[Federal Register Volume 64, Number 26 (Tuesday, February 9, 1999)]
[Proposed Rules]
[Pages 6486-6489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3009]
[[Page 6485]]
_______________________________________________________________________
Part IV
Department of the Treasury
_______________________________________________________________________
Bureau of Alcohol, Tobacco and Firearms
_______________________________________________________________________
27 CFR Parts 4, 5, and 7
Prohibition of Certain Alcohol Beverage Containers and Standards of
Fill for Distilled Spirits and Wine (98R-452P); Proposed Rule
Federal Register / Vol. 64, No. 26 / Tuesday, February 9, 1999 /
Proposed Rules
[[Page 6486]]
DEPARTMENT OF THE TREASURY
Bureau of Alcohol, Tobacco and Firearms
27 CFR Parts 4, 5, and 7
[Notice No. 872]
RIN 1512-AB89
Prohibition of Certain Alcohol Beverage Containers and Standards
of Fill for Distilled Spirits and Wine (98R-452P)
AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of
the Treasury.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: The Bureau of Alcohol, Tobacco and Firearms proposes to amend
regulations to clarify the standards of fill for distilled spirits and
wine. ATF also proposes to amend regulations to prohibit certain
alcohol beverage containers that are likely to mislead consumers as to
the identity or character of the distilled spirits, wine, or malt
beverage products or are likely to be confused with other (non-alcohol)
food products. ATF proposes these changes to ensure consumer protection
and to preclude administrative difficulties and jeopardy to the
revenue. These proposed rules prohibit certain types of alcohol
beverage containers. ATF is concerned that certain containers are
likely to confuse consumers as to the nature of the product, especially
those packages that are similar to those that contain ice cream,
popsicles, squeeze-package frozen snacks, dairy creamers, or other non-
alcohol food products. ATF specifically requests comments on the
clarity of this proposed rule and how it may be made easier to
understand. ATF also requests alternative approaches to accomplish the
objectives outlined in this notice.
DATES: Send your comments on or before April 12, 1999.
ADDRESSES: Send your comments in writing or via facsimile transmission,
electronic mail, or through the ATF internet web site.
Where do I Send Written Comments?
Send written comments to: Chief, Regulations Division, Bureau of
Alcohol, Tobacco and Firearms, P.O. Box 50221, Washington, DC 20091-
0221 Notice No. 872. You may submit comments by facsimile transmission,
e-mail, or by internet. You must follow specific instructions, see the
detailed requirements in Supplementary Information--2. Public
Participation--Written Comments.
Where do I Send Facsimile Comments?
Submit comments of not more than three pages by facsimile
transmission to (202) 927-8602.
Where do I Send Electronic Mail (e-mail) Comments?
Submit e-mail comments to [email protected].
Where do I Send Comments to the ATF Homepage?
Submit comments using the comment form provided with the online
copy of the proposed rule on the ATF homepage web site at http://
www.atf.treas.gov/core/regulations/rules.htm.
FOR FURTHER INFORMATION CONTACT: William H. Foster, Regulations
Division, (202) 927-8210, Bureau of Alcohol, Tobacco and Firearms, 650
Massachusetts Avenue, NW, Washington, DC 20226. You may also write
questions by e-mail to [email protected]. ATF will not
accept comments on the proposal that are submitted to this address.
SUPPLEMENTARY INFORMATION:
1. Background
The Bureau of Alcohol, Tobacco and Firearms is concerned that the
use of certain containers in the packaging of alcohol beverages
presents administrative difficulty for revenue collections and promotes
consumer deception as to the contents of the alcohol beverage
container. The use of these containers encourages complacency as to the
dangers of both the abuse of alcohol beverages by all consumers and the
consumption of alcohol beverages by underage persons. Existing
regulations provide for standardized fill sizes for distilled spirits
and wine. The standard sizes are intended to prevent consumer deception
as to the quantity of product purchased and to facilitate the proper
calculation of excise tax upon the products.
Some producers have increasingly stretched the limits of these
regulations by packaging their products in non-authorized-fill
containers that are sold together as a single authorized standard of
fill. In practice, these containers are then disbanded by retailers and
sold by their individual (non-standard of fill) units. This ``aggregate
packaging'' encourages inappropriate use of alcohol beverages by the
novelty of the small sizes that are, in turn, easily concealed. This
practice enables retailer and consumer practices to undermine State and
local controls which prohibit the possession of open containers of
alcohol or prohibit retailers such as bar establishments from
possessing on premise any package under certain specified sizes.
Aggregate Fill
The issue of whether the standard of fill requirements may be
satisfied by aggregate packaging was raised in 1988, when an importer
sought permission to import 375-milliliter bags. Each bag contained 25
individual pots of 15-milliliters each, similar to that of a coffee
creamer container. This request was approved, as were subsequent
requests for other types of containers. Such products now include
distilled spirits products packaged in packs of thirty 25-milliliter
test tubes (750-milliliter aggregate fill) and in a carton of plastic
sachets, like popcicles. Products are also packaged in small cups
similar to ice cream containers, or squeeze packages like popsicles,
with others similarly bundled in the aggregate. ATF believes that this
wide array of container types is likely to confuse consumers as to the
quantity and nature of the alcohol beverage. Likewise, the variety of
container sizes contributes to administrative difficulty in determining
appropriate excise tax for the products. ATF also now recognizes the
likelihood that underage individuals more easily obtain and use
aggregate fill products.
Enforcement Problems in States and Local Jurisdictions
ATF's policy of allowing aggregate fills has also resulted in
problems with State and local alcohol beverage controls, either by
conflicting with State standard of fill provisions or with prohibitions
against open containers of alcohol beverages.
For example, some states prohibit ``by-the-drink'' retailers from
possessing on premise packages such as those comprising the aggregate-
fill containers. To maintain these packages on retail premises, the
retailer must break apart the 750-milliliter aggregate package in order
to reach the individual 25-milliliter containers. Once the outer
``aggregate fill'' carton is broken apart, the retailer would be in
violation of State law by possessing a package containing less than the
authorized standard of fill on retail premises. Since these products
are packaged in a 750-milliliter aggregate standard of fill, questions
arise as to whether the State may prohibit such retailers from
possessing the products.
Also, these containers present conflicts with State and local
prohibitions against ``open containers.''
[[Page 6487]]
The smaller aggregate-fill containers are more easily concealed. In
public areas where alcohol beverages are prohibited these small
containers provide a ready means to undermine local enforcement
efforts.
ATF Authority for Standards of Fill
The Federal Alcohol Administration Act (27 USC 205(e)) authorizes
the Secretary of the Treasury to regulate the bottle sizes for wine,
distilled spirits, and malt beverages. The Internal Revenue Code of
1986 (26 USC 5301) likewise authorizes regulations regarding the kind
and size of containers for distilled spirits. Distilled spirits
regulations allow for several standards of fill (27 CFR 5.47a). Wine
regulations also authorize several standards of fill (27 CFR 4.73).
Malt beverage regulations do not currently prescribe standards of fill,
but do address net contents statements on labels (27 CFR 7.27). The
purpose of the standards of fill provisions is to prevent a
proliferation of bottle sizes and shapes which would inevitably result
in consumer confusion and deception with regard to the quantity and net
contents of the alcohol beverage package. The uniformity in bottle
sizes required by these standards also facilitates the proper
calculation of Federal excise tax.
Aggregate packaging practices undermine the standard of fill
regulations and the underlying objectives of revenue protection and
consumer protection. ATF recognizes such packaging presents the
possibility, if not likelihood, that retailers will break apart the
outer, labeled package and sell the individual non-standard containers,
thereby diminishing any likelihood that consumers will be adequately
informed about the quantity, identity, and quality of product they
purchase. Also, the individual non-standard containers do not bear the
mandatory label requirements, increasing the likelihood of consumer
deception as to the identity and quantity of the product. The
individual containers do not carry the required government warning
statement, so this basic health protection is lost when these aggregate
packages are unwrapped. ATF has no authority under the standard of fill
provisions to proceed against retailers for breaking apart authorized
fill containers for individual sale; however, ATF may proceed against
such retailers under the alteration of label provisions.
ATF has encouraged certain safeguards to protect against consumer
deception in the event that aggregate packages are broken apart and the
single-serving packages are sold individually. These safeguards
include: labeling the individual containers as ``not for individual
sale'' and ``not for children,'' sealing the outer container with
shrink wrap or other secure methods, and encouraging bottlers to bottle
the individual units of the package in authorized standards of fill
(such as 50-milliliters). However, ATF believes these safeguards have
not proven fully effective to preclude abuse of the standards of fill.
ATF has reconsidered its position on the standard of fill
regulations, for the reasons cited above. Although ATF authority exists
under the law, existing regulations do not provide an adequate basis to
reject such containers outright. We believe the most effective way of
resolving this issue is through rulemaking to define the standards of
fill to exclude aggregate fills. We propose to amend regulations to
define the standard of fill to apply to the container in direct contact
with the alcohol beverage. This measure serves to protect the integrity
of the existing standard of fill regulations.
ATF is not concerned about containers such as aluminum cans or
glass bottles that are well-established in the marketplace as both
alcohol and non-alcohol beverage containers. Nor does ATF consider this
change to preclude the use of certain distinctive containers that might
contain separate chambers. For example, a glass container with two
separate chambers permanently fused together would be considered a
single standard of fill.
ATF Authority to Prohibit Misleading Containers
The Federal Alcohol Administration Act (27 U.S.C. 205(e))
authorizes the Secretary of the Treasury to regulate the packaging of
wine, distilled spirits, and malt beverages to prohibit deception of
the consumer with respect to alcohol beverage products. Distilled
spirits regulations prohibit certain practices deemed to encourage
consumer deception (27 CFR 5.42). Wine and beer regulations also
prohibit practices that may lead to consumer deception (27 CFR 4.39 and
27 CFR 7.29). The purpose of these provisions is to prevent practices
that will result in consumer confusion and deception with regard to the
quality and character of the alcohol beverage contained in the package.
ATF likewise has authority under the Internal Revenue Code of 1986 to
prescribe containers and labeling for alcohol beverages (26 USC 5368).
Apart from the separate sale of individual units, additional
consumer deception issues have arisen from the aggregate packaging
concept. In ``aggregate packaging,'' some producers have used
unconventional alcohol beverage containers that are misleading as to
the identity or character of products as alcohol beverages. Some of
these smaller packages resemble products that consumers readily
identify as coffee creamers, or children's frozen gelatin confections.
Supermarket shelves offer a variety of products such as yogurt,
dairy creamers, ice cream, unfrozen popsicles, gelatins, and other
similar products. Alcohol beverages packaged in similar containers
either confuse the fact that they contain alcohol beverages or are
otherwise novelty-type containers that encourage alcohol consumption by
both eligible and underage consumers, trivialize the dangers associated
with inappropriate alcohol consumption, or are easily confused with
other food products.
Container manufacturers advertise that thinwall containers such as
those currently used by certain alcohol beverage producers have a
number of applications, such as kid's meals containers, sand buckets,
candy containers, popcorn containers, ice cream, yogurt, processed
cheese, and other similar uses. These containers are readily identified
in the marketplace with non-alcohol products. Such packaging for
alcohol beverages obscures the identity of the products as containing
alcohol. Questions also arise as to the health dangers such misleading
packaging might present to those who may be harmed by ingestion of
alcohol products, either due to allergy or other health conditions.
ATF proposes to prohibit alcohol beverage containers that are
likely to be confused with containers for other products, particularly
non-alcohol food products. This change would serve to preclude the use
of those containers that are likely to deceive the consumer as to its
contents or mislead consumers by trivializing the dangers and risks
associated with alcohol consumption.
ATF is also concerned about some containers of certain wines of
less than 7 percent alcohol by volume. These containers, while not
subject to the labeling requirements of the Federal Alcohol
Administration Act, must bear labels as prescribed by regulations. The
difficulty in determining that these are alcohol beverages raises
administrative problems for both the government and the industry and
retailers involved in the distribution of these products. For tax
administration purposes, the type of alcohol beverage must be readily
apparent. Regulation of container shapes and sizes protects the revenue
by prohibiting generic containers that would otherwise camouflage the
illegal
[[Page 6488]]
removal of non-tax-paid alcohol. Likewise, for wholesalers and
retailers who are subject to special tax based on the categories of
products they sell and who usually have local licenses that delineate
the type of alcohol beverage they can sell, it is important that the
markings, branding and labels are not misleading or confusing as to the
true character of the alcohol beverage product.
These changes do not affect or prohibit those generic containers,
such as aluminum cans, that meet the standards of fill and are labeled
sufficiently to identify the product as an alcohol beverage.
These changes would prohibit any container that, through its
material and shape, is not readily recognized as conveying an alcohol
beverage or any container that is likely to be confused with a non-
alcohol product. Through this effort, ATF seeks to standardize the type
or appearance of containers that are authorized for use to contain
alcohol beverages, so as to protect the consumer by preventing
deception as to the identity and quality of the product.
2. Public Participation--Written Comments
Who May Comment on This Notice?
ATF asks for comments from consumers, industry members, trade
associations, public interest and advocacy groups, State and local
governments, and all other interested persons. We will carefully
consider all comments we receive on or before April 12, 1999. We will
also carefully consider comments we receive after that date if it is
practical to do so, but we cannot assure consideration for late
comments. ATF specifically requests comments on the clarity of this
proposed rule and how it may be made easier to understand.
We are interested in any data or studies that deal with the impact
of container design or shapes of containers. ATF particularly solicits
public comment on the existence and degree of consumer deception as to
the identity and quality of the product in containers which resemble
non-alcohol conveyances or children's toys. We request relevant
information and data from consumers, industry members, public interest
advocacy groups, and all others interested. Also, we are interested in
any alternative approaches that achieve the objectives outlined in this
notice.
Will ATF Keep My Comment Confidential?
ATF cannot recognize any material in comments as confidential. All
comments and materials may be disclosed to the public. If you consider
your material to be confidential or inappropriate for disclosure to the
public you should not include it in a comment. We may also disclose the
name of any person who submits a comment.
Disclosure: Who May Review the Comments ATF Receives for This
Notice?
Any interested person may inspect copies of this notice and all
comments. You may inspect these documents during normal business hours
in the ATF Reference Library, Room 6480, 650 Massachusetts Avenue, NW,
Washington, DC.
How Do I Send Facsimile Comments?
You may submit comments of not more than three pages by facsimile
transmission to (202) 927-8602. Facsimile comments must:
be legible
reference this notice number
be 8\1/2\'' x 11'' in size
contain a legible written signature
be not more than three pages long.
We will not acknowledge receipt of facsimile transmissions. We will
treat facsimile transmissions as originals.
How Do I Send Electronic Mail (E-mail) Comments?
You may submit comments by e-mail by sending the comments to
[email protected]. You must follow these
instructions. E-mail comments must:
contain your name, mailing address, and e-mail address
reference this notice number
be legible when printed on not more than three pages 8\1/2\''
x 11'' in size
We will not acknowledge receipt of e-mail. We will treat e-mail as
originals.
How Do I Send Comments to the ATF Internet Web Site?
You may also submit comments using the comment form provided with
the online copy of the proposed rule on the ATF internet web site at
http://www.atf.treas.gov/core/regulations/rules.htm
3. Regulatory Analyses and Notices
Is this a Significant Regulatory Action as Defined by Executive
Order 12866?
This is not a significant regulatory action as defined in Executive
Order 12866. A regulatory assessment is not required.
Does the Paperwork Reduction Act Apply to this Proposed rule?
The Paperwork Reduction Act of 1995 (44 USC 3507) and its
implementing regulations (5 CFR Part 1320) do not apply to this notice
because ATF is not proposing any requirements to collect information.
How does the Regulatory Flexibility Act Apply to this Proposed
Rule?
Pursuant to Sec. 7805(f) of the Internal Revenue Code, ATF has
submitted these proposed rules to the Chief Counsel for Advocacy of the
Small Business Administration for comment on its impact on small
business.
Under the Regulatory Flexibility Act (5 USC 601 et seq.), ATF must
consider whether a notice of proposed rulemaking would have a
significant economic impact on a substantial number of small entities.
The factual basis of this proposal does not create a burden on small
entities.
It will not impose, or otherwise cause, a significant
increase in recordkeeping or other compliance burdens on a substantial
number of small entities.
It will not have significant secondary or incidental
effects on a substantial number of small entities.
This proposal strengthens existing regulations that prohibit the
use of unauthorized container sizes and that protect consumers from
being misled about the identity, quality, or quantity of the product.
ATF believes that because this proposal addresses only deceptive or
confusing packaging, and not the products themselves, it will not
burden sales or otherwise impose costs on distributors or retailers of
alcoholic beverage products.
Accordingly, ATF certifies this proposed rule will not have a
significant impact on a substantial number of small entities. ATF is
not required to conduct an initial regulatory flexibility analysis.
Drafting Information: Who Wrote This Notice?
William H. Foster, Regulations Division, Bureau of Alcohol, Tobacco
and Firearms wrote this notice.
List of Subjects
27 CFR Part 4
Advertising, consumer protection, customs duties and inspections,
imports, labeling, packaging and containers, and wine.
27 CFR Part 5
Advertising, consumer protection, customs duties and inspections,
imports, labeling, liquors, and packaging and containers.
[[Page 6489]]
27 CFR Part 7
Advertising, beer, consumer protection, customs duties and
inspection, imports, and labeling.
Authority and Issuance
For the reasons discussed in the preamble, ATF proposes to amend 27
CFR Parts 4, 5, and 7, as follows.
PART 4--LABELING AND ADVERTISING OF WINE
Paragraph 1. The authority citation for 27 CFR Part 4 is revised to
read as follows:
Authority: 26 USC 5368 and 27 USC 205.
Paragraph 2. ATF amends Sec. 4.39 by adding a new paragraph (n) to
read as follows:
Sec. 4.39 Prohibited practices.
* * * * *
(n) Misleading bottles or containers. Any container of wine (as
defined in Sec. 24.10 of this chapter) that, by virtue of the material
from which it is composed or by its shape or design, or that by its
ordinary and customary use is likely to mislead the consumer as to the
alcohol character of the product, is prohibited. Such containers that
are likely to be identified or perceived by consumers as conveying a
non-alcohol product will be considered misleading, unless the Director
determines that the information on the label adequately dispels any
misleading impression.
Paragraph 3. ATF amends Sec. 4.73 by adding a new paragraph (d) to
read as follows:
Sec. 4.73 Metric standards of fill.
* * * * *
(d) The standards of fill prescribed in paragraph (a) of this
section apply to the container in direct contact with the wine and may
not be satisfied by an aggregation of multiple containers into a single
unit.
PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS
Paragraph 4. 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.
Paragraph 5. ATF amends Sec. 5.42 by adding a new paragraph (c) to
read as follows:
Sec. 5.42 Prohibited practices.
* * * * *
(c) Misleading bottles or containers. Any container that, by virtue
of the material from which it is composed or by its shape or design, or
that by its ordinary and customary use is likely to mislead the
consumer as to the alcohol character of the product, is prohibited.
Containers that are likely to be identified or perceived by consumers
as conveying a non-alcohol product will be considered misleading,
unless the Director determines that the information on the label
adequately dispels any misleading impression.
Paragraph 6. ATF amends Sec. 5.47a by adding a new paragraph (a)(3)
to read as follows:
Sec. 5.47a Metric standards of fill (distilled spirits bottled after
December 31, 1979).
(a) * * *
(3) The standards of fill prescribed in paragraphs (a)(1) and
(a)(2) of this section apply to the container in direct contact with
the distilled spirits and may not be satisfied by an aggregation of
multiple smaller containers into a single unit.
* * * * *
PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES
Paragraph 7. The authority citation for 27 CFR Part 7 continues to
read as follows:
Authority: 27 U.S.C. 205.
Paragraph 8. ATF amends Sec. 7.29 by adding a new paragraph (i) to
read as follows:
Sec. 7.29 Prohibited practices.
* * * * *
(i) Misleading bottles or containers. Any container that, by virtue
of the material from which it is composed or by its shape or design, or
that by its ordinary and customary use is likely to mislead the
consumer as to the alcohol character of the product, is prohibited.
Containers that are likely to be identified or perceived by consumers
as conveying a non-alcohol product will be considered misleading,
unless the Director determines that the information on the label
adequately dispels any misleading impression.
Signed: January 20, 1999.
John W. Magaw,
Director.
Approved: January 22, 1999.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).
[FR Doc. 99-3009 Filed 2-5-99; 8:45 am]
BILLING CODE 4810-31-P