The TTB's Reevaluation of its AVA Approval Process: a Retreat from the "Common Good"?

[Editor's Note: with the publication in late November of the TTB's proposed new rules for AVA approval, the questions under debate have been clarified.  I have posted an updated analysis of the new rules, as well as a discussion of some of the responses of local and regional organizations, in the December 6th blog post The TTB's new AVA Rules: A Well-Meaning Step in the Wrong Direction.]

Recently, the TTB (Tax and Trade Bureau), which among other responsibilities oversees the applications for new AVAs (American Viticultural Areas) announced that they would be suspending consideration of any AVA petitions which either nest inside of an existing AVA or could conflict with an existing brand name.  This has effectively shut down the consideration of all new AVA petitions within the United States, including the 11 petitions to subdivide the 600,000 acres within the Paso Robles AVA (map below).

I was asked recently by a writer visiting the area what I thought of the TTB's decision.  I thought that the question deserved a little more thorough consideration, and began this post.  Shortly thereafter, a terrific article by Corie Brown was published in the Los Angeles Times addressing the issue.  I wanted to take a little more time to incorporate the new information she unearthed and think about this issue from a larger perspective.  My feeling is that this provides a great opportunity to think about what the purpose is of the TTB's regulation of viticultural areas, and to address why they might be looking at changing their regulations now.

In essence, viticultural areas were created to provide specificity of origin when existing place names (cities, counties, or states) were either too large or too imprecise.  To use the Paso Robles AVA as an example (as I'm most familiar with its specifics), the AVA includes portions of three towns: Atascadero, Templeton, and Paso Robles itself.  These all share characteristics of climate and geography that make them distinctive from other areas outside the AVA.  Yet, within the AVA there is still enormous variation in rainfall (from 7 inches to 45 inches, depending on where you are), temperature (as much as 10 degrees on any given day), elevation (from 600 to 2200 feet), topography (high plateau to the far east, alluvial riverbeds in the center, and foothills to the west) and soils (over 40 soil types have been identified within the appellation).

The goal of creating AVAs (within the Paso Robles region and elsewhere) is to help consumers understand what characteristics a wine will inherit from where its grapes are grown.  In order to make these AVAs meaningful, the TTB requires that any brand incorporating an AVA name use grapes grown in that AVA.  When the TTB began recognizing AVAs in 1986, and enforcing the directive that wineries that incorporated a place name into their brand name had to use grapes from that place in their bottlings, they identified that they had created a problem for some existing brands.  These brands were grandfathered in and are allowed to make wines from any California AVA, as long as the wine's AVA is clearly marked on the label.  This seems a reasonable compromise to the competing goals of protecting the meaningfulness of geographic identifiers and avoiding harm to brands created before the rules were made.

However, the rules are different for brands created since 1986.  The regulations expressly prohibit any winery from using an approved AVA as their brand name unless they're using fruit from that AVA.  This is well known within the industry, and is an important consideration for any winery in choosing its name.  If, for example, you're going to call yourself Paso Robles Winery, you know that this will preclude you from ever making a "Central Coast" or a "California" (or even a "Napa") AVA wine.  And, this is important even if you're using a place name that has not yet been made an AVA (such as Calistoga). 

In the Los Angeles Times article, Corie Brown interviews the proprietors of Calistoga Cellars, who are in a fight with the proposers of a "Calistoga" AVA.  They created the brand in 1999, but make wines under the Napa Valley AVA, incorporating some fruit from within the proposed Calistoga AVA but buying the majority of their fruit from elsewhere in Napa Valley.  They filed a letter of objection to the Calistoga AVA proposal, claiming that it would harm their business to have to find new sources of fruit.  I found the most fascinating insight into their thought process from the following quote from owner Roger Louer: "I assumed Calistoga Cellars would be grandfathered just as those wineries were in 1986".

It seems incredible that the federal government should be in the business of protecting speculative business owners who begin a project with the expectation of an exemption from the rules on the books, yet this is what has happened.  The TTB has suspended consideration of any new AVA that "would affect an established brand".

Every exception to the rules requiring geographical specificity undercuts the foundations of American AVAs.  It is alarming to me that the TTB seems to be indicating that it is planning a retreat from the rules that it has made for itself and for its wineries to follow.  What's more, it is doing so while several proposals developed under the old rules are in mid-approval.  In a letter explaining their decision, they state that what they're going to do is "take a balanced approach to its administration".  This sounds alarmingly to me like what is going on elsewhere in the federal government, where agencies are being directed to support the interests of individual businesses over their statutory responsibility to promote the common good.

What do all of you think of this?  Am I overreacting?

Comments

[Thomas]

One possible way the TTB could have handled this--and still can--is to add a word in front or following existing brand names that later gain AVA status.

Think Petit Chablis. One could have a Minor Paso Robles and a Paso Robles AVA, etc.

[Gary Barlettano]

My knee-jerk reaction is to suggest that the TTB is acting politically in what it assumes to be a pro-business gesture. Not allowing businesses to do things is "restraint of trade" and definitely not Bush-like. As always, it's all about the money since governmental inertia would probably leave the governmental at rest.

[Jason Haas]

Thanks, Gary.

I have trouble divorcing this decision with my disappointment across lots of levels in this current administration. But, I feel that in a number of agencies, the government is being told to favor business interests when in doubt about how to apply their statutory mission. This TTB ruling seems to follow this pattern (though I should stress that I have no evidence that this is directed from above).

I didn't really touch on (but am also concerned about) the TTB's assertion that it is suspending approval of any AVA within another AVA. This ignores the hundreds of years of tradition in Europe, where appellations of increasing quality are nested within each other. Sure, this can confuse some consumers, but it's an accurate description of conditions. Yes, all of Burgundy shares certain characteristics, but there is also something worth celebrating (or at least identifying) about Puligny Montrachet, or Clos de la Roche.

Anyway, thanks for the comment.
-Jason

[Jason Haas]

Thomas, the TTB does allow this, sort of, with the word "District". So, Stag's Leap District, etc etc. But, they still have the judgment call right to decide that a winery's name is too close to the AVA's name to use non-appellation grapes without misleading the consumer.

All of this is pretty far afield from our worries; we don't use grapes from anywhere outside the boundaries of our 120-acre vineyard, let alone outside the boundaries of the AVA. But, it's still frustrating to see the work (and time) that the members of the Paso Robles AVA put into coming up with reasonable, scientifically-based divisions within the AVA be put on hold because the TTB is unwilling to take a stand on one proposal to subdivide the AVA as opposed to another. I don't buy the argument that subdivisions (nested within the Paso Robles AVA) are too potentially confusing. If there's not scientific justification for the AVA, the TTB can (and should!) refuse the application. But, beyond that, let the market decide!

Thanks for the comment.
-Jason

[Harry Haff]

Hi Jason,

I think I may have been the writer asking about the TTB rule. I saw your comments on Wines and Vines and could not agree more. It is simple: The grapes either come from "some place" or not.If you are born in Vermont, you are a Vermonter. I posted a comment on the .gov web page. But the above writer hit the nail on the head: follow the money. This is what will determine the final rule.
Sad to say, this is symptomatic of the lack of business integrity prevalent today.

Thanks.

Harry Haff

[Jason Haas]

Hi Harry,

I hadn't seen the Wines&Vines piece until you mentioned it (and I looked at the referrers to the blog and saw the blip) but I'm actually heartened after reading it. It's good to see the adamant opposition from places like Napa.

My dad had a good proposal that he's submitted as a comment to the TTB. I'll post details of it here over the next day or so.

All the best,
-Jason

[myspace design]

Interesting read. Nice blog you got here.