Establishment of the Southern Oregon Viticultural Area (2002R-338P)

AGENCY:

Alcohol and Tobacco Tax and Trade Bureau (TTB), Treasury.

ACTION:

Final rule; Treasury decision.

SUMMARY:

This Treasury decision establishes the Southern Oregon viticultural area in portions of Douglas, Jackson, and Josephine Counties in southwestern Oregon. The established Applegate Valley, Rogue Valley, and Umpqua Valley viticultural areas are within boundaries of the Southern Oregon viticultural area. We designate 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 rule is effective February 7, 2005.

FOR FURTHER INFORMATION CONTACT:

N.A. Sutton, Program Manager, Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau, 925 Lakeville St., #158, Petaluma, CA 94952; telephone 415-271-1254.

SUPPLEMENTARY INFORMATION:

Background on Viticultural Areas

TTB Authority

Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 et seq.) requires that alcohol beverage labels provide the consumer with adequate information regarding a product's identity and prohibits the use of misleading information on such labels. The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers these regulations.

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) contains the list of approved viticultural areas.

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 distinguishable by geographical features, the boundaries of which have been recognized and defined 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 viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area 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 American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include—

• Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition;
• Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies;
• Evidence relating to the geographical features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas;
• A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey (USGS) maps; and
• A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked.

Southern Oregon Petition

General Background

In 2002, we received a petition from H. Earl Jones, a winemaker, and Dr. Gregory V. Jones, an associate professor of geography, requesting establishment of the “Southern Oregon” viticultural area. Located between the Coast Range and the Cascade Mountains, the Southern Oregon viticultural area covers portions of Douglas, Jackson, and Josephine Counties in southwestern Oregon. Beginning about 25 miles south of Eugene, the boundary area extends 125 miles south to the Oregon-California border. At its widest point the viticultural area is about 60 miles across.

The Southern Oregon viticultural area's boundary encompasses approximately 2,001,430 acres and includes the communities of Sutherlin, Roseburg, Grants Pass, Medford, and Ashland, Oregon. There are approximately 120 vineyards, with more than 3,000 acres planted to a wide range of vinifera grapes, and 17 commercial wineries within the area as of the 2002 petition filing. Both warm and cool climate wine grape varietals are successfully grown in the region.

The Southern Oregon viticultural area encompasses the established Umpqua Valley (27 CFR 9.89) and Rogue Valley (27 CFR 9.132) viticultural areas. A third established viticultural area, Applegate Valley (27 CFR 9.165), is entirely within the Rogue Valley area. TTB emphasizes that the boundaries and name usage of these three viticultural areas are not affected by the approval of the larger, encompassing Southern Oregon viticultural area.

The Southern Oregon viticultural area contains a series of high intermountain valleys that share a warm, sunny, arid climate and contain old, complex soils derived from bedrock. The warm Southern Oregon viticultural area is distinguishable from the cooler Willamette Valley to the north, the Pacific coastal regions to the west, and the region east of the Cascade Mountains.

Below, we summarize the information and evidence presented in the 2002 Southern Oregon petition.

Viticultural History

Historically, grapes have been grown in the Southern Oregon viticultural area since 1852, when Peter Britt operated a winery in Jacksonville, Oregon, that produced wine for local miners. Shortly thereafter, Jesse Applegate planted 1,200 grape vines in Umpqua, Oregon.

Modern day viticulture began in 1959, when Richard Summers founded Hillcrest Vineyard and produced 230 gallons of Riesling. The early 1970s saw the establishment of vineyards in the Umpqua and Rogue valleys by the Henry Estate Winery, Girardet Wine Cellars, and the Valley View Winery. Wine grape plantings have increased to 3,000 acres.

Name Evidence

The Encyclopedia of Oregon defines “Southern Oregon” as “extending from the Calapooya Mountains southward to the [California] State line between the Cascades and the Coast Range.” Geographical references to Southern Oregon are found in multiple business page listings in the telephone books of Douglas, Jackson, and Josephine Counties. East of the Southern Oregon boundary area, the Klamath Falls and Lakeview community telephone books indicate that that region is known as Central Oregon. The American Automobile Association map of Oregon labels the regions surrounding the Southern Oregon area as the Willamette Valley (north), the Cascade Range (east), the State of California (south), and the Coast Range (west), which meets the Pacific Ocean to define the Oregon coastline.

Wine industry publications, including the Wine Business Monthly and Northwest Palate magazines, refer to wine grape production in Jackson, Josephine, and Douglas Counties as “Southern Oregon.” Wine industry members in the area believe that a “Southern Oregon” appellation will have more relevance to consumers since it accurately describes the origin of the area's wines and helps distinguish them from Oregon's Willamette Valley wines, which are significantly different.

Boundary Evidence

The Southern Oregon viticultural area boundaries are based on a combination of climate, terrain, and soil factors that contrast with the nearby Willamette Valley, the Pacific coastal area, and Eastern Oregon region. The boundaries encompass three established viticultural areas (Umpqua Valley, Rogue Valley, and Applegate Valley) and a connecting valley corridor of similar viticultural potential. The boundaries of the three viticultural areas are well established and clearly documented in 27 CFR part 9, and there will be no changes to their boundaries.

The 12- by 17-mile north-south corridor in Douglas County connecting the Umpqua Valley and Rogue Valley viticultural areas has the same physical features as the viticultural areas to its north and south. A series of township and range lines, as noted on USGS maps, define the boundaries of the connecting corridor, which is roughly centered on Interstate 5 between the communities of Canyonville and Glendale Junction.

Distinguishing Features

Topography

The Southern Oregon area contains a varied, mountainous topography with vineyards typically situated in high mountain valleys. The Coast Range, in particular the Klamaths, forms a natural barrier to the west. This high mountain range barrier prevents marine air from freely moving inland to the Southern Oregon viticultural area. It also casts a rain shadow on the south and east regions of the Southern Oregon area.

To the north, a gap in the Coast Range allows cooling Pacific maritime air to flow into the Willamette Valley viticultural area. This contrast becomes more apparent as one travels south from the cooler, lower-elevation Willamette Valley into the warmer, higher elevations of the Southern Oregon area. Many vineyards in the Umpqua Valley are above 1,000 feet in elevation, and those to the south in the Rogue Valley are typically at elevations of 1,200 feet to 2,000 feet.

Soils

The Southern Oregon viticultural area soils evolved slowly from ancient rock formations, predominantly from the 200 million year-old Klamath Mountains. These ancient mountains, which extend from California to the latitude of Roseburg, Oregon, are comprised of sedimentary rock. Over time, a slow and complex geologic process crushed, metamorphosed, and modified these rock formations.

The old geology and soils of the Southern Oregon viticultural area generally contrast with that of the surrounding regions beyond the area's boundaries. To the north, the Willamette Valley has a more recent geologic history. Formed 25 million years ago as an extension of the Pacific Ocean, or perhaps as multiple interconnected bays, the Willamette Valley gradually filled with sediments and occasional basalt lava flows. The glacial Lake Missoula floods also deposited silts and sediments in the valley. To the west, the Pacific coastal zone's soils are more highly weathered and consist of a mix of soils from earlier volcanoes and oceanic crust terrains. To the east, the Cascade Mountains are comprised of mostly young volcanic soils, and beyond the Cascades are the arid desert and prairie soils of Eastern Oregon.

Temperature

The Southern Oregon viticultural area has the warmest growing conditions in the state of Oregon, thus allowing for the practice of “warm climate viticulture.” This warm growing climate impacts the grape varietals grown, quality, and harvest dates. Also, growers use cooler microclimates within the Southern Oregon area to produce some “cool climate” wine grape varietals.

The table below shows the growing season temperatures in and around the Southern Oregon area.

The Southern Oregon area climate is comparatively warmer and drier than the Willamette Valley to the north. Harvest may start 10 days earlier in Southern Oregon for identical varieties, such as Pinot Noir and Pinot Gris. The coastal region, despite having the longest growing season, does not accumulate enough heat to ripen most grape varieties. It also has high rainfall amounts that subject grapes to mildew and botrytis. Finally, the Eastern Oregon region has a cooler and shorter growing season climate due to its elevation and distance from the Pacific Ocean. The cold winters east of the Cascade Range leave vines vulnerable to frost kill, and the short growing season is insufficient to ripen fruit.

Rainfall

The Southern Oregon viticultural area receives significantly less rainfall than the coastal region to its west and the Willamette Valley to its north. Annual rainfall averages 35 inches in the Rogue Valley and 32 inches in the Umpqua Valley. By comparison, the Coast Range, and Willamette Valley, average 77 and 47 inches of annual rainfall, respectively, while eastern Oregon averages 20 inches of annual precipitation.

Boundary Description

See the narrative boundary description of the viticultural area in the regulatory text published at the end of this notice.

Maps

The petitioner(s) provided the required maps, and we list them below in the regulatory text.

Notice of Proposed Rulemaking and TTB Finding

TTB published a notice of proposed rulemaking on the establishment of the Southern Oregon viticultural area in the September 18, 2003, Federal Register as Notice No. 17 (68 FR 54696). In that notice, we requested comments from all interested persons by November 17, 2003. We received 13 comments in response to Notice No. 17. All commenters supported the establishment of the Southern Oregon viticultural area, with most emphasizing the area's distinct climatic and geographic features.

After careful review, TTB finds that the evidence submitted with the petition supports the establishment of the proposed viticultural area. Therefore, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we establish the “Southern Oregon” viticultural area in Douglas, Jackson, and Josephine Counties, Oregon, effective 60-days from this document's publication date.

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 viticultural area and its inclusion in part 9 of the TTB regulations, its name, “Southern Oregon,” is recognized as a name of viticultural significance. Consequently, wine bottlers using “Southern Oregon” in a brand name, including a trademark, or in another label reference as to the origin of the wine, must ensure that the product is eligible to use the viticultural area's name as an appellation of origin.

For a wine to be eligible to use as an appellation of origin the name of a viticultural area specified in part 9 of the TTB regulations, at least 85 percent of the grapes used to make the wine must have been 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 to use the viticultural area name as an appellation of origin 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 viticultural area 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 a viticultural area 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 Analyses and Notices

Regulatory Flexibility Act

We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is 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

This rule is not a significant regulatory action as defined by Executive Order 12866 (58 FR 51735). Therefore, it requires no regulatory assessment.

Drafting Information

N.A. Sutton of the Regulations and Procedures Division drafted this document.

List of Subjects in 27 CFR Part 9

• Wine

The Final Rule

For the reasons discussed in the preamble, we amend 27 CFR, chapter 1, part 9 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. Subpart C is amended by adding § 9.179 to read as follows: