[Federal Register Volume 67, Number 195 (Tuesday, October 8, 2002)]
[Rules and Regulations]
[Pages 62856-62859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25265]



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Part II





Department of the Treasury





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Bureau of Alcohol, Tobacco, and Firearms



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27 CFR Parts 4, 5, 7, and 13



Organic Claims in Labeling and Advertising of Alcohol Beverages (2002R-
288P); Final Rule and Proposed Rule

  Federal Register / Vol. 67, No. 195 / Tuesday, October 8, 2002 / 
Rules and Regulations  

[[Page 62856]]


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DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 4, 5, 7, and 13

[T.D. ATF-483]
RIN 1512-AC87


Organic Claims in Labeling and Advertising of Alcohol Beverages 
(2002R-288P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Treasury.

ACTION: Treasury decision; temporary rule.

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SUMMARY: ATF amends the alcohol labeling and advertising rules to 
cross-reference the United States Department of Agriculture's (USDA) 
National Organic Program (NOP) rules. Any alcohol beverage labeled or 
advertised with an organic claim must comply with both NOP rules 
administered by USDA and the applicable rules administered by ATF. 
Elsewhere in this separate part, ATF invites comments on this temporary 
rule. We will accept comments during the 60-day period following 
publication of the rule.

EFFECTIVE DATE: The effective date is October 21, 2002.

FOR FURTHER INFORMATION CONTACT: Richard Evanchec, Bureau of Alcohol, 
Tobacco and Firearms, Alcohol Labeling and Formulation Division, 650 
Massachusetts Avenue, NW., Washington, DC 20226; telephone 202-927-
8140; e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Background

ATF's Authority To Regulate Labeling and Advertising

    The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C. 
205(e) requires that alcohol beverage labels provide the consumer with 
adequate information about a product's identity and prohibits the use 
of deceptive information on such labels. At 27 U.S.C. 205(f), the FAA 
Act prohibits deceptive advertising. The FAA Act also authorizes ATF to 
issue regulations to carry out the Act's provisions. Regulations in 27 
CFR parts 4, 5, and 7 set forth the rules for labeling and advertising 
of wine, distilled spirits, and malt beverages, respectively. 
Regulations in 27 CFR part 13 set forth rules for approval, denial, and 
revocation of labels and for appeals of our decisions on such issues.

Organic Foods Production Act of 1990

    Under the Organic Foods Production Act of 1990 (OFPA), 7 U.S.C. 
6501 et seq., the USDA has authority over agricultural products sold, 
labeled, or represented (including those advertised) with organic 
claims. The OFPA applies to alcohol beverages, so producers and 
importers of wine, spirits, and malt beverages who comply with its 
rules may make organic claims about their products. The USDA office 
responsible for administering the OFPA is the Agricultural Marketing 
Service (AMS). On December 21, 2000, AMS published its final rule 
establishing the NOP. The final rule, beginning at 65 FR 80548, amended 
USDA regulations in title 7, Code of Federal Regulations, by adding a 
new part 205--National Organic Program.
    AMS regulations apply to all domestic and imported products that 
make organic claims. However, in drafting their rules, the AMS used 
terms specific to non-alcohol food labels, such as ``principal display 
panel,'' ``information panel,'' and ``ingredient list'' to refer to 
positions on the label. On the NOP Web site (http://www.ams.usda.gov/nop), AMS provides guidance for placement of required and optional 
information related to organic claims on other types of packaging, such 
as alcohol beverage labels.
    The OFPA and implementing regulations provide civil and criminal 
penalties for improper use of organic claims. AMS has sole authority to 
administer and enforce the NOP rules. Those rules became effective on 
February 20, 2001, and all labels and representations, including 
advertisements, that make organic claims must comply with the rules by 
October 21, 2002.

Prior ATF Policy on Organic Claims on Alcohol Beverages

    Before the NOP regulations were published, we allowed importers and 
producers to claim their alcohol beverage products were made from 
organically grown raw materials if the applicant for label approval 
provided documentation of organic certification by a recognized 
certifying agency or State or foreign government. We enunciated our 
organic claims policy in our publication, Compliance Matters 95-2 
(http://www.atf.treas.gov/pub/alctob_pub/ comp952.htm).
    After publication of the NOP regulations, we announced a new policy 
on organic claims in our Alcohol & Tobacco Newsletter of March 2001 
(http://www.atf.treas.gov/pub/alctob_pub/mar2001newsltr02.htm). We 
stated that our approval of labels with organic claims did not indicate 
compliance with the NOP.
    Based upon the NOP-required compliance date of October 21, 2002, 
approval of any label that makes organic claims but does not comply 
with such rules will be revoked by operation of regulations as of 
October 21, 2002.

ATF Policy on Organic Claims on Alcohol Beverages Under the NOP

    We have entered into a Memorandum of Understanding with AMS on a 
number of questions related to the agencies' responsibilities with 
respect to alcohol beverage labels and advertising that contain organic 
claims. ATF will refer any Certificate of Label Approval (COLA) or 
Certificate of Exemption from Label Approval application that makes an 
organic claim to AMS for a determination as to whether the label 
complies with NOP rules. If AMS advises us that the label complies with 
its rules, we will complete our customary review of the COLA or 
Exemption application and take appropriate action. If AMS advises us 
that the label does not comply with its rules, we will return the COLA 
or Exemption application to the applicant for correction, since the 
label would mislead consumers.
    When ATF approves a label, we presume the contents of the bottle 
that uses the label will be as described on the label. If the contents 
do not conform to the description on the label, the product is 
mislabeled in violation of the FAA Act and must not be sold in 
interstate commerce under ATF-administered rules. This has always been 
true for any label claim, and we want to confirm this policy as it 
applies to organic claims on labels. For example, if we approve a label 
for a beer made from organically grown barley and the grower of the 
barley loses its organic certification, the brewer must not use the 
approved label on beer made from barley that was grown after the grower 
lost its certification. We will take action on such violations under 
the FAA Act and will refer the labels and pertinent information to AMS. 
Aside from whether a label or advertisement conforms with the NOP, ATF 
will continue to review labels under existing regulations to ensure 
that organic claims, as presented, are not likely to mislead or deceive 
consumers as to the identity of the products.

Products Without COLAs or Certificates of Exemption From Label Approval

    There are certain situations when ATF does not issue a COLA or a 
Certificate of Exemption from Label

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Approval. Examples are malt beverages that are bottled in or shipped 
into a State that does not have similar State law to the FAA Act and 
wines that contain less than 7 percent alcohol by volume, since such 
wines are not covered under the FAA Act. In these cases, the NOP rules 
continue to apply.

Advertising

    ATF also has jurisdiction over advertising of alcohol beverages, 
but does not require pre-approval of advertising. If we discover any 
misleading use of organic claims in alcohol beverage advertising, we 
will treat these violations the same as any other violations involving 
misleading information in advertising. We will also refer our findings 
to the NOP for its further action.

Regulatory Changes

    ATF amends its regulations in parts 4, 5, 7, and 13 to recognize 
the NOP's authority to regulate any organic claims on labels of alcohol 
beverages. We add 7 CFR 205 to the list of related regulations in each 
part. We add a new section to parts 4, 5, and 7 to confirm that we will 
allow organic claims in labeling and advertising of alcohol beverages 
as long as they conform to the requirements of the NOP.
    In part 13, we add a section to reflect our reliance on AMS for 
determinations concerning organic claims on labels and to direct 
persons who wish to appeal any AMS determinations that affect labels to 
the proper office of AMS. We also amend Sec.  13.51 to clarify that 
labels may be revoked by operation of laws and regulations other than 
the FAA Act and its implementing regulations. This has been ATF's 
policy, and the amendment to the regulation is a clarification rather 
than a change. Finally, we amend Sec.  13.61 to note that we will 
disclose applications for approval of labels that make organic claims 
to the appropriate office of the USDA.
    Each prohibited practices section of parts 4, 5, and 7 includes a 
prohibition on referring to standards or tests in a way that is 
misleading (Sec. Sec.  4.39(a)(4), 5.42(a)(4), and 7.29(a)(4)). There 
is also a prohibition on the use of seals (Sec. Sec.  4.39(g), 
5.42(b)(7), and 7.29(d)), if they are misleading to consumers. Curative 
and therapeutic claims are prohibited under Sec. Sec.  4.39(h), 
5.42(b)(8), and 7.29(e). In its consumer information brochure on the 
organic rule (http://www.ams.usda.gov/nop/consumerbrochure.htm), the 
USDA stated, ``USDA makes no claims that organically produced food is 
safer or more nutritious than conventionally produced food. Organic 
food differs from conventionally produced food in the way it is grown, 
handled, and processed.'' Therefore, we do not consider organic claims 
to be curative or therapeutic. Since properly used organic claims, 
including certifying agent names and seals and the USDA organic seal, 
are not misleading to the consumer, we did not make any changes to the 
prohibited practices sections of the regulations.

No Change to Internal Revenue Code (IRC) Rules

    The IRC only gives ATF authority to require labels that show 
compliance with the alcohol tax and qualification rules in chapter 51 
of the Code. In parts 19, 24, and 25, we interpret this to mean the 
label must show the tax class, quantity, and responsible bottler. 
Because organic claims do not affect the tax classification or status 
of the product, we will not change the IRC regulations. Organic claims 
relating to alcohol beverage products that are exempt from FAA Act 
requirements will be entirely under the jurisdiction of the NOP.

Transition to New Rules

    Any approved labels that make organic claims but do not comply with 
the NOP rules are revoked by operation of law and regulations, 
effective October 21, 2002. For products that were made from 
ingredients grown before October 21, 2002, bottlers and importers may 
submit labels to ATF for approval only until supplies of such products 
are exhausted. The NOP policy is articulated at http://www.ams.usda.gov/nop/Commercestream091202.pdf.

Regulatory Analyses and Notices

Administrative Procedure Act

    Because this document merely cross-references the NOP rules as they 
relate to alcohol beverage labeling and because the compliance date for 
those rules is October 21, 2002, we find it to be impracticable to 
issue this Treasury Decision with notice and public procedure under 5 
U.S.C. 553(b) or subject to the effective date limitation in Sec.  
553(d).

Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required for this 
temporary rule, the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.) do not apply.

Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507) and its implementing regulations, 5 CFR part 1320, do not apply 
to this final rule because no new requirement for collection(s) of 
information is contained in these regulations.

Executive Order 12866

    We have determined that this regulation is not a significant 
regulatory action as defined by Executive Order 12866. Therefore, a 
regulatory assessment is not required.

Drafting Information

    Marjorie D. Ruhf of the Regulations Division, Bureau of Alcohol, 
Tobacco and Firearms, drafted this document. However, other employees 
of ATF, the Treasury Department, and the Department of Agriculture's 
Agricultural Marketing Service participated in developing the document.

List of Subjects

27 CFR Part 4

    Advertising, Customs duties and inspection, Imports, Labeling, 
Packaging and containers, Reporting and recordkeeping requirements, 
Trade practices, Wine.

27 CFR Part 5

    Advertising, Customs duties and inspection, Imports, Labeling, 
Liquors, Packaging and containers, Reporting and recordkeeping 
requirements, Trade practices.

27 CFR Part 7

    Advertising, Beer, Customs duties and inspection, Imports, 
Labeling, Reporting and recordkeeping requirements, Trade practices.

27 CFR Part 13

    Administrative practice and procedure, Alcohol and alcoholic 
beverages, Labeling.

Authority and Issuance

    Title 27, Code of Federal Regulations, is amended as follows:

PART 4--LABELING AND ADVERTISING OF WINE

    1. The authority citation for part 4 continues to read as follows:

    Authority: 27 U.S.C. 205, unless otherwise noted.


    2. The undesignated cross-references preceding the center heading 
for subpart A are removed and a new Sec.  4.5 is added to subpart A, to 
read as follows:


Sec.  4.5  Related regulations.

    The following regulations also relate to this part:

27 CFR Part 205--National Organic Program

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27 CFR Part 1--Basic Permit Requirements Under the Federal Alcohol 
Administration Act, Nonindustrial Use of Distilled Spirits and Wine, 
Bulk Sales and Bottling of Distilled Spirits
27 CFR Part 5--Labeling and Advertising of Distilled Spirits
27 CFR Part 7--Labeling and Advertising of Malt Beverages
27 CFR Part 9--American Viticultural Areas
27 CFR Part 12--Foreign Nongeneric Names of Geographic Significance 
Used in the Designation of Wines
27 CFR Part 13--Labeling Proceedings
27 CFR Part 16--Alcoholic Beverage Health Warning Statement
27 CFR Part 24--Wine
27 CFR Part 26--Liquors and Articles From Puerto Rico and the Virgin 
Islands
27 CFR Part 27--Importation of Distilled Spirits, Wines, and Beer
27 CFR Part 71--Rules of Practice in Permit Proceedings
27 CFR Part 252--Exportation of Liquors



    3. A new subpart K is added to part 4 to read as follows:

Subpart K--Use of the Term ``Organic''


Sec.  4.101  Use of the term ``organic.''

    (a) Use of the term ``organic'' is optional and is treated as 
``additional information on labels'' under Sec.  4.38(f).
    (b) Any use of the term ``organic'' on a wine label or in 
advertising of wine must comply with the United States Department of 
Agriculture's (USDA) National Organic Program rules (7 CFR part 205) as 
interpreted by the USDA.
    (c) This section applies to labels and advertising that use the 
term ``organic'' on and after October 21, 2002.

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

    4. The authority citation for part 5 continues to read as follows:

    Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.


    5. Section 5.2 is revised to read as follows:


Sec.  5.2  Related regulations.

    The following regulations also relate to this part:

7 CFR Part 205--National Organic Program
27 CFR Part 1--Basic Permit Requirements Under the Federal Alcohol 
Administration Act, Nonindustrial Use of Distilled Spirits and Wine, 
Bulk Sales and Bottling of Distilled Spirits
27 CFR Part 4--Labeling and Advertising of Wine
27 CFR Part 7--Labeling and Advertising of Malt Beverages
27 CFR Part 13--Labeling Proceedings
27 CFR Part 16--Alcoholic Beverage Health Warning Statement
27 CFR Part 19--Distilled Spirits Plants
27 CFR Part 26--Liquors and Articles From Puerto Rico and the Virgin 
Islands
27 CFR Part 27--Importation of Distilled Spirits, Wines, and Beer
27 CFR Part 71--Rules of Practice in Permit Proceedings
27 CFR Part 252--Exportation of Liquors


    6. A new subpart I is added to part 5 to read as follows:

Subpart I--Use of the Term ``Organic''


Sec.  5.71  Use of the term ``organic.''

    (a) Use of the term ``organic'' is optional and is treated as 
``additional information on labels'' under Sec.  5.33(f).
    (b) Any use of the term ``organic'' on a distilled spirits label or 
in advertising of distilled spirits must comply with the United States 
Department of Agriculture's (USDA) National Organic Program rules, 7 
CFR part 205, as interpreted by the USDA.
    (c) This section applies to labels and advertising that use the 
term ``organic'' on and after October 21, 2002.

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

    7. The authority citation for part 7 continues to read as follows:

    Authority: 27 U.S.C. 205.

    8. Section 7.4 is revised to read as follows:


Sec.  7.4  Related regulations.

    The following regulations also relate to this part:

27 CFR Part 205--National Organic Program
27 CFR Part 1--Basic Permit Requirements Under the Federal Alcohol 
Administration Act, Nonindustrial Use of Distilled Spirits and Wine, 
Bulk Sales and Bottling of Distilled Spirits
27 CFR Part 4--Labeling and Advertising of Wine
27 CFR Part 5--Labeling and Advertising of Distilled Spirits
27 CFR Part 13--Labeling Proceedings
27 CFR Part 16--Alcoholic Beverage Health Warning Statement
27 CFR Part 25--Beer
27 CFR Part 26--Liquors and Articles from Puerto Rico and the Virgin 
Islands
27 CFR Part 27--Importation of Distilled Spirits, Wines, and Beer
27 CFR Part 71--Rules of Practice in Permit Proceedings


    9. A new subpart I is added to part 7 to read as follows:

Subpart I--Use of the Term ``Organic''


Sec.  7.81  Use of the term ``organic.''

    (a) Use of the term ``organic'' is optional and is treated as 
``additional information on labels'' under Sec.  7.28(e).
    (b) Any use of the term ``organic'' on a malt beverage label or in 
advertising of malt beverages must comply with the United States 
Department of Agriculture's (USDA) National Organic Program rules (7 
CFR part 205) as interpreted by the USDA.
    (c) This section applies to labels and advertising that use the 
term ``organic'' on and after October 21, 2002.

PART 13--LABELING PROCEEDINGS

    10. The authority citation for part 13 continues to read as 
follows:

    Authority: 27 U.S.C. 205(e) and 26 U.S.C. 5301 and 7805.

    11. Section 13.1 is amended by adding two sentences to the end of 
the section, to read as follows:


Sec.  13.1  Scope of part.

    * * * The appeal process in this part does not apply to organic 
claims on alcohol beverage labels. See Sec.  13.101.

    12. A new Sec.  13.3 is added to subpart A to read as follows:


Sec.  13.3  Related regulations.

    The following regulations also relate to this part:

7 CFR Part 205--National Organic Program
27 CFR Part 1--Basic Permit Requirements Under the Federal Alcohol 
Administration Act, Nonindustrial Use of Distilled Spirits and Wine, 
Bulk Sales and Bottling of Distilled Spirits
27 CFR Part 4--Labeling and Advertising of Wine
27 CFR Part 5--Labeling and Advertising of Distilled Spirits
27 CFR Part 7--Labeling and Advertising of Malt Beverages
27 CFR Part 9--American Viticultural Areas
27 CFR Part 12--Foreign Nongeneric Names of Geographic Significance 
Used in the Designation of Wines
27 CFR Part 16--Alcoholic Beverage Health Warning Statement
27 CFR Part 19--Distilled Spirits Plants
27 CFR Part 24--Wine
27 CFR Part 25--Beer
27 CFR Part 26--Liquors and Articles from Puerto Rico and the Virgin 
Islands
27 CFR Part 27--Importation of Distilled Spirits, Wines, and Beer
27 CFR Part 71--Rules of Practice in Permit Proceedings
27 CFR Part 252--Exportation of Liquors


    13. Section 13.51 is amended by revising the first sentence to read 
as follows:


Sec.  13.51  Revocation by operation of law or regulation.

    ATF will not individually notify all holders of certificates of 
label approval, certificates of exemption from label approval, or 
distinctive liquor bottle approvals that their approvals have been 
revoked if the revocation occurs by operation of either ATF-
administered law or regulation or applicable law or regulation of other 
agencies. * * *

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    14. Section 13.61 is amended by redesignating the text of paragraph 
(a) as paragraph (a)(1); adding a paragraph heading to newly designated 
paragraph (a)(1); and adding paragraph (a)(2) to read as follows:


Sec.  13.61  Publicity of information.

    (a) Pending and denied applications.
    (1) General. * * *
    (2) Labels that make organic claims. ATF will disclose applications 
for approval of labels that make organic claims to the appropriate 
office of the United States Department of Agriculture to assure such 
labels comply with National Organic Program rules.
* * * * *

    15. A new subpart G is added to part 13 to read as follows:

Subpart G--Appeals Concerning Other Agencies' Rules


Sec.  13.101  Appeals concerning use of the term ``organic.''

    To appeal a determination that an organic claim on a label does not 
comply with the National Organic Program rules in 7 CFR part 205, 
contact the Program Manager, National Organic Program (NOP), 
Agricultural Marketing Service, United States Department of 
Agriculture. See the NOP appeal process in 7 CFR 205.680.

    Signed: August 19, 2002.
Bradley A. Buckles,
Director.

    Approved: September 6, 2002.
Timothy E. Skud,
Deputy Assistant Secretary (Regulatory, Tariff, and Trade Enforcement).
[FR Doc. 02-25265 Filed 10-7-02; 8:45 am]
BILLING CODE 4810-31-P