Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations 34955 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 9 

[Docket No. TTB–2020–0014; T.D. TTB–171; 

Ref: Notice No. 199] 

RIN 1513–AC65 

Establishment of the Ulupalakua 

Viticultural Area 

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 70-acre ‘‘Ulupalakua’’ 

viticultural area (AVA) on the island of 

Maui, Hawaii. The Ulupalakua 

viticultural area is not located within, 

nor does it contain, any other 

established viticultural area. 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 August 

2, 2021. 

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, dated December 10, 2013 

(superseding Treasury Order 120–01, 

dated January 24, 2003). 

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 grapegrowing 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 boundary; 

• 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. 

Ulupalakua AVA Petition 

TTB received a petition from Mark 

Beaman, winemaker at Maui Wines, 

proposing the establishment of the 

‘‘Ulupalakua’’ AVA. The proposed AVA 

is located within the privately-owned, 

18,000-acre Ulupalakua Ranch on the 

island of Maui, Hawaii. The proposed 

AVA contains approximately 70 acres, 

with approximately 16 acres of 

vineyards. Although there is no winery 

within the boundary of the proposed 

AVA, grapes from the proposed AVA 

are made into wine at the Maui Wines 

facility, which is a short distance south 

of the proposed AVA. According to the 

petition, the distinguishing features of 

the proposed Ulupalakua AVA include 

its topography, soils, and climate. 

The proposed Ulupalakua AVA 

contains a series of four distinct benches 

that are oriented to the southwest. The 

benches are gently sloped, with slope 

angles between 0 and 5 percent, and are 

separated by steeper erosional ravines. 

The petition states that the gentle slopes 

of the benches minimize the risk of 

erosion, facilitate safe agriculture, and 

allow vineyards planted on the benches 

to receive uniform amounts of sunlight, 

rainfall, and temperature-moderating 

cloud cover. By contrast, the 

surrounding regions all contain steeper 

slopes. The petition notes that the 

regions to the north, west, and east of 

the proposed AVA have average slope 

angles of 15 to 17 percent. The petition 

also notes that the regions to the north 

and west of the proposed AVA contain 

more erosional features, such as ravines, 

which are less suitable for viticulture 

than gently sloping benches. 

Furthermore, the region to the south of 

the proposed AVA contains rugged, 

exposed volcanic rocks that are not 

suitable for viticulture. 

The soils of the proposed Ulupalakua 

AVA formed from the erosion of ancient 

alkali lava flows from Mt. Haleakala. 

Kula loam makes up 80 percent of the 

soil of the proposed AVA and is derived 

from weathered basic igneous rocks. 

The remaining 20 percent of the soils of 

the proposed AVA are comprised of the 

Io series, which are silt loams that 

gradually acquire more clay deeper in 

the soils. According to the petition, the 

soils of the proposed AVA are fertile 

enough to produce healthy vines and 

fruit without promoting excessive vine 

and leaf growth. Additionally, the 

uniformity of the soils within the 

proposed AVA results in a greater 

consistency in growing conditions for 

vineyards than can be found in the 


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34956 Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations 

surrounding regions. To the south of the 

proposed AVA, the soil changes to Kula 

very rocky loam, which consists of very 

large volcanic rocks and boulders which 

would not be suitable for vineyards. The 

same Kula soil found within the 

proposed AVA is also found to the west, 

but the petition notes that the topsoil 

west of the proposed AVA has been 

scoured by erosion and would be 

thinner and not as suitable for 

viticulture. The petition did not provide 

information on the soils to the north and 

east of the proposed AVA. 

Within the proposed Ulupalakua 

AVA, annual temperatures are moderate 

and do not drop below 50 degrees 

Fahrenheit (F), which is generally 

considered to be the minimum 

temperature required for grape vine 

growth and fruit development. The 

difference between the average high and 

low temperatures each month in the 

proposed AVA is typically 20 degrees or 

less. The proposed AVA receives an 

average of 30.7 inches of rainfall a year 

and less than 2 inches per month in the 

harvest months of July and August. 

According to the petition, the low 

rainfall amounts during harvest reduce 

the risk of mildew and rot, while the 

mild temperatures protect ripening fruit 

against sunburn and heat stress. 

The petition states that the proposed 

AVA’s climate is influenced by its 

proximity to Mt. Haleakala. To the north 

of the proposed Ulupalakua AVA, on 

the higher slopes of the mountain, 

annual temperatures are cooler and 

temperatures drop below 50 degrees F. 

Because moist air moves from east to 

west over the mountain, regions to the 

east of the proposed AVA typically 

receive higher average annual rainfall 

amounts, while elevations to the west of 

the proposed AVA have less rainfall. 

The petition did not include 

temperature data for locations to the 

east, west, or south of the proposed 

AVA, nor did it include precipitation 

data for regions to the north and south 

of the proposed AVA. 

Notice of Proposed Rulemaking and 

Comments Received 

TTB published Notice No. 199 in the 

Federal Register on November 10, 2020 

(85 FR 71726), proposing to establish 

the Ulupalakua AVA. In the notice, TTB 

summarized the evidence from the 

petition regarding the name, boundary, 

and distinguishing features for the 

proposed AVA. The notice also 

compared the distinguishing features of 

the proposed AVA to the surrounding 

areas. For a detailed description of the 

evidence relating to the name, 

boundary, and distinguishing features of 

the proposed AVA, and for a detailed 

comparison of the distinguishing 

features of the proposed AVA to the 

surrounding areas, see Notice No. 199. 

In Notice No. 199, TTB solicited 

comments on the accuracy of the name, 

boundary, and other required 

information submitted in support of the 

petition. The comment period closed on 

January 11, 2021. 

In response to Notice No. 199, TTB 

received one comment. However, the 

comment did not contain information 

related to the proposed AVA or to the 

AVA program in general, and was not 

posted to the public docket. 

TTB Determination 

After careful review of the petition, 

TTB finds that the evidence provided by 

the petitioner supports the 

establishment of the Ulupalakua AVA. 

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 ‘‘Ulupalakua’’ AVA 

in Hawaii, effective 30 days from the 

publication date of this document. 

Boundary Description 

See the narrative description of the 

boundary of the Ulupalakua AVA in the 

regulatory text published at the end of 

this final rule. 

Maps 

The petitioner provided the required 

maps, and they are listed below in the 

regulatory text. The Ulupalakua AVA 

boundary may also be viewed on the 

AVA Map Explorer on the TTB website, 

at https://www.ttb.gov/wine/ava-mapexplorer. 

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 

Ulupalakua AVA, its name, 

‘‘Ulupalakua,’’ 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 

regulations clarifies this point. 

Consequently, wine bottlers using the 

name ‘‘Ulupalakua’’ in a brand name, 

including a trademark, or in another 

label reference 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. 

The establishment of the Ulupalakua 

AVA will not affect any existing AVA. 

The establishment of the Ulupalakua 

AVA will allow vintners to use 

‘‘Ulupalakua’’ as an appellation of 

origin for wines made primarily from 

grapes grown within the Ulupalakua 

AVA if the wines meet the eligibility 

requirements for the appellation. 

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 of 

September 30, 1993. 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. 

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. 


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Federal Register / Vol. 86, No. 124 / Thursday, July 1, 2021 / Rules and Regulations 34957 

Subpart C—Approved American 

Viticultural Areas 

■ 2. Subpart C is amended by adding 

§ 9.278 to read as follows: 

§ 9.278 Ulupalakua AVA. 

(a) Name. The name of the viticultural 

area described in this section is 

‘‘Ulupalakua’’. For purposes of part 4 of 

this chapter, ‘‘Ulupalakua’’ is a term of 

viticultural significance. 

(b) Approved maps. The United States 

Geological Survey (USGS) 1:24,000 

scale topographic maps used to 

determine the boundary of the 

Ulupalakua viticultural area is titled 

‘‘Makena, Hawaii, 1983.’’ 

(c) Boundary. The Ulupalakua 

viticultural area is located on the island 

of Maui, in Hawaii. The boundary of the 

Ulupalakua viticultural area is as 

described in paragraphs (c)(1) through 

(6) of this section: 

(1) The beginning point is on the 

Makena, Hawaii, map at the intersection 

of an unnamed, light-duty road known 

locally as State Highway 37 and the 

northernmost unnamed, unimproved 

road in the Palauea land division (a land 

division is known as an ‘‘ahupua’a’’ in 

Hawaii). From the beginning point, 

proceed south along State Highway 37 

to the next unnamed, unimproved road 

in the Palauea land division; then 

(2) Proceed west in a straight line for 

approximately 2,700 feet to the 1,560- 

foot elevation contour; then 

(3) Proceed north along the 1,560-foot 

elevation contour to the northern 

boundary of the Palauea land division; 

then 

(4) Proceed east along the northern 

boundary of the Palauea land division to 

the 1,800-foot elevation contour; then 

(5) Proceed south along the 1,800-foot 

elevation contour for approximately 400 

feet to the point where the 1,800-foot 

elevation contour intersects with an 

imaginary line drawn from the terminus 

of the northernmost unnamed, 

unimproved road in the Palauea land 

division; then 

(6) Proceed east in a straight line for 

approximately 800 feet, returning to the 

beginning point. 

Signed: June 21, 2021. 

Mary G. Ryan, 

Administrator. 

Approved: June 21, 2021. 

Timothy E. Skud, 

Deputy Assistant Secretary (Tax, Trade, and 

Tariff Policy). 

[FR Doc. 2021–14058 Filed 6–30–21; 8:45 am] 

BILLING CODE 4810–31–P 

DEPARTMENT OF THE TREASURY 

Alcohol and Tobacco Tax and Trade 

Bureau 

27 CFR Part 70 

[Docket No. TTB–2021–0004; T.D. TTB–169] 

RIN 1513–AC56 

Removal of Obsolete Regulation 

Regarding Rewards for Information 

Relating to Violations of Tax Laws 

Administered by the Alcohol and 

Tobacco Tax and Trade Bureau 

AGENCY: Alcohol and Tobacco Tax and 

Trade Bureau, Treasury. 

ACTION: Final rule; Treasury decision. 

SUMMARY: In this final rule, the Alcohol 

and Tobacco Tax and Trade Bureau 

(TTB) is removing obsolete regulatory 

provisions related to whistleblower 

rewards. Under the Internal Revenue 

Code, individuals who provide 

information to the Treasury Department 

regarding underpayment of taxes or 

violations of internal revenue laws may 

file claims for monetary 

‘‘whistleblower’’ awards. Recent 

changes to the Code have made the TTB 

regulation regarding whistleblower 

rewards obsolete, and, therefore, TTB is 

removing that provision from its 

regulations. TTB has signed a 

memorandum of understanding with the 

Internal Revenue Service, under which 

the Internal Revenue Service will 

process whistleblower award claims for 

information regarding underpayment of 

taxes collected by TTB or violations of 

the internal revenue laws administered 

by TTB. 

DATES: This final rule is effective on July 

1, 2021. 

FOR FURTHER INFORMATION CONTACT: 

Michael Hoover, Regulations and 

Rulings Division, Alcohol and Tobacco 

Tax and Trade Bureau, 1310 G Street 

NW, Box 12, Washington, DC 20005; 

202–453–1039, ext. 135. 

SUPPLEMENTARY INFORMATION: 

Background 

The Alcohol and Tobacco Tax and 

Trade Bureau (TTB) administers the 

following provisions of the Internal 

Revenue Code of 1986, as amended 

(IRC, 26 U.S.C.): Chapter 51 (imposing 

Federal excise tax on distilled spirits, 

wine, and beer), chapter 52 (imposing 

Federal excise tax on tobacco products 

and cigarette papers and tubes), and 

sections 4181–4182 (imposing Federal 

excise tax on firearms and ammunition). 

TTB administers these provisions 

pursuant to section 1111(d) of the 

Homeland Security Act of 2002, as 

codified at 6 U.S.C. 531(d). The 

Secretary of the Treasury (the Secretary) 

has delegated related IRC administrative 

and enforcement authorities to TTB 

through Treasury Order 120–01. The 

Secretary also has delegated 

administration and enforcement of other 

internal revenue laws to the Internal 

Revenue Service under Treasury Order 

150–10. 

Under section 7623 of the IRC (26 

U.S.C. 7623), individuals who provide 

information to the Department of the 

Treasury that is used to detect 

underpayments of Federal taxes or 

violations of internal revenue laws may 

be eligible for monetary 

‘‘whistleblower’’ awards under 

regulations issued by the Secretary. 

TTB had previously issued a 

whistleblower reward regulation at 27 

CFR 70.41. However, amendments to 

the Internal Revenue Code have made 

this regulation obsolete. See the 

amendments made to 26 U.S.C. 7623 by 

section 406 of the Tax Relief and Health 

Care Act of 2006 (Pub L. 109–432), 

section 41108 of the Balanced Budget 

Act of 2018 (Pub. L. 115–123), and 

section 1405 of the Taxpayer First Act 

(Pub. L. 116–25). As a result of these 

statutory amendments, described more 

fully below, § 70.41 has become 

obsolete, and TTB is removing that 

section from its regulations in 27 CFR 

part 70, Procedure and Administration. 

Section 406 of the Tax Relief and 

Health Care Act of 2006 significantly 

revised 26 U.S.C. 7623 and required the 

Treasury Department to establish a 

‘‘Whistleblower Office’’ within the 

Internal Revenue Service (IRS) to 

analyze information received by 

whistleblower claimants and determine 

the amount of any award under 26 

U.S.C. 7623(b). The IRS Whistleblower 

Office processes claims pertaining to 

underpayments of tax that are owed to 

the IRS or violations of internal revenue 

laws administered by the IRS that may 

be eligible for an award under 26 U.S.C. 

7623(a) and (b). See IRS Delegation 

Order 25–07 (delegation to the 

Whistleblower Office of the authority to 

approve IRS discretionary awards under 

section 7623(a)). Section 41108 of the 

Balanced Budget Act of 2018 then 

clarified the definition of ‘‘collected 

proceeds’’ from which the Treasury 

Department may make awards to 

whistleblowers. The Taxpayer First Act 

further amended 26 U.S.C. 7623 by 

establishing a notification process for 

whistleblowers and adding protections 

for whistleblowers against retaliation. 

To modernize the process for 

accepting, processing, and rewarding 

whistleblowers and to give effect to the 

statutory changes, TTB has entered into 


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