As linked by WineTerroirist, article in WineSearcher by LisaZimmerman on a wine labeling controversy:

It's not altogether clear to me what the exact problem is, but as I understand it:

1. You are a wnry in NM. You buy a bunch of NapaVlly Cabernet grapes and make a wine. If you only sell your wine in NM, you can legally label it as NapaVlly Cabernet, w/ the caveat on the label "For sale in NM only"

2. If you want to sell your NapaVllyCab outside of NM, you must label it as "American Cabernet".

3. If you request from the TTB a Note 160B waiver, you can sell your NapaVllyCab outside of NM labeled as "Napa Vlly Cabernet". Obviously, the NapaVlly Vintners Assoc regard this as unfair competition and are raising a hissy-fit (Kansas colloquialism) to have the 160B waiver repealed.

Gruet plays by the rules (sorta). It used to be labeled as "NM Sparkling Wine" before the sale to Precept Brands because it was made from grapes grown on their estate here in NM. Now, post-Precept, the grapes come primarily WashState grapes. So it is labeled on the back as "American Sparkling Wine". Though on the front label it states "Proudly Produced in NM", which sorta implies it's a NM Sparkling Wine. All above-board & legal.