18704 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

DEPARTMENT OF THE TREASURY Table of Contents consolidating TTB’s alcohol beverage I. Background advertising regulations in a new part, 27 Alcohol and Tobacco Tax and Trade CFR part 14. A. TTB’s Statutory Authority • Bureau B. Notice of Proposed Rulemaking on Incorporate into the regulations Modernization of the Labeling and TTB guidance documents and current 27 CFR Parts 4, 5, 7, and 19 Advertising Regulations for Alcohol TTB policy, as well as changes in Beverages labeling standards that have come about [Docket No. TTB–2018–0007; T.D. TTB–158; C. Scope of This Final Rule through statutory changes and Ref: Notice Nos. 176 and 176A] II. Discussion of Specific Comments Received international agreements. and TTB Responses • Provide notice and the opportunity RIN 1513–AB54 A. Issues Affecting Multiple Commodities B. Wine Issues to comment on potential new labeling Modernization of the Labeling and C. Distilled Spirits Issues policies and standards, and on certain Advertising Regulations for Wine, D. Malt Beverage Issues internal policies that had developed Distilled Spirits, and Malt Beverages III. Regulatory Analyses and Notices through the day-to-day practical A. Regulatory Flexibility Act application of the regulations to the AGENCY: Alcohol and Tobacco Tax and B. Executive Order 12866 approximately 200,000 label Trade Bureau, Treasury. C. Paperwork Reduction Act applications that TTB receives each IV. Drafting Information ACTION: Final rule; Treasury decision. year. I. Background The comment period for Notice No. SUMMARY: The Alcohol and Tobacco Tax 176 originally closed on March 26, and Trade Bureau (TTB) is amending A. TTB’s Statutory Authority 2019, but was reopened and extended at certain of its regulations governing the Sections 105(e) and 105(f) of the the request of commenters (see Notice labeling and advertising of wine, Federal Alcohol Administration Act No. 176A, 84 FR 9990). The extended distilled spirits, and malt beverages to (FAA Act), 27 U.S.C. 205(e) and 205(f), comment period ended June 26, 2019. address comments it received in set forth standards for the regulation of TTB received and posted 1,143 response to a notice of proposed the labeling and advertising of wine, comments in response to Notice No. rulemaking, Notice No. 176, published distilled spirits, and malt beverages 176. Commenters included trade on November 26, 2018. In this (referred to elsewhere in this document associations, consumer interest groups, document, TTB is finalizing certain as ‘‘alcohol beverages’’). foreign entities, a Federally-recognized liberalizing and clarifying changes that Chapter 51 of the Internal Revenue tribe, State legislators and members of were proposed, and that could be Code of 1986 (IRC), (26 U.S.C. 5001 et Congress, industry members and related implemented quickly and provide seq.), sets forth, among other things, companies, and members of the public. industry members greater flexibility. certain provisions relating to the TTB is also taking into consideration TTB is also identifying certain other taxation of, and production, marking, for purposes of this rulemaking earlier proposals that will not be adopted, and labeling requirements applicable to, comments that were submitted to the including the proposal to define an ‘‘oak distilled spirits, wine, and beer. Department of the Treasury in response barrel’’ for purposes of aging distilled The Alcohol and Tobacco Tax and to a Request for Information (RFI) spirits, the proposal to require that Trade Bureau (TTB) administers the published in the Federal Register (82 statements of composition for distilled FAA Act and IRC pursuant to section FR 27212) on June 14, 2017. The RFI spirits specialty products list 1111(d) of the Homeland Security Act of invited members of the public to submit components in ‘‘intermediate’’ products 2002, codified at 6 U.S.C. 531(d). The views and recommendations for and list distilled spirits and wines used Secretary of the Treasury (the Secretary) Treasury Department regulations that in distilled spirits specialty products in has delegated to the TTB Administrator could be eliminated, modified, or order of predominance, and the various functions and duties in the streamlined, in order to reduce burdens. proposal to adopt new policies on the administration and enforcement of these The comment period for the RFI closed use of cross-commodity terms. TTB laws through Treasury Department on October 31, 2017. continues to consider the remaining Order 120–01. For a more in-depth Eight comments on the FAA Act issues raised by comments it received discussion of TTB’s authority under the labeling regulations, which included 28 that are not addressed in this document. FAA Act and the IRC regarding labeling, specific recommendations, were TTB plans to address those issues in see Notice No. 176. submitted in response to the RFI. For subsequent rulemaking documents. The ease of reference, TTB has posted these B. Notice of Proposed Rulemaking on comments in the docket for this regulatory amendments in this Modernization of the Labeling and document will not require industry rulemaking. TTB is considering all of Advertising Regulations for Alcohol the relevant recommendations members to make changes to alcohol Beverages beverage labels or advertisements and submitted in response to the RFI either instead will afford them additional On November 26, 2018, TTB as comments to Notice No. 176 or as flexibility to make certain changes if published in the Federal Register suggestions for separate agency action, they wish. Notice No. 176 (83 FR 60562), as appropriate. ‘‘Modernization of the Labeling and DATES: This final rule is effective May 4, Advertising Regulations for Wine, C. Scope of This Final Rule 2020. Distilled Spirits, and Malt Beverages.’’ The comments TTB received in FOR FURTHER INFORMATION CONTACT: The principal goals of that proposed response to Notice No. 176 provided Christopher M. Thiemann or Kara T. rule were to: thorough, substantive, and thoughtful Fontaine, Regulations and Rulings • Make the regulations governing the information on a diverse array of issues. Division, Alcohol and Tobacco Tax and labeling of alcohol beverages easier to Determining the appropriate course of Trade Bureau, 1310 G Street NW, Box understand and easier to navigate. This action on all those issues will require 12, Washington, DC 20005; phone 202– included clarifying requirements, as further consideration by the Bureau. 453–2265. well as reorganizing the regulations in However, there are some issues that SUPPLEMENTARY INFORMATION: 27 CFR parts 4, 5, and 7 and TTB has decided to address now, while

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18705

it considers the remaining issues. In this not having the intended result within has completed review of all of the issues final rule, TTB is amending certain the purpose of the FAA Act. As a result, raised by commenters in response to regulations, identifying certain TTB is not finalizing certain of the Notice No. 176 against the potential proposals it will not move forward with, proposals in Notice No. 176. One such benefit of providing some more and identifying certain other issues proposal is TTB’s proposed definition of immediate flexibility in identified areas raised by commenters that TTB has an ‘‘oak barrel’’ for purposes of aging and certainty in others. TTB has determined are outside the scope of this distilled spirits. TTB received nearly decided to promulgate a final rule for a rulemaking or otherwise require 700 comments on this issue, almost all subset of the proposals in Notice No. separate, further rulemaking. of which raised specific concerns in 176. TTB plans to address the remaining opposition to the proposed definition. 1. Liberalizing and Clarifying Changes proposals from Notice No. 176 in In addition to not adopting its subsequent Federal Register That Are Being Implemented in This proposed definition of an ‘‘oak barrel,’’ Final Rule publications, whether by finalizing TTB has decided not to finalize: other proposed changes from Notice No. • The issues that TTB has decided to A proposed restriction on the use of 176, announcing that such changes will integrate into the regulations through certain types of cross-commodity terms not be adopted, or initiating further this final rule were well supported by (for example, imposing restrictions on rulemaking proceedings on certain commenters, can be implemented the use of various types of distilled issues to obtain the benefit of further relatively quickly, and would either give spirits terms, including homophones of public comment. The fact that TTB will more flexibility to industry members or distilled spirits classes on wine or malt address those issues in future help industry members understand beverage labels). • rulemaking documents rather than in existing requirements, while not Proposed changes to statements of this final rule does not in any way requiring any current labels or composition for distilled spirits labels, indicate whether the proposed changes advertisements to be changed. including changes that would have will or will not ultimately be adopted. Liberalizing measures that TTB is required disclosure of components of finalizing in this document include: intermediate products, required II. Discussion of Specific Comments Implementing an increase (to plus or distilled spirits and wines used in a Received and TTB Responses minus 0.3 percentage points) in the finished product to be listed in order of For ease of navigation, TTB is setting tolerance applicable to the alcohol predominance, and removed the forth the issues and comments it is content statements on distilled spirits flexibility to use an abbreviated addressing in this document in the labels, removing the current prohibition statement of composition for cocktails. following order: Issues affecting • against age statements on several classes A policy that would have limited multiple commodities, wine-related and types of distilled spirits, removing ‘‘age’’ statements on distilled spirits issues, distilled spirits-related issues, outdated prohibitions against the use of labels to include only the time the and malt beverage-related issues. Within the term ‘‘strong’’ and other indications product is aged in the first barrel, and each part, the order reflects generally of alcohol strength on malt beverage not aging that occurs in subsequent the order the sections appear in the labels, and removing a limitation on the barrels. • regulations, which will aid readers in way distilled spirits producers may A proposal that would have comparing the explanations in the count the distillations when making required that whisky that meets the preamble with the subsequent section optional ‘‘multiple distillation’’ claims standards for a specific type designation setting forth the regulatory text. TTB is on their labels. See Section VI below for be labeled with that type designation. not adopting in this document the a description of all of the changes, both These proposals are described more reorganization of labeling regulations liberalizing and clarifying, that TTB is fully in Section II of this document. proposed by Notice No.176, but may at incorporating into its regulations. TTB also is not finalizing its proposal a later date. Although TTB received positive to incorporate in its regulations the comments with regard to its proposed jurisdictional interaction between U.S. A. Issues Affecting Multiple reorganization and recodification of 27 Food and Drug Administration (FDA) Commodities CFR parts 4, 5, and 7, and the determinations that a product is 1. Incorporating a Definition of establishment of a separate part 14 to ‘‘adulterated’’ and TTB’s position that ‘‘Certificate of Label Approval (COLA)’’ address advertising, TTB is not such products are ‘‘mislabeled.’’ incorporating those organizational Commenters appeared to misunderstand In Notice No. 176, TTB proposed to changes in this document, but intends this proposal, and believed that TTB add in parts 4, 5, and 7 a definition of to incorporate them at a later date. At was proposing to take on a new role of ‘‘Certificate of Label Approval.’’ Under this stage, TTB is only addressing a interpreting FDA requirements. TTB is the proposal, the certificate of label small subset of the issues raised by explaining its proposals and clarifying approval is defined as a certificate commenters in response to Notice No. its position with regard to its policy issued on TTB Form 5100.31 that 176, and is therefore incorporating the position in this document, but is not authorizes the bottling of wine, distilled amendments into its current regulatory moving forward with finalizing the spirits, and malt beverages, or the organization. The reorganization will be proposed text. removal of bottled wine, distilled incorporated at a later date, as more spirits, and malt beverages from 3. Proposals That Will Be Considered issues are resolved. customs custody for introduction into for Further Rulemaking commerce, as long as the product bears 2. Proposed Changes That TTB Will Not TTB recognizes that industry labels identical to the labels appearing Adopt members have an interest in regulatory on the face of the certificate, or labels Some changes proposed in Notice No. certainty, particularly with regard to with changes authorized by TTB on the 176 were opposed by commenters who policies that may affect the labeling of certificate or otherwise. The proposed provided substantive statements about their products. Some commenters have definition was largely consistent with the proposed policies requiring changes asked that TTB complete its rulemaking the definition included in existing to existing labels, requiring industry without multiple final rules. TTB has § 13.11 and recognizes that TTB members to incur substantial costs, or weighed the benefit of waiting until it authorizes certain revisions to an

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18706 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

approved label without requiring the also set out for the first time in the may at any time request documentation certificate holder to obtain a new COLA. regulations TTB’s position that to be to establish such compliance. These allowable changes are set forth in labeled in accordance with the Current regulations allow TTB to Section V of the COLA Form, regulations in these parts, the wine, request information about the contents ‘‘Allowable Revisions to Approved distilled spirit, or malt beverage may not of a wine, distilled spirits product, or Labels.’’ However, the proposed be adulterated within the meaning of malt beverage through formula definition also specifically recognizes the Federal Food, Drug, and Cosmetic submissions or otherwise. See, for that TTB may authorize revisions in Act. example, 27 CFR 4.38(h), 5.33(g), and other ways, such as through guidance The proposed language was intended 7.31(d), as well as the formula issued on the TTB website. to codify for the first time TTB’s requirements in 27 parts 5, 19, 24, and TTB received two comments in longstanding position on these issues, as 25. As part of its formula review, TTB response to the proposed definition of reflected in current TTB label and may ask for substantiation that an ‘‘certificates of label approval.’’ The formula forms, and recent and older ingredient complies with FDA National Association of Beverage public guidance documents. The ingredient safety rules. See Industry Importers (NABI) supported the proposed regulatory language was also Circular 2019–1, dated April 25, 2019, proposed definition but requested that consistent with the 1987 Memorandum entitled ‘‘Hemp Ingredients in Alcohol TTB clarify what is meant by ‘‘on the of Understanding (MOU) between FDA Beverage Formulas.’’ (‘‘TTB also certificate or otherwise,’’ specifically and TTB’s predecessor agency, ATF, consults with FDA on ingredient safety whether the scope of the phrase ‘‘or which remains in effect between FDA issues where appropriate. In some cases, otherwise’’ includes an authorized ‘‘use and TTB. See 52 FR 45502. The MOU TTB may require formula applicants to up’’ of a label. The Distilled Spirits specifically refers to ATF’s authority obtain documentation from FDA Council of the United States (DISCUS) over ‘‘voluntary recalls of alcoholic indicating that the proposed use of an also supported the proposed definition. beverages that are adulterated under ingredient in an alcohol beverage would FDA law or mislabeled under the FAA not violate the FD&C Act.’’) See also TTB Response Act by reason of being adulterated.’’ Industry Circular 62–33, dated October TTB is incorporating the definition of [Emphasis added.] 26, 1962, entitled ‘‘Need for Review of ‘‘certificate of label approval’’ as The MOU thus reflects the Approved Formulas Covering Distilled proposed into existing §§ 4.10, 5.11, and longstanding position of TTB and its Spirits Products,’’ in which our 7.10, with minor grammatical changes predecessors that if FDA has determined predecessor agency, the Internal and clarifying language. With regard to that an alcohol beverage product is Revenue Service, advised industry the phrase ‘‘changes authorized by TTB adulterated, then the product is members that ‘‘they should be prepared on the certificate or otherwise,’’ TTB is mislabeled within the meaning of the to submit proof that all ingredients in intending to reference methods of FAA Act, even if the bottler or importer their products are acceptable under the authorizing allowable changes other of the product in question has obtained Federal Food and Drug regulations.’’ than listing those allowable changes on a COLA or formula approval from TTB. TTB received a number of comments the COLA form. For example, TTB may See Industry Circular 2010–8, dated on these proposals. TTB received two announce additional allowable changes November 23, 2010, entitled ‘‘Alcohol comments opposing the proposed through public guidance published on Beverages Containing Added Caffeine.’’ changes in §§ 4.3(d), 5.3(d), and 7.3(d), its website at www.ttb.gov. In this way, Subject to the jurisdictional which appear to reflect an erroneous TTB is able to authorize additional requirements of the FAA Act, belief that the proposed language would allowable changes, and thereby provide mislabeled distilled spirits, wines, and result in TTB, rather than FDA, more flexibility to industry members, malt beverages, including such enforcing the substantive provisions of more quickly while it is in the process adulterated products, may not be sold or the FD&C Act and making decisions as of updating the listing of ‘‘allowable shipped, delivered for sale or shipment, to whether alcohol beverages are revisions’’ that appears as supplemental or otherwise introduced or received in adulterated within the meaning of that information along with the instructions interstate or foreign commerce, or Act. The Brewers Association and for the approved form. Accordingly, removed from customs custody for American Distilled Spirits Association TTB has added a parenthetical to the consumption, by a producer, importer, both suggested that TTB eliminate this end of the definition to clarify that the or wholesaler, or other industry member provision and leave adulteration phrase ‘‘changes authorized by TTB on subject to 27 U.S.C. 205(e). determinations under the FD&C Act to the certificate or otherwise’’ includes a Furthermore, proposed §§ 4.9(b), FDA. Both comments urged TTB to TTB authorization of allowable changes 5.9(b), and 7.9(b) provided that it follow the 1987 Memorandum of through the issuance of public guidance remains the responsibility of the Understanding (MOU) between TTB’s available on the TTB website at industry member to ensure that any predecessor agency and FDA, which www.ttb.gov. ingredient used in the production of remains in effect between TTB and alcohol beverages complies fully with FDA. 2. Compliance With Federal and State all applicable FDA regulations TTB also received approximately 20 Requirements, Including FDA pertaining to the safety of food comments on the general issue of FDA Requirements ingredients and additives and that TTB and TTB roles in enforcing these In Notice No. 176, TTB proposed new may at any time request documentation requirements, stating that the proposed regulatory text that specifically stated to establish such compliance. In rule appears to indicate that TTB will that compliance with the requirements addition, proposed §§ 4.9(c), 5.9(c), and attempt to interpret FDA policy. These in parts 4, 5, and 7 relating to the 7.9(c) provided that it remains the comments similarly urge TTB to instead labeling and bottling of alcohol responsibility of the industry member to ‘‘honor the TTB’s longstanding beverages does not relieve industry ensure that containers are made of Memorandum of Understanding with members from responsibility for suitable materials that comply with all FDA in which TTB can freely refer complying with other applicable applicable FDA health and safety matters to FDA where questions of Federal and State requirements. regulations for the packaging of alcohol ingredient safety, food contact material Proposed §§ 4.3(d), 5.3(d), and 7.3(d) beverages for consumption and that TTB safety, or adulteration arise. The TTB

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18707

has expertise in many arenas, but these over alcoholic beverages, will have primary regard to ingredient safety issues did not topics are the purview of the FDA.’’ responsibility for issuing recall notices and represent a change from current policy. While a few commenters supported monitoring voluntary recalls of alcoholic TTB has decided not to move forward the proposals in §§ 4.9, 5.9 and 7.9 beverages that are adulterated under FDA law with the proposed amendments on this relating to compliance with other or mislabeled under the FAA Act by reason issue. The commenters generally of being adulterated. This agreement does not Federal requirements, many affect or otherwise attempt to restrict the supported TTB’s current policy, but commenters opposed finalizing these seizure or other statutory and regulatory misunderstood the intent of the proposals. For example, DISCUS authorities of the respective agencies. proposed revisions. After considering commented that the regulations were [Emphasis added.] the comments and reexamining the unnecessary because ‘‘industry issues, TTB has determined that the members fully recognize that complying Thus, the 1987 MOU specifically proposed clarification would not meet with TTB’s Part 5 rules does not relieve recognizes the position that adulterated its intended purpose. them from compliance with other alcohol beverages are mislabeled under 3. Alcohol Beverage Products That Do applicable federal and state the FAA Act. This position was Not Meet the Definition of a Wine, requirements.’’ The Beer Institute reiterated in Industry Circular 2010–8, Distilled Spirits, or Malt Beverage commented that language about in which TTB advised that FDA’s Under the FAA Act compliance with FDA requirements determination that certain alcohol created unnecessary confusion about beverages were adulterated under the In the proposed rule, TTB set forth which FDA requirements were being FD&C Act ‘‘would have consequences regulations to clarify which alcohol referenced, and recommended that the under the FAA Act, because of TTB’s beverage products meet the statutory language be deleted. position that adulterated alcohol definition of a wine or malt beverage Some commenters, including the beverages are mislabeled within the under the FAA Act, and which do not. Wine Institute, the American Distilled meaning of the FAA Act.’’ Products not meeting these definitions Spirits Association, the United States The proposed regulation was not are not subject to the requirements of Association of Cider Makers, and meant to suggest that TTB would parts 4 or 7 of the TTB regulations and, Heaven Hill Brands, commented in abandon its position that it defers to instead, are subject to FDA labeling opposition to the provisions authorizing FDA on issues of ingredient safety, food regulations (and may be subject to the the appropriate TTB officer to request contact material safety, and adulteration labeling requirements of the IRC, which documentation to establish compliance under the FD&C Act. TTB continues to are codified in the TTB regulations at with applicable FDA regulations work with FDA, within our respective parts 24 and 25). For example, wine that regarding the safety of ingredients and authorities, on these issues, and will is under 7 percent alcohol by volume packaging materials. These comments continue to rely upon FDA to make does not fall under the jurisdiction of made points similar to the following determinations about the safety of the FAA Act. Proposed §§ 4.5 and 4.6 statement made by the United States ingredients and whether the use of related to wine products not subject to Association of Cider Makers: certain ingredients renders an alcohol TTB labeling requirements, and beverage adulterated under the FD&C USACM believes the provisions above proposed § 7.6 related to brewery would invite a diversion of TTB resources Act. products. Proposed § 7.6 also explicitly into a subject area with which TTB has little- It is TTB’s position that its review of referred readers to the regulations in to-no expertise and possesses no legal basis labels and formulas does not relieve part 4 for sake´ and similar products that for asserting jurisdiction. Moreover, USACM industry members from their meet the definition of ‘‘wine’’ under the believes it would be fundamentally unfair for responsibility to ensure compliance FAA Act (but that are ‘‘beer’’ under the TTB to request information on an with applicable FDA regulations. See, Internal Revenue Code). TTB did not ingredient’s compliance with FD&C Act for example, Industry Circular 2010–8, standards, subsequently approve the product, propose a similar section for distilled but later charge that the approval of that in which TTB reminded industry spirits because there are no distilled product did not signify compliance with members as follows: spirits products that would be subject to FD&C Act standards. Such a position would * * * each producer and importer of alcohol the FDA food labeling regulations rather violate basic notions of due process. beverages is responsible for ensuring that the than TTB regulations. Products that TTB Response ingredients in its products comply with the would otherwise meet the definition of laws and regulations that FDA administers. wine except that they contain more than TTB wishes to clarify that the TTB’s approval of a COLA or formula does 24 percent alcohol by volume are proposed regulatory text was not meant not imply or otherwise constitute a considered to be distilled spirits; thus, to indicate that TTB was proposing to determination that the product complies with they are subject to the distilled spirits change how enforcement the [Federal Food, Drug, and Cosmetic Act], including a determination as to whether the labeling regulations in part 5 of the TTB responsibilities for ingredient safety, regulations. These clarifications did not food contact material safety, or product is adulterated because it contains an unapproved food additive. represent any change in TTB policy, and adulteration issues are allocated are based on statutory provisions. between FDA and TTB. See The instructions on the forms for TTB received no comments in Memorandum of Understanding formula approval (TTB F 5100.51, TTB response to proposed §§ 4.5 and 4.6. between the Food and Drug F 5110.38, and TTB F 5120.29) contain TTB also did not receive any comments Administration (FDA) and the Bureau of similar language. For example, TTB F in direct response to proposed § 7.6. Alcohol, Tobacco and Firearms (ATF), 5100.51 states: However, the Confederated Tribes of the 52 FR 45502 (1987). The MOU was This approval is granted under 27 CFR parts Chehalis Reservation did submit a entered into by TTB’s predecessor 4, 5, 7, 19, 24, 25, and 26 and does not in comment requesting TTB to clarify that agency, ATF, and remains in effect any way provide exemption from or waiver unmalted grains can be used to produce between FDA and TTB. With regard to of the provisions of the Food and Drug ‘‘fermented beer products.’’ adulterated alcohol beverage products, Administration regulations relating to the use the MOU provides as follows: of food and color additives in food products. TTB Response ATF, as the agency with a system of Accordingly, the proposed regulations TTB is finalizing the provisions of specific statutory and regulatory controls about requesting documentation with proposed §§ 4.5, 4.6, and 7.6, except

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18708 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

that §§ 4.5 and 4.6 are being § 5.1 would be viewed as impacting premises, to clarify that there is no incorporated into the existing existing practices, and if so, what the intent to create distinctions based on the regulations as §§ 4.6 and 4.7, impact would be. various types of exportations without respectively. In response to the Six commenters responded to the payment of tax that are allowed under comment from the Confederated Tribes proposals. Wine Institute supported the the IRC. of the Chehalis Reservation, TTB notes proposed amendment to part 4. NABI In response to the comments from the that the FAA Act allows malt beverages stated that the exemption for exported Oregon Winegrowers Association, the to be made from unmalted cereals in products should not be restricted to Willamette Valley Wineries Association, addition to malted barley and hops. alcohol beverage products exported in and the Mexican Chamber of the However, pursuant to the statutory bond. Tequila Industry that TTB regulations definition of a ‘‘malt beverage’’ found in DISCUS urged revision of the should require any statement on the 27 U.S.C. 211(a)(7), a beer made without proposal, stating as follows: labels of exported products to be any malted barley would not be We urge the Bureau to revise this proposal truthful, accurate, and not misleading, considered a ‘‘malt beverage’’ and to clarify that products may be sent to a TTB notes that the regulations would not be subject to the labeling different distribution center prior to implementing the FAA Act have always requirements of the FAA Act or part 7 exportation. Some industry members would included some sort of exemption for of the TTB regulations. Such a product be required to change their distribution exported products, and TTB knows of (other than sake´ and similar products) processes if this proposal is adopted as some no basis to limit that exemption now. companies utilize an internal central would generally be considered either a 5. Personalized Labels ‘‘beer’’ or a ‘‘cereal beverage,’’ distribution point in the United States to depending on the alcohol content, and gather products prior to international In Notice No. 176, TTB proposed, at shipment. To effectuate this change, we would be subject to the labeling new §§ 4.29, 5.29, and 7.29, to set forth propose adding the words ‘‘or between’’ after the process for importers and bottlers to requirements of the IRC, which are the words ‘‘directly from’’ in the rule. codified in the TTB regulations at part make certain changes to approved labels 25, and may also be subject to FDA The Oregon Winegrowers Association, in order to personalize the labels labeling regulations. See TTB Ruling the Willamette Valley Wineries without having to resubmit the labels 2008–3, Classification of Brewed Association, and the Mexican Chamber for TTB approval. Personalized labels Products as ‘‘Beer’’ Under the Internal of the Tequila Industry all suggested are labels that contain a personal Revenue Code of 1986 and as ‘‘Malt that, even though the regulations message, picture, or other artwork that Beverages’’ under the Federal Alcohol exempt exported products from COLA is specific to the consumer who is Administration Act, for more requirements, the regulations should purchasing the product. For example, a information. still require any statement on the labels producer may offer custom labels to of exported products to be truthful, individuals or businesses that 4. Exportation in Bond and Labeling accurate, and not misleading. commemorate an event such as a Requirements wedding or grand opening. TTB Response The current regulations exempting The proposed regulations reflect products for export from the labeling TTB is not moving forward with its current policy as set forth in TTB public regulations under the FAA Act are proposed changes in parts 4 and 7. guidance documents (see, for example, stated in an inconsistent manner. In Upon additional consideration, TTB TTB G 2017–2 and TTB G 2011–5) and existing §§ 4.80 and 7.60, wine and malt believes that the current regulatory text provide for a process whereby beverages ‘‘exported in bond’’ are is sufficiently clear that the FAA Act applicants submit a template as part of exempted from the requirements of regulations do not apply to wine and the application for label approval, with those respective parts. However, current malt beverages exported in bond. a description of the specific § 5.1, which is entitled ‘‘General,’’ Instead, in this document, TTB is personalized information that may provides that part 5 ‘‘does not apply to incorporating the existing text from change. If the application complies with distilled spirits for export.’’ In Notice parts 4 and 7 (at §§ 4.80 and 7.60) into the regulations, TTB will issue the No. 176, TTB proposed to clarify its part 5 (at § 5.1), to ensure consistency COLA with a qualification that will position that these three provisions all and promote clarity. allow the certificate holder to add or mean the same thing—i.e., that products It is TTB’s long-held position that change items on the personalized label exported in bond directly from a bonded products removed from industry such as salutations, names, graphics, wine premises, distilled spirits plant, or member premises for consumption or artwork, congratulatory dates and brewery, or from customs custody, are sale in the United States must be labeled names, or event dates, without applying not subject to the FAA Act regulations in accordance with the FAA Act. for a new COLA. The proposed under parts 4, 5, or 7 of the TTB Accordingly, TTB disagrees with NABI’s regulations provided examples of regulations. However, if products that comment that exemption from label situations where personalized labels are removed for consumption or sale in approval for exported products should would be permitted. the United States (which are subject to not be restricted to products exported in WineAmerica, Beverly Brewery the FAA Act regulatory provisions in bond. Consultants, the New York Farm parts 4, 5, and 7) are subsequently To the extent that the DISCUS Bureau, the Beer Institute, and DISCUS exported after being removed for comment reflects a concern about the all explicitly supported the proposed consumption or sale, they are not meaning of exportation ‘‘directly’’ from regulations. DISCUS also requested that ‘‘exported in bond,’’ and are accordingly a distilled spirits plant, TTB’s only additional examples be provided in the subject to the FAA Act provisions when intent was to clarify the current regulation to specifically recognize that the removal for consumption or sale requirements, and not to create personalized labels may include occurs. This proposal was only a distinctions between various types of ‘‘elements such as bottle engravings, clarifying change to existing §§ 4.80 and exportations without payment of tax. signatures, medallions, bottle bags, and 7.60. With regard to part 5, TTB sought Accordingly, TTB is removing barrel program information.’’ The Wine comments on whether the proposed references to whether the products are Institute and the Mexican Chamber of change to the current regulations in exported ‘‘directly’’ from the bonded the Tequila Industry did not specifically

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18709

express support or opposition for the TTB notes that industry members may TTB Response proposal but did each make offer personalized labels without going TTB is proceeding with its proposal to recommendations. The Wine Institute through this process, by obtaining remove the substantive requirement for noted that TTB had not included a individual COLAs for each personalized country of origin labeling for distilled definition of ‘‘personalized label’’ in label. Similarly, if the information to be spirits. It has been the longstanding each of the proposed sections and added to a personalized label is already policy of TTB and its predecessor that provided suggested language to clarify covered by an allowable revision to an this requirement should be interpreted the meaning of the term. The Wine approved label, the industry member in a manner that is consistent with the Institute also suggested removing the may make changes to the approved label CBP requirements. As noted by NABI, examples of types of personalized labels without obtaining TTB approval. which is the trade association from the proposed regulations, as they 6. Country of Origin References representing importers, ‘‘country of ‘‘are better conveyed in written origin information should be governed guidance.’’ Current TTB regulations require a The Mexican Chamber of the Tequila country of origin statement on labels of solely by CBP regulations rather than Industry requested that TTB include a imported distilled spirits, but include separate TTB regulations.’’ specific prohibition on information that no such requirement for imported wine TTB is also incorporating a cross- is misleading. or malt beverages. Nonetheless, U.S. reference to CBP regulations into Customs and Border Protection (CBP) existing §§ 4.35, 5.36, and 7.25 because TTB Response regulations in 19 CFR parts 102 and 134 the provisions are a clarifying change After reviewing the comments, TTB is require a country of origin statement to that alerts industry members of their incorporating the proposed provisions appear on containers of all imported obligation to comply with CBP into the existing regulations as new alcohol beverages, including alcohol requirements. TTB is simplifying the §§ 4.54, 5.57, and 7.43. In response to beverages that are imported in bulk and proposed language to instead simply the Wine Institute’s comment, TTB is then subjected to certain production refer readers to the CBP regulations for including a definition of ‘‘personalized activities or bottling in the United States those requirements. label’’ into each of the new sections. if, pursuant to CBP regulations, the 7. Misleading Representations as to The definition is drawn from (and is an beverage is the product of a country Commodity abbreviated version of) current TTB other than the United States. In ATF guidance on personalized labels (TTB G Ruling 2001–2, TTB’s predecessor In Notice No. 176, TTB proposed to 2017–2, Personalized Labels, dated agency clarified that the country of adopt a new prohibition on types of September 5, 2017), and reads in the origin requirements under part 5 would cross-commodity terms that TTB new regulatory text as follows: ‘‘A be interpreted in a manner consistent considered to be misleading (see personalized label is an alcohol with CBP’s rules of origin, to avoid proposed §§ 4.128, 5.128, and 7.128). beverage label that meets the minimum inconsistencies between CBP and ATF TTB proposed this prohibition in mandatory label requirements and is rules and confusion for the industries response to the fact that more and more customized for customers.’’ With regard affected by those rules. frequently TTB receives applications for to Wine Institute’s suggested clarifying For part 5, TTB proposed replacing approval of a label for one commodity language, TTB believes that the the existing requirements setting out bearing a term normally associated with examples in the proposed regulations how the country of origin statement a different commodity, including terms provided important context and served must appear on a label with a cross- that are specific classes and types for a clarifying purpose, and thus those reference to existing CBP country of other commodities. TTB was concerned examples remain in the final rule. origin regulations; this cross-reference that this had the potential to confuse With regard to the comment from The was also proposed for parts 4 and 7. consumers as to the identity of the Mexican Chamber of the Tequila This would have the effect of removing product. Industry, TTB believes that it is not the substantive requirement from the Some uses of cross-commodity terms necessary to include a specific TTB distilled spirits regulations in part are restricted under the current labeling prohibition on misleading information 5 and having a consistent cross regulations because they are considered on personalized labels, as the revised reference to the CBP regulations in parts misleading; for example, current regulations provide that approval of an 4, 5, and 7. TTB also proposed regulations at 27 CFR 7.29(a)(7) prohibit application for a personalized label does including information on requirements a malt beverage label from containing not authorize the addition of any for alcohol beverages that are further information (a statement, information that discusses either the processed in the United States after representation, etc.) that tends to create alcohol beverage or characteristics of the importation. a false or misleading impression that a alcohol beverage, or that is inconsistent TTB received three comments in malt beverage contains distilled spirits with or in violation of the regulations. response to this proposal. NABI or is a distilled spirits product. The With regard to the DISCUS comment expressly supported the addition of a regulation includes certain types of about including additional examples to cross reference to the CBP’s country of labeling statements that would not be cover bottle engravings, signatures, origin requirements, stating that country considered misleading. medallions, bottle bags, and barrel of origin marking requirements ‘‘should The text of the proposed regulations program information, TTB does not be governed solely by CBP regulations would have also established a new believe it is appropriate or helpful to rather than separate TTB regulations.’’ prohibition on the use of the name of a include these examples. In some cases, An attorney also commented in favor of class or type designation (or a the types of information that would be the general concept that TTB should homophone or coined word that added through these examples may be defer to CBP with respect to country of simulated or imitated a class or type covered by TTB’s allowable revision origin marking requirements. DISCUS designation) for one commodity on the policy, which is not specific to opposed the proposed amendment, and label of a different commodity, if the personalized labels; in other cases, they commented in favor of retaining the representation created a misleading may be covered by the personalized current country of origin requirement impression about the identity of the label rules. for distilled spirits. product.

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18710 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

Consistent with past practice and/or TTB Response part 4 standards of identity. current regulations, the proposed Based on the feedback provided by Furthermore, the ways in which fruit regulation clarified that the proposal commenters regarding the ambiguity of wine and citrus wine may be designated would not prohibit various non- the proposed text, TTB is not finalizing are consistent. misleading labeling statements, the proposal. Instead, TTB will continue In Notice No. 176, TTB proposed to including statements of alcohol content, to rely on its current regulations (in eliminate the class ‘‘citrus wine’’ and include any wines made from citrus the use of the same brand name for §§ 4.39(a)(1), 5.42(a)(1) and 7.29(a)(1)) to fruits in the existing fruit wine class. different commodities, the use of address specific circumstances where it TTB proposed this regulatory change in cocktail names for wines and malt finds that a representation on a label is part because distinguishing between beverages, or the use of truthful and misleading, and will not move forward citrus fruits and other fruits seemed to non-misleading statements such as with a blanket approach to cross- add an unnecessary complexity to the ‘‘aged in whisky barrels’’ for a malt commodity terms that could regulations and also in part because the beverage or wine. unnecessarily restrict creativity in the Bureau does not receive many TTB solicited comments on whether use of truthful and non-misleading applications for COLAs for wines the proposed prohibition and the representations on labels. proposed exceptions to the prohibition designated as ‘‘citrus wine’’ (as opposed would adequately prevent consumer 8. Alternate Contact Information for to applications for COLAs for citrus deception and whether the proposed Advertisements wines derived wholly from one kind of regulations would require changes to Current regulations in §§ 4.62, 5.63, citrus fruit, such as ‘‘orange wine’’ or existing labels. TTB particularly and 7.52 require advertisements to ‘‘grapefruit wine’’ and designated as solicited comments on whether the use include the name and address (city and such on the label). For these reasons and because citrus of coined terms and homophones in state) of the industry member is a type of fruit, TTB proposed to brand names and elsewhere on the responsible for the advertisement. TTB eliminate the class of ‘‘citrus wine’’ and labels is misleading to consumers when proposed to amend the regulations to to include any wines made from citrus those terms imply similarity to class and allow alternative contact information for fruits in the fruit wine class. TTB type designations to which a product is the permittee to be shown instead of the solicited comments on whether this not entitled. city and State. These new options change (in proposed § 4.145) would Eleven commenters responded to included the advertiser’s phone number, require changes to existing labels. these proposed provisions. The New website, or email address. TTB received one comment in York Farm Bureau and WineAmerica TTB received two comments on this response to this proposed change. expressed support for this proposal issue. Diageo and DISCUS both WineAmerica supported the proposal without offering further explanation. commented in support of the proposed without additional explanation. The Mexican Chamber of the Tequila liberalization of the mandatory Industry expressed support for more information requirements for the TTB Response restrictive provisions that would responsible advertiser. However, both The intent of the original proposal prohibit any use of a term associated commenters also believe mandatory was to streamline the regulations. TTB with one commodity from appearing on statements on advertisements are no sees no reason to continue to the label of another commodity. longer necessary and should be removed distinguish between citrus wine and Sazerac, DISCUS, the American Craft from TTB’s regulations. fruit wine. TTB is eliminating the class Spirits Association, and the American TTB Response designation ‘‘citrus wine,’’ and Distilled Spirits Association, however, amending § 4.21(e) to include citrus TTB is adopting the proposed expressed opposition to the proposal wines in the fruit wine class. The final amendment to allow additional options related to distilled spirits labels rule also adds language to clarify that for displaying contact information for (proposed § 5.128), and the Beer wines previously designated as ‘‘citrus responsible advertisers. This Institute opposed the similar proposal wine’’ or ‘‘citrus fruit wine’’ may amendment will allow the advertiser to related to malt beverage labels continue to use that term on the label display its phone number, website, or (proposed § 7.128). Wine Institute instead of ‘‘fruit wine.’’ Thus, labels will email address rather than the city and opposed the proposal related to wine not have to be revised as a result of this State where it is located. TTB is labels (proposed § 4.128). Williams amendment. Compliance and Consulting opposed the incorporating these amendments into proposal for all three commodities. The the existing regulations in §§ 4.62, 5.63, 2. Vintage Dates for Wine Imported in common theme among these comments and 7.52. The comments concerning the Bulk is that the proposed regulations would elimination of mandatory statements on In proposed § 4.95, TTB proposed to not meet the intent of, or were advertisements are outside the scope of remove a prohibition (that currently unnecessary for, preventing consumer this rulemaking. Accordingly, TTB will appears in § 4.27) that restricts the use deception and would also inhibit future consider these comments as suggestions of vintage dates on imported wine. innovations. For instance, the American for future rulemaking. Under current regulations, imported Distilled Spirits Association stated that B. Wine Issues wine may bear a vintage date only if, TTB’s general rules can address distilled among other things, it is imported in spirits labeling that falsely or 1. Citrus Wine containers of 5 liters or less, or it is deceptively suggests that a distilled The standards of identity currently bottled in the United States from the spirit is or contains a different provide for two different classes of fruit original container that shows a vintage commodity. Furthermore, Senator John wine—the standards of identity for date. In the preamble to Notice No. 176, Kennedy of Louisiana noted that the citrus wine are found in § 4.21(d) and TTB noted that this liberalizing measure proposal ‘‘may require the relabeling of the standards of identity for fruit wine would allow the use of vintage dates on certain products that are marketed using are found in § 4.21(e). The production wine imported in bulk containers and terms associated with different standards for the ‘‘citrus wine’’ and bottled in the United States, as long as commodities.’’ ‘‘fruit wine’’ classes are the same in the bottlers have the appropriate

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18711

documentation substantiating that the TTB did not receive any comments on the factual basis for TTB’s certification wine is entitled to be labeled with a this proposal. that this proposal would not have a vintage date. TTB received one significant economic impact on a TTB Response comment on this issue from an industry substantial number of small entities, representative supporting the proposal. TTB is adopting the proposed and suggesting that the proposal be amendment by amending the definition revised or that TTB publish a TTB Response of ‘‘distilled spirits’’ in existing § 5.11. supplemental initial regulatory TTB is incorporating the proposal in 2. Definition of ‘‘Oak Barrel’’ flexibility analysis (IRFA) to propose existing § 4.27. TTB believes the alternatives to the rule. amendment will provide additional In Notice No. 176, TTB proposed to Finally, TTB received a few labeling flexibility to bottlers who incorporate into its regulations in part 5 comments on oak barrels that went import vintage wine in bulk for bottling a definition of an ‘‘oak barrel’’ as a beyond the issues on which TTB in the United States. As long as the ‘‘cylindrical oak drum of approximately specifically sought comment. For bottler has the appropriate 50 gallons capacity used to age bulk example, a few commenters supported documentation substantiating that the spirits,’’ and specifically sought regulatory amendments that would wine is entitled to be labeled with a comments ‘‘on whether smaller barrels allow aging in barrels made of wood vintage date, it should not be or non-cylindrical shaped barrels other than oak, and one comment disqualifying that the wine was should be acceptable for storing supported the use of a metal container distilled spirits where the standard of imported in a bulk container that did with oak staves. identity requires storage in oak barrels.’’ not bear a vintage date. TTB received almost 700 comments in TTB Response 3. Natural Wine opposition to the proposed definition, After careful review of the comments including comments from individuals, In Notice No. 176, TTB set out received on this issue, TTB has distillers, trade associations, and a provisions that would update existing determined that it will not move United States Senator. These comments references to certain IRC provisions and forward with the proposal to define an generally opposed the proposed size provide that grape wine (including ‘‘oak barrel’’ as a ‘‘cylindrical oak drum restriction, and many also opposed the sparkling grape wine and carbonated of approximately 50 gallons used to age proposed restriction on shape. Only a grape wine), fruit wine, and citrus wine bulk spirits’’ or otherwise define the handful of individual comments must meet the standards for ‘‘natural term in the regulations. After analysis of supported the proposed definition. The wine’’ under the IRC. The proposal the comments, TTB has concluded that trade associations that commented on would align the part 4 regulations with current industry practice and consumer this issue (such as DISCUS, the the current requirements (pertaining to expectations for aging whisky (and other American Distillers Institute, the sweetening, amelioration, and the spirits aged in oak barrels) do not American Distilled Spirits Association, addition of wine spirits for natural support limiting the size and shape of the American Craft Spirits Association, wine) in the IRC, which includes wine the oak barrel in the manner proposed the American Single Malt Whiskey treating practices for imported wines in Notice No. 176. Under the standard Commission, the Kentucky Distillers’ acceptable to the United States under an of identity for whisky in the TTB Association, the Texas Whiskey international agreement or treaty. TTB regulations at 27 CFR 5.22(b), among Association, and the Missouri Craft did not receive any comments opposing other things, a product labeled as Distillers Guild) all opposed the the proposal or indicating that the whisky ‘‘possesses the taste, aroma, and proposed definition. characteristics generally attributed to proposed amendments would require Most of the commenters asserted that changes to any existing labels. whisky,’’ and is ‘‘stored in oak this proposal conflicted with innovative containers.’’ TTB’s intent was to define TTB Response industry practices where oak containers oak containers within objective of various sizes and/or shapes are used TTB is incorporating the proposed parameters that would be consistent to develop and age bulk spirits. Several provisions into current § 4.21. TTB had with a product possessing the taste, stated that the proposed definition identified this proposal as potentially aroma, and characteristics generally would economically burden distillers restrictive in Notice No. 176 out of an attributed to whisky, not to who age bulk spirits in oak containers abundance of caution. TTB, however, unnecessarily limit innovation. TTB other than cylindrical oak drums of did not receive comments indicating believes the current regulatory text can approximately fifty gallons capacity. that the proposed amendments would be interpreted to allow different sizes Many commenters suggested the require changes to any existing labels. and shapes of oak containers as long as proposed definition would impose an TTB believes that the alignment of the the product meets the other criteria for undue burden on small distillers, who regulations under the FAA Act and the the standard. In the absence of a use small or square barrels due to IRC will facilitate compliance with the regulatory definition for ‘‘oak barrel’’ or limited storage space or for other production standards specified under ‘‘oak container,’’ it will be TTB’s policy reasons. The consensus was that the the IRC for ‘‘natural wine.’’ that these terms include oak containers proposed definition would stifle of varying shapes and sizes. C. Distilled Spirits Issues innovation and did not adequately To the extent that a few commenters reflect industry practices or consumer 1. Definition of ‘‘Distilled Spirits’’ addressed other issues pertaining to the expectations regarding the aging of proposed definition, such as the In Notice No. 176, TTB proposed to whisky and other distilled spirits whose acceptability of other types of wood and amend the existing definition of standards of identity require storage in of metal containers with oak staves, TTB ‘‘distilled spirits,’’ as it currently oak barrels. will consider these issues for future appears in § 5.11, to reflect TTB’s As discussed further under rulemaking efforts. longstanding policy that products ‘‘Regulatory Flexibility Act’’ in Section containing less than 0.5 percent alcohol III below, the Office of Advocacy for the 3. Certificates of Age and Origin by volume are not regulated as Small Business Administration also In Notice No. 176, TTB proposed to ‘‘distilled spirits’’ under the FAA Act. commented on this issue, challenging maintain without substantive change

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18712 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

the current requirements related to change. Finally, TTB is amending the the production of the finished product imported distilled spirits that must be paragraph on Tequila to incorporate the be listed in order of predominance; and covered by certificates as to the age and correct terminology relating to the the third required a full statement of the origin of the spirits. TTB proposed certification process. These minor composition for cocktails rather than the an organizational change, to divide the amendments are being incorporated into abbreviated statement provided for by existing paragraph on brandy, Cognac, existing § 5.52. current regulations. and rum into one paragraph on brandy With respect to the comments from As explained in more detail below, and Cognac and a separate paragraph for DISCUS and the Beverage Alcohol after evaluating the comments received rum. That proposal would not result in Coalition that suggest that TTB should on these issues, TTB has decided not to any substantive change to the retain certificates instead of requiring move forward on any of these proposals. requirements for these three spirits, but importers to retain them for 5 years, For the sake of clarity, TTB will address would provide greater ease of TTB notes that current regulations do the comments received on each of these readability. not require that importers submit the three proposals separately, and then TTB received eight comments on this certificates to TTB or CBP on a routine provide a single TTB response, as the proposal. Privateer Rum, a distiller, basis. Rather, importers are only issues are related. At this time, TTB is stated that it applauds and supports the required to maintain such certificates in merely making a typographical proposal. Spirits Canada recommended their own possession and make them correction in the heading of § 5.35(b). changing the existing regulations by available to TTB or CBP upon request; i. Intermediates removing references to the Immature thus, were TTB to take the action Spirits Act for Canadian whisky suggested, it would create a new In Notice No. 176, TTB proposed to products. Spirits Canada also requested requirement that importers submit such treat components such as distilled that TTB allow aging in barrels made certificates, which is beyond the scope spirits and wines that are blended from any species of tree, not just oak. and intent of Notice No. 176. With together by a distilled spirits plant in an The Tequila Regulatory Council (CRT), regard to the suggestion that certificates intermediate product and then added to the Mexican Chamber of the Tequila should not be required to indicate a distilled spirits product the same as if Industry, and NABI each commented in whether the barrels in which all types the components of the intermediate had support of the requirements, but also of whiskies were aged are new or been added separately for purposes of suggested an edit to the requirements for reused, this suggestion also goes beyond determining the standard of identity of imported Tequila. These three the scope of Notice No. 176, but will be the finished product, such as a flavored commenters noted that the authority in considered for future rulemaking. distilled spirits product. (See proposed Mexico for issuing certificates is §§ 5.141 and 5.166.) Additionally, TTB 4. Statements of Composition delegated to a conformity assessment proposed to change its policy with body, the CRT, rather than a person or Current regulations at § 5.35(a) regard to statements of composition for government official. Additionally, provide that the class and type of specialty products to require the Tequila exports from Mexico are not distilled spirits must be stated on the disclosure of the components of the accompanied by a certificate of age and label if defined in current § 5.22. intermediate product, including spirits, origin, but rather by a Certificate of Otherwise, the product must be wines, and flavoring materials, as part of Tequila Export. Consequently, the designated in accordance with trade and the statement of composition. In the commenters asked TTB to amend the consumer understanding or with a case of distilled spirits specialty regulations for Tequila to take these distinctive or fanciful name; in either products, TTB currently treats facts into account. Finally, DISCUS and case, the designation must be followed intermediate products as ‘‘natural the Beverage Alcohol Coalition each by a ‘‘truthful and adequate statement of flavoring materials’’ when they are requested that TTB no longer require composition.’’ The regulations do not blended into a product, for the purpose certificates for whisky to indicate the provide general guidelines on what of disclosure as part of a truthful and type of barrel (new or reused) if the suffices as a truthful and adequate adequate statement of composition. TTB standard of identity for that whisky does statement of composition. However, the has seen changes in the alcohol not require the use of a new barrel. They regulations in § 5.35(b) provide that in beverage industry and in various also suggested that TTB retain the the case of highballs, cocktails, and formulas and put forward the proposed certificates indefinitely, instead of similar prepared specialties, a statement changes in the belief that treating requiring the importer to retain the of the classes and types of distilled intermediate products as natural certificate for five years, as required spirits used in the manufacture of the flavoring materials does not provide currently by 27 CFR 5.52(f). product is a sufficient statement of adequate information to consumers, as composition, when the designation required by the FAA Act. TTB Response adequately indicates to the consumer TTB received seven comments in TTB is finalizing the proposed the general character of the product. response to its proposal with regard to reorganization of the paragraph relating TTB proposed to set forth standards ‘‘intermediate products.’’ The to brandy, Cognac, and rum to make the for what should be included in comments, all in opposition to TTB’s related provisions easier to read. In statements of composition, including proposed policy, came from trade response to the comment from Spirits incorporation of current TTB policies on associations (DISCUS, the American Canada, TTB is also removing references how to identify distilled spirits, wines, Distilled Spirits Association, and the to the Immature Spirits Act for flavors, coloring materials, and non- Kentucky Distillers Association), Canadian whisky, and also for Scotch nutritive sweeteners that are added to a distillers (Diageo, Sazerac, and Heaven and Irish whiskies. The current specialty product. The proposed rule Hill Brands), and Senator John reference to compliance with the laws of also proposed three changes to the rules Kennedy. These comments urged TTB the applicable foreign countries would on statements of composition. The first to retain its current policy of treating cover any aging requirements of those required the listing of the separate intermediate products as ‘‘natural foreign governments, and there is no components of an ‘‘intermediate’’ flavoring materials’’ when they are need to specify the particular laws of flavoring product; the second required blended into a product, for the purpose those countries, which are subject to that distilled spirits and wines used in of both compliance with standards of

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18713

identity and disclosure as part of a any changes to the regulations on publish, after seeking input from the truthful and adequate statement of statements of composition, and industry and other sources, lists of composition. included a suggested revision that cocktails it recognizes and the Many commenters pointed to the reverted back to TTB’s current ingredients required for such cocktails.’’ proposal as a change in policy that regulations. Senator Kennedy also On the other hand, Sazerac commented would require changes in the labeling commented in opposition to the that TTB should eliminate the list of and formulation of several products. For proposal. recognized cocktails in the BAM, as the example, Heaven Hill Brands list is ‘‘outdated and not particularly iii. Cocktails commented that the proposal was ‘‘a relevant to consumers.’’ significant departure from existing In Notice No. 176, TTB proposed to labeling practices’’ that will ‘‘create amend its policies with regard to the use TTB Response consumer confusion, and will create the of cocktail names in statements of TTB is not finalizing its proposal to need to develop otherwise unnecessary composition on distilled spirits labels. require statements of composition to reformulations and relabeling for Under current regulations at 27 CFR include the elements of an intermediate. numerous products.’’ Diageo stated that 5.35(b)(1), and in guidance issued by TTB is persuaded that the proposed many specialty products currently TTB’s predecessor agency, the Bureau of changes could require changes in the contain wine added via intermediates, Alcohol, Tobacco, and Firearms (see labeling (or, alternatively, lead to and the ‘‘proposed rule upsets decades Compliance Matters 94–1, issued in reformulation) of many distilled spirits of reliance by the industry in crafting 1994), distilled spirits cocktails with products, and that benefit to consumers products that use wine for blending names recognized by consumers may be would be speculative. In addition, a purposes.’’ labeled with the cocktail name and an number of comments TTB received in Several commenters also suggested abbreviated, rather than a full, statement response to Notice No. 176 proposed that requiring labeling disclosure of the of composition. This abbreviated that TTB consider proposing ingredient specific components in the intermediate statement is a declaration of the spirits labeling, which would obviate the need product would actually mislead components of the cocktail, for example, for the types of information TTB consumers. For example, Sazerac ‘‘Screwdriver made with vodka.’’ In proposed to require. TTB agrees that commented that ‘‘a requirement to Notice No. 176, TTB proposed to require ingredient labeling is worth disclose intermediate products in the a full statement of composition in such consideration, and is reviewing such statement of composition for a distilled instances because, over the years, TTB comments to determine next steps to spirits specialty product, particularly has seen an increase in the number of obtain additional comment through where the intermediates do not impart cocktails recognized in bartenders’ further rulemaking. any characterizing flavor or qualities to recipe books as the industry continued TTB is also not moving forward with the finished product, would be to innovate. TTB was concerned about a reference to intermediates in the misleading to consumers.’’ Diageo, whether consumers are fully informed standard for flavored spirits and for DISCUS, the Kentucky Distillers’ when a label has only a cocktail name standards of identity in general. Current Association, and the American Distilled and the component spirit(s) because of policies and regulatory text regarding Spirits Association all raised similar the vast array of cocktails. Accordingly, intermediates and statements of objections. Some of the commenters TTB proposed to require a full statement composition will remain in effect, perceived the proposal as a partial form of composition on such specialty which includes the longstanding policy of ingredient labeling, and suggested products, and those products could that class 9 flavored spirits must derive that until and unless TTB actually continue to be designated with the name all of their spirits content from the base implemented ingredient labeling of a cocktail. spirit of the product, in contrast with requirements, this type of partial TTB received several comments those products that are labeled with disclosure requirement would mislead regarding its proposal. DISCUS, Sazerac, statements of composition in lieu of a consumers. the Kentucky Distillers’ Association, class or type. See, for example, T.D. and the American Distilled Spirits ATF–37, 41 FR 48120, 48121 (1976) ii. Order of Predominance Association opposed the proposal on (‘‘standards of identity for flavored In new § 5.166(a)(1), TTB proposed to the grounds that it would impose costs products adopted in 1968 require them require distilled spirits and wines in the as a result of labeling and formulation to contain a spirits base of 100 percent statement of composition to be listed in changes without benefiting consumers, gin, rum, vodka, etc.’’). Furthermore, the order of predominance, which was who might be confused by statements of current regulations expressly provide intended to provide consumers with composition that differed from what that class 9 flavored spirits may not more clear information about the they were used to seeing on cocktail contain more than 2.5 percent wine by composition of distilled spirits specialty labels. Sazerac also stated that a full volume (15 percent for certain flavored products. statement of composition would amount brandy products) without label TTB received comments from Heaven to an unnecessary labeling requirement disclosure. See 27 CFR 5.22(i). Hill Brands and the American Distilled for cocktails that are well recognized Additionally, TTB has decided it will Spirits Association in favor of clarifying and understood by consumers. not move forward with the order of TTB’s policies regarding statements of Some of the commenters also predominance requirement for distilled composition. However, these comments addressed TTB’s current policy of spirits and wines included in the final emphasized that TTB should clarify that including a list of ‘‘recognized product in the statement of composition it is not changing its longstanding cocktails’’ in the Beverage Alcohol and will retain current regulatory text. administrative policies, on which the Manual for Distilled Spirits (Distilled Current policy, which requires that the industry has relied. For example, Spirits BAM; TTB P 5110.7) for base distilled spirit is listed first (for Heaven Hill Brands requested that ‘‘TTB purposes of administering this example, ‘‘vodka with red wine and not make significant changes in existing provision. The American Distilled natural flavors’’), remains in effect. policy and interpretation that the spirits Spirits Association commented that the Finally, based on the comments, TTB industry has relied upon for decades.’’ regulation ‘‘should establish a is not moving forward with the proposal DISCUS commented in opposition to framework for TTB to periodically to require a full statement of

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18714 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

composition for cocktails. We agree that must be coated or lined with paraffin or cylindrical surface is that 40 percent of consumers are used to seeing the another substance to prevent the vodka the circumference which is most likely abbreviated statement of composition on or gin from coming into contact with the to be displayed, presented, shown, or cocktail labels. We also agree that a full wood. TTB specifically requested examined under normal and customary statement of composition is not comment on whether TTB should conditions of display for retail sale.’’ necessary in cases where the cocktail maintain the ‘‘bottled in bond’’ TTB believes that the information that name is well recognized and understood standards, including those relating to currently must appear together on the by consumers gin and vodka. brand label (or ‘‘principal display Accordingly, the existing regulations TTB received 14 comments in panel’’) is closely related information and policies on abbreviated statements response to the request for comment. that, taken together, conveys important of composition for cocktails will The majority of the comments were in facts to consumers about the identity of continue in effect. TTB notes that in favor of maintaining ‘‘bottled in bond’’ the product. Proposed § 5.63(a) would addition to the cocktails that are as a term related to quality. Only two allow this mandatory information to recognized in the Distilled Spirits BAM, commenters recommended removing appear anywhere on the labels, as long TTB evaluates applications for label the term as confusing and irrelevant. as it is within the same field of vision, approval that include new cocktail Four of the supporting comments also which means a single side of a container names on a case-by-case basis to responded directly to TTB’s request for (which for a cylindrical container is 40 determine if the cocktails are recognized comments on whether TTB should percent of the circumference) where all in bartender’s guides or other maintain the requirement that vodka pieces of information can be viewed publications that reflect a widespread and gin be stored in lined wooden simultaneously without the need to turn consensus on the composition of a containers if they are labeled as ‘‘bottled the container. TTB believes that cocktail (such as trade magazines). This in bond.’’ requiring that this information appear in review will, in turn, determine whether Roulaison Distilling Co., the the same field of vision, rather than on the designation adequately indicates to American Distilling Institute, and the display panel ‘‘most likely to be the consumer the general character of DISCUS each supported retaining the displayed, presented, shown, or the product. TTB will consider the bottled in bond standards and also examined’’ at retail, is a more objective comments on updating the list of recommended removing the related and understandable standard, recognized cocktails as suggestions for requirement concerning paraffin-lining particularly as applied to cylindrical future action. of barrels for storing gin. The Kentucky bottles. Distillers’ Association recommended the TTB received five comments related 5. Use of Term ‘‘Bottled in Bond’’ expansion of the term for gin, but to this proposal. A distiller and an In Notice No. 176, TTB proposed to recommended that TTB no longer allow industry group each supported the maintain the rules for the use of the for vodka to be bottled in bond. change to a ‘‘single field of vision’’ terms ‘‘bottled in bond,’’ ‘‘bond,’’ concept. Another distiller noted that it ‘‘bonded,’’ or ‘‘aged in bond,’’ or other TTB Response would like the alcohol content to be phrases containing these or synonymous Consistent with the comments, TTB is permitted on the front label or the back terms. The use of these terms was maintaining the regulatory standards for label. Diageo said that it supports a originally restricted to certain products ‘‘bottled in bond’’ with an amendment provision that would allow all national under the Bottled in Bond Act of 1897 to allow gin to be stored in either mandatory information to appear on a (29 Stat. 626), which was repealed in paraffin-lined or unlined barrels. This single label. DISCUS noted that it 1979 (see Distilled Spirits Tax Revision amendment is a conforming amendment supports the increased flexibility that Act of 1979, Public Law 96–39, 93 Stat. to account for changes made in this final the proposal would allow, bringing 273, title VIII, subtitle A). The Bottled rule that would allow for the aging of distilled spirits more in line with in Bond Act was intended to provide gin. (See Section 8, Age Statements, current requirements for wine. standards for certain spirits that would below.) TTB is not changing the However, DISCUS also recommended inform consumers that the spirits were provisions allowing vodka to be labeled that TTB liberalize placement rules not adulterated. Treasury Department ‘‘bottled in bond’’. further, allowing mandatory information officers monitored bonded distilled 6. Brand Labels to appear anywhere on distilled spirits spirits plants. labels. TTB’s predecessor agency, ATF, In Notice No. 176, TTB proposed to decided to maintain the labeling rules revise regulations relating to the TTB Response concerning ‘‘bottled in bond’’ and placement of mandatory information on TTB is moving forward with similar terms, because consumers distilled spirits containers, in order to liberalizing the placement rules as continued to place value on these terms increase flexibility. Current § 5.32(a) proposed, by allowing the brand name, on labels. Imported spirits may use requires that the following appear on class and type designation, and alcohol ‘‘bottled in bond’’ and similar terms on the ‘‘brand label’’: The brand name, the content to appear anywhere on the label labels when, among other conditions, class and type of the distilled spirits, the as long as those three pieces of the imported spirits are produced under alcohol content, and, on containers that information are in the same field of the same rules that would apply to do not meet a standard of fill, net vision. TTB is not adopting the DISCUS domestic spirits. contents. The term ‘‘brand label’’ is comment to eliminate all placement One of the conditions for use of these defined in current § 5.11 generally as standards for mandatory information, terms is that the distilled spirits must be the principal display panel that is most because TTB believes that it is stored in wooden containers for at least likely to be displayed, presented, important to keep together on the label four years. To maintain parity between shown, or examined under normal retail these three closely related elements of whisky that is aged and vodka and gin, display conditions, as well as any other information that, taken together, convey which do not undergo traditional aging, label appearing on the same side of the important facts to consumers about the vodka and gin are required to be stored bottle as the principal display panel. identity of the product. in wooden containers to use ‘‘bond’’ or Further, the definition states that ‘‘[t]he TTB is making a conforming change similar terms, but the wood containers principal display panel appearing on a to existing § 5.32 so that the net contents

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18715

statement may appear on any label. TTB barrel should be counted towards the neutral spirits or vodka. A spirit that is also amending the definition of spirit’s age statement—regardless of would otherwise be a neutral spirit but ‘‘brand label’’ in existing § 5.11 to movement between barrels.’’ The is aged would qualify for the remove the requirement that the brand Beverage Alcohol Coalition, a coalition designation ‘‘grain spirits,’’ which may label be the principal display panel. To of domestic and international distilled bear age statements as provided in clarify, this means that the brand label spirits industry groups, stated, ‘‘It is a current § 5.40(c). may be on any side of distilled spirits common practice for many distilled 9. Multiple Distillation Claims bottles, but must show the brand name, spirits products, including Scotch class and type designation, and alcohol Whisky, to mature in more than one Proposed § 5.89 would have defined a content within the same field of vision. type of cask. As proposed, the rule distillation as a single run through a pot would mean whiskies matured in more still or one run through a single 7. Alcohol Content Tolerance for than one cask, could not state the full distillation column of a column (reflux) Distilled Spirits time the product spent maturing, even still. The proposal also would have TTB received 24 comments in if the second cask complies with class/ maintained the current rule that only response to proposed § 5.65(c), which type requirements.’’ Five commenters additional distillations beyond those would expand the tolerance for the suggested that if multiple barrels are required to meet the product’s labeled alcohol content to plus or minus used, the label should contain an production standards may be counted as 0.3 percentage points for distilled optional or mandatory disclosure of that additional distillations. spirits. Twenty-three of the commenters fact. TTB received nine comments in expressed support for expanding the TTB also received 17 comments support of this definition. Commenters tolerance, and one distillery commenter supportive of the provision in proposed included distillers and industry groups. requested that the tolerance be § 5.74 to eliminate the prohibition on For example, a distiller stated that increased further to 0.99 proof for age statements on many classes of ‘‘consumers would reasonably expect liqueurs. One commenter, DISCUS, distilled spirits, including gin, liqueurs, that a distillation means a single pass requested that TTB amend also 27 CFR cordials, cocktails, highballs, bitters, through an alembic or column still and 19.353, which sets out requirements for flavored brandy, flavored gin, flavored not, for instance, a count of plates in a gauging product in the bottling tank at rum, flavored vodka, flavored whisky, column.’’ The American Distilling a distilled spirits premises, to be and specialties. Some of the comments Institute stated that ‘‘[w]e believe that consistent with the 0.3 percentage point specifically noted that they are [the proposed] definition is clear and tolerance allowed for labeling supportive of expanding the readily understood by consumers.’’ statements. permissibility of an age statement to gin. However, some commenters sought a Three commenters stated that age more scientific or technical definition of TTB Response statements should be permitted on all distillations. TTB is finalizing the expanded distilled spirits, including vodka. Many commenters opposed the alcohol content tolerance as proposed, provision that would not count the to plus or minus 0.3 percentage points. TTB Response distillations necessary to meet the This final rule amends §§ 5.37(b) and After reviewing the comments, TTB standard of identity towards multiple 19.356(c) and (d) to incorporate the agrees that all the time spent in all oak distillation claims, even though that language of the proposal. Regarding the containers should count towards the age provision has been in the current TTB comment requesting a 0.99 proof statement. TTB notes that where a regulations. For example, the American tolerance for liqueurs, TTB sees no basis standard of identity requires aging in a Distilling Institute said that the for allowing liqueurs to have a higher particular kind of barrel, such as straight provision ‘‘flies in the face of standard tolerance than all other classes. Finally, whisky, which requires aging two years industry convention, is highly TTB agrees with the comment made by in a new charred oak container, that dependent on the type of still being DISCUS regarding the need for a aging must take place in that specified used and would require a significant conforming amendment to § 19.353, and container type before being transferred amount of relabeling.’’ DISCUS said that is amending that section to provide that to another vessel. TTB is amending the provision would mean that ‘‘brands the gauge must be made at labeling existing § 5.40(a)(1) regarding cannot truthfully articulate the number proof, subject to the tolerances set forth statements of age for whisky that does of distillations a spirits undergoes.’’ in section 19.356(c). not contain neutral spirits to provide Spirits Europe also commented that not that multiple barrels may be used and allowing the distillations necessary to 8. Age Statements to provide that the label may optionally the production process would be In Notice No. 176, TTB proposed to include information about the types of ‘‘contrary to long standing labelling incorporate its current policy that only oak containers used. This does not affect conventions.’’ the time in a first oak barrel counts current requirements to disclose aging towards the ‘‘age’’ of a distilled spirit. in reused cooperage under 27 CFR TTB Response That is, if spirits are aged in more than 5.40(a)(4). After review and consideration of the one oak barrel (for example, if a whisky TTB believes that the contemporary comments, TTB has determined that is aged 2 years in a new charred oak consumer understands the meaning of allowing distillers to count all barrel and then placed into a second age statements and that there is distillations, including those required to new charred oak barrel for an additional consumer interest for innovative meet a specific standard of identity 6 months), only the time spent in the products such as aged gin. As a result, when making labeling claims, provides first barrel is counted in the ‘‘age’’ TTB is amending the regulations in the consumer with truthful and statement on the label. (See proposed current § 5.40(d) to allow age statements adequate information. TTB is § 5.74(a)(3).) on all distilled spirits except for neutral liberalizing the provision found in TTB received approximately 50 spirits (other than grain spirits). Because current § 5.42(b)(6) accordingly. comments in opposition to the proposal. neutral spirits and vodka are intended TTB is also incorporating the For example, St. George Spirits stated, to be neutral, spirits that are aged would proposed definition of a distillation (for ‘‘We believe that all time spent in a not meet the standard to be labeled as purposes of multiple distillation claims)

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18716 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

into existing § 5.42, as well as the consumer expectations and should be American Craft Spirits Association clarification that distillations may be eliminated. Vodka will continue to be commented in general support of the understated but not overstated. Multiple distinguished by its specific production proposed § 5.143 without addressing distillation claims will remain optional, standards: Vodka may not be labeled as this specific issue. not mandatory. TTB is making aged, and unlike other neutral spirits, it In § 5.143, TTB also proposed to conforming changes to the advertising may contain limited amounts of sugar specifically provide that the designation regulations in § 5.65(a)(9). and citric acid. ‘‘straight’’ was an optional labeling Accordingly, TTB is amending the 10. Standard of Identity for Vodka designation for whiskies. Currently, existing regulations at § 5.22(a)(1) to TTB labeling policy requires whiskies In Notice No. 176, TTB proposed to remove the requirement that vodka be that are aged more than two years to be amend the standard of identity for without distinctive character, aroma, designated as ‘‘straight.’’ DISCUS vodka, a type of neutral spirit, to codify taste, or color, and to incorporate in the commented in support of making the holdings in several past rulings: regulations the standards set forth in the ‘‘straight’’ an optional designation, Revenue Ruling 55–552 and Revenue rulings discussed above, obviating the stating this would provide labeling Ruling 55–740 (vodka may not be stored need for those rulings which will be flexibility. in wood); ATF Ruling 76–3 (vodka canceled. TTB will also make a treated with charcoal or activated conforming change to existing TTB Response carbon may be labeled as ‘‘charcoal § 5.23(a)(3)(iii), which discusses the After review of the comments, TTB filtered’’ under certain parameters); and addition of harmless coloring, flavoring, believes that the proposed amendment Revenue Ruling 56–98 and ATF Ruling or blending materials to neutral spirits, does not necessarily reflect current 97–1 (allowing treatment with up to 2 to reflect the allowed additions to vodka industry practice or consumer grams per liter of sugar and trace in amended § 5.22(a)(1). expectations. We also recognize that amounts (1 gram per liter) of citric acid). 11. Whisky Labeling requiring distillers to use a specific type In addition, TTB specifically sought designation for whiskies would require In Notice No. 176, TTB proposed to comment on whether the current a number of labeling changes. Therefore, require that, where a whisky meets the requirement that vodka be without TTB will maintain its policy that distinctive character, aroma, taste, or standard for one of the types of whiskies, it must be designated with distillers have the option of using the color should be retained and, if this general class ‘‘whisky’’ as the requirement is no longer appropriate, that type name, with an exception provided for Tennessee Whisky. TTB designation or one of the type what the appropriate standards should designations that applies. TTB also will be for distinguishing vodka from other solicited comments on this proposal as a potentially restrictive change to the liberalize its policy on the term neutral spirits. ‘‘straight’’ and is amending current TTB received twelve comments in regulations, because in the current § 5.22(b)(2)(iii) to make it an optional response to the proposed changes to the regulations, when a whisky meets the labeling designation for whiskies that standard of identity for vodka. TTB did standard for a type of whisky, it is qualify for the designation, but will not not receive any comments relating to the unclear whether the label must use that expand the use of the term to other proposal to incorporate several past type designation or may use the general classes of distilled spirits. TTB will rulings related to treatment of vodka class ‘‘whisky’’ on the label. However, cancel and supersede Revenue Ruling with sugar, citric acid, and charcoal. historical documents indicate that TTB requested comments on whether TTB’s predecessor agencies classified 55–399, ‘‘Straight Whisky,’’ which the requirement that vodka be without whiskies with the type designation that relates to outdated provisions regarding distinctive character, aroma, taste, or applied, and required that type to be the wholesale liquor dealer packages. color should be retained and, if this label designation. For example, in 12. Absinthe requirement is no longer appropriate, January 1937, the Federal Alcohol TTB proposed a new standard of what the standards should be for Administration stated that ‘‘[w]here a identity for Absinthe (or Absinth) in distinguishing vodka from other neutral product conforms to the standard of proposed § 5.149 in response to a spirits. Ten commenters suggested that identity for ‘Straight Bourbon Whiskey’ petition TTB had received. Absinthe the requirement should be eliminated. it must be so designated and it may not products are distilled spirits products For example, Altitude Spirits stated that be designated simply as ‘Whiskey.’’’ See produced with herbs, including ‘‘[t]he requirement that vodka be FA–91, ‘‘A Digest of Interpretations of wormwood, fennel, and anise. without distinctive character, aroma, Regulations No. 5 Relating to Labeling taste, or color should NOT be retained and Advertising of Distilled Spirits,’’ p. The proposed standard was to remind and is no longer appropriate given the 5. the reader that the products must be variety in base ingredients, flavors, and Accordingly, proposed § 5.143 thujone-free under FDA regulations. flavor profiles found in the diverse provided that where a whisky meets the Based on current limits of detection, a vodka category.’’ Within this group of standards for one of the type product is considered ‘‘thujone-free’’ if comments, two commenters stated that designations, it must be designated with it contains less than 10 parts per million they believe that TTB should reverse its that type name, with an exception for of thujone. longstanding policy and allow vodka to Tennessee Whisky. The current TTB TTB proposed to supersede a current be aged in wood. regulations at § 5.35(a) state, in part, that requirement that appears in Industry Two individual commenters the class and type of distilled spirits Circular 2007–5 that all wormwood- recommended—without explanation— shall be stated in conformity with containing products undergo analysis by that the standard be kept unchanged. current § 5.22 if defined therein. TTB’s laboratory before approval of the Two industry associations (DISCUS product’s formula. In the proposal, TTB TTB Response and the Kentucky Distillers’ explained that it would verify Based on its review of the comments, Association) opposed the proposed compliance with FDA limitations on TTB agrees that the requirement that change, stating that it would require a thujone through marketplace review and vodka be without distinctive character, large number of revisions to labels for distilled spirits plant investigations, aroma, taste, or color no longer reflects products currently on the market. The where necessary.

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18717

TTB received 10 comments and bottled at or above 40 percent rather than the class designation. supporting the addition of a standard for alcohol by volume. Tequila and Mezcal Making use of the type designation absinthe. Most of the commenters, would be types within the Agave Spirits optional rather than mandatory is including DISCUS, the American Craft class, and the standards of identity for consistent with TTB’s approach for Spirits Association, St. George Spirits, those products would not be changed. other classes and types, such as whisky, and the American Distilling Institute, TTB received 11 comments in support as described in Section 11 above, and recommend that TTB finalize a more of the creation of the ‘‘Agave Spirits’’ for brandy and rum. Accordingly, TTB restrictive standard for absinthe and class, including several distillers, the is not adopting this comment. TTB is provided comments on changes that Missouri Craft Distillers Guild, the making conforming changes to § 5.40(b) would better align the standard with the Kentucky Distillers’ Association, the to clarify that the current provisions marketplace. With regard to the American Craft Spirits Association, and relating to age statements for Tequila laboratory testing requirement, St. the American Distilled Spirits will apply to all agave spirits. George Spirits was the only commenter Association. Some commenters opposed to its elimination, and one suggested changes to the proposed With regard to the DISCUS comment commenter supported eliminating the standards, such as creating an about Tequila and Mezcal, we have requirement but requested that TTB additional type designation for products made a revision to clarify that this final laboratory services be made available for made from 100 percent agave or rule does permit the use of harmless thujone testing. DISCUS specifically allowing the use of agave syrup as the coloring, flavoring, or blending supported removing the laboratory fermentable ingredient. The Tequila materials in the production of agave testing requirement, saying that the Regulatory Council (CRT) stated that it spirits, including Tequila or Mezcal, in elimination of the testing requirement welcomes the proposed class but accordance with the provisions of will decrease burdens upon industry suggested that Tequila or Mezcal should § 5.23. This means that such materials and TTB. be required to use the designations may be used when they are ‘‘Tequila’’ or ‘‘Mezcal’’ on their labels if ‘‘customarily employed therein in TTB Response they meet the requirements for those accordance with established trade With regard to the standard of identity standards. usage, if such coloring, flavoring, or for absinthe, TTB is not finalizing its Two commenters, Diageo and blending materials do not total more proposed standard of identity for DISCUS, opposed the creation of the than 21⁄2 percent by volume of the absinthe at this time and intends to air class ‘‘agave spirits,’’ arguing that it may finished product.’’ 27 CFR 5.23(a)(2). in further rulemaking the standards that create consumer confusion or ‘‘take TTB has published guidance in the were proposed by the commenters. With advantage of Tequila’s or Mezcal’s Beverage Alcohol Manual for Distilled regard to the laboratory testing prestige.’’ Additionally, DISCUS Spirits (Distilled Spirits BAM; TTB P requirement, TTB is removing the requested ‘‘a carveout’’ to clarify that 5110.7), which provided that no testing requirement for products made ‘‘additives permitted under Mexican harmless coloring, flavoring, or blending with wormwood, and will update regulations for Tequila and Mezcal do materials may be used in the production published guidance to reflect this not change the class and type’’ of those of Tequila or Mezcal. This position was change. However, TTB intends to distilled spirits. based on the understanding that no such continue to offer the same type of TTB Response materials were recognized as being thujone-testing that it has previously TTB believes that the creation of the customarily used in the production of provided for the next year, and will Tequila or Mezcal in accordance with assist industry members and outside ‘‘Agave Spirits’’ class will provide more information to consumers and will established trade usage. TTB agrees that laboratories to develop their own in making such a determination, it thujone-testing capabilities. allow industry members greater flexibility in labeling products that are should take into consideration what 13. Agave Spirits distilled from agave. Accordingly, TTB Mexican regulations allow. Accordingly, The TTB regulations currently in is amending the regulations in current TTB will review this guidance and make § 5.22(g) provide for a standard for § 5.22(g) to incorporate the proposed appropriate revisions after consulting Tequila, and both Tequila and Mezcal standard. Industry members who have with the Government of Mexico with are recognized as distinctive products of approved labels for ‘‘spirits distilled regard to what ingredients are Mexico that must be manufactured in from agave’’ may choose to change their customarily used in the production of Mexico in accordance with the laws and labels to designate their products as alcohol beverages designated as regulations of Mexico governing their ‘‘agave spirits,’’ but will not be required ‘‘Tequila’’ or Mezcal’’ under Mexican manufacture. Currently, spirits that are to do so. New applicants will continue regulations. Any coloring or flavoring distilled from agave that are not Tequila to have the option of designating their materials that are allowed based on customary use would be subject to the or Mezcal are subject to formula products as ‘‘spirits distilled from 1 requirements. agave’’ if they meet the requirements for 2 ⁄2 percent limit prescribed by § 5.23. In Notice No. 176, TTB proposed to use of this statement of composition. As It should be noted that this position create within the standards of identity a a result of this change, products labeled does not change certain minimum class called ‘‘Agave Spirits’’ and two as ‘‘agave spirits’’ are not subject to a requirements that are set forth in the types within that class, ‘‘Tequila’’ and requirement to submit a formula for standard of identity for all ‘‘agave ‘‘Mezcal’’ (see proposed § 5.148), approval, which reduces the burden on spirits,’’ including Tequila and Mezcal, replacing the existing Class 7, Tequila. distillers and importers. regarding proof at distillation, bottling The proposed standard would include TTB does not plan to move forward proof, and the percentage of mash spirits distilled from a fermented mash, with the restrictive amendments derived from plant species in the genus of which at least 51 percent is derived suggested by commenters. Such Agave. Furthermore, TTB regulations from plant species in the genus Agave suggestions include a requirement that may require the disclosure of certain and up to 49 percent is derived from products meeting the standard of ingredients on distilled spirits labels sugar. Agave spirits must be distilled at identity for Tequila or Mezcal be labeled even if the ingredients are authorized by less than 95 percent alcohol by volume with the applicable type designation the regulations of a foreign country.

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18718 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

D. Malt Beverage Issues a percentage of alcohol by weight and in similar provisions for malt beverage other States that neither require nor advertisements, with an exception 1. Alcohol by Weight prohibit alcohol by weight statements. allowed for the reproduction of a malt Current regulations at § 7.71 provide beverage label bearing an alcohol 2. Use of the Term ‘‘Draft’’ or ‘‘Draught’’ that alcohol content may be stated on content statement as allowed by the malt beverage labels unless prohibited In § 7.87, TTB proposed codifying regulations. by State law. They further provide that longstanding Bureau policy, expressed As explained in the preamble to the when alcohol content is stated, and the in Industry Circular 65–1, that limited proposed rule, the labeling prohibitions manner of statement is not required use of the terms ‘‘draft’’ or ‘‘draught’’ to gave effect to section 105(e)(2) of the under State law, it must be expressed as malt beverages dispensed from a tap, FAA Act (27 U.S.C. 205(e)(2)), which percent alcohol by volume, and not as spigot, or similar device, or that were prohibited placement of alcohol content percent by weight, proof, or by unpasteurized and required refrigeration statements on malt beverage labels, maximums or minimums. Certain States for preservation. unless required by State law. The require alcohol content to be expressed Two commenters addressed this Supreme Court struck down this section as percent alcohol by weight, and some proposal. The Brewers Association of the law, as applied to truthful and industry members have expressed an opposed the proposal because it non-misleading statements of alcohol interest in using labels that express believes that industry members and content, on First Amendment grounds alcohol content as a percentage of consumers understand ‘‘draft’’ to mean in Rubin v. Coors Brewing Co., 514 U.S. alcohol by volume and by weight, so beer served from a keg or barrel. The 476 (1995). Since then, the TTB that they may use the same label Brewers Association stated that regulations have permitted optional throughout the country. consumers understand that beer in cans alcohol content statements for malt In Notice No. 176, proposed § 7.65 or bottles is not ‘‘draft’’ beer, and such beverage labels, and have mandated provided that other truthful, accurate, labeling claims are ‘‘puffery.’’ The alcohol content statements for malt and specific factual representations of Brewers Association therefore requested beverages that contain any alcohol alcohol content, such as alcohol by that TTB remove the proposed derived from added flavors or added weight, may appear on the label, as long restrictions on use of the word ‘‘draft.’’ nonbeverage ingredients (other than as they appear together with, and as part Beverly Brewery Consultants, however, hops extract) containing alcohol. See 27 of, the statement of alcohol content as supported the proposal, noting that it CFR 7.22(a)(5) and 7.71. Accordingly, a percentage of alcohol by volume. ‘‘reflects the requirements outlined in sections 7.29(f) and (g) do not prohibit TTB received one comment in Industry Circular 65–1.’’ statements of alcohol content as response to this proposal. The Beer permitted or mandated by those TTB Response Institute supported the proposal as long regulations. The advertising provisions as statements of alcohol by weight After further consideration, TTB has of § 7.54(c) are based on 27 U.S.C. appeared with statements of alcohol by decided not to incorporate the proposed 205(f)(2), which was not reviewed in the volume. The Beer Institute believed that restrictions on use of the word ‘‘draft’’ Coors decision. consumers were most familiar with or ‘‘draught’’ on malt beverages into its In Notice No. 176, TTB proposed to alcohol by volume statements, and regulations, and to cancel Industry modernize the language of these alcohol by weight information would be Circular 65–1. TTB agrees with the provisions, in proposed § 7.132, by more meaningful to them if presented in Brewers Association that consumer removing some terms (such as ‘‘pre-war conjunction with statements they perceptions have shifted regarding the strength’’ and ‘‘full oldtime alcoholic already recognize. No commenters terms ‘‘draft’’ or ‘‘draught,’’ and that to strength’’) that are not likely to be used opposed TTB’s proposal. most consumers, the term has little or by today’s brewers. TTB also proposed no relation to pasteurization. TTB also corresponding changes to the malt TTB Response agrees that consumers are not likely to beverage advertising regulations. The TTB is incorporating this provision confuse beer from a bottle or can with proposed regulations would prohibit into existing § 7.71(b)(1). This change beer from a tap or keg and will not be strength claims if they mislead will provide for an additional manner in misled by seeing the term ‘‘draft’’ on a consumers by implying that products which industry members can state label. Therefore, TTB will treat the should be purchased or consumed on truthful alcohol content statements, words ‘‘draft’’ or ‘‘draught’’ as marketing the basis of higher alcohol strength. such as alcohol by weight, that appear puffery. Three commenters addressed together with, and as part of, a statement proposed § 7.132. The Beer Institute of alcohol content as a percentage of 3. Prohibition on Strength Claims supported the proposed changes, but alcohol by volume. As stated in the The TTB regulations in § 7.29(f) noted that all information on product proposed rule, this change is also prohibit the use of the words ‘‘strong,’’ labels essentially exists to entice consistent with the policy adopted in ‘‘full strength,’’ ‘‘extra strength,’’ ‘‘high consumers to purchase a product. The TTB Ruling 2013–2, which authorizes test,’’ ‘‘high proof,’’ ‘‘pre-war strength,’’ Beer Institute therefore requested per-serving statements of fluid ounces of ‘‘full oldtime alcoholic strength,’’ and examples of claims that TTB would alcohol, as long as they appear as part similar words or statements that are consider to be implying that products of a statement that includes the likely to be considered as statements of should be purchased based on alcohol percentage of alcohol by volume. alcohol content on labels of malt strength. This change also reflects TTB’s beverages, unless required by State law. A member of the public expressed the recognition that under current The regulations in § 7.29(g) prohibit the belief that certain terms such as regulations, brewers may have to obtain use on malt beverage labels of any ‘‘strong’’ should not be prohibited on different labels for sale in States that statements, designs, or devices, whether labels if they are part of a recognized require different types of alcohol in the form of numerals, letters, style designation, such as ‘‘Belgian-style content statements. Under the characters, figures, or otherwise, which Dark Strong Ale.’’ The New Civil regulations as amended, brewers will be are likely to be considered as statements Liberties Alliance cited removal of the able to use the same label in States that of alcohol content, unless required by prohibition on ‘‘full oldtime alcoholic require alcohol content to be stated as State law. Current § 7.54(c) contains strength’’ as an example of easing the

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18719

burden of regulations on the alcoholic be considered as statements of alcoholic minimize the costs associated with any beverage industry. content.’’ The removal of TTB’s label changes. The Brewers Association commented prohibition on strength claims includes In this final rule, TTB is amending in support of requiring mandatory the use of the term ‘‘strong’’ or other certain of its regulations governing the statements of alcohol content on malt indications of alcohol strength in malt labeling and advertising of wine, beverages, which it believed would beverage names, provided such distilled spirits, and malt beverages to ‘‘eliminate the need to regulate use of descriptors are not misleading. address comments it received in the word ‘strong’ or similar terms.’’ The Although Coors related to labeling, response to Notice No. 176. TTB is Brewers Association also called for the not advertising, TTB believes it is continuing to consider all of the issues removal of the prohibition on the use of appropriate to have consistent policies raised by comments it received in ‘‘strong’’ and similar terms on malt regarding statements of alcohol content. response to that notice, but is taking this beverage labels in a comment in While such statements are now interim step to finalize certain of the response to the Treasury Department permitted, these regulatory changes liberalizing and clarifying changes that Request for Information. In that should not be interpreted to limit TTB’s have been decided, and that could be comment, the Brewers Association authority to prohibit claims relating to implemented quickly and provide industry members some greater expressed the belief that the prohibition alcohol content that TTB considers false is ‘‘an obsolete exercise in light of flexibility. or misleading. alcohol content labeling, a more 2. Comment From SBA Chief Counsel informed consumer, and recognition of For the same reasons, TTB is for Advocacy first amendment speech rights.’’ removing § 7.29(g), which prohibits the The Brewers Association also use of numerals likely to be considered As required by section 7805(f) of the suggested that TTB remove the statements of alcohol content. Internal Revenue Code (26 U.S.C. prohibition in current § 7.29(g) on the III. Regulatory Analysis and Notices 7805(f)), TTB submitted Notice No. 176 use of numerals on malt beverage labels to the Chief Counsel for Advocacy of the that are likely to be considered as A. Regulatory Flexibility Act Small Business Administration (SBA) statements of alcohol content. The for comment on the impact of these In accordance with the Regulatory Brewers Association claimed that regulations. Flexibility Act (5 U.S.C. 601 et. seq.), numbers on labels are rarely relevant to By letter dated August 6, 2019, the TTB certifies that this final rule will not alcohol content and are instead used to Office of Advocacy for the U.S. Small have a significant economic impact on convey information or distinguish Business Administration (‘‘SBA Office a substantial number of small entities. products, for example in names that of Advocacy’’) provided a comment on While TTB has determined that the refer to a brewer’s area code. Notice No. 176. The comment stated majority of businesses subject to this Accordingly, the Brewers Association that ‘‘Advocacy commends the TTB on rule are small businesses, the regulatory suggested that sections 7.29(f) and (g) its logical reorganization of the labeling should be removed, and that sections amendments in this final rule will not and advertising rules and streamlining 7.54(c)(1) and (c)(2) should also be have a significant impact on those small some of its processes.’’ However, the removed. entities as it will not impose, or comment also indicated that in its otherwise cause, an increase in discussions with small businesses in the TTB Response reporting, recordkeeping, or other alcohol beverage industry, two issues After reviewing the comments, TTB compliance burdens on regulated with the proposed rule were brought to has decided not to finalize proposed industry members. The final rule will its attention: The definition of an ‘‘oak § 7.132 and to instead remove not require industry members to make barrel,’’ and creating a separate class prohibitions on strength claims on malt changes to labels or advertisements. The and type for mead. The comment beverage labels from the regulations following analysis provides the factual suggested that TTB revise the rule to entirely. TTB’s proposed regulations basis for TTB’s certification under 5 reduce the impacts of the proposed defined a ‘‘strength claim’’ for the U.S.C. 605. definition of ‘‘oak barrel.’’ purposes of malt beverage labeling and 1. Background As described in more detail in section advertising as ‘‘a statement that directly II.C.2 of this preamble, in Notice No. or indirectly makes a claim about the In Notice No. 176, published on 176, TTB proposed to define the term alcohol content of the product’’ and November 26, 2018, TTB proposed a ‘‘oak barrel,’’ as a ‘‘cylindrical oak drum prohibited such statements if they recodification of the labeling and of approximately 50 gallons capacity implied that a malt beverage ‘‘should be advertising regulations pertaining to used to age bulk spirits.’’ However, TTB purchased or consumed on the basis of wine, distilled spirits, and malt specifically solicited comment on higher alcohol strength.’’ In light of the beverages. The purpose was to clarify whether smaller barrels or non- comments received, TTB believes that and update these regulations to make cylindrical shaped barrels should be the standard articulated in the proposed them easier to understand and to acceptable for storing distilled spirits regulations would be too difficult to incorporate agency policies. TTB where the standard of identity requires define or enforce in practice. determined that the majority of storage in oak barrels. Instead of implementing a separate businesses subject to the proposed rule With regard to TTB’s proposed policy for the evaluation of whether were small businesses (see Notice No. definition of an ‘‘oak barrel’’ as a strength claims are misleading, TTB is 176 for more information on this ‘‘cylindrical oak drum of approximately removing the regulations in §§ 7.29(f) determination). Accordingly, TTB 50 gallons used to age bulk spirits,’’ the and 7.54(c), which prohibit strength sought comments on the impact of the SBA Office of Advocacy stated that claims in malt beverage labeling and proposals, and on ways in which the many small distillers use oak barrels of advertising, respectively. These regulations could be improved. TTB varying sizes, including barrels of 25 regulations both prohibited the use of also proposed a delayed compliance and 30 gallons. The comment noted that several specific terms, such as ‘‘full date to provide all regulated entities the SBA Office of Advocacy had spoken strength’’ and ‘‘strong,’’ as well as three years to come into compliance with one small distiller that had ‘‘similar words or statements, likely to with the proposed regulations, to approximately 5,000 proof gallons of

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18720 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

whisky that is either aging in small spirits terms, including homophones of advertiser, such as a telephone number, cooperage or is in holding tanks after distilled spirits classes on wine or malt website, or email address, in lieu of the aging in small cooperage, and that under beverage labels). responsible advertiser’s location by city the proposed rule, that product could • Proposed changes to statements of and State. not be sold as ‘‘whisky.’’ The SBA composition for distilled spirits labels, In summary, while the entities Office of Advocacy noted that this including changes that would have affected by the amendments in this final distiller’s product is worth required disclosure of intermediate rule include a substantial number of approximately $1.5 million at retail. products, required distilled spirits and small entities, the final rule does not The comment from the SBA Office of wines used in a finished product to be require labeling or advertising changes Advocacy also stated that the proposed listed in order of predominance, and by these small businesses, but instead 3-year compliance date would be removed the flexibility to use an offers industry members additional inadequate, because it would not abbreviated statement of composition flexibility in complying with the provide enough time to sell all spirits for cocktails. regulations. Thus, TTB certifies that this aged in barrels smaller than 50 gallons, • A policy that would have limited final rule will not have a significant and because small distillers need to ‘‘age’’ statements on distilled spirits economic impact on a substantial make purchasing decisions for barrels labels to include only the time the number of small entities. on an ongoing basis. Additionally, some product is aged in the first barrel, and B. Executive Order 12866 small distillers use square barrels rather not aging that occurs in subsequent than cylindrical barrels. barrels. It has been determined that this final In response to Notice No. 176, TTB • A proposal that would have rule is not a significant regulatory action received almost 700 comments from required that whisky that meets the as defined in Executive Order 12866 of distillers and trade associations that standards for a specific type designation September 30, 1993. Therefore, a stated that the proposed rule would be labeled with that type designation regulatory assessment is not necessary. rather than the broader class impose burdens on small businesses C. Paperwork Reduction Act that currently use barrels of varying designation. sizes and shapes. Only a handful of This final rule includes only The collections of information in the commenters supported the proposed amendments that TTB believes offer regulations contained in this final rule definition. clarifications and liberalize have been previously reviewed and After careful review of the comments requirements for industry members and approved by the Office of Management received on this issue, TTB has that avoid unintended conflicts with and Budget (OMB) in accordance with determined that it will not move current labels or business practices, the Paperwork Reduction Act of 1995 forward with the proposal to define an while still providing adequate (44 U.S.C. 3507) and assigned control ‘‘oak barrel’’ as a ‘‘cylindrical oak drum protection for consumers. Because the numbers 1513–0020, 1513–0041, 1513– of approximately 50 gallons used to age final rule will not require changes to 0064 and 1513–0087. An agency may bulk spirits’’ or otherwise define the labels, advertisements, or business not conduct or sponsor, and a person is term in the regulations. In the absence practices, no delayed compliance date is not required to respond to, a collection of a regulatory definition for ‘‘oak necessary, and the final rule will take of information unless it displays a valid barrel’’ or ‘‘oak container,’’ it will be effect 30 days from publication in the control number assigned by OMB. TTB’s policy that these terms include Federal Register. The specific regulatory sections in oak containers of varying shapes and The preamble explains in detail the this final rule that contain approved sizes. reasons why the proposals that have collections of information are §§ 4.62, Because TTB is not moving forward been adopted in this final rule are either 5.32, 5.52, 5.63, 7.52, and 19.353. In with the proposed definition of ‘‘oak clarifying or liberalizing. For example, addition, the new regulations at §§ 4.54, barrel,’’ the final rule addresses the the final rule clarifies existing policies 5.57 and 7.43 include cross-references comment from SBA Office of Advocacy. regarding personalized labels and to regulations covered by an approved Accordingly, there is no need to exemptions from the labeling collection of information. As explained conduct a supplemental initial regulations for products exported in further below, the regulatory regulatory flexibility analysis to propose bond. Some examples of liberalizing amendments made in this final rule do alternatives to the rule. The other issue measures that TTB is finalizing in this not change any reporting, addressed by the comment from the document include: Implementing an recordkeeping, or third-party disclosure SBA Office of Advocacy dealt with the increase (to plus or minus 0.3 requirement of, or the respondent proposed regulations on honey wine percentage points) in the tolerance burden associated with, these existing (also known as ‘‘mead’’). This final rule applicable to the alcohol content information collections. does not address that issue; thus, TTB statements on distilled spirits labels; Regarding OMB control number will review SBA’s comment on mead, removing the current prohibition against 1513–0020, the regulations in §§ 4.54, along with the other comments received age statements on several classes and 5.57, and 7.43, set forth the process for on this issue, for further action. types of distilled spirits; removing importers and domestic bottlers to make outdated prohibitions against the use of certain changes to approved labels in 3. Other Proposals That Will Not Be the term ‘‘strong’’ and other indications order to personalize the labels without Adopted of alcohol strength on malt beverage having to resubmit the labels for TTB In addition to not adopting its labels; and removing a limitation on the approval. These new regulations cross- proposed definition of an ‘‘oak barrel,’’ way distilled spirits producers could reference the existing label approval TTB has decided not to adopt certain count the distillations when making regulations covered under OMB control other proposals, including the optional ‘‘multiple distillation’’ claims number 1513–0020 that require following: on their labels. The final rule also applications for label approval for wine, • A proposed restriction on the use of liberalizes the advertising regulations distilled spirits, and malt beverages, certain types of cross-commodity terms for wine, distilled spirits, and malt respectively. The new regulations do (for example, imposing restrictions on beverages, by allowing alternate contact not add any new requirements or the use of various types of distilled information for the responsible respondent burden to that previously-

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18721

approved collection as they merely set Labeling, Liquors, Packaging and definition of wine except that they forth current TTB guidance regarding containers, Reporting and recordkeeping contain less than 7 percent alcohol by when the submission of label approval requirements, Trade practices. volume. Bottlers and importers of applications for personalized labels is alcohol beverages that do not fall within 27 CFR Part 7 required. the definition of malt beverages, wine, Regarding OMB control number Advertising, Alcohol and alcoholic or distilled spirits under the FAA Act 1513–0041, relating to gauging records beverages, Beer, Customs duties and should refer to the applicable labeling for distilled spirits plants, TTB is inspection, Food additives, Imports, regulations for foods issued by the U.S. amending § 19.353 to include Labeling, Packaging and containers, Food and Drug Administration. See 21 conforming language that refers to the Reporting and recordkeeping CFR part 101. expanded labeling tolerance for alcohol requirements, Trade practices. (b) Products containing more than 24 content that is provided in the 27 CFR Part 19 percent alcohol by volume. Products amendments to § 19.356. The addition that would otherwise meet the of that conforming language has no Administrative practice and definition of wine except that they effect on this information collection’s procedure, Alcohol and alcoholic contain more than 24 percent alcohol by requirements or respondent burden. beverages, Authority delegations volume are classified as distilled spirits Regarding OMB control number (Government agencies), Caribbean Basin and must be labeled in accordance with 1513–0064, related to importer records, initiative, Chemicals, Claims, Customs part 5 of this chapter. amendments to § 5.52 merely make duties and inspection, Electronic funds clarifications to the regulations transfers, Excise taxes, Exports, Gasohol, Subpart B—Definitions concerning certificates of age and origin Imports, Labeling, Liquors, Packaging ■ for distilled spirits and do not affect the and containers, Puerto Rico, Reporting 4. Amend § 4.10 by adding the information collection’s requirements or and recordkeeping requirements, definition of ‘‘Certificate of label respondent burden. Research, Security measures, Spices and approval (COLA)’’ in alphabetical order Regarding OMB control number flavorings, Stills, Surety bonds, to read as follows: Transportation, Vinegar, Virgin Islands, 1513–0087, related to FAA Act-based § 4.10 Meaning of terms. Warehouses, Wine. labeling and advertising requirements, * * * * * TTB is amending §§ 4.62(a), 5.63(a) Regulatory Amendments Certificate of label approval (COLA). 7.52(a) to allow alcohol beverage For the reasons discussed in the A certificate issued on form TTB F advertisers optional ways to provide preamble, TTB amends 27 CFR, chapter 5100.31 that authorizes the bottling of contact information in their I, as follows: wine, distilled spirits, or malt beverages, advertisements, such as by displaying a or the removal of bottled wine, distilled telephone number, website, or email PART 4—LABELING AND spirits, or malt beverages from customs address in lieu of the advertiser’s city ADVERTISING OF WINE custody for introduction into commerce, and State. In § 5.32, TTB is amending its as long as the product bears labels ■ distilled spirits labeling requirements to 1. The authority citation for part 4 identical to the labels appearing on the allow the display of a non-standard continues to read as follows: face of the certificate, or labels with distilled spirits container’s net contents Authority: 27 U.S.C. 205, unless otherwise changes authorized by TTB on the on any label and to remove the TTB noted. certificate or otherwise (such as through regulatory provision relating to country the issuance of public guidance of origin statements. None of these Subpart A—Scope available on the TTB website at regulatory amendments increase the www.ttb.gov). requirements or respondent burdens ■ 2. Add § 4.6 to read as follows: * * * * * associated with OMB control number § 4.6 Wines covered by this part. 1513–0087. The regulations in this part apply to Subpart C—Standards of Identity for IV. Drafting Information wine containing not less than 7 percent Wine Personnel of the Regulations and and not more than 24 percent alcohol by volume. ■ 5. Amend § 4.21 by: Rulings Division drafted this document ■ ■ 3. Add § 4.7 to read as follows: a. Revising paragraph (a)(1); with the assistance of other employees ■ b. Redesignating paragraphs (a)(2) and of the Alcohol and Tobacco Tax and § 4.7 Products produced as wine that are (3) as paragraph (a)(5) and (6), Trade Bureau. not covered by this part. respectively; List of Subjects Certain wine products do not fall ■ c. Adding new paragraphs (a)(2), within the definition of a ‘‘wine’’ under (a)(3), and (a)(4); 27 CFR Part 4 the FAA Act and are thus not subject to ■ d. Removing and reserving paragraph Advertising, Alcohol and alcoholic this part. They may, however, also be (d); beverages, Customs duties and subject to other labeling requirements. ■ e. Revising paragraph (e)(1); inspection, Food additives, Imports, See 27 CFR parts 24 and 27 for labeling ■ f. Redesignating paragraphs (e)(2), (3), International agreements, Labeling, requirements applicable to ‘‘wine’’ as (4), and (5) as paragraphs (e)(5) (6), (7), Packaging and containers, Reporting defined by the IRC. See 27 CFR part 16 and (8), respectively; and recordkeeping requirements, Trade for health warning statement ■ g. Add new paragraphs (e)(2), (3), and practices, Wine. requirements applicable to ‘‘alcoholic (4); beverages’’ as defined by the Alcoholic ■ h. In redesignated paragraph (e)(8), in 27 CFR Part 5 Beverage Labeling Act. the first sentence, remove the phrase Advertising, Alcohol and alcoholic (a) Products containing less than 7 ‘‘e.g., ‘‘peach wine,’’ ‘‘blackberry beverages, Customs duties and percent alcohol by volume. The wine.’’ ’’ and add in its place the phrase inspection, Food additives, Grains, regulations in this part do not cover ‘‘e.g., ‘‘peach wine,’’ ‘‘blackberry wine,’’ Imports, International agreements, products that would otherwise meet the ‘‘orange wine.’’ ’’; and

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18722 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

■ i. In redesignated paragraph (e)(8), with the limits set forth in 26 U.S.C. to the consumer who is purchasing the inserting a new sentence after the end 5384 for natural fruit wine. product. For example, a winery may of the second sentence. (3) The maximum volatile acidity, offer individual or corporate customers The additions and revisions read as calculated as acetic acid and exclusive labels that commemorate an event such follows: of sulfur dioxide, shall not be, for fruit as a wedding or grand opening. wine that does not contain added (b) Application. Any person who § 4.21 The standards of identity. brandy or wine spirits, more than 0.14 intends to offer personalized labels must * * * * * gram, and for other fruit wine, more submit a template for the personalized (a) * * * than 0.12 gram, per 100 milliliters (20 label as part of the application for label (1) Grape wine is wine produced by degrees Celsius). approval required under §§ 4.40 or 4.50 the normal alcoholic fermentation of the (4) Any fruit wine containing no of this part, and must note on the juice of sound, ripe grapes (including added grape brandy or alcohol may be application a description of the specific restored or unrestored pure condensed further designated as ‘‘natural.’’ personalized information that may grape must), with or without the * * * * * change. addition, after fermentation, of pure (8) * * * If the fruit wine is derived (c) Approval of personalized label. If condensed grape must and with or wholly (except for sugar, water, or the application complies with the without added spirits of the type added alcohol) from more than one regulations, TTB will issue a certificate authorized for natural wine under 26 citrus fruit, the designation ‘‘citrus of label approval (COLA) with a U.S.C. 5382, but without other addition wine’’ or ‘‘citrus fruit wine’’ may, but is qualification allowing the or abstraction except as may occur in not required to, be used instead of ‘‘fruit personalization of labels. The cellar treatment of the type authorized wine,’’ and the designation must also be qualification will allow the certificate for natural wine under 26 U.S.C. 5382. qualified by a truthful and adequate holder to add or change items on the (2) Still grape wine may be statement of composition appearing in personalized label such as salutations, ameliorated, or sweetened, before, direct conjunction therewith. * * * names, graphics, artwork, during, or after fermentation, in a way congratulatory dates and names, or * * * * * that is consistent with the limits set event dates without applying for a new forth in 26 U.S.C. 5383 for natural grape § 4.27 [Amended] COLA. All of these items on wine. personalized labels must comply with ■ 6. Amend 4.27 by: (3) The maximum volatile acidity, the regulations of this part. ■ a. Removing the phrase ‘‘in containers calculated as acetic acid and exclusive (d) Changes not allowed to of 5 liters or less’’ from paragraph (b); of sulfur dioxide is 0.14 gram per 100 personalized labels. Approval of an ■ b. Adding the word ‘‘and’’ at the end mL (20 degrees Celsius) for red wine application to personalize labels does of paragraph (c)(1); and 0.12 gram per 100 mL (20 degrees not authorize the addition of any ■ c. Removing paragraph (c)(2); and Celsius) for other grape wine, provided information that discusses either the ■ d. Redesignating paragraph (c)(3) as that the maximum volatile acidity for alcohol beverage or characteristics of the new paragraph (c)(2). wine produced from unameliorated alcohol beverage or that is inconsistent juice of 28 or more degrees Brix is 0.17 Subpart D—Labeling Requirements for with or in violation of the provisions of gram per 100 mL for red wine and 0.15 Wine this part or any other applicable gram per 100 mL for white wine. provision of law or regulations. (4) Grape wine deriving its ■ 7. Amend § 4.35 by revising paragraph Subpart G—Advertising of Wine characteristic color or lack of color from (e) to read as follows: the presence or absence of the red ■ § 4.35 Name and address. 9. Amend § 4.62 by revising paragraph coloring matter of the skins, juice, or (a) to read as follows: pulp of grapes may be designated as * * * * * ‘‘red wine,’’ ‘‘pink (or rose) wine,’’ (e) Cross reference—country of origin § 4.62 Mandatory statements. ‘‘amber wine,’’ or ‘‘white wine’’ as the statement. For U.S. Customs and Border (a) Responsible advertiser. The case may be. Any grape wine containing Protection (CBP) rules regarding country advertisement must display the no added grape brandy or alcohol may of origin marking requirements, see the responsible advertiser’s name, city, and be further designated as ‘‘natural.’’ CBP regulations at 19 CFR parts 102 and State or the name and other contact * * * * * 134. information (such as telephone number, website, or email address) where the (d) [Reserved] Subpart F—Requirements for Approval responsible advertiser may be contacted. (e) * * * of Labels of Wine Domestically Bottled (1) Fruit wine is wine produced by or Packed * * * * * the normal alcoholic fermentation of the juice of sound, ripe fruit (including ■ 8. Add § 4.54 to read as follows: PART 5— LABELING AND restored or unrestored pure condensed ADVERTISING OF DISTILLED SPIRITS fruit must) other than grapes, with or § 4.54 Personalized labels. ■ 10. The authority citation for part 5 without the addition, after fermentation, (a) General. Applicants for label continues to read as follows: of pure condensed fruit must and, with approval may obtain permission from or without added spirits of the type TTB to make certain changes in order to Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. authorized for natural wine under 26 personalize labels without having to 205. U.S.C. 5382, but without other addition resubmit labels for TTB approval. A Subpart A—Scope or abstraction except as may occur in personalized label is an alcohol cellar treatment of the type authorized beverage label that meets the minimum ■ 11. Revise § 5.1 to read as follows: for natural wine under 26 U.S.C. 5382. mandatory label requirements and is (2) Fruit wine may be ameliorated, or customized for customers. Personalized § 5.1 General. sweetened, before, during, or after labels may contain a personal message, (a) The regulations in this part relate fermentation, in a way that is consistent picture, or other artwork that is specific to the labeling and advertising of

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18723

distilled spirits. This part applies to the (a) * * * (4) [Reserved] several States of the United States, the (1) ‘‘Vodka’’ is neutral spirits which * * * * * District of Columbia, and the may be treated with up to two grams per (b) * * * Commonwealth of Puerto Rico. liter of sugar and up to one gram per (2) [Reserved] (b) The regulations in this part shall liter of citric acid. Products to be labeled (3) Net contents, in accordance with not apply to distilled spirits exported in as vodka may not be aged or stored in § 5.38. bond. wood barrels at any time except when * * * * * stored in paraffin-lined wood barrels Subpart B—Definitions and labeled as bottled in bond pursuant § 5.35 [Amended]. ■ ■ 12. Amend § 5.11 by: to § 5.42(b)(3). Vodka treated and 16. Amend § 5.35 by removing the ■ a. Revising the definition of ‘‘Brand filtered with not less than one ounce of word ‘‘designed’’ and adding in its place label’’; activated carbon or activated charcoal the word ‘‘designated’’. ■ b. Adding the definition of per 100 wine gallons of spirits may be ■ 17. Amend § 5.36 by revising ‘‘Certificate of label approval (COLA)’’ labeled as ‘‘charcoal filtered.’’ paragraph (e) to read as follows: in alphabetical order; and * * * * * § 5.36 Name and address. ■ c. Adding a sentence to the end of the (g) Class 7; Agave Spirits. ‘‘Agave definition of ‘‘Distilled spirits.’’ spirits’’ are distilled from a fermented * * * * * (e) Cross reference—country of origin The revision and additions read as mash, of which at least 51 percent is statement. For U.S. Customs and Border follows: derived from plant species in the genus Protection (CBP) rules regarding country Agave and up to 49 percent is derived § 5.11 Meaning of terms. of origin marking requirements, see the from other sugars. Agave spirits must be CBP regulations at 19 CFR parts 102 and * * * * * distilled at less than 95 percent alcohol Brand label. The label or labels 134. by volume (190° proof) and bottled at or bearing the brand name, alcohol above 40 percent alcohol by volume (80° * * * * * content, and class or type designation in proof). Agave spirits may be stored in ■ 18. Amend § 5.37 by revising the same field of vision. Same field of wood barrels. Agave spirits may contain paragraph (b) to read as follows: vision means a single side of a container added flavoring or coloring materials as (for a cylindrical container, a side is 40 § 5.37 Alcohol content. authorized by § 5.23. This class also percent of the circumference) where all * * * * * includes mixtures of agave spirits. of the pieces of information can be (b) Tolerances. A tolerance of plus or Agave spirits that meet the standard of viewed simultaneously without the minus 0.3 percentage points is allowed identity for ‘‘Tequila’’ or ‘‘Mezcal’’ may need to turn the container. for actual alcohol content that is above be designated as ‘‘agave spirits’’ or as or below the labeled alcohol content. * * * * * ‘‘Tequila’’ or ‘‘Mezcal’’ as applicable. Certificate of label approval (COLA). (1) ‘‘Tequila’’ is an agave spirit that is * * * * * A certificate issued on form TTB F a distinctive product of Mexico. Tequila ■ 19. Amend § 5.40 by: ■ 5100.31 that authorizes the bottling of must be made in Mexico, in compliance a. Redesignating the text of paragraph wine, distilled spirits, or malt beverages, (a)(1) as paragraph (a)(1)(i); with the laws and regulations of Mexico ■ or the removal of bottled wine, distilled governing the manufacture of Tequila b. Adding paragraph (a)(1)(ii); ■ c. Amending paragraph (b) by spirits, or malt beverages from customs for consumption in that country. custody for introduction into commerce, removing the word ‘‘Tequila’’ and (2) ‘‘Mezcal’’ is an agave spirit that is adding in its place the phrase ‘‘agave as long as the product bears labels a distinctive product of Mexico. Mezcal identical to the labels appearing on the spirits’’ wherever it appears; and must be made in Mexico, in compliance ■ d. Revising paragraph (d). face of the certificate, or labels with with the laws and regulations of Mexico changes authorized by TTB on the The addition and revision read as governing the manufacture of Mezcal for follows: certificate or otherwise (such as through consumption in that country. the issuance of public guidance * * * * * § 5.40 Statements of age and percentage. available on the TTB website at (a) * * * www.ttb.gov). § 5.23 [Amended] (1) * * * * * * * * ■ 14. Amend § 5.23, paragraph (a)(3) by (ii) If a whisky is aged in more than Distilled spirits. * * *. The term one container, the label may optionally ‘‘distilled spirits’’ also does not include removing the phrase ‘‘a trace amount of citric acid’’ and adding in its place the indicate the types of oak containers products containing less than 0.5 used. percent alcohol by volume. phrase ‘‘citric acid in an amount not to exceed one gram per liter’’. * * * * * * * * * * (d) Other distilled spirits. (1) Subpart D—Labeling Requirements for Statements regarding age or maturity or Subpart C—Standards of Identity for Distilled Spirits similar statements or representations on Distilled Spirits labels for all other spirits, except neutral ■ ■ 15. Amend § 5.32 by: spirits, are permitted only when the 13. Amend § 5.22 by: ■ ■ a. Revising paragraph (a)(1); a. Removing and reserving paragraph distilled spirits are stored in an oak ■ b. Amending paragraph (b)(1)(iii) by (a)(4); barrel and, once dumped from the removing the word ‘‘shall’’ and adding ■ b. Removing and reserving paragraph barrel, subjected to no treatment besides in its place the phrase ‘‘may optionally’’ (b)(2); and mixing with water, filtering, and wherever it appears; and ■ c. Revising paragraph (b)(3). bottling. If batches are made from ■ c. Revising paragraph (g). The revision reads as follows: barrels of spirits of different ages, the The revisions read as follows: label may only state the age of the § 5.32 Mandatory label information. youngest spirits. § 5.22 The standards of identity. * * * * * (2) Statements regarding age or * * * * * (a) * * * maturity or similar statements as to

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18724 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

neutral spirits (except for grain spirits as § 5.525.52 Certificates of age and origin. person so removing the Cognac stated in paragraph (c) of this section) * * * * * possesses a certificate issued by an are prohibited from appearing on any (a) Scotch, Irish, and Canadian official duly authorized by the French label. whiskies. (1) Scotch, Irish, and Canadian Government, certifying that the product * * * * * whiskies, imported in containers, are is grape brandy distilled in the Cognac not eligible for release from customs region of France and entitled to be ■ 20. Amend § 5.42 by revising custody for consumption, and no person designated as ‘‘Cognac’’ by the laws and paragraphs (b)(3)(iii) and (b)(6), to read may remove such whiskies from regulations of the French Government. as follows: customs custody for consumption, * * * * * § 5.42 Prohibited practices. unless that person has obtained and is (e) Rum. Rum imported in bottles that * * * * * in possession of an invoice contain any statement of age is not accompanied by a certificate of origin (b) * * * eligible to be released from customs issued by an official duly authorized by (3) * * * custody for consumption, and no person the appropriate foreign government, may remove such rum from customs (iii) Stored for at least four years in certifying: custody for consumption, unless the wooden containers wherein the spirits (i) That the particular distilled spirits person so removing the rum possesses a have been in contact with the wood are Scotch, Irish, or Canadian whisky, as certificate issued by an official duly surface, except for vodka, which must the case may be; and authorized by the appropriate foreign be stored for at least four years in (ii) That the distilled spirits have been country, certifying to the age of the wooden containers coated or lined with manufactured in compliance with the youngest rum in the bottle. The age paraffin or other substance which will laws of the respective foreign certified shall be the period during preclude contact of the spirits with the governments regulating the manufacture which, after distillation and before wood surface, and except for gin, which of whisky for home consumption. bottling, the distilled spirits have been must be stored in paraffin-lined or (2) In addition, an official duly stored in oak containers. unlined wooden containers for at least authorized by the appropriate foreign four years; government must certify to the age of * * * * * * * * * * the youngest distilled spirits in the Subpart G–Requirements for Approval (6) Distilled spirits may not be labeled container. The age certified shall be the of Labels of Domestically Bottled as ‘‘double distilled’’ or ‘‘triple period during which, after distillation Distilled Spirits distilled’’ or any similar term unless it and before bottling, the distilled spirits is a truthful statement of fact. For have been stored in oak containers. ■ 22. Add § 5.57 to read as follows: (b) Brandy and Cognac. Brandy (other purposes of this paragraph only, a § 5.575.57 Personalized labels. distillation means a single run through than fruit brandies of a type not a pot still or a single run through a customarily stored in oak containers) or (a) General. Applicants for label column of a column (reflux) still. The Cognac, imported in bottles, is not approval may obtain permission from number of distillations may be eligible for release from customs TTB to make certain changes in order to understated but may not be overstated. custody for consumption, and no person personalize labels without having to may remove such brandy or Cognac resubmit labels for TTB approval. A * * * * * from customs custody for consumption, personalized label is an alcohol Subpart F—Requirements for unless the person so removing the beverage label that meets the minimum Withdrawal From Customs Custody of brandy or Cognac possesses a certificate mandatory label requirements and is Bottled Imported Distilled Spirits issued by an official duly authorized by customized for customers. Personalized the appropriate foreign country labels may contain a personal message, ■ 21. Amend § 5.52 by: certifying that the age of the youngest picture, or other artwork that is specific brandy or Cognac in the bottle is not ■ a. By revising paragraphs (a) and (b); to the consumer who is purchasing the less than two years, or if age is stated product. For example, a distiller may ■ b. In paragraph (c)(1), adding the on the label that none of the distilled offer individual or corporate customers phrase ‘‘, or a conformity assessment spirits are of an age less than that stated. labels that commemorate an event such body,’’ between the words The age certified shall be the period as a wedding or grand opening. ‘‘Government’’ and ‘‘stating’’, and by during which, after distillation and (b) Application. Any person who removing the word ‘‘certificate’’ and before bottling, the distilled spirits have intends to offer personalized labels must adding the phrase ‘‘Certificate of been stored in oak containers. If the submit a template for the personalized Tequila Export’’ in its place; label of any fruit brandy, not stored in label as part of the application for label ■ c. In paragraph (c)(2), adding the oak containers, bears any statement of approval required under §§ 5.51 or 5.55 phrase ‘‘, or a conformity assessment storage in another type of container, the of this part, and must note on the body,’’ between the words brandy is not eligible for release from application a description of the specific ‘‘Government’’ and ‘‘as’’, and by customs custody for consumption, and personalized information that may removing the word ‘‘certificate’’ and no person may remove such brandy change. adding the phrase ‘‘Certificate of from customs custody for consumption, (c) Approval of personalized label. If Tequila Export’’ in its place; unless the person so removing the the application complies with the ■ d. Redesignating paragraphs (e) and (f) brandy possesses a certificate issued by regulations, TTB will issue a certificate as paragraphs (f) and (g), respectively; an official duly authorized by the of label approval (COLA) with a ■ e. In newly redesignated paragraph appropriate foreign government qualification allowing the (g), removing the phrase ‘‘(a) through certifying to such storage. Cognac, personalization of labels. The (e)’’ and adding in its place the phrase imported in bottles, is not eligible for qualification will allow the certificate ‘‘(a) through (f)’’; and release from customs custody for holder to add or change items on the ■ f. Adding new paragraph (e). consumption, and no person may personalized label such as salutations, The addition and revisions read as remove such Cognac from customs names, graphics, artwork, follows: custody for consumption, unless the congratulatory dates and names, or

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations 18725

event dates without applying for a new statement requirements applicable to § 7.297.29 [Amended] COLA. All of these items on ‘‘alcoholic beverages’’ as defined in the ■ personalized labels must comply with Alcoholic Beverage Labeling Act. 29. Amend § 7.29 by removing and the regulations of this part. (a) Sake´ and similar products. Sake´ reserving paragraphs (f) and (g). and similar products (including (d) Changes not allowed to Subpart E—Requirements for Approval products that fall within the definition personalized labels. Approval of an of Labels of Malt Beverages of ‘‘beer’’ under parts 25 and 27 of this application to personalize labels does Domestically Bottled or Packed not authorize the addition of any chapter) that fall within the definition of information that discusses either the a ‘‘wine’’ under the FAA Act are ■ 30. Add § 7.43 to read as follows: alcohol beverage or characteristics of the covered by the labeling regulations for alcohol beverage or that is inconsistent wine in 27 CFR part 4. § 7.437.43 Personalized labels. with or in violation of the provisions of (b) Other beers not made with both this part or any other applicable malted barley and hops. The regulations (a) General. Applicants for label provision of law or regulations. in this part do not cover beer products approval may obtain permission from that are not made with both malted TTB to make certain changes in order to Subpart H—Advertising of Distilled barley and hops, or their parts or their personalize labels without having to Spirits products, or that do not fall within the resubmit labels for TTB approval. A definition of a ‘‘malt beverage’’ under personalized label is an alcohol ■ 23. Amend § 5.63 by revising § 7.10 for any other reason. Bottlers and beverage label that meets the minimum paragraph (a) to read as follows: importers of alcohol beverages that do mandatory label requirements and is customized for customers. Personalized § 5.635.63 Mandatory statements. not fall within the definition of malt beverages, wine, or distilled spirits labels may contain a personal message, (a) Responsible advertiser. The under the FAA Act should refer to the picture, or other artwork that is specific advertisement must display the applicable labeling regulations for foods to the consumer who is purchasing the responsible advertiser’s name, city, and issued by the U.S. Food and Drug product. For example, a brewer may State or the name and other contact Administration. See 21 CFR part 101. offer individual or corporate customers information (such as, telephone number, labels that commemorate an event such website, or email address) where the Subpart B—Definitions as a wedding or grand opening. responsible advertiser may be contacted. (b) Application. Any person who * * * * * ■ 27. Amend § 7.10 by adding a intends to offer personalized labels must ■ definition of ‘‘Certificate of label 24. Amend § 5.65 by revising submit a template for the personalized paragraph (a)(9) to read as follows: approval (COLA)’’ in alphabetical order to read as follows: label as part of the application for label § 5.655.65 Prohibited practices. approval required under §§ 7.31 or 7.41 § 7.107.10 Meaning of terms. (a) * * * of this part, and must note on the (9) The words ‘‘double distilled’’ or * * * * * application a description of the specific ‘‘triple distilled’’ or any similar terms Certificate of label approval (COLA). personalized information that may unless it is a truthful statement of fact. A certificate issued on form TTB F change. For purposes of this paragraph only, a 5100.31 that authorizes the bottling of (c) Approval of personalized label. If distillation means a single run through wine, distilled spirits, or malt beverages, the application complies with the a pot still or a single run through a or the removal of bottled wine, distilled regulations, TTB will issue a certificate column of a column (reflux) still. The spirits, or malt beverages from customs of label approval (COLA) with a number of distillations may be custody for introduction into commerce, qualification allowing the understated but may not be overstated. as long as the product bears labels personalization of labels. The identical to the labels appearing on the * * * * * qualification will allow the certificate face of the certificate, or labels with holder to add or change items on the PART 7—LABELING AND changes authorized by TTB on the personalized label such as salutations, ADVERTISING OF MALT BEVERAGES certificate or otherwise (such as through names, graphics, artwork, the issuance of public guidance congratulatory dates and names, or ■ 25. The authority citation for part 7 available on the TTB website at event dates without applying for a new continues to read as follows: www.ttb.gov). COLA. All of these items on Authority: 27 U.S.C. 205. * * * * * personalized labels must comply with the regulations of this part. Subpart A—Scope Subpart C—Labeling Requirements for Malt Beverages (d) Changes not allowed to ■ 26. Add § 7.6 to read as follows: personalized labels. Approval of an ■ 28. Amend § 7.25 by redesignating application to personalize labels does § 7.67.6 Brewery products not covered by paragraph (c) as paragraph (d) and not authorize the addition of any this part. adding new paragraph (c) to read as information that discusses either the Certain fermented products that are follows: alcohol beverage or characteristics of the regulated as ‘‘beer’’ under the Internal alcohol beverage or that is inconsistent Revenue Code (IRC) do not fall within § 7.257.25 Name and address. with or in violation of the provisions of the definition of a ‘‘malt beverage’’ * * * * * this part or any other applicable under the FAA Act and thus are not (c) Cross reference—country of origin provision of law or regulations. subject to this part. They may, however, statement. For U.S. Customs and Border also be subject to other labeling Protection (CBP) rules regarding country Subpart F—Advertising of Malt requirements. See 27 CFR parts 25 and of origin marking requirements, see the Beverages 27 for labeling requirements applicable CBP regulations at 19 CFR parts 102 and to ‘‘beer’’ as defined under the IRC. See 134. ■ 31. Amend § 7.52 by revising 27 CFR part 16 for health warning * * * * * paragraph (a) to read as follows:

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2 18726 Federal Register / Vol. 85, No. 64 / Thursday, April 2, 2020 / Rules and Regulations

§ 7.527.52 Mandatory statements. as part of, the statement of alcohol gauge must be entered on the bottling (a) Responsible advertiser. The content as a percentage of alcohol by and packaging record required in advertisement must display the volume. § 19.599. responsible advertiser’s name, city, and * * * * * * * * * * State or the name and other contact ■ 37. Amend § 19.356 by revising information (such as, telephone number, PART 19—DISTILLED SPIRITS paragraphs (c) and (d) to read as follows: website, or email address) where the PLANTS responsible advertiser may be contacted. § 19.35619.356 Alcohol content and fill. ■ * * * * * 35. The authority citation for part 19 * * * * * continues to read as follows: § 7.547.54 [Amended] (c) Variations in alcohol content. Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. Variations in alcohol content may not ■ 32. Amend § 7.54 by removing and 5001, 5002, 5004–5006, 5008, 5010, 5041, exceed 0.3 percent alcohol by volume reserving paragraph (c). 5061, 5062, 5066, 5081, 5101, 5111–5114, above or below the alcohol content ■ 33. Revise the heading to subpart H to 5121–5124, 5142, 5143, 5146, 5148, 5171– 5173, 5175, 5176, 5178–5181, 5201–5204, stated on the label. read as follows: 5206, 5207, 5211–5215, 5221–5223, 5231, (d) Example. Under paragraph (c) of 5232, 5235, 5236, 5241–5243, 5271, 5273, this section, a product labeled as Subpart H—Alcoholic Content 5301, 5311–5313, 5362, 5370, 5373, 5501– containing 40 percent alcohol by Statements 5505, 5551–5555, 5559, 5561, 5562, 5601, volume would be acceptable if the test 5612, 5682, 6001, 6065, 6109, 6302, 6311, ■ for alcohol content found that it 34. Amend § 7.71 by revising 6676, 6806, 7011, 7510, 7805; 31 U.S.C. 9301, paragraph (b)(1) to read as follows: contained no less than 39.7 percent 9303, 9304, 9306. alcohol by volume and no more than § 7.717.71 Alcoholic content. Subpart N—Processing of Distilled 40.3 percent alcohol by volume. * * * * * Spirits * * * * * (b) * * * Signed: January 9, 2020. (1) Statement of alcoholic content ■ 36. Amend § 19.353 by revising the Mary G. Ryan, shall be expressed in percent alcohol by second sentence to read as follows: volume, and not by proof, by a range, or Acting Administrator. by maximums or minimums, unless § 19.35319.353 Bottling tank gauge. Approved: March 13, 2020. required by State law. Other truthful, * * *. The gauge must be made at Timothy E. Skud, accurate, and specific factual labeling or package marking proof, Deputy Assistant Secretary (Tax, Trade, and representations of alcohol content, such subject to variations in accordance with Tariff Policy). as alcohol by weight, may be made, as the tolerances set forth in § 19.356(c); [FR Doc. 2020–05939 Filed 4–1–20; 8:45 am] long as they appear together with, and however, the actual measurement of the BILLING CODE 4810–31–P

VerDate Sep<11>2014 19:54 Apr 01, 2020 Jkt 250001 PO 00000 Frm 00024 Fmt 4701 Sfmt 9990 E:\FR\FM\02APR2.SGM 02APR2 jbell on DSKJLSW7X2PROD with RULES2