[Federal Register Volume 77, Number 83 (Monday, April 30, 2012)]
[Proposed Rules]
[Pages 25382-25384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10332]



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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 5

[Docket No. TTB-2012-0002; Notice No. 127]
RIN 1513-AB33


Proposed Amendment to the Standards of Identity for Distilled 
Spirits

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) proposes to 
amend the regulations setting forth the standards of identity for 
distilled spirits to include ``Cacha[ccedil]a'' as a type of rum and as 
a distinctive product of Brazil. This proposal follows requests 
received from the Government of Brazil and subsequent discussions with 
the Office of the United States Trade Representative. TTB invites 
comments on this proposed amendment to the TTB regulations.

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

ADDRESSES: You may send comments on this notice to one of the following 
addresses:
     http://www.regulations.gov: To submit comments via the 
Internet, use the comment form for this notice as posted within Docket 
No. TTB-2012-0002 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.
     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 notice for specific 
instructions and requirements for submitting comments, and for 
information on how to request a public hearing.
    You may view copies of this notice, selected supporting materials, 
and any comments TTB receives about this proposal within Docket No. 
TTB-2012-0002 at http://www.regulations.gov. A link to this 
Regulations.gov docket is posted on the TTB Web site at http://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No. 
127. You also may view copies of this notice, all supporting materials, 
and any comments TTB receives 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: Christopher M. Thiemann, Regulations 
and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G 
Street NW., Suite 200E, Washington, DC 20005; telephone 202-453-1039, 
Ext. 138.

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 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. The Alcohol and Tobacco Tax and Trade Bureau (TTB) 
administers the FAA Act pursuant to section 1111(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. Regulations implementing the 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).

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.

Classification of Cacha[ccedil]a

    ``Cacha[ccedil]a'' is a term recognized by the Brazilian Government 
as a designation for a Brazilian distilled spirits product made from 
sugar cane. Cacha[ccedil]a products are generally classified as rums 
under the terms of TTB's current labeling regulations. The standard of 
identity for rum is set forth in Sec.  5.22(f) as follows:

    Class 6; rum. ``Rum'' is an alcoholic distillate from the 
fermented juice of sugar cane, sugar cane syrup, sugar cane 
molasses, or other sugar cane by-products, produced at less than 
190[deg] proof in such manner that the distillate possesses the 
taste, aroma and characteristics generally attributed to rum, and 
bottled at not less than 80[deg] proof; and also includes mixtures 
solely of such distillates.

The above standard does not currently provide for any subcategories or 
``types'' of rum.
    In some instances, products identified by importers as 
Cacha[ccedil]a have been manufactured using a small quantity of corn or 
corn syrup in the fermentation process. Since these products do not 
meet the standard for rum as described at Sec.  5.22(f), TTB has 
required the labeling of these products as distilled spirit specialty 
products in accordance with Sec.  5.35. In some instances, these 
products have been labeled with the fanciful name ``Cacha[ccedil]a,'' 
followed by a truthful and adequate statement of composition.

2001 Brazilian Petition

    By letter dated April 30, 2001, the Embassy of the Government of 
Brazil submitted a petition to the Bureau of Alcohol, Tobacco and 
Firearms (ATF) in which it requested that ATF amend its regulations to 
recognize the Brazilian distilled spirits product known as 
``Cacha[ccedil]a'' as a distinctive product of Brazil.
    The Brazilian Embassy stated that Cacha[ccedil]a is known worldwide 
as a Brazilian product and that Brazil has been a supplier of 
Cacha[ccedil]a to the United States for many decades. After preliminary 
discussions with the Brazilian Embassy, no further action was taken 
with regard to the request.

2006 Brazilian Petition

    In a petition dated March 6, 2006, the Brazilian Embassy requested 
that TTB amend its regulations to provide

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recognition of Cacha[ccedil]a as a distinctive product of Brazil.
    Among other things, the Embassy noted Brazilian Decree No. 4851, of 
October 2, 2003, which defines ``Cacha[ccedil]a'' as ``the typical and 
exclusive designation of the sugar cane aguardente produced in Brazil, 
with an alcohol content of 38 to 48 percent by volume at 20 degrees 
Celsius, obtained from the distillation of the fermented must of sugar 
cane with specific sensory characteristics, to which up to six grams of 
sugar per liter may be added, expressed in terms of sucrose.''
    Brazil requested that TTB initiate regulatory action to recognize 
Cacha[ccedil]a as a typically and exclusively Brazilian beverage.
    In addition, following discussions between officials of Brazil and 
the Office of the United States Trade Representative (USTR), and after 
consultations between USTR, and TTB, the United States Trade 
Representative and Brazil's Minister of Development, Industry, and 
Foreign Trade signed an agreement on April 9, 2012, setting out a 
procedure that could lead each party to recognize certain distinctive 
distilled spirits produced in the other party's territory, including 
Cacha[ccedil]a. The agreement provides in part that if, following the 
publication of a notice of proposed rulemaking, the United States 
publishes a final rule that provides, among other things, that 
Cacha[ccedil]a is a type of rum that is a distinctive product of 
Brazil, then Brazil, within 30 days thereafter, will recognize Bourbon 
Whiskey and Tennessee Whiskey as distinctive products of the United 
States.
    In addition to the petition from the Brazilian Government and 
advice from USTR, TTB has received a number of essentially identical 
letters from private parties supporting the recognition of 
Cacha[ccedil]a as a distinctive type of spirit.

TTB Regulatory Proposal

    TTB considers that it is appropriate to recognize Cacha[ccedil]a as 
a distinctive product of Brazil. Therefore, this notice proposes to 
recognize Cacha[ccedil]a as a type within the class designation rum 
that would be recognized as a distinctive product of Brazil, 
manufactured in Brazil in compliance with the laws of Brazil regulating 
the manufacture of Cacha[ccedil]a for consumption in that country. 
Thus, the product may simply be labeled as ``Cacha[ccedil]a'' without 
the term ``rum'' on the label, just as a product labeled with the type 
designation ``Cognac'' is not required to also bear the class 
designation ``brandy.''
    The proposed type description will not include as 
``Cacha[ccedil]a'' any spirits that use corn or corn syrup in the 
fermentation process. TTB has confirmed with the Brazilian Government 
that the Brazilian standard for Cacha[ccedil]a would not allow for the 
use of corn or corn syrup in the fermentation process. As such, under 
the terms of the proposed text set forth in this document, distilled 
spirits that use any corn or corn syrup in the fermentation process 
would not meet the proposed standard for ``Cacha[ccedil]a'' because 
they are not manufactured in compliance with the laws of Brazil 
regulating the manufacture of Cacha[ccedil]a for consumption in that 
country. Such products would not be entitled to be labeled as 
Cacha[ccedil]a.
    The Brazilian standard allows products designated as Cacha[ccedil]a 
to have an alcohol content ranging from 38 to 48 percent alcohol by 
volume. However, since the standard proposed in this document would 
identify Cacha[ccedil]a as a type of rum, and the United States 
standard requires that rum must be bottled at not less than 40 percent 
alcohol by volume, or 80 degrees proof, any ``Cacha[ccedil]a'' 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 Cacha[ccedil]a'' or a distilled spirits 
specialty product bearing a statement of composition.

Public Participation

Comments Invited

    TTB invites comments from interested members of the public on this 
proposed rule, including on whether the proposed amendment would have 
an adverse impact on owners of U.S. trademarks and on the extent to 
which distilled spirits labeled as ``Cacha[ccedil]a'' are produced 
outside Brazil. Although information currently before TTB suggests that 
all distilled spirits currently sold in the United States with 
``Cacha[ccedil]a'' on the label are produced in Brazil, comments on the 
extent of production outside of Brazil will assist TTB in determining 
whether Cacha[ccedil]a should be recognized as a distinctive product of 
Brazil.

Submitting Comments

    You may submit comments on this notice by using one of the 
following three methods:
     Federal e-Rulemaking Portal: You may send comments via the 
online comment form associated with this notice in Docket No. TTB-2012-
0002 on ``Regulations.gov,'' the Federal e-rulemaking portal, at http://www.regulations.gov. A link to this Regulations.gov docket is 
available under Notice No. 127 on the TTB Web site at http://www.ttb.gov/regulations_laws/all_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 or 
FAQ 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.
    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 include the entity's name in the ``Organization'' blank of the 
comment form. If you comment via postal 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 to be confidential or inappropriate for 
public disclosure.

Public Disclosure

    On the Federal e-rulemaking portal, Regulations.gov, TTB will post, 
and you may view, copies of this notice, selected supporting materials, 
and any electronic or mailed comments we receive about this proposal. A 
link to the Regulations.gov docket containing this notice, any posted 
supporting materials, and the comments received on this proposal is 
available on the TTB Web site at http://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No. 127. You may also reach the 
relevant docket through the Regulatons.gov search page at http://www.regulations.gov. For information

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on how to use Regulations.gov, click on the site's Help or FAQ tabs.
    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. We may omit voluminous 
attachments or material that we consider unsuitable for posting.
    You also may view copies of this notice, the related petitions, any 
other supporting materials, and any electronic or mailed comments we 
receive about this proposal 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 our 
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 Flexibility Act

    We certify that this proposed amendment, if adopted, would not have 
a significant economic impact on a substantial number of small 
entities. The proposed amendment only amends the standards of identity 
for rum at 27 CFR 5.22(f) and does not impose any new reporting, 
recordkeeping, or other administrative requirement. Therefore, no 
regulatory flexibility analysis is required.

Executive Order 12866

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

Drafting Information

    Christopher M. Thiemann of the Regulations and Rulings Division 
prepared this notice.

List of Subjects in 27 CFR Part 5

    Advertising, Consumer protection, Customs duties and inspection, 
Imports, Labeling, Liquors, and Packaging and containers.

The Proposed Amendment

    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 revising paragraph (f) to read as 
follows:


Sec.  5.22  The standards of identity.

* * * * *
    (f) Class 6; rum. ``Rum'' is an alcoholic distillate from the 
fermented juice of sugar cane, sugar cane syrup, sugar cane molasses, 
or other sugar cane by-products, produced at less than 190[deg] proof 
in such manner that the distillate possesses the taste, aroma, and 
characteristics generally attributed to rum, and bottled at not less 
than 80[deg] proof; and also includes mixtures solely of such 
distillates.
    (1) ``Cacha[ccedil]a'' is a type of rum that is a distinctive 
product of Brazil, manufactured in Brazil in compliance with the laws 
of Brazil regulating the manufacture of Cacha[ccedil]a for consumption 
in that country. The word ``Cacha[ccedil]a'' may be spelled with or 
without the diacritic mark (i.e., ``Cacha[ccedil]a'' or ``Cachaca'').
    (2) [Reserved]
* * * * *

    Signed: April 9, 2012.
John J. Manfreda,
Administrator.
    Approved: April 11, 2012.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
[FR Doc. 2012-10332 Filed 4-27-12; 8:45 am]
BILLING CODE 4810-31-P