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###### Department of the Treasury

###### Alcohol and Tobacco Tax and Trade Bureau

          - 27 CFR Part 9
          - [Docket No. TTB-2023-0002; T.D. TTB-197; Ref: Notice No. 221]
          - RIN 1513-AC78

# AGENCY:

Alcohol and Tobacco Tax and Trade Bureau, Treasury.

# ACTION:

Final rule; Treasury decision.

# SUMMARY:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) establishes the approximately 4,000-acre “Crystal Springs of Napa Valley” American viticultural area (AVA) in Napa County, California. The newly-established AVA is located entirely within the existing North Coast and Napa Valley viticultural areas. TTB also is modifying the existing Calistoga AVA in response to comments received during the comment period. TTB designates 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:

This final rule is effective November 15, 2024.

# FOR FURTHER INFORMATION CONTACT:

Karen A. Thornton, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; phone 202-453-1039, ext. 175.

# 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 provides that these regulations should, 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 FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated the functions and duties in the administration and enforcement of these provisions to the TTB Administrator through Treasury Order 120-01.

Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to establish definitive viticultural areas and regulate 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) sets forth standards for the preparation and submission to TTB of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.

### 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 having distinguishing features as described in part 9 of the regulations and, once approved, a name and a delineated boundary codified 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 the wine's geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA 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 (27 CFR 4.25(e)(2)) outlines the procedure for proposing an AVA and allows any interested party to petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions to establish or modify AVAs. Petitions to establish an AVA must include the following:
    - Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;
    - An explanation of the basis for defining the boundary of the proposed AVA;
    - A narrative description of the features of the proposed AVA affecting viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA;
    - If the proposed AVA is to be established within, or overlapping, an existing AVA, an explanation that both identifies the attributes of the proposed AVA that are consistent with the existing AVA and explains how the proposed AVA is sufficiently distinct from the existing AVA and therefore appropriate for separate recognition;
    - The appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon; and
    - A detailed narrative description of the proposed AVA boundary based on USGS map markings.

## Crystal Springs of Napa Valley Petition

TTB received a petition from Steven Burgess, president of Burgess Cellars, Inc., proposing to establish the “Crystal Springs of Napa Valley” AVA. Mr. Burgess submitted the petition on behalf of local vineyard owners and winemakers. The proposed AVA is located in Napa County, California, and lies entirely within the established North Coast (27 CFR 9.30) and Napa Valley (27 CFR 9.23) AVAs. Within the proposed AVA, there are approximately 30 commercial vineyards covering a total of approximately 230 acres. The distinguishing feature of the proposed Crystal Springs of Napa Valley AVA is its topography.

                    The petition describes the proposed AVA as an “all hillside” region with no                           ( print page 83432)                        flat areas along the western face of the Vaca Range. Slope angles range from 15 to 40 percent within the proposed AVA and are generally west-to-southwesterly facing. According to the petition, west- and southwesterly-facing slopes receive larger amounts of solar radiation than north- and east-facing slopes. The higher solar radiation amounts can allow grapes to easily mature each growing season. Elevations in the proposed AVA range from 400 to 1,400 feet. According to the petition, the reason for limiting the proposed AVA to this range of elevations is that the 400-foot contour generally marks the transition point between the foothills of the Vaca Range and the floor of the Napa Valley. The lower foothills and valley floor are more susceptible to frosts than the elevations within the proposed AVA and, therefore, are more likely to need frost protection equipment in the vineyards. Additionally, the 1,400-foot contour along the northern boundary of the proposed AVA coincides with the southern boundary of the established Howell Mountain AVA (27 CFR 9.94). According to the petition, elevations over 1,400 feet are also more susceptible to frosts due to adiabatic cooling, also known as elevation cooling.                

To the north of the proposed AVA, the elevations rise up to 2,200 feet within the established Howell Mountain AVA. The topography of the Howell Mountain AVA contains hillsides, like the proposed Crystal Springs of Napa Valley AVA, but also has a rolling, plateau-like feature at the summit. The region to the east of the proposed AVA has elevations like those of the proposed AVA, but the slopes have a more easterly to northeasterly exposure. South and west of the proposed AVA are the established St. Helena (27 CFR 9.149) and Calistoga (27 CFR 9.209) AVAs, which have lower elevations and include the flat lands along the floor of the Napa Valley. The petition describes slope angles within the established St. Helena AVA as mostly less than 5 percent, while the established Calistoga AVA is described as having “a multitude of * * * slopes, from steep mountains to benchlands to fans, to flat valley floors to riparian habitats.”

## Notice of Proposed Rulemaking and Comments Received

                    TTB published Notice No. 221 in the                     **Federal Register**                     on March 2, 2023 (88 FR 13072), proposing to establish the Crystal Springs of Napa Valley AVA. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing feature of the proposed AVA. The notice also included the information from the petition comparing the distinguishing feature of the proposed AVA to the surrounding areas. For a detailed description of the evidence and for a detailed comparison of the proposed AVA to the surrounding areas, see Notice No. 221.                

                    In Notice No. 221, TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. In addition, given the proposed Crystal Springs of Napa Valley AVA's location within the North Coast and Napa Valley AVAs, TTB solicited comments on whether the evidence submitted in the petition sufficiently differentiates it from the established AVAs. TTB also requested comments on whether the features of the proposed AVA are so distinguishable from the established AVAs that the proposed AVA should no longer be part of one or the other, or both of, the established AVAs. The comment period originally closed May 1, 2023. TTB extended the comment period for an additional 60 days, until June 30, 2023, because of a request submitted during the comment period (comment 6). See Notice No. 221A, which published in the                     **Federal Register**                     on May 2, 2023 (88 FR 27420).                

TTB received 15 comments in response to Notices No. 221 and 221A. However, one comment was submitted in duplicate, so only 14 comments are posted to the public docket. One comment (comment 6) requested a 90-day extension of the comment period. In response to the request, the petitioner submitted a comment (comment 8) expressing his opposition to a comment period extension. In Notice No. 221A, TTB agreed to extend the comment period for an additional 60 days.

Eight comments (comments 4, 5, 7, 9, 11, 12, 13, and 14) expressed support for the proposed AVA. Three of those comments (comments 4, 7, and 9) support the proposed AVA without suggesting any additional changes. Three of the supporting comments (comments 5, 11, 13, and 14) express support for the proposed AVA if certain changes to the boundary are made. These proposed changes, and TTB's response to the requests, are discussed later in this document. The original petitioner submitted a comment (comment 12) agreeing to the proposed boundary changes.

One comment (comment 1) does not specifically support or oppose the proposed AVA but instead expresses concern that an AVA designation would provide tax breaks for vineyard owners and other landowners within the area. The commenter also expressed concern that property taxes on other property owners in Napa County outside of the proposed AVA would increase to make up for the loss of tax revenue that tax breaks would cause. In response, the petitioner submitted a comment (comment 2) stating that California does not provide tax breaks for properties within an AVA. The comment goes on to say that “property in California is subject to Proposition 13 which establishes a base year assessed value upon purchase or new construction,” and the establishment of an AVA would not impact a property's “factored base year assessed value”.

Property taxes and tax assessments are local matters and are outside TTB's authority and the scope of this proposed rulemaking document. TTB's establishment of an AVA through the federal rulemaking process does not in itself have a tax effect.

Comment 3 also does not specifically express support for or opposition to the proposed AVA. The comment includes a link to a newspaper article about the proposed Crystal Springs of Napa Valley AVA. The commenter notes that the article's writer frequently refers to the proposed AVA simply as “Crystal Springs,” and appears to be concerned that truncating the name could lead to confusion. Instead, the commenter states that the writer “missed the opportunity to explain how an AVA that technically mentions another AVA in its name as Crystal Springs of Napa Valley might, does not lead to brand confusion.” In Notice No. 221, TTB proposed that the name “Crystal Springs of Napa Valley” be recognized as a name of viticultural significance. As TTB stated in that notice, TTB is not proposing to make “Crystal Springs” standing alone a term of viticultural significance, due to the number of other locations in the United States. that are known simply as “Crystal Springs.” Therefore, in this final rule, TTB is finalizing its proposal that only the full AVA name may appear as an appellation of origin on wine labels.

                    One commenter (comment 10) claims to be the “real owner of Chrystal [sic] Springs of Napa Valley” but provided no explanation or supporting information. TTB notes that designation of an AVA does not confer or change ownership of property within the AVA, and that there is no “owner” of an AVA. Establishment of an AVA simply permits winemakers to provide additional information to consumers about the origin of the grapes used to make their wine, and providing that information is voluntary. Any winemaker may label their wines with the AVA name as an appellation of                           ( print page 83433)                        origin if the wines meet the regulatory requirements for use of the AVA name. Furthermore, TTB notes that the Bureau has not identified any labels that use the name “Crystal (or “Chrystal”) Springs of Napa Valley.” Therefore, TTB does not believe that establishment of the “Crystal Springs of Napa Valley” AVA will affect any wine industry member's use of their business name on their wine label, nor did any commenter indicate that establishing the AVA would have that affect.                

Comment 13, submitted by Napa Valley Vintners (NVV), proposes several changes to the boundary of the proposed Crystal Springs of Napa Valley AVA. The first change would remove a partial overlap with the established St. Helena AVA. As originally proposed, the southernmost portion of the Crystal Springs of Napa Valley AVA boundary, which follows the 400-foot elevation contour, would partially overlap the St. Helena AVA. To remove the overlap, NVV suggests following the 400-foot elevation contour to the point where it meets the St. Helena city limits, which forms the boundary of the St. Helena AVA, and then following the city limits until they again intersect the 400-foot elevation. NVV notes that the St. Helena city limits are not shown on the 2015 USGS St. Helena quadrangle map the petitioner used to draw the proposed AVA boundary. Instead, NVV recommends using the version of the map that was used to create the St. Helena AVA boundary, which is the 1960 (revised 1993) version. Appellation St. Helena and the Crystal Springs of Napa Valley AVA petitioner both submitted comments supporting the proposed boundary change (comments 5 and 12, respectively). TTB agrees with the comments and is amending the proposed boundary to eliminate the partial overlap with the established St. Helena AVA and to utilize the version of the USGS map that shows the St. Helena city limits.

In comment 13, NVV also requested substituting the 1960 (revised 1993) version of the St. Helena quadrangle map for the 2015 version to avoid the appearance of a second partial overlap with the St. Helena AVA. NVV notes that the 1960 version of the map shows the 400-foot elevation contour extending into the Bell Canyon reservoir, while the 2015 version stops the elevation contour at the reservoir's dam. The NVV states that, as a result, the proposed Crystal Springs of Napa Valley's use of the 400-foot elevation contour for its boundary gives the appearance of a partial overlap with the St. Helena AVA at the reservoir. TTB notes that although the use of different versions of the map gives the appearance of a partial overlap, such an overlap does not actually exist because both the St. Helena AVA boundary description and the proposed AVA boundary description follow the 400-foot elevation contour. As such, even though the 2015 version of the map does not show the contour extending into the reservoir, the contour still exists, and the boundaries of both AVAs still follow it. As discussed earlier, TTB has agreed to adopt the older version of the map for the Crystal Springs of Napa Valley AVA boundary description in order to use the St. Helena city limits to remove another partial overlap. Adopting the older map will also eliminate any confusion about the location of the St. Helena and proposed Crystal Springs of Napa Valley AVAs' boundaries near the Bell Canyon reservoir.

### Calistoga AVA Boundary Modification Comments

One comment (comment 11) requested a change to the proposed AVA boundary to fully include a vineyard, which is currently split between the proposed AVA and the established Calistoga AVA (27 CFR 9.209). The vineyard, known as the Crystal Springs Vineyard, sits along North Fork of Crystal Springs Road between the northwestern portion of the proposed AVA and the eastern portion of the Calistoga AVA. Approximately 11 acres of the vineyard are within the Calistoga AVA, and the remaining 6 acres are within the proposed Crystal Springs of Napa Valley AVA. The comment points out that the vineyard's name shows a current association with the proposed “Crystal Springs of Napa Valley” name. The comment also states that elevations within the vineyard are between 500 and 1,200 feet, which is within the range of elevations in the proposed AVA and higher than the floor of the Calistoga Valley, and it has a similar climate and hillside topography and soils as the proposed AVA.

The NVV comment (comment 13) also requests this boundary change and includes a letter from the Calistoga Wine Growers organization that supports the change. The NVV comment also suggests replacing the 2015 USGS Calistoga quadrangle map used to draw the proposed AVA with the 1997 version used to draw the original Calistoga AVA, to ensure that the proposed revisions to both boundaries refer to the same marked features and will align with the other maps used to make the remainder of the Calistoga AVA boundary. The proposed Crystal Springs of Napa Valley AVA petitioner also submitted a comment (comment 12) expressing support for these changes.

After reviewing the comments and related documents, TTB is making this change to the boundaries of the Calistoga AVA and the proposed Crystal Springs of Napa Valley AVA so that the Crystal Springs Vineyard is located entirely within the Crystal Springs of Napa Valley AVA.

## TTB Determination

After careful review of the petition and the comments received in response to Notice No. 221, TTB finds that the evidence provided by the petitioner supports establishing the Crystal Springs of Napa Valley AVA with the boundary modifications requested in the comments. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “Crystal Springs of Napa Valley” AVA in Napa County, California, effective 30 days from the publication date of this document. TTB is also modifying the boundary of the established Calistoga AVA, as requested during the comment period, effective 30 days from the publication of this document.

TTB has also determined that the Crystal Springs of Napa Valley AVA will remain part of the established North Coast and Napa Valley AVAs. As discussed in Notice No. 221, the Crystal Springs of Napa Valley AVA shares some broad characteristics with the established AVAs. For example, the proposed AVA is comprised of hillside slopes, which also occur in the North Coast and Napa Valley AVAs, and it also has a marine-influenced climate. However, the proposed AVA lacks flat valleys, which are common in both the North Coast and Napa Valley AVAs, and it is not as influenced by the ocean as the more coastal regions of the North Coast AVA.

## Boundary Description

See the narrative description of the boundary of the Crystal Springs of Napa Valley AVA and the modified Calistoga AVA boundary in the regulatory text published at the end of this final rule.

## Maps

                    The petitioners provided the required maps, and they are listed below in the regulatory text. The Crystal Springs of Napa Valley AVA boundary and the modified Calistoga AVA boundary may also be viewed on the AVA Map Explorer on the TTB website, at                     *https://www.ttb.gov/​wine/​ava-map-explorer*.                          ( print page 83434)    

## Impact on Current Wine Labels

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with an AVA name or with a brand name that includes an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing an AVA name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

With the establishment of the Crystal Springs of Napa Valley AVA, its name, “Crystal Springs of Napa Valley,” will be recognized as a name of viticultural significance under § 4.39(i)(3) of the TTB regulations (27 CFR 4.39(i)(3)). The text of the regulation clarifies this point. Consequently, wine bottlers using the name “Crystal Springs of Napa Valley” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the AVA name as an appellation of origin. TTB is not designating “Crystal Springs,” standing alone, as a term of viticultural significance due to the number of locations in the United States and elsewhere known as “Crystal Springs.”

The establishment of the Crystal Springs of Napa Valley AVA will not affect the existing North Coast or Napa Valley AVAs, and any bottlers using “North Coast” or “Napa Valley” as an appellation of origin or in a brand name for wines made from grapes grown within the North Coast or Napa Valley AVAs will not be affected by the establishment of this new AVA. The establishment of the Crystal Springs of Napa Valley AVA will allow vintners to use “Crystal Springs of Napa Valley,” “Napa Valley,” and “North Coast” as appellations of origin for wines made primarily from grapes grown within the Crystal Springs of Napa Valley AVA if the wines meet the eligibility requirements for these appellations.

After November 16, 2026, bottlers who use “Calistoga” as an appellation of origin on wines made primarily from grapes grown in the area that was removed from the Calistoga AVA will no longer be able to use “Calistoga” as an appellation of origin and would only be eligible to use “Crystal Springs of Napa Valley,” “North Coast,” “Napa Valley,” or a combination of these appellations as appellations of origin on those wines.

## Regulatory Flexibility Act

TTB certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of an AVA name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

## Executive Order 12866

It has been determined that this final rule is not a significant regulatory action as defined by Executive Order 12866, as amended. Therefore, no regulatory assessment is required.

## Drafting Information

Karen A. Thornton of the Regulations and Rulings Division drafted this final rule.

# List of Subjects in 27 CFR Part 9

      - Wine

## The Regulatory Amendment

For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:

# PART 9—AMERICAN VITICULTURAL AREAS

1. The authority citation for part 9 continues to read as follows: 

Authority:27 U.S.C. 205.

# Subpart C—Approved American Viticultural Areas

2. Amend § 9.209 by revising paragraphs (c)(8) and (9) to read as follows: 

§ 9.209 

* * * * *

(c) * * *

(8) Follows the 400-foot contour line easterly approximately 0.6 mile to its intersection with the eastern edge of the Calistoga map, denoted by a north-south longitude line labeled as longitude 122 degrees, 30 minutes;

(9) Continues north along the longitude line approximately 0.5 mile to its intersection with the 880-foot contour line in section 2, T8N/R6W;

* * * * *

3. Subpart C is amended by adding § 9.296 to read as follows: 

§ 9.296 

                            (a)                             *Name.*                             The name of the viticultural area described in this section is “Crystal Springs of Napa Valley”. For purposes of part 4 of this chapter, “Crystal Springs of Napa Valley” is a term of viticultural significance.                        

                            (b)                             *Approved maps.*                             The two United States Geological Survey (USGS) 1:24,000 scale topographic maps used to determine the boundary of the viticultural area are titled:                        

(1) St. Helena, CA, 1960, revised 1993; and

(2) Calistoga, CA, 1997.

                            (c)                             *Boundary.*                             The Crystal Springs of Napa Valley viticultural area is located in Napa County, California. Within the boundary description that follows, the viticultural area encompasses all areas at or below 1,400 feet in elevation. The boundary of the Crystal Springs of Napa Valley viticultural area is as described as follows:                        

(1) The beginning point is on the St. Helena map at the intersection of Howell Mountain Road and White Cottage Road. From the beginning point, proceed southeasterly along Howell Mountain Road to its intersection with the St. Helena city limits in section 29, T8N/R5W; then

(2) Proceed west then south along the St. Helena city limits to its intersection with the 400-foot elevation contour along the western edge of section 29, T8N/R5W; then

(3) Proceed northwesterly along the 400-foot elevation contour to its intersection with the western edge of the St. Helena map, denoted by the north-south longitude line labeled as longitude 122 degrees, 30 minutes; then

(4) Proceed due north along the longitude line approximately 0.5 mile to its intersection with the 880-foot elevation contour in section 2, T8N/R6W; then

(5) Proceed northwesterly along the meandering 880-foot elevation contour, crossing onto the Calistoga map, and continuing along the elevation contour (with a brief return to the St. Helena map) to its intersection with Biter Creek in the section 34, T9N/R6W, on the Calistoga map; then

(6) Proceed northerly (upstream) along Biter Creek to its intersection with the 1,400-foot elevation contour; then

                            (7) Proceed southeasterly along the meandering 1,400-foot elevation                                   ( print page 83435)                                contour, crossing onto the St. Helena map, to the intersection of the elevation contour with White Cottage Road; then                        

(8) Proceed easterly along White Cottage Road for approximately 130 feet, returning to the beginning point.

Signed: October 4, 2024.

Mary G. Ryan,

Administrator.

Approved: October 7, 2024.

Aviva R. Aron-Dine,

Deputy Assistant Secretary, Tax Policy.

[FR Doc. 2024-23655 Filed 10-15-24; 8:45 am]

BILLING CODE 4810-31-P