[Federal Register Volume 59, Number 249 (Thursday, December 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-32010]
[[Page Unknown]]
[Federal Register: December 29, 1994]
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DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco, and Firearms
27 CFR Part 5
[T.D. ATF-360; Re: Notice Nos. 782, 780, 91F009P]
RIN: 1512-AB22
Alteration of Class and Type: Vodka
AGENCY: Bureau of Alcohol, Tobacco, and Firearms (ATF), Department of
the Treasury.
ACTION: Final rule, Treasury decision.
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SUMMARY: ATF is amending the distilled spirits regulations, 27 CFR
5.23(a)(3), to authorize the use of a trace amount (defined as up to
300 milligrams per liter or 300 ppm) of citric acid in the production
of vodka, without changing its designation as vodka. This level is
intended to ensure that distillers may continue to use citric acid as a
smoothing agent to correct objectionable tastes which might result from
such things as the water used in reducing the proof, the charcoal used
in distillation, or the glass in which packaged. This level is also
intended to protect the integrity of the standard of identity for
vodka, a product, which by definition, may not have any distinctive
character, aroma, taste, or color. Pursuant to this document, T.D. ATF-
306 [55 FR 49994, December 4, 1990] is rescinded.
DATES: This document is effective on January 30, 1995.
FOR FURTHER INFORMATION CONTACT: David W. Brokaw, Wine and Beer Branch,
(202) 927-8230.
SUPPLEMENTARY INFORMATION:
Background
The standard of identity for vodka was promulgated in 1949 in TD
5707, 1949-2 C.B. 252. The hearing record indicates that a standard of
identity for vodka was proposed because many different types and
qualities of vodka were being offered for sale in the United States.
With the proliferation of vodka products, the Alcohol Tax Unit of the
Internal Revenue Service (IRS), a predecessor to ATF, was concerned
that, consistent with the mandate of section 105(e) of the Federal
Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), consumers were
adequately informed regarding the identity and quality of such
products. The standard for vodka provided that it was to be defined as
neutral spirits distilled from any material at or above 190 proof,
reduced to not more than 110 proof and not less than 80 proof and,
after such reduction in proof, so treated as to be without distinctive
character, aroma, or taste. Although no explicit definition of the term
``distinctive'' could be found in the hearing record, the testimony
indicates that vodka is to be as tasteless and odorless as possible.
In 1956, Revenue Ruling 56-98, 1956-1 C.B. 811, concluded that
citric acid and sugar were not considered to be flavoring ingredients
which would materially affect the taste of vodka or change its basic
character so long as the sugar did not exceed two-tenths of 1 percent
and citric acid was only added in a ``trace amount.'' The ruling did
not quantify ``trace amount.''
Revenue Ruling 56-98 was issued after testing of a vodka sample
prepared by the IRS' Alcohol and Tobacco Laboratory pursuant to a
formula submission which contained two-tenths of 1 percent of sugar and
13 ppm of citric acid. The Alcohol and Tobacco Laboratory stated that
the addition of such amounts of sugar and citric acid were advantageous
from the consumer-standpoint, in that such addition would make a
smoother and more neutral product. The Alcohol and Tobacco Laboratory
further stated that the use of two-tenths of 1 percent of sugar and 13
ppm of citric acid would in no way render vodka flavored but, rather,
would correct objectionable tastes which might be obtained from the
water used in reducing the proof, the charcoal used in distillation, or
the glass in which packaged. The Alcohol and Tobacco Laboratory
concluded that the use of sugar and citric acid in the amounts stated
was in conformance with the standard of identity for vodka in that such
amounts were not considered to be flavoring materials and would not
materially affect the taste of the product, or change its basic
character.
The Alcohol and Tobacco Laboratory therefore stated that the use of
these ingredients in the amounts prescribed would conform with a method
of production of vodka outlined in T.D. 5707, supra, which stated that
vodka could be produced ``[b]y purifying or refining the distillate by
any other method which the Deputy Commissioner finds will result in a
product equally without distinctive character, aroma, or taste, and
which has been approved by him.'' Simply stated, the addition of up to
two-tenths of 1 percent of sugar and ``trace amounts'' of citric acid
was allowed because those ingredients act as a smoothing agent which
results in rendering vodka without distinctive character, aroma, taste,
or color. ``Trace amounts'' was not quantified in view of the fact that
the Alcohol and Tobacco Laboratory recognized that the appropriate
amount of citric acid would vary on a case by case basis depending on
the extent of the treatment used to neutralize the product.
The issue of citric acid took on a new dimension in 1980, when 26
U.S.C. 5010 was enacted. The section 5010 credit created an incentive
for industry to add additional amounts of flavors to distilled spirits
products for the purpose of reducing the effective rate of tax. Under
current law, distilled spirits products are taxed at the rate of $13.50
a proof gallon, with a credit under section 5010 for the flavor
content. The credit for alcohol derived from flavors is equal to the
distilled spirits tax, but only 2 1/2 percent of the alcohol content of
a distilled spirits product qualifies for the credit. The net effect of
this credit is to reduce the tax rate applicable to such product.
Vodka producers apparently began to use citric acid as a method to
receive the credit. The ATF Laboratory has stated that 1,000 ppm
represents, as a practical matter, the amount of citric acid on which
the maximum section 5010 credit may be claimed. Moreover, the use of
1,000 ppm of citric acid reduces the effective rate of tax on a proof
gallon of neutral spirits by 34 cents. Such a reduction can result in a
tax benefit of hundreds of thousands, if not millions of dollars a year
for the vodka industry.
Notice No. 403
With the increasing use of citric acid, the ATF Laboratory tested
various vodka samples produced in accordance with Revenue Ruling 56-98
and found that vodka which contained sugar and citric acid within
levels authorized by the ruling had a measurable solids content due to
the presence of sugar, and displayed a change in the titratable acidity
due to the presence of citric acid. The ATF Laboratory stated that such
changes in the physical and chemical characteristics of the samples
resulted in a vodka having impermissible distinctive character even if
an organoleptic examination indicated no distinctive character, aroma,
taste, or color. Based on the conclusions of the ATF Laboratory with
respect to sugar and citric acid, ATF subsequently issued an Advance
Notice of Proposed Rulemaking (ANPRM) on January 11, 1982, Notice No.
403 (47 FR 1148), requesting comments on whether ATF should revoke
Revenue Ruling 56-98 and prohibit the treatment of vodka with sugar and
citric acid, or whether ATF should establish a separate class and type
of vodka containing specified quantities of sugar and citric acid.
Additionally, the ANPRM noted that a conflict seemed to exist between
the provisions of Revenue Ruling 56-98 authorizing treatment of vodka
with sugar and citric acid, and 27 CFR 5.23(a)(3) which prohibits any
addition of harmless coloring, flavoring, and blending materials to
neutral spirits. The ANPRM, therefore, requested comments on clarifying
the standard of identity for vodka to preclude the addition of any
ingredients to vodka, such as sugar and citric acid, that would
materially affect its chemical and physical characteristics and
comments on establishing another class of vodkas authorizing the
addition of sugar and citric acid within specified amounts.
Comments on Notice No. 403
ATF received 16 comments pursuant to the ANPRM. Eight respondents
opposed the addition of citric acid and sugar to vodka, and favored
revoking Revenue Ruling 56-98 for the following reasons: It is
inconsistent with 27 CFR 5.23(a)(3), the public perceives vodka as a
pure material spirit, there is no purpose to the addition of sugar and
citric acid, and allowing sugar and citric acid will allow other
materials to be added to vodka. Seven respondents favored permitting
the use of sugar and citric acid in the production of vodka by
retaining Revenue Ruling 56-98. These comments indicated mainly that
the standard of identity should be based on sensory factors such as
taste, aroma, and color, and not on physical and chemical
characteristics because consumers judge vodka by taste. These comments
further stated that consumers have not been harmed or deceived by the
addition of sugar and citric acid and would not benefit by a
prohibition on such ingredients. In addition, eight of the sixteen
respondents objected to the proposed establishment of a new class and
type of vodka containing sugar and citric acid for various reasons.
Notice No. 583
Based on the comments on Notice No. 403, ATF issued an NPRM on
February 19, 1986, Notice No. 583 (51 FR 6009), proposing to revoke
Revenue Ruling 56-98, incorporate its provisions into 27 CFR 5.23, and
define a ``trace amount'' as 150 ppm. The NPRM noted that trace amounts
varied widely with different formulas. The notice explained that 150
ppm was being proposed because it is sufficient to neutralize residual
alkalinity derived from charcoal treatment of some vodkas, or from the
use of certain glass in manufacturing bottles. The NPRM sought comments
on the appropriate level of citric acid, both above and below 150 ppm.
Comments on Notice No. 583
ATF received 10 new comments pursuant to the NPRM. Five commenters
opposed the addition of citric acid and sugar to vodka even though ATF
had previously decided to continue to allow the use of sugar and citric
acid in vodka based on comments received pursuant to the ANPRM. The
remaining commenters favored allowing the use of sugar and citric acid
so as not to interfere with eligibility for the section 5010 credit.
The comment received from the LeVecke Corporation included the results
of organoleptic tests which showed that the test panelists could
consistently detect the presence of citric acid at 400 ppm.
Accordingly, the company recommended that citric acid be allowed up to
400 ppm.
T.D. ATF-306
On December 4, 1990, ATF issued a Final Rule, T.D. (T.D. ATF-306,
55 FR 49994), that vodka with more than 150 ppm of citric acid has a
distinctive character, in violation of the standard of identity, and
must be labeled as flavored vodka. T.D. ATF-306, amended 27 CFR
5.23(a)(3) to authorize the use of up to 2 grams per liter (2,000 parts
per million) of sugar, and a trace amount (defined as 150 milligrams
per liter or 150 parts per million) of citric acid in the production of
vodka. T.D. ATF-306 was effective January 3, 1991, with a formula and
label cancellation date of March 4, 1991, for products not made within
the limitations of the Treasury decision.
The TD incorporated the comment received by the LeVecke Corporation
which showed that the test panelists could consistently detect the
presence of citric acid at 400 ppm. The TD states that ATF agrees that
the presence of citric acid is detectable at 400 ppm but that ``ATF's
Laboratory conducted similar tests and found that 150 ppm is
approximately the threshold at which the presence of citric acid in
vodka can be detected.'' The TD, therefore, concluded that any amount
of citric acid higher than 150 ppm was distinctive in violation of 27
CFR 5.22(a)(1) based on the position that citric acid, as with any
other ingredient, should not be present at a level at which it is
detectable to a consumer, irrespective of whether the consumer can
specifically identify the ingredient as citric acid.
Petition for Reconsideration
On March 4, 1991, in response to a petition from Heublein, Inc.,
(Heublein) for the reconsideration of T.D. ATF-306, ATF issued T.D.
ATF-311 (56 FR 8922). T.D. ATF-311 deferred the compliance date with
respect to the citric acid limitation set forth in 27 CFR
5.23(a)(3)(ii) by T.D. ATF-306 to December 4, 1991. Heublein's petition
was based on a representation that new scientific information and data
not previously available had come to their attention concerning maximum
levels for the use of citric acid in vodka. The compliance date set
forth in T.D. ATF-306 regarding a maximum level for the use of sugar in
vodka remained unchanged.
Notice No. 716
On April 29, 1991, ATF issued Notice No. 716 (56 FR 19623) to
gather additional information with respect to the 150 ppm limitation
set forth in T.D. ATF-306. Notice No. 716 was issued in conjunction
with Heublein's request for reconsideration which was granted in T.D.
ATF-311. Notice No. 716 proposed to retain the reasoning and conclusion
of T.D. ATF-306 as set forth above. The purpose of the Notice was to
solicit comments from the public and industry concerning the
appropriateness of sensory threshold citric acid levels higher and
lower than the proposed maximum level of 150 ppm.
Comments on Notice No. 716
In response to Notice No. 716, ATF received nine comments. All of
the comments were opposed to setting a maximum limitation as low as 150
ppm for the addition of citric acid to vodka. However, the only
commenter submitting substantiating test data was Heublein. In January
1991 and July 1991, Heublein submitted results of sensory (taste and
smell) testing which it claimed demonstrate that the majority of
consumers could not detect a difference between vodka containing 150
ppm and vodka containing 480 ppm. The purpose of these tests was not to
determine the level at which citric acid can be detected by the
consumer, but rather whether a statistically significant difference
could be detected between two levels of citric acid in vodka. For
example, if a panel were asked to determine whether there was a
difference between 1,000 ppm and 1,110 ppm of citric acid, the
statistical analysis of the results of such testing would only show
whether the two samples can be reliably distinguished but would not
generate any information concerning the threshold level at which citric
acid could be detected.
Heublein relied on these tests to support the conclusion that 480
ppm is not detectable. That is, if vodka at 480 ppm tastes, smells, and
looks no different than 150 ppm, then it is no more distinctive.
Heublein also tested vodka containing 528 ppm of citric acid and stated
that several of its tests showed significant and perceptible difference
between vodka containing 150 ppm of citric acid and vodka with 528 ppm
citric acid. Heublein further stated that changing the formulation of
the product from 528 ppm to 150 ppm would ``significantly change the
sensory character'' of their product. The ATF Laboratory interpreted
Heublein's tests as concluding that, while the majority of consumers
could not detect a change in the level of citric acid from 150 ppm to
480 ppm, such a change could be detected from 150 ppm to 528 ppm. As
discussed later, ATF does not believe that these tests can be relied
upon in setting a citric acid limitation.
Independent Testing
During the comment period, ATF secured an outside testing firm,
Odor Science and Engineering (OS&E), to conduct independent testing on
sensory threshold levels for citric acid addition to vodka. The outside
testing firm was secured in order to provide data for comparison to the
results secured by ATF and industry members.
OS&E was requested to conduct a test which would produce results
with respect to the taste threshold of citric acid in vodka. The
initial tests were conducted on April 25 and 29, 1991. Various
concentrations of ethanol solution and citric acid were presented to a
taste panel comprised of ten experienced sensory panelists familiarized
with the taste of the ethanol solutions. The initial ethanol solutions
were supplied to OS&E by ATF and consisted of 40 percent ethanol in
water (80 proof). The flasks were stoppered to prevent any opportunity
of interference because of odor perception. The initial levels of
citric acid in the various ethanol solutions were: 50 ppm, 100 ppm, 150
ppm, 200 ppm, and 1,000 ppm.
The presentations consisted of two flasks containing only ethanol
solution and one flask containing ethanol solution mixed with one of
the levels of citric acid described above. One panelist at a time
entered the sensory laboratory and tasted each of the three flasks.
Each of the panelists tasted each of the three flasks and indicated to
the panel moderator which of the three samples was different, thus
requiring the panelist to guess if he or she expressed uncertainty.
This procedure is known as the forced-choice ascending concentration
method and was repeated for each of the citric acid concentrations
described above. The forced-choice ascending method is stacked against
guessing which sample contains the citric acid because two out of three
choices do not contain citric acid.
As results of the initial trials were inconclusive, repeat trials
were conducted with eleven panelists using citric acid concentrations
of 100 ppm, 250 ppm, and 500 ppm. However, as with the initial tests,
the ethanol solution had a pronounced anesthetic effect which precluded
accurate determinations of taste thresholds. As a result, the ethanol
solution was diluted to 20 percent ethanol in water (40 proof) as
directed by American Society for Testing and Materials he American
Society for Testing and Materials (ASTM) methodology and three
concentrations of citric acid in the diluted solution were evaluated:
25 ppm, 50 ppm, and 500 ppm. The anesthetic effect discussed above was
presumably eliminated because all of the panelists detected taste
differences at lower concentrations of citric acid.
An additional test was run on May 28, 1991, using twelve series (2
by each panelist) in order to develop more representative data using a
20 percent ethanol in water (40 proof) solution. The concentrations of
citric acid in the diluted solution were 25 ppm, 50 ppm, 100 ppm, 200
ppm, and 400 ppm. The threshold of citric acid in vodka could then be
determined using the forced-choice ascending concentration method. OS&E
concluded that a majority of people could detect the presence of citric
acid in vodka at a level of approximately 180 ppm.
However, such test results collected by OS&E were not calculated in
accordance with the methodology prescribed by the ASTM. ASTM Procedure
E-679 is entitled ``Standard Practice for Determination of Odor and
Taste Thresholds By a Forced-Choice Ascending Concentration Series
Method of Limits.'' This method requires use of a geometric progression
of concentrations, i.e., each concentration of citric acid is a factor
or multiple of the previous concentration. In this test, the factor was
two. In order to calculate the mean of such a progression, one must
take the geometric mean. This is calculated by taking the nth root of
the product of the numbers. This differs from the familiar arithmetic
mean which is found by dividing the sum of the numbers by n. In both
cases, n is the number of values under consideration.
ATF Analysis of Independent Test Data
The OS&E tests were supported by the ATF Laboratory in lieu of the
tests relied on in setting the 150 ppm limit in T.D. ATF-306 because
those earlier tests did not fully conform to the methodology
established for sensory threshold testing established by the ASTM.
However, although the OS&E tests were conducted in accordance with the
ASTM methodology, OS&E did not calculate results from the data it
generated in the ASTM prescribed method. The ATF Laboratory therefore
used the data generated by OS&E and recalculated the results according
to the approved ASTM method. The detection threshold of citric acid in
vodka was determined using the best-estimate criterion, or the group
geometric mean of all the panelists' thresholds. Each panelist's
threshold is the geometric mean of the last missed concentration (the
last concentration of citric acid not detected) and the next higher
concentration. This kind of analysis is considered most reliable when
most of the panelists have had at least two hits in a row at the high
concentration end. For those panelists who have a miss at the highest
concentration, it is assumed by the ASTM method that they would have
had a hit at the next higher concentration had there been one more
sample in the series (800 ppm citric acid for this test). For those
panelists who have no misses, it is assumed by the ASTM method that,
had the testing begun one sample lower in the series (12.5 ppm citric
acid for this test), they would have missed it.
For normally distributed data, half of the population lies on each
side of the center of the data curve. Using the OS&E data, the ATF
laboratory determined that two-thirds of the population lies within the
range of citric acid concentrations between 202 ppm and 700 ppm and
one-sixth lies outside this region in each tail of the distribution. A
normal distribution did not exist because the data were skewed toward
lower concentrations of citric acid. Because of this, the geometric
mean (which is calculated from the average of the log of the values)
would not yield as accurate a measure of where the majority of people
would detect the presence of citric acid in vodka as the median, or
middle point, of the distribution ordered from lowest point to highest
point.
The ATF Laboratory also utilized the OS&E data to determine that
the actual range of concentrations of citric acid that would include
two-thirds of the population results in a geometric mean of 376 ppm and
a range of 202 ppm to 700 ppm at 40 percent alcohol or 80 proof. The
results of the OS&E testing also show that a majority of the panelists
were able to detect citric acid at the median level of 282 ppm in 80
proof vodka. That is, the OS&E data revealed that 282 ppm was the
initial point of detection for the majority of panelists. The median
level of 282 ppm is lower than the group geometric mean of 376 ppm
because the data are skewed away from a normal distribution toward
lower concentrations of citric acid.
The sample size of the OS&E study was sufficient to be
statistically valid based on the ASTM method in place at the time of
the testing. As is always the case, a larger sample size would have
certainly given a distribution more closely representative of the total
population. ATF has allowed for the uncertainty inherent in any
determination where the entire population is not sampled. The standard
of identity for vodka would prescribe that the lower limit of
detectability be used to ensure that a majority of the population could
not detect the presence of citric acid.
Disparity in Test Results
Heublein was provided with the opportunity to comment on the data
secured on behalf of ATF by OS&E. Heublein acknowledged the
discrepancies in the OS&E report in their comments to ATF when they
stated that ``we were unable to reproduce some * * * values in the
report.'' Nevertheless, Heublein used the incorrect OS&E calculations
and represented to ATF that the level at which the majority of people
could detect citric acid in vodka is 734 ppm. This level is much higher
than the 282 ppm level generated by ATF from the OS&E data because the
value of 734 ppm was erroneously based on the calculation of the
arithmetic mean.
The citric acid level of 734 ppm proposed by Heublein would be the
concentration at which greater than two-thirds of the population would
detect the presence of citric acid in vodka. In addition, the tests
submitted by Heublein were designed to determine whether there is a
statistically significant difference between two solutions of different
concentrations of citric acid in vodka, not the threshold level of
citric acid. Accordingly, ATF does not believe that the tests submitted
by Heublein are germane to the issue of setting a level of citric acid
that will not be in conflict with the current standard of identity for
vodka which defines the product as being without distinctive character,
aroma, taste, or color. Indeed, ATF believes that the use of a level of
citric acid which greater than two-thirds of the population could
detect is inconsistent with the above-stated standard of identity for
vodka. ATF believes instead that it is in the interest of preserving
the standard of identity for vodka that any statistical treatment be
applied in the opposite direction, i.e., where most of the population
would not detect the presence of citric acid.
Deferrals of Compliance Date
A significant disparity existed between the methodologies of the
studies done by ATF and Heublein, and the conclusions reached by
Heublein and OS&E with respect to the study conducted by OS&E. Based on
these disparities, ATF concluded that more time would be needed to
properly evaluate the sensory tests and results derived from Heublein
and the outside firm hired by ATF. The compliance date of December 4,
1991, with respect to citric acid, set forth in T.D. ATF-311 was
subsequently deferred to September 3, 1992, by T.D. ATF-319 (56 FR
63398, December 3, 1991) in order to allow for time to resolve the
disparity in the test results. As ATF had not yet completed its review
of all data submitted relative to the citric acid limitation as of
September 3, 1992, ATF issued T.D. ATF-333 (57 FR 40323, September 3,
1992), which deferred the compliance date with respect to the citric
acid limitation set forth in 27 CFR. 5.23(a)(3)(ii) until September 3,
1993. On August 27, 1993, ATF issued T.D. ATF-348 (58 FR 45251)
deferring the compliance date set forth in T.D. ATF-333 until August
28, 1995, with respect to the citric acid limitation set forth in 27
CFR 5.23(a)(3)(ii) by T.D. ATF-306. The two year compliance date
deferral was necessary in order to allow ATF to analyze the comments
received during the comment period relative to the issuance of Notice
No. 780 and to allow for additional unforeseen contingencies.
Notice No. 780
Upon consideration of both the OS&E and Heublein tests, ATF
published Notice No. 780 (58 FR 46141) on September 1, 1993, proposing
to amend the regulations authorizing the use of a trace amount (defined
as up to 300 milligrams per liter or 300 ppm) of citric acid in the
production of vodka, without changing its designation as vodka. The
NPRM was issued in order to provide the public with an opportunity to
comment on the OS&E study. Notice No. 780 contains the detailed
description and analysis of the OS&E study and the critique of the
Heublein tests submitted in response to Notice No. 716 set forth above.
The NPRM proposed a level of 300 ppm as a rounding off of the 282 ppm
level derived by OS&E in order to facilitate regulatory administration
and consumer understanding. Because citric acid is not an essential
component of vodka, the NPRM proposed amending 27 CFR. 5.23 which
regulates additions of substances to distilled spirits, rather than 27
CFR 5.22(a)(1) which is the standard of identity of vodka. Under this
proposal, vodka made with a greater concentration of citric acid would
be designated ``flavored vodka'' or labeled with a fanciful name under
27 CFR part 5.
The comment period for Notice No. 780 ended on October 18, 1993. At
that time, Notice No. 782 [58 FR 53682] was published in the Federal
Register extending the comment period for Notice No. 780 until January
3, 1994. Notice No. 782 was issued in response to a request from the
Distilled Spirits Council of the United States (DISCUS) for an
extension of the comment period in order to provide sufficient time for
all interested parties to respond to the issues addressed in the NPRM.
Comments on Notice No. 780
In response to Notice No. 780, 8 comments were received. Seven of
the commenters felt that the maximum authorized level for the addition
of citric acid to vodka should be 1,000 ppm without changing the
product's designation as vodka. The remaining commenter, Mr. David A.
Owen, did not object to the proposed 300 ppm level but felt that the
level of all such ingredients should be indicated on the label.
Three of the commenters, the President's Forum of the Beverage
Alcohol Industry, the David Sherman Corporation, and Barton
Incorporated, while opposed to setting a maximum limitation as low as
300 ppm, did not submit any substantiating data to support their
recommended level of 1,000 ppm.
Jim Beam Brands Co., another of the seven commenters supporting
1,000 ppm, felt that consumer response to vodka produced with citric
acid is the most important issue. Jim Beam pointed out that the actual
presence of citric acid has not raised any health or safety issues, nor
has it resulted in any consumer deception since being introduced in
vodka production in 1956. Rather, Jim Beam argued that consumers would
be confused by requiring vodka containing greater than 300 ppm to be
labeled as a ``flavored vodka'' when such products traditionally have
been marketed as ``vodka.'' Jim Beam notes that in decreasing the
allowable amount of citric acid, ATF must depend on valid scientific
studies which demonstrate that consumers can reliably detect a
distinctive difference between vodkas at or above that threshold and
vodkas below that threshold. Jim Beam also includes in its comment a
critique of the OS&E study which Beam believes was neither reliable nor
valid. As such, Jim Beam believes that ATF is fulfilling its statutory
mandate in this matter without further action.
The comment submitted by United Distillers also criticizes the OS&E
study. In addition, United Distillers argues that there are detectable
differences even amongst vodkas that are untreated. These differences
are said to result from ingredients, manufacturing processes, and the
subjective tastes of the consumer. Therefore, based on the historical
acceptance of vodkas with up to 1,000 ppm of citric acid, international
practices, and product standardization, United Distillers supports a
level of 1,000 ppm.
Heublein argues in its comment that the OS&E study was unreliable.
Heublein also states that ATF should not determine a minimum threshold
level since they believe that it has no relevance to the
distinctiveness requirements of the vodka standard of identity.
Similarly, Heublein states that the test results it submitted in
response to Notice No. 716 demonstrate the insufficiency of the minimum
threshold standard and the appropriateness of distinctiveness standard.
Heublein argues that ATF misinterpreted the test results it submitted
in connection with Notice No. 716. Heublein maintains that those tests
do in fact demonstrate that vodkas containing 480 ppm and 528 ppm are
not distinguishable from vodka containing 150 ppm. Heublein further
argues that ``the effort being expended to justify an additive limit
below 1,000 ppm is in clear conflict with the instruction of the
President to ATF and other agencies,'' as stated in the President's
Executive Order on Regulatory Planning and Review dated September 30,
1993 (58 FR 51735 (Oct. 4, 1993)). The President stated, in part, that
Federal agencies should promulgate only such regulations as are
required by law, are necessary to interpret the law, or are made
necessary by compelling public need, such as the material failure of
private markets to protect or improve the health and safety of the
public. The President further stated that, in deciding whether and how
to regulate, agencies should assess all costs and benefits of available
regulatory alternatives, including the alternative of not regulating.
Heublein therefore asserts that since there is no compelling public
health or safety reason for the change proposed, ATF should allow up to
1,000 ppm. Heublein supports its conclusion by arguing that no reliable
evidence exists in support of 300 ppm, and that it has provided
evidence in support of 1,000 ppm,
Finally, DISCUS submitted substantive comments which were supported
by Heublein in its comment. Initially, DISCUS reiterates the argument
that a maximum level of citric acid can be based only on distinctive
differences between vodkas with levels of citric acid at or above a
specific level and vodkas without citric acid. DISCUS also argues that
ATF's longstanding approval of formulas containing up to 1,000 ppm and
the confusion that would result from the adoption of 300 ppm militate
toward allowing 1,000 ppm.
In support of its conclusions, DISCUS issued a critique of the OS&E
study. It criticized OS&E for, in general, using too few test subjects,
failing to verify the qualifications of the testers that it did use,
apparently using the study authors as test subjects, collecting too few
test responses, and failing to use proper testing procedures. DISCUS
states that these criticisms demonstrate the unreliability of the OS&E
study.
DISCUS also submitted the results of an independent test conducted
by the Tragon Corporation (a sensory testing and marketing research
company) which purports to demonstrate that vodka containing up to
1,000 ppm has no distinctive character, aroma, taste, or color. This
test was not ``threshold testing'' in which the minimum amount of
citric acid which could be detected by a test subject is determined
but, rather, ``difference testing'' in which a test subject is asked
whether a difference can be detected between vodka containing 0 ppm,
500 ppm, and 1,000 ppm of citric acid. This test also inquired as to
whether test subjects could ascribe any characteristics of citric acid,
such as tartness, to any of the test samples and concluded that such
characteristics could not be identified. These tests were characterized
as ``reliable scientific evidence'' in Heublein's and DISCUS' comments
and both commenters now urge ATF to set a limit of 1,000 ppm.
The substantive comments on Notice No. 780 related in large part to
the relative merits of the OS&E and DISCUS studies. With respect to the
test data submitted by DISCUS, ATF has several criticisms which serve
as the basis to discount its conclusions. Initially, ATF does not
believe that DISCUS' study conforms with ASTM procedures. For example,
the DISCUS study utilizes commercially available vodkas which contain
80 proof alcohol while the ASTM procedures require that distilled
spirits used in testing be diluted to 25 proof or 45 proof. In
addition, ATF believes that the inclusion of a flavored vodka and a
vodka with two tenths of 1 percent sugar added in the testing samples
cast doubt on the validity of the study's conclusions. Most
importantly, ATF believes that the DISCUS study improperly involved
``difference testing'' while the proper focus should be ``threshold
testing'' as those terms are described above. With respect to the
criticisms of DISCUS and all other commenters of the OS&E study, ATF
believes that the study conformed with ASTM procedures. For example,
although the size of a testing panel and the number of test responses
collected could always be larger, both were within acceptable ASTM
procedures. Moreover, ATF ensured that the data collected by OS&E was
calculated in accordance with ASTM procedures. As such, ATF believes
that the criticisms of the OS&E study by seven of the commenters on
Notice No. 780 do not diminish the validity of the study.
Based on all of the above, ATF believes that its reliance on the
OS&E study in reaching a conclusion in this matter is justified. In
that regard, no commenter during the course of this rulemaking
submitted a study which both involved threshold testing and conformed
with ASTM procedures. As the OS&E study did meet these criteria, and
its results are scientifically valid and reliable, it is reasonable to
utilize the data from that study rather than data submitted by
commenters that are in favor of 1,000 ppm.
The other principal contentions of the comments on Notice No. 780
are that the acceptable level of citric acid should be based on
distinctiveness rather than on detectability and that, in essence,
there is no reason not to allow 1,000 ppm because that level represents
the status quo regarding citric acid. ATF believes that detection is
the appropriate standard because the standard of identity for vodka
states that vodka should be without distinctive character, aroma,
taste, or color. If an ingredient is present in an amount at which it
can be distinguished from other ingredients in the product, then its
presence contravenes rather than supports the standard of identity.
Indeed, the ingredient in question would itself become distinctive in
violation of the standard of identity. With respect to the argument in
favor of maintaining the status quo, ATF believes that its statutory
mandate to protect consumers is best served by adhering as closely as
possible to the standard of identity. Moreover, ATF does not believe
that consumers would be misled or confused by the setting of a citric
acid limitation. Indeed, consumers receive no information as to the
level of citric acid in vodka products. Thus, the setting of a citric
acid limitation, which will require that vodkas above 300 ppm be
labeled as ``flavored'' while vodkas below that level retain the
designation ``vodka,'' will prohibit deception in that consumers will
be able to relate such terms to the level of citric acid contained in
vodkas. Consumers will, therefore, be better informed as to the
identity and quality of the products in question. ATF believes that the
preservation of the standard of identity is best served by ensuring a
change in labeling for vodkas over 300 ppm. As such, ATF believes that
its regulation of citric acid is in accordance with the Executive Order
on Regulatory Planning, and Review because it is a necessary
interpretation of the law. Stated another way, ATF believes that
regulating citric acid is necessary to maintain both the original
intent and integrity of the standard of identity for vodka.
Discussion
Any discussion of a citric acid limitation must begin with the
premise that the standard of identity for vodka contemplates a neutral
product. The addition of any ingredient to such neutral spirits must
not only be clearly justified, but must not contravene the standard of
identity for vodka by contributing distinctiveness to the product. No
comments since the inception of this rulemaking have offered such a
justification for the use of more than 300 ppm of citric acid.
In that regard, ATF has historically maintained that the use of
citric acid should be for the purpose of correcting deficiencies in
vodka; i.e., acting as a smoothing agent to correct objectionable
tastes which might be obtained from the water used in reducing the
proof, the charcoal used in distillation, or the glass in which
packaged. ATF has viewed vodka as a product which, in essence, was
neutral in character, aroma, taste, and color for forty-five years;
although this policy has been deferred during the pendency of the
rulemaking. While sugar and citric acid are recognized as acting as
smoothing agents in vodka, it was very clear that they were authorized
only for the purpose of correcting objectionable tastes which might
result from such things as the water used in reducing the proof, or
from the glass in which packaged. The ATF Laboratory has further stated
that it believes that such use of citric acid should not be detectable
to a majority of consumers. ATF therefore takes the position that the
addition of citric acid to a level equal to or greater than that of
detection would contribute a distinctive character to the product in
violation of the standard of identity.
ATF is fulfilling its statutory mandate in 27 U.S.C. 205(e) by
ensuring adherence to the standard of identity for vodka. That is, ATF
is setting a citric acid limitation in order to ensure that consumers
are adequately informed as to identity and quality of vodka; a product
which is understood to be without distinctive character, aroma, taste,
or color. The addition of sugar, citric acid, or any other ingredient
for that matter, has and should be allowed only to facilitate rendering
vodka without distinctive character, aroma, taste, or color. Therefore,
there is a strong presumption against the use of any ingredients, in
any amount, particularly where they are likely to contribute to
distinctiveness rather than neutrality. Moreover, the point at which
the amount of such an ingredient begins to contravene the standard of
identity, as in the point at which citric acid can be detected by a
majority of consumers, is the maximum allowable level of that
ingredient in vodka.
ATF therefore believes that the rulemaking record in this case
supports a level of 300 ppm of citric acid in vodka without changing
the product designation. The current standard of identity mandates
consideration of not only differences attributable to taste, but also
differences attributable to character, aroma, or color. To that end,
the ATF Laboratory has conducted tests based upon chemical and physical
characteristics and designed the OS&E tests based upon organoleptic
factors, all of which lend support to a level of 300 ppm.
This position is clearly supported not only by an examination of
the history of 27 CFR 5.22(a)(1), but also by 27 CFR 5.23(a)(1), which
provides that no material whatsoever may be added to neutral spirits
(which encompasses vodka). ATF believes that this section clearly
reflects the original intent of the regulations in that vodka was
presumed to be a product which was not altered in any way by the
addition of any material, and would, therefore, be as tasteless and
odorless as possible. Thus, sugar and citric acid were recognized as
acting as smoothing agents in vodka, which were authorized only for the
purpose of correcting objectionable tastes which might result from such
things as the water used in reducing the proof, the charcoal used in
distillation, or the glass in which packaged.
In light of this purpose, ATF believes that this interpretation
correctly applies the standard of identity for vodka since the level of
detection to a majority of consumers would demonstrate that the amount
of citric acid used reached a point with regard to the product that was
no longer viewed only as corrective. That is, the addition of citric
acid to a level equal to or greater than that of detection would
contribute a distinctive character to the product in violation of the
standard of identity.
It is apparent that the reason for the increased use of citric acid
in vodka has been directly tied to the tax credit savings available by
virtue of the 26 U.S.C. 5010 wine/flavor credit enacted in 1980. While
ATF recognizes that such a rationale is not, in and of itself, a basis
for denial of citric acid in vodka production, it certainly can be used
to determine whether the amounts that are currently used reflect the
levels which were initially contemplated by Revenue Ruling 56-98. That
is, the inquiry becomes whether the level of citric acid proposed by
vodka producers whose comments support the use of greater than 300 ppm
is necessary to correct objectionable tastes, etc., in vodka or whether
such levels are merely a tax saving mechanism used to reduce the
effective tax rate on vodka products. Commenters supporting the use of
greater than 300 ppm have offered no rationale for the use of citric
acid in amounts up to 1,000 ppm since the initiation of this rulemaking
effort. To the contrary, it is apparent that the use of up to 1,000 ppm
of citric acid is directly related to the section 5010 flavors credit.
Absent such a rationale, ATF is unable to conclude that the addition of
that quantity of citric acid serves a corrective purpose in the
production of vodka. Even assuming it has such a purpose, the
detectability of 1,000 ppm would preclude the authorization of such a
level. As such, 27 CFR 5.23(a)(1) precludes, as it would the addition
of any other material whatsoever, the addition of greater than 300 ppm
of citric acid.
ATF recognizes in setting a limit of 300 ppm that formulas
containing up to 1,000 ppm have been approved for several years.
Rulemaking with respect to this issue was initiated in January 1982.
ATF has therefore allowed the use of up to 1,000 ppm during the
pendency of the rulemaking. Vodka producers began submitting formulas,
for the most part, after the enactment of section 5010 and ATF did not
believe that it was equitable to deny such formulas until an ultimate
decision was reached in this matter. Moreover, ATF has only now
obtained reliable scientific data in support of 300 ppm, allowed
interested parties the opportunity to comment on this data, evaluated
the comments on such data, and reached a final conclusion in this
matter.
ATF notes that two options exist with respect to vodka products
containing more than 300 ppm of citric acid that are currently in the
marketplace. First, such products may continue to be produced in their
current form and relabeled as ``flavored vodka'' or labeled with a
fanciful name, followed by a truthful and adequate statement of
composition under 27 CFR part 5. In addition, the level of citric acid
can be reduced to 300 ppm and thereby retain the designation ``vodka.''
ATF does not believe that such a reduction is unreasonable in light of
the fact that the use of citric acid in vodka must serve a purpose
relative to maintaining the product's standard of identity and no
commenter advocating the use of greater than 300 ppm has, since the
inception of this rulemaking, offered such a purpose, or indeed any
purpose, for the use of such a level of citric acid.
ATF believes that the 300 ppm figure demonstrates sensitivity to
the amounts of citric acid used in the marketplace in that it is closer
to the level of citric used by some producers than the 282 ppm level
that the ATF Laboratory derived from the OS&E data. The 300 ppm level
also recognizes the uncertainty inherent in any determination where the
entire population is not sampled. Moreover, a level of 300 ppm is
acceptable to the ATF Laboratory because that level of citric acid
represents a de minimis difference from its conclusions with respect to
the OS&E tests and because it believes that the integrity of the
standard of identity for vodka continues to be maintained at that
level. That is, the 300 ppm level is within a reasonable range of the
initial point of detection for the majority of people. As such, a level
of 300 ppm is a reasonable interpretation in light of both the OS&E
data and the practical considerations surrounding the marketplace.
ATF believes that a level of 1,000 ppm as suggested by several
commenters throughout the rulemaking can only be supported if the
standard of identity for vodka is changed. Thus, ATF believes that a
limit of 300 ppm is reasonable for all of the above-stated reasons.
Accordingly, ATF is amending 27 CFR 5.23(a)(3)(ii) to authorize the
use of a trace amount (defined as up to 300 milligrams per liter or 300
ppm) of citric acid in the production of vodka, without changing its
designation as vodka.
Formula and Label Approvals
Vodka products bottled or imported for sale or distribution in the
United States on or after December 29, 1995 must comply with the
standards set forth in this final rule. It is the responsibility of
domestic bottlers to provide, upon request, sufficient evidence to
establish that the vodka product was bottled in the United States prior
to December 29, 1995. It is the responsibility of importers to provide,
upon request, sufficient evidence to establish that the vodka product
was bottled in a foreign country prior to December 29, 1995.
Existing formulas and corresponding labels that are not in
compliance with the standards set forth in this final rule are
effectively canceled December 29, 1995, and where necessary, new
formulas and affected labels should be re-submitted to the Product
Compliance Branch, Bureau of Alcohol, Tobacco and Firearms, Room 5408,
650 Massachusetts Avenue., NW., Washington, DC 20226.
Regulatory Flexibility Act
It is hereby certified that this regulation will not have a
significant economic impact on a substantial number of small entities.
No new recordkeeping or reporting requirements are proposed.
Accordingly, a regulatory flexibility analysis is not required.
Executive Order 12866
It has been determined that this regulation is not a significant
regulatory action as defined in E.O. 12866 because (1) it will not have
an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, productivity, competition, jobs,
the environment, public health or safety, or state, local, or tribal
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impact of entitlement, grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or (4)
raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in Executive Order
12866.
Paperwork Reduction Act
The provisions of the Paperwork Reduction Act of 1980, Public Law
96-511, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR
Part 1320, do not apply to this final rule because no requirement to
collect information is imposed.
Drafting Information
The principal author of this document is David W. Brokaw, Wine and
Beer Branch, Bureau of Alcohol, Tobacco, and Firearms.
List of Subjects in 27 CFR Part 5
Advertising, Consumer protection, Customs duties and inspection,
Imports, Labeling, Liquors, Packaging and Containers
Authority and Issuance
27 CFR Part 5--Labeling and Advertising of Distilled Spirits, is
amended as follows:
PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS
Paragraph 1. The authority citation for 27 CFR, Part 5 continues to
read as follows:
Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.
Par. 2. Section 5.23(a)(3)(ii) and (iii) are revised to read as
follows:
Sec. 5.23 Alteration of class and type.
(a) Additions. * * *
* * * * *
(3) * * * (ii) any material, other than caramel, infusion of oak
chips, and sugar, in the case of Cognac brandy; or (iii) any material
whatsoever in the case of neutral spirits or straight whiskey, except
that vodka may be treated with sugar in an amount not to exceed 2 grams
per liter, and, on and after December 29, 1995, with citric acid in an
amount not to exceed 300 milligrams per liter.
* * * * *
Par. 3. Section 5.23(c) is revised to read as follows:
Sec. 5.23 Alteration of class and type.
* * * * *
(c) Exceptions. (1) This section shall not be construed as in any
manner modifying the standards of identity for cordials and liqueurs,
flavored brandy, flavored gin, flavored rum, flavored vodka, and
flavored whisky or as authorizing any product which is defined in
Sec. 5.22(j), Class 10, as an imitation to be otherwise designated.
(2) Vodka products bottled in the United States or a foreign
country prior to December 29, 1995 are exempt from the citric acid
limitation set forth in Sec. 5.23(a)(3)(iii). It is the responsibility
of the bottler or importer to provide, upon request, sufficient
evidence to establish that the vodka was bottled prior to such date.
Signed: November 11, 1994.
Daniel R. Black,
Acting Director.
Approved: November 23, 1994.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff, and Trade Enforcement).
[FR Doc. 94-32010 Filed 12-28-94; 8:45 am]
BILLING CODE 4810-31-P