In its Notice of Proposed Rulemaking No. 160 (NPRM 160), the TTB proposes amendments to existing appellation of origin rules that would close a loophole that has allowed certain wineries to produce wine labeled with the name of an appellation of origin, including protected American Viticultural Area (AVA) names, even though the wines did not meet the normally stringent requirements for appellation labeling.

AVA-labeled wines sold in interstate commerce must contain no less than 85 percent of wine derived from grapes grown in the AVA, and the wine needs to be fully finished in the state of origin.[1] State legislatures adopt rules regarding wine production, composition and labeling to protect the quality of the product and promote their AVAs, which have always been incorporated into the federal rules for wines sold interstate. Under the current system, though, wineries that sell within their home state exclusively are able to apply for an exemption from the normal requirements for a Certificate of Label Approval (COLA) for use of an appellation name, and thus market wine that is not necessarily finished in the state where the appellation is located. In other words, a Texas winery could purchase grapes from Napa Valley, make wine in Texas, and so long as they only market the wine in Texas, they could label their Texas-made wine with Napa Valley AVA, without having to comply with the other production requirements imposed on Napa Valley winemakers.  The new proposed rule would eliminate this loophole, imposing the same standards for use of appellations in labeling, whether or not the wine is sold in interstate commerce.

The rule is also seen as a way to protect and incentivize states’ investment in promoting and regulating wine production within the state. Further, proponents argue that closing the loophole strengthens the case for enforcing AVA regulations internationally, where countries with little or no regulation of wine production and labeling could undermine the integrity of U.S. AVAs by competing in the global market by attaching AVA names to low quality wine. While there is certainly opposition to the proposed changes, many in the industry see this as an overdue acknowledgement of the value in the AVA system, and the importance of protecting it.

[1]  27 C.F.R. §4.25(e)(3)(iv).


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