[Federal Register Volume 70, Number 11 (Tuesday, January 18, 2005)]
[Rules and Regulations]
[Pages 2799-2801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-911]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 4 and 24

[T.D. TTB-23; Ref. Notice No. 13]
RIN 1513-AC21


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

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

ACTION: Treasury decision; final rule.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) makes two 
amendments to its regulations in response to two petitions submitted by 
producers of raisin and honey wines. One amendment allows the 
production of dried fruit wines with an alcohol by volume content of 
more than 14 percent. The other amendment lowers the minimum starting 
Brix of 22 degrees to 13 degrees in the production of honey wines. In 
addition, TTB corrects 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.

EFFECTIVE DATE: March 21, 2005.

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

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    Section 5387 of the Internal Revenue Code of 1986 (IRC), 26 U.S.C. 
5387, provides that wines made from agricultural products other than 
the juice of fruit must be made ``in accordance with good commercial 
practice'' as may be prescribed by the Secretary of the Treasury by 
regulation. Under this statutory provision, wines made according to 
those regulations are classed as `` `standard agricultural wines.' '' 
However, Sec.  5387 precludes the following production processes:
     The addition of wine spirits to agricultural wines;
     The addition of coloring or flavoring materials to 
agricultural wines, with the exception of the addition of hops to honey 
wine; or
     The blending of wines from different agricultural 
commodities.
    The Alcohol and Tobacco Tax and Trade Bureau (TTB) is responsible 
for the administration of the IRC provisions that relate to alcohol 
beverages, including wine. Part 24 of the TTB regulations (27 CFR part 
24) addresses the IRC provisions pertaining to wine and contains, in 
subpart I, Production of Agricultural Wine, regulations that implement 
the provisions of IRC Sec.  5387.

Requirements

    Subpart I concerns the production of agricultural wines. Sections 
24.202 and 24.203 specifically address dried fruit wine and honey wine, 
respectively, and Sec.  24.204 addresses requirements for all 
agricultural wines other than dried fruit and honey wines. These 
sections prohibit the production of any agricultural wine with an 
alcohol content of more than 14 percent by volume following complete 
fermentation or complete fermentation and sweetening. The IRC does not 
specify this limitation, which has been in the regulations since 1954. 
Rather, the limitation derives from the law's ``good commercial 
practice'' standard.
    Sections 24.202, 24.203, and 24.204 also contain limits on degrees 
Brix prior to fermentation for agricultural wines. Brix is the quantity 
of dissolved solids in a wine expressed as grams of sucrose in 100 
grams of solution at 60 degrees Fahrenheit, that is, the percent of 
sugar by weight stated in degrees. The regulations permit the addition 
of water during the production of agricultural wines, to facilitate 
fermentation, as long as the density of the fermenting mixture is not 
reduced below 22 degrees Brix. The 22 degree limit, 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 
specific statutory language.

Petitions

Dried Fruit Wine Petition

    Bruno and George Wines, Inc., of Beaumont, Texas, petitioned TTB to 
amend Sec.  24.202 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

[[Page 2800]]

dried fruit wines with a higher alcohol content, we now classify such 
wines as Other Than Standard Wine (OTSW) under 27 CFR 24.210.
    Shawn Bruno, president of Bruno and George Wines, Inc., 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, and Mr. Bruno argues 
that his wine can be classified as a dessert wine. Upon lifting this 
prohibition, Mr. Bruno's wine can be classified as a dessert raisin 
wine because Sec.  4.21(f)(3) of the TTB regulations (27 CFR 
4.21(f)(3)) allows designation of agricultural wines as agricultural 
dessert wines if they have an alcohol content greater than 14 percent 
but less than 24 percent by volume. This provision currently only 
applies to imported products by default because domestic producers are 
limited to the 14 percent maximum alcohol content.

Honey Wine Petition

    Redstone Meadery of Boulder, Colorado, petitioned TTB to amend 
Sec.  24.203 to allow for the production of a standard honey wine with 
a minimum starting Brix of less than 22 degrees. As indicated above, 
Sec.  24.203 permits the addition of water 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 OTSW.
    David Myers of Redstone Meadery states that he wants to make a 
lower alcohol honey wine that requires a starting Brix 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. He suggests that we create 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 degrees, or roughly 7 percent alcohol by 
volume in the finished product.

Analysis

    Both the language of IRC Sec.  5387 and its implementing 
regulations in 27 CFR 24.202, 24.203, and 24.204 date from the Internal 
Revenue Code of 1954. The legislative history relating to Sec.  5387 
includes the following passage:

    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.R. Rep. 1337, 83rd Cong., 2nd Sess. (1954), reprinted 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 standards for natural wine 
(wines made from sound, ripe grapes or other sound, ripe fruit) may 
influence agricultural wine standards, the two can vary significantly.
    In 1954, the Internal Revenue Service established regulations based 
on standards of good commercial practice at that time. Because such 
standards change over time as a result of technical developments and 
consumer preferences, it is prudent to reassess these regulations in 
light of current industry practice and consumer understanding of these 
products.
    TTB research initiated as a result of these proposals failed to 
locate the rationale for the maximum 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, November 27, 1954, and 19 FR 9633, December 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 decided 
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 one of the petitioners, Sec.  4.21(f)(3) permits 
a dessert wine classification for agricultural wines that are 14 to 24 
percent alcohol by volume. Currently, producers of imported 
agricultural wines can legally call their products ``dessert 
agricultural wine,'' and some dessert raisin wines, in fact, are 
imported into the United States. On the other hand, 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 label their 
wines as dessert wines. We expect that changing Sec.  24.202 will put 
domestic dried fruit wines on an equal footing with imported products. 
In addition, customer preference drives the importation of these dried 
fruit dessert wines, which is evidence that the higher alcohol content 
represents a good commercial practice.
    We also were unable to document a reason for the 22 degrees Brix 
limitation, but we believe it derives from the limitations placed on 
grape and fruit natural wines. IRC Sec.  5382(b)(1) (26 U.S.C. 
5382(b)(1)) states, in this regard, that the juice or must of grape and 
fruit wines may not be reduced with water to less than 22 degrees. It 
may be inappropriate to apply this same standard to all agricultural 
wines, since source products such as honey, raisins, and dandelions 
often contain far less natural water than do grapes and other fruits. 
In these cases, vintners must add water in order to achieve 
fermentation.
    Our research into the production of honey wines identified 
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 indicates that such a wine is consistent with good 
commercial practice.

Notice of Proposed Rulemaking

    TTB published Notice No. 13 regarding these two petition proposals 
in the July 2, 2003, Federal Register (68 FR 39500). We received three 
comments, all of which supported the proposed amendments to the honey 
wine regulations. Two of the commenters produce honey wine; the third 
produces apple wine. They stated that the proposed amendments were 
consistent with producer practices and would allow them to make better 
products. One of the honey wine producers suggested additional changes 
to further liberalize the honey wine regulations. These changes were 
beyond the scope of the present rulemaking. We will, however, consider 
future petitions that propose additional amendments to the honey wine 
regulations.

Conclusion

    Based on the above analysis, we amend Sec.  24.202 to remove the 14 
percent alcohol by volume limitation on wine produced from dried fruit. 
In addition, based on the above analysis and the submitted comments, we 
amend Sec.  24.203 to lower the minimum Brix from 22 degrees to 13 
degrees for honey wine. We also amend the latter section to make it 
clear that vintners may add sugar to sweeten honey wine only after 
fermentation. This restriction ensures that the alcohol in honey wine 
derives from honey and not from added sugar.

[[Page 2801]]

    During the comment period, we also received an informal verbal 
comment from a wine industry member who felt that the proposed 
regulatory language for Sec.  24.203 was confusing. We agree and have 
changed the structure of this paragraph. We have not, however, altered 
the meaning.
    We do not adopt the suggestion of Mr. Myers to create a separate 
category for low-alcohol honey wines. No separate category exists for 
low-alcohol grape or fruit wines. Therefore, we 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 that could cause 
consumer confusion when they are used in labeling wines. Section 
4.21(a)(2) of the TTB regulations 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. In 
Notice No. 13, we stated that we would reconsider the creation of a 
separate category if we received sufficient comments that favor such a 
change over the lowering of the minimum Brix. We received no comments 
addressing this issue.

Technical Correction

    While reviewing the regulations relating to agricultural wines, we 
noted a technical error in Sec.  4.21(f)(1)(i) of the TTB regulations, 
which states that ameliorated agricultural wines may not have an 
alcohol content of more than 13 percent by volume that is derived from 
fermentation. 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. 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 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.

Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), 
we certify that implementation of this regulation will not have a 
significant economic impact on a substantial number of small business 
entities. We expect no negative impact on small entities and are not 
enacting new reporting, recordkeeping, or other administrative 
requirements. Accordingly, a regulatory flexibility analysis is not 
required.

Executive Order 12866

    This rule is not a significant regulatory action, as defined in 
Executive Order 12866. Therefore, it requires no regulatory analysis.

Drafting Information

    The principal author of this document is Jennifer Berry, 
Regulations and Procedures Division, 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, Wine.

27 CFR Part 24

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

Amendments to the Regulations

0
For the reasons discussed in the preamble, we amend 27 CFR parts 4 and 
24 as follows:

PART 4--LABELING AND ADVERTISING OF WINE

0
1. The authority citation for 27 CFR part 4 continues to read as 
follows:

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


Sec.  4.21  [Amended]

0
2. Amend Sec.  4.21 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

0
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.


0
4. Amend Sec.  24.202 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)


0
5. Revise Sec.  24.203 to read as follows:


Sec.  24.203  Honey wine.

    (a) Subject to paragraph (b) of this section, a winemaker, in the 
production of wine from honey, may add the following:
    (1) Water to facilitate fermentation, provided the density of the 
honey and water mixture is not reduced below 13 degrees Brix;
    (2) Hops in quantities not to exceed one pound for each 1,000 
pounds of honey; and
    (3) Pure, dry sugar or honey for sweetening. Sugar may be added 
only after fermentation is completed.
    (b) 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 that exceeds 35 degrees 
Brix. (26 U.S.C. 5387)

    Signed: November 18, 2004.
Arthur J. Libertucci,
Administrator.


    Approved: November 24, 2004.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
[FR Doc. 05-911 Filed 1-14-05; 8:45 am]
BILLING CODE 4810-31-P