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Uinta Brewing Duo Compass CansUinta Brewing Company (Applicant) filed an application before the United States Patent and Trademark Office (USPTO) to register on the Principal Register the mark DUO in standard characters for beer. The Trademark Examining Attorney refused registration under § 2(d) of the Trademark Act, 15 U.S.C. § 1052(d), for the reason that Applicant’s mark (as used in connection with Applicant’s goods) resembled a registered mark DUO as likely to cause confusion. (The registered mark is for wine and is owned by a Chilean wine company named Alto de Casablanca, S.A. but was originally registered by Franciscan Vineyards in Rutherford, California.) When the Examining Attorney’s refusal was issued, Applicant brought an appeal before the Trademark Trial and Appeal Board (TTAB), and both the Applicant and Examining Attorney filed briefs. In re Uinta Brewing Company, Serial No. 86333439 (June 29, 2016) [not precedential]. As is standard in a likelihood of confusion analysis, the TTAB considered whether or not there were similarities between the marks as well as similarities between the goods at issue.

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Starting a New Winery? Ten Questions You Should Ask

Starting any new business can be overwhelming, and taking the leap to start a winery is certainly no exception. The details can be intimidating and a newcomer can often lose sight of the larger picture. This article aims to review ten of the very basic legal or compliance steps all new winery businesses should consider when starting out. And for those already producing wine, the below may provide a point or two of new insight.

What Are Ten Questions Every New Winery Should Ask?

  1. Who are the owners and how will the business be organized? First and foremost, you should determine who the owners of the winery will be and how it will be funded. This is a key point in the TTB federal winery permit application, as well as mot state license applications. Depending on the setup, you will be required to submit certain types of information to both the federal and state governments. Furthermore, you should consider how the business entity itself will be set up. For example, sole proprietorship, partnership, LLC, corporation, or similar. Each entity type has its own benefit and drawbacks, and the type of entity you choose may depend on your business itself, the owners, and your ultimate goals. You should work with an attorney well-versed in business law to determine the entity that is best for your needs.
  2. Is my business information filed with the state and is it up-to-date? When forming a new business, the state may require business information to be filed with the state. For example, this may include the Articles of Organization or the Articles of Incorporation. This step should be completed before you submit your winery permit application with TTB. If you are a new entity, you will not necessarily be concerned about whether the information on file with the state is accurate and up-to-date. However, if you are using an entity that was previously formed and whose information has been on file with the state for a while, you should consider whether any of this information (such as address, ownership, etc.) has changed and may need to be updated with the state. If ownership or addresses or similar have changed, certain documents may need to be updated.
  3. Do I have an EIN? An Employer Identification Number (EIN) is absolutely one of the first steps when setting up a new business. The EIN can be set up online through the Internal Revenue Services (IRS) website and can generally be obtained instantaneously. The number will be used for tax purposes and is also necessary for the TTB federal winery permit application, as well as for most state applications.
  4. Should I register my business? Most likely, your state government will require you to register the business and obtain a certificate of authorization (or similar) in order to do business within the state. Because every state varies, this step—along with the cost—can be quite different from one state to another. However, at the very least, you should consider whether or not (1) your state requires the business to register; and (2) whether or not you also want to file a Doing Business As (DBA) name. The DBA name is used as a “fictitious” business name as an alternative to the actual entity name. It is a popular option for companies that have been formed using human names and may want to operate under a more professional or industry-specific name.
  5. Is my winery registered with FDA as a food facility? This is an essential step for almost every winery. If your facility is manufacturing, processing, packaging, or holding food in the U.S., your facility is required to be registered with the Food and Drug Administration (FDA) as a domestic food facility and maintain an active FDA food facility registration. For food facility registration purposes, “food” is defined by federal regulations to include wine. A TTB federal winery permit does not exempt wineries from this requirement. Keep in mind that the FDA food facility registration needs to be renewed every even-numbered year for FDA’s biennial renewal and in order to remain active with FDA. The good thing about this registration is that is can be obtained instantaneously once the application is completed and is generally easy to update.
  6. Do I need to obtain a bond for my TTB permit application? A bond is a legal guarantee that federal excise taxes will be paid for wine produced or stored at the specific winery location for that specific winery. It is also one of the top reasons why the TTB winery application will be sent back to the applicant for corrections. The required penal sum of the bond for the TTB winery permit application ranges from $1,000 to $100,000 depending on the winery’s tax liability, which is determined by the volume, type, and alcohol content of the wine produced at the winery. It covers the tax liability that the winery owes to the federal government in regard to excise taxes; it does not authorizes the production, purchase, or sale of the wine itself. There are three ways for a bond to be issued: (1) by a surety company; (2) in cash; or (3) through a treasury note. The best option will depend on your business, as well as the tax liability owed. As of July 2016, the bond is mandatory for the TTB winery permit application.
  7. Do I have all paperwork organized for the federal TTB winery permit application? This application is incredibly time consuming and requires many details before you will obtain an approved license from the TTB. On top of that, it generally takes at least three months (if not more) for the license to be reviewed and approved by TTB. There can be many bumps along the way, and the specialist assigned to the application may get in touch with you multiple times to request more information or clarification. It is thus incredibly important that all documents submitted to TTB are in top shape and contain specific requirements that TTB will need to review the application. Small oversights can hold the application back weeks, if not months. Review every step of the application at least two times to ensure that the information you are submitting is complete, thorough, and accurate.
  8. Do I need a state license to operate as a winery? In all likelihood, yes. The type of license and the agency overseeing licensure will vary by state. In some instances, you may need multiple licenses depending on whether you will, for example, have a tasting room. You may also need to register with multiple state agencies. Some states also provide several types of winery license options, which can be less costly and may provide benefits like self-distribution. These alternative licenses may depend on your proposed production amount and the raw ingredients you plan to use. Every state winery license application varies and requires knowing the particulars and complexities of state regulations.
  9. Do I need a formula approval for my wines? There are some wines that are required to have formulas approved by TTB. Traditional table wines (i.e., grape wine between and including 7% alcohol by volume to 14% alcohol by volume) or dessert wines (i.e., grape wine above 14% alcohol by volume) will generally not require a formula approval unless you start adding additional ingredients, like flavors, colors, other fruit wines, etc. to the process. Other products, like mead, sake, and vermouth, will require a formula approval before you can obtain a label approval from the federal government. The formulation process for a domestic wine requires you to submit a list of ingredients, their use rates, and a method of manufacture. The process can be tricky and requires many details. It can also be extremely time consuming and may take several weeks (or even months) to obtain formulation approval. The average processing time can vary significantly depending on a number of factors..
  10. Do I need a label approval for my wine? Generally speaking, yes. Wines at or above 7% alcohol by volume will generally be required to obtain a Certificate of Label Approval (COLA) from TTB before the wines can be sold at market. While you may be eager to start printing your labels, the label approval cannot be obtained until after you have the federal basic winery permit from TTB. The average processing time for federal wine labels varies significantly and can be as little as 10 days to about 40 days. This is something you must budget for in the time it takes to get your wine to market. Further, the label submission process can often require many intricate details, as there are federal regulations that govern both mandatory and non-mandatory language that must and can appear on wine labels. See 27 CFR Part 4 for more information.
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SPONSORED: A Taste of Rhode Island Wine

Disclosure: This post was sponsored by Rhode Island Tourism, which organized and provided transportation to the below Rhode Island wineries. I was not otherwise compensated for this article. The below remains my opinion of Rhode Island wines from my experience at the properties.

Rhode Island wine.

I consider myself fairly knowledgeable about wine. I say “fairly”  because I strongly (and personally) believe that with wine—and especially with wine—there is always more to learn and more to taste. I am, by no means, an expert, but I do enjoy tasting and learning and experiencing. My palate, for example, is forever changing and increasingly expanding. Perhaps that is what makes wine so interesting to me. I can say with some degree of affirmation that my preferences have certainly changed in a matter of several years and, in some instances, even months. On my first trip to Champagne, I found myself reaching for older blanc de blancs, but on a more recent return to the region, I surprised myself and gravitated toward a younger blanc de noirs during a tasting. (Of course, that could be the product of so many factors.) When I was approached with an invitation to visit several Rhode Island wineries to taste Rhode Island wine, I was not only intrigued but also somewhat reserved. I did not know much about Rhode Island wine, which may not be dissimilar to your own experience with Rhone Island wines.

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On Wednesday, June 22, 2016, TTB published a notice in the Federal Register proposing important changes to wine labeling regulations and recordkeeping requirements. Comments to the proposed changes will be accepted through August 22, 2016 and can be submitted through the Federal Register website). The notice proposes to amend TTB’s labeling and recordkeeping regulations to maintain that standard grape wines at or above 7% alcohol by volume that are covered by a certificate of exemption from label approval may not be labeled with any of the following:

  1. A varietal (grape type) designation;
  2. A type designation of varietal significance;
  3. A vintage date; or
  4. An appellation of origin (unless the wine is labeled in compliance with the corresponding requirements found in 27 CFR Part 4)

The notice also proposes amendments to Part 4 (wine labeling regulations) to include a reference to the new Part 24 requirement.

In its industry newsletter, TTB states, “[w]e are taking this action in response to concerns raised by wine industry members and members of Congress about the accuracy of label information on certain wines covered by certificates of exemption from label approval, particularly the labeling of certain wines that may not meet the part 4 regulatory requirements for using American viticultural area (AVA) names.”

27 CFR Part 24 talks to the records a proprietor must maintain to substantiate label information in regard to wines. Specifically, Part 24 requires a proprietor who removes a bottled or packed wine with certain information on the label (such as the varietal, type designation, vintage date, or appellation or origin) maintain complete records so that the information appearing on the label can be verified by TTB during an audit. This includes information from the beginning source material to the removal of the wine for consumption or sale and these requirements apply to all wines (not just wines that are required to obtain a COLA from TTB).

However, as the regulations currently stand, Part 24 does not discuss the conditions under which a proprietor may use a grape variety as a type designation, an appellation of origin, or vintage year on a wine label.  Instead, TTB wine labeling regulations are found in 27 CFR Part 4. Part 4 covers labeling requirements with respect to vintage years, appellations of origin (and AVAs), type designations of varietal significance, and similar. 

Certificates of exemption from label approval are generally issued when a wine will only be sold within the state where it is bottled and not, for example, in interstate commerce (thus subjecting the wine to labeling requirements in 27 CFR Part 4 as well as the need for a Certificate of Label Approval from TTB). These wines are usually quite easy to differentiate from those sold in interstate commerce because the labels of wines covered by the certificate of exemption contain a statement along the lines of, “FOR SALE IN [STATE] ONLY.” Further, if a bottler or packer of wine can show that the wine will not be sold, offered for sale, or shipped or delivered for shipment, or otherwise introduced into interstate commerce, the wine will be exempt from the requirements of Part 4.

The specific concern that appears to be common among industry members (per the proposed rule) is the use of AVAs on these wine labels covered by the certificate of exemption from label approval. The wines covered by the exemption are labeled with AVA  names but allegedly do not meet the Part 4 requirements with respect to using an AVA name on a label. To use an AVA name on a label, the following conditions must be met per 27 CFR 4.25(e)(3)(iv):

  1. The AVA name must have been approved under 27 CFR Part 9;
  2. Not less than 85% of the wine must be derived from the grapes grown within the boundaries of the AVA (Note that this is the federal requirement and some state or local laws may be more restrictive); and
  3. The wine must have been fully finished within the State, or one of the States, within which the labeled viticultural area is located (with few, minor exceptions).

The proposed rule proceeds to say that a wine labeled with “Napa Valley” as the AVA but also containing a statement, “Produced and bottled by ABC Winery, Anytown, Illinois” would not meet the provisions of 27 CFR 4.25(e)(3)(iv) because the wine was not fully finished in California and the wine would thus not qualify for a COLA (i.e., if submitted to TTB for review, the label would likely come back either needing corrections with respect to the above mentioned statement or be rejected). The loophole that currently seems to exist is that such wine labels can instead request a certificate of exemption from label approval from TTB as long as they are sold only within the state of the permittee submitting the label (Illinois in the above example) and not introduced into interstate commerce. Should the label be eligible for the certificate of exemption from label approval, the label would be exempt from Part 4 provisions (and thus exempt from provisions detailing AVA, vintage year, and other similar requirements). This is a very realistic concern as, if one quickly browses the TTB public COLA database or LabelVision, it is very evident that several industry members are submitting certificate of exemption from label approval applications to TTB and using recognized AVAs on the label (a practice which could easily beguile an unsuspecting consumer). Understandably, this is very much a concern of industry members, trade groups, and other players who have sought to protect and form strict regulations pertaining to, for example, AVAs.

While TTB’s proposed rule may solve industry concern that some wines (at or above 7% alcohol by volume) covered by the certificate of exemption from label approval that do not meet the regulatory label requirements in Part 4, it leaves an interesting loophole open and calls to question the following: What about wines under 7% alcohol by volume whose labels are subject to the regulations of the FDA? These wines are not required to obtain a COLA or a certificate of exemption from label approval. While I have not seen many wine labels under the 7% alcohol by volume threshold that would cause the type of industry concern that many of the at or above 7% alcohol by volume wine labels have, there still seems to be an interesting loophole here that, should the proposed rule become finalized, may provide opportunity for creative industry members.

For more information on wine or alcohol law, AVAs, or TTB matters, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Empire Wine Bill Passes in New York Senate

Empire Wine Bill Passed in New York SenateThe “Empire Wine Bill” (version 2.0) passed in the New York State Senate on Friday, June 17th per the New York State Assembly website. The matching Assembly bill, A10248, passed earlier on June 15th.

The summary of the Senate bill is as follows:

Relates to clarifying the basis upon which the state liquor authority has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.

The  bills now await the Governor’s review.

As previously noted by On Reserve, these bills are very similar to the “Empire Wine Bill” that appeared in New York’s Assembly and Senate and 2015, which passed in both the Assembly and Senate, but was ultimately vetoed by Governor Cuomo at the end of 2015. For more information on the specific changes to the 2016 bill in comparison to the 2015 bill, please see here

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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Empire Wine Bill Passes in Assembly

Empire Wine Bill Version 2 Passes New York AssemblyThe “Empire Wine Bill” (version 2.0) passed in the New York State Assembly on Wednesday, June 15th per the New York State Assembly website. The matching Senate bill, S07728, has not yet passed and shows no action on the bill’s page other than an entry for May 12, 2016.

The summary of the Assembly bill is as follows:

Relates to clarifying the basis upon which the state liquor authority has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.

As previously noted by On Reserve, these bills are very similar to the “Empire Wine Bill” that appeared in New York’s Assembly and Senate and 2015, which passed in both the Assembly and Senate, but was ultimately vetoed by Governor Cuomo at the end of 2015. 

The proposed text found in A10248 and S07728 are similar to the prior bills (A05920Aand S04446A), but is organized somewhat differently and also adds three new conditions that were not present in either of the 2015 bills. Specifically, conditions three, four, and five were not present in the 2015 bills. Condition two was present in the 2015 bill, however the 2016 bill contains broader language and establishes “for cause” when a licensee is found to be in violation of another state’s law (assuming due process). The 2015 bill purportedly allowed for revocation of a license if a licensee was found in violation of another state’s laws and either (1) the conduct violated a specific chapter of the New York Alcoholic Beverage Control Law, or (2) if the conduct had occurred in New York, it would have been a violation of the New York Alcoholic Beverage Control Law. Condition two of the proposed 2016 bill is boarder in that it does not take into consideration whether such conduct outside of the State violated or would have violated (if the conduct had occurred in New York) the New York Alcoholic Beverage Control Law. Instead, the second condition simply requires a finding of a violation of another state’s law and due process. 

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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New Presentation on Wine Law

A few weeks ago, I filmed a presentation called “Introduction to Wine Law” for Lawline. The course is now available on demand through the Lawline website and runs approximately 90 minutes. A summary of the course is listed below:

The alcohol beverage industry is one of the most regulated consumer product industries in the United States: producers, importers, distributors, and retailers generally require licenses through both federal and state government agencies; labels and formulas are subject to administrative approval prior to sale at market; and regulations exist that often prohibit cross ownership between licensed entities. The wine industry is not immune from these concerns, and wine is additionally subject to laws and rules for grape varieties and appellations of origin. Wine was also the topic of the 2005 Supreme Court case Granholm v. Heald, which had a major impact on the industry in the last decade.

This course, presented by Lindsey A. Zahn, lawyer at Lehrman Beverage Law, PLLC, provides a brief history of wine regulation in the United States, addresses some of the contemporary issues in wine law, and offers insight on some of the most convoluted laws in existence since the repeal of Prohibition.

The learning objectives are as follows:

  1. Learn the history of wine regulation in the U.S.;
  2. Gain a general understanding of federal wine labeling and advertising;
  3. Generate a picture of how federal and state agencies work together; and
  4. Provide an overview of trade practice laws unique to a highly regulated industry.

The course is available for CLE credit in several states. For more information, see Introduction to Wine Law

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Two new bills have been introduced to New York’s Senate and Assembly on May 12th and May 18th (respectively), sponsored by New York State Senator Phil Boyle and Assembly Member Philip Steck. The bills are very similar to the “Empire Wine Bill” that appeared in both the Senate and Assembly last year, but was ultimately vetoed by Governor Cuomo in December 2015. The new bills, known as A10248 and S07728, have a similar mission to their predecessor bills. Specifically, these bills aim to “clarify[] the basis upon which the [NYSLA] has the authority to revoke, suspend or cancel a license or permit by excluding perceived violations of the laws of other states unless the conduct falls within certain exceptions and established standards in statute for the delivery of beverage alcohol.”

A10248 and S07728 propose to change Subdivision 3, Section 118—which talks to the Authority’s ability to revoke a license for cause—of the state’s alcohol beverage control law by adding additional language to the law which provides guidance on the definition of “for cause.” As it currently stands, the New York Alcoholic Beverage Control law defines “for cause” (in regard to the revocation of a license) in part as:

(3) As used in this section, the term “for cause” shall also include the existence of a sustained and continuing pattern of noise, disturbance, misconduct, or disorder on or about the licensed premises, related to the operation of the premises or the conduct of its patrons, which adversely affects the health, welfare or safety of the inhabitants of the area in which such licensed premises are located. 

A10248 and S07728 propose additional language to establish “for cause.” The bills propose a subsection to (3) by adding (b) which, in summary, establishes the following:

  1. The first provision (3(b)) states that “for cause”  (as used in Subdivision 3, Section 118) shall not include conduct by a licensee that occurs outside of New York State or violations of another state’s laws or regulations
  2. The first provisions (3(b)) goes on to say that the only way “for cause” will constitute such conduct is if one of the following conditions are met:
    1. The conduct independently violated a specific provision of the New York Alcoholic Beverage Control Law;
    2. The licensee or permittee is found guilty by authorities in another state in violation of that state’s law and has been provided due process of the law;
    3. The other state notified the licensee that such conduct is in violation of that state’s law and, having requested that the licensee cease and desist from that conduct, the licensee knowingly and repeatedly continues to engage in such conduct within that state;
    4. The licensee or permittee engaged in sales to minors in the other state; or
    5. The licensee failed to pay taxes in the other state where taxes are owed by the licensee or permittee.

The proposed text found in A10248 and S07728 are similar to the prior bills (A05920A and S04446A), but is organized somewhat differently and also adds three new conditions that were not present in either of the 2015 bills. Specifically, conditions three, four, and five (as noted above) were not present in the 2015 bills. Condition two was present in the 2015 bill, however the 2016 bill contains broader language and establishes “for cause” when a licensee is found to be in violation of another state’s law (assuming due process). The 2015 bill purportedly allowed for revocation of a license if a licensee was found in violation of another state’s laws and either (1) the conduct violated a specific chapter of the New York Alcoholic Beverage Control Law, or (2) if the conduct had occurred in New York, it would have been a violation of the New York Alcoholic Beverage Control Law. Condition two of the proposed 2016 bill is boarder in that it does not take into consideration whether such conduct outside of the State violated or would have violated (if the conduct had occurred in New York) the New York Alcoholic Beverage Control Law. Instead, the second condition simply requires a finding of a violation of another state’s law and due process. 

For more information on the Empire Wine and prior bills, please see Retailer Empire Wine Sues New York State Liquor Authority: Direct Shipping and Bill Introduced to New York State Assembly Supports Empire Wine.

For more information on New York State wine or alcohol law, direct shipping, or establishing a New York beverage business, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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TTB announced last week that it administratively approved two new grape varieties for use on American wine labels.  The new grape varieties, Mustang and Riverbank, can be used on American wine labels contingent upon TTB’s next rulemaking to update the list of approved varieties in the CFR (i.e., at 27 CFR 4.91). TTB currently has a list of many grape varieties that have been administratively approved for use on American wine labels, which can be found on its American Grape Variety Names website.

According to Wikipedia, Mustang (or vitis mustangensis) is a grape variety that is native to the southern United States (including Mississippi, Alabama, Louisiana, Texas, and Oklahoma) and was reportedly used in mustang wines prior to the Civil War. The Riverbank grape variety (or vitis riparia Michx or front grape) is also native to the United States and commonly found in the the central and northeastern portions of the country and is used in viticulture as grafted rootstock and in hybrid grape breeding programs. 

When a petition to approve a new grape variety for use on American wine labels is submitted to and reviewed by TTB, the agency issues an administrative approval if the grape variety petition is approved. This means that TTB will approve American wine labels that use the grape variety name, but such label approvals are valid for labels used in the U.S. market (i.e., such approvals do not necessarily imply that the variety names are acceptable in other countries). After issuing an administrative approval, TTB will propose rulemaking by publishing a notice in the Federal Register to add the grape variety name to the list of approved grape varieties that appear in 27 CFR 4.91. Just like other proposed rules, this process invites the public to comment on whether the administratively approved grape variety should be recognized as an approved grape variety in 27 CFR 4.91. Public comment may or may not influence the agency to approve the variety. As of today, there are almost 50 grape varieties that were granted administrative approval for use on American wine labels, but have not yet been subject to notice and comment. 

After completing the rulemaking process, should the Agency decide for any reason not to add the grape name to the approved list, any final rulemaking action will supersede its administrative approval. Essentially, this would affect the label approvals for a wine sporting an administratively approved grape variety. 

For more information on wine or alcohol law, or submitting a varietal petition to TTB, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

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The (Legal) Truth Behind American Viticultural Areas

What are American Viticultural Areas (AVAs)? Are they appellations? AVAs are types of appellations—but not all appellations are AVAs. For example, California and Texas and Napa County and Sonoma County are considered to be an appellation of origin with respect to wine labeling. But they are not AVAs.

 Both appellations and AVAs provide a significant amount of information about a wine. When used on a label, the wine tells a consumer that (at minimum) the majority of the grapes used in that wine were grown in the labeled appellation or AVA. However, appellations and AVAs have some differences. Appellations are generally defined by political boundaries, such as by the name of a county, state, or country, whereas AVAs are defined by geographic boundaries that are very carefully defined. AVAs are formed through a federal process overseen by the Alcohol and Tobacco Tax and Trade Bureau (TTB).

History of AVAs

 The AVA system developed with the idea that place—including geography, soil, weather, and other environmental factors—can influence grapes as well as a wine’s characteristics. This is very much in sync with the French term terroir—which derives from the French word terre (literally meaning “land”)—which, in summary, is the understanding that environmental factors can distinguish one wine from another. Terroir is taken very seriously in France, such that the French have developed  a system called appellation d’origine controlee (AOC) through which the French grant geographic significance to certain wines based on their qualifications. Such qualifications mostly include the location in which the wine grapes were grown but may also include the types of grapes used, the harvesting techniques, production methods, and whether the wine was produced and bottled within the appellation (not an exhaustive list).  Often, the local level may be involved in deciding the rules and laws of the appellation.

The AVA system is somewhat different from the French AOC system in that it is very much the exception (rather than the norm) that an AVA mandate the types of grapes grown or the processes that must be carried out by a winery within the AVA in order to use that AVA on the label of a wine. The one exception is that federal, state, and/or local laws may mandate that a winery use a certain percentage of grapes grown in the AVA in order to boast that AVA on the wine’s label.

Napa Valley is probably the most recognized AVA. It was formed in 1981 and was America’s second AVA (the first to be recognized in California). Napa Valley is located within Napa County, California. Today, Napa Valley houses sixteen sub-AVAs all located inside of the Napa Valley AVA. For example, Napa Valley is home to Calistoga, Coombsville, Oakville, Rutherford, St. Helena, and Stags Leap District (not an exhaustive list). 

AVAs range significantly in size and some AVAs cover multiple counties while other AVAs cover multiple states. Some AVAs have other AVAs within them (generally referred to as sub-AVAs). Still, some AVAs are smaller than counties. Boundaries will depend a lot on subclimates that are typical of the AVA as well as geography, which help to break up and define boundaries of AVAs.

As of March 30, 2106, the TTB reports that 234 AVAs exist in the U.S. with the greatest number (138) located in California. See Alcohol and Tobacco Tax and Trade Bureau: Appellation: US by AVA. A full list of the established AVAs is found in 27 CFR Part 9, Subpart C. Subpart C fully details the name of the AVA, the approves maps for the AVA, and the boundaries of the AVA.

How are AVAs Formed?

Today, AVAs are formed by submitting a petition to TTB. According to 27 CFR § 9.11, anyone can submit a petition to TTB to establish a new AVA, but petitions are most commonly formed and filed by an interested industry member (such as a vineyard, winery, local vintners association, trade group, etc.). Petitions can also be submitted to change the boundary of an AVA or change the name of an AVA. The submission of a petition is supposed to provide TTB with sufficient information to support the establishment of a new AVA.

AVA petitions for the establishment of a new AVA must include the following information:

  1. Name evidence (such as name usage, source of name, and name evidence);
  2. Boundary evidence (must explain in detail the basis for defining the boundary of the proposed AVA);
  3. Distinguishing features (such as climate, geography, soils, physical features, and elevation); and
  4. Maps and boundary description (an appropriate scale the U.S.G.S. map(s) showing the location of the proposed AVA).

Once the petition is received by TTB, an appropriate TTB officer will perform an initial review of the petition to determine whether or not the petition is perfected. If the petition is not perfected, the officer will return the petition to the petitioner without prejudice for resubmission in perfected form. If the petition is perfected, TTB will decide whether or not to proceed with rulemaking. If TTB does proceed with rulemaking, the agency will advise the petitioner of the date of the rulemaking; if TTB does not proceed with rulemaking, the agency will provide the petitioner with an explanation.

If TTB determines that rulemaking is appropriate, TTB prepares and publishes a notice of proposed rulemaking in the Federal Register to solicit public comments on the proposed AVA. The notice and comment process is typical of TTB (and other governmental agencies) and is used by the agency in many instances in order to obtain industry comments on issues that impact the industry at large. After the comment period closes, TTB reviews the comments received and any other relevant information.

Next, TTB takes one of the following actions:

  1. Prepares a final rule for publication in the Federal Register establishing the proposed AVA;
  2. Prepares a notice for publication in the Federal Register that withdraws the proposal and provides explanations (one of which must be the following: (1) the extent of viticulture within the proposed AVA is not sufficient to constitute a grape-growing region; (2) the name, boundary, or distinguishing features evidence is not sufficient; or (3) the proposed AVA would be inconsistent with the Federal Alcohol Administration Act, another Federal statute or regulation, or contrary to public interest);
  3. Prepares a new notice of proposed rulemaking for publication in the Federal Register that describes a modified proposed AVA, for public comment; or
  4. Pursues another option as allowed by law.

While forming an AVA is subject to many regulations, the importance of a place or name on a wine label can be significant. The use of an AVA can help a consumer connect more with the wine and develop a strong identification of place. While the AVA system developed based off of the European appellation system, it has many differences that are unique to the American wine industry and the growing and winemaking processes of American vintners and winemakers. Nonetheless, the AVA system maintains a similar goal: to protect and promote place names and origins and demand truth in labeling.

For more information on wine or alcohol law, AVAs, or TTB matters, please contact Lindsey Zahn.

DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.

 

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