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America’s War on Terroir: How Tax and Trade Bureau Notice 147 Would Diminish the Value in Wine Labeling

America’s War on Terroir: How Tax and Trade Bureau Notice 147 Would Diminish the Value in Wine Labeling

David Sloan 

On February 9, 2015, the Alcohol and Tobacco Tax and Trade Bureau (TTB), under the Department of the Treasury, proposed a major amendment to regulations governing the use of American viticultural area (AVA) names as appellations of origin on wine labels.[1] AVAs serve as “delimited grape-growing region[s] having distinguishing features[,] . . . a name[,] and a delineated boundary.”[2] They are used on wine labels to describe unique features relating to wine origin and production.[3]

TTB’s regulations must honor the purpose of the Federal Alcohol Administration Act (FAA Act) to “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.”[4] Contrary to prior regulations, TTB’s Notice 147 proposes that winemakers may label their wines with the name of an AVA if the wines are finished in states adjacent to the state encompassing the labeled AVA.[5]

This Note argues that expanding the permitted use of AVAs to include wines that are finished in adjacent states weakens the legal concept of geographic significance. Designations of geographic significance are supplemental to trademark law and describe a wine’s uniqueness of place.[6] Today, winemakers use geographic significance to represent a wine’s quality. This Note suggests that by watering down safeguards to geographic significance, TTB’s Notice 147 encourages winemakers to engage in deceptive practices by allowing them to legally label wines with AVAs of unequal quality.

International law has sought to discourage such deception through the 1996 World Trade Organization (WTO) agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).[7] Article 23 of TRIPS mandates that parties can prevent the use of geographical indications that identify wines originating outside of a geographic indication.[8] This Note advocates that TTB regulators should err on the side of caution and follow the protections that the international community currently values from geographic significance. Section I argues that TTB Notice 147 does not comport with traditional systems of wine regulation; such systems emphasize viticultural practice in whole. Section II introduces the law controlling geographic significance, the relationship between geographic significance and quality, and issues surrounding quality control. Section III distinguishes between geographic indications and trademarks and advocates for TRIPS policies that adequately enforce trademarks. Section IV examines the controlling case law. The Note concludes by calling for TTB Notice 147’s withdrawal. TTB Notice 147 has the potential to set off a chain of events that could forever scar the practice of wine labeling.

Questions and inquiries regarding this Note may be forwarded to the author at LawReview@vermontlaw.edu.


[1] Use of American Viticultural Area Names as Appellations of Origin on Wine Labels, 80 Fed. Reg. 6931-01, 6933 (Feb. 9, 2015).

[2] 27 C.F.R. § 4.25(e)(1)(i) (2012).

[3] Use of American Viticultural Area Names as Appellations of Origin on Wine Labels, 80 Fed. Reg. at 6931.

[4] Establishment of The Rocks District of Milton-Freewater Viticultural Area, 80 Fed. Reg. 6902-03, 6903 (Feb. 9, 2015) (to be codified at 27 C.F.R. pt. 9).

[5] Use of American Viticultural Area Names as Appellations of Origin on Wine Labels, 80 Fed. Reg. at 6933.

[6] 27 C.F.R. § 4.24 (2012).

[7] Carol Robertson, The Little Red Book of Wine Law: A Case of Legal Issues 152 (American Bar Association 2008). TRIPS is the standard acronym by which field experts refer to the agreement.

[8] Overview: the TRIPS Agreement, World Trade Org., https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm. (last visited Feb. 3, 2016).

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