Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverages
| Published date | 02 April 2020 |
| Citation | 85 FR 18704 |
| Record Number | 2020-05939 |
| Section | Rules and Regulations |
| Court | Alcohol And Tobacco Tax And Trade Bureau |
Federal Register, Volume 85 Issue 64 (Thursday, April 2, 2020)
[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
[Rules and Regulations]
[Pages 18704-18726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05939]
[[Page 18703]]
Vol. 85
Thursday,
No. 64
April 2, 2020
Part IIIDepartment of the Treasury-----------------------------------------------------------------------Alcohol and Tobacco Tax and Trade Bureau-----------------------------------------------------------------------27 CFR Parts 4, 5, 7, et al.Modernization of the Labeling and Advertising Regulations for Wine,
Distilled Spirits, and Malt Beverages; Final Rule
Federal Register / Vol. 85 , No. 64 / Thursday, April 2, 2020 / Rules
and Regulations
[[Page 18704]]
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 4, 5, 7, and 19
[Docket No. TTB-2018-0007; T.D. TTB-158; Ref: Notice Nos. 176 and 176A]
RIN 1513-AB54
Modernization of the Labeling and Advertising Regulations for
Wine, Distilled Spirits, and Malt Beverages
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Final rule; Treasury decision.
-----------------------------------------------------------------------
SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is amending
certain of its regulations governing the labeling and advertising of
wine, distilled spirits, and malt beverages to address comments it
received in response to a notice of proposed rulemaking, Notice No.
176, published on November 26, 2018. In this document, TTB is
finalizing certain liberalizing and clarifying changes that were
proposed, and that could be implemented quickly and provide industry
members greater flexibility. TTB is also identifying certain other
proposals that will not be adopted, including the proposal to define an
``oak barrel'' for purposes of aging distilled spirits, the proposal to
require that statements of composition for distilled spirits specialty
products list components in ``intermediate'' products and list
distilled spirits and wines used in distilled spirits specialty
products in order of predominance, and the proposal to adopt new
policies on the use of cross-commodity terms. TTB continues to consider
the remaining issues raised by comments it received that are not
addressed in this document. TTB plans to address those issues in
subsequent rulemaking documents. The regulatory amendments in this
document will not require industry members to make changes to alcohol
beverage labels or advertisements and instead will afford them
additional flexibility to make certain changes if they wish.
DATES: This final rule is effective May 4, 2020.
FOR FURTHER INFORMATION CONTACT: Christopher M. Thiemann or Kara T.
Fontaine, Regulations and Rulings Division, Alcohol and Tobacco Tax and
Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; phone
202-453-2265.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. TTB's Statutory Authority
B. Notice of Proposed Rulemaking on Modernization of the
Labeling and Advertising Regulations for Alcohol Beverages
C. Scope of This Final Rule
II. Discussion of Specific Comments Received and TTB Responses
A. Issues Affecting Multiple Commodities
B. Wine Issues
C. Distilled Spirits Issues
D. Malt Beverage Issues
III. Regulatory Analyses and Notices
A. Regulatory Flexibility Act
B. Executive Order 112866
C. Paperwork Reduction Act
IV. Drafting Information
I. Background
A. TTB's Statutory Authority
Sections 105(e) and 105(f) of the Federal Alcohol Administration
Act (FAA Act), 27 U.S.C. 205(e) and 205(f), set forth standards for the
regulation of the labeling and advertising of wine, distilled spirits,
and malt beverages (referred to elsewhere in this document as ``alcohol
beverages'').
Chapter 51 of the Internal Revenue Code of 1986 (IRC), (26 U.S.C.
5001 et seq.), sets forth, among other things, certain provisions
relating to the taxation of, and production, marking, and labeling
requirements applicable to, distilled spirits, wine, and beer.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the
FAA Act and IRC pursuant to section 1111(d) of the Homeland Security
Act of 2002, codified at 6 U.S.C. 531(d). The Secretary of the Treasury
(the Secretary) has delegated to the TTB Administrator various
functions and duties in the administration and enforcement of these
laws through Treasury Department Order 120-01. For a more in-depth
discussion of TTB's authority under the FAA Act and the IRC regarding
labeling, see Notice No. 176.
B. Notice of Proposed Rulemaking on Modernization of the Labeling and
Advertising Regulations for Alcohol Beverages
On November 26, 2018, TTB published in the Federal Register Notice
No. 176 (83 FR 60562), ``Modernization of the Labeling and Advertising
Regulations for Wine, Distilled Spirits, and Malt Beverages.'' The
principal goals of that proposed rule were to:
Make the regulations governing the labeling of alcohol
beverages easier to understand and easier to navigate. This included
clarifying requirements, as well as reorganizing the regulations in 27
CFR parts 4, 5, and 7 and consolidating TTB's alcohol beverage
advertising regulations in a new part, 27 CFR part 14.
Incorporate into the regulations TTB guidance documents
and current TTB policy, as well as changes in labeling standards that
have come about through statutory changes and international agreements.
Provide notice and the opportunity to comment on potential
new labeling policies and standards, and on certain internal policies
that had developed through the day-to-day practical application of the
regulations to the approximately 200,000 label applications that TTB
receives each year.
The comment period for Notice No. 176 originally closed on March
26, 2019, but was reopened and extended at the request of commenters
(see Notice No. 176A, 84 FR 9990). The extended comment period ended
June 26, 2019. TTB received and posted 1,143 comments in response to
Notice No. 176. Commenters included trade associations, consumer
interest groups, foreign entities, a Federally-recognized tribe, State
legislators and members of Congress, industry members and related
companies, and members of the public.
TTB is also taking into consideration for purposes of this
rulemaking earlier comments that were submitted to the Department of
the Treasury in response to a Request for Information (RFI) published
in the Federal Register (82 FR 27212) on June 14, 2017. The RFI invited
members of the public to submit views and recommendations for Treasury
Department regulations that could be eliminated, modified, or
streamlined, in order to reduce burdens. The comment period for the RFI
closed on October 31, 2017.
Eight comments on the FAA Act labeling regulations, which included
28 specific recommendations, were submitted in response to the RFI. For
ease of reference, TTB has posted these comments in the docket for this
rulemaking. TTB is considering all of the relevant recommendations
submitted in response to the RFI either as comments to Notice No. 176
or as suggestions for separate agency action, as appropriate.
C. Scope of This Final Rule
The comments TTB received in response to Notice No. 176 provided
thorough, substantive, and thoughtful information on a diverse array of
issues. Determining the appropriate course of action on all those
issues will require further consideration by the Bureau. However, there
are some issues that TTB has decided to address now, while
[[Page 18705]]
it considers the remaining issues. In this final rule, TTB is amending
certain regulations, identifying certain proposals it will not move
forward with, and identifying certain other issues raised by commenters
that TTB has determined are outside the scope of this rulemaking or
otherwise require separate, further rulemaking.
1. Liberalizing and Clarifying Changes That Are Being Implemented in
This Final Rule
The issues that TTB has decided to integrate into the regulations
through this final rule were well supported by commenters, can be
implemented relatively quickly, and would either give more flexibility
to industry members or help industry members understand existing
requirements, while not requiring any current labels or advertisements
to be changed. Liberalizing measures that TTB is finalizing in this
document include: Implementing an increase (to plus or minus 0.3
percentage points) in the tolerance applicable to the alcohol content
statements on distilled spirits labels, removing the current
prohibition against age statements on several classes and types of
distilled spirits, removing outdated prohibitions against the use of
the term ``strong'' and other indications of alcohol strength on malt
beverage labels, and removing a limitation on the way distilled spirits
producers may count the distillations when making optional ``multiple
distillation'' claims on their labels. See Section VI below for a
description of all of the changes, both liberalizing and clarifying,
that TTB is incorporating into its regulations.
Although TTB received positive comments with regard to its proposed
reorganization and recodification of 27 CFR parts 4, 5, and 7, and the
establishment of a separate part 14 to address advertising, TTB is not
incorporating those organizational changes in this document, but
intends to incorporate them at a later date. At this stage, TTB is only
addressing a small subset of the issues raised by commenters in
response to Notice No. 176, and is therefore incorporating the
amendments into its current regulatory organization. The reorganization
will be incorporated at a later date, as more issues are resolved.
2. Proposed Changes That TTB Will Not Adopt
Some changes proposed in Notice No. 176 were opposed by commenters
who provided substantive statements about the proposed policies
requiring changes to existing labels, requiring industry members to
incur substantial costs, or not having the intended result within the
purpose of the FAA Act. As a result, TTB is not finalizing certain of
the proposals in Notice No. 176. One such proposal is TTB's proposed
definition of an ``oak barrel'' for purposes of aging distilled
spirits. TTB received nearly 700 comments on this issue, almost all of
which raised specific concerns in opposition to the proposed
definition.
In addition to not adopting its proposed definition of an ``oak
barrel,'' TTB has decided not to finalize:
A proposed restriction on the use of certain types of
cross-commodity terms (for example, imposing restrictions on the use of
various types of distilled spirits terms, including homophones of
distilled spirits classes on wine or malt beverage labels).
Proposed changes to statements of composition for
distilled spirits labels, including changes that would have required
disclosure of components of intermediate products, required distilled
spirits and wines used in a finished product to be listed in order of
predominance, and removed the flexibility to use an abbreviated
statement of composition for cocktails.
A policy that would have limited ``age'' statements on
distilled spirits labels to include only the time the product is aged
in the first barrel, and not aging that occurs in subsequent barrels.
A proposal that would have required that whisky that meets
the standards for a specific type designation be labeled with that type
designation. These proposals are described more fully in Section II of
this document.
TTB also is not finalizing its proposal to incorporate in its
regulations the jurisdictional interaction between U.S. Food and Drug
Administration (FDA) determinations that a product is ``adulterated''
and TTB's position that such products are ``mislabeled.'' Commenters
appeared to misunderstand this proposal, and believed that TTB was
proposing to take on a new role of interpreting FDA requirements. TTB
is explaining its proposals and clarifying its position with regard to
its policy position in this document, but is not moving forward with
finalizing the proposed text.
3. Proposals That Will Be Considered for Further Rulemaking
TTB recognizes that industry members have an interest in regulatory
certainty, particularly with regard to policies that may affect the
labeling of their products. Some commenters have asked that TTB
complete its rulemaking without multiple final rules. TTB has weighed
the benefit of waiting until it has completed review of all of the
issues raised by commenters in response to Notice No. 176 against the
potential benefit of providing some more immediate flexibility in
identified areas and certainty in others. TTB has decided to promulgate
a final rule for a subset of the proposals in Notice No. 176. TTB plans
to address the remaining proposals from Notice No. 176 in subsequent
Federal Register publications, whether by finalizing other proposed
changes from Notice No. 176, announcing that such changes will not be
adopted, or initiating further rulemaking proceedings on certain issues
to obtain the benefit of further public comment. The fact that TTB will
address those issues in future rulemaking documents rather than in this
final rule does not in any way indicate whether the proposed changes
will or will not ultimately be adopted.
II. Discussion of Specific Comments Received and TTB Responses
For ease of navigation, TTB is setting forth the issues and
comments it is addressing in this document in the following order:
Issues affecting multiple commodities, wine-related issues, distilled
spirits-related issues, and malt beverage-related issues. Within each
part, the order reflects generally the order the sections appear in the
regulations, which will aid readers in comparing the explanations in
the preamble with the subsequent section setting forth the regulatory
text. TTB is not adopting in this document the reorganization of
labeling regulations proposed by Notice No.176, but may at a later
date.
A. Issues Affecting Multiple Commodities
1. Incorporating a Definition of ``Certificate of Label Approval
(COLA)''
In Notice No. 176, TTB proposed to add in parts 4, 5, and 7 a
definition of ``Certificate of Label Approval.'' Under the proposal,
the certificate of label approval is defined as a certificate issued on
TTB Form 5100.31 that authorizes the bottling of wine, distilled
spirits, and malt beverages, or the removal of bottled wine, distilled
spirits, and malt beverages from customs custody for introduction into
commerce, as long as the product bears labels identical to the labels
appearing on the face of the certificate, or labels with changes
authorized by TTB on the certificate or otherwise. The proposed
definition was largely consistent with the definition included in
existing Sec. 13.11 and recognizes that TTB authorizes certain
revisions to an
[[Page 18706]]
approved label without requiring the certificate holder to obtain a new
COLA. These allowable changes are set forth in Section V of the COLA
Form, ``Allowable Revisions to Approved Labels.'' However, the proposed
definition also specifically recognizes that TTB may authorize
revisions in other ways, such as through guidance issued on the TTB
website.
TTB received two comments in response to the proposed definition of
``certificates of label approval.'' The National Association of
Beverage Importers (NABI) supported the proposed definition but
requested that TTB clarify what is meant by ``on the certificate or
otherwise,'' specifically whether the scope of the phrase ``or
otherwise'' includes an authorized ``use up'' of a label. The Distilled
Spirits Council of the United States (DISCUS) also supported the
proposed definition.
TTB Response
TTB is incorporating the definition of ``certificate of label
approval'' as proposed into existing Sec. Sec. 4.10, 5.11, and 7.10,
with minor grammatical changes and clarifying language. With regard to
the phrase ``changes authorized by TTB on the certificate or
otherwise,'' TTB is intending to reference methods of authorizing
allowable changes other than listing those allowable changes on the
COLA form. For example, TTB may announce additional allowable changes
through public guidance published on its website at www.ttb.gov. In
this way, TTB is able to authorize additional allowable changes, and
thereby provide more flexibility to industry members, more quickly
while it is in the process of updating the listing of ``allowable
revisions'' that appears as supplemental information along with the
instructions for the approved form. Accordingly, TTB has added a
parenthetical to the end of the definition to clarify that the phrase
``changes authorized by TTB on the certificate or otherwise'' includes
a TTB authorization of allowable changes through the issuance of public
guidance available on the TTB website at www.ttb.gov.
2. Compliance With Federal and State Requirements, Including FDA
Requirements
In Notice No. 176, TTB proposed new regulatory text that
specifically stated that compliance with the requirements in parts 4,
5, and 7 relating to the labeling and bottling of alcohol beverages
does not relieve industry members from responsibility for complying
with other applicable Federal and State requirements. Proposed
Sec. Sec. 4.3(d), 5.3(d), and 7.3(d) also set out for the first time
in the regulations TTB's position that to be labeled in accordance with
the regulations in these parts, the wine, distilled spirit, or malt
beverage may not be adulterated within the meaning of the Federal Food,
Drug, and Cosmetic Act.
The proposed language was intended to codify for the first time
TTB's longstanding position on these issues, as reflected in current
TTB label and formula forms, and recent and older public guidance
documents. The proposed regulatory language was also consistent with
the 1987 Memorandum of Understanding (MOU) between FDA and TTB's
predecessor agency, ATF, which remains in effect between FDA and TTB.
See 52 FR 45502. The MOU specifically refers to ATF's authority over
``voluntary recalls of alcoholic beverages that are adulterated under
FDA law or mislabeled under the FAA Act by reason of being
adulterated.'' [Emphasis added.]
The MOU thus reflects the longstanding position of TTB and its
predecessors that if FDA has determined that an alcohol beverage
product is adulterated, then the product is mislabeled within the
meaning of the FAA Act, even if the bottler or importer of the product
in question has obtained a COLA or formula approval from TTB. See
Industry Circular 2010-8, dated November 23, 2010, entitled ``Alcohol
Beverages Containing Added Caffeine.'' Subject to the jurisdictional
requirements of the FAA Act, mislabeled distilled spirits, wines, and
malt beverages, including such adulterated products, may not be sold or
shipped, delivered for sale or shipment, or otherwise introduced or
received in interstate or foreign commerce, or removed from customs
custody for consumption, by a producer, importer, or wholesaler, or
other industry member subject to 27 U.S.C. 205(e).
Furthermore, proposed Sec. Sec. 4.9(b), 5.9(b), and 7.9(b)
provided that it remains the responsibility of the industry member to
ensure that any ingredient used in the production of alcohol beverages
complies fully with all applicable FDA regulations pertaining to the
safety of food ingredients and additives and that TTB may at any time
request documentation to establish such compliance. In addition,
proposed Sec. Sec. 4.9(c), 5.9(c), and 7.9(c) provided that it remains
the responsibility of the industry member to ensure that containers are
made of suitable materials that comply with all applicable FDA health
and safety regulations for the packaging of alcohol beverages for
consumption and that TTB may at any time request documentation to
establish such compliance.
Current regulations allow TTB to request information about the
contents of a wine, distilled spirits product, or malt beverage through
formula submissions or otherwise. See, for example, 27 CFR 4.38(h),
5.33(g), and 7.31(d), as well as the formula requirements in 27 parts
5, 19, 24, and 25. As part of its formula review, TTB may ask for
substantiation that an ingredient complies with FDA ingredient safety
rules. See Industry Circular 2019-1, dated April 25, 2019, entitled
``Hemp Ingredients in Alcohol Beverage Formulas.'' (``TTB also consults
with FDA on ingredient safety issues where appropriate. In some cases,
TTB may require formula applicants to obtain documentation from FDA
indicating that the proposed use of an ingredient in an alcohol
beverage would not violate the FD&C Act.'') See also Industry Circular
62-33, dated October 26, 1962, entitled ``Need for Review of Approved
Formulas Covering Distilled Spirits Products,'' in which our
predecessor agency, the Internal Revenue Service, advised industry
members that ``they should be prepared to submit proof that all
ingredients in their products are acceptable under the Federal Food and
Drug regulations.''
TTB received a number of comments on these proposals. TTB received
two comments opposing the proposed changes in Sec. Sec. 4.3(d),
5.3(d), and 7.3(d), which appear to reflect an erroneous belief that
the proposed language would result in TTB, rather than FDA, enforcing
the substantive provisions of the FD&C Act and making decisions as to
whether alcohol beverages are adulterated within the meaning of that
Act. The Brewers Association and American Distilled Spirits Association
both suggested that TTB eliminate this provision and leave adulteration
determinations under the FD&C Act to FDA. Both comments urged TTB to
follow the 1987 Memorandum of Understanding (MOU) between TTB's
predecessor agency and FDA, which remains in effect between TTB and
FDA.
TTB also received approximately 20 comments on the general issue of
FDA and TTB roles in enforcing these requirements, stating that the
proposed rule appears to indicate that TTB will attempt to interpret
FDA policy. These comments similarly urge TTB to instead ``honor the
TTB's longstanding Memorandum of Understanding with FDA in which TTB
can freely refer matters to FDA where questions of ingredient safety,
food contact material safety, or adulteration arise. The TTB
[[Page 18707]]
has expertise in many arenas, but these topics are the purview of the
FDA.''
While a few commenters supported the proposals in Sec. Sec. 4.9,
5.9 and 7.9 relating to compliance with other Federal requirements,
many commenters opposed finalizing these proposals. For example, DISCUS
commented that the regulations were unnecessary because ``industry
members fully recognize that complying with TTB's Part 5 rules does not
relieve them from compliance with other applicable federal and state
requirements.'' The Beer Institute commented that language about
compliance with FDA requirements created unnecessary confusion about
which FDA requirements were being referenced, and recommended that the
language be deleted.
Some commenters, including the Wine Institute, the American
Distilled Spirits Association, the United States Association of Cider
Makers, and Heaven Hill Brands, commented in opposition to the
provisions authorizing the appropriate TTB officer to request
documentation to establish compliance with applicable FDA regulations
regarding the safety of ingredients and packaging materials. These
comments made points similar to the following statement made by the
United States Association of Cider Makers:
USACM believes the provisions above would invite a diversion of
TTB resources into a subject area with which TTB has little-to-no
expertise and possesses no legal basis for asserting jurisdiction.
Moreover, USACM believes it would be fundamentally unfair for TTB to
request information on an ingredient's compliance with FD&C Act
standards, subsequently approve the product, but later charge that
the approval of that product did not signify compliance with FD&C
Act standards. Such a position would violate basic notions of due
process.
TTB Response
TTB wishes to clarify that the proposed regulatory text was not
meant to indicate that TTB was proposing to change how enforcement
responsibilities for ingredient safety, food contact material safety,
or adulteration issues are allocated between FDA and TTB. See
Memorandum of Understanding between the Food and Drug Administration
(FDA) and the Bureau of Alcohol, Tobacco and Firearms (ATF), 52 FR
45502 (1987). The MOU was entered into by TTB's predecessor agency,
ATF, and remains in effect between FDA and TTB. With regard to
adulterated alcohol beverage products, the MOU provides as follows:
ATF, as the agency with a system of specific statutory and
regulatory controls over alcoholic beverages, will have primary
responsibility for issuing recall notices and monitoring voluntary
recalls of alcoholic beverages that are adulterated under FDA law or
mislabeled under the FAA Act by reason of being adulterated. This
agreement does not affect or otherwise attempt to restrict the
seizure or other statutory and regulatory authorities of the
respective agencies. [Emphasis added.]
Thus, the 1987 MOU specifically recognizes the position that
adulterated alcohol beverages are mislabeled under the FAA Act. This
position was reiterated in Industry Circular 2010-8, in which TTB
advised that FDA's determination that certain alcohol beverages were
adulterated under the FD&C Act ``would have consequences under the FAA
Act, because of TTB's position that adulterated alcohol beverages are
mislabeled within the meaning of the FAA Act.''
The proposed regulation was not meant to suggest that TTB would
abandon its position that it defers to FDA on issues of ingredient
safety, food contact material safety, and adulteration under the FD&C
Act. TTB continues to work with FDA, within our respective authorities,
on these issues, and will continue to rely upon FDA to make
determinations about the safety of ingredients and whether the use of
certain ingredients renders an alcohol beverage adulterated under the
FD&C Act.
It is TTB's position that its review of labels and formulas does
not relieve industry members from their responsibility to ensure
compliance with applicable FDA regulations. See, for example, Industry
Circular 2010-8, in which TTB reminded industry members as follows:
* * * each producer and importer of alcohol beverages is responsible
for ensuring that the ingredients in its products comply with the
laws and regulations that FDA administers. TTB's approval of a COLA
or formula does not imply or otherwise constitute a determination
that the product complies with the [Federal Food, Drug, and Cosmetic
Act], including a determination as to whether the product is
adulterated because it contains an unapproved food additive.
The instructions on the forms for formula approval (TTB F 5100.51, TTB
F 5110.38, and TTB F 5120.29) contain similar language. For example,
TTB F 5100.51 states:
This approval is granted under 27 CFR parts 4, 5, 7, 19, 24, 25, and
26 and does not in any way provide exemption from or waiver of the
provisions of the Food and Drug Administration regulations relating
to the use of food and color additives in food products.
Accordingly, the proposed regulations about requesting
documentation with regard to ingredient safety issues did not represent
a change from current policy.
TTB has decided not to move forward with the proposed amendments on
this issue. The commenters generally supported TTB's current policy,
but misunderstood the intent of the proposed revisions. After
considering the comments and reexamining the issues, TTB has determined
that the proposed clarification would not meet its intended purpose.
3. Alcohol Beverage Products That Do Not Meet the Definition of a Wine,
Distilled Spirits, or Malt Beverage Under the FAA Act
In the proposed rule, TTB set forth regulations to clarify which
alcohol beverage products meet the statutory definition of a wine or
malt beverage under the FAA Act, and which do not. Products not meeting
these definitions are not subject to the requirements of parts 4 or 7
of the TTB regulations and, instead, are subject to FDA labeling
regulations (and may be subject to the labeling requirements of the
IRC, which are codified in the TTB regulations at parts 24 and 25). For
example, wine that is under 7 percent alcohol by volume does not fall
under the jurisdiction of the FAA Act. Proposed Sec. Sec. 4.5 and 4.6
related to wine products not subject to TTB labeling requirements, and
proposed Sec. 7.6 related to brewery products. Proposed Sec. 7.6 also
explicitly referred readers to the regulations in part 4 for
sak[eacute] and similar products that meet the definition of ``wine''
under the FAA Act (but that are ``beer'' under the Internal Revenue
Code). TTB did not propose a similar section for distilled spirits
because there are no distilled spirits products that would be subject
to the FDA food labeling regulations rather than TTB regulations.
Products that would otherwise meet the definition of wine except that
they contain more than 24 percent alcohol by volume are considered to
be distilled spirits; thus, they are subject to the distilled spirits
labeling regulations in part 5 of the TTB regulations. These
clarifications did not represent any change in TTB policy, and are
based on statutory provisions.
TTB received no comments in response to proposed Sec. Sec. 4.5 and
4.6. TTB also did not receive any comments in direct response to
proposed Sec. 7.6. However, the Confederated Tribes of the Chehalis
Reservation did submit a comment requesting TTB to clarify that
unmalted grains can be used to produce ``fermented beer products.''
TTB Response
TTB is finalizing the provisions of proposed Sec. Sec. 4.5, 4.6,
and 7.6, except
[[Page 18708]]
that Sec. Sec. 4.5 and 4.6 are being incorporated into the existing
regulations as Sec. Sec. 4.6 and 4.7, respectively. In response to the
comment from the Confederated Tribes of the Chehalis Reservation, TTB
notes that the FAA Act allows malt beverages to be made from unmalted
cereals in addition to malted barley and hops. However, pursuant to the
statutory definition of a ``malt beverage'' found in 27 U.S.C.
211(a)(7), a beer made without any malted barley would not be
considered a ``malt beverage'' and would not be subject to the labeling
requirements of the FAA Act or part 7 of the TTB regulations. Such a
product (other than sak[eacute] and similar products) would generally
be considered either a ``beer'' or a ``cereal beverage,'' depending on
the alcohol content, and would be subject to the labeling requirements
of the IRC, which are codified in the TTB regulations at part 25, and
may also be subject to FDA labeling regulations. See TTB Ruling 2008-3,
Classification of Brewed Products as ``Beer'' Under the Internal
Revenue Code of 1986 and as ``Malt Beverages'' under the Federal
Alcohol Administration Act, for more information.
4. Exportation in Bond and Labeling Requirements
The current regulations exempting products for export from the
labeling regulations under the FAA Act are stated in an inconsistent
manner. In existing Sec. Sec. 4.80 and 7.60, wine and malt beverages
``exported in bond'' are exempted from the requirements of those
respective parts. However, current Sec. 5.1, which is entitled
``General,'' provides that part 5 ``does not apply to distilled spirits
for export.'' In Notice No. 176, TTB proposed to clarify its position
that these three provisions all mean the same thing--i.e., that
products exported in bond directly from a bonded wine premises,
distilled spirits plant, or brewery, or from customs custody, are not
subject to the FAA Act regulations under parts 4, 5, or 7 of the TTB
regulations. However, if products that are removed for consumption or
sale in the United States (which are subject to the FAA Act regulatory
provisions in parts 4, 5, and 7) are subsequently exported after being
removed for consumption or sale, they are not ``exported in bond,'' and
are accordingly subject to the FAA Act provisions when the removal for
consumption or sale occurs. This proposal was only a clarifying change
to existing Sec. Sec. 4.80 and 7.60. With regard to part 5, TTB sought
comments on whether the proposed change to the current regulations in
Sec. 5.1 would be viewed as impacting existing practices, and if so,
what the impact would be.
Six commenters responded to the proposals. Wine Institute supported
the proposed amendment to part 4. NABI stated that the exemption for
exported products should not be restricted to alcohol beverage products
exported in bond.
DISCUS urged revision of the proposal, stating as follows:
We urge the Bureau to revise this proposal to clarify that
products may be sent to a different distribution center prior to
exportation. Some industry members would be required to change their
distribution processes if this proposal is adopted as some companies
utilize an internal central distribution point in the United States
to gather products prior to international shipment. To effectuate
this change, we propose adding the words ``or between'' after the
words ``directly from'' in the rule.
The Oregon Winegrowers Association, the Willamette Valley Wineries
Association, and the Mexican Chamber of the Tequila Industry all
suggested that, even though the regulations exempt exported products
from COLA requirements, the regulations should still require any
statement on the labels of exported products to be truthful, accurate,
and not misleading.
TTB Response
TTB is not moving forward with its proposed changes in parts 4 and
7. Upon additional consideration, TTB believes that the current
regulatory text is sufficiently clear that the FAA Act regulations do
not apply to wine and malt beverages exported in bond. Instead, in this
document, TTB is incorporating the existing text from parts 4 and 7 (at
Sec. Sec. 4.80 and 7.60) into part 5 (at Sec. 5.1), to ensure
consistency and promote clarity.
It is TTB's long-held position that products removed from industry
member premises for consumption or sale in the United States must be
labeled in accordance with the FAA Act. Accordingly, TTB disagrees with
NABI's comment that exemption from label approval for exported products
should not be restricted to products exported in bond.
To the extent that the DISCUS comment reflects a concern about the
meaning of exportation ``directly'' from a distilled spirits plant,
TTB's only intent was to clarify the current requirements, and not to
create distinctions between various types of exportations without
payment of tax. Accordingly, TTB is removing references to whether the
products are exported ``directly'' from the bonded premises, to clarify
that there is no intent to create distinctions based on the various
types of exportations without payment of tax that are allowed under the
IRC.
In response to the comments from the Oregon Winegrowers
Association, the Willamette Valley Wineries Association, and the
Mexican Chamber of the Tequila Industry that TTB regulations should
require any statement on the labels of exported products to be
truthful, accurate, and not misleading, TTB notes that the regulations
implementing the FAA Act have always included some sort of exemption
for exported products, and TTB knows of no basis to limit that
exemption now.
5. Personalized Labels
In Notice No. 176, TTB proposed, at new Sec. Sec. 4.29, 5.29, and
7.29, to set forth the process for importers and bottlers to make
certain changes to approved labels in order to personalize the labels
without having to resubmit the labels for TTB approval. Personalized
labels are labels that contain a personal message, picture, or other
artwork that is specific to the consumer who is purchasing the product.
For example, a producer may offer custom labels to individuals or
businesses that commemorate an event such as a wedding or grand
opening.
The proposed regulations reflect current policy as set forth in TTB
public guidance documents (see, for example, TTB G 2017-2 and TTB G
2011-5) and provide for a process whereby applicants submit a template
as part of the application for label approval, with a description of
the specific personalized information that may change. If the
application complies with the regulations, TTB will issue the COLA with
a qualification that will allow the certificate holder to add or change
items on the personalized label such as salutations, names, graphics,
artwork, congratulatory dates and names, or event dates, without
applying for a new COLA. The proposed regulations provided examples of
situations where personalized labels would be permitted.
WineAmerica, Beverly Brewery Consultants, the New York Farm Bureau,
the Beer Institute, and DISCUS all explicitly supported the proposed
regulations. DISCUS also requested that additional examples be provided
in the regulation to specifically recognize that personalized labels
may include ``elements such as bottle engravings, signatures,
medallions, bottle bags, and barrel program information.'' The Wine
Institute and the Mexican Chamber of the Tequila Industry did not
specifically
[[Page 18709]]
express support or opposition for the proposal but did each make
recommendations. The Wine Institute noted that TTB had not included a
definition of ``personalized label'' in each of the proposed sections
and provided suggested language to clarify the meaning of the term. The
Wine Institute also suggested removing the examples of types of
personalized labels from the proposed regulations, as they ``are better
conveyed in written guidance.''
The Mexican Chamber of the Tequila Industry requested that TTB
include a specific prohibition on information that is misleading.
TTB Response
After reviewing the comments, TTB is incorporating the proposed
provisions into the existing regulations as new Sec. Sec. 4.54, 5.57,
and 7.43. In response to the Wine Institute's comment, TTB is including
a definition of ``personalized label'' into each of the new sections.
The definition is drawn from (and is an abbreviated version of) current
TTB guidance on personalized labels (TTB G 2017-2, Personalized Labels,
dated September 5, 2017), and reads in the new regulatory text as
follows: ``A personalized label is an alcohol beverage label that meets
the minimum mandatory label requirements and is customized for
customers.'' With regard to Wine Institute's suggested clarifying
language, TTB believes that the examples in the proposed regulations
provided important context and served a clarifying purpose, and thus
those examples remain in the final rule.
With regard to the comment from The Mexican Chamber of the Tequila
Industry, TTB believes that it is not necessary to include a specific
prohibition on misleading information on personalized labels, as the
revised regulations provide that approval of an application for a
personalized label does not authorize the addition of any information
that discusses either the alcohol beverage or characteristics of the
alcohol beverage, or that is inconsistent with or in violation of the
regulations.
With regard to the DISCUS comment about including additional
examples to cover bottle engravings, signatures, medallions, bottle
bags, and barrel program information, TTB does not believe it is
appropriate or helpful to include these examples. In some cases, the
types of information that would be added through these examples may be
covered by TTB's allowable revision policy, which is not specific to
personalized labels; in other cases, they may be covered by the
personalized label rules.
TTB notes that industry members may offer personalized labels
without going through this process, by obtaining individual COLAs for
each personalized label. Similarly, if the information to be added to a
personalized label is already covered by an allowable revision to an
approved label, the industry member may make changes to the approved
label without obtaining TTB approval.
6. Country of Origin References
Current TTB regulations require a country of origin statement on
labels of imported distilled spirits, but include no such requirement
for imported wine or malt beverages. Nonetheless, U.S. Customs and
Border Protection (CBP) regulations in 19 CFR parts 102 and 134 require
a country of origin statement to appear on containers of all imported
alcohol beverages, including alcohol beverages that are imported in
bulk and then subjected to certain production activities or bottling in
the United States if, pursuant to CBP regulations, the beverage is the
product of a country other than the United States. In ATF Ruling 2001-
2, TTB's predecessor agency clarified that the country of origin
requirements under part 5 would be interpreted in a manner consistent
with CBP's rules of origin, to avoid inconsistencies between CBP and
ATF rules and confusion for the industries affected by those rules.
For part 5, TTB proposed replacing the existing requirements
setting out how the country of origin statement must appear on a label
with a cross-reference to existing CBP country of origin regulations;
this cross-reference was also proposed for parts 4 and 7. This would
have the effect of removing the substantive requirement from the TTB
distilled spirits regulations in part 5 and having a consistent cross
reference to the CBP regulations in parts 4, 5, and 7. TTB also
proposed including information on requirements for alcohol beverages
that are further processed in the United States after importation.
TTB received three comments in response to this proposal. NABI
expressly supported the addition of a cross reference to the CBP's
country of origin requirements, stating that country of origin marking
requirements ``should be governed solely by CBP regulations rather than
separate TTB regulations.'' An attorney also commented in favor of the
general concept that TTB should defer to CBP with respect to country of
origin marking requirements. DISCUS opposed the proposed amendment, and
commented in favor of retaining the current country of origin
requirement for distilled spirits.
TTB Response
TTB is proceeding with its proposal to remove the substantive
requirement for country of origin labeling for distilled spirits. It
has been the longstanding policy of TTB and its predecessor that this
requirement should be interpreted in a manner that is consistent with
the CBP requirements. As noted by NABI, which is the trade association
representing importers, ``country of origin information should be
governed solely by CBP regulations rather than separate TTB
regulations.''
TTB is also incorporating a cross-reference to CBP regulations into
existing Sec. Sec. 4.35, 5.36, and 7.25 because the provisions are a
clarifying change that alerts industry members of their obligation to
comply with CBP requirements. TTB is simplifying the proposed language
to instead simply refer readers to the CBP regulations for those
requirements.
7. Misleading Representations as to Commodity
In Notice No. 176, TTB proposed to adopt a new prohibition on types
of cross-commodity terms that TTB considered to be misleading (see
proposed Sec. Sec. 4.128, 5.128, and 7.128). TTB proposed this
prohibition in response to the fact that more and more frequently TTB
receives applications for approval of a label for one commodity bearing
a term normally associated with a different commodity, including terms
that are specific classes and types for other commodities. TTB was
concerned that this had the potential to confuse consumers as to the
identity of the product.
Some uses of cross-commodity terms are restricted under the current
labeling regulations because they are considered misleading; for
example, current regulations at 27 CFR 7.29(a)(7) prohibit a malt
beverage label from containing information (a statement,
representation, etc.) that tends to create a false or misleading
impression that a malt beverage contains distilled spirits or is a
distilled spirits product. The regulation includes certain types of
labeling statements that would not be considered misleading.
The text of the proposed regulations would have also established a
new prohibition on the use of the name of a class or type designation
(or a homophone or coined word that simulated or imitated a class or
type designation) for one commodity on the label of a different
commodity, if the representation created a misleading impression about
the identity of the product.
[[Page 18710]]
Consistent with past practice and/or current regulations, the
proposed regulation clarified that the proposal would not prohibit
various non-misleading labeling statements, including statements of
alcohol content, the use of the same brand name for different
commodities, the use of cocktail names for wines and malt beverages, or
the use of truthful and non-misleading statements such as ``aged in
whisky barrels'' for a malt beverage or wine.
TTB solicited comments on whether the proposed prohibition and the
proposed exceptions to the prohibition would adequately prevent
consumer deception and whether the proposed regulations would require
changes to existing labels. TTB particularly solicited comments on
whether the use of coined terms and homophones in brand names and
elsewhere on the labels is misleading to consumers when those terms
imply similarity to class and type designations to which a product is
not entitled.
Eleven commenters responded to these proposed provisions. The New
York Farm Bureau and WineAmerica expressed support for this proposal
without offering further explanation. The Mexican Chamber of the
Tequila Industry expressed support for more restrictive provisions that
would prohibit any use of a term associated with one commodity from
appearing on the label of another commodity.
Sazerac, DISCUS, the American Craft Spirits Association, and the
American Distilled Spirits Association, however, expressed opposition
to the proposal related to distilled spirits labels (proposed Sec.
5.128), and the Beer Institute opposed the similar proposal related to
malt beverage labels (proposed Sec. 7.128). Wine Institute opposed the
proposal related to wine labels (proposed Sec. 4.128). Williams
Compliance and Consulting opposed the proposal for all three
commodities. The common theme among these comments is that the proposed
regulations would not meet the intent of, or were unnecessary for,
preventing consumer deception and would also inhibit future
innovations. For instance, the American Distilled Spirits Association
stated that TTB's general rules can address distilled spirits labeling
that falsely or deceptively suggests that a distilled spirit is or
contains a different commodity. Furthermore, Senator John Kennedy of
Louisiana noted that the proposal ``may require the relabeling of
certain products that are marketed using terms associated with
different commodities.''
TTB Response
Based on the feedback provided by commenters regarding the
ambiguity of the proposed text, TTB is not finalizing the proposal.
Instead, TTB will continue to rely on its current regulations (in
Sec. Sec. 4.39(a)(1), 5.42(a)(1) and 7.29(a)(1)) to address specific
circumstances where it finds that a representation on a label is
misleading, and will not move forward with a blanket approach to cross-
commodity terms that could unnecessarily restrict creativity in the use
of truthful and non-misleading representations on labels.
8. Alternate Contact Information for Advertisements
Current regulations in Sec. Sec. 4.62, 5.63, and 7.52 require
advertisements to include the name and address (city and state) of the
industry member responsible for the advertisement. TTB proposed to
amend the regulations to allow alternative contact information for the
permittee to be shown instead of the city and State. These new options
included the advertiser's phone number, website, or email address.
TTB received two comments on this issue. Diageo and DISCUS both
commented in support of the proposed liberalization of the mandatory
information requirements for the responsible advertiser. However, both
commenters also believe mandatory statements on advertisements are no
longer necessary and should be removed from TTB's regulations.
TTB Response
TTB is adopting the proposed amendment to allow additional options
for displaying contact information for responsible advertisers. This
amendment will allow the advertiser to display its phone number,
website, or email address rather than the city and State where it is
located. TTB is incorporating these amendments into the existing
regulations in Sec. Sec. 4.62, 5.63, and 7.52. The comments concerning
the elimination of mandatory statements on advertisements are outside
the scope of this rulemaking. Accordingly, TTB will consider these
comments as suggestions for future rulemaking.
B. Wine Issues
1. Citrus Wine
The standards of identity currently provide for two different
classes of fruit wine--the standards of identity for citrus wine are
found in Sec. 4.21(d) and the standards of identity for fruit wine are
found in Sec. 4.21(e). The production standards for the ``citrus
wine'' and ``fruit wine'' classes are the same in the part 4 standards
of identity. Furthermore, the ways in which fruit wine and citrus wine
may be designated are consistent.
In Notice No. 176, TTB proposed to eliminate the class ``citrus
wine'' and include any wines made from citrus fruits in the existing
fruit wine class. TTB proposed this regulatory change in part because
distinguishing between citrus fruits and other fruits seemed to add an
unnecessary complexity to the regulations and also in part because the
Bureau does not receive many applications for COLAs for wines
designated as ``citrus wine'' (as opposed to applications for COLAs for
citrus wines derived wholly from one kind of citrus fruit, such as
``orange wine'' or ``grapefruit wine'' and designated as such on the
label).
For these reasons and because citrus is a type of fruit, TTB
proposed to eliminate the class of ``citrus wine'' and to include any
wines made from citrus fruits in the fruit wine class. TTB solicited
comments on whether this change (in proposed Sec. 4.145) would require
changes to existing labels.
TTB received one comment in response to this proposed change.
WineAmerica supported the proposal without additional explanation.
TTB Response
The intent of the original proposal was to streamline the
regulations. TTB sees no reason to continue to distinguish between
citrus wine and fruit wine. TTB is eliminating the class designation
``citrus wine,'' and amending Sec. 4.21(e) to include citrus wines in
the fruit wine class. The final rule also adds language to clarify that
wines previously designated as ``citrus wine'' or ``citrus fruit wine''
may continue to use that term on the label instead of ``fruit wine.''
Thus, labels will not have to be revised as a result of this amendment.
2. Vintage Dates for Wine Imported in Bulk
In proposed Sec. 4.95, TTB proposed to remove a prohibition (that
currently appears in Sec. 4.27) that restricts the use of vintage
dates on imported wine. Under current regulations, imported wine may
bear a vintage date only if, among other things, it is imported in
containers of 5 liters or less, or it is bottled in the United States
from the original container that shows a vintage date. In the preamble
to Notice No. 176, TTB noted that this liberalizing measure would allow
the use of vintage dates on wine imported in bulk containers and
bottled in the United States, as long as bottlers have the appropriate
[[Page 18711]]
documentation substantiating that the wine is entitled to be labeled
with a vintage date. TTB received one comment on this issue from an
industry representative supporting the proposal.
TTB Response
TTB is incorporating the proposal in existing Sec. 4.27. TTB
believes the amendment will provide additional labeling flexibility to
bottlers who import vintage wine in bulk for bottling in the United
States. As long as the bottler has the appropriate documentation
substantiating that the wine is entitled to be labeled with a vintage
date, it should not be disqualifying that the wine was imported in a
bulk container that did not bear a vintage date.
3. Natural Wine
In Notice No. 176, TTB set out provisions that would update
existing references to certain IRC provisions and provide that grape
wine (including sparkling grape wine and carbonated grape wine), fruit
wine, and citrus wine must meet the standards for ``natural wine''
under the IRC. The proposal would align the part 4 regulations with the
current requirements (pertaining to sweetening, amelioration, and the
addition of wine spirits for natural wine) in the IRC, which includes
wine treating practices for imported wines acceptable to the United
States under an international agreement or treaty. TTB did not receive
any comments opposing the proposal or indicating that the proposed
amendments would require changes to any existing labels.
TTB Response
TTB is incorporating the proposed provisions into current Sec.
4.21. TTB had identified this proposal as potentially restrictive in
Notice No. 176 out of an abundance of caution. TTB, however, did not
receive comments indicating that the proposed amendments would require
changes to any existing labels. TTB believes that the alignment of the
regulations under the FAA Act and the IRC will facilitate compliance
with the production standards specified under the IRC for ``natural
wine.''
C. Distilled Spirits Issues
1. Definition of ``Distilled Spirits''
In Notice No. 176, TTB proposed to amend the existing definition of
``distilled spirits,'' as it currently appears in Sec. 5.11, to
reflect TTB's longstanding policy that products containing less than
0.5 percent alcohol by volume are not regulated as ``distilled
spirits'' under the FAA Act. TTB did not receive any comments on this
proposal.
TTB Response
TTB is adopting the proposed amendment by amending the definition
of ``distilled spirits'' in existing Sec. 5.11.
2. Definition of ``Oak Barrel''
In Notice No. 176, TTB proposed to incorporate into its regulations
in part 5 a definition of an ``oak barrel'' as a ``cylindrical oak drum
of approximately 50 gallons capacity used to age bulk spirits,'' and
specifically sought comments ``on whether smaller barrels or non-
cylindrical shaped barrels should be acceptable for storing distilled
spirits where the standard of identity requires storage in oak
barrels.''
TTB received almost 700 comments in opposition to the proposed
definition, including comments from individuals, distillers, trade
associations, and a United States Senator. These comments generally
opposed the proposed size restriction, and many also opposed the
proposed restriction on shape. Only a handful of individual comments
supported the proposed definition. The trade associations that
commented on this issue (such as DISCUS, the American Distillers
Institute, the American Distilled Spirits Association, the American
Craft Spirits Association, the American Single Malt Whiskey Commission,
the Kentucky Distillers' Association, the Texas Whiskey Association,
and the Missouri Craft Distillers Guild) all opposed the proposed
definition.
Most of the commenters asserted that this proposal conflicted with
innovative industry practices where oak containers of various sizes
and/or shapes are used to develop and age bulk spirits. Several stated
that the proposed definition would economically burden distillers who
age bulk spirits in oak containers other than cylindrical oak drums of
approximately fifty gallons capacity. Many commenters suggested the
proposed definition would impose an undue burden on small distillers,
who use small or square barrels due to limited storage space or for
other reasons. The consensus was that the proposed definition would
stifle innovation and did not adequately reflect industry practices or
consumer expectations regarding the aging of whisky and other distilled
spirits whose standards of identity require storage in oak barrels.
As discussed further under ``Regulatory Flexibility Act'' in
Section III below, the Office of Advocacy for the Small Business
Administration also commented on this issue, challenging the factual
basis for TTB's certification that this proposal would not have a
significant economic impact on a substantial number of small entities,
and suggesting that the proposal be revised or that TTB publish a
supplemental initial regulatory flexibility analysis (IRFA) to propose
alternatives to the rule.
Finally, TTB received a few comments on oak barrels that went
beyond the issues on which TTB specifically sought comment. For
example, a few commenters supported regulatory amendments that would
allow aging in barrels made of wood other than oak, and one comment
supported the use of a metal container with oak staves.
TTB Response
After careful review of the comments received on this issue, TTB
has determined that it will not move forward with the proposal to
define an ``oak barrel'' as a ``cylindrical oak drum of approximately
50 gallons used to age bulk spirits'' or otherwise define the term in
the regulations. After analysis of the comments, TTB has concluded that
current industry practice and consumer expectations for aging whisky
(and other spirits aged in oak barrels) do not support limiting the
size and shape of the oak barrel in the manner proposed in Notice No.
176. Under the standard of identity for whisky in the TTB regulations
at 27 CFR 5.22(b), among other things, a product labeled as whisky
``possesses the taste, aroma, and characteristics generally attributed
to whisky,'' and is ``stored in oak containers.'' TTB's intent was to
define oak containers within objective parameters that would be
consistent with a product possessing the taste, aroma, and
characteristics generally attributed to whisky, not to unnecessarily
limit innovation. TTB believes the current regulatory text can be
interpreted to allow different sizes and shapes of oak containers as
long as the product meets the other criteria for the standard. In the
absence of a regulatory definition for ``oak barrel'' or ``oak
container,'' it will be TTB's policy that these terms include oak
containers of varying shapes and sizes.
To the extent that a few commenters addressed other issues
pertaining to the proposed definition, such as the acceptability of
other types of wood and of metal containers with oak staves, TTB will
consider these issues for future rulemaking efforts.
3. Certificates of Age and Origin
In Notice No. 176, TTB proposed to maintain without substantive
change
[[Page 18712]]
the current requirements related to imported distilled spirits that
must be covered by certificates as to the age and the origin of the
spirits. TTB proposed an organizational change, to divide the existing
paragraph on brandy, Cognac, and rum into one paragraph on brandy and
Cognac and a separate paragraph for rum. That proposal would not result
in any substantive change to the requirements for these three spirits,
but would provide greater ease of readability.
TTB received eight comments on this proposal. Privateer Rum, a
distiller, stated that it applauds and supports the proposal. Spirits
Canada recommended changing the existing regulations by removing
references to the Immature Spirits Act for Canadian whisky products.
Spirits Canada also requested that TTB allow aging in barrels made from
any species of tree, not just oak. The Tequila Regulatory Council
(CRT), the Mexican Chamber of the Tequila Industry, and NABI each
commented in support of the requirements, but also suggested an edit to
the requirements for imported Tequila. These three commenters noted
that the authority in Mexico for issuing certificates is delegated to a
conformity assessment body, the CRT, rather than a person or government
official. Additionally, Tequila exports from Mexico are not accompanied
by a certificate of age and origin, but rather by a Certificate of
Tequila Export. Consequently, the commenters asked TTB to amend the
regulations for Tequila to take these facts into account. Finally,
DISCUS and the Beverage Alcohol Coalition each requested that TTB no
longer require certificates for whisky to indicate the type of barrel
(new or reused) if the standard of identity for that whisky does not
require the use of a new barrel. They also suggested that TTB retain
the certificates indefinitely, instead of requiring the importer to
retain the certificate for five years, as required currently by 27 CFR
5.52(f).
TTB Response
TTB is finalizing the proposed reorganization of the paragraph
relating to brandy, Cognac, and rum to make the related provisions
easier to read. In response to the comment from Spirits Canada, TTB is
also removing references to the Immature Spirits Act for Canadian
whisky, and also for Scotch and Irish whiskies. The current reference
to compliance with the laws of the applicable foreign countries would
cover any aging requirements of those foreign governments, and there is
no need to specify the particular laws of those countries, which are
subject to change. Finally, TTB is amending the paragraph on Tequila to
incorporate the correct terminology relating to the certification
process. These minor amendments are being incorporated into existing
Sec. 5.52.
With respect to the comments from DISCUS and the Beverage Alcohol
Coalition that suggest that TTB should retain certificates instead of
requiring importers to retain them for 5 years, TTB notes that current
regulations do not require that importers submit the certificates to
TTB or CBP on a routine basis. Rather, importers are only required to
maintain such certificates in their own possession and make them
available to TTB or CBP upon request; thus, were TTB to take the action
suggested, it would create a new requirement that importers submit such
certificates, which is beyond the scope and intent of Notice No. 176.
With regard to the suggestion that certificates should not be required
to indicate whether the barrels in which all types of whiskies were
aged are new or reused, this suggestion also goes beyond the scope of
Notice No. 176, but will be considered for future rulemaking.
4. Statements of Composition
Current regulations at Sec. 5.35(a) provide that the class and
type of distilled spirits must be stated on the label if defined in
current Sec. 5.22. Otherwise, the product must be designated in
accordance with trade and consumer understanding or with a distinctive
or fanciful name; in either case, the designation must be followed by a
``truthful and adequate statement of composition.'' The regulations do
not provide general guidelines on what suffices as a truthful and
adequate statement of composition. However, the regulations in Sec.
5.35(b) provide that in the case of highballs, cocktails, and similar
prepared specialties, a statement of the classes and types of distilled
spirits used in the manufacture of the product is a sufficient
statement of composition, when the designation adequately indicates to
the consumer the general character of the product.
TTB proposed to set forth standards for what should be included in
statements of composition, including incorporation of current TTB
policies on how to identify distilled spirits, wines, flavors, coloring
materials, and non-nutritive sweeteners that are added to a specialty
product. The proposed rule also proposed three changes to the rules on
statements of composition. The first required the listing of the
separate components of an ``intermediate'' flavoring product; the
second required that distilled spirits and wines used in the production
of the finished product be listed in order of predominance; and the
third required a full statement of composition for cocktails rather
than the abbreviated statement provided for by current regulations.
As explained in more detail below, after evaluating the comments
received on these issues, TTB has decided not to move forward on any of
these proposals. For the sake of clarity, TTB will address the comments
received on each of these three proposals separately, and then provide
a single TTB response, as the issues are related. At this time, TTB is
merely making a typographical correction in the heading of Sec.
5.35(b).
i. Intermediates
In Notice No. 176, TTB proposed to treat components such as
distilled spirits and wines that are blended together by a distilled
spirits plant in an intermediate product and then added to a distilled
spirits product the same as if the components of the intermediate had
been added separately for purposes of determining the standard of
identity of the finished product, such as a flavored distilled spirits
product. (See proposed Sec. Sec. 5.141 and 5.166.) Additionally, TTB
proposed to change its policy with regard to statements of composition
for specialty products to require the disclosure of the components of
the intermediate product, including spirits, wines, and flavoring
materials, as part of the statement of composition. In the case of
distilled spirits specialty products, TTB currently treats intermediate
products as ``natural flavoring materials'' when they are blended into
a product, for the purpose of disclosure as part of a truthful and
adequate statement of composition. TTB has seen changes in the alcohol
beverage industry and in various formulas and put forward the proposed
changes in the belief that treating intermediate products as natural
flavoring materials does not provide adequate information to consumers,
as required by the FAA Act.
TTB received seven comments in response to its proposal with regard
to ``intermediate products.'' The comments, all in opposition to TTB's
proposed policy, came from trade associations (DISCUS, the American
Distilled Spirits Association, and the Kentucky Distillers
Association), distillers (Diageo, Sazerac, and Heaven Hill Brands), and
Senator John Kennedy. These comments urged TTB to retain its current
policy of treating intermediate products as ``natural flavoring
materials'' when they are blended into a product, for the purpose of
both compliance with standards of
[[Page 18713]]
identity and disclosure as part of a truthful and adequate statement of
composition.
Many commenters pointed to the proposal as a change in policy that
would require changes in the labeling and formulation of several
products. For example, Heaven Hill Brands commented that the proposal
was ``a significant departure from existing labeling practices'' that
will ``create consumer confusion, and will create the need to develop
otherwise unnecessary reformulations and relabeling for numerous
products.'' Diageo stated that many specialty products currently
contain wine added via intermediates, and the ``proposed rule upsets
decades of reliance by the industry in crafting products that use wine
for blending purposes.''
Several commenters also suggested that requiring labeling
disclosure of the specific components in the intermediate product would
actually mislead consumers. For example, Sazerac commented that ``a
requirement to disclose intermediate products in the statement of
composition for a distilled spirits specialty product, particularly
where the intermediates do not impart any characterizing flavor or
qualities to the finished product, would be misleading to consumers.''
Diageo, DISCUS, the Kentucky Distillers' Association, and the American
Distilled Spirits Association all raised similar objections. Some of
the commenters perceived the proposal as a partial form of ingredient
labeling, and suggested that until and unless TTB actually implemented
ingredient labeling requirements, this type of partial disclosure
requirement would mislead consumers.
ii. Order of Predominance
In new Sec. 5.166(a)(1), TTB proposed to require distilled spirits
and wines in the statement of composition to be listed in order of
predominance, which was intended to provide consumers with more clear
information about the composition of distilled spirits specialty
products.
TTB received comments from Heaven Hill Brands and the American
Distilled Spirits Association in favor of clarifying TTB's policies
regarding statements of composition. However, these comments emphasized
that TTB should clarify that it is not changing its longstanding
administrative policies, on which the industry has relied. For example,
Heaven Hill Brands requested that ``TTB not make significant changes in
existing policy and interpretation that the spirits industry has relied
upon for decades.'' DISCUS commented in opposition to any changes to
the regulations on statements of composition, and included a suggested
revision that reverted back to TTB's current regulations. Senator
Kennedy also commented in opposition to the proposal.
iii. Cocktails
In Notice No. 176, TTB proposed to amend its policies with regard
to the use of cocktail names in statements of composition on distilled
spirits labels. Under current regulations at 27 CFR 5.35(b)(1), and in
guidance issued by TTB's predecessor agency, the Bureau of Alcohol,
Tobacco, and Firearms (see Compliance Matters 94-1, issued in 1994),
distilled spirits cocktails with names recognized by consumers may be
labeled with the cocktail name and an abbreviated, rather than a full,
statement of composition. This abbreviated statement is a declaration
of the spirits components of the cocktail, for example, ``Screwdriver
made with vodka.'' In Notice No. 176, TTB proposed to require a full
statement of composition in such instances because, over the years, TTB
has seen an increase in the number of cocktails recognized in
bartenders' recipe books as the industry continued to innovate. TTB was
concerned about whether consumers are fully informed when a label has
only a cocktail name and the component spirit(s) because of the vast
array of cocktails. Accordingly, TTB proposed to require a full
statement of composition on such specialty products, and those products
could continue to be designated with the name of a cocktail.
TTB received several comments regarding its proposal. DISCUS,
Sazerac, the Kentucky Distillers' Association, and the American
Distilled Spirits Association opposed the proposal on the grounds that
it would impose costs as a result of labeling and formulation changes
without benefiting consumers, who might be confused by statements of
composition that differed from what they were used to seeing on
cocktail labels. Sazerac also stated that a full statement of
composition would amount to an unnecessary labeling requirement for
cocktails that are well recognized and understood by consumers.
Some of the commenters also addressed TTB's current policy of
including a list of ``recognized cocktails'' in the Beverage Alcohol
Manual for Distilled Spirits (Distilled Spirits BAM; TTB P 5110.7) for
purposes of administering this provision. The American Distilled
Spirits Association commented that the regulation ``should establish a
framework for TTB to periodically publish, after seeking input from the
industry and other sources, lists of cocktails it recognizes and the
ingredients required for such cocktails.'' On the other hand, Sazerac
commented that TTB should eliminate the list of recognized cocktails in
the BAM, as the list is ``outdated and not particularly relevant to
consumers.''
TTB Response
TTB is not finalizing its proposal to require statements of
composition to include the elements of an intermediate. TTB is
persuaded that the proposed changes could require changes in the
labeling (or, alternatively, lead to reformulation) of many distilled
spirits products, and that benefit to consumers would be speculative.
In addition, a number of comments TTB received in response to Notice
No. 176 proposed that TTB consider proposing ingredient labeling, which
would obviate the need for the types of information TTB proposed to
require. TTB agrees that ingredient labeling is worth consideration,
and is reviewing such comments to determine next steps to obtain
additional comment through further rulemaking.
TTB is also not moving forward with a reference to intermediates in
the standard for flavored spirits and for standards of identity in
general. Current policies and regulatory text regarding intermediates
and statements of composition will remain in effect, which includes the
longstanding policy that class 9 flavored spirits must derive all of
their spirits content from the base spirit of the product, in contrast
with those products that are labeled with statements of composition in
lieu of a class or type. See, for example, T.D. ATF-37, 41 FR 48120,
48121 (1976) (``standards of identity for flavored products adopted in
1968 require them to contain a spirits base of 100 percent gin, rum,
vodka, etc.''). Furthermore, the current regulations expressly provide
that class 9 flavored spirits may not contain more than 2.5 percent
wine by volume (15 percent for certain flavored brandy products)
without label disclosure. See 27 CFR 5.22(i).
Additionally, TTB has decided it will not move forward with the
order of predominance requirement for distilled spirits and wines
included in the final product in the statement of composition and will
retain current regulatory text. Current policy, which requires that the
base distilled spirit is listed first (for example, ``vodka with red
wine and natural flavors''), remains in effect.
Finally, based on the comments, TTB is not moving forward with the
proposal to require a full statement of
[[Page 18714]]
composition for cocktails. We agree that consumers are used to seeing
the abbreviated statement of composition on cocktail labels. We also
agree that a full statement of composition is not necessary in cases
where the cocktail name is well recognized and understood by consumers
Accordingly, the existing regulations and policies on abbreviated
statements of composition for cocktails will continue in effect. TTB
notes that in addition to the cocktails that are recognized in the
Distilled Spirits BAM, TTB evaluates applications for label approval
that include new cocktail names on a case-by-case basis to determine if
the cocktails are recognized in bartender's guides or other
publications that reflect a widespread consensus on the composition of
a cocktail (such as trade magazines). This review will, in turn,
determine whether the designation adequately indicates to the consumer
the general character of the product. TTB will consider the comments on
updating the list of recognized cocktails as suggestions for future
action.
5. Use of Term ``Bottled in Bond''
In Notice No. 176, TTB proposed to maintain the rules for the use
of the terms ``bottled in bond,'' ``bond,'' ``bonded,'' or ``aged in
bond,'' or other phrases containing these or synonymous terms. The use
of these terms was originally restricted to certain products under the
Bottled in Bond Act of 1897 (29 Stat. 626), which was repealed in 1979
(see Distilled Spirits Tax Revision Act of 1979, Public Law 96-39, 93
Stat. 273, title VIII, subtitle A). The Bottled in Bond Act was
intended to provide standards for certain spirits that would inform
consumers that the spirits were not adulterated. Treasury Department
officers monitored bonded distilled spirits plants.
TTB's predecessor agency, ATF, decided to maintain the labeling
rules concerning ``bottled in bond'' and similar terms, because
consumers continued to place value on these terms on labels. Imported
spirits may use ``bottled in bond'' and similar terms on labels when,
among other conditions, the imported spirits are produced under the
same rules that would apply to domestic spirits.
One of the conditions for use of these terms is that the distilled
spirits must be stored in wooden containers for at least four years. To
maintain parity between whisky that is aged and vodka and gin, which do
not undergo traditional aging, vodka and gin are required to be stored
in wooden containers to use ``bond'' or similar terms, but the wood
containers must be coated or lined with paraffin or another substance
to prevent the vodka or gin from coming into contact with the wood. TTB
specifically requested comment on whether TTB should maintain the
``bottled in bond'' standards, including those relating to gin and
vodka.
TTB received 14 comments in response to the request for comment.
The majority of the comments were in favor of maintaining ``bottled in
bond'' as a term related to quality. Only two commenters recommended
removing the term as confusing and irrelevant. Four of the supporting
comments also responded directly to TTB's request for comments on
whether TTB should maintain the requirement that vodka and gin be
stored in lined wooden containers if they are labeled as ``bottled in
bond.''
Roulaison Distilling Co., the American Distilling Institute, and
DISCUS each supported retaining the bottled in bond standards and also
recommended removing the related requirement concerning paraffin-lining
of barrels for storing gin. The Kentucky Distillers' Association
recommended the expansion of the term for gin, but recommended that TTB
no longer allow for vodka to be bottled in bond.
TTB Response
Consistent with the comments, TTB is maintaining the regulatory
standards for ``bottled in bond'' with an amendment to allow gin to be
stored in either paraffin-lined or unlined barrels. This amendment is a
conforming amendment to account for changes made in this final rule
that would allow for the aging of gin. (See Section 8, Age Statements,
below.) TTB is not changing the provisions allowing vodka to be labeled
``bottled in bond''.
6. Brand Labels
In Notice No. 176, TTB proposed to revise regulations relating to
the placement of mandatory information on distilled spirits containers,
in order to increase flexibility. Current Sec. 5.32(a) requires that
the following appear on the ``brand label'': The brand name, the class
and type of the distilled spirits, the alcohol content, and, on
containers that do not meet a standard of fill, net contents. The term
``brand label'' is defined in current Sec. 5.11 generally as the
principal display panel that is most likely to be displayed, presented,
shown, or examined under normal retail display conditions, as well as
any other label appearing on the same side of the bottle as the
principal display panel. Further, the definition states that ``[t]he
principal display panel appearing on a cylindrical surface is that 40
percent of the circumference which is most likely to be displayed,
presented, shown, or examined under normal and customary conditions of
display for retail sale.''
TTB believes that the information that currently must appear
together on the brand label (or ``principal display panel'') is closely
related information that, taken together, conveys important facts to
consumers about the identity of the product. Proposed Sec. 5.63(a)
would allow this mandatory information to appear anywhere on the
labels, as long as it is within the same field of vision, which means a
single side of a container (which for a cylindrical container is 40
percent of the circumference) where all pieces of information can be
viewed simultaneously without the need to turn the container. TTB
believes that requiring that this information appear in the same field
of vision, rather than on the display panel ``most likely to be
displayed, presented, shown, or examined'' at retail, is a more
objective and understandable standard, particularly as applied to
cylindrical bottles.
TTB received five comments related to this proposal. A distiller
and an industry group each supported the change to a ``single field of
vision'' concept. Another distiller noted that it would like the
alcohol content to be permitted on the front label or the back label.
Diageo said that it supports a provision that would allow all national
mandatory information to appear on a single label. DISCUS noted that it
supports the increased flexibility that the proposal would allow,
bringing distilled spirits more in line with current requirements for
wine. However, DISCUS also recommended that TTB liberalize placement
rules further, allowing mandatory information to appear anywhere on
distilled spirits labels.
TTB Response
TTB is moving forward with liberalizing the placement rules as
proposed, by allowing the brand name, class and type designation, and
alcohol content to appear anywhere on the label as long as those three
pieces of information are in the same field of vision. TTB is not
adopting the DISCUS comment to eliminate all placement standards for
mandatory information, because TTB believes that it is important to
keep together on the label these three closely related elements of
information that, taken together, convey important facts to consumers
about the identity of the product.
TTB is making a conforming change to existing Sec. 5.32 so that
the net contents
[[Page 18715]]
statement may appear on any label. TTB is also amending the definition
of ``brand label'' in existing Sec. 5.11 to remove the requirement
that the brand label be the principal display panel. To clarify, this
means that the brand label may be on any side of distilled spirits
bottles, but must show the brand name, class and type designation, and
alcohol content within the same field of vision.
7. Alcohol Content Tolerance for Distilled Spirits
TTB received 24 comments in response to proposed Sec. 5.65(c),
which would expand the tolerance for the labeled alcohol content to
plus or minus 0.3 percentage points for distilled spirits. Twenty-three
of the commenters expressed support for expanding the tolerance, and
one distillery commenter requested that the tolerance be increased
further to 0.99 proof for liqueurs. One commenter, DISCUS, requested
that TTB amend also 27 CFR 19.353, which sets out requirements for
gauging product in the bottling tank at a distilled spirits premises,
to be consistent with the 0.3 percentage point tolerance allowed for
labeling statements.
TTB Response
TTB is finalizing the expanded alcohol content tolerance as
proposed, to plus or minus 0.3 percentage points. This final rule
amends Sec. Sec. 5.37(b) and 19.356(c) and (d) to incorporate the
language of the proposal. Regarding the comment requesting a 0.99 proof
tolerance for liqueurs, TTB sees no basis for allowing liqueurs to have
a higher tolerance than all other classes. Finally, TTB agrees with the
comment made by DISCUS regarding the need for a conforming amendment to
Sec. 19.353, and is amending that section to provide that the gauge
must be made at labeling proof, subject to the tolerances set forth in
section 19.356(c).
8. Age Statements
In Notice No. 176, TTB proposed to incorporate its current policy
that only the time in a first oak barrel counts towards the ``age'' of
a distilled spirit. That is, if spirits are aged in more than one oak
barrel (for example, if a whisky is aged 2 years in a new charred oak
barrel and then placed into a second new charred oak barrel for an
additional 6 months), only the time spent in the first barrel is
counted in the ``age'' statement on the label. (See proposed Sec.
5.74(a)(3).)
TTB received approximately 50 comments in opposition to the
proposal. For example, St. George Spirits stated, ``We believe that all
time spent in a barrel should be counted towards the spirit's age
statement--regardless of movement between barrels.'' The Beverage
Alcohol Coalition, a coalition of domestic and international distilled
spirits industry groups, stated, ``It is a common practice for many
distilled spirits products, including Scotch Whisky, to mature in more
than one type of cask. As proposed, the rule would mean whiskies
matured in more than one cask, could not state the full time the
product spent maturing, even if the second cask complies with class/
type requirements.'' Five commenters suggested that if multiple barrels
are used, the label should contain an optional or mandatory disclosure
of that fact.
TTB also received 17 comments supportive of the provision in
proposed Sec. 5.74 to eliminate the prohibition on age statements on
many classes of distilled spirits, including gin, liqueurs, cordials,
cocktails, highballs, bitters, flavored brandy, flavored gin, flavored
rum, flavored vodka, flavored whisky, and specialties. Some of the
comments specifically noted that they are supportive of expanding the
permissibility of an age statement to gin. Three commenters stated that
age statements should be permitted on all distilled spirits, including
vodka.
TTB Response
After reviewing the comments, TTB agrees that all the time spent in
all oak containers should count towards the age statement. TTB notes
that where a standard of identity requires aging in a particular kind
of barrel, such as straight whisky, which requires aging two years in a
new charred oak container, that aging must take place in that specified
container type before being transferred to another vessel. TTB is
amending existing Sec. 5.40(a)(1) regarding statements of age for
whisky that does not contain neutral spirits to provide that multiple
barrels may be used and to provide that the label may optionally
include information about the types of oak containers used. This does
not affect current requirements to disclose aging in reused cooperage
under 27 CFR 5.40(a)(4).
TTB believes that the contemporary consumer understands the meaning
of age statements and that there is consumer interest for innovative
products such as aged gin. As a result, TTB is amending the regulations
in current Sec. 5.40(d) to allow age statements on all distilled
spirits except for neutral spirits (other than grain spirits). Because
neutral spirits and vodka are intended to be neutral, spirits that are
aged would not meet the standard to be labeled as neutral spirits or
vodka. A spirit that would otherwise be a neutral spirit but is aged
would qualify for the designation ``grain spirits,'' which may bear age
statements as provided in current Sec. 5.40(c).
9. Multiple Distillation Claims
Proposed Sec. 5.89 would have defined a distillation as a single
run through a pot still or one run through a single distillation column
of a column (reflux) still. The proposal also would have maintained the
current rule that only additional distillations beyond those required
to meet the product's production standards may be counted as additional
distillations.
TTB received nine comments in support of this definition.
Commenters included distillers and industry groups. For example, a
distiller stated that ``consumers would reasonably expect that a
distillation means a single pass through an alembic or column still and
not, for instance, a count of plates in a column.'' The American
Distilling Institute stated that ``[w]e believe that [the proposed]
definition is clear and readily understood by consumers.'' However,
some commenters sought a more scientific or technical definition of
distillations.
Many commenters opposed the provision that would not count the
distillations necessary to meet the standard of identity towards
multiple distillation claims, even though that provision has been in
the current TTB regulations. For example, the American Distilling
Institute said that the provision ``flies in the face of standard
industry convention, is highly dependent on the type of still being
used and would require a significant amount of relabeling.'' DISCUS
said that the provision would mean that ``brands cannot truthfully
articulate the number of distillations a spirits undergoes.'' Spirits
Europe also commented that not allowing the distillations necessary to
the production process would be ``contrary to long standing labelling
conventions.''
TTB Response
After review and consideration of the comments, TTB has determined
that allowing distillers to count all distillations, including those
required to meet a specific standard of identity when making labeling
claims, provides the consumer with truthful and adequate information.
TTB is liberalizing the provision found in current Sec. 5.42(b)(6)
accordingly.
TTB is also incorporating the proposed definition of a distillation
(for purposes of multiple distillation claims)
[[Page 18716]]
into existing Sec. 5.42, as well as the clarification that
distillations may be understated but not overstated. Multiple
distillation claims will remain optional, not mandatory. TTB is making
conforming changes to the advertising regulations in Sec. 5.65(a)(9).
10. Standard of Identity for Vodka
In Notice No. 176, TTB proposed to amend the standard of identity
for vodka, a type of neutral spirit, to codify the holdings in several
past rulings: Revenue Ruling 55-552 and Revenue Ruling 55-740 (vodka
may not be stored in wood); ATF Ruling 76-3 (vodka treated with
charcoal or activated carbon may be labeled as ``charcoal filtered''
under certain parameters); and Revenue Ruling 56-98 and ATF Ruling 97-1
(allowing treatment with up to 2 grams per liter of sugar and trace
amounts (1 gram per liter) of citric acid). In addition, TTB
specifically sought comment on whether the current requirement that
vodka be without distinctive character, aroma, taste, or color should
be retained and, if this requirement is no longer appropriate, what the
appropriate standards should be for distinguishing vodka from other
neutral spirits.
TTB received twelve comments in response to the proposed changes to
the standard of identity for vodka. TTB did not receive any comments
relating to the proposal to incorporate several past rulings related to
treatment of vodka with sugar, citric acid, and charcoal.
TTB requested comments on whether the requirement that vodka be
without distinctive character, aroma, taste, or color should be
retained and, if this requirement is no longer appropriate, what the
standards should be for distinguishing vodka from other neutral
spirits. Ten commenters suggested that the requirement should be
eliminated. For example, Altitude Spirits stated that ``[t]he
requirement that vodka be without distinctive character, aroma, taste,
or color should NOT be retained and is no longer appropriate given the
variety in base ingredients, flavors, and flavor profiles found in the
diverse vodka category.'' Within this group of comments, two commenters
stated that they believe that TTB should reverse its longstanding
policy and allow vodka to be aged in wood.
Two individual commenters recommended--without explanation--that
the standard be kept unchanged.
TTB Response
Based on its review of the comments, TTB agrees that the
requirement that vodka be without distinctive character, aroma, taste,
or color no longer reflects consumer expectations and should be
eliminated. Vodka will continue to be distinguished by its specific
production standards: Vodka may not be labeled as aged, and unlike
other neutral spirits, it may contain limited amounts of sugar and
citric acid.
Accordingly, TTB is amending the existing regulations at Sec.
5.22(a)(1) to remove the requirement that vodka be without distinctive
character, aroma, taste, or color, and to incorporate in the
regulations the standards set forth in the rulings discussed above,
obviating the need for those rulings which will be canceled. TTB will
also make a conforming change to existing Sec. 5.23(a)(3)(iii), which
discusses the addition of harmless coloring, flavoring, or blending
materials to neutral spirits, to reflect the allowed additions to vodka
in amended Sec. 5.22(a)(1).
11. Whisky Labeling
In Notice No. 176, TTB proposed to require that, where a whisky
meets the standard for one of the types of whiskies, it must be
designated with that type name, with an exception provided for
Tennessee Whisky. TTB solicited comments on this proposal as a
potentially restrictive change to the regulations, because in the
current regulations, when a whisky meets the standard for a type of
whisky, it is unclear whether the label must use that type designation
or may use the general class ``whisky'' on the label. However,
historical documents indicate that TTB's predecessor agencies
classified whiskies with the type designation that applied, and
required that type to be the label designation. For example, in January
1937, the Federal Alcohol Administration stated that ``[w]here a
product conforms to the standard of identity for `Straight Bourbon
Whiskey' it must be so designated and it may not be designated simply
as `Whiskey.''' See FA-91, ``A Digest of Interpretations of Regulations
No. 5 Relating to Labeling and Advertising of Distilled Spirits,'' p.
5.
Accordingly, proposed Sec. 5.143 provided that where a whisky
meets the standards for one of the type designations, it must be
designated with that type name, with an exception for Tennessee Whisky.
The current TTB regulations at Sec. 5.35(a) state, in part, that the
class and type of distilled spirits shall be stated in conformity with
current Sec. 5.22 if defined therein.
Two industry associations (DISCUS and the Kentucky Distillers'
Association) opposed the proposed change, stating that it would require
a large number of revisions to labels for products currently on the
market. The American Craft Spirits Association commented in general
support of the proposed Sec. 5.143 without addressing this specific
issue.
In Sec. 5.143, TTB also proposed to specifically provide that the
designation ``straight'' was an optional labeling designation for
whiskies. Currently, TTB labeling policy requires whiskies that are
aged more than two years to be designated as ``straight.'' DISCUS
commented in support of making ``straight'' an optional designation,
stating this would provide labeling flexibility.
TTB Response
After review of the comments, TTB believes that the proposed
amendment does not necessarily reflect current industry practice or
consumer expectations. We also recognize that requiring distillers to
use a specific type designation for whiskies would require a number of
labeling changes. Therefore, TTB will maintain its policy that
distillers have the option of using the general class ``whisky'' as the
designation or one of the type designations that applies. TTB also will
liberalize its policy on the term ``straight'' and is amending current
Sec. 5.22(b)(2)(iii) to make it an optional labeling designation for
whiskies that qualify for the designation, but will not expand the use
of the term to other classes of distilled spirits. TTB will cancel and
supersede Revenue Ruling 55-399, ``Straight Whisky,'' which relates to
outdated provisions regarding wholesale liquor dealer packages.
12. Absinthe
TTB proposed a new standard of identity for Absinthe (or Absinth)
in proposed Sec. 5.149 in response to a petition TTB had received.
Absinthe products are distilled spirits products produced with herbs,
including wormwood, fennel, and anise.
The proposed standard was to remind the reader that the products
must be thujone-free under FDA regulations. Based on current limits of
detection, a product is considered ``thujone-free'' if it contains less
than 10 parts per million of thujone.
TTB proposed to supersede a current requirement that appears in
Industry Circular 2007-5 that all wormwood-containing products undergo
analysis by TTB's laboratory before approval of the product's formula.
In the proposal, TTB explained that it would verify compliance with FDA
limitations on thujone through marketplace review and distilled spirits
plant investigations, where necessary.
[[Page 18717]]
TTB received 10 comments supporting the addition of a standard for
absinthe. Most of the commenters, including DISCUS, the American Craft
Spirits Association, St. George Spirits, and the American Distilling
Institute, recommend that TTB finalize a more restrictive standard for
absinthe and provided comments on changes that would better align the
standard with the marketplace. With regard to the laboratory testing
requirement, St. George Spirits was the only commenter opposed to its
elimination, and one commenter supported eliminating the requirement
but requested that TTB laboratory services be made available for
thujone testing. DISCUS specifically supported removing the laboratory
testing requirement, saying that the elimination of the testing
requirement will decrease burdens upon industry and TTB.
TTB Response
With regard to the standard of identity for absinthe, TTB is not
finalizing its proposed standard of identity for absinthe at this time
and intends to air in further rulemaking the standards that were
proposed by the commenters. With regard to the laboratory testing
requirement, TTB is removing the testing requirement for products made
with wormwood, and will update published guidance to reflect this
change. However, TTB intends to continue to offer the same type of
thujone-testing that it has previously provided for the next year, and
will assist industry members and outside laboratories to develop their
own thujone-testing capabilities.
13. Agave Spirits
The TTB regulations currently in Sec. 5.22(g) provide for a
standard for Tequila, and both Tequila and Mezcal are recognized as
distinctive products of Mexico that must be manufactured in Mexico in
accordance with the laws and regulations of Mexico governing their
manufacture. Currently, spirits that are distilled from agave that are
not Tequila or Mezcal are subject to formula requirements.
In Notice No. 176, TTB proposed to create within the standards of
identity a class called ``Agave Spirits'' and two types within that
class, ``Tequila'' and ``Mezcal'' (see proposed Sec. 5.148), replacing
the existing Class 7, Tequila. The proposed standard would include
spirits distilled from a fermented mash, of which at least 51 percent
is derived from plant species in the genus Agave and up to 49 percent
is derived from sugar. Agave spirits must be distilled at less than 95
percent alcohol by volume and bottled at or above 40 percent alcohol by
volume. Tequila and Mezcal would be types within the Agave Spirits
class, and the standards of identity for those products would not be
changed.
TTB received 11 comments in support of the creation of the ``Agave
Spirits'' class, including several distillers, the Missouri Craft
Distillers Guild, the Kentucky Distillers' Association, the American
Craft Spirits Association, and the American Distilled Spirits
Association. Some commenters suggested changes to the proposed
standards, such as creating an additional type designation for products
made from 100 percent agave or allowing the use of agave syrup as the
fermentable ingredient. The Tequila Regulatory Council (CRT) stated
that it welcomes the proposed class but suggested that Tequila or
Mezcal should be required to use the designations ``Tequila'' or
``Mezcal'' on their labels if they meet the requirements for those
standards.
Two commenters, Diageo and DISCUS, opposed the creation of the
class ``agave spirits,'' arguing that it may create consumer confusion
or ``take advantage of Tequila's or Mezcal's prestige.'' Additionally,
DISCUS requested ``a carveout'' to clarify that ``additives permitted
under Mexican regulations for Tequila and Mezcal do not change the
class and type'' of those distilled spirits.
TTB Response
TTB believes that the creation of the ``Agave Spirits'' class will
provide more information to consumers and will allow industry members
greater flexibility in labeling products that are distilled from agave.
Accordingly, TTB is amending the regulations in current Sec. 5.22(g)
to incorporate the proposed standard. Industry members who have
approved labels for ``spirits distilled from agave'' may choose to
change their labels to designate their products as ``agave spirits,''
but will not be required to do so. New applicants will continue to have
the option of designating their products as ``spirits distilled from
agave'' if they meet the requirements for use of this statement of
composition. As a result of this change, products labeled as ``agave
spirits'' are not subject to a requirement to submit a formula for
approval, which reduces the burden on distillers and importers.
TTB does not plan to move forward with the restrictive amendments
suggested by commenters. Such suggestions include a requirement that
products meeting the standard of identity for Tequila or Mezcal be
labeled with the applicable type designation rather than the class
designation. Making use of the type designation optional rather than
mandatory is consistent with TTB's approach for other classes and
types, such as whisky, as described in Section 11 above, and for brandy
and rum. Accordingly, TTB is not adopting this comment. TTB is making
conforming changes to Sec. 5.40(b) to clarify that the current
provisions relating to age statements for Tequila will apply to all
agave spirits.
With regard to the DISCUS comment about Tequila and Mezcal, we have
made a revision to clarify that this final rule does permit the use of
harmless coloring, flavoring, or blending materials in the production
of agave spirits, including Tequila or Mezcal, in accordance with the
provisions of Sec. 5.23. This means that such materials may be used
when they are ``customarily employed therein in accordance with
established trade usage, if such coloring, flavoring, or blending
materials do not total more than 2\1/2\ percent by volume of the
finished product.'' 27 CFR 5.23(a)(2).
TTB has published guidance in the Beverage Alcohol Manual for
Distilled Spirits (Distilled Spirits BAM; TTB P 5110.7), which provided
that no harmless coloring, flavoring, or blending materials may be used
in the production of Tequila or Mezcal. This position was based on the
understanding that no such materials were recognized as being
customarily used in the production of Tequila or Mezcal in accordance
with established trade usage. TTB agrees that in making such a
determination, it should take into consideration what Mexican
regulations allow. Accordingly, TTB will review this guidance and make
appropriate revisions after consulting with the Government of Mexico
with regard to what ingredients are customarily used in the production
of alcohol beverages designated as ``Tequila'' or Mezcal'' under
Mexican regulations. Any coloring or flavoring materials that are
allowed based on customary use would be subject to the 2\1/2\ percent
limit prescribed by Sec. 5.23.
It should be noted that this position does not change certain
minimum requirements that are set forth in the standard of identity for
all ``agave spirits,'' including Tequila and Mezcal, regarding proof at
distillation, bottling proof, and the percentage of mash derived from
plant species in the genus Agave. Furthermore, TTB regulations may
require the disclosure of certain ingredients on distilled spirits
labels even if the ingredients are authorized by the regulations of a
foreign country.
[[Page 18718]]
D. Malt Beverage Issues
1. Alcohol by Weight
Current regulations at Sec. 7.71 provide that alcohol content may
be stated on malt beverage labels unless prohibited by State law. They
further provide that when alcohol content is stated, and the manner of
statement is not required under State law, it must be expressed as
percent alcohol by volume, and not as percent by weight, proof, or by
maximums or minimums. Certain States require alcohol content to be
expressed as percent alcohol by weight, and some industry members have
expressed an interest in using labels that express alcohol content as a
percentage of alcohol by volume and by weight, so that they may use the
same label throughout the country.
In Notice No. 176, proposed Sec. 7.65 provided that other
truthful, accurate, and specific factual representations of alcohol
content, such as alcohol by weight, may appear on the label, as long as
they appear together with, and as part of, the statement of alcohol
content as a percentage of alcohol by volume.
TTB received one comment in response to this proposal. The Beer
Institute supported the proposal as long as statements of alcohol by
weight appeared with statements of alcohol by volume. The Beer
Institute believed that consumers were most familiar with alcohol by
volume statements, and alcohol by weight information would be more
meaningful to them if presented in conjunction with statements they
already recognize. No commenters opposed TTB's proposal.
TTB Response
TTB is incorporating this provision into existing Sec. 7.71(b)(1).
This change will provide for an additional manner in which industry
members can state truthful alcohol content statements, such as alcohol
by weight, that appear together with, and as part of, a statement of
alcohol content as a percentage of alcohol by volume. As stated in the
proposed rule, this change is also consistent with the policy adopted
in TTB Ruling 2013-2, which authorizes per-serving statements of fluid
ounces of alcohol, as long as they appear as part of a statement that
includes the percentage of alcohol by volume.
This change also reflects TTB's recognition that under current
regulations, brewers may have to obtain different labels for sale in
States that require different types of alcohol content statements.
Under the regulations as amended, brewers will be able to use the same
label in States that require alcohol content to be stated as a
percentage of alcohol by weight and in other States that neither
require nor prohibit alcohol by weight statements.
2. Use of the Term ``Draft'' or ``Draught''
In Sec. 7.87, TTB proposed codifying longstanding Bureau policy,
expressed in Industry Circular 65-1, that limited use of the terms
``draft'' or ``draught'' to malt beverages dispensed from a tap,
spigot, or similar device, or that were unpasteurized and required
refrigeration for preservation.
Two commenters addressed this proposal. The Brewers Association
opposed the proposal because it believes that industry members and
consumers understand ``draft'' to mean beer served from a keg or
barrel. The Brewers Association stated that consumers understand that
beer in cans or bottles is not ``draft'' beer, and such labeling claims
are ``puffery.'' The Brewers Association therefore requested that TTB
remove the proposed restrictions on use of the word ``draft.'' Beverly
Brewery Consultants, however, supported the proposal, noting that it
``reflects the requirements outlined in Industry Circular 65-1.''
TTB Response
After further consideration, TTB has decided not to incorporate the
proposed restrictions on use of the word ``draft'' or ``draught'' on
malt beverages into its regulations, and to cancel Industry Circular
65-1. TTB agrees with the Brewers Association that consumer perceptions
have shifted regarding the terms ``draft'' or ``draught,'' and that to
most consumers, the term has little or no relation to pasteurization.
TTB also agrees that consumers are not likely to confuse beer from a
bottle or can with beer from a tap or keg and will not be misled by
seeing the term ``draft'' on a label. Therefore, TTB will treat the
words ``draft'' or ``draught'' as marketing puffery.
3. Prohibition on Strength Claims
The TTB regulations in Sec. 7.29(f) prohibit the use of the words
``strong,'' ``full strength,'' ``extra strength,'' ``high test,''
``high proof,'' ``pre-war strength,'' ``full oldtime alcoholic
strength,'' and similar words or statements that are likely to be
considered as statements of alcohol content on labels of malt
beverages, unless required by State law. The regulations in Sec.
7.29(g) prohibit the use on malt beverage labels of any statements,
designs, or devices, whether in the form of numerals, letters,
characters, figures, or otherwise, which are likely to be considered as
statements of alcohol content, unless required by State law. Current
Sec. 7.54(c) contains similar provisions for malt beverage
advertisements, with an exception allowed for the reproduction of a
malt beverage label bearing an alcohol content statement as allowed by
the regulations.
As explained in the preamble to the proposed rule, the labeling
prohibitions gave effect to section 105(e)(2) of the FAA Act (27 U.S.C.
205(e)(2)), which prohibited placement of alcohol content statements on
malt beverage labels, unless required by State law. The Supreme Court
struck down this section of the law, as applied to truthful and non-
misleading statements of alcohol content, on First Amendment grounds in
Rubin v. Coors Brewing Co., 514 U.S. 476 (1995). Since then, the TTB
regulations have permitted optional alcohol content statements for malt
beverage labels, and have mandated alcohol content statements for malt
beverages that contain any alcohol derived from added flavors or added
nonbeverage ingredients (other than hops extract) containing alcohol.
See 27 CFR 7.22(a)(5) and 7.71. Accordingly, sections 7.29(f) and (g)
do not prohibit statements of alcohol content as permitted or mandated
by those regulations. The advertising provisions of Sec. 7.54(c) are
based on 27 U.S.C. 205(f)(2), which was not reviewed in the Coors
decision.
In Notice No. 176, TTB proposed to modernize the language of these
provisions, in proposed Sec. 7.132, by removing some terms (such as
``pre-war strength'' and ``full oldtime alcoholic strength'') that are
not likely to be used by today's brewers. TTB also proposed
corresponding changes to the malt beverage advertising regulations. The
proposed regulations would prohibit strength claims if they mislead
consumers by implying that products should be purchased or consumed on
the basis of higher alcohol strength.
Three commenters addressed proposed Sec. 7.132. The Beer Institute
supported the proposed changes, but noted that all information on
product labels essentially exists to entice consumers to purchase a
product. The Beer Institute therefore requested examples of claims that
TTB would consider to be implying that products should be purchased
based on alcohol strength.
A member of the public expressed the belief that certain terms such
as ``strong'' should not be prohibited on labels if they are part of a
recognized style designation, such as ``Belgian-style Dark Strong
Ale.'' The New Civil Liberties Alliance cited removal of the
prohibition on ``full oldtime alcoholic strength'' as an example of
easing the
[[Page 18719]]
burden of regulations on the alcoholic beverage industry.
The Brewers Association commented in support of requiring mandatory
statements of alcohol content on malt beverages, which it believed
would ``eliminate the need to regulate use of the word `strong' or
similar terms.'' The Brewers Association also called for the removal of
the prohibition on the use of ``strong'' and similar terms on malt
beverage labels in a comment in response to the Treasury Department
Request for Information. In that comment, the Brewers Association
expressed the belief that the prohibition is ``an obsolete exercise in
light of alcohol content labeling, a more informed consumer, and
recognition of first amendment speech rights.''
The Brewers Association also suggested that TTB remove the
prohibition in current Sec. 7.29(g) on the use of numerals on malt
beverage labels that are likely to be considered as statements of
alcohol content. The Brewers Association claimed that numbers on labels
are rarely relevant to alcohol content and are instead used to convey
information or distinguish products, for example in names that refer to
a brewer's area code. Accordingly, the Brewers Association suggested
that sections 7.29(f) and (g) should be removed, and that sections
7.54(c)(1) and (c)(2) should also be removed.
TTB Response
After reviewing the comments, TTB has decided not to finalize
proposed Sec. 7.132 and to instead remove prohibitions on strength
claims on malt beverage labels from the regulations entirely. TTB's
proposed regulations defined a ``strength claim'' for the purposes of
malt beverage labeling and advertising as ``a statement that directly
or indirectly makes a claim about the alcohol content of the product''
and prohibited such statements if they implied that a malt beverage
``should be purchased or consumed on the basis of higher alcohol
strength.'' In light of the comments received, TTB believes that the
standard articulated in the proposed regulations would be too difficult
to define or enforce in practice.
Instead of implementing a separate policy for the evaluation of
whether strength claims are misleading, TTB is removing the regulations
in Sec. Sec. 7.29(f) and 7.54(c), which prohibit strength claims in
malt beverage labeling and advertising, respectively. These regulations
both prohibited the use of several specific terms, such as ``full
strength'' and ``strong,'' as well as ``similar words or statements,
likely to be considered as statements of alcoholic content.'' The
removal of TTB's prohibition on strength claims includes the use of the
term ``strong'' or other indications of alcohol strength in malt
beverage names, provided such descriptors are not misleading.
Although Coors related to labeling, not advertising, TTB believes
it is appropriate to have consistent policies regarding statements of
alcohol content. While such statements are now permitted, these
regulatory changes should not be interpreted to limit TTB's authority
to prohibit claims relating to alcohol content that TTB considers false
or misleading.
For the same reasons, TTB is removing Sec. 7.29(g), which
prohibits the use of numerals likely to be considered statements of
alcohol content.
III. Regulatory Analysis and Notices
A. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et.
seq.), TTB certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. While TTB
has determined that the majority of businesses subject to this rule are
small businesses, the regulatory amendments in this final rule will not
have a significant impact on those small entities as it will not
impose, or otherwise cause, an increase in reporting, recordkeeping, or
other compliance burdens on regulated industry members. The final rule
will not require industry members to make changes to labels or
advertisements. The following analysis provides the factual basis for
TTB's certification under 5 U.S.C. 605.
1. Background
In Notice No. 176, published on November 26, 2018, TTB proposed a
recodification of the labeling and advertising regulations pertaining
to wine, distilled spirits, and malt beverages. The purpose was to
clarify and update these regulations to make them easier to understand
and to incorporate agency policies. TTB determined that the majority of
businesses subject to the proposed rule were small businesses (see
Notice No. 176 for more information on this determination).
Accordingly, TTB sought comments on the impact of the proposals, and on
ways in which the regulations could be improved. TTB also proposed a
delayed compliance date to provide all regulated entities three years
to come into compliance with the proposed regulations, to minimize the
costs associated with any label changes.
In this final rule, TTB is amending certain of its regulations
governing the labeling and advertising of wine, distilled spirits, and
malt beverages to address comments it received in response to Notice
No. 176. TTB is continuing to consider all of the issues raised by
comments it received in response to that notice, but is taking this
interim step to finalize certain of the liberalizing and clarifying
changes that have been decided, and that could be implemented quickly
and provide industry members some greater flexibility.
2. Comment From SBA Chief Counsel for Advocacy
As required by section 7805(f) of the Internal Revenue Code (26
U.S.C. 7805(f)), TTB submitted Notice No. 176 to the Chief Counsel for
Advocacy of the Small Business Administration (SBA) for comment on the
impact of these regulations.
By letter dated August 6, 2019, the Office of Advocacy for the U.S.
Small Business Administration (``SBA Office of Advocacy'') provided a
comment on Notice No. 176. The comment stated that ``Advocacy commends
the TTB on its logical reorganization of the labeling and advertising
rules and streamlining some of its processes.'' However, the comment
also indicated that in its discussions with small businesses in the
alcohol beverage industry, two issues with the proposed rule were
brought to its attention: The definition of an ``oak barrel,'' and
creating a separate class and type for mead. The comment suggested that
TTB revise the rule to reduce the impacts of the proposed definition of
``oak barrel.''
As described in more detail in section II.C.2 of this preamble, in
Notice No. 176, TTB proposed to define the term ``oak barrel,'' as a
``cylindrical oak drum of approximately 50 gallons capacity used to age
bulk spirits.'' However, TTB specifically solicited comment on whether
smaller barrels or non-cylindrical shaped barrels should be acceptable
for storing distilled spirits where the standard of identity requires
storage in oak barrels.
With regard to TTB's proposed definition of an ``oak barrel'' as a
``cylindrical oak drum of approximately 50 gallons used to age bulk
spirits,'' the SBA Office of Advocacy stated that many small distillers
use oak barrels of varying sizes, including barrels of 25 and 30
gallons. The comment noted that the SBA Office of Advocacy had spoken
with one small distiller that had approximately 5,000 proof gallons of
[[Page 18720]]
whisky that is either aging in small cooperage or is in holding tanks
after aging in small cooperage, and that under the proposed rule, that
product could not be sold as ``whisky.'' The SBA Office of Advocacy
noted that this distiller's product is worth approximately $1.5 million
at retail.
The comment from the SBA Office of Advocacy also stated that the
proposed 3-year compliance date would be inadequate, because it would
not provide enough time to sell all spirits aged in barrels smaller
than 50 gallons, and because small distillers need to make purchasing
decisions for barrels on an ongoing basis. Additionally, some small
distillers use square barrels rather than cylindrical barrels.
In response to Notice No. 176, TTB received almost 700 comments
from distillers and trade associations that stated that the proposed
rule would impose burdens on small businesses that currently use
barrels of varying sizes and shapes. Only a handful of commenters
supported the proposed definition.
After careful review of the comments received on this issue, TTB
has determined that it will not move forward with the proposal to
define an ``oak barrel'' as a ``cylindrical oak drum of approximately
50 gallons used to age bulk spirits'' or otherwise define the term in
the regulations. In the absence of a regulatory definition for ``oak
barrel'' or ``oak container,'' it will be TTB's policy that these terms
include oak containers of varying shapes and sizes.
Because TTB is not moving forward with the proposed definition of
``oak barrel,'' the final rule addresses the comment from SBA Office of
Advocacy. Accordingly, there is no need to conduct a supplemental
initial regulatory flexibility analysis to propose alternatives to the
rule. The other issue addressed by the comment from the SBA Office of
Advocacy dealt with the proposed regulations on honey wine (also known
as ``mead''). This final rule does not address that issue; thus, TTB
will review SBA's comment on mead, along with the other comments
received on this issue, for further action.
3. Other Proposals That Will Not Be Adopted
In addition to not adopting its proposed definition of an ``oak
barrel,'' TTB has decided not to adopt certain other proposals,
including the following:
A proposed restriction on the use of certain types of
cross-commodity terms (for example, imposing restrictions on the use of
various types of distilled spirits terms, including homophones of
distilled spirits classes on wine or malt beverage labels).
Proposed changes to statements of composition for
distilled spirits labels, including changes that would have required
disclosure of intermediate products, required distilled spirits and
wines used in a finished product to be listed in order of predominance,
and removed the flexibility to use an abbreviated statement of
composition for cocktails.
A policy that would have limited ``age'' statements on
distilled spirits labels to include only the time the product is aged
in the first barrel, and not aging that occurs in subsequent barrels.
A proposal that would have required that whisky that meets
the standards for a specific type designation be labeled with that type
designation rather than the broader class designation.
This final rule includes only amendments that TTB believes offer
clarifications and liberalize requirements for industry members and
that avoid unintended conflicts with current labels or business
practices, while still providing adequate protection for consumers.
Because the final rule will not require changes to labels,
advertisements, or business practices, no delayed compliance date is
necessary, and the final rule will take effect 30 days from publication
in the Federal Register.
The preamble explains in detail the reasons why the proposals that
have been adopted in this final rule are either clarifying or
liberalizing. For example, the final rule clarifies existing policies
regarding personalized labels and exemptions from the labeling
regulations for products exported in bond. Some examples of
liberalizing measures that TTB is finalizing in this document include:
Implementing an increase (to plus or minus 0.3 percentage points) in
the tolerance applicable to the alcohol content statements on distilled
spirits labels; removing the current prohibition against age statements
on several classes and types of distilled spirits; removing outdated
prohibitions against the use of the term ``strong'' and other
indications of alcohol strength on malt beverage labels; and removing a
limitation on the way distilled spirits producers could count the
distillations when making optional ``multiple distillation'' claims on
their labels. The final rule also liberalizes the advertising
regulations for wine, distilled spirits, and malt beverages, by
allowing alternate contact information for the responsible advertiser,
such as a telephone number, website, or email address, in lieu of the
responsible advertiser's location by city and State.
In summary, while the entities affected by the amendments in this
final rule include a substantial number of small entities, the final
rule does not require labeling or advertising changes by these small
businesses, but instead offers industry members additional flexibility
in complying with the regulations. Thus, TTB certifies that this final
rule will not have a significant economic impact on a substantial
number of small entities.
B. 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.
C. Paperwork Reduction Act
The collections of information in the regulations contained in this
final rule have been previously reviewed and approved by the Office of
Management and Budget (OMB) in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3507) and assigned control numbers 1513-0020,
1513-0041, 1513-0064 and 1513-0087. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid control number assigned by OMB.
The specific regulatory sections in this final rule that contain
approved collections of information are Sec. Sec. 4.62, 5.32, 5.52,
5.63, 7.52, and 19.353. In addition, the new regulations at Sec. Sec.
4.54, 5.57 and 7.43 include cross-references to regulations covered by
an approved collection of information. As explained further below, the
regulatory amendments made in this final rule do not change any
reporting, recordkeeping, or third-party disclosure requirement of, or
the respondent burden associated with, these existing information
collections.
Regarding OMB control number 1513-0020, the regulations in
Sec. Sec. 4.54, 5.57, and 7.43, set forth the process for importers
and domestic bottlers to make certain changes to approved labels in
order to personalize the labels without having to resubmit the labels
for TTB approval. These new regulations cross-reference the existing
label approval regulations covered under OMB control number 1513-0020
that require applications for label approval for wine, distilled
spirits, and malt beverages, respectively. The new regulations do not
add any new requirements or respondent burden to that previously-
[[Page 18721]]
approved collection as they merely set forth current TTB guidance
regarding when the submission of label approval applications for
personalized labels is required.
Regarding OMB control number 1513-0041, relating to gauging records
for distilled spirits plants, TTB is amending Sec. 19.353 to include
conforming language that refers to the expanded labeling tolerance for
alcohol content that is provided in the amendments to Sec. 19.356. The
addition of that conforming language has no effect on this information
collection's requirements or respondent burden.
Regarding OMB control number 1513-0064, related to importer
records, amendments to Sec. 5.52 merely make clarifications to the
regulations concerning certificates of age and origin for distilled
spirits and do not affect the information collection's requirements or
respondent burden.
Regarding OMB control number 1513-0087, related to FAA Act-based
labeling and advertising requirements, TTB is amending Sec. Sec.
4.62(a), 5.63(a) 7.52(a) to allow alcohol beverage advertisers optional
ways to provide contact information in their advertisements, such as by
displaying a telephone number, website, or email address in lieu of the
advertiser's city and State. In Sec. 5.32, TTB is amending its
distilled spirits labeling requirements to allow the display of a non-
standard distilled spirits container's net contents on any label and to
remove the TTB regulatory provision relating to country of origin
statements. None of these regulatory amendments increase the
requirements or respondent burdens associated with OMB control number
1513-0087.
IV. Drafting Information
Personnel of the Regulations and Rulings Division drafted this
document with the assistance of other employees of the Alcohol and
Tobacco Tax and Trade Bureau.
List of Subjects
27 CFR Part 4
Advertising, Alcohol and alcoholic beverages, Customs duties and
inspection, Food additives, Imports, International agreements,
Labeling, Packaging and containers, Reporting and recordkeeping
requirements, Trade practices, Wine.
27 CFR Part 5
Advertising, Alcohol and alcoholic beverages, Customs duties and
inspection, Food additives, Grains, Imports, International agreements,
Labeling, Liquors, Packaging and containers, Reporting and
recordkeeping requirements, Trade practices.
27 CFR Part 7
Advertising, Alcohol and alcoholic beverages, Beer, Customs duties
and inspection, Food additives, Imports, Labeling, Packaging and
containers, Reporting and recordkeeping requirements, Trade practices.
27 CFR Part 19
Administrative practice and procedure, Alcohol and alcoholic
beverages, Authority delegations (Government agencies), Caribbean Basin
initiative, Chemicals, Claims, Customs duties and inspection,
Electronic funds transfers, Excise taxes, Exports, Gasohol, Imports,
Labeling, Liquors, Packaging and containers, Puerto Rico, Reporting and
recordkeeping requirements, Research, Security measures, Spices and
flavorings, Stills, Surety bonds, Transportation, Vinegar, Virgin
Islands, Warehouses, Wine.
Regulatory Amendments
For the reasons discussed in the preamble, TTB amends 27 CFR,
chapter I, 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.
Subpart A--Scope
0
2. Add Sec. 4.6 to read as follows:
Sec. 4.6 Wines covered by this part.
The regulations in this part apply to wine containing not less than
7 percent and not more than 24 percent alcohol by volume.
0
3. Add Sec. 4.7 to read as follows:
Sec. 4.7 Products produced as wine that are not covered by this
part.
Certain wine products do not fall within the definition of a
``wine'' under the FAA Act and are thus not subject to this part. They
may, however, also be subject to other labeling requirements. See 27
CFR parts 24 and 27 for labeling requirements applicable to ``wine'' as
defined by the IRC. See 27 CFR part 16 for health warning statement
requirements applicable to ``alcoholic beverages'' as defined by the
Alcoholic Beverage Labeling Act.
(a) Products containing less than 7 percent alcohol by volume. The
regulations in this part do not cover products that would otherwise
meet the definition of wine except that they contain less than 7
percent alcohol by volume. Bottlers and importers of alcohol beverages
that do not fall within the definition of malt beverages, wine, or
distilled spirits under the FAA Act should refer to the applicable
labeling regulations for foods issued by the U.S. Food and Drug
Administration. See 21 CFR part 101.
(b) Products containing more than 24 percent alcohol by volume.
Products that would otherwise meet the definition of wine except that
they contain more than 24 percent alcohol by volume are classified as
distilled spirits and must be labeled in accordance with part 5 of this
chapter.
Subpart B--Definitions
0
4. Amend Sec. 4.10 by adding the definition of ``Certificate of label
approval (COLA)'' in alphabetical order to read as follows:
Sec. 4.10 Meaning of terms.
* * * * *
Certificate of label approval (COLA). A certificate issued on form
TTB F 5100.31 that authorizes the bottling of wine, distilled spirits,
or malt beverages, or the removal of bottled wine, distilled spirits,
or malt beverages from customs custody for introduction into commerce,
as long as the product bears labels identical to the labels appearing
on the face of the certificate, or labels with changes authorized by
TTB on the certificate or otherwise (such as through the issuance of
public guidance available on the TTB website at www.ttb.gov).
* * * * *
Subpart C--Standards of Identity for Wine
0
5. Amend Sec. 4.21 by:
0
a. Revising paragraph (a)(1);
0
b. Redesignating paragraphs (a)(2) and (3) as paragraph (a)(5) and (6),
respectively;
0
c. Adding new paragraphs (a)(2), (a)(3), and (a)(4);
0
d. Removing and reserving paragraph (d);
0
e. Revising paragraph (e)(1);
0
f. Redesignating paragraphs (e)(2), (3), (4), and (5) as paragraphs
(e)(5) (6), (7), and (8), respectively;
0
g. Add new paragraphs (e)(2), (3), and (4);
0
h. In redesignated paragraph (e)(8), in the first sentence, remove the
phrase ``e.g., ``peach wine,'' ``blackberry wine.'' '' and add in its
place the phrase ``e.g., ``peach wine,'' ``blackberry wine,'' ``orange
wine.'' ''; and
[[Page 18722]]
0
i. In redesignated paragraph (e)(8), inserting a new sentence after the
end of the second sentence.
The additions and revisions read as follows:
Sec. 4.21 The standards of identity.
* * * * *
(a) * * *
(1) Grape wine is wine produced by the normal alcoholic
fermentation of the juice of sound, ripe grapes (including restored or
unrestored pure condensed grape must), with or without the addition,
after fermentation, of pure condensed grape must and with or without
added spirits of the type authorized for natural wine under 26 U.S.C.
5382, but without other addition or abstraction except as may occur in
cellar treatment of the type authorized for natural wine under 26
U.S.C. 5382.
(2) Still grape wine may be ameliorated, or sweetened, before,
during, or after fermentation, in a way that is consistent with the
limits set forth in 26 U.S.C. 5383 for natural grape wine.
(3) The maximum volatile acidity, calculated as acetic acid and
exclusive of sulfur dioxide is 0.14 gram per 100 mL (20 degrees
Celsius) for red wine and 0.12 gram per 100 mL (20 degrees Celsius) for
other grape wine, provided that the maximum volatile acidity for wine
produced from unameliorated juice of 28 or more degrees Brix is 0.17
gram per 100 mL for red wine and 0.15 gram per 100 mL for white wine.
(4) Grape wine deriving its characteristic color or lack of color
from the presence or absence of the red coloring matter of the skins,
juice, or pulp of grapes may be designated as ``red wine,'' ``pink (or
rose) wine,'' ``amber wine,'' or ``white wine'' as the case may be. Any
grape wine containing no added grape brandy or alcohol may be further
designated as ``natural.''
* * * * *
(d) [Reserved]
(e) * * *
(1) Fruit wine is wine produced by the normal alcoholic
fermentation of the juice of sound, ripe fruit (including restored or
unrestored pure condensed fruit must) other than grapes, with or
without the addition, after fermentation, of pure condensed fruit must
and, with or without added spirits of the type authorized for natural
wine under 26 U.S.C. 5382, but without other addition or abstraction
except as may occur in cellar treatment of the type authorized for
natural wine under 26 U.S.C. 5382.
(2) Fruit wine may be ameliorated, or sweetened, before, during, or
after fermentation, in a way that is consistent with the limits set
forth in 26 U.S.C. 5384 for natural fruit wine.
(3) The maximum volatile acidity, calculated as acetic acid and
exclusive of sulfur dioxide, shall not be, for fruit wine that does not
contain added brandy or wine spirits, more than 0.14 gram, and for
other fruit wine, more than 0.12 gram, per 100 milliliters (20 degrees
Celsius).
(4) Any fruit wine containing no added grape brandy or alcohol may
be further designated as ``natural.''
* * * * *
(8) * * * If the fruit wine is derived wholly (except for sugar,
water, or added alcohol) from more than one citrus fruit, the
designation ``citrus wine'' or ``citrus fruit wine'' may, but is not
required to, be used instead of ``fruit wine,'' and the designation
must also be qualified by a truthful and adequate statement of
composition appearing in direct conjunction therewith. * * *
* * * * *
Sec. 4.27 [Amended]
0
6. Amend 4.27 by:
0
a. Removing the phrase ``in containers of 5 liters or less'' from
paragraph (b);
0
b. Adding the word ``and'' at the end of paragraph (c)(1);
0
c. Removing paragraph (c)(2); and
0
d. Redesignating paragraph (c)(3) as new paragraph (c)(2).
Subpart D--Labeling Requirements for Wine
0
7. Amend Sec. 4.35 by revising paragraph (e) to read as follows:
Sec. 4.35 Name and address.
* * * * *
(e) Cross reference--country of origin statement. For U.S. Customs
and Border Protection (CBP) rules regarding country of origin marking
requirements, see the CBP regulations at 19 CFR parts 102 and 134.
Subpart F--Requirements for Approval of Labels of Wine Domestically
Bottled or Packed
0
8. Add Sec. 4.54 to read as follows:
Sec. 4.54 Personalized labels.
(a) General. Applicants for label approval may obtain permission
from TTB to make certain changes in order to personalize labels without
having to resubmit labels for TTB approval. A personalized label is an
alcohol beverage label that meets the minimum mandatory label
requirements and is customized for customers. Personalized labels may
contain a personal message, picture, or other artwork that is specific
to the consumer who is purchasing the product. For example, a winery
may offer individual or corporate customers labels that commemorate an
event such as a wedding or grand opening.
(b) Application. Any person who intends to offer personalized
labels must submit a template for the personalized label as part of the
application for label approval required under Sec. Sec. 4.40 or 4.50
of this part, and must note on the application a description of the
specific personalized information that may change.
(c) Approval of personalized label. If the application complies
with the regulations, TTB will issue a certificate of label approval
(COLA) with a qualification allowing the personalization of labels. The
qualification will allow the certificate holder to add or change items
on the personalized label such as salutations, names, graphics,
artwork, congratulatory dates and names, or event dates without
applying for a new COLA. All of these items on personalized labels must
comply with the regulations of this part.
(d) Changes not allowed to personalized labels. Approval of an
application to personalize labels does not authorize the addition of
any information that discusses either the alcohol beverage or
characteristics of the alcohol beverage or that is inconsistent with or
in violation of the provisions of this part or any other applicable
provision of law or regulations.
Subpart G--Advertising of Wine
0
9. Amend Sec. 4.62 by revising paragraph (a) to read as follows:
Sec. 4.62 Mandatory statements.
(a) Responsible advertiser. The advertisement must display the
responsible advertiser's name, city, and State or the name and other
contact information (such as telephone number, website, or email
address) where the responsible advertiser may be contacted.
* * * * *
PART 5-- LABELING AND ADVERTISING OF DISTILLED SPIRITS
0
10. The authority citation for part 5 continues to read as follows:
Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.
Subpart A--Scope
0
11. Revise Sec. 5.1 to read as follows:
Sec. 5.1 General.
(a) The regulations in this part relate to the labeling and
advertising of
[[Page 18723]]
distilled spirits. This part applies to the several States of the
United States, the District of Columbia, and the Commonwealth of Puerto
Rico.
(b) The regulations in this part shall not apply to distilled
spirits exported in bond.
Subpart B--Definitions
0
12. Amend Sec. 5.11 by:
0
a. Revising the definition of ``Brand label'';
0
b. Adding the definition of ``Certificate of label approval (COLA)'' in
alphabetical order; and
0
c. Adding a sentence to the end of the definition of ``Distilled
spirits.''
The revision and additions read as follows:
Sec. 5.11 Meaning of terms.
* * * * *
Brand label. The label or labels bearing the brand name, alcohol
content, and class or type designation in the same field of vision.
Same field of vision means a single side of a container (for a
cylindrical container, a side is 40 percent of the circumference) where
all of the pieces of information can be viewed simultaneously without
the need to turn the container.
* * * * *
Certificate of label approval (COLA). A certificate issued on form
TTB F 5100.31 that authorizes the bottling of wine, distilled spirits,
or malt beverages, or the removal of bottled wine, distilled spirits,
or malt beverages from customs custody for introduction into commerce,
as long as the product bears labels identical to the labels appearing
on the face of the certificate, or labels with changes authorized by
TTB on the certificate or otherwise (such as through the issuance of
public guidance available on the TTB website at www.ttb.gov).
* * * * *
Distilled spirits. * * *. The term ``distilled spirits'' also does
not include products containing less than 0.5 percent alcohol by
volume.
* * * * *
Subpart C--Standards of Identity for Distilled Spirits
0
13. Amend Sec. 5.22 by:
0
a. Revising paragraph (a)(1);
0
b. Amending paragraph (b)(1)(iii) by removing the word ``shall'' and
adding in its place the phrase ``may optionally'' wherever it appears;
and
0
c. Revising paragraph (g).
The revisions read as follows:
Sec. 5.22 The standards of identity.
* * * * *
(a) * * *
(1) ``Vodka'' is neutral spirits which may be treated with up to
two grams per liter of sugar and up to one gram per liter of citric
acid. Products to be labeled as vodka may not be aged or stored in wood
barrels at any time except when stored in paraffin-lined wood barrels
and labeled as bottled in bond pursuant to Sec. 5.42(b)(3). Vodka
treated and filtered with not less than one ounce of activated carbon
or activated charcoal per 100 wine gallons of spirits may be labeled as
``charcoal filtered.''
* * * * *
(g) Class 7; Agave Spirits. ``Agave spirits'' are distilled from a
fermented mash, of which at least 51 percent is derived from plant
species in the genus Agave and up to 49 percent is derived from other
sugars. Agave spirits must be distilled at less than 95 percent alcohol
by volume (190[deg] proof) and bottled at or above 40 percent alcohol
by volume (80[deg] proof). Agave spirits may be stored in wood barrels.
Agave spirits may contain added flavoring or coloring materials as
authorized by Sec. 5.23. This class also includes mixtures of agave
spirits. Agave spirits that meet the standard of identity for
``Tequila'' or ``Mezcal'' may be designated as ``agave spirits'' or as
``Tequila'' or ``Mezcal'' as applicable.
(1) ``Tequila'' is an agave spirit that is a distinctive product of
Mexico. Tequila must be made in Mexico, in compliance with the laws and
regulations of Mexico governing the manufacture of Tequila for
consumption in that country.
(2) ``Mezcal'' is an agave spirit that is a distinctive product of
Mexico. Mezcal must be made in Mexico, in compliance with the laws and
regulations of Mexico governing the manufacture of Mezcal for
consumption in that country.
* * * * *
Sec. 5.23 [Amended]
0
14. Amend Sec. 5.23, paragraph (a)(3) by removing the phrase ``a trace
amount of citric acid'' and adding in its place the phrase ``citric
acid in an amount not to exceed one gram per liter''.
Subpart D--Labeling Requirements for Distilled Spirits
0
15. Amend Sec. 5.32 by:
0
a. Removing and reserving paragraph (a)(4);
0
b. Removing and reserving paragraph (b)(2); and
0
c. Revising paragraph (b)(3).
The revision reads as follows:
Sec. 5.32 Mandatory label information.
* * * * *
(a) * * *
(4) [Reserved]
* * * * *
(b) * * *
(2) [Reserved]
(3) Net contents, in accordance with Sec. 5.38.
* * * * *
Sec. 5.35 [Amended].
0
16. Amend Sec. 5.35 by removing the word ``designed'' and adding in
its place the word ``designated''.
0
17. Amend Sec. 5.36 by revising paragraph (e) to read as follows:
Sec. 5.36 Name and address.
* * * * *
(e) Cross reference--country of origin statement. For U.S. Customs
and Border Protection (CBP) rules regarding country of origin marking
requirements, see the CBP regulations at 19 CFR parts 102 and 134.
* * * * *
0
18. Amend Sec. 5.37 by revising paragraph (b) to read as follows:
Sec. 5.37 Alcohol content.
* * * * *
(b) Tolerances. A tolerance of plus or minus 0.3 percentage points
is allowed for actual alcohol content that is above or below the
labeled alcohol content.
* * * * *
0
19. Amend Sec. 5.40 by:
0
a. Redesignating the text of paragraph (a)(1) as paragraph (a)(1)(i);
0
b. Adding paragraph (a)(1)(ii);
0
c. Amending paragraph (b) by removing the word ``Tequila'' and adding
in its place the phrase ``agave spirits'' wherever it appears; and
0
d. Revising paragraph (d).
The addition and revision read as follows:
Sec. 5.40 Statements of age and percentage.
(a) * * *
(1) * * *
(ii) If a whisky is aged in more than one container, the label may
optionally indicate the types of oak containers used.
* * * * *
(d) Other distilled spirits. (1) Statements regarding age or
maturity or similar statements or representations on labels for all
other spirits, except neutral spirits, are permitted only when the
distilled spirits are stored in an oak barrel and, once dumped from the
barrel, subjected to no treatment besides mixing with water, filtering,
and bottling. If batches are made from barrels of spirits of different
ages, the label may only state the age of the youngest spirits.
(2) Statements regarding age or maturity or similar statements as
to
[[Page 18724]]
neutral spirits (except for grain spirits as stated in paragraph (c) of
this section) are prohibited from appearing on any label.
* * * * *
0
20. Amend Sec. 5.42 by revising paragraphs (b)(3)(iii) and (b)(6), to
read as follows:
Sec. 5.42 Prohibited practices.
* * * * *
(b) * * *
(3) * * *
(iii) Stored for at least four years in wooden containers wherein
the spirits have been in contact with the wood surface, except for
vodka, which must be stored for at least four years in wooden
containers coated or lined with paraffin or other substance which will
preclude contact of the spirits with the wood surface, and except for
gin, which must be stored in paraffin-lined or unlined wooden
containers for at least four years;
* * * * *
(6) Distilled spirits may not be labeled as ``double distilled'' or
``triple distilled'' or any similar term unless it is a truthful
statement of fact. For purposes of this paragraph only, a distillation
means a single run through a pot still or a single run through a column
of a column (reflux) still. The number of distillations may be
understated but may not be overstated.
* * * * *
Subpart F--Requirements for Withdrawal From Customs Custody of
Bottled Imported Distilled Spirits
0
21. Amend Sec. 5.52 by:
0
a. By revising paragraphs (a) and (b);
0
b. In paragraph (c)(1), adding the phrase ``, or a conformity
assessment body,'' between the words ``Government'' and ``stating'',
and by removing the word ``certificate'' and adding the phrase
``Certificate of Tequila Export'' in its place;
0
c. In paragraph (c)(2), adding the phrase ``, or a conformity
assessment body,'' between the words ``Government'' and ``as'', and by
removing the word ``certificate'' and adding the phrase ``Certificate
of Tequila Export'' in its place;
0
d. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g),
respectively;
0
e. In newly redesignated paragraph (g), removing the phrase ``(a)
through (e)'' and adding in its place the phrase ``(a) through (f)'';
and
0
f. Adding new paragraph (e).
The addition and revisions read as follows:
Sec. 5.525.52 Certificates of age and origin.
* * * * *
(a) Scotch, Irish, and Canadian whiskies. (1) Scotch, Irish, and
Canadian whiskies, imported in containers, are not eligible for release
from customs custody for consumption, and no person may remove such
whiskies from customs custody for consumption, unless that person has
obtained and is in possession of an invoice accompanied by a
certificate of origin issued by an official duly authorized by the
appropriate foreign government, certifying:
(i) That the particular distilled spirits are Scotch, Irish, or
Canadian whisky, as the case may be; and
(ii) That the distilled spirits have been manufactured in
compliance with the laws of the respective foreign governments
regulating the manufacture of whisky for home consumption.
(2) In addition, an official duly authorized by the appropriate
foreign government must certify to the age of the youngest distilled
spirits in the container. The age certified shall be the period during
which, after distillation and before bottling, the distilled spirits
have been stored in oak containers.
(b) Brandy and Cognac. Brandy (other than fruit brandies of a type
not customarily stored in oak containers) or Cognac, imported in
bottles, is not eligible for release from customs custody for
consumption, and no person may remove such brandy or Cognac from
customs custody for consumption, unless the person so removing the
brandy or Cognac possesses a certificate issued by an official duly
authorized by the appropriate foreign country certifying that the age
of the youngest brandy or Cognac in the bottle is not less than two
years, or if age is stated on the label that none of the distilled
spirits are of an age less than that stated. The age certified shall be
the period during which, after distillation and before bottling, the
distilled spirits have been stored in oak containers. If the label of
any fruit brandy, not stored in oak containers, bears any statement of
storage in another type of container, the brandy is not eligible for
release from customs custody for consumption, and no person may remove
such brandy from customs custody for consumption, unless the person so
removing the brandy possesses a certificate issued by an official duly
authorized by the appropriate foreign government certifying to such
storage. Cognac, imported in bottles, is not eligible for release from
customs custody for consumption, and no person may remove such Cognac
from customs custody for consumption, unless the person so removing the
Cognac possesses a certificate issued by an official duly authorized by
the French Government, certifying that the product is grape brandy
distilled in the Cognac region of France and entitled to be designated
as ``Cognac'' by the laws and regulations of the French Government.
* * * * *
(e) Rum. Rum imported in bottles that contain any statement of age
is not eligible to be released from customs custody for consumption,
and no person may remove such rum from customs custody for consumption,
unless the person so removing the rum possesses a certificate issued by
an official duly authorized by the appropriate foreign country,
certifying to the age of the youngest rum in the bottle. The age
certified shall be the period during which, after distillation and
before bottling, the distilled spirits have been stored in oak
containers.
* * * * *
Subpart G-Requirements for Approval of Labels of Domestically
Bottled Distilled Spirits
0
22. Add Sec. 5.57 to read as follows:
Sec. 5.575.57 Personalized labels.
(a) General. Applicants for label approval may obtain permission
from TTB to make certain changes in order to personalize labels without
having to resubmit labels for TTB approval. A personalized label is an
alcohol beverage label that meets the minimum mandatory label
requirements and is customized for customers. Personalized labels may
contain a personal message, picture, or other artwork that is specific
to the consumer who is purchasing the product. For example, a distiller
may offer individual or corporate customers labels that commemorate an
event such as a wedding or grand opening.
(b) Application. Any person who intends to offer personalized
labels must submit a template for the personalized label as part of the
application for label approval required under Sec. Sec. 5.51 or 5.55
of this part, and must note on the application a description of the
specific personalized information that may change.
(c) Approval of personalized label. If the application complies
with the regulations, TTB will issue a certificate of label approval
(COLA) with a qualification allowing the personalization of labels. The
qualification will allow the certificate holder to add or change items
on the personalized label such as salutations, names, graphics,
artwork, congratulatory dates and names, or
[[Page 18725]]
event dates without applying for a new COLA. All of these items on
personalized labels must comply with the regulations of this part.
(d) Changes not allowed to personalized labels. Approval of an
application to personalize labels does not authorize the addition of
any information that discusses either the alcohol beverage or
characteristics of the alcohol beverage or that is inconsistent with or
in violation of the provisions of this part or any other applicable
provision of law or regulations.
Subpart H--Advertising of Distilled Spirits
0
23. Amend Sec. 5.63 by revising paragraph (a) to read as follows:
Sec. 5.635.63 Mandatory statements.
(a) Responsible advertiser. The advertisement must display the
responsible advertiser's name, city, and State or the name and other
contact information (such as, telephone number, website, or email
address) where the responsible advertiser may be contacted.
* * * * *
0
24. Amend Sec. 5.65 by revising paragraph (a)(9) to read as follows:
Sec. 5.655.65 Prohibited practices.
(a) * * *
(9) The words ``double distilled'' or ``triple distilled'' or any
similar terms unless it is a truthful statement of fact. For purposes
of this paragraph only, a distillation means a single run through a pot
still or a single run through a column of a column (reflux) still. The
number of distillations may be understated but may not be overstated.
* * * * *
PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES
0
25. The authority citation for part 7 continues to read as follows:
Authority: 27 U.S.C. 205.
Subpart A--Scope
0
26. Add Sec. 7.6 to read as follows:
Sec. 7.67.6 Brewery products not covered by this part.
Certain fermented products that are regulated as ``beer'' under the
Internal Revenue Code (IRC) do not fall within the definition of a
``malt beverage'' under the FAA Act and thus are not subject to this
part. They may, however, also be subject to other labeling
requirements. See 27 CFR parts 25 and 27 for labeling requirements
applicable to ``beer'' as defined under the IRC. See 27 CFR part 16 for
health warning statement requirements applicable to ``alcoholic
beverages'' as defined in the Alcoholic Beverage Labeling Act.
(a) Sak[eacute] and similar products. Sak[eacute] and similar
products (including products that fall within the definition of
``beer'' under parts 25 and 27 of this chapter) that fall within the
definition of a ``wine'' under the FAA Act are covered by the labeling
regulations for wine in 27 CFR part 4.
(b) Other beers not made with both malted barley and hops. The
regulations in this part do not cover beer products that are not made
with both malted barley and hops, or their parts or their products, or
that do not fall within the definition of a ``malt beverage'' under
Sec. 7.10 for any other reason. Bottlers and importers of alcohol
beverages that do not fall within the definition of malt beverages,
wine, or distilled spirits under the FAA Act should refer to the
applicable labeling regulations for foods issued by the U.S. Food and
Drug Administration. See 21 CFR part 101.
Subpart B--Definitions
0
27. Amend Sec. 7.10 by adding a definition of ``Certificate of label
approval (COLA)'' in alphabetical order to read as follows:
Sec. 7.107.10 Meaning of terms.
* * * * *
Certificate of label approval (COLA). A certificate issued on form
TTB F 5100.31 that authorizes the bottling of wine, distilled spirits,
or malt beverages, or the removal of bottled wine, distilled spirits,
or malt beverages from customs custody for introduction into commerce,
as long as the product bears labels identical to the labels appearing
on the face of the certificate, or labels with changes authorized by
TTB on the certificate or otherwise (such as through the issuance of
public guidance available on the TTB website at www.ttb.gov).
* * * * *
Subpart C--Labeling Requirements for Malt Beverages
0
28. Amend Sec. 7.25 by redesignating paragraph (c) as paragraph (d)
and adding new paragraph (c) to read as follows:
Sec. 7.257.25 Name and address.
* * * * *
(c) Cross reference--country of origin statement. For U.S. Customs
and Border Protection (CBP) rules regarding country of origin marking
requirements, see the CBP regulations at 19 CFR parts 102 and 134.
* * * * *
Sec. 7.297.29 [Amended]
0
29. Amend Sec. 7.29 by removing and reserving paragraphs (f) and (g).
Subpart E--Requirements for Approval of Labels of Malt Beverages
Domestically Bottled or Packed
0
30. Add Sec. 7.43 to read as follows:
Sec. 7.437.43 Personalized labels.
(a) General. Applicants for label approval may obtain permission
from TTB to make certain changes in order to personalize labels without
having to resubmit labels for TTB approval. A personalized label is an
alcohol beverage label that meets the minimum mandatory label
requirements and is customized for customers. Personalized labels may
contain a personal message, picture, or other artwork that is specific
to the consumer who is purchasing the product. For example, a brewer
may offer individual or corporate customers labels that commemorate an
event such as a wedding or grand opening.
(b) Application. Any person who intends to offer personalized
labels must submit a template for the personalized label as part of the
application for label approval required under Sec. Sec. 7.31 or 7.41
of this part, and must note on the application a description of the
specific personalized information that may change.
(c) Approval of personalized label. If the application complies
with the regulations, TTB will issue a certificate of label approval
(COLA) with a qualification allowing the personalization of labels. The
qualification will allow the certificate holder to add or change items
on the personalized label such as salutations, names, graphics,
artwork, congratulatory dates and names, or event dates without
applying for a new COLA. All of these items on personalized labels must
comply with the regulations of this part.
(d) Changes not allowed to personalized labels. Approval of an
application to personalize labels does not authorize the addition of
any information that discusses either the alcohol beverage or
characteristics of the alcohol beverage or that is inconsistent with or
in violation of the provisions of this part or any other applicable
provision of law or regulations.
Subpart F--Advertising of Malt Beverages
0
31. Amend Sec. 7.52 by revising paragraph (a) to read as follows:
[[Page 18726]]
Sec. 7.527.52 Mandatory statements.
(a) Responsible advertiser. The advertisement must display the
responsible advertiser's name, city, and State or the name and other
contact information (such as, telephone number, website, or email
address) where the responsible advertiser may be contacted.
* * * * *
Sec. 7.547.54 [Amended]
0
32. Amend Sec. 7.54 by removing and reserving paragraph (c).
0
33. Revise the heading to subpart H to read as follows:
Subpart H--Alcoholic Content Statements
0
34. Amend Sec. 7.71 by revising paragraph (b)(1) to read as follows:
Sec. 7.717.71 Alcoholic content.
* * * * *
(b) * * *
(1) Statement of alcoholic content shall be expressed in percent
alcohol by volume, and not by proof, by a range, or by maximums or
minimums, unless required by State law. Other truthful, accurate, and
specific factual representations of alcohol content, such as alcohol by
weight, may be made, as long as they appear together with, and as part
of, the statement of alcohol content as a percentage of alcohol by
volume.
* * * * *
PART 19--DISTILLED SPIRITS PLANTS
0
35. The authority citation for part 19 continues to read as follows:
Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006,
5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5114, 5121-
5124, 5142, 5143, 5146, 5148, 5171-5173, 5175, 5176, 5178-5181,
5201-5204, 5206, 5207, 5211-5215, 5221-5223, 5231, 5232, 5235, 5236,
5241-5243, 5271, 5273, 5301, 5311-5313, 5362, 5370, 5373, 5501-5505,
5551-5555, 5559, 5561, 5562, 5601, 5612, 5682, 6001, 6065, 6109,
6302, 6311, 6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301, 9303,
9304, 9306.
Subpart N--Processing of Distilled Spirits
0
36. Amend Sec. 19.353 by revising the second sentence to read as
follows:
Sec. 19.35319.353 Bottling tank gauge.
* * *. The gauge must be made at labeling or package marking proof,
subject to variations in accordance with the tolerances set forth in
Sec. 19.356(c); however, the actual measurement of the gauge must be
entered on the bottling and packaging record required in Sec. 19.599.
* * * * *
0
37. Amend Sec. 19.356 by revising paragraphs (c) and (d) to read as
follows:
Sec. 19.35619.356 Alcohol content and fill.
* * * * *
(c) Variations in alcohol content. Variations in alcohol content
may not exceed 0.3 percent alcohol by volume above or below the alcohol
content stated on the label.
(d) Example. Under paragraph (c) of this section, a product labeled
as containing 40 percent alcohol by volume would be acceptable if the
test for alcohol content found that it contained no less than 39.7
percent alcohol by volume and no more than 40.3 percent alcohol by
volume.
* * * * *
Signed: January 9, 2020.
Mary G. Ryan,
Acting Administrator.
Approved: March 13, 2020.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2020-05939 Filed 4-1-20; 8:45 am]
BILLING CODE 4810-31-P
