Calling the Treasury Department’s action last week that temporarily suspended the issuance of any more American Viticultural Areas (AVA), “a major freeze,” Wine Institute’s general counsel Wendell Lee has sounded a warning that the AVA system cries out for tougher scrutiny.

Although the government’s move was most assuredly motivated by Calistoga’s (CA) four-year attempt to secure AVA status, the situation – now a full-blown controversy – goes well beyond the tiny northern Napa Valley region. The Treasury and Tax and Trade Bureau’s (TTB) surprising action will prove to test the viability of the AVA system as it’s currently regulated.

“Is this global warming, or the ice age?” asked Lee rhetorically, after hearing the news from Hawaii where he was vacationing. “The TTB is freezing AVAs and virtually every single California AVA will have two issues that will be affected - intellectual property (as it pertains to trademarks) and overlapping AVAs and what trumps what.”

Actually, according to TTB spokesperson Art Resnick, his department currently has “approximately” a dozen AVA-within- AVA petitions, whose status will be put on hold pending the TTB’s call for hearings on the matter.

In addition to the Calistoga petition - which has been stymied because of two geographically named entities both using Calistoga in their brand names – there are 12 outstanding regions which have been forced to continue to wait. These include Tulocay in the Coombsville area of the town of Napa and Paso Robles, which is petitioning TTB to divide its area along east-west boundaries.

There’s More Than Geography That Goes into a Sub-Appellation

It is precisely the murky question of sub-regional areas within larger AVAs that has TTB putting a halt to its regulations for the first time since 1986 when its rules for sub-appellations were placed on the books.

“The ones that we’re not taking action on currently are appellations within appellations and overlapping appellations that may affect brand names that are currently out in the market,” said Resnick. He was no doubt alluding to Calistoga Estates and Calistoga Cellars, the two brands which currently don’t use a preponderance of their grapes from the area in question.

“In recent years, an increasing number of petitions have been submitted that affect established brands, and there are some that believe that undermines the value of the program,” continued Resnick.

Marvin Stirman of Calistoga Estates has refused in recent phone calls and e-mails to speak with AppellationAmerica on the matter. But Roger Louer of Calistoga Cellars said he believes TTB is “doing the right thing” to curtail any further action. However, he added, “I don’t like things up in the air. It could be four to five years down the pike (for the matter to be resolved). … It’s still in limbo. The good news is that we can continue with the brand. I don’t think anything’s changed, except it’s delayed it.”

Stirman, Louer and others who have geographic-named brands within a proposed AVA face the unenviable and costly possibility of having to switch their brand names if the TTB doesn’t change its regulations. But that seems unlikely since the conundrum is precisely why the agency is now calling for public comments.

TTB’s Resnick reiterated the department’s stance: “There are those (brands) who some think are undermining the value of the program to begin with, and because of those concerns, we’re going to review it. Our goal here is to protect the integrity of the AVA system for both consumers and producers. And if that means perhaps changing some of the approval process, that’s what we’ll do.”

When that process will begin is undetermined but Resnick added, “In the near future, we’ll enter the rule-making process and open this up for public comments. We’re moving rapidly toward rule-making and I do know there’s a push on this. This one’s going to move rapidly.”

The Wine Institute, which is the powerful lobbying arm for the California wine industry, with offices in Washington, D.C. and San Francisco, also will take another look at the AVA system. According to WI’s president and CEO Bobby Koch, who knows his way around the capital as a lobbyist and is George W. Bush’s brother-in-law, the institute will poll its members on the matter.

“We’re going to have a public policy meeting later this month to begin a dialogue internally – not only on actions by Treasury but what directions they may take,” Koch said. “There is some serious education that needs to take place as well. It’s been a number of years since the rank and file membership has focused on this issue.”

According to Institute’s Wendell Lee, his organization has only focused on one AVA in the past – California Coastal – but this latest matter most assuredly will bring the larger issue back onto center stage.

“We’re curious observers” regarding AVAs, is how Lee described WI’s previous stance on these matters. “But with this latest issue, it will be something that we will have to query our members about and get their response. It’s a major change in Wine Institute’s approach to AVAs and (we need) to see if our members want us to become engaged in this issue.”

Are There Too Many Sub-Appellations Now?

Both Lee and TTB’s Resnick were asked by APPELLATION AMERICA if the AVA system was showing signs of maturation by the fact that there have been so many petitions from AVAs within AVAs? And isn’t that an indication of better defining of specific areas based on unique and definable characteristics?

Resnick declined to respond, indicating that it is not his place to do so. But Lee had some comments pertaining to the notion that two decades into the AVA system, its main purpose seems to be that of a marketing tool rather than an indication of definitive regional characteristics.

“When you look at the underlying purpose of what an AVA could be is, that it’s indicating to the consumer what a region is and where the grapes come from,” he said. “AVAs weren’t designed to be quality designations. They were designed for geographic designations; and they’ve been used as a