[Federal Register Volume 77, Number 59 (Tuesday, March 27, 2012)]
[Proposed Rules]
[Pages 18146-18149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-7256]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 5

[Docket No. TTB-2012-0001; Notice No. 126]
RIN 1513-AB91


Standards of Identity for Pisco and Cognac

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

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Alcohol and Tobacco Tax and Trade Bureau 
proposes to amend its regulations setting forth the standards of 
identity for distilled spirits to include Pisco as a

[[Page 18147]]

type of brandy that must be manufactured in accordance with the laws 
and regulations of either Peru or Chile, as appropriate, governing the 
manufacture of those products. This change will remove ``Pisco brandy'' 
from the list of examples of geographical designations in the distilled 
spirits standards of identity. This document also includes a technical 
correction to remove ``Cognac'' from the same list of examples. These 
changes will provide greater clarity in distilled spirits labeling.

DATES: Comments must be received on or before May 29, 2012.

ADDRESSES: You may send comments on this document to one of the 
following addresses:
     http://www.regulations.gov (via the online comment form 
for this document as posted within Docket No. TTB-2012-0001 at 
``Regulations.gov,'' the Federal e-rulemaking portal);
     Mail: Director, Regulations and Rulings Division, Alcohol 
and Tobacco Tax and Trade Bureau, P.O. Box 14412, Washington, DC 20044-
4412; or
     Hand delivery/courier in lieu of mail: Alcohol and Tobacco 
Tax and Trade Bureau, 1310 G Street NW., Suite 200-E, Washington, DC 
20005.
    See the Public Participation section of this document for specific 
instructions and requirements for submitting comments, and for 
information on how to request a public hearing.
    You may view copies of this document, selected supporting 
materials, and any comments we receive about this proposal at http://www.regulations.gov within Docket No. TTB-2012-0001. A direct link to 
this docket is posted on the TTB Web site at http://www.ttb.gov/spirits/spirits-rulemaking.shtml under Notice No. 126. You also may 
view copies of this document, all related supporting materials, and any 
comments we receive about this proposal by appointment at the TTB 
Information Resource Center, 1310 G Street NW., Washington, DC 20005. 
Please call 202-453-2270 to make an appointment.

FOR FURTHER INFORMATION CONTACT: Karen E. Welch, Regulations and 
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G 
Street NW., Box 12, Washington, DC 20005; telephone 202-453-1039, ext. 
046; email [email protected].

SUPPLEMENTARY INFORMATION:

Background

TTB Authority

    Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 
codified in the United States Code at 27 U.S.C. 205(e), authorizes the 
Secretary of the Treasury (Secretary) to prescribe regulations relating 
to the packaging, marking, branding, labeling, and size and fill of 
containers of alcohol beverages that will prohibit consumer deception 
and provide the consumer with adequate information as to the identity 
and quality of the product. Section 105(e) of the FAA Act also 
generally requires bottlers and importers of alcohol beverages to 
obtain certificates of label approval prior to bottling or importing 
alcohol beverages for sale in interstate commerce. Regulations 
implementing those provisions of section 105(e) as they relate to 
distilled spirits are set forth in part 5 of title 27 of the Code of 
Federal Regulations (27 CFR part 5). The Alcohol and Tobacco Tax and 
Trade Bureau (TTB) administers the FAA Act pursuant to section 111(d) 
of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The 
Secretary has delegated various authorities through Treasury Department 
Order 120-01 (Revised), dated January 21, 2003, to the TTB 
Administrator to perform the functions and duties in the administration 
and enforcement of this law.

Certificates of Label Approval

    TTB's regulations prohibit the release of bottled distilled spirits 
from customs custody for consumption unless an approved Certificate of 
Label Approval (COLA) covering the product has been deposited with the 
appropriate Customs officer at the port of entry. See 27 CFR 5.51. The 
TTB regulations also generally prohibit the bottling or removal from a 
plant of distilled spirits unless the proprietor possesses a COLA 
covering the labels on the bottle. See 27 CFR 5.55.

Classes and Types of Spirits

    The TTB labeling regulations require that the class and type of 
distilled spirits appear on the product's brand label. See 27 CFR 
5.32(a)(2) and 5.35. Those regulations provide that the class and type 
must be stated in conformity with Sec.  5.22 of the TTB regulations (27 
CFR 5.22) if defined therein. Otherwise, the product must be designated 
in accordance with trade and consumer understanding thereof, or, if no 
such understanding exists, by a distinctive or fanciful name, and in 
either case (with limited exceptions), followed by a truthful and 
adequate statement of composition.
    Section 5.22 establishes standards of identity for distilled 
spirits products and categorizes these products according to various 
classes and types. As used in Sec.  5.22, the term ``class'' refers to 
a general category of spirits, such as ``whisky'' or ``brandy.'' 
Currently, there are 12 different classes of distilled spirits 
recognized in Sec.  5.22, including whisky, rum, and brandy. The term 
``type'' refers to a subcategory within a class of spirits. For 
example, ``Cognac'' is a type of brandy, and ``Canadian whisky'' is a 
type of whisky.

Brandy and Pisco

    Brandy is Class 4 in the standards of identity, where it is defined 
in Sec.  5.22(d) as ``an alcoholic distillate from the fermented juice, 
mash, or wine of fruit, or from the residue thereof, produced at less 
than 190[deg] proof in such manner that the distillate possesses the 
taste, aroma, and characteristics generally attributed to the product, 
and bottled at not less than 80[deg] proof.'' ``Pisco'' is a term 
recognized by both the governments of Peru and Chile as a designation 
for a distilled spirits product made from grapes. However, ``Pisco 
brandy'' is not currently listed as a type of brandy in Class 4. 
Rather, it is provided in Class 11, at Sec.  5.22(k)(3), as an example 
of a geographical name that is not a name for a distinctive type of 
distilled spirits, and that has not become generic.

International Agreements

    Pursuant to the United States-Peru Trade Promotion Agreement, the 
United States recognized Pisco Per[uacute] as a distinctive product of 
Peru (Article 2.12(2) of the Agreement). Accordingly, the United States 
agreed not to permit the sale of any product as Pisco Per[uacute] 
unless it has been manufactured in Peru in accordance with the laws and 
regulations of Peru governing Pisco.
    In addition, pursuant to the United States-Chile Free Trade 
Agreement, the United States recognized Pisco Chileno (Chilean Pisco) 
as a distinctive product of Chile (Article 3.15(2) of the Agreement). 
Accordingly, the United States agreed not to permit the sale of any 
product as Pisco Chileno (Chilean Pisco) unless it has been 
manufactured in Chile in accordance with the laws and regulations of 
Chile governing the manufacture of Pisco.
    In like manner, Peru and Chile agreed, respectively, to recognize 
Bourbon Whiskey and Tennessee Whiskey (which is defined in both 
Agreements as a straight Bourbon Whiskey authorized to be produced only 
in the State of Tennessee), as distinctive products of the United 
States, and not to permit the sale of any product as Bourbon Whiskey or 
Tennessee Whiskey unless it has been manufactured in the United States 
in accordance with the laws and

[[Page 18148]]

regulations of the United States governing the manufacture of Bourbon 
Whiskey and Tennessee Whiskey. (TTB notes that there are alternative 
spellings for the same term--``whisky'' in the TTB regulations in 27 
CFR part 5 and ``whiskey'' in the Agreements with Peru and Chile.)

Pisco Production

    ``The Oxford Companion to Wine'' (Jancis Robinson, ed., Oxford 
University Press, 2d ed., 2001, p. 536) reports that Spanish colonists 
began producing aguardiente (grape spirits) in both Peru and Chile 
since the sixteenth century, in addition to describing the spirits 
produced in the area near the town of Pisco in Peru. Further, ``The 
Oxford Companion to Wine'' says ``Pisco'' is an aromatic brandy made in 
Peru, Chile, and Bolivia, mainly from Moscatel (muscat) grapes.'' 
According to ``Alexis Lichine's Encyclopedia of Wines and Spirits'' 
(Alexis Lichine, ed., 5th ed., Alfred A. Knopf, Inc., 1987), ``Pisco 
brandy'' is brandy distilled from Muscat wine in Peru, Chile, 
Argentina, and Bolivia. Peru and Chile have promulgated standards for 
the production of Pisco, which, under both countries' respective 
regulations, is distilled from grapes that were grown in delimited 
geographical areas.

TTB Regulatory Proposal

    After reviewing the standards of identity in 27 CFR part 5, TTB's 
COLA database, and the laws and regulations of Peru and Chile, TTB has 
determined that amending Sec.  5.22 is appropriate to clarify the 
status of Pisco under the standards of identity.
    TTB believes that Pisco generally meets the U.S. standard for 
brandy and should be classified as a type of brandy. TTB also believes 
that evidence suggests that the generally recognized geographical 
limits of the Pisco-producing areas do not extend beyond the boundaries 
of Chile and Peru. The wine and spirits authorities cited above 
indicate that Pisco production is not associated with any areas outside 
of South America. COLAs naming ``Pisco'' as the brand name or fanciful 
name of a distilled spirits product are almost exclusively for products 
from Chile and Peru. TTB could not locate any COLAs naming ``Pisco'' as 
the brand name or fanciful name for any products from Argentina, or 
from any other country in South America with the exception of Peru, 
Chile, and Bolivia. COLAs for products from Bolivia that name ``Pisco'' 
as the brand name or fanciful name also use the term ``Singani.'' ``The 
Oxford Companion to Wine'' defines ``Singani'' as an ``aromatic grape-
based spirit rather like pisco in that it is high in terpenes and made 
under a strictly controlled regime, principally from Muscat of 
Alexandria grapes'' and a specialty of Bolivia (Robinson, p. 638). 
Bolivia maintains standards for Singani production in Bolivia, but does 
not have standards for Pisco production.
    Therefore, TTB proposes to amend the standard of identity in Sec.  
5.22(d) by adding Pisco as a type of brandy that is manufactured in 
Peru or Chile in compliance with the laws of the country of production 
regulating the manufacture of Pisco. The proposed amendment also 
recognizes the phrases ``Pisco Per[uacute]'' (with or without the 
diacritic mark, i.e., ``Pisco Per[uacute]'' or ``Pisco Peru''), ``Pisco 
Chileno,'' and ``Chilean Pisco,'' as equivalent class and type names of 
the product, to reflect the provisions of the trade agreements. 
Further, if Pisco is recognized as a type of brandy, persons who 
distribute it in the United States will be entitled to label the 
product according to its type designation ``Pisco'' without the term 
``brandy'' on the label, in the same way that a product labeled with 
the type designation ``Cognac'' is not required to also bear the class 
designation ``brandy.''
    TTB notes that the Peruvian standard allows products designated as 
Pisco to have an alcohol content ranging from 38 to 48 percent alcohol 
by volume, and the Chilean standard allows products designated as Pisco 
to have an alcohol content as low as 30 percent alcohol by volume. 
However, since the standard proposed in this document would identify 
Pisco as a type of brandy, and the U.S. standard requires that brandy 
must be bottled at not less than 40 percent alcohol by volume, any 
Pisco imported into the United States would have to conform to this 
minimum bottling proof requirement. A product that is bottled at below 
40 percent alcohol by volume would fall outside this class and type 
designation. Depending on the way that such a product is manufactured, 
it could be labeled as a ``diluted Pisco'' or as a distilled spirits 
specialty product bearing a statement of composition.
    Finally, TTB believes that it is appropriate to remove both ``Pisco 
brandy'' and ``Cognac'' from Sec.  5.22(k)(3), where they are listed as 
examples of geographical names that are not names for distinctive types 
of distilled spirits, and that have not become generic. Pisco will 
appear in new Sec.  5.22(d)(9), where it will be a type of brandy 
defined as grape brandy manufactured in Peru or Chile in accordance 
with the laws and regulations governing the manufacture of Pisco of the 
country of manufacture.
    Cognac currently appears in Sec.  5.22(d)(2), where it is a type of 
brandy defined as ``grape brandy distilled in the Cognac region of 
France, which is entitled to be so designated by the laws and 
regulations of the French Government.'' The inclusion of ``Cognac'' in 
the list of examples of geographical names that are not names for 
distinctive types of distilled spirits, and that have not become 
generic, in Sec.  5.22(k)(3) is duplicative and confusing. Accordingly, 
TTB proposes to remove the reference to Cognac in Sec.  5.22(k)(3) as a 
technical correction to the regulations.

Effect on Currently Approved Labels

    If finalized, this change to the regulations would revoke by 
operation of regulation any COLAs that specify ``Pisco'' as the class 
and type or brand name or fanciful name of distilled spirits products 
that are not products of Peru or Chile. TTB has searched its COLA 
database, and believes that this rulemaking will affect only a small 
number of labels.

Public Participation

Comments Invited

    We invite comments from interested members of the public on this 
proposed rulemaking.

Submitting Comments

    Please submit your comments by the closing date shown above in this 
notice. You may submit comments in one of the following three ways:
     Federal e-Rulemaking Portal: You may send comments via the 
online comment form associated with this notice in Docket No. TTB-2012-
0001 on ``Regulations.gov,'' the Federal e-rulemaking portal, at http://www.regulations.gov. A direct link to that docket is available under 
Notice No. 126 on the TTB Web site at http://www.ttb.gov/spirits/spirits-rulemaking.shtml. Supplemental files may be attached to 
comments submitted via Regulations.gov. For information on how to use 
Regulations.gov, click on the site's Help tabs.
     U.S. Mail: You may send comments via postal mail to the 
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and 
Trade Bureau, P.O. Box 14412, Washington, DC 20044-4412.
     Hand Delivery/Courier: You may hand-carry your comments or 
have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 
1310 G Street NW., Suite 200-E, Washington, DC 20005.
    Your comments must reference Notice No. 126 and include your name 
and

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mailing address. Your comments also must be made in English, be 
legible, and be written in language acceptable for public disclosure. 
TTB does not accept anonymous comments, does not acknowledge receipt of 
comments, and considers all comments as originals.
    If you are commenting on behalf of an association, business, or 
other entity, your comment must include the entity's name as well as 
your name and position title. If you comment via Regulations.gov, 
please enter the entity's name in the ``Organization'' blank of the 
comment form. If you comment via mail, please submit your entity's 
comment on letterhead.
    You may also write to the Administrator before the comment closing 
date to ask for a public hearing. The Administrator reserves the right 
to determine whether to hold a public hearing.

Confidentiality

    All submitted comments and attachments are part of the public 
record and subject to disclosure. Do not enclose any material in your 
comments that you consider confidential or inappropriate for public 
disclosure.

Public Disclosure

    On the Federal e-rulemaking portal, Regulations.gov, TTB will post, 
and the public may view, copies of this notice and any electronic or 
mailed comments we receive about it. A direct link to the 
Regulations.gov docket containing this notice and the posted comments 
received on it is available on the TTB Web site at http://www.ttb.gov/spirits/spirits-rulemaking.shtml under Notice No. 126. You may also 
reach the docket containing this notice and its related comments 
through the Regulations.gov search page at http://www.regulations.gov.
    All posted comments will display the commenter's name, organization 
(if any), city, and State, and, in the case of mailed comments, all 
address information, including email addresses. TTB may omit voluminous 
attachments or material that the Bureau considers unsuitable for 
posting.
    You and other members of the public may view copies of this notice 
and any electronic or mailed comments TTB receives on it by appointment 
at the TTB Information Resource Center, 1310 G Street NW., Washington, 
DC 20005. You may also obtain copies at 20 cents per 8.5 x 11-inch 
page. Contact the TTB information specialist at the above address or by 
telephone at 202-453-2270 to schedule an appointment or to request 
copies of comments or other materials.

Regulatory Analysis and Notices

Executive Order 12866

    It has been determined that this proposed rule is not a significant 
regulatory action as defined in Executive Order 12866. Therefore, a 
regulatory assessment is not required.

Regulatory Flexibility Act

    Pursuant to the requirements of the Regulatory Flexibility Act (5 
U.S.C. chapter 6), TTB certifies that this notice of proposed 
rulemaking will not have a significant economic impact on a substantial 
number of small entities. The propose rule would clarify the statue of 
Pisco under the standards of identity for distilled spirits and, if 
promulgated, will not impose, or otherwise cause, a significant 
increase in reporting, recordkeeping, or other compliance burdens on a 
substantial number of small entities. Accordingly, a regulatory 
flexibility analysis is not required.

Drafting Information

    Karen Welch of the Regulations and Rulings Division, Alcohol and 
Tobacco Tax and Trade Bureau, drafted this notice.

List of Subjects in 27 CFR Part 5

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

Amendment to the Regulations

    For the reasons discussed in the preamble, TTB proposes to amend 27 
CFR part 5 as follows:

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

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

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

    2. Section 5.22 is amended by:
    a. In paragraph (d) introductory text, removing the words 
``paragraph (d)(1) through (8)'' and adding, in their place, the words 
``paragraphs (d)(1) through (9)'';
    b. In paragraph (k)(3), by removing the words ``Cognac,'' and 
``Pisco brandy,''; and
    c. Adding new paragraph (d)(9) to read as follows:


Sec.  5.22  The standards of identity.

* * * * *
    (d) * * *
    (9) ``Pisco'' is grape brandy manufactured in Peru or Chile in 
accordance with the laws and regulations governing the manufacture of 
Pisco of the country of manufacture.
    (i) ``Pisco Per[uacute]'' (or ``Pisco Peru'') is Pisco manufactured 
in Peru in accordance with the laws and regulations of Peru governing 
the manufacture of Pisco.
    (ii) ``Pisco Chileno'' or ``Chilean Pisco'' is Pisco manufactured 
in Chile in accordance with the laws and regulations of Chile governing 
the manufacture of Pisco.
* * * * *

    Signed: February 3, 2012.
John J. Manfreda,
Administrator.
    Approved: February 27, 2012.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. 2012-7256 Filed 3-26-12; 8:45 am]
BILLING CODE 4810-31-P