U.S. Government Puts Hold on Approving New Appellations

Federal agency that oversees the wine industry has seen a surge in proposals for new American Viticultural Areas, many of them controversial

Lynn Alley
Posted: August 21, 2007

The U.S. Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB), the federal agency that regulates the wine industry, is considering redefining some of the criteria for establishing American Viticultural Areas (AVAs)—particularly subappellations within major winegrowing regions such as Napa Valley. The TTB has placed a hold on the approval of all petitions for the creation of sub-AVAs as well as on petitions that might conflict with the interests of currently established brand names.

"We've seen an increase in the number of petitions for AVAs within AVAs, and even AVAs within AVAs within AVAs," said Art Resnick, spokesperson for the TTB. "Based on those concerns, we are delaying approval of AVAs that fall within those areas of concern while we review the approval process."

While some industry members claim the new delineations will aid consumers in making more informed wine purchases, others argue that an increased number of AVAs will only serve to confuse consumers and undermine the value of marketing a wine as being from a certain place. That's one of the arguments surrounding a proposal to carve up the Paso Robles AVA in California. But there are additional problems as well.

"As written, the current regulations do not address conflicts between brand names and AVAs," said Resnick. For example, controversy recently arose following a petition to establish a new Calistoga sub-AVA in the Napa Valley. But two wineries—Calistoga Cellars and Calistoga Estate Vineyards—produce wines using grapes from outside the proposed Calistoga region. Both complained that establishing a Calistoga AVA would interfere with their continued ability to market their brands. Their concern is valid given that Bronco Wine Co., which makes the Charles Shaw wines, was forced to stop making its Napa Ridge, Napa Creek and Rutherford Vintners brands unless the wines contained grapes from those AVAs.

Such complaints are nothing new to the TTB. In the late 1990s, the agency was sued by Viña Santa Rita, a publicly traded Chilean winery, which claimed that TTB's approval of the Santa Rita Hills AVA in Santa Barbara County, Calif., infringed upon the trademarked Viña Santa Rita label. The ensuing court battle, in which the TTB was defended by the Justice Department and prevailed, was long and costly.

Though the move to suspend further such applications has been met with widespread complaints from wine industry members and even members of the Congressional Wine Caucus, headed by Rep. Mike Thompson (D-Calif.), the TTB is standing firm in its decision to take a closer look at redefining the criteria for granting AVA approval.

"Our goal is to protect the integrity of the AVA system," said Resnick.

Resnick said that there are only 23 AVA petitions currently in the works, 15 of which are affected by the freeze. He went on to say that the TTB is currently moving ahead rapidly to resolve any questions concerning the approval process, and the agency will continue to process petitions that are not deemed controversial.