Addition of New Standards of Fill for Wine and Distilled Spirits; Amendment of Distilled Spirits and Malt Beverage Net Contents Labeling Regulations
| Published date | 29 December 2020 |
| Citation | 85 FR 85514 |
| Record Number | 2020-28747 |
| Section | Rules and Regulations |
| Court | Alcohol And Tobacco Tax And Trade Bureau |
Federal Register, Volume 85 Issue 249 (Tuesday, December 29, 2020)
[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Rules and Regulations]
[Pages 85514-85520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28747]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 4, 5, and 7
[Docket Nos. TTB-2019-0004 and TTB-2019-0005; T.D. TTB-165; Re: Notice
Nos. 182, 183, and 184]
RIN 1513-AB56 and 1513-AC45
Addition of New Standards of Fill for Wine and Distilled Spirits;
Amendment of Distilled Spirits and Malt Beverage Net Contents Labeling
Regulations
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Final rule; Treasury decision.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Alcohol and Tobacco Tax and Trade
Bureau (TTB) regulations that govern wine and distilled spirits
containers to add seven new standards of fill for wine and distilled
spirits. Although TTB had originally proposed to generally eliminate
the standards of fill for wine and distilled spirits, TTB is not
adopting that proposal at this time. The amendments described in this
final rule will provide bottlers with flexibility by allowing the use
of the added container sizes, and will facilitate the movement of goods
in domestic and international commerce, while also providing consumers
broader purchasing options.
TTB is also amending the labeling regulations for distilled spirits
and malt beverages to reflect current policy by specifically stating in
the regulations that distilled spirits may be labeled with the
equivalent standard United States (U.S.) measure in addition to the
mandatory metric measure, and that malt beverages may be labeled with
the equivalent metric measure in addition to the mandatory U.S.
measure.
DATES: This final rule is effective December 29, 2020.
FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco
Tax and Trade Bureau, Regulations and Rulings Division; telephone 202-
453-1039, ext. 275.
SUPPLEMENTARY INFORMATION:
Background
TTB Authority
The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers
regulations setting forth standards of fill for containers of wine and
distilled spirits products distributed within the United States. For
wine, the authority to establish these standards is based on section
105(e) of the Federal Alcohol Administration Act (FAA Act), codified at
27 U.S.C. 205(e), which authorizes the Secretary of the Treasury to
prescribe regulations relating to the ``packaging, marking, branding,
and labeling and size and fill'' of alcohol beverage containers ``as
will prohibit deception of the consumer with respect to such products
or the quantity thereof * * *.'' For distilled spirits, the authority
to establish standards of fill is based on two provisions of law: (1)
Section 205(e) of the FAA Act as discussed above, and (2) section
5301(a) of the Internal Revenue Code of 1986 (IRC), codified at 26
U.S.C. 5301(a). Section 5301(a) of the IRC authorizes the Secretary of
the Treasury to prescribe regulations ``to regulate the kind, size,
branding, marking, sale, resale, possession, use, and reuse of
containers (of a capacity of not more than 5 wine gallons) designed or
intended for use for the sale of distilled spirits * * *'' when the
Secretary determines that such action is necessary to protect the
revenue. TTB administers these IRC and FAA Act provisions pursuant to
section 1111(d) of the Homeland Security Act of 2002, as codified at 6
U.S.C. 531(d). In addition, the Secretary of the Treasury has delegated
certain administrative and enforcement authorities to TTB through
Treasury Order 120-01.
Current Standards of Fill for Wine
The standards of fill for wine are contained in subpart H of part 4
of the TTB regulations (27 CFR part 4). The term ``standard of fill''
is used in the TTB regulations and in this document to refer to the
authorized amount of liquid in the container, rather than the size or
capacity of the container itself. For better readability, however, this
document sometimes uses the terms ``size'' or ``container size'' and
``standards of fill'' interchangeably. Within subpart H, paragraph (a)
of Sec. 4.72 (27 CFR 4.72(a)) authorizes the use of the following
metric standards of fill for containers other than those described in
paragraph (b) of that section:
3 liters;
1.5 liters;
1 liter;
750 milliliters;
500 milliliters;
375 milliliters;
187 milliliters;
100 milliliters; and
50 milliliters.
Paragraph (b) of Sec. 4.72 states that wine may be bottled or
packed in containers of 4 liters or larger if the containers are filled
and labeled in quantities of even liters (4 liters, 5 liters, 6 liters,
etc.).
[[Page 85515]]
Current Headspace Requirements for Wine
Requirements for headspace, the empty space between the top of the
wine and the top of the container, are also contained in subpart H of
27 CFR part 4. Within subpart H, paragraph (a)(3) of Sec. 4.71 (27 CFR
4.71(a)(3)) states that a standard wine container must be made and
filled so as to have a headspace not in excess of 6 percent of the
total capacity of the container after closure if the net content of the
container is 187 milliliters or more and, in the case of all other wine
containers, a headspace not in excess of 10 percent of such capacity.
Current Standards of Fill for Distilled Spirits
The standards of fill for distilled spirits are contained in
subpart E of part 5 of the TTB regulations (27 CFR part 5). Within
subpart E, paragraph (a)(1) of Sec. 5.47a (27 CFR 5.47a(a)(1))
specifies the following metric standards of fill for containers other
than those described in paragraph (a)(2) of that section:
1.75 liters;
1 liter;
750 milliliters;
500 milliliters (authorized only until June 30, 1989);
375 milliliters;
200 milliliters;
100 milliliters; and
50 milliliters.
In the case of distilled spirits in metal containers that have the
general shape and design of a can, that have a closure which is an
integral part of the container, and that cannot be readily reclosed
after opening, paragraph (a)(2) of Sec. 5.47a authorizes the use of
the following metric standards of fill:
355 milliliters;
200 milliliters;
100 milliliters; and
50 milliliters.
In addition to the metric standards specified above, Sec. 5.47a
contains provisions regarding tolerances (discrepancies between actual
and stated fill), unreasonable shortages in fill, and distilled spirits
bottled or imported before January 1, 1980, and marketed or released
from customs custody on or after that date (the date on which the U.S.
volumetric standards were replaced by the Sec. 5.47a metric standards,
as discussed in more detail below).
Current Headspace Requirements for Distilled Spirits
Requirements for headspace are contained in 27 CFR 5.46(b), which
states that a standard liquor bottle of a capacity of 200 milliliters
or more shall be held to be misleading if it has a headspace in excess
of 8 percent of the total capacity of the bottle after closure.
Malt Beverages
Unlike wine and distilled spirits, there are no standards of fill
prescribed for malt beverages under the FAA Act. However, in the case
of malt beverages, Sec. 7.22(a)(4) of the TTB regulations (27 CFR
7.22(a)(4)) requires the display of net contents on the brand label as
mandatory label information.
Notices of Proposed Rulemaking
On July 1, 2019, TTB published Notice Nos. 182 and 183 in the
Federal Register (84 FR 31257 and 84 FR 31264).
Notice No. 182 proposed to eliminate all but a minimum standard of
fill for wine containers. The minimum container size was retained to
ensure the container would be of sufficient size to accommodate
required labeling. The notice also proposed, in response to a petition,
to increase the minimum headspace from not in excess of 10 percent of
the container's capacity to not in excess of 30 percent for clear
containers 100 milliliters or less. Finally, TTB also sought comments
on alternatives to eliminating the standards of fill, including
authorizing some or all of the petitioned-for sizes that were discussed
in the notice, and developing an expedited administrative process for
adding new standards in the future.
Notice No. 183 proposed to eliminate all but minimum and maximum
standards of fill for distilled spirits. Retaining the minimum was
proposed to ensure the container would be of sufficient size to
accommodate required labeling, while the maximum maintains the
distinction between bottled and bulk products. The FAA Act at 27 U.S.C.
206(c) establishes a bulk distilled spirits container as one having a
capacity in excess of one wine gallon, while paragraphs (a) and (b) of
section 206 do not permit the retail sale of distilled spirits in bulk
containers to consumers.
In Notice No. 183, TTB also proposed to amend the labeling
regulations for distilled spirits and malt beverages to reflect current
policy by specifically stating that distilled spirits may be labeled
with the equivalent standard U.S. measure in addition to the mandatory
metric measure, and that malt beverages may be labeled with the
equivalent metric measure in addition to the mandatory U.S. measure.
Similar labeling is authorized for wine labels in 27 CFR 4.37(b) and
has been authorized for distilled spirits and malt beverage labels as a
matter of policy, but has not been explicitly stated in the distilled
spirits and malt beverage regulations.
As in Notice No. 182, in Notice No. 183 TTB also sought comments on
alternatives to eliminating the standards of fill, including
authorizing some or all of the petitioned-for sizes that were discussed
in the notice, and developing an expedited administrative process for
adding new standards in the future.
In Notice Nos. 182 and 183, TTB provided reasons for proposing the
elimination of the standards of fill, including the following:
1. It would address several petitions TTB had received on this
issue, would eliminate the need for industry members to petition for
additional authorizations if marketplace conditions favor different
standards in the future, and would eliminate restrictions on
competition and the movement of goods in domestic and international
commerce.
2. It would address concerns that the current standards of fill
unnecessarily limit manufacturing options and consumer purchasing
options, particularly where consumers may seek smaller containers to
target a specific amount of consumption.
3. TTB believed that the current and proposed labeling requirements
regarding net contents (see 27 CFR 4.32(b)(2) and 4.37, 27 CFR
5.32(b)(3) and 5.38) and those regarding the design and fill of
containers (see 27 CFR 4.71 and 27 CFR 5.46) provide consumers with
adequate information about container contents, so standards of fill are
not necessary to prevent consumer confusion.
4. Limiting standards of fill is no longer necessary to ensure
accurate calculation of tax liabilities or to protect the revenue.
5. TTB's current experience with malt beverages, for which there is
no Federal standard of fill requirement, shows no disproportionate
level of revenue compliance or consumer deception issues related to
bottle sizes.
The comment periods for Notice Nos. 182 and 183 originally closed
on August 30, 2019, but TTB reopened and extended the comment periods
at the request of commenters (see Notice No. 184, 84 FR 39786). The
extended comment periods ended October 30, 2019. Because Notice Nos.
182 and 183 proposed similar regulatory amendments and the substance of
the comments received were similar, TTB is finalizing the two notices
in one final rule.
Comments
TTB received 644 comments in response to Notice No. 182 and 603
[[Page 85516]]
comments in response to Notice No. 183, for a total of 1,247 comments.
Commenters included producers, wholesale distributers, retailers, trade
associations (domestic and foreign), members of Congress, foreign
government entities, and members of the public.
TTB also considered 79 comments concerning standards of fill that
were submitted in response to Notice No. 176, Modernization of the
Labeling and Advertising Regulations for Wine, Distilled Spirits, and
Malt Beverages, published in the Federal Register (83 FR 60562) on
November 26, 2018. When these additional comments are taken into
account, TTB reviewed 1,326 comments regarding standard of fill issues
as summarized below.
Comments on the Proposed Elimination of the Standards of Fill
Of the 1,326 comments TTB received, 1,251 comments address the
proposed elimination of the standards of fill. A total of 110 comments
support the proposal--40 comments to Notice No. 182, 40 comments to
Notice No. 183, and 30 comments to Notice No. 176. Of the 1,141
comments opposed to eliminating the standards of fill--575 commenters
to Notice No. 182, 560 commenters to Notice No. 183, and 6 comments to
Notice No. 176--960 are nearly identical form letters, a majority of
which are associated with three wholesale distributing companies and
their employees.
Commenters supporting the elimination of the standards of fill
generally state that the standards are unnecessary, restrictive to
producers, and out-of-date. They note that there are no standards of
fill for malt beverages or for other consumer products, and state that
this does not cause difficulties. They contend that eliminating the
standards of fill will result in lower costs for producers, will
facilitate international trade, and will provide consumers with more
options in beverage alcohol packaging. The American Craft Spirits
Association (Notice No. 183, comment 78) states that it surveyed its
membership concerning the rulemaking and ``found overwhelming support
for elimination of the current standards.'' It adds that ``[i]n order
to promote innovation within the industry and competitively enter
products into the global marketplace, smaller spirits producers must
have maximum flexibility to quickly meet consumer demand as well as
diverse regulatory standards.''
Several of the wine commenters who support elimination of the
standards of fill cite the fact that they are unable to use certain can
sizes to package wine because they are not among the authorized
standard sizes. For example, Senator Charles Schumer (Notice No. 182,
comment 12) cites the inability of New York wineries to package their
wine in 250 milliliter and 355 milliliter cans as grounds for
eliminating the standard of fill regulations. The Senator argues that
these sizes are popular single serving sizes that are readily available
to producers since they are already mass produced for beer and soda.
Commenters opposing the elimination of the standards of fill cite a
number of reasons to retain the standards. The most often cited
argument is that the standards of fill prevent consumer confusion. For
example, commenters state that eliminating the standards of fill will
cause a proliferation of sizes, making it difficult for consumers to
compare prices on similar products. The Wine Institute (Notice No. 182,
comment 162) states ``consumers may not be able to tell the difference
between a 750 milliliter wine bottle and a 700 milliliter bottle, which
could create an opportunity for producers to reduce costs and taxes
while not necessarily reducing their prices. The current federal
standards of fill allow consumers to shop by cost comparison without
needing to calculate the price per milliliter.''
A handful of commenters cite the European Union's (EU) experience
prior to 1990, when it had no standards of fill for distilled spirits.
Drinks Ireland (Notice No. 183, comment 77) states that without
standards of fill the market situation was ``complex, expensive, and
confusing for consumers.'' The American Distilled Spirits Association
(Notice No. 183, comment 111), citing comments submitted in response to
the Bureau of Alcohol, Tobacco and Firearm's 1987 Advance Notice of
Proposed Rulemaking (Notice No. 633, June 24, 1987, 52 FR 23685) on
standards of fill, notes that the EU's lack of standards resulted in
``a confusing array of bottle sizes being sold side-by-side on retail
shelves creating an environment ripe for consumer confusion.''
A number of commenters state that eliminating the standards of fill
is inconsistent with the FAA Act. A letter signed by 52 members of the
Congressional Wine Caucus states it would ``run directly counter to
TTB's stated mission of prohibiting consumer deception'' (Notice No.
182, comment 168). Similar comments include that of the Wine Institute,
which comments that eliminating the standards of fill ``would lead to
the chaotic consumer marketplace that the FAA Act was intended to
prevent.'' Six industry associations filing jointly (Notice No. 183,
comment 108) state that retaining the standards of fill is consistent
with TTB's statutory authority under the FAA Act to protect consumers.
Opposing comments also argued that eliminating the standards of
fill will result in conflicting State requirements. These commenters
report that a number of States defer to the Federal standard of fill
requirements, so elimination could result in a patchwork of different
State rules. The Congressional Wine Caucus states: ``38 states defer to
the federal standard and if it is eliminated, these states will be
forced to enact new container size requirements. This will create
serious disruption to business as wineries would have to overhaul their
sales, marketing, and compliance models to adjust to 38 varying state
regulations.''
No State entity submitted comments to either notice, although TTB
did request comments in Notice Nos. 182 and 183 from State regulators
on whether the proposal would present regulatory issues at a State
level. However, TTB did receive a comment from the National Alcohol
Beverage Control Association (NABCA), which represents jurisdictions,
including States, which directly control the distribution and sale of
beverage alcohol within their borders. NABCA (Notice No. 182, comment
64; Notice No. 183, comment 55) opposes the elimination of the
standards of fill and comments that the States currently using the
Federal standards will enact new standard of fill requirements that
could be different in each State.
Numerous commenters state that a proliferation in sizes will cause
harm to distributors and retailers. According to many of these
commenters, more sizes will result in additional SKUs, which will
increase costs for these industry members. Southern Glazer's Wine &
Spirits (Notice No. 183, comment 66) states that the increase in SKUs
``will have cascading economic ramifications throughout the entire
value chain--from supplier to wholesaler to retailer to the end
consumer. It will require major wholesalers, for example, to invest in
elevated inventory levels, enhanced material handling capabilities, and
increased storage space.'' The California Grocers Association (Notice
No. 182, comment 169) states that ``Eliminating the regulation on
standard wine and spirits sizes will increase our costs,'' and provides
examples relating to such things as shelf space and inventory.
Opponents also contend that eliminating the standards of fill will
[[Page 85517]]
cause an increase in counterfeit and gray market imports that are
currently prevented because the standards do not include some common
international sizes, most specifically the 700 milliliter size. A large
number of commenters state that adulterated products could more easily
enter the country, resulting in injury and possibly death to consumers.
This concern is expressed by Mo[euml]t Hennessy USA, Inc. (Notice No.
183, comment 100) in its comment: ``* * * we wish to express a serious
concern that will be impacted by changes to the existing standards--
unauthorized importation of distilled spirits and wine products * * *.
Allowing unauthorized imports robs Mo[euml]t Hennessy USA and other
authorized importers of the opportunity to protect against those risks
and to ensure that our products are being sold in the intended state
and manner. U.S. consumers should never face the risk of injury or
death due to untraceable adulterated or counterfeit product brought in
by an unauthorized importer.''
Finally, a few commenters argue that malt beverages are different
in meaningful ways from wine and distilled spirits, and the fact that
there are no standards of fill for malt beverages does not imply that
there should not be standards of fill for wine and distilled spirits.
These commenters state that because of historical practices consumers
have different expectations for malt beverages than they do for wine
and spirits. Additionally, Sazerac (Notice No. 183, comment 67) reports
that a number of States mandate specific standards of fill for malt
beverages, which it argues has driven standardization nationally.
Heaven Hill Brands (Notice No. 183, comment 96) notes that in most
states malt beverage distributors have the ability to distribute
directly. It contends that ``[t]his direct distribution by suppliers
allows for more flexibility in size due to fewer limitations resulting
from a distributor's management of malt beverage inventory. Distilled
spirits, however, must go through the distributor tier and have a much
longer shelf life creating long periods of storage.''
Comments Regarding the Addition of Specific Sizes
Both Notice Nos. 182 and 183 stated that TTB was also considering
maintaining the standards of fill, but ``liberalizing the existing
regulatory scheme'' by adding certain additional standards of fill. In
the respective notices, TTB listed sizes for which it had received a
petition as 200, 250, 355, 620, and 700 milliliters and 2.25 liters for
wine, and 700, 720, 900 milliliter and 1.8 liters for distilled
spirits. A large number of commenters expressed support for the
addition of specific petitioned-for sizes as follows:
Wine--250 milliliter: This size was supported by 51 commenters.
Proponents of this size note that some wines are currently being sold
in aggregate packages of four 250 milliliter cans, which together equal
one liter, an authorized standard of fill. Industry members state that
the 250 milliliter is popular with consumers as a single serving size,
with some further stating that this size promotes portion control and
responsible drinking. In his comment, Senator Schumer states that ``a
recent wine consumer survey by WICResearch.com concluded that `the
total wine market will grow in order to satisfy consumer preferences,'
if TTB permitted sales of wine-in-a-can in a single 250 milliliter
size, which the survey revealed is the single-serve size most popular
with consumers.'' Wine Institute notes that 250 milliliter containers
are ``ideal serving containers for consumption at certain licensed
venues such as stadiums, parks and other locations where glass or
larger containers are not viable,'' and retailers wish to sell them
individually in such venues.
Some commenters report that retailers often separate the containers
from the aggregate packages, causing trade enforcement issues at the
State level. To remedy this, these commenters recommend TTB approve the
250 milliliter size as an authorized standard of fill.
Wine--355 milliliter (12 oz.): This size was supported by 38
commenters. Several cider producers state that since the 355 milliliter
(12 oz) can size is standard in the beer industry, their customers want
and expect that size, making it critical to their commercial success.
These producers note that, in the production of cider, apples often
naturally ferment to an alcohol by volume (abv) level just above 7.4%,
so producers often take steps to lower the abv below 7% so that the
standards of fill regulations will not apply, enabling them to use 355
milliliter containers. They state that sugar levels in apples vary
widely depending on climate and other factors, making final alcohol
levels difficult to predict. They argue that being able to use the 355
milliliter container size will eliminate this uncertainty.
Wine--200 milliliter: This size was supported by 23 commenters.
Several cider industry members state that their customers are seeking
products in this size. The Vermont Grape and Wine Council (Notice No.
182, comment 74) and Presque Isle Wine Cellars (Notice No. 182, comment
37) state that this size is good for ice wine and is the size used in
Canada for ice wine. Other commenters note that this size is authorized
in Europe, so its approval will facilitate trade.
Other wine sizes: The other container sizes proposed in Notice No.
182--620 milliliter and 700 milliliter--were supported by two comments
and one comment, respectively. TTB received no comments specifically
addressing the proposed 2.25 liter size. However, TTB received comments
proposing additional wine sizes that had not been proposed in Notice
No. 182: 20 milliliter, 180 milliliter, 225 milliliter, 255 milliliter,
300 milliliter, 360 milliliter, 473 milliliter (16 oz), 475 milliliter,
550 milliliter, 568 milliliter, 650 milliliter, 720 milliliter, 1.8
liters, and 3.5 liters. Several of these sizes were suggested in Notice
No. 176 by cider producers who contend that the sizes are important for
their industry's success. Other proponents state that their proposed
sizes are authorized in another country, so approval will facilitate
trade.
Distilled spirits--700 milliliter: This size was supported by 18
commenters, who generally state that the 700 milliliter size is popular
in other countries, so approval will facilitate trade and allow U.S.
consumers more options in imported distilled spirits. However, several
other commenters specifically cite the 700 milliliter size as a size
that should not be approved. These commenters state that 700 milliliter
is too close to the currently approved 750 milliliter size, and also
contend that the size is the most popular bottle size worldwide with
counterfeiters. Constellation Brands, Inc. (Notice No. 183, comment
107) states that the ``existence of both a 750 ml and 700 ml size in
the marketplace could lead to consumer confusion and allow for
confusing or misleading pricing practices. The addition of a 700 ml
size could also enable sales by unauthorized importers.'' Moet Hennessy
USA, Inc. (Notice No. 183, comment 100) states that the prohibition
against the 700 milliliter size has kept many unauthorized spirits
imports out. Approval, it believes, ``will `open the floodgates' for
unauthorized spirits imports into the U.S.'' It further states that
``unreputable operators * * * refill used spirits bottles with
different liquid, causing potential serious risk to consumers.''
Other distilled spirits sizes: Three of the petitioned-for sizes--
720 milliliter, 900 milliliter, and 1.8 liters--received
[[Page 85518]]
support from three Japanese trade associations and the Japanese
National Tax Agency. Several other additional distilled spirits sizes
were proposed by commenters that had not been proposed in Notice No.
183: 20 milliliter, 250 milliliter, 350 milliliter, 355 milliliter, 500
milliliter, 1.5 liters, 2 liters, 3 liters, 3.75 liters, and 5 gallons.
Five commenters proposed the 1.5 liters size, stating that the size is
used in other countries, so its approval will align the standards of
fill more closely with the global marketplace. The EU referenced all
nine of its authorized sizes (100 milliliter, 200 milliliter, 350
milliliter, 500 milliliter, 700 milliliter, 1 liter, 1.5 liters, 1.75
liters and 2 liters) in its comment. The proponents of these sizes cite
their usage in other countries and state that their approval will
facilitate trade and offer additional options to U.S. consumers.
Comments Opposing Addition of Any New Sizes
Numerous commenters to both notices opposed the approval of any new
sizes, stating that the existing standards of fill already provide a
wide variety of package sizes. Some of these commenters are not against
the addition of new sizes per se, but rather believe that the current
rulemaking did not provide enough opportunity for the public to focus
on the petitioned-for sizes. E. & J. Gallo Winery (Notice No. 182,
comment 146) states that ``[e]ach proposed new standard of fill should
be the subject of a separate rulemaking proceeding so that commenters
can review each in the context of existing standards of fill and any
other proposals under consideration. Among other things, those
rulemakings should address whether a proposed new standard of fill
should replace an existing standard of fill or whether it should be
limited to a particular package type such as cans or Tetra Paks. This
type of deliberation is not possible in the current rulemaking.''
Comments on Proposal for an Expedited Approval Process
Both Notice Nos. 182 and 183 proposed the option of instituting an
expedited approval process for standards of fill were TTB to continue
to approve individual standards. A total of 33 comments from both
notices specifically address this proposal.
Only four comments express complete support for an expedited
approval process. The U.S. Association of Cider Makers (Notice No. 182,
comment 158) supports an expedited process because ``the industry and
marketplace change faster than the existing proposed rulemaking process
can react, and we believe it is unreasonable to rely on NPRMs to
quickly respond to market innovations.'' The National Association of
Beverage Importers (Notice No. 182, comment 136 and Notice No. 183,
comment 105) states that an administrative process would ``enable TTB
to `test the waters' of multiple sizes.'' It could, for example, permit
the optional use of a 700 milliliter distilled spirits bottle for a
limited period of time to determine how consumers react and the
industry implements the introduction of this standard size from the
global market.
Thirteen comments express complete opposition to any administrative
approval process. These commenters generally state that new sizes
should be approved by rulemaking, which will allow for public comments
and transparency. Some of them also comment that it is not clear how
such a process would work. Sazerac Company, Inc. (Notice No. 182,
comment 85) states that ``the public should be given a meaningful
opportunity to comment on potential changes as this should not be
merely an administrative decision. Without sufficiently clear,
publically-available standards, these standards could change over time
without public input as officials change.'' Sazerac also states that it
believes comment would be required under the Administrative Procedure
Act (APA) because the standards of fill are binding on industry.
An additional 16 comments express support for an expedited process
if it includes a public comment period or an opportunity for ``open
consultation'' with all stakeholders before new sizes are approved.
Several of these commenters also state that they would like additional
information about how an expedited process would work.
Other Comments
No comments were received regarding the Notice No. 182 proposal to
increase the minimum headspace for wine containers from not in excess
of 10 percent of the container's capacity to not in excess of 30
percent for clear containers 100 milliliters or less.
Comments on Labeling Distilled Spirits With U.S. Measure and Malt
Beverages With Metric Measure
Five comments to Notice No. 183 opposed the proposal to amend the
labeling regulations for distilled spirits and malt beverages to
specifically provide that distilled spirits may be labeled with the
equivalent standard U.S. measure in addition to the mandatory metric
measure, and that malt beverages may be labeled with the equivalent
metric measure in addition to the mandatory U.S. measure. Such labeling
has been allowed under TTB policy, but it has not been explicitly
authorized in the regulations. These commenters state that such dual
labeling is unnecessary and will cause ``label clutter.'' Six comments
to Notice No. 182 expressed opposition to allowing U.S. units on wine
labels, even though TTB made no proposal on the issue in Notice No.
182, as the wine labeling regulations already state that wine may be
labeled with the equivalent U.S. unit in addition to the mandatory
metric unit. See 27 CFR 4.37(b).
TTB Analysis
As discussed above, TTB received 110 comments that expressed
support for eliminating the standards of fill, asserting that
eliminating the standards will provide them with greater flexibility to
meet consumer demands and grow their businesses. TTB received 1,141
comments that oppose eliminating the standards of fill (including the
937 nearly identical comments from individuals associated with three
industry members). These commenters contended that eliminating the
standards of fill would cause consumer confusion and potentially lead
to a proliferation of differing State container size requirements that
could cause further consumer confusion. Commenters also expressed
concern about significant market disruption.
Based upon these comments, particularly those with regard to the
potential consumer confusion, TTB believes that the appropriate action
at this time is not to eliminate all standards of fill but instead to
identify and authorize specific standards of fill from among those
sizes that were the subject of notice and comment and for which TTB
received sufficient information to make a determination.
TTB notes that, while some commenters expressed support for
eliminating of the standards of fill (including Senator Charles
Schumer), the comments themselves focused specifically upon ensuring
that certain can sizes, such as 250 milliliter and 355 milliliter for
wine, were authorized. TTB believes that its authorization of these
sizes largely addresses these commenters' concerns.
Commenters expressed considerable support for most of the sizes TTB
included in its proposals. However, few commenters supported
authorizing the 620 milliliter, 700 milliliter, and 2.25 liter sizes
for wine (which received specific support from 2, 1, and 0 commenters
respectively).
[[Page 85519]]
The 700 milliliter size for distilled spirits was the only proposed
size, for either wine or distilled spirits, for which some expressed
opposition. With regard to the 700 milliliter size, TTB received
supportive comments from industry members who state that approval of
the 700 milliliter size for distilled spirits will facilitate trade for
U.S. exporters and importers, because it is commonly used in other
countries, and none of the commenters opposed to the 700-milliliter
size provided information that would support a finding that the 700-
milliliter size will be any more misleading to consumers than the other
sizes supported by commenters generally. While some commenters noted
that the 700-milliliter size is close to the already authorized 750-
milliter size, as noted above, commenters supported approving the 355-
milliliter size for wine, although 375-milliter is already an
authorized size, and no commenters suggested that the closeness in size
would lead to confusion. Additionally, although TTB understands the
concern that commenters raised with regard to the potential for
counterfeit products in the 700-milliliter size, TTB believes it is
appropriate to continue to apply enforcement measures to deal with
counterfeit products of any size.
In light of this, TTB believes that the addition of most of the
petitioned-for sizes will result in many of the same benefits that were
intended when it proposed eliminating the standards of fill--providing
bottlers with more flexibility, facilitating the movement of goods in
domestic and international commerce, and providing additional
purchasing options to consumers, but without causing the disruption
commenters expressed concerns over regarding the proposed elimination
of standards of fill.
U.S.-Japan Trade Agreement
On October 7, 2019, the United States and Japan reached an
agreement (the Agreement) on market access for certain agriculture and
industrial goods. On December 30, 2019, a Federal Register notice (84
FR 72187) was issued to implement the Agreement. As part of the
Agreement, the United States reached a side letter agreement with Japan
dated October 7, 2019, which addresses issues related to alcohol
beverages, including standards of fill (``Side Letter''). See https://ustr.gov/sites/default/files/files/agreements/japan/Letter_Exchange_on_Alcoholic_Beverages.pdf. The Side Letter states that
the U.S. Department of the Treasury will take final action on Notice
Nos. 182 and 183. If the final action does not address certain sizes--
180, 300, 360, 550, 720 milliliters, and 1.8 liters for wine, and 700,
720, 900 milliliters, and 1.8 liters for distilled spirits--then the
U.S. Department of the Treasury shall propose new rulemaking to allow
for those sizes. The Side Letter took effect with the U.S.-Japan Trade
Agreement, which entered into force on January 1, 2020.
In Notice No. 183, TTB referenced the distilled spirits sizes
listed in the Side Letter. It described the petitions from three
Japanese trade associations and a Japanese government agency for those
sizes. These entities submitted comments that supported the elimination
of the standards of fill, but further stated that, if the standards are
not eliminated, they support the approval of their petitioned-for
sizes. These proposed sizes for distilled spirits are discussed in
Notice No. 183. Because TTB had not received petitions for the wine
sizes listed in the Side Letter, TTB did not reference those sizes for
wine in Notice No. 182. Nevertheless, TTB did receive comments from a
Japanese trade association and a Japanese government agency proposing
the approval of those sizes. The two comments support the elimination
of the standards of fill, but requested the approval of the 180, 300,
360, 550, 720 milliliters, and 1.8 liters sizes for wine if the
standards of fill for wine are not eliminated.
Administrative Approval Process
TTB requested comments regarding whether it should include in the
new regulations an expedited administrative approval process that would
replace the requirement for separate rulemaking in order to add new
sizes to the standards of fill. This expedited approval process was
offered as a quicker and less burdensome way to facilitate the
expansion of bottled sizes without creating unnecessary industry
burden. However, few commenters supported the process unless it
included a public comment period or other means to consult with the
industry, similar to the existing rulemaking process. Other commenters
expressed support for an administrative approval process provided that
TTB establishes criteria for approving additional sizes, and stated
that TTB had not identified appropriate criteria for such a procedure.
Consequently, TTB believes that an administrative procedure for
approving new standards of fill is not appropriate at this time.
TTB Finding
After careful analysis of the comments discussed above, TTB has
decided not to eliminate the standards of fill for wine and distilled
spirits. Rather, TTB is adding certain sizes for which TTB had aired
petitions in Notice Nos. 182 and 183. Based upon the comments received
to those notices, TTB is authorizing the addition of the 200, 250, and
355 milliliters sizes for wine to Sec. 4.72, and the 700, 720, 900
milliliters, and 1.8 liters sizes for distilled spirits to Sec. 5.47a.
At this time, TTB is not adding the 620 milliliters, 700
milliliters, and 2.25 liter wine sizes for which it had aired
petitions, because comments received regarding these sizes did not
provide sufficient information for TTB to determine that they should be
authorized standards of fill. TTB will consider including these sizes
and any new petitions for additional sizes in subsequent rulemaking.
Moreover, TTB is not adding a 2-milliliter size for distilled spirits
that was the subject of a petition because, as discussed in Notice No.
183, TTB believes that a minimum size of 50 milliliters is needed to
ensure sufficient space on the container for required labeling.
TTB is adopting the proposal in Notice No. 182 to increase the
minimum headspace in wine containers from not in excess of 10 percent
of the container's capacity to not in excess of 30 percent for clear
containers 100 milliliters or less. TTB is likewise adopting the Notice
No. 183 proposal to amend the labeling regulations for distilled
spirits and malt beverages to specifically provide that distilled
spirits may be labeled with the equivalent standard U.S. measure in
addition to the mandatory metric measure, and that malt beverages may
be labeled with the equivalent metric measure in addition to the
mandatory U.S. measure.
TTB will conduct rulemaking to propose the addition of new
standards of fill for wine, including the 180, 300, 360, 550, 720
milliliters, and 1.8 L sizes that Japanese government entities and
Japanese industry associations requested during the comment period, and
which were included in the Side Letter signed as part of the U.S.-Japan
Trade Agreement discussed above.
Regulatory Analysis and Notices
Regulatory Flexibility Act
TTB certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. This final
rule will provide wine and distilled spirits bottlers and importers
with additional flexibility to use new bottle sizes if they so choose.
This proposed regulation does not impose any new reporting,
[[Page 85520]]
recordkeeping, or other administrative requirements. Accordingly, a
regulatory flexibility analysis is not required.
Paperwork Reduction Act
The collection of information in this rule has been previously
approved by the Office of Management and Budget (OMB) under the title
``Labeling and Advertising Requirements Under the Federal Alcohol
Administration Act,'' and assigned control number 1513-0087. This
regulation will not result in a substantive or material change in the
previously approved collection action, since the nature of the
mandatory information that must appear on labels affixed to the
container remains unchanged.
Executive Order 12866
It has been determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866 of September 30,
1993. Therefore, a regulatory assessment is not necessary.
Inapplicability of the Delayed Effective Date Requirement
Because these regulations relieve a restriction by providing wine
and distilled spirits bottlers and importers with additional
flexibility to use new bottle sizes if they so choose, and do not
impose any new reporting, recordkeeping, or other administrative
requirements, it has been determined, pursuant to 5 U.S.C. 553(d)(1),
that these regulations will be issued without a delayed effective date.
Drafting Information
Jennifer Berry of the Regulations and Rulings Division drafted this
document, along with other Department of the Treasury personnel.
List of Subjects
27 CFR Part 4
Advertising, Alcohol and alcoholic beverages, Consumer protection,
Customs duties and inspection, Export, Imports, Labeling, Packaging and
containers, Reporting and recordkeeping requirements, Wine.
27 CFR Part 5
Advertising, Alcohol and alcoholic beverages, Consumer protection,
Customs duties and inspection, Exports, Imports, Labeling, Liquors,
Packaging and containers, Reporting and recordkeeping requirements.
27 CFR Part 7
Advertising, Alcohol and alcoholic beverages, Beer, Customs duties
and inspection, Exports, Imports, Labeling, Malt beverages, Packaging
and containers. Reporting and recordkeeping requirements.
Amendment to the Regulations
For the reasons discussed in the preamble, TTB is amending 27 CFR
parts 4, 5, and 7 as follows:
PART 4--LABELING AND ADVERTISING OF WINE
0
1. The authority citation for part 4 continues to read as follows:
Authority: 27 U.S.C. 205, unless otherwise noted.
0
2. Section 4.71(a)(3) is revised to read as follows:
Sec. 4.71 Standard wine containers.
(a) * * *
(3) Headspace. It must be designed and filled so that the
headspace, or empty space between the top of the wine and the top of
the container, meets the following specifications:
(i) 187 mL or more. If the net contents stated on the label are 187
milliliters or more, the headspace must not exceed 6 percent of the
container's total capacity after closure.
(ii) Less than 187 mL. If the net contents stated on the label are
less than 187 milliliters, except as described in (a)(3)(iii) of this
section, the headspace must not exceed 10 percent of the container's
total capacity after closure.
(iii) Exception. Wine bottled in clear containers with the contents
clearly visible, with a net content stated on the label of 100
milliliters or less, may have a headspace that does not exceed 30
percent of the container's total capacity after closure.
0
3. In Sec. 4.72, amend the table in paragraph (a) by adding to the
list of authorized standards of fill three new sizes after the entry
for 375 milliliters, to read as follows:
Sec. 4.72 Metric standards of fill.
(a) * * *
* * * * *
355 milliliters.
250 milliliters.
200 milliliters.
* * * * *
PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS
0
4. The authority citation for part 5 continues to read as follows:
Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.
0
5. In Sec. 5.38, revise paragraph (a) to read as follows:
Sec. 5.38 Net Contents.
(a) Standards of fill. The net contents of distilled spirits shall
be stated in metric measure. The equivalent standard U.S. measure may
also be stated on the container in addition to the metric measure. See
Sec. 5.47a of this part for tolerances and for regulations pertaining
to unreasonable shortages.
* * * * *
0
6. In Sec. 5.47a, amend paragraph (a)(1) by adding to the list of
authorized standards of fill four new entries in numeric order, to read
as follows:
Sec. 5.47a Metric standards of fill (distilled spirits bottled after
December 31, 1979).
(a) * * *
(1) * * * 8 liters.
* * * * *
900 milliliters.
* * * * *
720 milliliters.
700 milliliters.
* * * * *
PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES
0
7. The authority citation for part 7 continues to read as follows:
Authority: 27 U.S.C. 205.
0
8. In Sec. 7.27, the introductory text of paragraph (a) is revised to
read as follows:
Sec. 7.27 Net contents.
(a) Net contents shall be stated in standard U.S. measure as
follows, and the equivalent metric measure may also be stated:
* * * * *
Signed: December 22, 2020.
Elisabeth C. Kann,
Acting Administrator.
Approved: December 22, 2020.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. 2020-28747 Filed 12-28-20; 8:45 am]
BILLING CODE 4810-31-P
