Modern Wine Industry Still Fears the ‘Feds’ but for Labeling Reasons : Regulations: The Bureau of Alcohol, Tobacco and Firearms decides the fate of guns, smokes and using old rules, wine labels.

A California winery wanted to use a phrase on the label of one of its wines that said, “This wine has lively acidity.” It submitted the label for approval to the Bureau of Alcohol, Tobacco and Firearms.

The label was rejected because the word lively was deemed appropriate only on bottles of sparkling wine, not on table wine.

Rulings such as this confuse and irritate winery owners and generate a dichotomous appraisal of the BATF, the branch of the Treasury Department that regulates the wine industry.

As the agency that collects taxes and monitors winery records, BATF is feared. But not because these are the same “Feds” who, during Prohibition, ran through the Appalachian hills kicking over stills.

Instead, today the major weapons of the folks who regulate the alcoholic beverage industries are the calculator and the label approval form. And whereas beer and distilled spirits are formulated products that change little from year to year, wine changes annually.

Among other things, BATF audits wineries and insures that the wine inside a bottle of varietal wine is 75% of the variety named on the label.

But one of the facts of life for winery owners is that the agency that oversees label approval is also the one that regulates guns, drugs, explosives and tobacco.

“We regulate commodities that are driven by disaster,” said Terry Cates, chief of the industry compliance division of BATF, speaking about some of the products BATF looks after.

A majority of BATF’s 3,400 employees today are concerned with drugs, explosives and guns; alcoholic beverages take a smaller role, tobacco smaller still.

On Nov. 18 a congressionally mandated warning label began appearing on bottles, cans and packages of wine, beer and spirits. It warns against the dangers of birth defects for those who are pregnant, it says that consuming alcoholic beverages can impair your ability to drive a car, and it warns against its use with machinery.

The warning label was implemented by BATF, and it is BATF who will monitor the warning label for the first year of its existence, and then determine what the final ruling on it will be.

Recently, BATF asked wineries not to print more than a one-year supply of labels because the final ruling on the appearance of the warning label won’t be published for at least a year.

Sources say the final warning label will probably differ from the one now in force.

Beyond warning labels, however, BATF regulates everything that appears on packages of alcoholic beverages. All such products must have certain mandatory information on their labels, and wine--which changes every vintage--has regulations for labeling that differ from spirits and beer.

California winery owners often say they are irritated by what they call the antiquated rules BATF uses to regulate labeling and advertising. Technically, it is Part 4 of Title 27, U.S. Code of Federal Regulations, written in 1935.

Though it has been amended throughout the years, Part 4 is not very specific and it is open to interpretation. Some rulings occasionally cause wineries to curse BATF’s decisions.

Yet Tom Busey, recently appointed chief of the product compliance branch of BATF, said American vintners should be happy BATF’s regulations are written as loosely as they are.

Busey spent the last seven years in BATF’s international division, where he analyzed European wine regulations.

“The EEC ‘regs’ were written under a philosophy that says if it’s not specifically permitted, you can’t do it,” said Busey. “Our ‘regs’ say that if something’s not prohibited and it’s not false, there’s probably a way to say it (on a label).”

Busey’s 16 label approval specialists receive some 4,500 label applications per month, many of them identical with last year’s label. These can be rubber-stamped “Approved” without problems.

But new wine terms can confound these people, and Busey acknowledges that having flexible regulations leaves much open to interpretation. Thus some of BATF’s label approval specialists fall back on historic interpretations.

In one recent case, BATF used historic precedent to rule that the word refreshing may appear on a wine label or in an advertisement only if the consumer is also told that the wine should be served chilled.

“In many cases, we have to fall back on past precedence,” said Jim Hunt, coordinator in the wine and beer branch.

Busey added, “I have always felt the ‘regs’ should be more specific,” and Hunt said his office was working on a revision of Part 4 to smooth out regulations covering wine labeling and advertising.

Some time early next year, Hunt said, BATF will publish an advance notice of proposed rule making, seeking recommendations on changes in the regulations. Hunt said, for example, that the industry needs guidelines on terms such as late harvest, early harvest and ice wine, among others.

A revision of Part 4 of the regulations will take about four to five years, he said, but it’s overdue. The last revision in the code was 1978.

Hunt said his own office feels Part 4 is inadequate: “Why should a little winery that grows all its own grapes be prohibited from using the term estate bottled on his label just because he’s not located in a viticultural area?” he asked rhetorically.

He also said his office had received about a dozen applications for specific changes and at least two of those may be implemented soon.

One request, by Merlion Winery of Napa, would permit wine bottles of 500-milliliter size to be marketed in the United States. Current rules list officially approved bottle sizes and the 500-milliliter bottle is not an approved size. (The standard size bottle is 750 milliliters.)

Merlion president George Viera, who sent in the petition, says 500 milliliters is a good size for a couple having dinner because it promotes moderation.

Another petition, by Fetzer Vineyards of Mendocino County, seeks to change the law that now prohibits the use of a state appellation on a bottle of wine made from grapes coming from a non-contiguous state to the one in which the winery is located.

Fetzer seeks the change because it bought grapes grown in Washington had them trucked to its winery and made into wine. Because Washington is not contiguous to California, under current regulations, Fetzer was prohibited from using a Washington appellation on its label. Hunt and others agree this rule might be antiquated.

Busey said wineries who have labels rejected may appeal, and appeals are given serious consideration. Statements that are truthful and not misleading are likely to be approved, he said.

And, referring to the use of precedence as a guide to what is permitted, Busey said, “Maybe our interpretation of 20 years ago is just not applicable to today.”

He said that as more wineries come into existence (there are some 700 in California alone), more wine labels are disallowed. However, he said, “We think label examiners are more sensitized to issues, more aware of wine terms and how they’re used, and possibly things that slipped by before are not slipping by now.”

Last year, even though his division acted upon more than 50,000 label applications, only 36 were initially approved that later were recalled, said Cates.

But the cases in which labels that are perfectly accurate and logical are rejected, and the cases in which labels are approved that violate the regulations frustrate the industry. And one reason this happens is that label approval specialists don’t know enough about wine, Busey admitted.

He said that his label approval staffers “don’t have 60% of the wine knowledge we should have,” and that most were not dedicated wine lovers with a great understanding of wine produced in this country or around the world.

Because of this, Busey acknowledged, some labels may have been rejected that perhaps shouldn’t have been, and some other labels have sailed through that shouldn’t have.

One recent controversial case came about earlier this year when Sebastiani Vineyards applied for, and received approval for, a brand called Domaine Chardonnay. Only later did it come out that Sebastiani intended to sell a wine called Domaine Chardonnay that had no Chardonnay grapes in it. BATF eventually rescinded its approval of that brand name.

“There have been some little inconsistencies over the years,” Busey said, “but we’re not in the business of trying to cost the American wine industry a lot of money. We want to work with them.” He said the Domaine Chardonnay label was initially approved because no one at BATF thought to ask what the wine in question would be made from.

He acknowledged that the Domaine Chardonnay name appearing on a wine containing no Chardonnay could be misleading.

Busey said his office is now looking at its label approval form to end label rejections based on faulty logic or on possible misunderstandings.

Sara Schorske, a label approval specialist and the publisher of an industry newsletter called Compliance Update, said the industry welcomes that attempt. Schorske’s clients have had labels rejected that were not false or misleading. She said the rejections usually were based on silly or flimsy--or nonexistent--logic.

Recently, Schorske said, she heard of a bottle of wine that was bottled for a hospital association, and that used the hospital’s name, that had a label disapproved for a curious reason.

Labeling wine for a hospital is common practice worldwide. One of the most prestigious wine auctions annually is conducted in France’s Burgundy district to benefit the Hospices de Beaune, a series of hospitals. Wine with the Hospices de Beaune label commands top dollar.

In the California case, however, the hospital label was rejected, said Schorske, because someone at BATF reasoned that the name of the hospital on the label, “would imply that the wine had therapeutic benefits.”

And one regulation says that wineries or sellers of wine may not suggest “that the use of wine has curative or therapeutic effects if such statement is untrue . . . (or) misleading.”

The BATF also does laboratory analysis of bottles purchased off store shelves to determine if any unapproved additives have been used.

Here are the meanings of the various statements on the Belvedere Chardonnay wine label, based on regulations of the Bureau of Alcohol, Tobacco and Firearms:

100% Barrel Fermented: All the contents were fermented in barrels. All such statements must be true and the winery must produce records to prove it.

Belvedere: Brand name; the TM mark is not mandatory.

Reserve: Has no legal meaning.

Sonoma County: County where grapes grew.

1988: At least 95% of the wine must be from grapes grown in 1988.

Russian River Valley: The Appellation of Origin of the grapes. Because this is used and not just the county designation, 85% of this wine must be from the region named.

Chardonnay: The name of the grape variety. By law, the wine must contain at least 75% of the grape named. Proprietary or generic wines can be blends of any percentage of any grape varieties, but all of the wine must be made from grapes or grape juice. By California law, no sugar or water may be added.

Produced and Bottled by Belvedere Winery: Belvedere Winery is the producer of the wine, and Belvedere crushed and fermented at least 75% of the wine and bottled it.

Healdsburg, Sonoma County, CA.: Location of the bonded winery where the wine was crushed, fermented and bottled.

Alcohol 13.3%: Percentage of alcohol. However, by BATF regulations this figure may be plus or minus 1.5% -- meaning this wine could legally contain as little as 11.8% or as much as 14.8%

Contains sulfites: Mandated to alert the public to trace amounts of sulfites, which may be used in production as a preservative and which are also produced naturally during fermentation.