Federal Register / Vol. 77, No. 56 / Thursday, March 22, 2012 / Rules and Regulations 16671

litigation, establish clear legal DEPARTMENT OF THE TREASURY • The United States; standards, and reduce burden. • A State; Alcohol and Tobacco Tax and Trade • Two or no more than three States Executive Order 13563 Bureau which are all contiguous; The Department of State has • A county; considered this rule in light of 27 CFR Part 4 • Two or no more than three counties Executive Order 13563, dated January in the same State; or [Docket No. TTB–2010–0007; T.D. TTB–101; • A viticultural area as defined in 18, 2011, and affirms that this regulation Re: Notice No. 110] is consistent with the guidance therein. § 4.25(e). RIN 1513–AB58 Section 4.25(b)(1) states that an Executive Order 13175 American wine is entitled to an Labeling Imported Wines With The Department has determined that appellation of origin other than a Multistate Appellations this rulemaking will not have tribal multicounty or multistate appellation, implications, will not impose AGENCY: Alcohol and Tobacco Tax and or a viticultural area, if, among other substantial direct compliance costs on Trade Bureau, Treasury. requirements, at least 75 percent of the Indian tribal governments, and will not ACTION: Final rule; Treasury decision. wine is derived from fruit or agricultural preempt tribal law. Accordingly, products grown in the appellation area Executive Order 13175 does not apply SUMMARY: The Alcohol and Tobacco Tax indicated. Use of an appellation of to this rulemaking. and Trade Bureau is amending the wine origin comprising two or no more than labeling regulations to allow the three States which are all contiguous is Paperwork Reduction Act labeling of imported wines with allowed under § 4.25(d) if: This rule does not impose any new multistate appellations of origin. This • All of the fruit or other agricultural reporting or recordkeeping requirements amendment provides treatment for products were grown in the States subject to the Paperwork Reduction Act, imported wines similar to that currently indicated, and the percentage of the 44 U.S.C. Chapter 35. available to domestic wines bearing wine derived from fruit or other multistate appellations. It also provides agricultural products grown in each List of Subjects in 22 CFR Part 126 consumers with additional information State is shown on the label with a Arms and munitions, Exports. regarding the origin of these wines. tolerance of plus or minus 2 percent; • Accordingly, for the reasons set forth DATES: Effective Date: This final rule is The wine has been fully finished above, Title 22, Chapter I, Subchapter effective April 23, 2012. (except for cellar treatment pursuant to M, part 126 is amended as follows: FOR FURTHER INFORMATION CONTACT: 27 CFR 4.22(c) and blending that does Jennifer Berry, Alcohol and Tobacco not result in an alteration of class or PART 126—GENERAL POLICIES AND Tax and Trade Bureau, Regulations and type under 27 CFR 4.22(b)) in one of the PROVISIONS Rulings Division; telephone (202) 453– labeled appellation States; and • 1039 ext. 275, or email The wine conforms to the laws and ■ 1. The authority citation for part 126 [email protected]. regulations governing the composition, is revised to read as follows: method of manufacture, and designation SUPPLEMENTARY INFORMATION: Authority: Secs. 2, 38, 40, 42, and 71, Pub. of wines in all the States listed in the L. 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778, Background on Wine Labeling appellation. 2780, 2791, and 2797); E.O. 11958, 42 FR An appellation of origin for imported 4311; 3 CFR, 1977 Comp., p. 79; 22 U.S.C. TTB Authority wine is defined in § 4.25(a)(2) as: 2651a; 22 U.S.C. 287c; E.O. 12918, 59 FR Section 105(e) of the Federal Alcohol • A country; 28205; 3 CFR, 1994 Comp., p. 899; Sec. 1225, Administration Act (FAA Act), 27 • A state, province, territory, or Pub. L. 108–375; Sec. 7089, Pub. L. 111–117; U.S.C. 205(e), authorizes the Secretary similar political subdivision of a Sections 7045 and 7046, Pub. L. 112–74. of the Treasury to prescribe regulations country equivalent to a state or county; ■ for the labeling of wine, distilled spirits, or 2. Section 126.1 is amended by • revising paragraph (n) to read as and malt beverages. The FAA Act A viticultural area (which is follows: requires that these regulations, among defined in § 4.25(e)(1)(ii) in the case of other things, prohibit consumer imported wine). § 126.1 Prohibited exports, imports, and deception and the use of misleading Section 4.25(b)(2) states that an sales to or from certain countries. statements on labels, and ensure that imported wine is entitled to an * * * * * labels provide the consumer with appellation of origin other than a (n) Sri Lanka. It is the policy of the adequate information as to the identity viticultural area if: ‘‘(1) At least 75 United States to deny licenses or other and quality of the product. The Alcohol percent of the wine is derived from fruit approvals for exports or imports of and Tobacco Tax and Trade Bureau or agricultural products grown in the defense articles and defense services (TTB) administers the regulations area indicated by the appellation of destined for or originating in Sri Lanka, promulgated under the FAA Act. origin; and (2) the wine conforms to the except that a license or other approval requirements of the foreign laws and Use of Appellations of Origin on Wine may be issued, on a case-by-case basis, regulations governing the composition, Labels for humanitarian demining and aerial or method of production, and designation maritime surveillance. Part 4 of the TTB regulations (27 CFR of wines available for consumption * * * * * part 4) sets forth standards promulgated within the country of origin.’’ There is under the FAA Act for the labeling and no provision in the current TTB Dated: March 13, 2012. advertising of wine. Section 4.25 of the regulations for the use of multistate Rose E. Gottemoeller, TTB regulations (27 CFR 4.25) sets forth appellations on imported wines. Acting Under Secretary, Arms Control and rules regarding the use of appellations The existing regulations regarding International Security, Department of State. of origin. An appellation of origin for an appellations of origin, including the [FR Doc. 2012–6822 Filed 3–21–12; 8:45 am] American wine is defined in § 4.25(a)(1) provisions permitting multistate BILLING CODE 4710–25–P as: appellations for American wines, were

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promulgated by TTB’s predecessor and that 100 percent of the wine be fair and equitable treatment of imported agency, the Bureau of Alcohol, Tobacco derived from fruit or other agricultural and domestic wines, including the and Firearms (ATF), in T.D. ATF–53 (43 products grown in those regions. These requirement questioned by some FR 37672), published August 23, 1978. requirements mirror the current commenters that multistate appellations The preamble of T.D. ATF–53 stated requirements, discussed above, for be contiguous for foreign wines. that the regulations provided ‘‘a multistate appellations on American Contiguity is already required for comprehensive scheme for appellation wines. domestic wines; therefore TTB is of origin labeling’’ resulting in ‘‘more TTB received four comments in requiring it for foreign wines in this rule accurate information being provided to response to Notice No. 110. The as well. consumers about wine origin.’’ commenters were: (1) An Australian The Bureau and its predecessor have According to T.D. ATF–53, multistate winery; (2) the Australian Department of long interpreted the term ‘‘contiguous,’’ appellations were suggested by Foreign Affairs and Trade; (3) New as it appears in 27 CFR 4.25(a)(1)(iii), to domestic wine industry members. ATF Zealand Winegrowers, a trade include two States which actually touch decided to allow multistate appellations organization; and (4) the Government of at a point along a common boundary, or ‘‘in order to permit greater flexibility in New Zealand. All four commenters three States which are connected appellation of origin labeling,’’ provided generally support the proposal to allow throughout in an unbroken sequence. that all the grapes come from the named multistate appellation labeling on See ATF Ruling 91–1 (1991), http:// States, that the percentage of grapes imported wines. However, three of the www.ttb.gov/rulings/2001-2.htm. For from each State be shown on the label, commenters express concerns about example, North Dakota and South and that the wine conform to the laws certain aspects of the proposal. Dakota are contiguous, as are South and regulations governing the The Australian Department of Foreign Dakota and Nebraska. North Dakota, composition, method of manufacture, Affairs and Trade expresses concern South Dakota and Nebraska are also and designation of wines in all of the about the requirement that all the contiguous for the purpose of using States listed in the appellation. There named areas be contiguous, a three States in a multistate appellation was no discussion in T.D. ATF–53 requirement that duplicates that for on a wine label, even though North American wine contained in 27 CFR regarding multistate appellations for Dakota and Nebraska, without South 4.25(d). The commenter states that this foreign wines, including why multistate Dakota, are not contiguous with one requirement would preclude Tasmania, appellations were limited to American another and could not be used together an island, from being included in a wines. on a wine label. A similar interpretation multistate appellation. Further, in of the term contiguous will be applied Australian Petition contrast to the 100 percent rule to foreign appellations, where two The Australian Wine and Brandy proposed by TTB, the commenter notes states, territories or other applicable Corporation (AWBC), a quasi- that Australian regulations allow up to political subdivisions should actually governmental authority responsible for, three Australian States and Territories touch at a point along a common among other activities, regulating the to be included on a label so long as 95 boundary and where three such exportation of Australian wine, percent of the product is from the listed subdivisions are connected throughout submitted a petition to TTB to amend regions and at least 5 percent of the in an unbroken sequence. § 4.25(a)(2) to permit the labeling of wine is from each listed region. This Australian wines with multistate commenter suggests that the United For land boundaries, TTB expects the appellations. This proposal would allow States engage in further discussion on contiguous requirement to operate an Australian wine imported into the this issue. equally for foreign and domestic wines. United States to bear an appellation The New Zealander Winegrowers However, as some commenters point comprised of two or three Australian states that contiguity would be a out, island geography and maritime States, such as ‘‘Victoria-New South difficult requirement for them due to borders present additional Wales-South Australia.’’ According to their geography because large islands considerations for determining whether the AWBC petition, Australian constitute most of the country. or not two states, territories or other regulations allow wines to be labeled Finally, the Government of New applicable political subdivisions are with up to three Geographical Zealand notes the absence of a contiguous. Indications (officially defined wine ‘‘contiguous’’ requirement in New In the domestic context under existing regions) provided that 95 percent of the Zealand law and also points out that its regulations, TTB still looks for the two product is from the listed regions, the rules for appellations of more than one States separated by water to actually regions are listed in descending order of region require that only 85 percent of touch at a point along their common their proportions in the blend, and a the wine be from the named regions maritime border. For example, the minimum of 5 percent of the wine is rather than 100 percent as proposed by States of Rhode Island and New York from each listed region. Australian TTB. The commenter states that their are considered contiguous (although Geographical Indications include preferred approach is that foreign wines separated by water and sharing no Australian States, which are roughly with multistate appellations be labeled common land boundary), because they equivalent to American States. according to the rules of the country of actually touch at a point along a origin. common maritime border in Block Notice of Proposed Rulemaking and Island Sound; whereas the States of Comments Received TTB Analysis Indiana and Wisconsin are not On November 3, 2010, TTB published In Notice 110, TTB stated its intention considered contiguous, even though Notice No. 110 in the Federal Register to provide treatment for imported wines also separated by a body of water at 75 FR 67663 proposing to amend bearing multistate appellations similar common to both (Lake Michigan). In the § 4.25 to permit the use of multistate to that which is currently available for latter example, Indiana and Wisconsin appellations for imported wines. The domestic wines bearing multistate are not contiguous because they do not notice proposed, among other appellations. The Bureau believes that actually touch at a point along a requirements, that the regions named in the proposed regulatory amendments common maritime border within Lake multistate appellations be contiguous would achieve that goal and provide for Michigan, as the maritime borders of the

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States of Illinois and Michigan intervene second ‘‘s’’ from ‘‘States’’ to correct the (ii) A state, province, territory, or instead. error. similar political subdivision of a In the international context, after Regulatory Flexibility Act country equivalent to a state or county; consultation with the U.S. Department (iii) Two or no more than three states, TTB certifies under the provisions of of State, TTB recognizes that maritime provinces, territories, or similar political borders within the territorial seas of a the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) that this final rule will not subdivisions of a country equivalent to nation are determined by the domestic a state which are all contiguous; or laws of that nation and that subnational have a significant economic impact on (e.g., state) borders are delineated by a substantial number of small entities. (iv) A viticultural area (as defined in other nations in myriad ways or for a The amendments merely provide paragraph (e) of this section). variety of purposes that may differ from optional, additional flexibility in wine (b) * * * labeling decisions. Accordingly, a how maritime borders are delineated in (2) Imported wine. An imported wine the United States. (The United States regulatory flexibility analysis is not is entitled to an appellation of origin grants to its coastal States a right to the required. other than a multistate appellation, or a territorial seas of the United States to a Executive Order 12866 viticultural area, if: certain limit, thereby establishing common maritime borders between This final rule is not a significant * * * * * regulatory action as defined by States similar to those on land). TTB (d) Multistate appellations. (1) believes it would be inappropriate to Executive Order 12866. Therefore, it requires no regulatory assessment. American wine. An appellation of origin strictly apply its interpretation of the comprising two or no more than three term contiguous for domestic wines, Drafting Information States which are all contiguous may be particularly as to the issue as to what Jennifer Berry of the Regulations and used, if: constitutes a common maritime border, Rulings Division, Alcohol and Tobacco to foreign wines without considering the (i) All of the fruit or other agricultural Tax and Trade Bureau, drafted this position of the foreign nation products were grown in the States document. concerning its own subnational indicated, and the percentage of the maritime borders. Therefore, foreign List of Subjects in 27 CFR Part 4 wine derived from fruit or other states, territories, or other applicable agricultural products grown in each Administrative practice and State is shown on the label with a political subdivisions may be procedure, Advertising, Customs duties tolerance of plus or minus 2 percent; considered contiguous, for purposes of and inspection, Imports, Labeling, this rule, so long as the label applicant, Packaging and containers, Reporting (ii) The wine has been fully finished in conjunction with the government of and recordkeeping requirements, Trade (except for cellar treatment pursuant to the country of origin, can demonstrate practices, Wine. § 4.22(c), and blending that does not to TTB that the political subdivisions result in an alteration of class or type Amendments to the Regulations sharing a common maritime border under § 4.22(b)) in one of the labeled actually touch at a point along such For the reasons discussed in the appellation States; and border for a nationally- and/or preamble, TTB amends 27 CFR part 4, (iii) The wine conforms to the laws internationally-recognized purpose (e.g., Labeling and Advertising of Wine, as set and regulations governing the a common maritime border for fishing forth below: or mineral rights jurisdiction). composition, method of manufacture, TTB will consider the facts and PART 4—LABELING AND and designation of wines in all of the evidence submitted by the label ADVERTISING OF WINE States listed in the appellation. applicant and government of the (2) Imported wine. An appellation of ■ country of origin on a case-by-case basis 1. The authority citation for 27 CFR origin comprising two or no more than to establish whether the multiple part 4 continues to read as follows: three states, provinces, territories, or appellations are contiguous. Foreign Authority: 27 U.S.C. 205, unless otherwise similar political subdivisions of a governments are also encouraged to noted. country equivalent to a state which are provide TTB with information ■ 2. Section 4.25 is amended: all contiguous may be used if: demonstrating the contiguity of their ■ a. In paragraph (a)(1)(v), by removing (i) All of the fruit or other agricultural various states, territories, or other the word ‘‘States’’ and adding in its applicable political subdivisions, in products were grown in the states, place the word ‘‘State’’; provinces, territories, or similar political order to assist TTB with its label review ■ b. By revising paragraph (a)(2), the subdivisions of a country equivalent to in advance of TTB’s receipt of label introductory text of paragraph (b)(2), a state indicated, and the percentage of applications that would be subject to and paragraph (d); and the wine derived from fruit or other this requirement. Lack of information ■ c. In paragraph (e)(1)(ii), by removing supporting the contiguity of a multistate the words ‘‘(other than an appellation agricultural products grown in each appellation could result in TTB having defined in paragraph (a)(2)(i) or state, province, territory, or political to reject a label application. (a)(2)(ii))’’ and adding, in their place, subdivision equivalent to a state is shown on the label with a tolerance of TTB Finding the words ‘‘(other than an appellation defined in paragraph (a)(2)(i), (a)(2)(ii), plus or minus 2 percent; and For the reasons set forth above, TTB or (a)(2)(iii))’’. (ii) The wine conforms to the believes it would be appropriate to The revisions read as follows: requirements of the foreign laws and adopt the proposed regulatory changes regulations governing the composition, contained in Notice 110. In addition, § 4.25 Appellations of origin. method of production, and designation TTB has noted a technical error in (a) * * * of wines available for consumption § 4.25(a)(1)(v): The word ‘‘States’’ (2) Imported wine. An appellation of within the country of origin. should be singular, not plural. origin for imported wine is: Accordingly, this document removes the (i) A country; * * * * *

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Signed: July 27, 2011. authorities through Treasury viticultural area distinctive and John J. Manfreda, Department Order 120–01 (Revised), distinguish it from adjacent areas Administrator. dated January 21, 2003, to the TTB outside the proposed viticultural area Approved: September 29, 2011. Administrator to perform the functions boundary; Timothy E. Skud, and duties in the administration and • A copy of the appropriate United enforcement of this law. States Geological Survey (USGS) map(s) Deputy Assistant Secretary, Tax, Trade, and Part 4 of the TTB regulations (27 CFR Tariff Policy. showing the location of the proposed part 4) allows the establishment of viticultural area, with the boundary of [FR Doc. 2012–6930 Filed 3–21–12; 8:45 am] definitive viticultural areas and the use BILLING CODE 4810–31–P the proposed viticultural area clearly of their names as appellations of origin drawn thereon; and on wine labels and in wine • advertisements. Part 9 of the TTB A detailed narrative description of DEPARTMENT OF THE TREASURY regulations (27 CFR part 9) sets forth the proposed viticultural area boundary based on USGS map markings. Alcohol and Tobacco Tax and Trade standards for the preparation and Bureau submission of petitions for the Wisconsin Ledge Petition establishment or modification of 27 CFR Part 9 American viticultural areas and lists the TTB received a petition from Steven approved American viticultural areas. J. DeBaker of Trout Springs Winery in [Docket No. TTB–2011–0007; T.D. TTB–102; Green Leaf, Wisconsin, to establish the Re: Notice No. 121] Definition ‘‘Wisconsin Ledge’’ American RIN 1513–AB82 Section 4.25(e)(1)(i) of the TTB viticultural area. The proposed regulations (27 CFR 4.25(e)(1)(i)) defines viticultural area contains approximately Establishment of the Wisconsin Ledge a viticultural area for American wine as 3,800 square miles, with approximately Viticultural Area a delimited grape-growing region having 320 acres of vineyards in at least 14 distinguishing features as described in commercially-producing vineyards and AGENCY: Alcohol and Tobacco Tax and part 9 of the regulations and a name and wineries, and an additional 70 acres Trade Bureau, Treasury. a delineated boundary as established in projected to be planted within the next ACTION: Final rule; Treasury Decision. part 9 of the regulations. These two years. A map that was submitted designations allow vintners and with the petition shows that the SUMMARY: The Alcohol and Tobacco Tax consumers to attribute a given quality, commercial vineyards and wineries are and Trade Bureau establishes the reputation, or other characteristic of a geographically dispersed throughout the approximately 3,800 square-mile wine made from grapes grown in an area proposed viticultural area. The ‘‘Wisconsin Ledge’’ viticultural area in to its geographic origin. The proposed Wisconsin Ledge viticultural northeast Wisconsin. TTB designates establishment of viticultural areas area lies in Door, Kewaunee, viticultural areas to allow vintners to allows vintners to describe more Manitowoc, Sheboygan, Ozaukee, better describe the origin of their wines accurately the origin of their wines to Washington, Dodge, Fond du Lac, and to allow consumers to better consumers and helps consumers to Calumet, Outagamie, and Brown identify wines they may purchase. identify wines they may purchase. Counties of northeast Wisconsin and DATES: Effective Date: April 23, 2012. Establishment of a viticultural area is does not overlap, or otherwise involve, FOR FURTHER INFORMATION CONTACT: neither an approval nor an endorsement any existing or proposed viticultural Karen A. Thornton, Regulations and by TTB of the wine produced in that area. Rulings Division, Alcohol and Tobacco area. The proposed Wisconsin Ledge Tax and Trade Bureau, 1310 G Street Requirements viticultural area is largely surrounded NW., Box 12, Washington, DC 20005; by water, including Lake Winnebago, Section 4.25(e)(2) of the TTB phone 202–453–1039, ext. 175. the Fox River, Green Bay, and Lake regulations outlines the procedure for SUPPLEMENTARY INFORMATION: Michigan. According to the petition, the proposing an American viticultural area region is heavily affected by the lasting Background on Viticultural Areas and provides that any interested party effects of ancient glacial activity and the may petition TTB to establish a grape- TTB Authority moderating marine influence of the growing region as a viticultural area. surrounding bodies of water. Section 105(e) of the Federal Alcohol Section 9.12 of the TTB regulations (27 Administration Act (FAA Act), 27 CFR 9.12) prescribes standards for TTB published Notice No. 121 in the U.S.C. 205(e), authorizes the Secretary petitions for the establishment or Federal Register on October 14, 2011 of the Treasury to prescribe regulations modification of American viticultural (76 FR 63852), proposing to establish for the labeling of wine, distilled spirits, areas. Such petitions must include the the Wisconsin Ledge viticultural area. In and malt beverages. The FAA Act following: the notice, TTB summarized the provides that these regulations should, • Evidence that the area within the evidence from the petition regarding the among other things, prohibit consumer proposed viticultural area boundary is name, boundary, and distinguishing deception and the use of misleading nationally or locally known by the features for the proposed viticultural statements on labels, and ensure that viticultural area name specified in the area. The distinguishing features of the labels provide the consumer with petition; proposed area are its geology, adequate information as to the identity • An explanation of the basis for geography, climate, hydrology, and and quality of the product. The Alcohol defining the boundary of the proposed soils. The notice also included a and Tobacco Tax and Trade Bureau viticultural area; comparison of the distinguishing (TTB) administers the FAA Act • A narrative description of the features to the surrounding area. For a pursuant to section 1111(d) of the features of the proposed viticultural area description of the evidence relating to Homeland Security Act of 2002, that affect viticulture, such as climate, the name, boundary, and distinguishing codified at 6 U.S.C. 531(d). The geology, soils, physical features, and features of the proposed viticultural Secretary has delegated various elevation, that make the proposed area, see Notice No. 121.

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