1986, LLC purchased a small estate in the daytime temperatures provide color and big and met the conditions under the Calistoga area which had no vineyards berry fruit, while the cool nights provide § 4.39(i)(2) ‘‘grandfather’’ provision. of its own. The Calistoga Estate wines good acid balance for structure and develop Both indicated that, under their existing were made under contract with another power in the wines. The character of wines business practices, their wines would winery, Adler Fels in Santa Rosa, in the southeastern-most corner of the not meet the appellation of origin California, and produced with grapes proposed viticultural district, south of the ‘‘Sterling Hill’’ between Maple and Dunaweal requirements for use of the Calistoga from the Napa Region, but not Lanes is somewhat softer due to higher viticultural area name on their wine necessarily from the Calistoga region. nighttime temperatures. labels and that, additionally, neither This commenter stated that Calistoga In its southern and central portions, the would meet the conditions of the Estate had spent thousands of dollars Napa Valley trends northwest-southeast, with ‘‘grandfather’’ provision. The two and a considerable amount of time

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building its brand name, selling the and the ‘‘Calistoga’’ viticultural area restricted by a subsequent, valid wine in six states and the District of name. (We also note that the evidence administrative action (establishment of a Columbia and planned to add two submitted with the original petition did viticultural area). And perhaps more additional states, and urged that TTB include historical information that the importantly, where a conflict arises between consider some relief for that brand a proposed AVA name and an established term ‘‘District’’ was associated with the brand name, we do not believe that, in the name. Calistoga area. Nevertheless, while not context of the labeling provisions of the FAA III. Notice No. 77 determinative of the appropriateness of Act, it is an appropriate government role to the name, the petitioner did not believe make choices between competing On November 20, 2007, TTB that a modifier in the name such as commercial interests, if such choices can be published in the Federal Register (72 ‘‘district’’ was appropriate.) Moreover, avoided. FR 65256) as Notice No. 77 a new TTB had not found any potential name As a result, we proposed regulatory proposal for the establishment of the modifications that would be acceptable text that would address the concerns of Calistoga viticultural area for public alternative names for the proposed Calistoga Partners, L.P., and its comment. This new proposal included a ‘‘Calistoga’’ viticultural area. TTB had limited ‘‘grandfather’’ protection for continued use of the brand name carefully considered the evidence ‘‘Calistoga Cellars.’’ Specifically, the some brand names, as explained later in submitted in support of the Calistoga this preamble. proposal would allow for the continued viticultural area petition and had use of a brand name containing the In Notice No. 77, TTB stated that the concluded that the term ‘‘Calistoga’’ original petition included sufficient word ‘‘Calistoga’’ on a label for wine not alone is a specific, not generic, meeting the appellation of origin evidence of the viticultural descriptive name that is clearly distinctiveness of the Calistoga area and requirements of 27 CFR 4.25 for the associated with Napa Valley viticulture. established Calistoga viticultural area if that there was a substantial basis for the Accordingly, TTB acknowledged in establishment of the Calistoga (1) the appropriate TTB officer finds Notice No. 77 that the term ‘‘Calistoga’’ viticultural area. At the same time, that the brand name has been in actual alone would have viticultural while distinctive from surrounding commercial use for a significant period significance. Therefore, under § 4.39(i), areas, the Calistoga area nevertheless of time under one or more existing even if the name of the viticultural area retains common characteristics with the certificates of label approval that were were ‘‘Calistoga District,’’ a wine Napa Valley appellation. We also noted issued under 27 CFR part 4 before containing the term ‘‘Calistoga’’ in the that, consistent with previous practice, March 31, 2005; and (2) the wine is brand name would still have to meet the we had considered alternative names as labeled with information that the appellation of origin requirements for a means of resolving conflicts between appropriate TTB officer finds to be the viticultural area (unless the brand existing labels and the ‘‘Calistoga’’ sufficient to dispel the impression that viticultural area name. For example, the name were subject to the exception in the use of ‘‘Calistoga’’ in the brand name ‘‘Oak Knoll District of Napa Valley’’ § 4.39(i)(2)). conforms to the appellation of origin In Notice No. 77, we stated that the viticultural area (T.D. TTB–9, 69 FR requirements of 27 CFR 4.25. The notice evidence submitted by the petitioners 8562) and the ‘‘Diamond Mountain noted that the proposed grandfather indicates that designation of the District’’ viticultural area (T.D. ATF– provision would not apply to a brand Calistoga viticultural area would be in 456, 66 FR 29698) were established after name that was first used in a certificate conformity with applicable law and resolving such conflicts, resulting in of label approval issued on or after regulations, and that a delay in the viticultural area names that were March 31, 2005, the date that Notice No. modifications of those originally approval of the ‘‘Calistoga’’ viticultural 36 was published in the Federal proposed by the petitioners. The area, as suggested by Calistoga Partners, Register originally proposing the petition to establish the ‘‘Oak Knoll would not be an appropriate or establishment of the Calistoga District of Napa Valley’’ viticultural area responsive resolution. After noting that viticultural area. This ‘‘grandfather’’ originally proposed the name ‘‘Oak the Calistoga case and cases with similar protection as proposed would not Knoll District’’. The petition to establish factual bases involve a fundamental extend to the use of the name ‘‘Calistoga the ‘‘Diamond Mountain District’’ conflict between two otherwise valid Estate’’ because that name was first viticultural area originally proposed the and appropriate TTB administrative submitted to TTB in connection with a name ‘‘Diamond Mountain’’ for the actions, that is, the approval of labels by label approval in July 2005, that is, after viticultural area. In these and similar TTB through the issuance of certificates publication in the Federal Register of cases, TTB or its predecessor agency of label approval (COLAs) and the Notice No. 36. found that name evidence supported the subsequent approval of a petitioned-for In Notice No. 77 we invited comments use of the modified names, that the AVA, we stated: on the ‘‘grandfather’’ provision, on the modified names were associated with However, TTB also believes that Calistoga period of time that a label should be in the proposed viticultural area Partners has demonstrated a legitimate actual commercial use for that use to be boundaries, and that their use reduced interest in not losing the ability to continue deemed ‘‘significant,’’ on the type of potential consumer confusion with to use its long-held Calistoga Cellars brand dispelling information that would be name on its wines in the same way it has long-standing existing labels. In the been using this name. We believe it is sufficient to prevent consumers from cases of Oak Knoll District of Napa desirable to find a solution that will address being misled as to the origin of the Valley and Diamond Mountain District, the legitimate interests of both the Calistoga grapes used to produce the wine, on the the petitioners also agreed to the petitioners, who have an interest in gaining appropriate type size and location on modifications of the viticultural area formal recognition of a viticulturally the wine label of such dispelling names. significant area and name, and vintners who information, and on other alternatives. Notice No. 77 explained that, in the have an interest in retaining the use of long- The comment period for Notice No. case at hand, the petitioners and held brand names. We also believe, as a 77 was originally scheduled to end on fundamental tenet of administrative practice, commenters to Notice No. 36 did not that it is preferable to avoid, whenever December 20, 2007. TTB received suggest any modification to the possible, a situation in which one otherwise multiple requests to extend the proposed name that would resolve proper administrative action (issuance of a comment period. In consideration of the conflicts between existing brand names certificate of label approval in this case) is requests and in light of the impact that

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the approval of the proposed viticultural these two issues follows this category Wine America, California Farm Bureau area and grandfather provision would breakdown discussion. Federation, Paso Robles AVA have on wine labels, we published • Form letters and postcards. As Committee, California Association of Notice No. 79 on December 17, 2007 (72 mentioned above, we received over Winegrape Growers, Washington Wine FR 71289), extending the comment 1,160 comments that were variations of Institute, Walla Walla Valley Wine period through March 20, 2008. form letters and postcards, nearly all of Alliance, Stags Leap District which were submitted through a group Winegrowers Association, Santa Cruz IV. Overview of Comments Received in called ‘‘Stand Up for the Little Guy,’’ an Mountains Winegrowers Association, Response to Notice No. 77 interest group supporting Calistoga and the Washington Wine Group (self- TTB received over 1,350 comments in Cellars. The form letter asks TTB to described as a public agency response to Notice No. 77. Of these, ‘‘sustain TTB Notice #77’’ as it ‘‘strikes ‘‘empowered to speak for the approximately 1,160 were variations of a balance between the desire for a Washington wine industry’’). Many of form letters and postcards, submitted by regional competitive advantage by these groups explicitly or implicitly mail and e-mail. The remaining written designating the new Calistoga AVA and supported the establishment of the comments were received from the due process right of a small winery.’’ Calistoga AVA in their comments, individuals, wine consumers, wine It states that ‘‘Calistoga Cellars has spent although all of the comments from these distributors, winegrape growers, over 10 years building a successful groups also expressed opposition to wineries, interest groups, business and brand with customers throughout the Notice No. 77. Many argued that the trade organizations, and local, State and country,’’ that the winery has ‘‘already Notice No. 77 grandfather provision Federal Government representatives. agreed to more stringent labeling would have the effect of confusing and Nearly all of these comments focused on language,’’ and that it is ‘‘wrong for misleading consumers and undermining the proposed grandfather provision for large, corporate wineries to use the AVA the integrity of the AVA system and the some labels and the ‘‘dispelling’’ process to threaten the livelihood of a global competitiveness of American information statement (referred to by small winery such as Calistoga Cellars.’’ wines. Napa Valley Vintners (NVV) many as the ‘‘disclaimer’’) that was The form postcard language is similar to suggests that existing labels using the that of the letter. term ‘‘Calistoga’’ in the brand name proposed as a condition for use of the • grandfather provision. Wineries and wine cellars. We should be prohibited from continued received approximately 60 nonform- A number of the comments we use because, along with being letter comments from representatives of received in response to Notice No. 77 misleading, they were ‘‘mistakenly wineries and wine cellars (other than also included commentary on Notice issued.’’ In addition, the NVV states that the petitioner and representatives of No. 78, which also was published in the the proposed grandfathering of Calistoga Cellars and Calistoga Estate). Federal Register (72 FR 65261) on ‘‘Calistoga’’ brand names is All of these comments opposed the November 20, 2007. Notice No. 78 incompatible with U.S. international proposals set forth in Notice No. 77, primarily involved proposed obligations pursuant to Article 23 of the without distinguishing between the Agreement on Trade-Related Aspects of amendments to the TTB regulations establishment issue and the grandfather regarding the establishment of Intellectual Property Rights (TRIPS). issue. The majority of these comments • Members of Congress. We received viticultural areas in general, including a argued that allowing geographic brand a number of letters from members of the new grandfather concept for § 4.39(i). names to appear on labels of wine that United States Congress. Several Comments that relate to proposals in do not comply with the sourcing forwarded letters from constituents Notice No. 78 are outside the scope of requirements for the use of that supporting Notice No. 77 (constituents this rulemaking and will be addressed viticultural area on the label will included owners and investors in in a separate rulemaking action specific mislead and confuse consumers, and Calistoga Cellars). One Senator voiced to Notice No. 78. will undermine the integrity of the support for Notice No. 77, expressing During the public comment period for viticultural area. Many of these concern that ‘‘a large wine industry Notice No. 77, TTB also met with comments also noted that a disclaimer group could use the AVA process to attorneys representing Calistoga Cellars on a back label of a wine will not dispel threaten the livelihood and survival of at their request. TTB included a consumer misperception of the origin of one vineyard,’’ and asking that ‘‘full and summary of that meeting with the the wine. Several of the commenters fair consideration’’ be given to the comments we received on Notice No. 77 suggest that the affected wineries should concerns raised by Calistoga Cellars. that are posted on the Regulations.gov have known better than to have selected Similar views were expressed in letters Web site (http://www.regulations.gov), geographic brand names, like Calistoga, submitted by other Members of and the points raised on behalf of and that the proposal serves to harm Congress. Another Senator also wrote on Calistoga Cellars in that meeting are those in the industry who have played behalf of Calistoga Cellars, stating that, included where applicable in the by the rules when selecting their brand while he recognized the legitimate following discussion. names. needs of consumers to better identify The following discussion focuses on • Business interests and trade groups. wines they purchase and vintners’ the commenters’ positions on the We received approximately 25 desires to better describe their wines’ establishment of the Calistoga American comments from interest groups and origins, he encouraged TTB to viticultural area (AVA) as a general wine trade organizations, including the ‘‘continue to fully take into account proposition and on the grandfather Calistoga Chamber of Commerce, the businesses like Calistoga Cellars, which provision in the proposed regulatory Napa Chamber of Commerce, Napa have made significant commercial text (referred to herein as the ‘‘Notice Valley Vintners, the Wine Institute, investments over a period of time.’’ No. 77 grandfather provision’’). Some Sonoma County Vintners, Oregon One Senator submitted four letters in commenter totals are given as Winegrowers Association, Appellations opposition to Notice No. 77. In approximations, because some St. Helena, Family Winemakers of referencing both Notice Nos. 77 and 78, commenters might fall within more than California, Napa County Farm Bureau, the Senator stated that ‘‘the changes one of these general categories. A more Winegrowers of Napa Valley, Lodi being proposed do not improve the detailed discussion of the comments on District Grape Growers Association, identification and labeling requirement

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of wine products nor do they protect the Compliance Service of America, whose provision applies only to labels in consumer.’’ The Senator further stated services include the preparation and commercial use as of March 31, 2005, the proposed rules are ‘‘contrary to U.S. filing of AVA petitions. With the whereas Calistoga Estate received its international obligations and out of step exception of the latter, all of these first label approval in July 2005. They with international wine industry commenters oppose the provisions of argued that the proposed provisions standards for recognition of wine Notice No. 77. Generally, these would be arbitrary and capricious, serve regions’’, and that the grandfather commenters cited concerns about no public policy purpose, and constitute provision in Notice No. 77 does not misleading wine labels that confuse an improper taking of their property comply with the regulatory standards of consumers and about disclaimers (brand). Further, the commenters the AVA system for grape content and hidden on the back labels that would asserted that the winery has spent geographic origin. TTB also received a not be read by a consumer before considerable time and money letter signed by 61 members of the purchase at retail, from a wine list in a establishing the brand name United States Congress expressing restaurant, or when using the internet. (distributing in 10 States, adding 3 more support for the existing AVA regulations Some argued that such labels will in January 2008), and that for the winery and ‘‘grave concern’’ over Notice Nos. undermine the integrity of American to ‘‘have to change our name at this time 77 and 78, ‘‘which would significantly wine and the credibility of the AVA would be devastating.’’ They asserted and detrimentally alter the American system. The comment from Compliance that the Notice No. 77 proposals, if Viticultural Area (AVA) system.’’ Two Service of America supports all of the adopted, would also harm the of the cosigners subsequently submitted proposals set forth in Notice No. 77 and wholesalers, brokers, retailers, and food a separate letter expressing the same cites examples of how conflicts between establishments handling Calistoga Estate viewpoint. viticultural area names and brand wines. They suggested that TTB should • State and local governments. We names may legitimately arise. have notified the winery about the received comments from five State and • Calistoga Cellars. Five comments potential AVA name conflict when the local government representatives. A were submitted by representatives of Calistoga Estate labels were submitted California State Senator submitted a Calistoga Cellars. The general partners for approval. resolution passed unanimously by the of Calistoga Cellars provided specific • The petitioner. The original California State Legislature requesting information about that winery’s petitioner for the Calistoga AVA, TTB to withdraw Notice Nos. 77 and 78 operations, similar to information submitted two comments, both and to move forward with the submitted in response to Notice No. 36 opposing the Notice No. 77 grandfather ‘‘uncompromised recognition’’ of the described above, including a list of provision. He argued that the provision Calistoga AVA as originally petitioned existing certificates of label approval, would ‘‘greatly weaken American for. The Mayor of the City of Paso specific sourcing information for grapes consumers’ confidence in American Robles wrote in opposition to the Notice used in Calistoga Cellars wine, and an wine labels,’’ that the proposed No. 77 grandfather provision, as did the explanation of the ‘‘impediments to regulations would conflict with City Manager for the City of Calistoga, sourcing grapes in the proposed international agreements and may cause the Napa County Agricultural Calistoga AVA.’’ One comment the European Union and Japan to Commissioner, and the Chair of the reiterated the winery’s position that it prohibit importation of wine from the Napa County Board of Supervisors, who would be unable to find grapes of United States bearing a viticultural area also expressed support for the appropriate quality and quantity for its designation, and that the proposals establishment of the petitioned-for winery operations. For example, they conflict with current TTB publications Calistoga AVA. The comment from the asserted that the winery has found no and regulations. He also argued that the Napa County Board of Supervisors source of Sauvignon Blanc grapes, proposals would benefit ‘‘illegitimate included a resolution passed by that Zinfandel grapes, or Cabernet economic interests of one owner of a body endorsing the Calistoga AVA Sauvignon grapes in the Calistoga misdescriptive Calistoga brand name petition and objecting to the Notice No. viticultural area equal to or superior to over the legitimate economic interests of 77 proposals. These State and local its current sources. Further, they stated the wine industry for the entire government commenters raised that, if required to source grapes only Calistoga region and the veracity of the concerns over potential negative from the Calistoga AVA, the winery Calistoga name.’’ economic consequences of the proposal, would suffer a ‘‘devastating financial • Concerned citizens and misleading and deceptive labels, impact’’ and the quality of its wines ‘‘unaffiliated’’ commenters. The diluting public confidence in domestic would suffer. According to that letter, remaining commenters, approximately wine products, potential conflicts with Calistoga Cellars sold approximately 50, either described themselves as the provisions of international 10,000 cases of wine in 2006 and 2007, ‘‘concerned citizens’’ or did not agreements and with trademark laws, an increase from approximately 8,000 designate a particular affiliation. One of the integrity of the American wine cases in 2005. Further, Calistoga Cellars these comments supported the position industry domestically and had continued to build its national of Calistoga Estate and asked that the internationally, and the devaluing of the brand by increasing the number of date by which labels could be Calistoga name. States into which it was distributed to considered for the Notice No. 77 • Other businesses. Approximately 35. grandfather provision be changed to twenty comments were received from • Calistoga Estate. Eight comments accommodate that winery’s labels. submitters identifying themselves in were received from submitters Seven of the approximately 50 occupations relating to wine publishing describing themselves as owners, comments supported the position of and education, hotel operations, and investors, partners, or attorneys of Calistoga Cellars, most citing concern wine importation, marketing, Calistoga Estate. One commenter over abuses of the policy process by promotion, retail sales and distribution. specifically opposed the establishment ‘‘large corporations’’ and Others identified themselves with Napa of the Calistoga viticultural area. Others anticompetitive practices that harm area businesses, such as the Napa opposed excluding Calistoga Estate from ‘‘small, independent businesses,’’ while Community Bank and Chardonnay Golf the Notice No. 77 grandfather provision, one argued that not sustaining Notice Club. One comment was received from pointing out that the grandfather No. 77 would ‘‘constitute an ex post

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facto taking of Calistoga Cellars’ name expressed opposition to the proposed response to Notice No. 77, TTB without just compensation.’’ The viticultural area boundaries because of continues to believe that the evidence remaining comments opposed Notice the relationship between those submitted supports the establishment of No. 77, suggesting that it would allow boundaries and political (e.g., county or the ‘‘Calistoga’’ viticultural area, with misleading labels, would violate the city) boundaries in the area. One the boundaries as the petition describes intent of, and would be contradictory to, commenter specifically objected to the and as set forth in the proposed the stated objectives of the AVA process use of the county line as the proposed regulatory text. We find that there is and would support deceptive brand AVA boundary ‘‘as if the characteristics sufficient evidence that the proposed names. Many commenters opposed a of the soil and climate respected viticultural area boundaries are provision they describe as contrary to political divisions’’. This commenter associated with both a name and a set ‘‘truth in labeling,’’ and considered argued that those with Calistoga as their of geographical features (climate, soils, disclaimers on back labels to be legal address should be allowed to use elevation, and physical features) that are ineffectual in conveying information to the name on their wines. common to the designated region and consumers buying wine at a restaurant, Two commenters, one an investor in that distinguish it from other areas. at retail, or through the Internet. the Calistoga Estate winery and the None of the commenters opposing the other an attorney writing on behalf of proposed boundaries has submitted V. Comments on the Establishment of that winery, questioned the proposed the Calistoga Viticultural Area evidence to undermine this finding. viticultural area boundaries because the Much of the Calistoga boundary reflects Twenty-eight commenters stated boundaries do not include all of the city the boundaries of existing AVAs, and support for the establishment of the of Calistoga. The latter commenter the record in those rulemakings Calistoga viticultural area. Many others asserted that, because the proposed supports those boundaries, including indirectly expressed support for or viticultural area boundaries and the city the political boundary of the county line opposition to the establishment of the boundaries do not perfectly correspond, to which one commenter objected. AVA, conditioned on other issues, such using the ‘‘Calistoga’’ name for the Moreover, none of these commenters as the Notice No. 77 grandfather viticultural area would cause confusion has specifically proposed new, more provision. A few commenters who between that Calistoga viticultural area appropriate boundaries, other than to supported the establishment of the and the city of Calistoga. He stated that, say that the boundaries should or viticultural area said that it would ‘‘because many consumers know the should not reflect political boundaries enhance the distinct character of the city of Calistoga, they almost certainly or that the boundaries should include Calistoga region and protect consumers will believe that wine bearing a other vineyards or wineries. None of who rely on the meaning and value of Calistoga AVA originated in the city of these commenters has provided the Calistoga name. A representative of Calistoga.’’ In addition, he pointed out evidence to show that the viticultural Jericho Canyon Vineyard wrote that the that some parts of the city of Calistoga area geographic features coincide with, Calistoga appellation would enable are within a different viticultural area, or vary from, the relevant political consumers to ‘‘identify characteristics the Diamond Mountain District boundaries such as a county line. We that make Calistoga wines unique.’’ A viticultural area and that, in some cases, have in the past considered, and will Jax Vineyards representative stated that ‘‘consumers would confront wines that continue to consider, any petition to ‘‘[w]hen we purchased our vineyard in bear Calistoga, California as the amend the boundaries of an established 1996, we specifically chose Calistoga for mandatory name and address viticultural area, so long as that petition its unique weather conditions and information on the label, but contains sufficient name and specific soil content ideal for Cabernet confusingly bear the Diamond Mountain geographical features evidence to Sauvignon,’’ and that the proposed District AVA on the label.’’ support such an amendment. The points Calistoga viticultural area is distinct Additionally, some wineries that are not made by these commenters do not meet from the viticultural area next to it. That within the Calistoga city limits would this evidentiary standard and, therefore, commenter argued that she should be be in the Calistoga viticultural area. This we find no basis at this time for able to promote the fact that her wines commenter also argued that the modifying the boundary proposed for come from Calistoga. Napa Valley proposed AVA would include areas the Calistoga viticultural area. Vintners also provided numerous even outside of the city of Calistoga’s references in support of the petitioners’ ‘‘unincorporated Planning Area,’’ which We disagree with those commenters evidence showing that the Calistoga area would ‘‘sweep in far more area than the who suggested that there is, or should is recognized as an area of viticultural city itself,’’ and that consumers could be be, a relationship between the legal significance and has been associated confused by areas in the AVA that are address of a business, in this case a with the ‘‘Calistoga’’ name. outside of the planning area. The winery, and the viticultural area Three commenters offered several commenter suggested for the reasons designation of a wine. Under the TTB arguments against the establishment of above that the name ‘‘Calistoga’’ for the regulations at 27 CFR 4.32(b)(1) and the proposed viticultural area, including viticultural area would be misleading 4.35(a) there is only one specification questioning the proposed name and unless further qualified, for example, by for name and address that is mandatory boundaries. Two commenters suggested modifying the name to ‘‘Calistoga on a label for American wine: The that Calistoga is not known for wine, but District.’’ words ‘‘bottled by’’ or ‘‘packed by’’ rather for tourism, hot springs, and Another commenter stated that TTB followed by the name of the packer or mineral water. One asserted that there should expand the boundaries of the bottler of the wine and the place where ‘‘has not been any clear connection with proposed viticultural area to the wine is bottled or packed. (Wine that name and wine produced in the accommodate the vineyards used by labels may also bear, as optional Napa Valley, or for that matter in and Calistoga Cellars. statements under certain conditions, near the city of Calistoga.’’ Another address information corresponding to opined that ‘‘suggesting an AVA is TTB Response the place the wine was produced, confusing in that Calistoga is not the After carefully considering the blended, or cellared.) Therefore, it is not major wine ‘player’ that is suggested by evidence submitted in support of the uncommon or inappropriate for a wine an AVA designation.’’ Two commenters petition and the comments received in label that bears a viticultural area name

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to also bear address information that expected effect of the grandfather Along the same lines, Compliance does not correspond to that viticultural provision (that is, the protection of a Service of America suggested that area. The same result might arise from ‘‘small winery’’ or ‘‘a small investor’’ or vintners commenting in opposition to wines that bear a county or state name ‘‘individual business owners’’ in the the Notice No. 77 proposals may not as an appellation of origin due to the face of actions by ‘‘large, corporate realize that their own brand names hold fact the product may be bottled outside wineries’’ or ‘‘the large wine industry the same potential for being limited by of the county or State. group, the Napa Valley Vintners’’) and the creation of a viticultural area. The With regard to the viticultural area the hardship that the winery would commenter gave as an example the Eola name, the evidence clearly establishes otherwise face. Hills viticultural area proposal, that ‘‘Calistoga’’ is a name that is locally As noted above, several Members of asserting that the winery that developed and regionally known and that the term Congress commented in support of the viticultural significance of the ‘‘Calistoga’’ by itself has been associated Notice No. 77. The comment of one region found that a petition had been historically with viticulture, specifically Senator provided a concise summary of submitted for the establishment of the Napa Valley viticulture. As noted above, many of the comments in favor of viticultural area which would have in the preamble to Notice No. 77, we Notice No. 77, saying that it ‘‘struck the caused the Eola Hills winery to lose the discussed in detail possible appropriate balance’’ and that, without right to use its brand name on wines modifications to the name of the the grandfather provision, the made with grapes sourced from outside viticultural area, including the addition establishment of the Calistoga AVA the proposed viticultural area of the word ‘‘District’’ (making the ‘‘would have a devastating impact on boundaries. The resolution was a viticultural area name ‘‘Calistoga Calistoga Cellars, forcing this small modification of the proposed District’’). The evidence submitted with company to lose its investment and the viticultural area name and of the term the viticultural area petition as outlined brand name the company spent over 10 designated as viticulturally significant, earlier in this final rule under ‘‘Name years building.’’ One Senator expressed which were agreed to by the petitioners Evidence’’ supported a finding that the concern about opposition to the and label holder. This commenter went term ‘‘Calistoga’’ alone is a specific grandfather provision by Napa Valley on to note, with regard to the Calistoga reference to an area associated with Vintners, stating that he was ‘‘troubled viticultural area, that the ‘‘history of the viticulture and therefore would be a that a large wine industry group could Calistoga name does not support the term of viticultural significance use the AVA process to threaten the argument that it had so much regardless of other words that might be livelihood and survival of one small viticultural significance that the equities included in the viticultural area name vineyard’’ and that ‘‘the AVA process favor the AVA name over the brand such as ‘‘District’’. As to whether the should not be used as a tool to eliminate name.’’ name was underinclusive by not competition in the marketplace.’’ Out of the 184 nonform-letter including other areas also known by the A comment submitted by one of the comments, 110 specifically addressed term Calistoga, such as all of the city of general partners of Calistoga Cellars the Notice No. 77 grandfather provision, Calistoga, TTB’s establishment of an further argued that the existing 99 of which expressed opposition to it. AVA does not mean that there can be no grandfather provision of 27 CFR 4.39(i), Many of these commenters asserted that, area outside of the established AVA which applies to brand names in because the TTB regulations have boundaries also known by that term. commercial use prior to July 7, 1986, is included a grandfather provision since This is consistent with the past practice ‘‘fundamentally unfair’’ because it 1986, at 27 CFR 4.39(i)(2), which ‘‘requires all owners of brand names of TTB and its predecessor in prohibits the use of brand names on containing a geographical term of establishing AVAs (e.g., Snake River labels unless those labels were approved viticultural significance used under Valley, T.D. TTB–59, 72 FR.10602 (Mar. on certificates of label approval issued certificates of label approval approved 9, 2007) and Niagara Escarpment, T.D. prior to July 7, 1986, Calistoga Cellars after July 7, 1986 * * * to change their TTB–33, 70 FR 53300 (Sept. 8, 2005)). should have known better than to use a business plan, marketing strategy and In response to the comment that the brand name containing a geographic grape sources immediately upon the AVA includes areas not included in the name, should have been aware that they creation of a new AVA incorporating could lose the use of their brand name, ‘‘unincorporated Planning Area,’’ TTB such geographic term, no matter how and ‘‘did not do their due diligence in does not believe that a map designed to long such * * * COLA has been in choosing the name.’’ One commenter, a reflect planning authority defines the use.’’ The commenter went on to state winery owner, recalled attending extent of this area’s name. Furthermore, that a ‘‘brand owner may have chosen numerous seminars and reading the commenter was satisfied with a name without any knowledge of its information regarding geographic brand calling the area ‘‘Calistoga District,’’ (potential) geographic significance’’ and names and, after ‘‘doing his homework’’ which suggests that the term ‘‘Calistoga’’ that ‘‘brand owners should have some decided against using a geographic in connection with the proposed area assurance that their geographic brand brand name for his winery. Another was acceptable. name, perhaps used for years, will not commenter stated that ‘‘responsible VI. Comments on the Notice No. 77 be canceled by a newly created AVA.’’ vintners know the risk in choosing to Grandfather Provision Finally, he argued that, if the Calistoga name a winery after a township or region were such a noted viticultural geographic region (of potential conflict Whether Another Grandfather Provision area for over 100 years, those concerned with future AVA designations) and the Is Appropriate about protecting the use of its name benefits (immediate brand As noted earlier, TTB received would have filed a petition for recognition).’’ approximately 1,160 variations of a form establishment of the Calistoga Napa Valley Vintners (NVV) argued letter and postcard supporting the viticultural area sooner. He stated that that TTB’s approval of the labels bearing Notice No. 77 grandfather provision. he believes the ‘‘failure to file until 2005 a ‘‘Calistoga’’ brand name was done so The vast majority of these comments, should be taken into consideration contrary to TTB guidance regarding along with another 15 written comments when determining how pre-petition geographic brand names appearing in supporting the position of Calistoga geographic brand names should be the Beverage Alcohol Manual for Wine Cellars, focused primarily on the treated.’’ (BAM). NVV pointed out that the BAM

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states that ‘‘[i]f the brand name includes We do not agree that, in light of for use of the AVA name, a change that the name of a geographic area that statements appearing in the BAM, the would permanently affect the actually exists and is described in at COLAs for labels bearing the application of § 4.39(i) would not be least two reference materials as a grape ‘‘Calistoga’’ brand names were warranted in this case. Moreover, a growing area, the wine cannot be mistakenly issued. The BAM was specific grandfather provision for one labeled with such a brand name.’’ The published as guidance to assist the winery is an approach that TTB and its NVV included in its comment a number industry in understanding the pertinent predecessor have not used in the past. of references to the Calistoga area regulatory provisions, in this case, those We believe in this matter that a label appearing in wine-related publications appearing at § 4.39(i)(3) pertinent to the with the proposed disclaimer may not and, based upon those references, use of geographic brand names on wine provide a consumer with adequate asserted that the COLAs issued for labels. As we have noted, that regulation information as to the identity of the labels bearing the ‘‘Calistoga’’ brand provides that a name has viticultural product but rather may result in the names were mistakenly issued as significance when it is the name of a consumer being misled as to the true Calistoga was a clearly established term State or county (or the foreign origin of the grapes used to produce the of viticultural significance appearing in equivalent), when approved as a wine. Section 4.39(i) has been in effect multiple reference sources at the time of viticultural area in accordance with the for over 20 years, and its application the approval. Further, the NVV pointed regulations in 27 CFR part 9, or by a and effect have been well understood to the TTB regulations in 27 CFR part foreign government, or when found to over that period of time. That is, when 13 setting forth procedures by which have viticultural significance by the it cannot be otherwise avoided the specific COLAs may be revoked as the appropriate TTB officer under government may make a choice between appropriate means for addressing labels § 4.39(i)(3). The regulations specifically competing commercial interests by that TTB may have erroneously provide discretion to the Bureau with requiring existing labels’ compliance approved. regard to making such determinations. with regulations establishing a new Regardless of whether TTB or its AVA. TTB Response predecessor agency should have done Furthermore, the use of a grandfather As noted above, in the preamble of so, the fact remains that, when labels provision would result in the Notice No. 77 TTB set forth the reasons containing the ‘‘Calistoga Cellars’’ brand application of multiple standards for the why we proposed the step of including name or the ‘‘Calistoga Estate’’ brand use of one name on wine labels, leading a limited grandfather provision in the name were approved, no specific to potential consumer confusion and proposed regulatory text. We explained determination had been made by TTB thus potentially frustrating the that we recognized in the Calistoga case that the name ‘‘Calistoga’’ was consumer protection purpose of the a rare instance in which a conflict viticulturally significant. FAA Act labeling provisions. In the between approved COLAs and the In the past, TTB and its predecessor present case, we conclude that it is approval of a petitioned-for AVA hinged agency looked at the proposed names of preferable as a matter of consumer upon a specific term of viticultural the AVAs to determine whether they protection for ‘‘Calistoga’’ to have only significance in such a way that an would mislead the consumer taking into one meaning and association for appropriate compromise between the account existing brand names (see Stags viticultural area purposes. Accordingly, affected parties regarding the term could Leap, Spring Mountain, Diamond in this final rule we are not adopting a not be reached. We believe that the Mountain, Oak Knoll, etc.). Where the grandfather provision in the new § 9.209 comments that attempt to define the proposed AVA name did not lead to a text, and, as a consequence of this equities in this case by portraying the likelihood of confusion, for example decision we are not adopting the different parties as ‘‘large’’ or ‘‘small’’, because the proposed name included an proposed conforming amendment to or that describe the Notice No. 77 additional word such as ‘‘District’’ or § 4.39(i). proposal as ‘‘protecting’’ one entity over ‘‘Hills’’ that distinguished it from another, raise points that are not another identical name (such as a brand Whether the Proposed Action Would germane to the fundamental issue that name), the name was approved. Result in a Taking of Property Notice No. 77 addressed. Alternatively, where the proposed name One commenter suggested, in the The present rulemaking raised the would likely lead to confusion, the context of Calistoga Estate, that the question of what to do about viticultural assessment turned to alternative names proposal would take away the label and area petitions that are received long proposed by the petitioner or that therefore the brand, as property, after the issuance in 1986 of § 4.39(i) on commenters. In the present rulemaking, would be taken away by the the use of geographical brand names of neither situation is present. The government. viticultural significance where the proposed name Calistoga would conflict TTB Response petition proposes a name that results in with the existing brand names and a a conflict with a brand name first used satisfactory alternative name has not We do not agree that applying the on an approved COLA not covered by been proposed by the petitioner or regulations set forth at § 4.39(i) the grandfather provision in § 4.39(i). commenters nor found by TTB. constitutes a ‘‘taking’’ of property. TTB Such a circumstance may occur for Notwithstanding the considerations and its predecessor agency have long legitimate reasons because exact terms noted above, we have concluded for the held that the certificate of label approval of viticultural significance are not reasons set forth below that the was never intended to convey any type always universally agreed upon, and adoption of a specific, limited of proprietary interest to the certificate relevant facts and issues regarding terms grandfather provision would not be holder. Indeed a statement to that effect and areas of viticultural significance are appropriate in this case. was made in T.D. ATF–406 published in not always brought forward until a We believe that, consistent with the the Federal Register (64 FR 2122) on petition is published for rulemaking. purpose behind the labeling provisions January 13, 1999, which set forth the Notice No. 78 addressed this issue in of the FAA Act and existing regulations, procedures by which specific COLAs general terms. In the present in particular § 4.39(i) which would may be revoked. Moreover, the form rulemaking, TTB has to resolve it in the preclude the use of a brand name that required for use in applying for label context of the Calistoga name. does not conform to the requirements approval, TTB F 5100.31, Application

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for and Certification/Exemption of pointed out that a similar sunset to continue to use its brand name or to Label/Bottle Approval, states, ‘‘This principle was provided for varietal transition to a new brand name. certificate does not constitute trademark names and for the implementation of TTB Finding protection.’’ In addition, we note that the original appellation of origin rules affected wineries may continue to use in T.D. ATF–53, 43 FR 37672 (Aug. 23, After careful consideration of the the labels in question if they configure 1978). An attorney commenting on evidence submitted in support of the their wines so that at least 85 percent of behalf of Calistoga Estate also argued petition and the comments received, for the wine is produced from grapes grown that, should TTB decide to establish an the reasons set forth above, TTB finds within the Calistoga viticultural area. AVA for the Calistoga area that does not that the evidence submitted supports We note that a ‘‘taking’’ may occur permit Calistoga Estate to continue the establishment of the proposed under the Fifth Amendment, inter alia, using the Calistoga Estate brand name viticultural area. The petitioners when the government restricts some of on wine produced from grapes submitted sufficient evidence of the the owners’ uses of private property purchased elsewhere in the Napa viticultural distinctiveness of the even though the owner is left with a Valley, TTB should provide Calistoga Calistoga area, and the comments did substantial economic use. Consistent Estate a minimum 3-year phase-out not include contradictory evidence. TTB with the Supreme Court’s decision in period to allow the establishment of a also finds that ‘‘Calistoga’’ is the most Penn Central Transp. Co. v. New York new brand. The commenter argued that appropriate name for the area. The City, 438 U.S. 104 (1978), three a minimum 3-year transition period evidence clearly shows that ‘‘Calistoga’’ considerations may be applied in this would allow Calistoga Estate to ‘‘fully is the name by which the area is locally situation to conclude that the inform wholesalers, brokers, control and regionally known and that the term government’s action is not a taking. state buyers, retailers and consumers ‘‘Calistoga’’ by itself has been associated First, the nature of the government about its new name, allowing it to historically with viticulture, specifically action to protect consumers from transition the goodwill now associated Napa Valley viticulture. misleading labels and to prevent new with the Calistoga Estate wine to TTB finds that the evidence submitted conflicting brand names from coming another brand name.’’ In addition, the by the petitioners establishes that into use after the establishment of a commenter cited other factors in designation of the Calistoga viticultural viticultural area is sound public policy. support of a 3-year transition period, area is in conformity with applicable The brand names ‘‘Calistoga Cellars’’ including the need to use up existing law and regulations. Therefore, under and ‘‘Calistoga Estate’’ may continue to label stocks, the need to design new the authority of the Federal Alcohol be used but simply must be used in a labels and receive TTB approval of Administration Act and part 4 of our manner that conforms to the those labels, and the need to test regulations, we establish the ‘‘Calistoga’’ requirements of § 4.39(i) to ensure that consumer acceptance of any new brand viticultural area in Napa County, consumers are not misled. That is, these name. The commenter cited other TTB California, effective 30 days from the brand names must be used in a truthful rulemaking actions that allowed for a publication date of this document with manner. See Bronco Wine Co. v. Jolly, 3-year transition period. a 3-year transition period for the use of 129 Cal.App.4th 988, 29 Cal.Rptr.3d existing approved COLAs for labels 462, (Cal. Ct. App. 2005), review denied, TTB Response containing ‘‘Calistoga’’ in the brand 2005 Cal LEXIS 9470 (Aug. 24, 2005) name on wine that does not qualify for We agree with the comments and cert. denied, 546 U.S. 1150 (2006). the ‘‘Calistoga’’ designation. Second, the negative economic impact received, and accordingly we believe on the affected brand names is mitigated that a 3-year use-up period would be Boundary Description by the fact that the government action sufficient and appropriate to transition See the narrative boundary leaves significant value in the brand the affected brand labels without description of the viticultural area in the name when it is used with grapes from unnecessary disruptions or economic regulatory text published at the end of Calistoga, or when the brand name is costs. Therefore, we are providing for a this final rule. sold to a winery for use on wine eligible 3-year transition period for the affected for the Calistoga viticultural name, and brand labels. As pointed out in the Maps the brand name also may gain enhanced comments, there is agency precedent for The maps for determining the value from the new viticultural area such a transition period. In addition to boundary of the viticultural area are designation. See Andrus v. Allard, 444 the commenter’s reference to the 5-year listed below in the regulatory text. transition period for the original U.S. 51 (1979). Finally, the investment- Impact on Current Wine Labels back expectations are not derogated appellation of origin rules, among because all affected brand names came others, TTB provided a 1-year transition Part 4 of the TTB regulations prohibits into use after publication of the current period for brand labels affected by the any label reference on a wine that rule in § 4.39(i) and the approval of change in the name of the Santa Rita indicates or implies an origin other than COLAs by TTB or its predecessor did Hills AVA to the Sta. Rita Hills AVA, the wine’s true place of origin. With the not imply that the brand name could be T.D. TTB–37, 70 FR 72710 (Dec. 7, establishment of this viticultural area used in every situation. 2005). We are providing this 3-year and its inclusion in part 9 of the TTB transition period to allow the use-up of regulations, its name, ‘‘Calistoga,’’ is Whether Affected Wineries Should Be existing label stocks, to provide time for recognized under 27 CFR 4.39(i)(3) as a Allowed a Time Period To Phase Out the design of new labels, to submit name of viticultural significance. The Noncompliant Labels labels and receive label approvals from text of the new regulation clarifies this NVV asserted that it would be TTB, and to allow each affected brand point. Consequently, wine bottlers using reasonable to allow Calistoga Cellars to label holder the opportunity to consider ‘‘Calistoga’’ in a brand name, including phase out, over a 3-year period, its use other changes required of its business a trademark, or in another label of the Calistoga Cellars brand name on model in light of this rulemaking, reference as to the origin of the wine, wine not complying with the including whether to begin sourcing 85 must ensure that the product is eligible appellation of origin requirements for percent or more of its grapes from the to use the viticultural area’s name as an the Calistoga viticultural area. NVV new Calistoga viticultural area in order appellation of origin or meets the

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requirements for application of the Subpart C—Approved American intersection with an unimproved dirt existing § 4.39(i) ‘‘grandfather’’ Viticultural Areas road (an extension of a road known provision. locally as the North Fork of Crystal ■ 2. Subpart C is amended by adding Springs Road), which lies in the Carne Regulatory Flexibility Act § 9.209 to read as follows: Humana Land Grant approximately We certify that this regulation will not § 9.209 Calistoga. 1,400 feet southwest of the northwest have a significant economic impact on (a) Name. The name of the viticultural corner of section 11, T8N/R6W on the a substantial number of small entities. area described in this section is St. Helena map; This rule would impact only a small ‘‘Calistoga’’. For purposes of part 4 of (9) Continues northerly along the number of existing entities. In addition, this chapter, ‘‘Calistoga’’ is a term of unimproved dirt road approximately this regulation imposes no new viticultural significance. 2,700 feet to its intersection with the reporting, recordkeeping, or other (b) Approved maps. The appropriate 880-foot contour line in section 2, T8N/ administrative requirement. Any benefit maps used to determine the boundary of R6W; the Calistoga viticultural area are four derived from the use of a viticultural (10) Follows the meandering 880-foot United States Geological Survey area name is the result of a proprietor’s contour line northwesterly, crossing efforts and consumer acceptance of 1:24,000 scale topographic quadrangle maps. They are titled: onto the Calistoga map in section 2, wines from that area. While we received T8N/R6W, and continues along the 880- comments suggesting that two small (1) Mark West Springs, Calif. (1993); (2) Calistoga, CA (1997); foot contour line through section 3, wineries might be adversely impacted T8N/R6W, sections 34 and 35, T9N/ by the adoption of the Calistoga AVA (3) St. Helena, Calif. (1960, revised 1993); and R6W, (with a brief return to the St. without some sort of relief, the final rule (4) Detert Reservoir, CA (1997). Helena map in section 35), to the 880- provides such relief in the form of a (c) Boundary. The Calistoga contour line’s intersection with Biter three-year period to allow the use-up of viticultural area is located in Creek in the northeast quadrant of existing labels, to transition to new northwestern Napa County, California. section 34, T9N/R6W; labels, or to consider other options for The boundary beginning point is on the (11) Continues westerly along the changing business practices to comply Mark West Springs map at the point with the regulatory provisions. A search meandering 880-foot contour line where the Napa-Sonoma county line around Dutch Henry Canyon in section of the COLA database disclosed that intersects Petrified Forest Road in 28, T9N/R6W, and Simmons Canyon in several other brand names incorporating section 3, T8N/R7W. From this point, section 29, T9N/R6W, to the contour the name ‘‘Calistoga’’ appear on the boundary: approved labels and the holders of those (1) Continues northeasterly along line’s first intersection with the R7W/ brand names did not comment on the Petrified Forest Road approximately 1.9 R6W range line in section 30, T9N/R6W; proposal. It may be that these brand miles to the road’s intersection with the (12) Continues northerly along the names are used on wines that are 400-foot contour line near the north meandering 880-foot contour line across eligible for Calistoga AVA requirements bank of Cyrus Creek approximately the two forks of Horns Creek and or otherwise comply with § 4.39(i). In 1,000 feet southwest of the intersection through Hoisting Works Canyon in any case, to the extent those names are of Petrified Forest Road and State Route section 19, T9N/R6W, crossing between limited by the establishment of the 128 on the Calistoga map; the Calistoga and Detert Reservoir maps, Calistoga AVA, they are eligible for the (2) Proceeds generally east-southeast to the contour line’s intersection with continued use allowed under the (after crossing Cyrus Creek) along the Garnett Creek in section 13, T9N/R7W, transition period. Therefore, no 400-foot contour line to its intersection on the Detert Reservoir map; with Ritchey Creek in section 16, T8N/ regulatory flexibility analysis is (13) Continues westerly along the required. R6W; (3) Follows Ritchey Creek northeast meandering 880-foot contour line, Executive Order 12866 approximately 0.3 mile to its crossing between the Calistoga and intersection with State Route 29 at the Detert Reservoir maps in sections 13 This rule is not a significant 347-foot benchmark; and 14, T9N/R7W, and in the region regulatory action as defined by (4) Proceeds east-southeast along State labeled ‘‘Mallacomes or Moristul y Plan Executive Order 12866 (58 FR 51735). Route 29 approximately 0.3 mile to its de Agua Caliente,’’ to the contour line’s Therefore, it requires no regulatory intersection with a light-duty road intersection with the Napa-Sonoma assessment. labeled Bale Lane; county line approximately 1.1 miles northeast of State Route 128 in the List of Subjects in 27 CFR Part 9 (5) Follows Bale Lane northeast approximately 0.7 mile to its ‘‘Mallacomes or Moristul y Plan de Wine. intersection with the Silverado Trail; Agua Caliente’’ region, T9N/R7W, of the (6) Proceeds northwest along the Mark Springs West map; and The Regulatory Amendment Silverado Trail approximately 1,500 feet (14) Proceeds southerly along the to its intersection with an unmarked ■ For the reasons discussed in the Napa-Sonoma county line to the driveway on the north side of the beginning point. preamble, we amend 27 CFR, chapter 1, Silverado Trail near the 275-foot part 9, as follows: benchmark; (d) Transition Period. A label (7) Continues northeasterly along the containing the word ‘‘Calistoga’’ in the PART 9—AMERICAN VITICULTURAL driveway for 300 feet to its intersection brand name approved prior to December AREAS with another driveway, and then 8, 2009 may not be used on wine bottled on or after December 10, 2012 if the ■ continues north-northeast in a straight 1. The authority citation for part 9 line to the 400-foot contour line; wine does not conform to the standards continues to read as follows: (8) Follows the 400-foot contour line for use of the label set forth in § 4.39(i) Authority: 27 U.S.C. 205. easterly approximately 0.7 miles to its of this chapter.

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Signed: December 1, 2009. SUPPLEMENTARY INFORMATION: Coastal the fireworks show on December 5, John J. Manfreda, Marine Construction, INC, on behalf of 2009. Entry into, transit through, Administrator. Pinellas County, FL, has requested a mooring, or anchoring within this safety zone is prohibited unless authorized by Approved: December 1, 2009. deviation to the regulations of the Dunedin Causeway bridge, mile 141.9, the Captain of the Port, Puget Sound or Timothy E. Skud, across the Gulf Intracoastal Waterway as Designated Representative. Deputy Assistant Secretary (Tax, Trade, and required by 33 CFR 117.5: Except as DATES: This rule is effective from 5 p.m. Tariff Policy). otherwise authorized or required by this to 8 p.m., December 5, 2009. [FR Doc. E9–29217 Filed 12–3–09; 4:15 pm] part, drawbridges must open promptly ADDRESSES: Documents indicated in this BILLING CODE 4810–31–P and fully for the passage of vessels preamble as being available in the when a request or signal to open is docket are part of docket USCG–2009– given in accordance with this subpart. 0989 and are available online by going DEPARTMENT OF HOMELAND To facilitate the repair of the bascule to http://www.regulations.gov, inserting SECURITY leaves, one leaf will be required to USCG–2009–0989 in the ‘‘Keyword’’ remain in the closed position upon box, and then clicking ‘‘Search.’’ They Coast Guard signal from a vessel, except with a three are also available for inspection or hour notification for an opening copying at the Docket Management 33 CFR Part 117 requiring both leaves. This deviation Facility (M–30), U.S. Department of [Docket No. USCG–2009–0764] effectively reduces the horizontal Transportation, West Building Ground clearance of 91 feet by half for vessels Floor, Room W12–140, 1200 New Jersey Drawbridge Operation Regulation; Gulf requiring an opening. The Mean High Avenue, SE., Washington, DC 20590, Intracoastal Waterway, Dunedin, FL Water clearance in the closed position between 9 a.m. and 5 p.m., Monday remains 24 feet. Vessels not requiring an through Friday, except Federal holidays. AGENCY: Coast Guard, DHS. opening may pass at any time. This FOR FURTHER INFORMATION CONTACT: If ACTION: Notice of temporary deviation action will affect a limited number of you have questions on this temporary from regulations. vessels as the ability to use the full 91 rule, call or e-mail ENS Ashley M. foot horizontal clearance is available SUMMARY: The Commander, Seventh Wanzer, Sector Seattle Waterways with a three hour notification. This Management Division, Coast Guard; Coast Guard District, has issued a action is necessary to allow Coastal temporary deviation from the regulation telephone (206) 217–6175, e-mail Marine Construction, INC to conduct [email protected]. If you governing the operation of the Dunedin necessary repairs the bascule leaves Causeway bridge across the Gulf have questions on viewing the docket, safely and efficiently. call Renee V. Wright, Program Manager, Intracoastal Waterway, mile 141.9, at In accordance with 33 CFR 117.35(e), Dunedin, FL. The deviation is necessary Docket Operations, telephone 202–366– the drawbridge must return to its regular 9826. to facilitate rehabilitation of the bascule operating schedule immediately at the SUPPLEMENTARY INFORMATION: leaves of the bridge. This deviation end of the designated time period. This allows the bridge to conduct single leaf deviation from the operating regulations Regulatory Information operations while repairs are conducted is authorized under 33 CFR 117.35. with a three hour notice for double leaf The Coast Guard is issuing this operations. Dated: November 6, 2009. temporary final rule without prior Scott A. Buschman, notice and opportunity to comment DATES: This deviation is effective from Captain, U.S. Coast Guard Commander, pursuant to authority under section 4(a) 7 a.m. on September 8, 2009 through 6 of the Administrative Procedure Act p.m. on February 28, 2010. Seventh Coast Guard District, Acting. [FR Doc. E9–29126 Filed 12–7–09; 8:45 am] (APA) (5 U.S.C. 553(b)). This provision ADDRESSES: Documents mentioned in BILLING CODE 9110–04–P authorizes an agency to issue a rule this preamble as being available in the without prior notice and opportunity to docket are part of docket USCG–2009– comment when the agency for good 0764 and are available online by going DEPARTMENT OF HOMELAND cause finds that those procedures are to http://www.regulations.gov, inserting SECURITY ‘‘impracticable, unnecessary, or contrary USCG–2009–0764 in the ‘‘Keyword’’ to the public interest.’’ Under U.S.C. box and then clicking ‘‘Search’’. They Coast Guard 553(b)(B), the Coast Guard finds that are also available for inspection or good cause exists for not publishing a copying at the Docket Management 33 CFR Part 165 notice of proposed rulemaking (NPRM) Facility (M–30), U.S. Department of [Docket No. USCG–2009–0989] with respect to this rule because it is Transportation, West Building Ground contrary to the public interest to delay Floor, Room W12–140, 1200 New Jersey RIN 1625–AA00 the effective date of this rule. Delaying Avenue, SE., Washington, DC 20590, the effective date by first publishing an between 9 a.m. and 5 p.m., Monday Safety Zone; Chimes and Lights NPRM would be contrary to the safety through Friday, except Federal holidays. Fireworks Display, Port Orchard, WA zone’s intended objective since FOR FURTHER INFORMATION CONTACT: If AGENCY: Coast Guard, DHS. immediate action is necessary to ensure you have questions on this rule, call or ACTION: Temporary final rule. the safety of vessels and spectators e-mail Mr. Gene Stratton, Bridge gathering in the vicinity of the fireworks Branch, Seventh Coast Guard district; SUMMARY: The Coast Guard is launching barge and display sites. telephone 305–415–6740, e-mail establishing a temporary safety zone on Hazards include premature detonations, [email protected]. If you have the waters of Port Orchard, WA during dangerous detonations, dangerous questions on viewing the docket, call the Chimes and Lights fireworks projectiles and falling or burning debris. Renee V. Wright, Program Manager, display. This action is necessary to Additionally, the zone should have Docket Operations, telephone 202–366– provide for the safety of recreational and negligible impact on vessel transits due 9826. commercial boaters in the area during to the fact that vessels will be limited

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