A simmering feud between wine producers in Virginia and California over rights to the name "Shenandoah Valley" intensified last week in a packed hearing room in northern California.

At issue in this nomenclature controversy, as in others pending before the Federal Bureau of Alcohol, Tobacco and Firearms (BATF), is the official designation of defined viticultural areas throughout the country and the use of viticultural area names as "appellations of origin" in wine labeling and advertising. The bureau, which granted the first petition for a viticultural designation in 1980 (for tiny Augusta, Mo.), believes official appellations of origin will "help consumers identify wines they may purchase." If Bordeaux -- and thus the French wine industry -- can profit from an "appellation controle'e Margaux," American winemakers believe, the United States could likewise profit from an appellation for "Napa Valley" or "Hudson River Valley."

While almost a dozen viticultural areas have been designated to date without precipitating major controversies, the current squabble over labeling rights to the appellation "Shenandoah Valley" has become a particularly sticky one, involving grape growers in both California and Virginia, a host of purported wine "historians" and two colorful, sparring United States senators. Bill Drake, BATF assistant director, calls the transcontinental dispute "easily the most controversial" of the numerous pending cases.

Last winter, representatives of the Amador County Wine Grape Growers Association petitioned BATF to designate their northern California Shenandoah Valley as an official viticultural area. Almost immediately, protests poured in from Virginia citizens claiming that the international fame and renown of "their" Shenandoah Valley was in danger of being expropriated by the johnny-come-lately Californians. To the Virginians, the name Shenandoah -- which means "daughter of the stars" in the language of indigenous Indians who had applied it to the region as early as the 16th century -- belongs to them, and they view the matter in strictly proprietary terms. Concerned about the likelihood of "consumer confusion" regarding grape origin if the name Shenandoah Valley were used to identify this area of California, the bureau ordered public hearings to be held in the two states.

Testifying before two top BATF officials last week in Jackson, Calif., grape growers and representatives from a dozen Amador County wineries argued that the matter of appellation designation is a viticultural question, not one of historical rights. A staff representative of U.S. Senator S.I. Hayakawa (R-Calif.) conceded that Virginia's Shenandoah Valley has been memorialized in songs, movies and American literature, but nevertheless argued that a comparison of the two valleys' wine industries "leaves little question as to who should receive the appellation."

Lee Sobon, proprietor of the small family-owned Shenandoah Vineyards at Plymouth, Calif., asked BATF to follow its own guidelines in making a strictly viticultural designation. Citing a history of commercial wine production in "his" Shenandoah Valley dating from 1856 and claiming that "his" valley has 12 times the acreage under grape cultivation as have his Virginia counterparts, Sobon asserted that the buying public would not be confused. "They are a very studied public -- a cult almost," he contended.

Other witnesses at the two-day hearing emphasized that certain Amador County wineries, such as Montevina and Sutter Home, had used the Shenandoah Valley designation for many years. Wines from these producers, particularly the unique, high-alcohol zinfandels, have won national attention if not universal praise.

Many of the 42 witnesses contrasted the more advanced development of California's Shenandoah Valley -- 12 bonded wineries and $19 million grossed annually from sales of grapes to 50 other California wineries -- with the three small wineries in Virginia's valley. Senator Hayakawa's representative asserted, "Virginia's valley has no viticultural reputation whatsoever." As for stealing the name "Shenandoah" from Virginia, Amador County grower Ken Deaver, Jr. pleaded not guilty. "After all," he said, "most of the names in America were 'stolen' from England or somewhere else." And in this case, he added, "the Virginians stole 'Shenandoah' from the Indians."

The citizens of the Commonwealth of Virginia are likely to state the issue differently when the BATF hearings begin in Harrisonburg, Va., next month. In addition to valley grape growers and a representative from the Shenandoah Vineyards at Edinburg, Va., opponents of the California petition include fellow "farmer" Sen. John W. Warner (R-Va.). Armed with a barrage of statistics and detailed Library of Congress reports, Warner will personally testify next month that the term "Shenandoah Valley" is fixed in the public's mind as belonging to Virginia, and consequently, that use of that term by the Californians "would be utterly confusing, misleading and tantamount to a 'legalized fraud' on the American wine-buying public." Although Warner will have available for citing 37 books devoted to the fame of the Shenandoah National Park and possibly the 1944 hit recording of Edna L. Smith's "In the Shenandoah Valley (Down Virginia Way)," his "viticultural" evidence, like some Virginia wines, is a bit thin and unmemorable.

One Shenandoah Valley, Va., property owner who will not testify in January is BATF director G.R. Dickerson, on whose leased farm there is a small vineyard. In order to "avoid the appearance of a conflict," Dickerson has excused himself from this case. According to BATF spokesman Jim Lynch, deputy director Stephen E. Higgins will make the final decision in this "sensitive" case, following consultation with Assistant Secretary of the Treasury John M. Walker Jr. It was Walker who announced the administration's approval last month of a plan to abolish BATF next spring and to "reassign" the alcohol and tobacco regulatory functions to the customs branch of the Treasury Department.

Drake, who will make a recommendation regarding the Shenandoah Valley petition several months after the record is closed next month, does not rule out the possibility of a Solomonic resolution, whereby both Virginia and California would be permitted a Shenandoah Valley appellation. "It really depends," he says, "on whether a petitioner can prove its viticultural existence extends over a period longer than the last two weeks."