Establishment of the Petaluma Gap Viticultural Area and Modification of the North Coast Viticultural Area

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION:

Final rule; Treasury decision.

SUMMARY:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) establishes the approximately 202,476-acre “Petaluma Gap” viticultural area in portions of Sonoma and Marin Counties in California. The viticultural area lies entirely within the larger existing North Coast viticultural area and partially within the established Sonoma Coast viticultural area. TTB also modifies the boundary of the North Coast viticultural area to eliminate a partial overlap with the Petaluma Gap viticultural area. TTB designates viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase.

DATES:

This final rule is effective January 8, 2018.

FOR FURTHER INFORMATION CONTACT:

Kaori Flores, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; phone (202) 453-1039.

SUPPLEMENTARY INFORMATION:

Background on Viticultural Areas

TTB Authority

Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels, and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01, dated December 10, 2013 (superseding Treasury Department Order 120-01, dated January 24, 2003), to the TTB Administrator to perform the functions and duties in the administration and enforcement of these provisions.

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.

Definition

Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features as described in part 9 of the regulations and a name and a delineated boundary as established in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an approval nor an endorsement by TTB of the wine produced in that area.

Requirements

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an AVA and provides that any interested party may petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment of AVAs. Petitions to establish an AVA must include the following:

• Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;
• An explanation of the basis for defining the boundary of the proposed AVA;
• A narrative description of the features of the proposed AVA that affect viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA boundary;
• A copy of the appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon; and
• A detailed narrative description of the proposed AVA boundary based on USGS map markings.

Petaluma Gap Petition

TTB received a petition from Patrick L. Shabram, on behalf of the Petaluma Gap Winegrowers Alliance, proposing the establishment of the “Petaluma Gap” AVA and the modification of the boundary of the established multi-county North Coast AVA (27 CFR 9.30). The proposed Petaluma Gap AVA is located in portions of Sonoma and Marin Counties, California. The proposed AVA covers approximately 202,476 acres and contains 80 commercially-producing vineyards covering a total of approximately 4,000 acres, as well as 9 bonded wineries. According to the petition, the distinguishing features of the proposed Petaluma Gap AVA include its topography and wind speed.

The proposed AVA lies in southern Sonoma County and northern Marin County, has a northwest-southeast orientation, and extends from the Pacific Ocean to San Pablo Bay. As proposed, a small portion of the Petaluma Gap AVA would overlap a portion of the established North Coast AVA. To eliminate the potential overlap, the petitioner also proposed modifying the boundary of the North Coast AVA to eliminate the potential overlap and place the proposed Petaluma Gap AVA entirely within the North Coast AVA. The proposed modification would increase the size of the 3 million-acre North Coast AVA by approximately 28,077 acres. The petition provided evidence that the proposed expansion area shares the main characteristic of the North Coast AVA—the marine climate influence that moderates growing season temperatures in the area. The expansion area was also shown to have similar growing degree day accumulations to the North Coast AVA and to be within the range of Winkler scale regions that characterizes the rest of the North Coast AVA.

The proposed Petaluma Gap AVA is located in the southern portion of the established Sonoma Coast AVA and shares the marine-influenced climate and coastal fog of the established AVA. As proposed, the Petaluma Gap AVA would also partially overlap the southwestern boundary of the established Sonoma Coast AVA (27 CFR 9.116), leaving the Marin County portion of the proposed AVA, consisting of approximately 68,130 acres, outside of the Sonoma Coast AVA. The petition did not propose to modify the boundary of the Sonoma Coast AVA for several reasons, including the lack of use of the name “Sonoma Coast” to describe lands in Marin County. Additionally, the evidence in the petition demonstrated that both the Sonoma County and the Marin County portions of the proposed Petaluma Gap AVA share similar topographic characteristics and similar wind speeds, so excluding Marin County entirely would have affected the integrity of the proposed AVA. Further, TTB notes that removing the proposed Petaluma Gap AVA from the Sonoma Coast AVA would potentially affect current label holders who use the “Sonoma Coast” appellation on their wines because wines made primarily from grapes grown in the region removed from the Sonoma Coast AVA would no longer be eligible to be labeled with that AVA as an appellation of origin.

According to the petition, the distinguishing features of the proposed Petaluma Gap AVA are its topography and wind speeds. The terrain consists of highlands characterized by low, rolling hills not exceeding 600 feet, except in a few places within the ridgelines that form the proposed northern, eastern, and southern boundaries. Within the proposed Petaluma Gap AVA, there are also small valleys and fluvial terraces, with flat land along the Petaluma River, especially east of the City of Petaluma and near the mouth of San Pablo Bay. The low elevations and gently rolling terrain of the proposed Petaluma Gap create a corridor that allows marine winds to flow relatively unhindered from the Pacific Ocean to San Pablo Bay, particularly during the mid-to-late afternoon. As a result, cool air and marine fog enter the vineyards during the time of day when temperatures would normally be at their highest, bringing heat relief to the vines.

To the north of the proposed Petaluma Gap AVA, the elevations are much higher, with elevations over 1,000 feet not uncommon in northern Sonoma County. The broad Santa Rosa Plain is also located north of the proposed AVA and has a much flatter topography than the proposed AVA. East of the proposed AVA, the higher elevations of Sonoma Mountain prevent much of the marine airflow that enters the Petaluma Gap from travelling farther east. East of Sonoma Mountain is the Sonoma Valley, which has lower elevations and flatter terrain than the proposed AVA. To the south of the proposed AVA, the elevations can exceed 1,000 feet.

The low elevations and rolling hills of the proposed Petaluma Gap AVA also allow the marine air to enter the proposed AVA at higher speeds than found in the surrounding areas, where higher, steeper mountains disrupt the flow of air. Although marine breezes are present within the proposed Petaluma Gap AVA during most of the day, the wind speeds increase significantly in the afternoon hours because the inland temperatures increase, causing the hot air to rise and pull the cooler, heavier marine air in from the coast and create steady winds.

The effect of these prolonged high wind speeds on grapes is a reduction in photosynthesis to the extent that the grapes have to remain on the vine longer in order to reach a given sugar level (a longer “hang time”), compared to the same grape varietal grown in a less windy location. Grapes grown in windy locations are also typically smaller and have thicker skins than the same varietal grown elsewhere. According to the petition, the smaller grape size, thicker skins, and longer hang time concentrate the flavor compounds in the fruit, allowing grapes that are harvested at lower sugar levels to still have the typical flavor characteristics of the grape varietal.

Notice of Proposed Rulemaking and Comments Received

TTB published Notice No. 163 in the Federal Register on October 28, 2016, (81 FR 74979), proposing to establish the Petaluma Gap AVA and modify the boundary of the North Coast AVA. In the document, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed viticultural area. For a description of the evidence relating to the name, boundary, and distinguishing features of the proposed viticultural area, and for a comparison of the distinguishing features of the proposed viticultural area to the surrounding areas, see Notice No. 163.

In Notice No. 163, TTB solicited comments on the accuracy of the name, boundary, climatic, and other required information submitted in support of the petition. In addition, given the proposed AVA's location within the existing North Coast AVA and in the southern portion of the Sonoma Coast AVA, TTB solicited comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed AVA sufficiently differentiates it from the two established AVAs. TTB also asked for comments on whether the geographical features of the proposed viticultural area are so distinguishable from the existing North Coast and Sonoma Coast AVAs that the proposed Petaluma Gap AVA should not be part of one or either established AVA.

Additionally, TTB asked for comments on the proposed modification of the North Coast AVA and whether the evidence presented in the proposed Petaluma Gap AVA petition was sufficient to warrant expansion of the North Coast AVA to include the entire proposed Petaluma Gap AVA. Finally, TTB asked for comments on whether the evidence submitted in the petition supported allowing the partial overlap between the proposed Petaluma Gap AVA and the established Sonoma Coast AVA. The comment period on Notice No. 163 closed on December 27, 2016.

In response to Notice No. 163, TTB received a total of 11 comments, all of which supported the establishment of the Petaluma Gap AVA and the expansion of the North Coast AVA boundary. Commenters were primarily local residents, vineyard owners, and members of the wine industry. The commenters generally supported the proposed AVA due to the rolling terrain and distinct microclimate, featuring distinct temperatures, moderate rainfall, the presence of fog, and wind gusts. Other comments emphasized the distinct flavor of the wines from the Petaluma Gap region and stated that establishing the Petaluma Gap AVA will help consumers to buy and identify wine accurately. Several comments received during the comment period stated that the proposed AVA has characteristics that are distinct from the larger Sonoma Coast AVA and warrant its recognition as a sub-AVA. However, none of the commenters specifically stated that the proposed Petaluma Gap AVA should be completely removed from the Sonoma Coast AVA. TTB received no comments in opposition of the Petaluma Gap AVA, as proposed, and no comments opposing the proposed North Coast AVA boundary modification or the proposed partial overlap with the Sonoma Coast AVA.

TTB Determination

After careful review of the petition and of the comments received in response to Notice No. 163, TTB finds that the evidence provided by the petitioner supports the establishment of the approximately 202,476-acre Petaluma Gap AVA and the modification of the boundary of the North Coast AVA. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and part 4 of the TTB regulations, TTB establishes the “Petaluma Gap” AVA in Sonoma and Marin Counties, in California.

TTB has also determined that the land within the Petaluma Gap AVA will remain part of the larger North Coast AVA. The Petaluma Gap AVA shares the basic viticultural feature of the North Coast AVA, which consists of the marine influence that moderates growing season temperatures in the area. Therefore, TTB is recognizing the Petaluma Gap AVA as a distinct AVA within the larger North Coast AVA.

Furthermore, TTB modifies the boundary of the North Coast AVA as described in Notice No. 163. TTB has determined that the expansion area has the similar marine-influenced climate of the North Coast AVA. Therefore, TTB is expanding the North Coast to include all of the Petaluma Gap AVA. This change is effective 30 days from the date of publication of this document. TTB is also allowing the partial overlap of the Petaluma Gap AVA with the Sonoma Coast AVA. The Marin County portion of the Petaluma Gap AVA will remain outside of the Sonoma Coast AVA, while the Sonoma County portion will be within the Sonoma Coast AVA. TTB allows the partial overlap to remain, primarily because the name “Sonoma Coast” is associated only with the coastal region of Sonoma County and does not extend into Marin County.

Boundary Description

See the narrative boundary description of the Petaluma Gap AVA and the modified boundary of the North Coast AVA in the regulatory text published at the end of this final rule.

Maps

The petitioner provided the required maps, and they are listed below in the regulatory text.

Impact on Current Wine Labels

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this AVA, its name, “Petaluma Gap,” will be recognized as a name of viticultural significance under 27 CFR 4.39(i)(3). The text of the regulation clarifies this point. Once this final rule becomes effective, wine bottlers using the name “Petaluma Gap” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the viticultural name as an appellation of origin. The establishment of the Petaluma Gap AVA will allow vintners to use “Petaluma Gap” as an appellation of origin for wines made from grapes grown within the Petaluma Gap AVA if the wines meet the eligibility requirements for the appellation.

The establishment of the Petaluma Gap AVA will not affect any existing viticultural area, and any bottlers using “North Coast AVA” as an appellation of origin or in a brand name for wines made from grapes grown within the North Coast AVA will not be affected by the establishment of this new AVA. The establishment of the AVA will allow vintners to use “Petaluma Gap and “North Coast” as appellations of origin for wines made from grapes grown within the Petaluma Gap AVA if the wines meet the eligibility requirements for the appellation. Additionally, vintners would be able to use “Sonoma Coast” as an appellation of origin on wines made primarily from grapes grown within the Sonoma County portion of the Petaluma Gap AVA, if the wines meet the eligibility requirements for the appellation.

For a wine to be labeled with an AVA name or with a brand name that includes an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label.

Different rules apply if a wine has a brand name containing an AVA name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

Regulatory Flexibility Act

TTB certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

Executive Order 12866

It has been determined that this rule is not a significant regulatory action as defined by Executive Order 12866 of September 30, 1993. Therefore, no regulatory assessment is required.

Drafting Information

Kaori Flores of the Regulations and Rulings Division drafted this final rule.

List of Subjects in 27 CFR Part 9

• Wine

The Regulatory Amendment

For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:

PART 9—AMERICAN VITICULTURAL AREAS

1. The authority citation for part 9 continues to read as follows:

Authority: 27 U.S.C. 205.

Subpart C—Approved American Viticultural Areas

2. Section 9.30 is amended as follows:

a. The introductory text of paragraph (b) is revised;

b. The word “and” is removed from the end of paragraph (b)(2);

c. The period is removed from the end of paragraph (b)(3) and a semicolon is added in its place;

d. Paragraphs (b)(4) and (5) are added;

e. Paragraphs (c)(1) and (2) are revised;

f. Paragraphs (c)(3) through (24) are redesignated as paragraphs (c)(7) through (28); and

g. Paragraphs (c)(3) through (6) are added.

The revisions and additions read as follows:

3. Add § 9.261 to read as follows: