[Federal Register Volume 68, Number 127 (Wednesday, July 2, 2003)]
[Proposed Rules]
[Pages 39500-39503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16564]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 4 and 24

[Notice No. 13]
RIN 1512-AC48


Production of Dried Fruit and Honey Wines (2001R-136P)

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) requests 
comments on two proposed amendments to the regulations relating to the 
production of dried fruit and honey wines. The first amendment will 
allow the production of dried fruit wines with an alcohol by volume 
content of more than 14 percent. The second will lower the minimum 
starting Brix of 22 degrees to 13 degrees in the production of honey 
wines. These proposals are the result of two petitions submitted by 
producers of raisin and honey wines. We also correct a technical error 
in the wine labeling regulations by raising the maximum limit on 
alcohol content derived from fermentation from 13 to 14 percent for 
ameliorated agricultural wines.

DATES: Submit written comments on or before September 2, 2003.

ADDRESSES: You may view copies of the proposed regulations, related 
documents, and any comments received on this notice by appointment at 
the ATF Reference Library, Room 6480, 650 Massachusetts Avenue, NW., 
Washington, DC 20226.
    You may send comments to any of the following addresses--
    [sbull] Chief, Regulations and Procedures Division, Alcohol and 
Tobacco Tax and Trade Bureau, PO Box 50221, Washington, DC 20091-0221 
(Attn: Notice No. 13);
    [sbull] (202) 927-8525 (facsimile);
    [sbull] [email protected] (e-mail); or
    [sbull] http://www.ttb.gov (online). A comment form is available 
with the copy of this notice posted on our Web site.
    See the Public Participation section of this notice for specific 
instructions and requirements.

FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco 
Tax and Trade Bureau, Regulations and Procedures Division, PO Box 
18152, Roanoke, VA 24014; or telephone (540) 344-9333.

SUPPLEMENTARY INFORMATION:

Background

Has Passage of the Homeland Security Act Affected Department of 
Treasury Rulemaking?

    Effective January 24, 2003, the Homeland Security Act of 2002 
divided the Bureau of Alcohol, Tobacco and Firearms (ATF) into two new 
agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB) in the 
Department of the Treasury and the Bureau of Alcohol, Tobacco, 
Firearms, and Explosives in the Department of Justice. Regulation of 
wine production is the responsibility of the new TTB. References to ATF 
and TTB in this document reflect the timeframe, before or after January 
24, 2003, of the rulemaking process.

What Is TTB's Authority To Regulate the Production of Dried Fruit and 
Honey Wines?

    The Internal Revenue Code (IRC) of 1986 (26 U.S.C. 5387) states 
that wines made from agricultural products other than the juice of 
fruit must be made ``in accordance with good commercial practice,'' as 
prescribed by the Secretary of the Treasury through regulations. We 
define wines made according to these regulations, including those made 
from dried fruit and honey, as ``standard agricultural wines.'' The IRC 
specifies these production limitations:
    [sbull] You may not add wine spirits to agricultural wines;
    [sbull] You may not add coloring or flavoring materials to 
agricultural wines, with the exception of hops to honey wine; and
    [sbull] You may not blend wines from different agricultural 
commodities.
    Title 27 CFR part 24, Wine, Subpart I--Production of Agricultural 
Wine, contains regulations under the jurisdiction of TTB that implement 
these statutory requirements.

What Are the Current Regulatory Requirements for the Production of 
Dried Fruit and Honey Wines?

    Subpart I contains provisions for the production of agricultural 
wines, including some derived from the IRC's ``good commercial 
practice'' provision. Sections 24.202 and 24.203 contain provisions 
specific to dried fruit wine and honey wine, respectively. Section 
24.204 contains requirements for all agricultural wines other than 
dried fruit and honey wines. Among other requirements, all three of 
these sections prohibit the production of any agricultural wine with an 
alcohol content of more than 14 percent by volume after complete 
fermentation or complete fermentation and sweetening. The IRC does not 
specify this limitation,

[[Page 39501]]

which has been in the regulations since 1954. Rather, the limitation 
derives from the law's ``good commercial practice'' provision.
    In addition to the provisions on alcohol content, Sec. Sec.  
24.202, 24.203, and 24.204 also contain limits on starting Brix for 
agricultural wines. The regulations define Brix as the quantity of 
dissolved solids in a wine, expressed as grams of sucrose in 100 grams 
of solution at 60 degrees Fahrenheit, i.e., the percent of sugar by 
weight. The regulations permit the addition of water, and sugar in the 
case of Sec.  24.204, during the production of agricultural wines, in 
order to facilitate fermentation if the density of the fermenting 
mixture is not reduced below 22 degrees Brix. This limitation, like 
that on alcohol content discussed above, was placed in the wine 
regulations in 1954 and is based on ``good commercial practice'' 
standards and not on a specific statutory prohibition.

Petitions

Dried Fruit Petition

    Bruno and George Wines, Inc., in Beaumont, Texas, petitioned us to 
propose that the regulations at Sec.  24.202, Dried fruit, be amended 
to allow for the production of a standard dried fruit wine that 
contains more than 14 percent alcohol by volume. Because of the current 
prohibition in Sec.  24.202 against dried fruit wines with a higher 
alcohol content, we now classify such a wine as an ``other than 
standard'' wine. Mr. Shawn Bruno, the president of Bruno and George, 
Inc., states that he wishes to produce and market a raisin wine made 
according to his grandfather's traditional Sicilian recipe. The 
resulting wine would have an alcohol content greater than 14 percent 
alcohol by volume. Mr. Bruno points out that, if we lift this 
prohibition, his wine could be classified as a dessert raisin wine. In 
fact, the wine labeling regulations at Sec.  4.21(f)(3) allow for 
agricultural wines with an alcohol content greater than 14 percent but 
less than 24 percent to be designated as agricultural dessert wines. 
Mr. Bruno comments that he sees no logical reason for exclusion of his 
raisin wine from this category.

Honey Wine Petition

    Redstone Meadery in Boulder, Colorado, petitioned us to propose 
that we amend the regulations at Sec.  24.203, Honey wine, to allow for 
the production of a standard honey wine with a starting Brix below 22 
degrees. As discussed above, Sec.  24.203 currently states that water 
may be added in the production of honey wine to facilitate 
fermentation, as long as the density of the honey and water mixture is 
not reduced below 22 degrees Brix. We currently classify honey wines 
with a lower starting Brix as ``other than standard'' wines. Mr. David 
Myers of Redstone Meadery states that he wishes to make a lower alcohol 
honey wine that will require that the starting Brix be below 22 
degrees. Mr. Myers argues that, because such a wine would still have 
honey as its primary fermentable ingredient, we should classify it as 
honey wine. Mr. Myers suggests the creation of a new category for low-
alcohol honey wines, if the minimum starting Brix cannot be lowered. He 
proposes the names ``light honey wine'' or ``honey wine varietal'' for 
this new category, which would encompass honey wines with a starting 
Brix of between 22 degrees and 13.3 degrees, or roughly 7 percent 
alcohol by volume.

What Was the Result of TTB's Analysis of the Proposals?

    Our research into the history of the requirements for agricultural 
wines reveals that both section 5387 of the IRC and its implementing 
regulations in Sec. Sec.  24.202, 24.203, and 24.204 date from 1954. 
Section 5387 includes the following explanation:

    These wines are not specifically referred to in existing law. 
This addition to the law enables the setting up by regulations of 
standards of agricultural wines after experience has shown to what 
extent provisions of law relating to natural wines should be 
considered applicable. Uniform limitations cannot be prescribed for 
all agricultural wines. Limitations consistent with good commercial 
practices in respect to the production of rice wines could not be 
prescribed for other wines, such as honey wine, rhubarb wine, etc. 
(H. Rept. 1337, 83rd Cong., 2nd Sess. (1954), reprinted at 1954 U.S. 
Code Cong. & Admin. News 3, 4518.)

    This explanation shows that the law recognizes that agricultural 
wines are unique, with production standards that may vary significantly 
from one type of wine to another. While these standards may be guided 
by those for natural wine, defined in the law as wines made from sound, 
ripe grapes or other sound, ripe fruit, they may also vary 
significantly from natural wine standards. Thus, in 1954, the Internal 
Revenue Service established regulations that were based on standards of 
good commercial practice at that time. Because these standards can 
change over time as a result of technical developments and consumer 
preferences, we feel it is reasonable to reexamine these regulations in 
light of current industry practice and consumer understanding of these 
products.
    During our research into these requirements, we were unable to 
determine the rationale for the alcohol content limit of 14 percent for 
agricultural wines. The initial implementing regulations in 1954 do not 
explain why the limitation of 14 percent alcohol content was determined 
to be a good commercial practice for agricultural wines. See 19 FR 
7642, Nov. 27, 1954, and 19 FR 9633, Dec. 31, 1954. While the IRC 
places similar limits on sweetened grape and sweetened fruit and berry 
wines (see 26 U.S.C. 5383(a) and 5384(a)), we feel that it may be 
unreasonable to apply standards for fruit and berry wines to all 
agricultural wines, since agricultural products typically have 
different requirements for fermentation.
    Also, as noted by the petitioner, Sec.  4.21(f)(3) permits a 
dessert wine classification for agricultural wines that are 14 to 24 
percent alcohol by volume. Currently, only producers of imported 
agricultural wines can legally call their products ``dessert 
agricultural wine.'' Some dessert raisin wines are imported into the 
United States. Because domestic raisin wine producers must comply with 
the production provisions in part 24, they cannot take advantage of 
Sec.  4.21(f)(3) and also label their wines as dessert wines. Changing 
Sec.  24.202 will put domestic dried fruit wines on an equal footing 
with imported products. In addition, the importation of these dessert 
dried fruit wines evidences that the higher alcohol content is a good 
commercial practice that produces wines that meet consumer preferences. 
For these reasons, we propose to amend the regulations to allow for the 
production of dried fruit wines that are greater than 14 percent 
alcohol by volume.
    We were also unable to document a reason for the 22 degrees Brix 
limitation, but we believe it derives from the limitations placed on 
grape and fruit wines. Section 5382(b)(1) of the IRC states that the 
juice or must of grape and fruit wines may not be reduced with water to 
less than 22 degrees. We believe it may be inappropriate to apply this 
same standard to all agricultural wines, since source products such as 
honey, raisins, and dandelions, etc., often contain far less natural 
water than do grapes and other fruits. Because they do, vintners must 
add water in order to achieve fermentation. Also, our research into the 
production of honey wines unearthed references to a category of low-
alcohol honey wine called ``hydromel.'' The fact that a recognized 
category already exists for a lower alcohol honey wine

[[Page 39502]]

indicates that such a wine is consistent with good commercial practice.
    For these reasons, we propose to lower the minimum Brix from 22 
degrees to 13 degrees in 27 CFR 24.203, Honey wine. We also propose to 
amend this section to make it clear that sugar may be added only after 
fermentation for the purpose of sweetening. This restriction will 
ensure that the alcohol in honey wine is derived from honey and not 
added sugar.
    We are not proposing the creation of a separate category for low-
alcohol honey wines, as suggested by Redstone Meadery. No separate 
category exists for grape or fruit wines that are, for example, 7 
percent alcohol by volume. We, therefore, see no need to have one for 
agricultural wines.
    Also, the terms proposed by Mr. Myers, ``light honey wine'' and 
``honey wine varietal,'' have other connotations when used in labeling 
wine that could cause consumer confusion. Title 27 CFR 4.21(a)(2) 
currently allows use of the term ``light'' on labels of grape wines 
that are less than 14 percent alcohol by volume. This authorization 
encompasses wines that are not usually considered low-alcohol. Creating 
a different meaning for ``light'' honey wines could confuse consumers.
    In addition, we feel that the consumer associates the word 
``varietal'' with grape varieties, not with agricultural products. We 
will, however, reconsider the creation of a separate category if we 
receive sufficient comments that favor such a change over the lowering 
of the minimum Brix.
    As noted earlier, we were unable to determine the original reason 
for the regulatory limits on alcohol content and starting Brix. 
However, the intent may have been to restrict the quantity of sugar and 
water additions that would result in alcohol through fermentation. In 
other words, the regulation writers intended that the alcohol result 
primarily from the sugar in the agricultural winemaking material, 
rather than from both sugar and water. This intent would be consistent 
with the same restriction on natural wines from grapes and from 
berries. Accordingly, we are particularly interested in comments on 
whether this increased allowance for sugar and water additions to dried 
fruit and honey wines is consistent with good commercial practice.

What Technical Error Is TTB Correcting?

    While reviewing the regulations relating to agricultural wines, we 
noted a technical error in Sec.  4.21(f)(1)(i), which states that 
ameliorated agricultural wines may not have an alcohol content derived 
from fermentation of more than 13 percent by volume. This 13 percent 
limit is inconsistent with the IRC's treatment of other types of 
ameliorated wines. While the IRC does not contain a limit on alcohol 
content for ameliorated agricultural wines, it gives a 14 percent limit 
for ameliorated fruit and berry wines. Until corrected by T.D. ATF-458, 
Sec.  4.21(d)(1)(i) and (e)(1)(i), the standards of identity for citrus 
and fruit wines, respectively, also contained an incorrect limit of 13 
percent. In order to establish consistency for all classes of wine, we 
propose to amend Sec.  4.21(f)(1)(i) to raise the alcohol content limit 
on ameliorated agricultural wines to 14 percent. Note that Sec.  
4.21(f)(1)(i) addresses only ameliorated agricultural wines and does 
not prohibit the production of nonameliorated agricultural wines that 
are greater than 14 percent alcohol by volume.

Public Participation

    We request comments on these two proposals. We specifically request 
comments from producers and consumers of dried fruit and honey wines on 
whether these two proposals conflict with current standards of good 
commercial practice, and of what constitutes a raisin wine or honey 
wine. We also request comments regarding the increases of sugar in 
dried fruit wines and water in honey wines that will be allowed as a 
result of these revisions.
    All comments must include your name and mailing address, reference 
this notice number, and be legible and written in language generally 
acceptable for public disclosure.
    Although we do not acknowledge receipt, we will consider your 
comments if we receive them on or before the closing date. We will 
consider comments received after the closing date if we can. We regard 
all comments as originals.

What Is a Comment?

    To be considered a comment, your submission must relate 
specifically to this proposed rule. For example, you might be for or 
against all or part of this proposed rule, or you might express 
neutrality. We find comments that use reasoning, logic, and, if 
applicable, good science to explain your position most persuasive in 
the formation of a final rule.

How Should I Submit Comments?

    You may submit comments in any of four ways.
    [sbull] By mail: You may send written comments to TTB at the 
address listed in the ADDRESSES section. We require a legible, written 
signature.
    [sbull] By facsimile: You may submit comments by facsimile 
transmission to 202-927-8525. Faxed comments must--
    (1) Be on 8.5- by 11-inch paper;
    (2) Contain a legible, written signature; and
    (3) Be five or less pages long. This limitation assures electronic 
access to our equipment. We will not accept faxed comments that exceed 
five pages.
    [sbull] By e-mail: You may e-mail comments to [email protected]. 
Comments transmitted by electronic-mail must--
    (1) Contain your e-mail address; and
    (2) Be legible when printed on 8.5- by 11-inch paper.
    [sbull] By online form: We provide a comment form with the online 
copy of this proposed rule on our Web site at http://www.ttb.gov/alcohol/rules/index.htm. At this site, select ``Send comments via e-
mail'' under this notice number.
    You may also write to the Administrator to ask for a public 
hearing. The Administrator reserves the right to determine, in light of 
all circumstances, whether a public hearing will be held.

What Information Will TTB Disclose About This Notice?

    You may see copies of the proposed regulations, related 
information, and any comments on this notice by appointment at the ATF 
Reference Library, Room 6480, 650 Massachusetts Avenue, NW., 
Washington, DC 20226. You may also get copies at 20 cents per page. 
Telephone the ATF librarian at (202) 927-7890 if you want to schedule 
an appointment or request copies of comments.
    For your convenience, we will post comments received in response to 
this notice on the TTB Web site. All comments posted on our Web site 
will show the names of commenters but not street addresses, telephone 
numbers, or e-mail addresses. We may also omit voluminous attachments 
or material that we consider unsuitable for posting. In all cases, the 
full comment will be available in the ATF Reference Library. To access 
online copies of the comments on this rulemaking, visit http://www.ttb.gov/alcohol/rules/index.htm and select ``View Comments'' under 
this notice number.

Will TTB Keep My Comments Confidential?

    We cannot recognize any material in comments as confidential. We 
will disclose all information on comments and commenters. In addition, 
we will summarize and discuss pertinent

[[Page 39503]]

comments in the preamble to the final rule or to any subsequent notices 
that are published as a result of the comments. Do not present any 
material you consider confidential or inappropriate for disclosure.

Regulatory Analyses and Notices

Does the Paperwork Reduction Act Apply to This Proposed Rule?

    We propose no requirement to collect information. Therefore, the 
provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 
35, and its implementing regulations, 5 CFR part 1320, do not apply.

Does the Regulatory Flexibility Act (RFA) Apply to This Proposed Rule?

    As required by the RFA, we certify that implementation of this 
proposed regulation would not have a significant economic impact on a 
substantial number of small business entities. We expect no negative 
impact on small entities and propose no new reporting, recordkeeping, 
or other administrative requirements. Accordingly, the RFA does not 
require a regulatory flexibility analysis.

Does Executive Order 12866 Define This NPRM as a Significant Regulatory 
Action?

    This proposed rule fits none of the criteria of significant 
regulatory actions, as defined by Executive Order 12866, 58 FR 51735. 
Therefore, it requires no regulatory assessment.

Drafting Information

    The principal author of this document is Jennifer Berry, 
Regulations and Procedures Division (Roanoke), Alcohol and Tobacco Tax 
and Trade Bureau.

List of Subjects

27 CFR Part 4

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

27 CFR Part 24

    Administrative practice and procedure, Claims, Electronic fund 
transfers, Excise taxes, Exports, Food additives, Fruit juices, 
Labeling, Liquors, Packaging and containers, Reporting and 
recordkeeping requirements, Research, Scientific equipment, Spices and 
flavoring, Surety bonds, Vinegar, Warehouses, Wine.

Authority and Issuance

    For the reasons discussed in the preamble, TTB proposes to amend 27 
CFR part 4 as follows:

PART 4--LABELING AND ADVERTISING OF WINE

    1. The authority citation for 27 CFR part 4 continues to read as 
follows:

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

    2. Section 4.21 is amended by removing the phrase ``13 percent'' 
where it appears in the proviso in paragraph (f)(1)(i) and adding in 
its place the phrase ``14 percent''.

PART 24--WINE

    3. The authority citation for part 24 continues to read as follows:

    Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042, 
5044, 5061, 5062, 5081, 5111-5113, 5121, 5122, 5142, 5143, 5173, 
5206, 5214, 5215, 5351, 5353, 5354, 5356, 5357, 5361, 5362, 5364-
5373, 5381-5388, 5391, 5392, 5511, 5551, 5552, 5661, 5662, 5684, 
6065, 6091, 6109, 6301, 6302, 6311, 6651, 6676, 7011, 7302, 7342, 
7502, 7503, 7606, 7805, 7851; 31 U.S.C. 9301, 9303, 9304, 9306.

    4. Section 24.202 is amended by revising the last sentence to read 
as follows:


Sec.  24.202  Dried fruit.

* * * After complete fermentation or complete fermentation and 
sweetening, the finished product may not have a total solids content 
that exceeds 35 degrees Brix. (26 U.S.C. 5387)
    5. Section 24.203 is revised to read as follows:


Sec.  24.203  Honey wine.

    In the production of wine from honey, the winemaker may add water 
to facilitate fermentation, provided the density of the honey and water 
mixture is not reduced below 13 degrees Brix; hops in quantities not to 
exceed one pound for each 1,000 pounds of honey; pure, dry sugar or 
honey for sweetening; and sugar only after fermentation is completed. 
After complete fermentation or complete fermentation and sweetening, 
the wine may not have an alcohol content of more than 14 percent by 
volume or a total solids content exceeding 35 degrees Brix. (26 U.S.C. 
5387)

    Signed: February 5, 2003.
Arthur J. Libertucci,
Administrator.
    Approved: March 11, 2003.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 03-16564 Filed 7-1-03; 8:45 am]
BILLING CODE 4810-31-P