I have been around the block more than a few times with the establishment of American Viticultural Areas. Beginning in 1983, I have written successful petitions to establish five areas and amend three others, and advised petitioners regarding several proposed areas. I have also studied the evidence for many existing areas, and have watched the continuing developments in this field with great interest.
The next two Compliance Watch columns, starting with this issue, are devoted to sharing the fruits of nearly two decades experience with the controversial and fascinating field of viticultural areas.
I am a big believer in the importance of appellation —the bit of information on a wine label that discloses where the grapes were grown. For winegrowers and vintners in America, marketing by appellation has many advantages in today's global marketplace.
I realized just how important appellation is several years ago, while attending a meeting of grape growers as a panelist. The importation of inexpensive bulk foreign wine had became popular, and much of the discussion revolved around the growers' legitimate concerns about their offshore competition. It became clear that only one thing would ultimately level the playing field: an emphasis on "location, location, location"!
The importance of appellation
It is more than a simple case of a grower's "dream come true" when a wine lover searches the shelf for a wine from Carneros or Willamette Valley. Nowadays, a consumer can choose among wines of the same varietal hailing from many parts of the world —and many of the foreign wines are less expensive than their domestic counterparts. Growers from low yielding premium areas, and the wineries who buy from them, are at a competitive disadvantage unless appellation labeling tells a knowledgeable consumer that a more expensive wine may be a better value.
Many of the wine drinkers in the world, and certainly the most sophisticated ones, are accustomed to selecting wines by their origin. Under the European system of labeling, wines have traditionally been described not by varietal but by place of origin. Even today, when varietal labeling has become more common in Europe, place of origin still takes precedence in importance.
Judging by the industry's ongoing interest in establishing and fine tuning American Viticultural Areas (AVAs), it appears that many share my conviction about the importance of appellation. Although the process of defining AVAs has been going on for twenty years now, the pace has not slacked off. At last count, there were 137 existing AVAs, and ATF was considering petitions to establish or amend no fewer than 12 viticultural areas.
Various types of appellations
There are several ways to label appellation of origin. It can be indicated by the name of a country, a state, a county, or, under certain conditions, multiple states or counties. All these choices involve politically defined regions.
To use a name other than a political subdivision as an appellation of origin on domestic wine, it must be approved by ATF as an American Viticultural Area. Although the process can be difficult and very time consuming, the promotional and informational value of a new AVA makes the effort and waiting all worthwhile. Not only does the AVA open up new marketing opportunities, but the prestigious term "estate bottled" may only be used on wines bearing an AVA as the appellation of origin.
The basics of establishing an AVA:
The process of establishing an AVA starts by submitting a petition to ATF which includes the following information:
- Evidence that the proposed area is known, either locally or nationally, by the name specified in the petition. Often, historical references are cited, but current evidence is also persuasive.
- Evidence that the boundaries of the proposed place name coincide with the proposed boundaries of the viticultural area.
- Geographic and viticultural evidence that distinguishes the proposed area from the surrounding area. Normally this would include climate, soils, geology, hydrology (watershed boundaries) and topography.
- A description of the boundaries using USGS maps.
The approval process normally takes at least a year and has been known to take two or three years —or more. The shortest approval time I am aware of was an amendment to the Chalk Hill viticultural area several years ago which sailed through in 9 months, partly due to unanimous support from growers and wineries in the area.
Factors that determine the length of the approval process include:
- the thoroughness of the evidence presented in the petition
- the presence or absence of controversy and conflicting evidence
- the other workload of the specialist involved, and of ATF's legal department, which gets heavily involved in the process at various stages
- higher priority interruptions in workload, such as letters from Congress people, which take precedence over all other tasks at ATF
ATF's approval process
Each AVA petition travels a long a winding road to approval, including the following steps:
- When ATF receives a petition, it starts by acknowledging receipt within a month and assigning it to a specialist.
- The specialist reviews the petition to make sure the evidence is sufficient. If not, the petitioner is given an opportunity to strengthen the petition with more information.
- Once the evidence is deemed sufficient, the specialist drafts a Notice of Proposed Rulemaking (NPRM) to invite public comment.
- Before the NPRM is published, it goes through several levels of review.
- In cases where evidence is in question, an inspector in the field may be assigned to investigate the petition before publication.
- When the NPRM is published, it specifies a public comment period, usually 45 to 90 days. Although ATF is not legally obliged to consider comments arriving after the close of the comment period, as a practical matter they do take these into consideration.
- If sufficient controversy arises during the review or comment period, a hearing may be scheduled.
- After the comment period and hearing, if any, are over, a final rule is drafted.
- The draft final rule goes through four levels of review, passing through as many as 14 offices including ATF's legal department and the Treasury Department, before being published. It can take another 3 to 5 months to get to the Federal Register for publication.
- Generally the final rule specifies an effective date 30 days following publication.
There is also an option for what is called "negotiated rulemaking." If this path is chosen by ATF, a meeting is held in the local area, with all interested parties invited, before the NPRM is published. ATF can use this method if it believes that it would streamline the process and resolve differences of opinion or data more effectively than the traditional procedure. However, I am not aware that this process has ever been used on a viticultural area petition.
Working with an imperfect system
The establishment of AVAs has always been a somewhat controversial subject, with vintners differing —sometimes strongly —about where boundary lines belong, about how the approval of a proposed area may affect existing brand names in the industry, and even about how many AVAs the system can support. There are always voices in the crowd saying, "We have enough viticultural areas already. Any more would be confusing." Proponents of that view have been asserting it since the early 80's! Recently, AVA controversy achieved a new milestone: the California Wine Institute broke with its own tradition of impartiality by coming out against the proposed California Coast Viticultural Area.
There is plenty of room for controversy in the process. No human system is perfect, and the AVA approval process isn't even close. The petitioners and the regulators face several challenges:
- It can be difficult to find actual empirical data to support an area that is intuitively understood or popularly accepted to be unique. This was especially true in the early days of AVAs, when many areas were newly converted to winegrapes. Today more is known about existing vineyards, and more soils and weather consideration often goes into planning new plantings. But it still can be challenging to find enough of the right kind of information to support a petition.
- At the same time, it can be relatively easy for opponents of a proposed area to find at least some data, or to present some subjective testimony, that seems to refute the petitioner's suggestion.
- Previously approved areas are treated like legal precedents, even when the evidence originally presented for their approval may have been weaker or less objective than the kind of data currently required for new AVAs.
- The boundaries suggested by the historical usage of a proposed name may be different than the boundaries supported by pure scientific fact. When historical or current name evidence contradicts geographical evidence, ATF will sometimes honor history, and sometimes follow science. Generally, if the petition makes a good case for one over the other, ATF will agree. This makes sense, especially where there is no controversy. Years later, however, petitioners for a new area adjacent to or enclosed within such an AVA may feel the rigorousness of their geographic arguments is hampered by the precedent status of the existing boundaries.
- When the first AVAs were established, ATF occasionally allowed partial overlaps (AVAs which are only partly contained within other AVAs). Now, the Bureau's policy is to disallow partial overlaps, unless the evidence for them is extremely strong. This often constrains present day petitioners to either work within existing boundaries or change them concurrent with the establishment of a new sub appellation, if current evidence supports a different, more precise boundary that extends beyond the previously approved line.
In my next column, I will explore the AVA creation process and its challenges in more depth, using past and current examples.