Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81843 

included in the escrow payment disclosure 

such as property taxes and homeowner’s 

insurance generally are not finance charges 

under § 226.4 and, therefore, do not affect 

other disclosures, including the finance 

charge and annual percentage rate. 

* * * * * 

18(s)(7) Definitions. 

1. Negative amortization loans. Under 

§ 226.18(s)(7)(v), a negative amortization loan 

is one that requires only a minimum periodic 

payment that covers only a portion of the 

accrued interest, resulting in negative 

amortization. For such a loan, 

§ 226.18(s)(4)(iii) requires creditors to 

disclose the fully amortizing periodic 

payment for each interest rate disclosed 

under § 226.18(s)(2)(ii), in addition to the 

minimum periodic payment, regardless of 

whether the legal obligation explicitly recites 

that the consumer may make the fully 

amortizing payment. Some loan types that 

result in negative amortization do not meet 

the definition of negative amortization loan 

for purposes of § 226.18(s). These include, for 

example, loans requiring level, amortizing 

payments but having a payment schedule 

containing gaps during which interest 

accrues and is added to the principal balance 

before regular, amortizing payments begin (or 

resume). For example, ‘‘seasonal income’’ 

loans may provide for amortizing payments 

during nine months of the year and no 

payments for the other three months; the 

required minimum payments (when made) 

are amortizing payments, thus such loans are 

not negative amortization loans under 

§ 226.18(s)(7)(v). An adjustable-rate loan that 

has fixed periodic payments that do not 

adjust when the interest rate adjusts also 

would not be disclosed as a negative 

amortization loan under § 226.18(s). For 

example, assume the initial rate is 4%, for 

which the fully amortizing payment is $1500. 

Under the terms of the legal obligation, the 

consumer will make $1500 monthly 

payments even if the interest rate increases, 

and the additional interest is capitalized. The 

possibility (but not certainty) of negative 

amortization occurring after consummation 

does not make this transaction a negative 

amortization loan for purposes of § 226.18(s). 

Loans that do not meet the definition of 

negative amortization loan, even if they may 

have negative amortization, are amortizing 

loans and are disclosed under 

§§ 226.18(s)(2)(i) and 226.18(s)(3). 

* * * * * 

Appendix D—Multiple Advance 

Construction Loans 

* * * * * 

6. Relation to § 226.18(s). A creditor must 

disclose an interest rate and payment 

summary table for transactions secured by 

real property or a dwelling, pursuant to 

§ 226.18(s), instead of the general payment 

schedule required by § 226.18(g). 

Accordingly, home construction loans that 

are secured by real property or a dwelling are 

subject to § 226.18(s) and not § 226.18(g). 

Under § 226.176(c)(6)(ii), when a multipleadvance construction loan may be 

permanently financed by the same creditor, 

the construction phase and the permanent 

phase may be treated as either one 

transaction or more than one transaction. 

i. If a creditor uses Appendix D and elects 

pursuant to § 226.17(c)(6)(ii) to disclose the 

construction and permanent phases as 

separate transactions, the construction phase 

must be disclosed according to the rules in 

§ 226.18(s). Under § 226.18(s), the creditor 

must disclose the applicable interest rates 

and corresponding periodic payments during 

the construction phase in an interest rate and 

payment summary table. The provision in 

Appendix D, Part I.A.3, which allows the 

creditor to omit the number and amounts of 

any interest payments ‘‘in disclosing the 

payment schedule under § 226.18(g)’’ does 

not apply because the transaction is governed 

by § 226.18(s) rather than § 226.18(g). Also, 

because the construction phase is being 

disclosed as a separate transaction and its 

terms do not repay all principal, the creditor 

must disclose a balloon payment, pursuant to 

§ 226.18(s)(5). 

ii. On the other hand, if the creditor elects 

to disclose the construction and permanent 

phases as a single transaction, the 

construction phase must be disclosed 

pursuant to Appendix D, Part II.C, which 

provides that the creditor shall disclose the 

repayment schedule without reflecting the 

number or amounts of payments of interest 

only that are made during the construction 

phase. Appendix D also provides, however, 

that creditors must disclose (outside of the 

table) the fact that interest payments must be 

made and the timing of such payments. The 

rate and payment summary table disclosed 

under § 226.18(s) must reflect only the 

permanent phase of the transaction. 

Therefore, in determining the rates and 

payments that must be disclosed in the 

columns of the table, creditors should apply 

the requirements of § 226.18(s) to the 

permanent phase only. For example, under 

§ 226.18(s)(2)(i)(A) or § 226.18(s)(2)(i)(B)(1), 

as applicable, the creditor should disclose 

the interest rate corresponding to the first 

installment due under the permanent phase 

and not any rate applicable during the 

construction phase. 

* * * * * 

Appendices G and H—Open-End and 

Closed-End Model Forms and Clauses 

1. Permissible changes. Although use of the 

model forms and clauses is not required, 

creditors using them properly will be deemed 

to be in compliance with the regulation with 

regard to those disclosures. Creditors may 

make certain changes in the format or content 

of the forms and clauses and may delete any 

disclosures that are inapplicable to a 

transaction or a plan without losing the act’s 

protection from liability, except formatting 

changes may not be made to model forms and 

samples in H–18, H–19, H–20, H–21, H–22, 

H–23, G–2(A), G–3(A), G–4(A), G–10(A)–(E), 

G–17(A)–(D), G–18(A) (except as permitted 

pursuant to § 226.7(b)(2)), G–18(B)–(C), G–19, 

G–20, and G–21, or to the model clauses in 

H–4(E), H–4(F), H–4(G), and H–4(H). 

Creditors may modify the heading of the 

second column shown in Model Clause H– 

4(H) to read ‘‘first adjustment’’ or ‘‘first 

increase,’’ as applicable, pursuant to 

§ 226.18(s)(2)(i)(C). The rearrangement of the 

model forms and clauses may not be so 

extensive as to affect the substance, clarity, 

or meaningful sequence of the forms and 

clauses. Creditors making revisions with that 

effect will lose their protection from civil 

liability. Except as otherwise specifically 

required, acceptable changes include, for 

example: 

i. Using the first person, instead of the 

second person, in referring to the borrower. 

ii. Using ‘‘borrower’’ and ‘‘creditor’’ instead 

of pronouns. 

iii. Rearranging the sequences of the 

disclosures. 

iv. Not using bold type for headings. 

v. Incorporating certain state ‘‘plain 

English’’ requirements. 

vi. Deleting inapplicable disclosures by 

whiting out, blocking out, filling in ‘‘N/A’’ 

(not applicable) or ‘‘0,’’ crossing out, leaving 

blanks, checking a box for applicable items, 

or circling applicable items. (This should 

permit use of multipurpose standard forms.) 

vii. Using a vertical, rather than a 

horizontal, format for the boxes in the closedend disclosures. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, December 21, 2010. 

Certain amendments to the Official Staff 

Commentary were approved by the Director 

of the Division of Consumer and Community 

Affairs, acting under authority delegated by 

the Board. 

Jennifer J. Johnson, 

Secretary of the Board. 

[FR Doc. 2010–32534 Filed 12–28–10; 8:45 am] 

BILLING CODE 6210–01–P 

SOCIAL SECURITY ADMINISTRATION 

20 CFR Part 418 

[Docket No. SSA–2010–0033] 

RIN 0960–AH24 

Amendments to Regulations 

Regarding Eligibility for a Medicare 

Prescription Drug Subsidy 

AGENCY: Social Security Administration. 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: We are revising our 

regulations to incorporate changes to the 

Medicare prescription drug coverage 

low-income subsidy (Extra Help) 

program made by the Affordable Care 

Act which was enacted on March 23, 

2010. Under our interpretation of 

section 3304 of the Affordable Care Act 

and this interim final rule, if the death 

of a beneficiary’s spouse would decrease 

or eliminate the subsidy provided by the 

Extra Help program, we will, based on 

a determination, or redetermination, 

extend the effective period of eligibility 

for the most recent determination or 

redetermination until 1 year after the 


srobinson on DSKHWCL6B1PROD with RULES
81844 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

1Public Law 110–275. 2Public Law 111–148 § 3304. 

month following the month we are 

notified of the death of the spouse. 

These regulatory changes will allow us 

to implement this provision of the 

Affordable Care Act when it goes into 

effect on January 1, 2011. We are also 

revising our regulations to incorporate 

changes made by the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA), which 

affect the way we account for income 

and resources when determining 

eligibility for the Extra Help program. 

The statute provides that we no longer 

count as a resource the value of any life 

insurance policy for Extra Help 

applications filed, or redeterminations 

that are effective, on or after January 1, 

2010. In addition, we will no longer 

count as income the help a beneficiary 

receives when someone else provides 

food and shelter, or pays household 

bills for food, mortgage, rent, electricity, 

water, property taxes, or heating fuel or 

gas. These revisions will update our 

rules to reflect these statutory changes. 

DATES: Effective Date: This interim final 

rule will be effective January 1, 2011. 

Comment Date: To ensure that your 

comments are considered, we must 

receive them no later than February 28, 

2011. 

ADDRESSES: You may submit comments 

by any one of three methods—Internet, 

fax, or mail. Do not submit the same 

comments multiple times or by more 

than one method. Regardless of which 

method you choose, please state that 

your comments refer to Docket No. 

SSA–2010–0033 so that we may 

associate your comments with the 

correct regulation. 

Caution: You should be careful to 

include in your comments only 

information that you wish to make 

publicly available. We strongly urge you 

not to include in your comments any 

personal information, such as Social 

Security numbers or medical 

information. 

1. Internet: We strongly recommend 

that you submit your comments via the 

Internet. Please visit the Federal 

eRulemaking portal at http:// 

www.regulations.gov. Use the Search 

function to find docket number SSA– 

2010–0033. The system will issue a 

tracking number to confirm your 

submission. You will not be able to 

view your comment immediately 

because we must post each comment 

manually. It may take up to a week for 

your comment to be viewable. 

2. Fax: Fax comments to (410) 966– 

2830. 

3. Mail: Mail your comments to the 

Office of Regulations, Social Security 

Administration, 107 Altmeyer Building, 

6401 Security Boulevard, Baltimore, 

Maryland 21235–6401. 

Comments are available for public 

viewing on the Federal eRulemaking 

portal at http://www.regulations.gov or 

in person, during regular business 

hours, by arranging with the contact 

person identified below. 

FOR FURTHER INFORMATION CONTACT: 

Craig Streett, Office of Income Security 

Programs, Social Security 

Administration, 2–R–24 Operations 

Building, 6401 Security Boulevard, 

Baltimore, MD 21235–6401, (410) 965– 

9793. For information on eligibility or 

filing for benefits, call our national tollfree number, 1–800–772–1213 or TTY 

1–800–325–0778, or visit our Internet 

site, Social Security Online, at http:// 

www.socialsecurity.gov. 

SUPPLEMENTARY INFORMATION: 

Electronic Version 

The electronic file of this document is 

available on the date of publication in 

the Federal Register at http:// 

www.gpoaccess.gov/fr/index.html. 

Background 

Medicare prescription drug coverage 

is a voluntary program that covers 

various prescription drugs. The 

regulations and requirements for the 

program are codified in 42 CFR Part 

423. The Centers for Medicare & 

Medicaid Services (CMS) promulgates 

rules and regulations concerning the 

Medicare program. Anyone who meets 

the requirements in 42 CFR 423.30(a) 

can enroll in Medicare prescription drug 

coverage. Medicare prescription drug 

coverage beneficiaries are responsible 

for deductibles, cost-sharing, and 

monthly premiums towards the cost of 

covered prescriptions. Costs vary by 

plan. 

Beneficiaries with Medicare 

prescription drug coverage who have 

limited income and resources may 

qualify for Extra Help with their 

monthly premiums, deductibles, and 

cost-sharing for Medicare prescription 

drug coverage. To qualify for Extra Help 

a Medicare beneficiary must reside in 

one of the 50 states or the District of 

Columbia and must have resources and 

income within specific limits. 

Congress passed MIPPA in July of 

2008.1 Section 116 of MIPPA exempts 

certain items from income and resources 

determinations of Extra Help eligibility 

for applications filed on or after January 

1, 2010. We also apply these exemptions 

to redeterminations that become 

effective on or after January 1, 2010. The 

items exempted under section 116 are 

the cash surrender value of life 

insurance and in-kind support and 

maintenance. To implement these 

requirements of MIPPA, we issued 

guidance in August 2009 and 

discontinued counting these exempted 

items for applications and 

redeterminations in accordance with the 

requirements of the statute. 

Accordingly, we no longer count as 

income the help a beneficiary receives 

when someone else provides food and 

shelter, or pays for food, mortgage, rent, 

heating fuel or gas, electricity, water, or 

property taxes. To reflect these statutory 

exemptions, we have revised sections 

418.3335(b) and 418.3350 and deleted 

section 418.3345 of our regulations. 

In March 2010, Congress passed the 

Affordable Care Act, which extends the 

effective date of a determination or 

redetermination of an Extra Help 

subsidy due to the death of a spouse.2

Currently, any adjustment in the 

amount of Extra Help the beneficiary 

receives is effective the month after the 

month in which we are notified of the 

death of a spouse. In some cases, the 

death of a spouse could result in a 

decrease in the amount or loss of Extra 

Help eligibility for the beneficiary. 

Effective January 1, 2011, if the death 

of the spouse would decrease or 

eliminate the subsidy provided by the 

Extra Help program, we will extend the 

effective period for a determination or 

redetermination until 1 year after the 

date on which it would otherwise cease 

to be effective—that is, the month after 

the month we are notified of the death 

of the spouse. In order to reflect the 

changes made by the Affordable Care 

Act, we have revised sections 418.3120 

and 418.3123 of our regulations. 

Our current Extra Help rules at 

418.3350(b) state that we do not count 

as income the unearned income 

described in sections 416.1124(b), (c)(1) 

through (c)(12), and (c)(14) through 

(c)(21). Our current rule omits a 

reference to paragraph 416.1124(c)(22), 

which we added after we published 

section 418.3350 in December 2005. We 

are updating the reference in section 

418.3350 to correct this omission. This 

is a technical change only and does not 

affect the substance of our rules. 

Clarity of These Rules 

Executive Order 12866 requires each 

agency to write all rules in plain 

language. In addition to your 

substantive comments on this interim 

final rule, we invite your comments on 

how to make rules easier to understand. 

For example: 


srobinson on DSKHWCL6B1PROD with RULES
Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 81845 

3 5 U.S.C. 553(b)(B). 4See 5 U.S.C. 553(d)(3). 

• Would more, but shorter, sections 

be better? 

• Are the requirements in the rule 

clearly stated? 

• Have we organized the material to 

suit your needs? 

• Could we improve clarity by adding 

tables, lists, or diagrams? 

• What else could we do to make the 

rule easier to understand? 

• Does the rule contain technical 

language or jargon that is not clear? 

• Would a different format make the 

rule easier to understand, e.g. grouping 

and order of sections, use of headings, 

paragraphing? 

When will we start to use these rules? 

We will start to use this rule on the 

effective date shown under DATES 

earlier in this preamble. 

We are also inviting public comment 

on the changes made by this rule. We 

will consider any relevant comments we 

receive. We will publish a final rule to 

respond to those comments and to make 

any appropriate changes. 

Regulatory Procedures 

We follow the Administrative 

Procedure Act (APA) rulemaking 

procedures specified in 5 U.S.C. 553 

when we develop regulations. 

Generally, the APA requires that an 

agency provide prior notice and 

opportunity for public comment before 

issuing a final rule. The APA provides 

exceptions to its notice and public 

comment procedures when an agency 

finds good cause for dispensing with 

such procedures because they are 

impracticable, unnecessary, or contrary 

to the public interest, and the agency 

incorporates a statement of the finding 

and its reasons in the rule issued.3

We find good cause exists for 

proceeding without prior public notice 

and comment with respect to the new 

rules that exempt in-kind support and 

maintenance and the cash surrender 

value of life insurance policies from 

being counted as income or resources 

for determining Extra Help eligibility 

because the policies implemented with 

these rules are nondiscretionary under 

MIPPA. We implemented the policies 

on their effective date of January 1, 

2010. Accordingly, we find that prior 

public comment with respect to these 

changes is unnecessary. 

Beginning January 1, 2011, section 

3304 of the Affordable Care Act requires 

us to implement the provision that 

extends the effective date of a decrease 

or elimination of an Extra Help subsidy 

due to the death of a spouse. In light of 

the March 23, 2010, enactment date of 

the Affordable Care Act and our need to 

have authority in place to implement 

section 3304 beginning January 1, 2011, 

we do not have sufficient time to 

provide a notice and comment period 

before promulgating final rules in order 

to begin administering the provision in 

a timely manner. Therefore, we find that 

the use of the APA’s notice and 

comment rulemaking procedures would 

be impracticable in this situation. 

However, we are inviting public 

comment on the rule and will consider 

any relevant comments we receive 

within 60 days of the publication of the 

rule. 

In addition, for the reasons cited 

above, we also find good cause for 

dispensing with the 30-day delay in the 

effective date of this rule.4 For the 

reasons stated above, we find it is 

impracticable and unnecessary to delay 

the effective date of the changes we are 

making in this interim final rule. 

Accordingly, we are making this interim 

final rule effective January 1, 2011. 

Executive Order 12866 

We have consulted with the Office of 

Management and Budget (OMB) and 

determined that this interim final rule 

meets the criteria for a significant 

regulatory action under Executive Order 

12866. It was subject to OMB formal 

review. 

Regulatory Flexibility Act 

We certify that this interim final rule 

will not have a significant economic 

impact on a substantial number of small 

entities because it affects individuals 

only. Therefore, a regulatory flexibility 

analysis is not required under the 

Regulatory Flexibility Act, as amended. 

Paperwork Reduction Act 

These rules do not create any new or 

affect any existing collections and, 

therefore, do not require Office of 

Management and Budget approval 

under the Paperwork Reduction Act. 

(Catalog of Federal Domestic Assistance 

Program Nos. 93.770, Medicare Prescription 

Drug Coverage; 96.002 Social Security— 

Retirement Insurance.) 

List of Subjects in 20 CFR Part 418 

Administrative practice and 

procedure, Aged, Blind, Disability 

benefits, Public assistance programs, 

Reporting and recordkeeping 

requirements, Supplemental Security 

Income (SSI), Medicare subsidies. 

Dated: December 23, 2010. 

Michael J. Astrue, 

Commissioner of Social Security. 

■ For the reasons set forth in the 

preamble, we amend 20 CFR chapter III, 

part 418, subpart D as set forth below: 

PART 418—MEDICARE SUBSIDIES 

Subpart D—Medicare Part D Subsidies 

■ 1. The authority citation for subpart D 

of part 418 continues to read as follows: 

Authority: Secs. 702(a)(5) and 1860D–1, 

1860D–14 and –15 of the Social Security Act 

(42 U.S.C. 902(a)(5), 1395w–101, 1395w–114, 

and –115). 

■ 2. Amend § 418.3120 to revise 

paragraph (a)(3) and add paragraph 

(b)(4) to read as follows: 

§ 418.3120 What happens if your 

circumstances change after we determine 

you are eligible for a subsidy? 

(a) * * * 

(3) Subject to the provisions of 

paragraph (b)(4) of this section, your 

spouse, who lives with you, dies. 

* * * * * 

(b) * * * 

(4) If your spouse who lives with you 

dies, your spouse’s death may result in 

changes in your income or resources 

that could decrease or eliminate your 

subsidy. If we are informed of the death 

of your spouse and the death would 

cause a decrease in or elimination of 

your subsidy, we will notify you that we 

will not immediately change your 

subsidy because of your spouse’s death. 

We will defer your redetermination for 

1 year from the month following the 

month we are notified of the death of 

your spouse, unless we receive a report 

of another event specified in 

418.3120(a) that would affect your 

eligibility for a subsidy. 

■ 3. Amend § 418.3123 to add paragraph 

(e) to read as follows: 

§ 418.3123 When is a change in your 

subsidy effective? 

* * * * * 

(e) Special rule for widows and 

widowers.—If your spouse who lives 

with you dies and the changes in your 

income or resources resulting from your 

spouse’s death would decrease or 

eliminate your subsidy, we will defer 

your next redetermination for 1 year 

from the month following the month we 

are notified of the death of your spouse, 

unless we receive a report of another 

event specified in 418.3120(a) that 

would affect your eligibility for a 

subsidy. 

■ 4. Amend § 412.3335 to revise 

paragraph (b) to read as follows: 


srobinson on DSKHWCL6B1PROD with RULES
81846 Federal Register / Vol. 75, No. 249 / Wednesday, December 29, 2010 / Rules and Regulations 

§ 418.3335 What types of unearned income 

do we count? 

* * * * * 

(b) For claims filed before January 1, 

2010, and redeterminations that are 

effective before January 1, 2010, we also 

count in-kind support and maintenance 

as unearned income. In-kind support 

and maintenance is any food and shelter 

given to you or that you receive because 

someone else pays for it. 

§ 418.3345 [Removed] 

■ 5. Remove § 418.3345. 

■ 6. Revise § 418.3350 to read as 

follows: 

§ 418.3350 What types of unearned income 

do we not count? 

(a) For claims filed on or after January 

1, 2010 and redeterminations that are 

effective on or after January 1, 2010, we 

do not count as income in-kind support 

and maintenance. 

(b) While we must know the source 

and amount of all of your unearned 

income, we do not count all of it to 

determine your eligibility for the 

subsidy. We apply to your unearned 

income the exclusions in § 418.3350(c) 

in the order listed. However, we do not 

reduce your unearned income below 

zero, and we do not apply any unused 

unearned income exclusion to earned 

income except for the $20 per month 

exclusion described in § 416.1124(c)(12) 

of this chapter. For purposes of 

determining eligibility for a subsidy and 

whether you should receive a full or 

partial subsidy, we treat the $20 per 

month exclusion as a $240 per year 

exclusion. 

(c) We do not count as income the 

unearned income described in 

§ 416.1124(b) and (c) of this chapter, 

except for paragraph (c)(13). 

(d) We do not count as income any 

dividends or interest earned on 

resources you or your spouse owns. 

■ 7. Amend § 418.3405 to revise 

paragraph (a) to read as follows: 

§ 418.3405 What types of resources do we 

count? 

(a) We count liquid resources. Liquid 

resources are cash, financial accounts, 

and other financial instruments that can 

be converted to cash within 20 

workdays, excluding certain nonworkdays as explained in § 416.120(d) 

of this chapter. Examples of resources 

that are ordinarily liquid include: 

stocks, bonds, mutual fund shares, 

promissory notes, mortgages, life 

insurance policies (for claims filed 

before January 1, 2010, and 

redeterminations that are effective 

before January 1, 2010), financial 

institution accounts (including savings, 

checking, and time deposits, also known 

as certificates of deposit), retirement 

accounts (such as individual retirement 

accounts or 401(k) accounts), revocable 

trusts, funds in an irrevocable trust if 

the trust beneficiary can direct the use 

of the funds, and similar items. We will 

presume that these types of resources 

can be converted to cash within 20 

workdays and are countable as 

resources for subsidy determinations. 

However, if you establish that a 

particular resource cannot be converted 

to cash within 20 workdays, we will not 

count it as a resource. 

* * * * * 

■ 8. Amend § 418.3425 to revise 

paragraph (f) to read as follows: 

§ 418.3425 What resources do we exclude 

from counting? 

* * * * * 

(f) For claims filed on or after January 

1, 2010, and redeterminations that are 

effective on or after January 1, 2010, life 

insurance owned by an individual (and 

spouse, if any). 

* * * * * 

[FR Doc. 2010–32848 Filed 12–28–10; 8:45 am] 

BILLING CODE 4191–02–P 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 9 

[Docket No. TTB–2010–0001; T.D. TTB–88; 

Re: Notice No. 103] 

RIN 1513–AB31 

Expansion of the Santa Maria Valley 

Viticultural Area 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Final rule; Treasury decision. 

SUMMARY: This Treasury decision 

expands the Santa Maria Valley 

viticultural area in Santa Barbara and 

San Luis Obispo Counties, California, by 

18,790 acres. We designate viticultural 

areas to allow vintners to better describe 

the origin of their wines and to allow 

consumers to better identify wines they 

may purchase. 

DATES: Effective Date: January 28, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Elisabeth C. Kann, Regulations and 

Rulings Division, Alcohol and Tobacco 

Tax and Trade Bureau, 1310 G Street, 

NW., Washington, DC 20220; telephone 

202–453–2002. 

SUPPLEMENTARY INFORMATION: 

Background on Viticultural Areas 

TTB Authority 

Section 105(e) of the Federal Alcohol 

Administration Act (FAA Act), 27 

U.S.C. 205(e), authorizes the Secretary 

of the Treasury to prescribe regulations 

for the labeling of wine, distilled spirits, 

and malt beverages. The FAA Act 

requires that these regulations, among 

other things, prohibit consumer 

deception and the use of misleading 

statements on labels, and ensure that 

labels provide the consumer with 

adequate information as to the identity 

and quality of the product. The Alcohol 

and Tobacco Tax and Trade Bureau 

(TTB) administers the regulations 

promulgated under the FAA Act. 

Part 4 of the TTB regulations (27 CFR 

part 4) allows the establishment of 

definitive viticultural areas and the use 

of their names as appellations of origin 

on wine labels and in wine 

advertisements. Part 9 of the TTB 

regulations (27 CFR part 9) contains the 

list of approved viticultural areas. 

Definition 

Section 4.25(e)(1)(i) of the TTB 

regulations (27 CFR 4.25(e)(1)(i)) defines 

a viticultural area for American wine as 

a delimited grape-growing region 

distinguishable by geographical 

features, the boundaries of which have 

been recognized and defined in part 9 

of the regulations. These designations 

allow vintners and consumers to 

attribute a given quality, reputation, or 

other characteristic of a wine made from 

grapes grown in an area to its 

geographical origin. The establishment 

of viticultural areas allows vintners to 

describe more accurately the origin of 

their wines to consumers and helps 

consumers to identify wines they may 

purchase. Establishment of a viticultural 

area is neither an approval nor an 

endorsement by TTB of the wine 

produced in that area. 

Requirements 

Section 4.25(e)(2) of the TTB 

regulations outlines the procedure for 

proposing an American viticultural area 

and provides that any interested party 

may petition TTB to establish a grapegrowing region as a viticultural area. 

Section 9.3(b) of the TTB regulations 

requires the petition to include— 

• Evidence that the proposed 

viticultural area is locally and/or 

nationally known by the name specified 

in the petition; 

• Historical or current evidence that 

supports setting the boundary of the 

proposed viticultural area as the 

petition specifies; 


srobinson on DSKHWCL6B1PROD with RULES