For Sale in Texas Only

Lawyers may know law, but they don’t necessarily know regional wine – and the FSO rule changes are good for regional wine.

When the federal government proposed rules to stop wineries from confusing customers by using the For Sale in Texas Only dodge, those of us who care about regional wine wrote glowing reviews of the regulations. Finally, producers would have to call a non-local wine a non-local wine, instead of using some fine print on the back label to get around appellation laws.

Now, though, the lawyers for the other side are taking shots at the proposal, and you’d think those of us who want Texas wine to be from Texas – or Virginia wine to be from Virginia, Missouri wine to be from Missouri, and so forth – were Commie pinkos trying to undermine the American way of life.

“… [C]onsumers right to know where the grapes in their wine come from is compromised,” says the blog post describing the proposal, written by two attorneys from the prestigious Hinman & Carmichael law firm in San Francisco, well known in liquor law circles (and who are not related to me, though one is named Siegel). The post says the rules are unfair and will penalize hard-working winemakers who genuinely want to make great wine using out-of-state grapes.

It also defends “small wineries in remote states” who “won’t be able to provide their consumers with truthful and accurate information about the wine they are drinking locally” if the rules are accepted. Which may be the first time in more than 25 years writing about regional wine that I’ve seen anyone in California take up the cause of small wineries in remote states.

The proposed regulations require wine that doesn’t meet appellation laws for local labeling to be labeled American, or else not list the vintage and the grapes the wine is made to be allowed to a For Sale in Only, or FSO, label. There is nothing onerous about that, and especially for producers who aren’t trying to pull a fast one by using the FSO rules to make wine drinkers think the wine is local. Because FSO rules allow wine that can be mostly out-of-state grapes to carry a label that makes it look like the grapes are all local. As I have written, “This is unfortunately common in regional wine, and has been an especial problem in Texas for the past decade or so.”

I would never try to explain law to a lawyer, and there may be something legal in the Hinman post that I’m missing. But I do know regional wine, maybe better than all but two or three people in the country. And to argue that this law penalizes well-intentioned winemakers is specious. Well-intentioned winemakers are already labeling their wine American, so this law won’t hurt them at all. It will hurt everyone who wants consumers to think a wine is local when it isn’t, and what’s wrong with that?

A proposed change to federal wine label laws could mean the end for wine that says For Sale in Texas Only – a term that implies that a wine is local when it might be made with grapes from anywhere in the world.

The Treasury department’s tax and trade bureau announced this week that it wants to revise the regulations that allow a wine to carry For Sale in Only designation. In Texas, we call it FSTO – which stands for For Sale in Texas Only – but you’ll see FSO labels in every state: For Sale in Colorado Only, For Sale in Pennsylvania Only, and so forth.

Under the new rules, wines labeled FSO won’t be allowed to list the vintage or the grape it is made with, like cabernet sauvignon or chardonnay. Currently, FSO wines can list both and look local in almost every respect, save that they don’t have a state name or other appellation on the front label. The only clue that they aren’t local is a line in small type on the back label that says FSO, and that only wine writers, wine geeks, and winemakers understand.

FSO is sometimes used to circumvent appellation laws when the wine isn’t made with enough local fruit for it to have a state name. This is unfortunately common in regional wine, and has been an especial problem in Texas for the past decade or so, as the number of wineries has almost doubled and grape acreage hasn’t kept up.

That’s because appellation laws require that 75 percent of the grapes used to make the wine must come from that state for it to labeled Texas (or whatever). If a wine is made with less than 75 percent local grapes, it must use the word American on the front label, something producers don’t like to do because it’s obvious that the wine isn’t local. And what’s the point of local wine that isn’t local?

Hence the FSO label.

It’s important to note that FSO isn’t illegal and that many producers use it legitimately. The problem comes when it’s used to disguise non-local wine as local. That, apparently, was the impetus for the rules change – a Georgia winery selling an FSO wine made with Napa Valley grapes in North Carolina, and which caught the attention of a key Napa trade group and the Napa Valley’s U.S. congressman.

In fact, a spokeswoman for U.S. House Rep. Mike Thompson (D-Calif)., who chairs the Congressional wine caucus, emailed me to say that FSO in the Georgia case was “a TTB labeling loophole” and “works against strict and rigorous labeling rules to ensure that consumers know exactly what they are purchasing.”

The actual rules proposal is almost indecipherable unless you practice liquor law. My thanks to Austin attorney Kimberly Frost, who did her usual brilliant job in explaining it to me. The new rules will limit FSO wines to terms like red wine or white wine on the front label, in the hope that producers will use the more accurate American appellation so they can list the grapes and the vintage..

One irony to all this? The new FSO rules may give regional producers incentive to buy California bulk wine and put their label on it. That means we could see more California wine sold by wineries in the other 47 — Texas-bottled Russian River pinot noir, anyone? That’s because the revisions will allow producers to use grape names and vintage on California bulk wine, which they couldn’t do if they bought California grapes or grape juice and combined them with local grapes to make FSO wine.

The tax and trade bureau is taking comments until Aug. 22, but there’s no time frame on when the rules will take effect. My guess, given how slowly the agency works, is that we won’t see anything until the middle of next year, and it could be even later than that.

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