[Federal Register Volume 87, Number 27 (Wednesday, February 9, 2022)]
[Rules and Regulations]
[Pages 7526-7622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00841]



[[Page 7525]]

Vol. 87

Wednesday,

No. 27

February 9, 2022

Part II





Department of the Treasury





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Alcohol and Tobacco Tax and Trade Bureau





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27 CFR Parts 5 and 7





Modernization of the Labeling and Advertising Regulations for Distilled 
Spirits and Malt Beverages; Final Rule

  Federal Register / Vol. 87, No. 27 / Wednesday, February 9, 2022 / 
Rules and Regulations  

[[Page 7526]]



DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 5 and 7

[Docket No. TTB-2018-0007; T.D. TTB-176; Ref: T.D. TTB-158 and Notice 
Nos. 176 and 176A]
RIN 1513-AB54


Modernization of the Labeling and Advertising Regulations for 
Distilled Spirits and Malt Beverages

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

ACTION: Final rule; Treasury decision.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is amending 
certain of its regulations governing the labeling and advertising of 
distilled spirits and malt beverages to address comments it received in 
response to a notice of proposed rulemaking, Notice No. 176, published 
on November 26, 2018. On April 2, 2020, TTB finalized certain labeling 
amendments arising out of that proposed rule. This document finalizes 
the reorganization of, and addresses the remaining issues related to, 
the labeling of distilled spirits and malt beverages. Reorganizing the 
wine labeling regulations, and addressing the remaining labeling issues 
related to wine, as well as reorganizing and finalizing the regulations 
related to the advertising of wine, distilled spirits, and malt 
beverages, will be accomplished in future rulemaking. The regulatory 
amendments in this document will not require industry members to make 
changes to alcohol beverage labels or advertisements but instead 
provide additional flexibility to make certain changes going forward.

DATES: This final rule is effective March 11, 2022.

FOR FURTHER INFORMATION CONTACT: Christopher M. Thiemann or Kara T. 
Fontaine, Regulations and Rulings Division, Alcohol and Tobacco Tax and 
Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; telephone 
202-453-2265.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. TTB's Statutory Authority
    B. Notice No. 176
    C. T.D. TTB-158
    D. Scope of this Final Rule
    E. Issues That Are Outside of the Scope of This Final Rule
    F. Proposals Not Being Adopted
II. Discussion of Specific Comments Received and TTB Responses
    A. Issues Affecting Multiple Commodities
    B. Amendments Specific to 27 CFR part 5 (Distilled Spirits)
    C. Amendments Specific to 27 CFR part 7 (Malt Beverages)
    D. Amendments of the Advertising Regulations
    E. Impact on Public Guidance Documents
III. Derivation Tables for Finalized Parts 5 and 7
IV. Regulatory Analyses and Notices
    A. Regulatory Flexibility Act
    B. Executive Order 12866
    C. Paperwork Reduction Act
V. Drafting Information
List of Subjects
Authority and Issuance

I. Background

A. TTB's Statutory Authority

    Sections 105(e) and 105(f) of the Federal Alcohol Administration 
Act (FAA Act), 27 U.S.C. 205(e) and 205(f), set forth standards for the 
regulation of the labeling and advertising of wine, distilled spirits, 
and malt beverages (referred to elsewhere in this document as ``alcohol 
beverages'').
    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 of the Treasury (the 
Secretary) has delegated to the TTB Administrator various functions and 
duties in the administration and enforcement of this law through 
Treasury Department Order 120-01. For a more in-depth discussion of 
TTB's authority under the FAA Act regarding labeling, see Notice No. 
176.

B. Notice No. 176

    The TTB regulations concerning the labeling and advertising of 
alcohol beverages are contained in 27 CFR part 4, Labeling and 
Advertising of Wine; 27 CFR part 5, Labeling and Advertising of 
Distilled Spirits; and 27 CFR part 7, Labeling and Advertising of Malt 
Beverages. These 27 CFR parts are hereafter referred to as parts 4, 5, 
and 7, respectively.
    On November 26, 2018, TTB published in the Federal Register Notice 
No. 176 (83 FR 60562), ``Modernization of the Labeling and Advertising 
Regulations for Wine, Distilled Spirits, and Malt Beverages.'' The 
principal goals of that proposed rule were to:
     Make the regulations governing the labeling of alcohol 
beverages easier to understand and easier to navigate. This included 
clarifying requirements, as well as reorganizing the regulations in 27 
CFR parts 4, 5, and 7 and consolidating TTB's alcohol beverage 
advertising regulations in a new part, 27 CFR part 14.
     Incorporate into the regulations TTB guidance documents 
and current TTB policy, as well as changes in labeling standards that 
have come about through statutory changes and international agreements.
     Provide notice and the opportunity to comment on potential 
new labeling policies and standards, and on certain internal policies 
that had developed through the day-to-day practical application of the 
regulations to the approximately 200,000 label applications that TTB 
receives each year.
    TTB requested comments from the public and all interested parties 
on the regulatory proposals contained in Notice No. 176. TTB stated 
that it was particularly interested in comments that address whether 
the proposed revisions to the labeling and advertising regulations will 
continue to protect the consumer by prohibiting false or misleading 
statements and requiring that labels provide the consumer with adequate 
information about the identity and quality of the product. Where TTB 
proposed substantive changes, TTB sought comments on the proposals for 
further appropriate improvements. With respect to the few proposed 
changes in Notice No. 176 that might require changes in current 
labeling or advertising practices, TTB sought comments on the impact 
that the proposed changes would have on industry members and any 
suggestions as to how to minimize any negative impact.
    TTB also solicited comments from consumers, industry members, and 
the public on whether such changes would adequately protect consumers. 
Any regulatory proposals put forward by TTB on this issue would, of 
course, have to be consistent with the statutory requirements of the 
FAA Act.
    The comment period for Notice No. 176 originally closed on March 
26, 2019, but was reopened and extended at the request of commenters 
(see Notice No. 176A, 84 FR 9990). The extended comment period ended on 
June 26, 2019. TTB received and posted 1,143 comments in response to 
Notice No. 176. Commenters included trade associations, consumer and 
public interest groups, foreign entities, a Federally-recognized 
American Indian tribe, State legislators and members of Congress, 
industry members and related companies, and members of the public. The 
vast majority of comments addressed proposals relating to distilled 
spirits, with nearly 700 comments addressing the proposed amendment on 
the size and shape of oak barrels used to age distilled spirits.

[[Page 7527]]

    TTB is also taking into consideration for purposes of this 
rulemaking earlier comments that were submitted to the Department of 
the Treasury in response to a Request for Information (RFI) published 
in the Federal Register on June 14, 2017 (82 FR 27212). The RFI invited 
members of the public to submit views and recommendations for Treasury 
Department regulations that could be eliminated, modified, or 
streamlined to reduce burdens. The comment period for the RFI closed on 
October 31, 2017.
    Eight comments on the FAA Act labeling regulations, which included 
28 specific recommendations, were submitted in response to the RFI. For 
ease of reference, TTB has posted these comments in the docket for this 
rulemaking. TTB is considering all of the relevant recommendations 
submitted in response to the RFI either as comments to Notice No. 176 
or as suggestions for separate agency action, as appropriate.

C. T.D. TTB-158

    On April 2, 2020, TTB published T.D. TTB-158 in the Federal 
Register (85 FR 18704), which finalized certain proposals from Notice 
No. 176, and announced its decision not to move forward with certain 
other proposals. Generally, the amendments that TTB adopted in T.D. 
TTB-158 were well-supported by commenters, could be implemented 
relatively quickly, and would either give more flexibility to industry 
members or help industry members understand existing requirements, 
while not requiring any current labels or advertisements to be changed. 
TTB did not incorporate the proposed reorganization of the regulations 
in T.D. TTB-158. Instead, amendments to the TTB regulations were made 
within the framework of the existing regulations.

D. Scope of This Final Rule

    In this rulemaking, TTB is finalizing the reorganization proposed 
in Notice No. 176 for parts 5 and 7. This includes breaking up large 
existing sections into smaller sections to improve clarity and 
readability, resulting in a larger number of overall sections but not a 
larger number of regulatory requirements. TTB is also adopting many 
proposals that incorporate current policy into the regulations, 
providing improved transparency for industry and facilitating overall 
compliance. This final rule also addresses comments that TTB received 
on the proposed regulatory provisions for all of parts 5 and 7 by 
incorporating changes in the regulations; announcing that TTB will not 
move forward with some proposed changes; and identifying proposals or 
issues raised that will be considered for future rulemaking.
    The document also includes liberalizing changes for distilled 
spirits or malt beverages that are either unique to a single commodity 
(such as the keg collar amendments, which are specific to malt 
beverages), or which largely bring the distilled spirits and malt 
beverage regulations into conformity with current policy already 
adopted for wine labeling (such as the liberalizing changes that allow 
information previously required to appear on a ``brand label'' to 
appear anywhere on the container, as long as certain elements of 
mandatory information appear in the same field of vision).
    As previously indicated, this document does not contain any 
amendments that will require changes to distilled spirits or malt 
beverage labels or advertisements.
    TTB is also adopting clarifying and liberalizing changes that will 
remove certain outdated regulatory restrictions on labeling and 
otherwise allow additional flexibility in labeling requirements that 
were proposed in Notice No. 176. Examples include providing additional 
flexibility in allowing the labeling of kegs with ``keg collars'' and 
``tap covers'' that are not firmly affixed to the keg under certain 
circumstances to facilitate the reuse of kegs by different brewers; and 
removing some outdated restrictions on the use of ``disparaging'' 
statements on labels if such statements are truthful and non-
misleading.
    In this final rule, TTB is not amending the labeling or advertising 
regulations in part 4, which relate to wine. The comments on the 
proposed amendments to part 4 raised several issues that are unique to 
wine and require further analysis. Accordingly, TTB plans to address 
these issues in a future rulemaking, which will reorganize part 4 in a 
manner similar to the way in which parts 5 and 7 are being reorganized. 
The future rulemaking on part 4 will also address the substantive 
issues raised by the commenters on the labeling and advertising of 
wine. At that time, TTB will also pursue the reorganization of the 
advertising regulations pertaining to wine, distilled spirits, and malt 
beverages in a new part 14, as proposed in Notice No. 176. In the 
interim, existing policies will continue for wines.

E. Issues That Are Outside of the Scope of This Final Rule

    TTB received some comments that either asked TTB to take action 
with regard to separate rulemaking projects or petitioned for 
rulemaking on specific issues. These comments are considered to be 
outside of the scope of this rulemaking but will be evaluated as 
suggestions for future rulemaking by TTB.
1. Separate Rulemaking Initiatives
    In Notice 176, TTB identified several ongoing rulemaking 
initiatives related to the labeling and advertising of alcohol 
beverages that would be handled separately from the proposed rule, 
stating as follows:

    There are a number of ongoing rulemaking initiatives related to 
labeling and advertising of alcohol beverages that will be handled 
separately from this proposed rule due to their complexity. For 
example, this document does not deal with ``Serving Facts'' 
statements, an issue that was the subject of a 2007 notice of 
proposed rulemaking (see Notice No. 73, 72 FR 41860, July 31, 2007) 
and TTB Ruling 2013-2. Nor does TTB address its current policy 
requiring statements of average analysis on labels that include 
nutrient content claims. Industry members should continue to rely on 
TTB's published rulings and other guidance documents on these 
issues. TTB's policy on gluten content statements is still an 
interim one; therefore, that issue is not addressed in the proposed 
rule (see TTB Ruling 2014-2). Substantive changes to allergen 
labeling requirements are not addressed in this document. Standards 
of fill requirements are not addressed in this document but TTB 
plans to address them in a separate rulemaking document.

    Subsequent to the publication of Notice No. 176, TTB published 
Ruling 2020-2, which put into place updated policy on gluten content 
statements. Accordingly, comments that TTB received on these issues 
will either be treated as suggestions for future rulemaking or as 
comments on other current rulemaking initiatives.
a. Serving Facts and Allergen Labeling
    The Center for Science in the Public Interest (CSPI), the Consumer 
Federation of America, and the National Consumers League submitted a 
joint comment to the Secretary of the Treasury, which referenced prior 
rulemaking initiatives relating to ``Serving Facts'' and allergen 
labeling. The comment asked the Secretary to instruct TTB:

to withdraw the proposed rule and to issue a new proposal providing 
a mandatory, standardized declaration covering alcohol content by 
percentage and amount, serving size, calories, ingredients, allergen 
information, and other information relevant to consumers. This rule 
could be based on the prior regulatory dockets already underway and 
would provide much-needed closure to those considerable efforts.


[[Page 7528]]


TTB received many other comments urging the adoption of mandatory 
allergen labeling, mandatory ingredient labeling, and mandatory 
nutrient labeling.
    As noted above, TTB specifically identified these issues as being 
outside the scope of Notice No. 176. Accordingly, TTB will consider 
these comments as a suggestion for future rulemaking.
b. Standards of Fill
    In Notice No. 176, TTB identified standard of fill requirements as 
being outside of the scope of this rulemaking, and explained that TTB 
planned to address standards of fill in a separate rulemaking document. 
However, Notice No. 176 included a proposal to address ``aggregate'' 
standards of fill in a manner that is based on current policy. In 1988, 
TTB's predecessor agency started permitting bottlers and importers of 
wine and distilled spirits products to use containers that did not meet 
a standard of fill provided that the non-standard of fill containers 
were banded or wrapped together and sold as a single wine or distilled 
spirits product that, in total, met an approved standard of fill. For 
example, a wine or distilled spirits product sold in a package of 
thirty 25 mL containers to meet an authorized standard of fill of 750 
mL would be an aggregate package under this policy. While this type of 
aggregate packaging has been permitted for some time, TTB's policy 
(which includes several conditions that must be met to qualify for 
treatment as an aggregate standard of fill) has not yet been codified 
in the regulations. In Notice No. 176, TTB proposed to codify the 
policy in the regulations, with certain revisions.
    In response to Notice No. 176, TTB received 79 comments regarding 
standards of fill. Only a few of these comments addressed aggregate 
standards of fill. Instead, the comments generally focused on whether 
standards of fill should be eliminated entirely, and if not, what new 
standards of fill should be added to the wine and distilled spirits 
regulations. Accordingly, TTB included these comments in the rulemaking 
docket for its separate rulemaking project that focused on standards of 
fill.
    On July 1, 2019, TTB published two notices of proposed rulemaking 
on standards of fill in the Federal Register. See Notice No. 182 (84 FR 
31257) and Notice No. 183 (84 FR 31264). On December 29, 2020, after 
reviewing the comments received in response to these notices, as well 
as the 79 comments concerning standards of fill that were submitted in 
response to Notice No. 176, TTB published in the Federal Register T.D. 
TTB-165 (85 FR 85514), which amended the regulations in parts 4 and 5 
to add seven new standards of fill for wine and distilled spirits. TTB 
also stated that it will conduct rulemaking to propose the addition of 
several new standards of fill for wine, including the 180, 300, 360, 
550, 720 milliliters, and 1.8 L sizes.
    TTB believes it would be premature to adopt final regulations on 
aggregate standards of fill before TTB, the industry, and the public 
have the opportunity to evaluate whether the expansion of the number of 
standards of fill available to industry members affects the merits of 
codifying in the regulations its aggregate standard of fill policy. 
Accordingly, while TTB will continue to enforce its current policy on 
aggregate standards of fill, it is not adopting regulations on this 
issue at this time, but will instead evaluate the need for further 
rulemaking on this question.
c. Petition on Agency Guidance
    In response to Notice No. 176, TTB also received a petition from 
the New Civil Liberties Alliance requesting that the Treasury 
Department initiate a rulemaking process to promulgate regulations 
prohibiting any departmental component from issuing, relying on, or 
defending improper agency guidance. This petition is outside of the 
scope of Notice No. 176.
d. Comments and Petitions on Standards of Identity for New Classes of 
Distilled Spirits Products
    TTB received several comments requesting the creation of new 
standards of identity for various distilled spirits products that TTB 
did not propose in Notice No. 176. For example, Privateer International 
asked that the regulations be amended to create a standard of identity 
for ``Straight rum.'' The comment stated that if TTB determined that 
the proposal was not within the scope of Notice No. 176, it should be 
considered as a petition under 27 CFR 70.701(c). Other commenters 
requesting new standards of identity for various distilled spirits 
products included E&J Gallo Winery (for Superior Grape Brandy), Desert 
Door (for Sotol), the Irish Spirits Association (for Irish Cream 
Liqueur), and Domeloz Spirits (for Somel).
    After carefully reviewing these requests, TTB has determined that 
it would not be appropriate to move forward on any of these issues 
without first soliciting public comment on the proposed standards of 
identity. Accordingly, TTB will treat these comments as a request for 
further rulemaking and will evaluate them separately from this 
rulemaking.
    TTB also received comments in support of petitions that had 
previously been filed with TTB but were not incorporated into the 
proposed amendments in the notice. For example, the American Single 
Malt Whiskey Commission submitted a comment in which it renewed its 
petition to include ``Single malt whiskey'' as a standard of identity 
in 27 CFR part 5. TTB received over 250 comments in support of this 
petition. Similarly, Singani63 submitted comments in support of a 
petition to establish a standard of identity for ``Singani,'' and 
SpiritsNL submitted comments in support of a petition to establish 
standards of identity for ``Genever.'' Because these issues were not 
specifically put forward for comment in Notice No. 176, the public and 
the industry were not given an opportunity to comment on the standards 
of identity suggested by the petitioners. TTB has determined that 
actions on these petitions would be premature without seeking public 
comment on the petitioned-for standards of identity. Accordingly, TTB 
will consider these comments for future rulemaking.
2. Other Issues Outside of the Scope
    TTB also received comments on other topics that relate to 
regulatory provisions that are not in parts 4, 5, or 7 (such as 
Internal Revenue Code reporting requirements) or issues that were not 
aired for comment (such as regulations on private labels). TTB will 
treat these comments as suggestions for future rulemaking.
3. Label Approval Requirements
    TTB also sought comments on whether more significant changes to the 
label approval process, such as expanding the categories of optional 
information that may be revised without TTB approval or limiting the 
scope of TTB's prior review of labels to certain mandatory information, 
should be considered. As noted earlier in this document, the FAA Act 
generally requires the submission of applications for label approval 
before bottlers or importers introduce their products into interstate 
commerce. As part of its label review process, TTB reviews both 
optional and mandatory information on labels. With regard to optional 
information, TTB's main goal is to ensure that such information does 
not mislead consumers.
    While TTB received some comments with regard to the larger issue of 
ways to streamline the label approval process, TTB has determined that 
adoption of

[[Page 7529]]

any regulatory amendments in response to these comments is premature, 
without providing industry members and the general public with the 
opportunity to directly comment on such proposals.

F. Proposals Not Being Adopted

    Some changes proposed in Notice No. 176 were opposed by commenters 
who provided substantive comments suggesting that the proposed policies 
required changes to existing labels, required industry members to incur 
costs, or did not have the intended result within the purpose of the 
FAA Act. As a result, TTB is not finalizing the following proposals:
     An amendment that proposed to clarify and somewhat expand 
existing requirements with regard to placing certain label information 
on closed ``packaging'' of wine, distilled spirits, and malt beverage 
containers.
     An amendment that proposed to clarify and expand current 
requirements that certain whisky products distilled in the United 
States must include the State of distillation on the label, by 
providing that a bottling address within the State does not suffice 
unless it includes a representation as to distillation.
    While the proposed amendments would have provided additional 
information to consumers, some comments suggested that each of these 
proposals might also impose regulatory burdens or costs on industry 
members. TTB has concluded that the rulemaking record before it does 
not provide an adequate basis for evaluating the costs and benefits of 
the proposed revisions. Accordingly, TTB is not moving forward with 
these proposals in this rulemaking but will instead clarify current 
requirements with regard to labeling requirements for products in 
sealed, opaque cartons and the labeling of certain whiskies with 
information regarding the State of distillation. TTB will consider 
amendments to current policies for future rulemaking.
    There were also some proposed clarifying changes that industry 
members interpreted as imposing new requirements, even where that was 
not the intent of the amendment. In several cases, TTB decided it was 
not necessary to adopt regulations on these issues. The failure to 
codify these policies does not represent a change in policy, but does 
reflect a determination by TTB that codification of these policies in 
the manner proposed by Notice No. 176 could be confusing to the 
industry and the public.

II. Discussion of Specific Comments Received and TTB Responses

    For ease of navigation, TTB is setting forth the issues and 
comments it is addressing in this document in the following order: 
Issues affecting multiple commodities; amendments specific to 27 CFR 
part 5 (distilled spirits); amendments specific to 27 CFR part 7 (malt 
beverages); and amendments to the advertising regulations. Within each 
discussion, the order reflects generally the order the sections appear 
in the finalized regulations, which will aid readers in comparing the 
explanations in the preamble with the subsequent section setting forth 
the regulatory text.
    The proposed changes from Notice No. 176 that were not addressed in 
T.D. TTB-158, and that are not addressed specifically in this preamble, 
are adopted without change in this final rule, and will not be 
discussed in this section. See Notice No. 176 for further information 
on those proposals.

A. Issues Affecting Multiple Commodities

1. Comments on the Need for Modernization and Reorganization
    TTB received numerous comments from industry members and trade 
associations supporting its overall goal to reorganize and recodify the 
labeling regulations to simplify and clarify regulatory standards; 
incorporate industry circulars, rulings, and current policy into the 
regulations; and reduce the regulatory burden on industry members where 
possible. A few industry members expressed support for the overall 
modernization of the current regulations. For example, a comment from 
Big Cypress Distillery called the proposed regulations ``a most welcome 
and modernized improvement over the current regulations.'' A comment 
from Altitude Spirits stated, ``I think your updates and effort to 
modernize the regulations surrounding wine, beer, and spirits are a 
great idea and current regulations are in many cases in need of an 
update.'' Roulasion Distilling Company commented that the proposed 
changes were generally ``a great stride towards transparency and an 
improvement for many of my fellow producers.''
    Several trade associations also praised the overall modernization 
of the regulations. The comment from the Texas Whiskey Association, 
which 117 other comments supported, stated that:

    In general, we are very supportive of the proposed changes. We 
think it clears up perceived ambiguities. We support a code for 
producers that results in more transparency and truthfulness for 
consumers.

    The Brewers Association (BA) noted that the incorporation of 
existing industry circulars, rulings, and policy ``is important to 
achieve greater understanding and compliance among members of the BA 
and the broader alcohol beverage industry.'' The National Association 
of Beverage Importers (NABI) expressed its appreciation for the 
``structure and parallelism of the three parts.'' Finally, Senator 
Charles Schumer expressed support for the ``streamlining'' of the 
regulations and urged TTB to finalize them.
    Heaven Hill Brands commended TTB for taking on this project, but 
also asked that TTB avoid taking a ``piecemeal approach to 
modernization'' by finalizing the proposed rule ``in numerous'' 
documents. BA urged TTB ``to sustain the momentum and complete the 
process initiated in Notice 176.'' Finally, some commenters, including 
the Distilled Spirits Council of the United States (DISCUS) and Senator 
John Kennedy, were more critical of the overall impact of the proposed 
rule as well as the wording of certain clarifying language, but 
supported certain regulatory amendments.
TTB Response
    TTB agrees with the commenters who suggested that incorporating 
industry circulars and rulings into the regulations promotes 
transparency and consistency, and believes that transparency benefits 
both industry members and consumers. TTB also plans to move forward 
with the proposed reorganization and parallelism of the parts. TTB 
continues to believe that proposed reorganization of the regulations 
will make it easier for the public and industry members to find 
relevant regulations and to compare regulations in the three parts.
    TTB understands the concern that commenters expressed with regard 
to an approach that would result in numerous final rules. Nonetheless, 
for the reasons described earlier in this document, this final rule 
will reorganize only the labeling provisions in parts 5 (distilled 
spirits) and 7 (malt beverages). TTB believes it is important to 
resolve all of the outstanding labeling issues relating to distilled 
spirits and malt beverages in this document, while continuing to work 
on the some of the complex issues that pertain specifically to wine. 
The reorganization of the wine labeling regulations (in part 4) and the 
advertising regulations for wine, distilled spirits, and malt beverages 
(in

[[Page 7530]]

a new part 14) will not be addressed in this document, but will be 
addressed in the future.
    Accordingly, TTB plans to address the reorganization of the wine 
labeling regulations in a future rulemaking, which will reorganize part 
4 in a manner similar to the way in which TTB is reorganizing parts 5 
and 7, and which also will address the substantive issues raised by the 
commenters on the labeling and advertising of wine. At that time, TTB 
will also pursue the reorganization of the advertising regulations 
pertaining to wine, distilled spirits, and malt beverages in a new part 
14, as proposed in Notice No. 176.
2. Subpart A--General Provisions
a. Definitions
    In Notice No. 176, TTB proposed definitions for ``certificate 
holder,'' ``container,'' ``distinctive or fanciful name,'' and 
``person'' for consistency across the regulations for wine, distilled 
spirits, and malt beverages.
    Certificate holder: TTB proposed to add the definition of 
``certificate holder'' to parts 4, 5, and 7 to read as follows: ``The 
permittee or brewer whose name, address, and basic permit number, plant 
registry number, or brewer's notice number appears on an approved TTB 
Form 5100.31.'' TTB received one comment on this proposal, from DISCUS, 
which expressed support for the addition of this definition to the part 
5 regulations, but suggested the elimination of the use of the term 
``brewer'' because ``such references should be to a specific alcohol 
beverage category in its corresponding part.''
TTB Response
    TTB believes that maintaining a single definition in the labeling 
regulations for all of the alcohol beverage commodities aids in 
understanding, particularly for the many industry members who engage in 
business in several alcohol beverage commodities. TTB also notes that 
the definitions of the term ``certificate of label approval'' in parts 
4, 5 and 7, as amended by T.D. TTB-158, as well as the definition in 
part 13, which was not amended by T.D. TTB-158, currently refer to 
wine, distilled spirits, and malt beverages. Accordingly, TTB is 
finalizing the term ``certificate holder'' as proposed in parts 5 and 
7.
    Container: TTB proposed to amend the definition of the term 
``container'' in parts 4 and 7 and to add the definition to part 5 to 
replace the definition of the term ``bottle.'' The proposed rule 
defined ``container'' in parts 4 and 7 as any can, bottle, box with an 
internal bladder, cask, keg, barrel, or other closed receptacle, in any 
size or material, that is for use in the sale of wine or malt 
beverages, respectively, at retail. Aside from editorial changes, this 
differs from the current definitions in that it specifically 
incorporates a box with an internal bladder, sometimes referred to as a 
``bag in a box.''
    Because of the restrictions on the size of distilled spirits 
containers, the proposed definition in part 5 did not include 
references to barrels. Furthermore, because there are prescribed 
standards of fill for both wine and distilled spirits, the proposed 
definitions in parts 4 and 5 included a cross reference to those 
standard of fill regulations, to clarify that containers must be in 
certain sizes.
    TTB received one comment on these proposed amendments. DISCUS 
stated that while it recognized ``that a definition including a broader 
range of packages is necessary and generally agree[d] with the proposed 
definition of ``container[,]'' it urged that the definition include a 
cross[hyphen]reference to proposed Sec.  5.62 in order to clarify that 
a ``closed receptacle'' should ``not be construed as including 
secondary and tertiary packaging.''
TTB Response
    TTB is finalizing the definition of ``container'' as proposed in 
parts 5 and 7. Because of changes that are being made to the proposed 
amendment regarding closed packaging, which will be discussed in 
further detail in this document, TTB does not find it necessary to 
include the cross reference suggested by DISCUS. TTB is also making a 
minor change to the definition, by deleting the reference to internal 
bladders, so that the definition covers all boxes, regardless of 
whether they include a bladder. TTB notes that some boxes in use today 
do not include bladders.
    Distinctive or fanciful name: Under current regulations, the term 
``distinctive or fanciful name'' refers to a name that must be used on 
a distilled spirits label, when a statement of composition is required. 
A distinctive or fanciful name is optional on other distilled spirits 
or malt beverage products. A distinctive or fanciful name is also 
optional for wine, whether or not it bears a statement of composition. 
Current regulations use but do not define the term.
    Consistent with current policy and use of the term elsewhere in the 
regulations, TTB proposed to add a definition of ``distinctive or 
fanciful name'' to the definitions section of parts 4, 5, and 7 for the 
first time to mean a descriptive name or phrase chosen to identify a 
product on the label. The proposed definition clarifies that the term 
does not include a brand name, class or type designation, statement of 
composition, or, in part 7 only, a designation known to the trade or 
consumers.
    Beverly Brewery Consultants supported the inclusion of the 
definition of ``distinctive or fanciful'' name in the regulations. 
However, the Brewers Association opposed the proposed definition of 
``distinctive or fanciful name,'' stating that the definition, like 
other proposed changes to the class and type regulations, was ``based 
on longstanding concepts used in distilled spirits labeling and 
advertising regulations. These concepts are not generally understood by 
brewers and would necessitate many changes in existing labels and 
advertisements.'' Instead, the Brewers Association requested that ``TTB 
utilize the language currently found in Sec.  7.24 to address class and 
type. If TTB sees the need to modify the current class and type 
regulations for beer, those issues should be address[ed] in a separate 
rulemaking.''
TTB Response
    The Brewers Association commented that the proposed definition of 
the term ``distinctive or fanciful name'' would require changes to 
labels. However, the proposed definition simply codifies current policy 
with regard to the meaning of this term, and thus would not require 
changes to approved labels. Furthermore, as previously noted, the 
requirement for a distinctive or fanciful name for certain malt 
beverages and distilled spirits is in current regulations, and the 
Brewers Association comment does not appear to object to the 
requirement that such a name appear on labels for certain malt 
beverages. See current Sec. Sec.  7.24(a), 7.29(a)(7)(iii), and 
7.54(a)(8)(iii).
    With regard to the suggestion from the Brewers Association that TTB 
should not modify the current class and type regulations for beer, this 
comment will be discussed in further detail below in Section II.C.6.a.
    Person: TTB proposed to amend the definition of the term ``person'' 
in parts 4, 5, and 7 by adding ``limited liability company'' to 
specifically reflect TTB's current position that limited liability 
companies fall under the definition of a ``person.'' TTB also removed 
the language pertaining to ``trade buyer'' that read ``and the term 
`trade buyer' means any person who is a wholesaler or retailer'' from 
the definition of ``person'' that was in part 5. The current definition 
of a ``person'' in part 7 did

[[Page 7531]]

not include the definition of a ``trade buyer.''
    DISCUS commented that it supported the proposed definition of a 
``person'' but urged that the definition of ``trade buyer'' (as any 
person who is a wholesaler or retailer) from the existing definition be 
retained in some manner in the labeling and advertising regulations, 
and that some definition of the term ``retailer'' be added. The DISCUS 
comment included a suggested mark-up of the proposed regulations in 
part 5, but it did not include regulatory language for this comment.
TTB Response
    TTB removed the language pertaining to ``trade buyer'' from the 
definition of ``person'' in part 5 because the term ``trade buyer'' 
does not appear anywhere else in the part 5 regulations. The purpose of 
the ``Definitions'' section in each part is to define terms used 
elsewhere in that part. Accordingly, TTB is not adopting this 
suggestion from DISCUS.
3. Subpart B--Certificates of Label Approval (for Distilled Spirits and 
Malt Beverages) and Certificates of Exemption From Label Approval (for 
Distilled Spirits)
    Notice No. 176 proposed a subpart B in parts 4, 5, and 7, which 
contained TTB's regulations implementing the statutory requirement for 
COLAs (for wine, distilled spirits and malt beverages) and certificates 
of exemption (for wine and distilled spirits). Proposed subpart B also 
contained three sections grouped under the heading of ``Administrative 
Rules,'' which set forth requirements for: (1) Presenting COLAs to 
Government officials; (2) submitting formulas, samples, and other 
documentation related to obtaining or using COLAs; and (3) applying for 
and obtaining permission to use personalized labels. TTB described 
these proposals in more detail in Notice No. 176, Section II.B.2.
a. Explanation of What a Certificate of Label Approval (COLA) 
Authorizes
    In Notice No. 176, TTB proposed to reorganize for clarity the 
regulations implementing the statutory requirement for certificates of 
label approval (COLAs). TTB proposed to establish new Sec. Sec.  4.22, 
4.25, 5.22, 5.25, 7.22, and 7.25 to set out these requirements. In 
these sections, TTB also proposed to set forth what a COLA does and 
does not authorize. This information does not appear in the current 
regulations.
    Specifically, the proposed regulations stated that a COLA, on an 
approved TTB Form 5100.31, authorizes the bottling of wine, distilled 
spirits, or malt beverages, or the importation of bottled wine, 
distilled spirits, or malt beverages, with labels identical to labels 
on the COLA or with changes authorized on the COLA or otherwise 
authorized by TTB. See proposed Sec. Sec.  4.22(a), 4.25(a), 5.22(a), 
5.25(a), 7.22(a), and 7.25(a). The proposed regulations in paragraph 
(b) of each of the aforementioned sections provided that, among other 
things, a COLA does not: (1) Confer trademark protection; (2) relieve 
the certificate holder from its responsibility to ensure that all 
ingredients used in the production of wine, distilled spirits, or malt 
beverages comply with applicable requirements of the U.S. Food and Drug 
Administration (FDA) with regard to ingredient safety; or (3) relieve 
the certificate holder from liability for violations of the Federal 
Alcohol Administration Act (FAA Act), the Alcoholic Beverage Labeling 
Act (ABLA), the Internal Revenue Code (IRC), or related regulations and 
rulings. Proposed paragraphs (c) and (d) of the aforementioned sections 
discuss when a COLA must be obtained and how to apply for a COLA.
    The proposed revisions reflected the longstanding policy of TTB and 
its predecessor agencies. Furthermore, the COLA form (TTB Form 5100.31, 
Application for and Certification/Exemption of Label/Bottle Approval), 
currently specifically provides that the issuance of a COLA does not 
confer trademark protection and does not relieve the applicant from 
liability for violations of the FAA Act, the ABLA, the IRC, or related 
regulations and rulings. TTB believed that adding this information to 
the regulations would clarify this position for the public and industry 
members.
    TTB received several comments in response to the proposed 
revisions. Some commenters, including WineAmerica and the United States 
Association of Cider Makers (USACM), supported the proposed language 
clarifying that the issuance of a COLA does not confer trademark 
protection or relieve the certificate holder from its responsibility to 
ensure that all of the ingredients used in the production of the 
alcohol beverage comply with applicable requirements of the FDA with 
regard to ingredient safety. Two commenters suggested revisions that 
would require more information on the COLA application regarding 
compliance with State law for appellations of origin. As previously 
indicated, however, some comments raised concerns about whether TTB was 
interpreting FDA regulations. TTB addressed these issues in T.D.TTB-
158.
    However, TTB also received many comments in opposition to the 
language relating to liability under the FAA Act, ABLA, and the IRC. 
The Wine Institute made the following comment:

    Wine Institute is concerned about the language found in Sec.  
4.22(b)(3) and Sec.  4.25(b)(3), both of which indicate that a 
Certificate of Label Approval (COLA) does not relieve the 
certificate holder from liability for violations of the FAA Act, the 
Alcohol Beverage Labeling Act, the Internal Revenue Code, or related 
regulations and rulings. Wine Institute members rely on the COLA 
review process to confirm that they have placed information onto 
wine labels in compliance with the FAA Act, the Alcohol Beverage 
Labeling Act, the Internal Revenue Code, and related federal 
regulations and rulings. Wine Institute members understand it is 
their responsibility to ensure they have adequate substantiation to 
support the accuracy of information and claims made on labels. 
However, Wine Institute is concerned that Sec.  4.22(b)(3), for wine 
bottled in the United States, and Sec.  4.25(b)(3), for wine 
imported in containers, could be used as the basis for a permit 
enforcement action against a winery even when a label may have been 
approved in error by TTB. Wine Institute would like to better 
understand the implications for Wine Institute members with regard 
to this provision.

    DISCUS also urged TTB not to finalize proposed Sec. Sec.  5.22(b) 
and 5.25(b), arguing that it is unnecessary to repeat the statement on 
the COLA form that the COLA did not convey trademark protection and 
making the following statement:

    We urge the Bureau to expressly state that the issuance of a 
COLA is confirmation of compliance with TTB's labeling requirements. 
If TTB approves a label, misleading statements or representations 
should not be present on that label. TTB labeling specialists have 
reviewed the material and assessed it against the labeling 
regulations and decided whether or not to approve, as well as if any 
information needed to be changed. Suppliers need to be able to rely 
on TTB approval in this regard.

    The Vermont Hard Cider Company (VCC) urged TTB ``not to render the 
Congressionally-mandated COLA process purely advisory and oppos[ed] any 
changes that undermine the legal certainty of an approved COLA.'' 
Several commenters, including the American Distilled Spirits 
Association (ADSA) and an attorney representing the USACM, suggested 
that the revisions propose ``to utterly destroy the certainty provided 
by [the] COLA, upending a system that has served both the public and 
the industry well and rendering the entire process advisory.'' These 
comments suggested that it would violate due process to punish industry 
members for activity that was approved through the COLA process, and 
that the

[[Page 7532]]

appropriate remedy in such a situation would be to follow the label 
revocation procedures contained in part 13 of the TTB regulations. The 
comments acknowledged, however, that a COLA would not protect an 
industry member who put a product in a container that did not conform 
to the product described on the label.
TTB Response
    TTB is finalizing Sec. Sec.  5.22(a) and 7.22(a) as proposed, with 
the clarifying changes that TTB has already adopted in T.D. TTB-158. 
These changes provide that an approved TTB Form 5100.31 authorizes the 
bottling of distilled spirits covered by the COLA, as long as the 
container bears labels identical to the labels appearing on the face of 
the COLA, or labels with changes authorized by TTB on the COLA or 
otherwise (such as through the issuance of public guidance available on 
the TTB website at https://www.ttb.gov).
    The proposed regulatory amendments in Sec. Sec.  5.22(b) and 
7.22(b) were intended to clarify current policy, not change the effect 
of obtaining TTB approval of a COLA. TTB agrees that, subject to the 
conditions set forth on the COLA form itself, TTB's approval of a COLA 
represents a decision by the Bureau that the approved label complies, 
on its face, with the requirements of the FAA Act, and industry members 
are entitled to rely upon that approval unless and until TTB takes 
appropriate action, under the provisions of 27 CFR part 13, to revoke 
the approval. TTB also agrees that such reliance would not be a willful 
violation of the FAA Act.
    As previously noted, the language in the proposed sections simply 
repeats language from the COLA form that explicitly sets forth the 
conditions of a COLA. Some commenters agreed that a COLA does not 
convey trademark protection, relieve the industry member from FDA 
requirements regarding ingredient safety, or relieve the industry 
member from liability for violations under the FAA Act arising from a 
situation in which the approved COLA's language does not accurately 
describe the product in the container.
    Sections I and II of the COLA form expressly set out these 
limitations, advising that the form does not constitute trademark 
protection, and that the applicant must ensure that all of the 
information on the application is ``true and correct.'' With regard to 
mandatory type size requirements under the regulations implementing 
both the FAA Act and ABLA, Section II of the COLA form also advises 
that TTB:

does not routinely review submitted labels for compliance with 
applicable requirements for mandatory label information regarding 
type size, characters per inch or contrasting background. You must 
ensure that the mandatory information on the actual labels is 
legible and displayed in the correct type size, number of characters 
per inch, and on a contrasting background in accordance with the TTB 
labeling regulations, 27 CFR parts 4, 5, 7, and 16, as applicable. 
TTB does reserve the right to review applications for compliance 
with these requirements and to return non-compliant applications.

Thus, the COLA form itself expressly advises applicants that it is 
their responsibility to ensure that the type size of mandatory 
information complies with the regulatory requirements.
    Furthermore, Section V of the COLA form sets out certain 
``allowable revisions'' that may be made to approved labels without 
obtaining a new COLA, subject to the condition that the new label 
``must be in compliance with the applicable regulations in 27 CFR parts 
4, 5, 7, and 16, and any other applicable provision of law or 
regulation, including, but not limited to, the conditions set forth in 
the `Comments' below.'' TTB does not approve those revisions on an 
individual basis, and the industry member is responsible for ensuring 
compliance with the regulations and the conditions set forth in Section 
V.
    Finally, as explained in T.D. TTB-158, it is TTB's position that if 
FDA advises TTB that it has determined that distilled spirits, wines, 
or malt beverages are adulterated under the Federal Food, Drug and 
Cosmetic Act (FD&C Act), then those beverages are also mislabeled 
within the meaning of the FAA Act, even if the bottler or importer of 
the product in question has obtained a COLA or an approved formula for 
the product in question. See Industry Circular 2010-8, dated November 
23, 2010, entitled ``Alcohol Beverages Containing Added Caffeine.'' In 
such a situation, it is the responsibility of industry members to take 
appropriate action after TTB has notified them that their products are 
mislabeled as a result of a determination by FDA that the products are 
adulterated under the FD&C Act. Nonetheless, after carefully evaluating 
the comments, TTB has concluded that it will not move forward with the 
proposed Sec. Sec.  5.22(b), 5.25(b), 7.22(b), and 7.25(b). In the 
final regulatory text below, these paragraphs are removed and 
paragraphs (c) and (d) of each section as proposed are finalized as 
paragraphs (b) and (c). While TTB intended the proposed revisions to be 
clarifying, the revisions instead caused confusion among the 
commenters. Thus, TTB will evaluate all of the comments on this issue 
as suggestions for further action to more clearly address these issues 
on the COLA form itself or in the regulations in 27 CFR part 13.
    TTB's decision not to move forward with the proposed amendments 
does not represent any change in TTB's current policy on this issue, 
and the limitations and conditions referenced above will continue to 
appear on the COLA form.
b. COLA Requirements for Alcohol Beverages Imported in Containers
    In Notice No. 176, TTB proposed, consistent with current 
regulations, that wine, distilled spirits, and malt beverages, imported 
in containers, are not eligible for release from customs custody for 
consumption unless the person removing the products has obtained and is 
in possession of a COLA. The regulations allow importers, when filing 
TTB data electronically, to file with U.S. Customs and Border 
Protection (CBP) the COLA identification number(s) applicable to each 
such product in lieu of filing a copy of each COLA with CBP. See 
Sec. Sec.  4.24(c), 5.24(c), and 7.24(c). Proposed Sec. Sec.  4.25, 
5.25, and 7.25, in addition to the provisions described above, state 
that importers must obtain a COLA before removing alcohol beverages in 
containers from customs custody for consumption.
    Beverly Brewery Consultants commented that proposed Sec.  7.24, 
relating to COLA requirements for malt beverages imported in 
containers, was poorly organized and should be separated into two 
sections.
TTB Response
    After reviewing the editorial suggestions from Beverly Brewery 
Consultants, TTB has decided that the proposed Sec. Sec.  5.24 and 7.24 
clearly communicate requirements relating to distilled spirits and malt 
beverages imported in containers, and there is no need to separate each 
section into two sections. Accordingly, these sections are finalized, 
but with minor changes to certain paragraphs discussed below.
c. Transfer of COLAs
    Consistent with the FAA Act and current regulations, proposed 
Sec. Sec.  4.24, 5.24, and 7.24 provide that wine, distilled spirits, 
and malt beverages, imported in containers, are not eligible for 
release from customs custody for consumption unless the person removing 
the wine, distilled spirits, or malt beverages has obtained a COLA. The 
current regulations, as amended by the final rule facilitating the use 
of the International Trade Data System (ITDS)

[[Page 7533]]

(T.D. TTB-145, 81 FR 94186, December 22, 2016), provide importers with 
two options for showing compliance with this requirement--they may file 
with CBP the identification number assigned to the approved COLA, or 
they may provide a copy of the COLA to CBP at the time of entry, as was 
the case prior to the ITDS amendments.
    As a general rule, only the importer to whom TTB issued a COLA may 
use that COLA to withdraw bottled alcohol beverages from customs 
custody for consumption. Other importers who intend to import the same 
distilled spirits, wine, or malt beverages are responsible for 
obtaining their own COLAs for such products, as approved labels bear 
the name and address of the importer who obtained the COLA for the 
product and who is responsible for compliance with the Federal labeling 
regulations as part of the mandatory information. An exception to this 
general rule is set forth in ATF Ruling 84-3 (which modified ATF Ruling 
83-6), which describes circumstances in which an importer may use a 
COLA issued to another importer. In general, an importer may use a COLA 
issued to another importer if: (1) The importer to which the COLA was 
issued has authorized such use, (2) each bottle or individual container 
bears the name (or trade name) and address of the importer to which the 
COLA was issued, and (3) the importer to which the COLA was issued 
maintains records of the companies it has authorized to use its 
certificate.
    When TTB amended Sec. Sec.  4.40, 5.51, and 7.31 in T.D. TTB-145, 
it incorporated text to reflect the provisions of ATF Ruling 84-3 and 
provide that bottled wine, distilled spirits, or malt beverages may be 
released to an importer who is authorized by a COLA holder to import 
products covered by the COLA. Importers must provide proof of such 
authorization if specifically requested. TTB noted in T.D. TTB-145 that 
it did not supersede ATF Ruling 84-3 or its holding that the COLA 
holder, who is the importer identified on the COLA, remains responsible 
for the imported product and its distribution in the United States.
    Readers should note that these requirements apply only in 
situations in which a second importer wishes to use a COLA that was 
issued to the first importer, to obtain the release of products bearing 
labels that include the name of that first importer from customs 
custody. TTB regulations do not prohibit several different importers 
from obtaining a COLA for the same foreign wine, distilled spirits 
product, or malt beverage, as long as the name of the responsible 
importer appears on each label.
    Comments from Wine Institute and DISCUS questioned why the proposed 
regulations did not incorporate the language in our current regulations 
and the ATF Rulings about COLA holders authorizing other importers to 
remove from customs custody products covered by a COLA. Wine Institute 
noted that this principle seemed to be partially addressed, and 
suggested that the regulations be amended to refer to importations with 
the COLA holder's authorization. DISCUS urged TTB to incorporate all of 
the provisions of ATF Ruling 84-3 into the regulations, stating that 
these provisions are critical to the proposed regulation.
TTB Response
    As indicated by the comments from Wine Institute and DISCUS, TTB 
failed to fully incorporate the regulations finalized by T.D. TTB-145 
into Notice No. 176. Accordingly, TTB is adopting the comments from 
Wine Institute and DISCUS to the extent that they reflect current 
provisions that TTB added to the regulations in 2016 by T.D. TTB-145 
regarding the use by one importer of another importer's COLA under 
certain circumstances. It was not TTB's intent to modify this policy. 
Accordingly, in this final rule, TTB is reinstating the language that 
allows an importer to use another importer's COLA under certain 
circumstances. This final rule does not supersede ATF Ruling 84-3 or 
its holding that the COLA holder remains responsible for the imported 
product and its distribution in the United States.
    TTB is not adopting DISCUS's suggestion that TTB amend the 
regulations to incorporate all of the requirements set forth in ATF 
Ruling 84-3. TTB did not air that specific issue for comment in Notice 
No. 176, and TTB believes it would be beneficial to solicit public 
comments on the recordkeeping and other requirements associated with 
adopting such regulatory amendments. TTB will evaluate whether it 
should update the ruling in the future, and will treat the DISCUS 
comment as a suggestion for future rulemaking.
d. COLA Requirements for Imported Alcohol Beverages Released ``for 
Consumption''
    Subject to certain exceptions, the FAA Act makes it unlawful for 
anyone to remove ``from customs custody, in bottles, for sale or any 
other commercial purpose, distilled spirits, wine, or malt beverages, 
respectively'' unless the person has obtained and possesses ``a 
certificate of label approval covering the distilled spirits, wine, or 
malt beverages, issued by the Secretary in such manner and form as he 
shall by regulations prescribe.'' [Emphasis added.] See 27 U.S.C. 
205(e). That same law also provides that the substantive labeling 
requirements of the FAA Act apply to importers who ``remove from 
customs custody for consumption, any distilled spirits, wine, or malt 
beverages in bottles . . .'' [Emphasis added.] The FAA Act defines the 
term ``bottle'' to mean ``any container, irrespective of the material 
from which made, for use for the sale of distilled spirits, wine, or 
malt beverages at retail.'' See 27 U.S.C. 211(a)(8). TTB and its 
predecessors have consistently interpreted these statutory provisions 
to mean that (1) a COLA is required for imported alcohol beverages in 
bottles only if they are released from customs custody for consumption 
in the United States, and (2) that for such consumption entries, a COLA 
is not required if the beverage is being imported for a purpose other 
than for sale or any other commercial purpose.
    NABI commented that the regulations in proposed Sec. Sec.  4.24 and 
4.25, 5.24 and 5.25, and 7.24 and 7.25, should be revised to eliminate 
references to requiring COLAs before wine, distilled spirits, or malt 
beverages, respectively, are removed in containers from customs custody 
``for consumption,'' and to instead include only a reference to 
removals for ``sale or any other commercial purpose.'' NABI stated that 
this revision would be consistent with the statutory language in 27 
U.S.C. 205(e), and that the language about removals for consumption was 
overly broad.
TTB Response
    The final rule adopts the language of the proposed regulations on 
this issue. As explained above, TTB views the statutory requirements of 
the FAA Act, as implemented in the regulations since 1936, as imposing 
two levels of inquiry. Initially, the substantive labeling requirements 
of the FAA Act, as well as the COLA requirements for alcohol beverages 
released from customs custody in containers, apply only to products 
released ``for consumption'' from customs custody. Within the category 
of products released for consumption, there is a subcategory of 
products that are exempt from the COLA requirement because they are 
being imported for a purpose other than sale or any other commercial 
purpose.
    Current TTB regulations at 27 CFR 4.40(a), 5.51(a), and 7.31(a), as 
amended by T.D. TTB-145 (the final rule facilitating the use of ITDS) 
include this

[[Page 7534]]

structure, and the final rule also includes this regulatory text in 
Sec. Sec.  4.24(d), 5.24(d), and 7.24(d). Thus, the exemption from the 
COLA requirement for products imported for a purpose other than sale or 
any other commercial purpose is in addition to, not instead of, the 
provision that applies the COLA requirements only to alcohol beverages 
removed ``for consumption'' in containers from customs custody.
e. Electronic Filing of the COLA Identification Numbers
    The proposed and current regulations allow importers, when filing 
TTB data electronically with CBP along with the customs entry, to file 
the identification number of the valid COLA applicable to each such 
product in lieu of filing a copy of each COLA with CBP. See Sec. Sec.  
4.24(c), 5.24(c), and 7.24(c).
    NABI requested that TTB require only that approved COLAs be on file 
for CBP or TTB inspection, citing the time burden of entering each 
identification number for shipments that contain products covered by 
numerous COLAs. NABI stated that its recommendation is consistent with 
proposed regulations at 27 CFR 4.27, 5.27, and 7.27, which require the 
importer to present a copy of the approved COLA upon request.
TTB Response
    With regard to the electronic filing of the COLA identification 
numbers, in 2016, TTB amended its regulations to provide for electronic 
filing of an entry with CBP, so that an importer files an 
identification number of the approved COLA when filing electronically, 
rather than submitting the COLA to customs. See T.D. TTB-145, 81 FR 
94186, December 22, 2016. The importer must provide a copy of the COLA 
(either electronically or on paper) upon request. As stated in T.D. 
TTB-145, these requirements ensure compliance with the FAA Act at 27 
U.S.C. 205(e), which requires, with respect to imports, that no person 
shall remove from customs custody, in bottles, for sale or any other 
commercial purpose, distilled spirits, wine, or malt beverages, without 
having obtained and being in possession of a COLA covering the 
products. This rule finalizes this aspect of Sec. Sec.  5.24 and 7.24 
in a manner consistent with current regulations.
    TTB believes that submitting the identification numbers 
corresponding to COLAs that cover the products intended for removal 
from customs custody, represents the minimum requirement necessary to 
support compliance with label requirements and a level playing field 
for industry members. This approach also minimizes the number of 
importers TTB and/or CBP potentially would need to contact directly to 
identify the appropriate COLA intended to be used by the importer, 
which supports compliance without unnecessarily impeding the 
importation process.
f. Formula Requirements--Cross-cutting 27 CFR 5.28 and 7.28
    Specific formula requirements for certain types of beer and wine 
are found in TTB's regulations under the IRC. See 27 CFR part 24 for 
wine and part 25 for beer. For distilled spirits, the specific formula 
regulations are found in both the IRC regulations (part 19) and the FAA 
Act regulations (part 5). However, when reviewing applications for 
label approval, TTB often finds it necessary to obtain formulation 
information about certain products (including imported alcohol 
beverages) that are not otherwise subject to the specific formula 
requirements in the regulations. TTB requires industry members to 
obtain formula approval for certain unusual products to enable 
appropriate classification of the product and ensure that producers do 
not use prohibited ingredients in the product.
    Accordingly, current regulations in Sec. Sec.  4.38(h), 5.33(g), 
and 7.31(d) authorize TTB to request more information about the 
contents of a wine, distilled spirits product, or malt beverage, but 
the language in part 7 is different from the language in parts 4 and 5. 
Sections 4.38(h) and 5.33(g) provide that, upon request of the 
appropriate TTB officer, a complete and accurate statement of the 
contents of any container to which labels are to be or have been 
affixed shall be submitted. The regulations in Sec.  7.31(d) state that 
the appropriate TTB officer may require an importer to submit a formula 
for a malt beverage, or a sample of any malt beverage or ingredients 
used in producing a malt beverage, prior to or in conjunction with the 
filing of an application for a COLA.
    The type of product evaluation required for a particular product 
prior to issuance of a COLA depends on that product's formulation and 
origin. TTB periodically updates its public guidance to include a list 
of the domestic and imported products for which TTB currently requires 
formulas or laboratory analysis prior to issuing a COLA.
    In Notice No. 176, TTB proposed to standardize the regulatory 
language in parts 4, 5, and 7 on this issue. Accordingly, proposed 
Sec. Sec.  4.28(a), 5.28(a), and 7.28(a) provided that the appropriate 
TTB officer may require a bottler or importer to submit a formula, the 
results of laboratory testing, and samples of the product or 
ingredients used in the final product, prior to or in conjunction with 
the review of an application for label approval. The proposed 
regulations also provided that TTB may request such information after 
the issuance of a COLA, or in connection with any product that is 
required to be covered by a COLA. Proposed Sec. Sec.  4.28(b), 5.28(b), 
and 7.28(b) provided that, upon request of the appropriate TTB officer, 
a bottler or importer must submit a full and accurate statement of the 
contents of any container to which labels are to be or have been 
affixed, as well as any other documentation on any issue pertaining to 
whether the wine, distilled spirits, or malt beverage is labeled in 
accordance with the TTB regulations.
    Current TTB regulations and industry practice involve the 
submission of alcohol beverage formulas in varying forms and formats 
depending on the type of alcohol beverage and whether the product is 
domestically produced or imported. TTB believes that this multiplicity 
of procedures is unnecessarily complicated and burdensome for both the 
regulated industries and TTB. Accordingly, TTB proposed in Notice No. 
176 to amend the TTB regulations in parts 4, 5 and 7 to provide that 
industry members may file a formula electronically by using Formulas 
Online or submitted on paper on TTB Form 5100.51, ``Formula and Process 
for Domestic and Imported Alcohol Beverages.'' TTB notes that the vast 
majority of industry members now use Formulas Online to submit 
formulas, and encourages all industry members to consider the 
advantages of online filing.
    WineAmerica and the New York Farm Bureau commented in support of 
``formula standardization for ease of submission and approval.'' A law 
student commented in favor of requiring more formulas to safeguard the 
health of consumers. However, some commenters raised concerns that the 
proposed regulations were too broad. For example, Wine Institute 
commented that proposed Sec.  4.28(b), as drafted, attempted to expand 
TTB's authority to demand information from wineries outside of a formal 
investigation, and also noted that bottlers of wine may not always have 
complete information about the ingredients in formula wine produced by 
other wineries.
    Some commenters focused on differences in laboratory analysis 
requirements for imported alcohol beverages. The Mexican Chamber of the 
Tequila Industry and DISCUS both noted that under current TTB policy 
(which is not addressed in the current

[[Page 7535]]

or proposed regulations), formulas for domestic products have no 
expiration date, while formulas for imported products expire after 10 
years. They both urged TTB to eliminate the expiration date for 
imported products and to relieve formula requirements regarding 
samples. They also disagreed with granting authority to request 
formulas, laboratory testing, or samples for products that are not 
specifically required to submit formulas, noting that the formulation 
of alcohol beverages is often a closely guarded trade secret. 
Similarly, Federation des Exportateurs de Vins & Spiritueux de France 
(FEVS) commented in support of all the efforts made by TTB to simplify 
and streamline the pre-COLA evaluation process, especially for imported 
products, and stated that it understood the need for TTB officers 
sometimes to get more information on a specific product on a 
case[hyphen]by[hyphen]case basis. However, FEVS encouraged TTB to 
consider the economic costs and administrative burdens involved with 
formula and other pre-COLA analysis, and asked TTB to not define 
stricter ``Pre[hyphen]COLA Evaluation modalities for imported products 
than those required for domestic products of the same category.'' As an 
example, FEVS questioned why a laboratory analysis is still required 
for imported flavored distilled spirits while domestic producers only 
have to obtain the approval of their formulas. FEVS stated that this 
situation creates extra costs and complexity for European Union (EU) 
exporters, and that these burdens were not justified because these 
products are also well regulated under the EU framework.
TTB Response
    TTB is moving forward with its proposal to standardize in parts 5 
and 7 the regulatory language regarding TTB's authority to require the 
submission of formulas, laboratory testing results, or samples as part 
of the label approval process. This is consistent with current policy 
and reflects the need to sometimes request, on a case-by-case basis, 
more information about a particular product prior to approval of a 
label. The final rule also standardizes the language found in the 
current distilled spirits regulations, which authorize TTB to require a 
full and accurate statement of the contents of the container. TTB is 
finalizing the clarifying language from the proposed rule, which 
provides that this authority applies after the issuance of a COLA, or 
with regard to any distilled spirits or malt beverages required to be 
covered by a COLA.
    After reviewing the comments on the issue of whether the additional 
language in proposed Sec. Sec.  5.28(b) and 7.28(b) reflected an 
intention by TTB to expand its authority to require information about 
products, TTB has revised the language to mirror more closely the 
language found in the current regulations. Thus, to avoid any confusion 
on this issue, the final rule does not include language about 
submission of other documentation at the time of formula submission 
relating to whether the alcohol beverage products comply with labeling 
regulations, although this change does not reflect a shift in current 
TTB policy regarding its authority require such information.
    Finally, with regard to the commenters who requested that imported 
and domestic products be subject to the same requirements relating to 
formulas and laboratory analysis, TTB notes that it did not specially 
address the issues raised in the current or proposed regulations. As 
explained in Industry Circular 2020-1, dated February 12, 2020, TTB 
currently maintains guidance documents on its website, https://www.ttb.gov, which set forth current formula and laboratory analysis 
requirements. TTB periodically updates that list to reflect changes in 
TTB policy.
    TTB will consider the comments on this issue as suggestions for 
future changes to its policy. However, it has been the position of TTB 
and its predecessor agencies that because TTB does not have access to 
the production records of foreign producers, it must rely upon the 
importer, whose basic permit is conditioned upon compliance with the 
FAA Act, to provide the necessary information at the time of 
importation. For this reason, the formula and laboratory analysis 
requirements for imported products may sometimes differ from those 
imposed on domestic products of the same class and type. TTB is 
continually reviewing its formula and laboratory analysis requirements 
to determine if it can reduce burdens on the regulated industry while 
fulfilling its statutory mission to protect consumers. The final rule 
allows TTB the flexibility to liberalize such requirements without 
engaging in rulemaking each time it removes a formula requirement under 
the FAA Act.
4. Subpart C--Alteration of Labels, Relabeling, and Adding Information 
to Containers
    Proposed subpart C of parts 4, 5, and 7 regulates the alteration of 
labels, relabeling, and the addition of information to wine, distilled 
spirit, and malt beverage labels for which TTB has already issued a 
COLA. As stated in Notice No. 176, these regulations are intended to 
implement the prohibition in section 105(e) of the FAA Act (27 U.S.C. 
205(e)) that prohibits any person from altering, obliterating, or 
removing any mark, brand, or label except as authorized by Federal law 
or regulations implemented by the Secretary.
    As previously noted, the COLA requirements of the FAA Act are 
intended to prevent the sale or shipment or other introduction in 
interstate or foreign commerce of distilled spirits, wine, or malt 
beverages that are not bottled, packaged, or labeled in compliance with 
the regulations. To ensure that products with proper labels are not 
altered once such products have been removed from bond, section 105(e) 
of the FAA Act (27 U.S.C. 205(e)) makes it unlawful for ``any person to 
alter, mutilate, destroy, obliterate, or remove any mark, brand, or 
label upon distilled spirits, wine, or malt beverages'' that are held 
for sale in interstate or foreign commerce, or are held for sale after 
shipment in interstate or foreign commerce, unless authorized by 
Federal law or pursuant to regulations allowing relabeling for purposes 
of compliance with either the FAA Act or State law.
    Regulations that implement these provisions of the FAA Act, as they 
relate to wine, distilled spirits, and malt beverages, are set forth in 
parts 4, 5, and 7, respectively. Current Sec. Sec.  4.30 and 7.20 
provide that someone wanting to relabel must receive prior written 
permission from the appropriate TTB officer. Current Sec.  5.31 does 
not require prior written approval for the relabeling of distilled 
spirits, as long as such relabeling is done in accordance with an 
approved COLA.
    As described in more detail below, proposed subpart C of parts 4, 
5, and 7, proposed conforming changes to the regulations that: (1) 
Implement the statutory prohibition discussed above; (2) set out the 
provisions allowing for relabeling without TTB authorization; (3) set 
out the provisions allowing for relabeling only with TTB authorization; 
and (4) provide for the use of stickers to identify the wholesaler and 
retailer.
a. Alteration of Labels
    Proposed Sec. Sec.  4.41(a), 5.41(a), and 7.41(a) set forth the 
statutory prohibition under 27 U.S.C. 205(e) on the alteration of 
labels. The proposed language provided that the prohibition applies to 
any persons, including retailers, holding wine, distilled spirits, or 
malt beverages for sale in (or after

[[Page 7536]]

shipment in) interstate or foreign commerce.
    Proposed Sec. Sec.  4.41(b), 5.41(b), and 7.41(b) provided that for 
purposes of the relabeling activities authorized by this subpart, the 
term ``relabel'' includes the alteration, mutilation, destruction, 
obliteration, or removal of any existing mark, brand, or label on the 
container, as well as the addition of a new label (such as a sticker 
that adds information about the product or information engraved on the 
container) to the container, and the replacement of a label with a new 
label bearing identical information.
    Proposed Sec. Sec.  4.41(c), 5.41(c), and 7.41(c) contained new 
language that provides that authorization to relabel in no way 
authorizes the placement of labels on containers that do not accurately 
reflect the brand, bottler, identity, or other characteristics of the 
product; nor does it relieve the person conducting the relabeling 
operations from any obligation to comply with the regulations in this 
part and with State or local law, or to obtain permission from the 
owner of the brand where otherwise required.
    TTB received four comments of general support for proposed 
Sec. Sec.  4.41, 5.41, and 7.41 from Beer Institute, Heaven Hill 
Brands, Wine Institute, and DISCUS. However, DISCUS stated that 
alteration of labels should only be done with the COLA holder's 
approval.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.41 and 7.41 without change. 
These regulatory provisions implement the statutory language in a 
clearer manner than the current regulations. With regard to the DISCUS 
comment, TTB notes that Sec. Sec.  5.41(c) and 7.41(c) explicitly 
provide that authorization to relabel under this subpart does not 
authorize the placement of labels on containers that do not accurately 
reflect the brand, bottler, or other characteristics or the product, 
nor does it relieve the responsible person from any obligation to 
comply with the TTB regulations and with State or local law, or to 
obtain permission from the owner of the brand where required under 
other laws. TTB believes this provision adequately addresses the 
concerns raised by the DISCUS comment.
b. Authorized Relabeling Activities Without Prior Authorization From 
TTB
    The current regulations in parts 4 and 7 require persons wishing to 
relabel to obtain written permission from TTB, with certain exceptions, 
while the regulations in part 5 require persons wishing to relabel to 
obtain a COLA from TTB. TTB proposed to update the regulations in parts 
4, 5 and 7 for consistency, and to cover all of the situations in which 
people need to relabel. The current regulations in part 5 allow persons 
who are eligible to obtain COLAs, such as bottlers and importers, to 
relabel the covered products even after their removal from bottling 
premises or customs custody, respectively, without first obtaining 
written approval from TTB. The proposed rule extended this provision to 
parts 4 and 7.
    Accordingly, the proposed regulations provided that proprietors of 
bonded wine premises, distilled spirits plant premises, and breweries, 
may relabel domestically bottled products prior to their removal from, 
and after their return to bond at, the bottling premises, with labels 
covered by a COLA, without obtaining separate permission from TTB for 
the relabeling activity. See proposed Sec. Sec.  4.42(a), 5.42(a), and 
7.42(a).
    The proposed regulations also provided that proprietors of bonded 
wine premises, distilled spirits plant premises, and breweries, may 
relabel domestically bottled products after removal from the bottling 
premises with labels covered by a COLA, without obtaining separate 
permission from TTB for the relabeling activity. This would allow, for 
example, a brewer to replace damaged labels on containers held at a 
wholesaler's premises, as long as a COLA covers the labels, without 
obtaining separate permission from TTB to remove the existing labels 
and replace them with either identical or different approved labels. 
See Sec. Sec.  4.42(b), 5.42(b), and 7.42(b).
    The proposed regulations also provided that, under the supervision 
of U.S. customs officers, imported wine, distilled spirits, and malt 
beverages, in containers in customs custody may be relabeled without 
obtaining separate permission from TTB for the relabeling activity. 
Such containers must bear labels covered by a COLA when the products 
are removed from customs custody for consumption. See Sec. Sec.  
4.42(c) and (d), 5.42(c) and (d), and 7.42(c) and (d).
    TTB received several comments of strong support in response to 
TTB's efforts to bring consistency to the relabeling rules between 
wine, distilled spirits, and malt beverages from NABI, Heaven Hill 
Brands, the Beer Institute, ADSA, WineAmerica, and the New York Farm 
Bureau.
    In their comments, WineAmerica and the New York Farm Bureau noted 
that these proposals would reduce the regulatory burden with regard to 
wine. Heaven Hill Brands and ADSA expressed support for equal treatment 
with regard to relabeling activities between wine, distilled spirits, 
and malt beverages. NABI stated its appreciation for provisions that 
allow importers to relabel products without separate permission. The 
Beer Institute recommended ``that TTB allow additional flexibility in 
the proposed rule so that `authorized agents' (such as distributors or 
co-packers) of breweries and importers are also authorized to make such 
changes without having to obtain approval from TTB.''
TTB Response
    TTB is finalizing Sec. Sec.  5.42, and 7.42 as proposed, with the 
modification that a domestic proprietor who enjoys these privileges 
must also be the certificate holder for the COLA (which, in the case of 
domestically bottled products, would be the bottler).
    In response to the comment from Beer Institute, which suggested 
allowing relabeling by ``authorized agents'' of the COLA holder, TTB 
notes that nothing in the regulation precludes COLA holders from using 
either employees or ``authorized agents'' to physically conduct 
relabeling activities, as long as the relabeling is being done at the 
direction of the COLA holder. To clarify this point, the regulatory 
text in sections 7.42(b) and 5.42(b) is revised to provide that 
proprietors may relabel (or direct the relabeling of) domestically 
bottled products after removal with labels covered by a COLA, without 
obtaining separate permission from TTB for the relabeling activity, 
provided that the proprietor is the certificate holder (and bottler).
c. Relabeling Activities That Require Separate Written Authorization
    In Notice No. 176, TTB stated that the language in current parts 4 
and 7 allow persons who are not eligible to obtain COLAs, such as 
retailers, to obtain written permission from TTB to relabel products 
that are in the marketplace when unusual circumstances exist. The 
proposed rule extended this provision to part 5. It is rare that 
someone other than the original bottler or importer will need to 
relabel the product, but these situations sometimes occur. For example, 
sometimes bottles packed in a shipping carton break, causing damage to 
labels of unbroken bottles.
    Thus, the proposed regulations allowed persons who are not eligible 
to obtain a COLA (such as retailers or permittees other than the 
bottler) to obtain written authorization for relabeling if the request 
demonstrates that the relabeling was for the purpose of compliance with 
the requirements of

[[Page 7537]]

this part or of State law. The proposed regulations provided that the 
written application must include copies of the original and proposed 
new labels; the circumstances of the request, including the reason for 
relabeling; the number of containers to be relabeled; the location 
where the relabeling will take place; and the name and address of the 
person who will be conducting the relabeling operations.
    TTB intended that the proposed regulations enable permittees, 
brewers, and retailers to relabel alcohol beverage containers in the 
marketplace when there is a permissible reason to do so. TTB sought 
comments from industry on whether the proposed regulations would 
protect the integrity of labels in the marketplace without imposing 
undue burdens on the industry.
    WineAmerica, NABI, Heaven Hill Brands, Williams Compliance and 
Consulting Group (the Williams Group), Wine Institute, and DISCUS 
expressed general support for these provisions.
    In its comment, Heaven Hill Brands expressed support for equal 
treatment between wine, distilled spirits, and malt beverage 
regulations. In addition to providing their support for the proposed 
regulations, Wine Institute and DISCUS suggested that any persons 
engaged in relabeling who are not eligible to obtain a COLA (retailers, 
wholesalers, or proprietors other than the bottler) should be required 
to obtain authorization from the COLA holder in addition to written 
authorization from TTB. DISCUS commented that its suggested ``revision 
will provide greater certainty to industry members regarding their 
brand equity and the power to control what happens to their brand 
labels once in the marketplace.''
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.43 and 7.43 with the 
clarification that those who must obtain written authorization to 
relabel distilled spirits and malt beverages are wholesalers and 
permittees other than the original bottler, not retailers. In response 
to DISCUS's concerns about the power of producers to control what 
happens to their brand labels once in the marketplace, and the comments 
from Wine Institute and DISCUS requesting that TTB require that persons 
performing relabeling activities obtain COLA holder approval, TTB is 
only authorizing permittees (wholesalers and proprietors other than the 
original bottler) to apply for authorization to relabel; however, TTB 
is not requiring that the applicant first obtain approval from the COLA 
holder. Adopting the comments from Wine Institute and DISCUS that TTB 
should require the person performing the relabeling activities to 
obtain authorization from the original COLA holder would be more 
restrictive than current regulations, and was not specifically aired 
for comment. TTB notes that distillers are also subject to the 
relabeling regulations under the IRC in 27 CFR part 19, which require 
proprietors to retain a statement of authorization to relabel products 
that they did not originally bottle; there is no such requirement for 
wine under the IRC regulations in 27 CFR part 24.
d. Adding a Label or Other Information to a Container That Identifies 
the Wholesaler, Retailer, or Consumer
    Consistent with current regulations for wine and distilled spirits, 
and an intention to liberalize regulatory requirements for malt 
beverages, TTB proposed to allow the addition of a label identifying 
the wholesaler, retailer, or consumer as long as the label does not 
reference the characteristics of the product, does not violate the 
labeling regulations, and does not obscure any existing labels. The 
proprietor may add information identifying the wholesaler, retailer, or 
consumer before the wine, distilled spirit, or malt beverage leaves the 
premises. The wholesaler, retailers, or an agent may make such 
additions of information prior to the release of a product from customs 
custody. See proposed Sec. Sec.  4.44, 5.44, and 7.44.
    NABI, Heaven Hill Brands, Wine Institute, and DISCUS expressed 
support for proposed Sec. Sec.  4.44, 5.44, and 7.44. In addition to 
expressing support, Wine Institute requested that any alteration of the 
label be conducted only with the authorization of the COLA holder and 
indicates that consumers could be confused about such stickers.
TTB Response
    TTB will finalize Sec. Sec.  5.44 and 7.44 without change. In 
response to Wine Institute's request that authorization from the COLA 
holder should be required prior to any alteration of a label, TTB notes 
that the proposal is consistent with current regulation, and that under 
this section, only information regarding the wholesaler, retailer, or 
consumer is being applied to the container (rather than the replacement 
of an entire label). The adoption of Wine Institute's request would be 
a significant restriction and would require rulemaking. Also, TTB has 
not received comments from consumers or consumer groups that stickers 
identifying the names of wholesalers, retailers, or consumers are 
confusing.
5. Subpart D--Label Standards
    In Notice No. 176, TTB proposed a new subpart D in each of parts 4, 
5, and 7, governing legibility of labels, type size, and language 
requirements for mandatory information on labels. The provisions were 
predominantly derived from and consistent with current regulations.
a. Affixing Labels
    Proposed Sec. Sec.  4.51, 5.51, and 7.51 provided, consistent with 
current requirements, that labels must be affixed such that they cannot 
be removed without the thorough application of water or other solvents. 
DISCUS expressed support for these provisions, but they suggested 
amending the regulations so that only mandatory information would be 
subject to the ``firmly affixed'' requirement, and to allow ``any part 
of the label without mandatory information to be peeled off.'' NABI 
recommended that the regulations allow a label to be affixed to a 
container over another label ``provided both labels are firmly affixed 
to the container and the overlapping label does not obscure any 
mandatory information.'' NABI suggested that this amendment would 
reflect current TTB policy.
TTB Response
    With the exception of the keg collar exemption discussed in the 
part 7-specific discussion below, TTB is finalizing Sec. Sec.  5.51 and 
7.51 as proposed. Adoption of the DISCUS comment, which would allow 
optional information to be included on a peel-off label, would require 
broader changes to the definition of a label, which currently includes 
both optional and mandatory information. TTB will consider this comment 
as a suggestion for future rulemaking. In response to the NABI comment, 
TTB notes that, currently, it does not allow a bottler to place one 
label over another label on a container. Instead, TTB sometimes allows 
this as a temporary solution in a ``use-up'' situation, where 
circumstances do not allow another feasible solution. TTB does not 
believe that it should extend that option beyond temporary ``use-up'' 
situations, because the practice could be subject to abuse. 
Accordingly, TTB will not adopt the NABI suggestion at this time, but 
will consider the comment as a suggestion for further rulemaking on 
this issue.
b. Legibility and Other Requirements for Mandatory Information on 
Labels
    The regulations in proposed Sec. Sec.  4.52, 5.52, and 7.52 
governing legibility of labels, type size, and language

[[Page 7538]]

requirements were largely based on the requirements currently found in 
Sec. Sec.  4.38, 5.33, and 7.28. The proposed regulations clarified 
existing regulations and policy.
    TTB set out in proposed Sec. Sec.  4.52(b), 5.52(b), and 7.52(b) 
current regulations and existing policy that require mandatory 
information to be separate and apart from additional information. The 
proposed rule provided a few exceptions to this general rule. First, 
brand names are exempt from this requirement. Second, this provision 
would not preclude the addition of brief optional phrases as part of 
the class and type designation (such as ``premium malt beverage''), the 
name and address statement (such as ``Proudly distilled and bottled by 
ABC Distilling Company, Atlanta, GA, for over 30 years''), or other 
information required by the regulations, as long as the additional 
information does not detract from the prominence of the mandatory 
information.
    Beverly Brewery Consultants, Wine Institute, WineAmerica, the New 
York Farm Bureau, and ADSA supported this proposal. Beverly Brewery 
Consultants also suggested that TTB should consider adding a 
requirement that mandatory information be conspicuous in addition to 
being separate and apart from other information on the label. This 
comment referred to current requirements in 27 CFR 7.28, which provide 
that if ``contained among other descriptive or explanatory information, 
the script, type, or printing of all mandatory information shall be of 
a size substantially more conspicuous than that of the descriptive or 
explanatory information.'' Wine Institute stated that it ``supports the 
ability to include brief optional phrases of additional information in 
conjunction with mandatory information.'' DISCUS opposed the 
requirement that mandatory information be separate and apart from 
additional information, but did not provide its rationale for this 
position. The Mexican Chamber of the Tequila Industry proposed that TTB 
establish specific parameters for the meaning of ``separate and 
apart.''
    NABI stated that TTB's proposal to allow additional information to 
appear with mandatory information provided the ``additional information 
does not detract from the prominence of the mandatory information'' 
represented a vague standard. NABI requested that TTB replace this 
standard with one that prohibits additional information from creating a 
``misleading impression inconsistent with the mandatory information.'' 
NABI stated that, under the ``commercial speech'' doctrine developed by 
the U.S. Supreme Court, the government may prevent misleading speech, 
but not ``detracting speech.''
TTB Response
    TTB is finalizing in Sec. Sec.  5.52(b) and 7.52(b) the proposed 
provisions requiring mandatory information to be separate and apart 
from additional information with the exceptions set forth in the 
proposed regulations and as discussed above. However, in response to 
the comments, we are clarifying that this new standard does not 
represent a change in TTB's current labeling policy. Accordingly, we 
are incorporating language in the regulation for greater consistency 
with existing regulatory standards in Sec. Sec.  4.38, 5.33, and 7.28. 
Instead of requiring that the additional information does not ``detract 
from the prominence of the mandatory information,'' the final rule 
provides that if contained among other descriptive or explanatory 
information, the script, type, or printing of all mandatory information 
shall be substantially more conspicuous than that of the descriptive or 
explanatory information. While these determinations are made on a case-
by-case basis, current TTB policy considers mandatory information 
(other than aspartame) to be substantially more conspicuous if the type 
size is at least twice the type size of the surrounding information, or 
if the mandatory information is otherwise substantially more 
conspicuous because of, for example, the boldness or color of the font. 
The final rule provides for distilled spirits labels, and continues to 
provide for malt beverage labels, that aspartame declarations must be 
separate and apart from all other information.
    In response to the Mexican Chamber of the Tequila Industry, TTB 
notes that establishing specific parameters for ``separate and apart'' 
would result in more strict rules than what is currently in place, 
potentially requiring industry members to change current labels. This 
would also place a significant administrative burden on TTB without a 
clear benefit.
    In response to NABI, TTB notes that requirements with regard to 
mandatory statements are issued pursuant to TTB's authority to ensure 
that labels provide consumers with adequate information about the 
identity and quality of the product. Requiring that such information be 
sufficiently conspicuous on the label is well within TTB's statutory 
authority.
c. Contrasting Background
    Consistent with current regulations, proposed Sec. Sec.  4.52(c), 
5.52(c), and 7.52(c) set forth the existing regulation that states the 
requirement that mandatory information must appear on a ``contrasting 
background.'' The requirement for a contrasting background ensures that 
mandatory information is readily legible to consumers; for example, 
white letters on a white background will typically be difficult for 
consumers to read. The proposed regulations provided new examples that 
indicate how this requirement may be satisfied. The proposed 
regulations specifically state that TTB considers black lettering 
appearing on a white or cream background, or white or cream lettering 
appearing on a black background, to be contrasting. The proposed 
regulations do not restrict industry members to the use of black, 
cream, or white for use on labels.
    Beverly Brewery Consultants and the New York Farm Bureau supported 
this proposal. DISCUS opposed this requirement, commenting in favor of 
retaining the current language from which TTB derived this provision. 
DISCUS suggested that by providing examples of what constitutes a 
contrasting background, TTB is requiring, for example, black text to 
appear on a white or cream background. DISCUS also suggested that TTB 
had determined in 2002 that regulations regarding contrasting 
background were not necessary. DISCUS pointed to an advance notice of 
proposed rulemaking to support this claim (Notice No. 917, May 22, 
2001, 66 FR 28135).
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.52(c), and 7.52(c) without 
change. The advance notice of proposed rulemaking that DISCUS refers to 
pertains to the placement, noticeability, and legibility of the Health 
Warning Statement under the Alcoholic Beverage Labeling Act, and TTB 
did not propose further amendments in response to that advance notice. 
TTB believes that the examples in the final rule are useful points of 
reference that act as guide rails for industry members. However, the 
regulations do not require mandatory information to appear in specific 
colors, nor do they require a contrasting background to be of a 
specific color. Industry members will remain free to select type colors 
and backgrounds for their labels other than black, white, or cream as 
long as the background is contrasting in the judgment of the 
appropriate TTB officer.
d. Type Size Requirements for Mandatory Information
    Proposed Sec. Sec.  4.53, 5.53, and 7.53 set out the type size 
requirements for mandatory information under the

[[Page 7539]]

regulations and incorporated existing policy, which provides that the 
minimum type size requirements apply to both capital and lowercase 
letters. For malt beverages, these requirements were consistent with 
current Sec.  7.28(b)(3), including the requirement that alcohol 
content statements not exceed four millimeters on containers larger 
than forty fluid ounces.
    WineAmerica and FEVS expressed support for the incorporation of 
TTB's current policy that minimum type size requirements apply to 
capital and lowercase letters. The European Union indicated that it 
understood the proposed minimum type size requirements for mandatory 
information to be ``fixed,'' that is, that type size cannot exceed the 
minimum type sizes set forth in the current and proposed regulations. 
The European Union stated that such ``requirements may possibly create 
unnecessary obstacles to international trade'' for wine and distilled 
spirits.
    Beverly Brewery Consultants stated that proposed Sec.  7.53 should 
clearly state whether it applies to mandatory or optional alcohol 
content statements, or both. In response to the Treasury Department's 
Request for Information (RFI), published in the Federal Register on 
June 14, 2017 (82 FR 27212), the Brewers Association requested that TTB 
remove the maximum type size restriction for alcohol content 
statements, stating that such statements have been permitted for more 
than 20 years and that there is no compelling reason to restrict the 
type size.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.53, and 7.53 as set forth 
in Notice No. 176, with a clarifying change to Sec.  7.53, as discussed 
below.
    In response to the European Union's concern, TTB emphasizes that, 
like the current requirements for type size of mandatory information, 
the proposed requirements--with the exception of alcohol content 
statements--are minimum type size requirements. That is, mandatory 
information may appear in type size that is larger than the minimum 
type size requirements. Given that these provisions are not new, TTB 
does not believe that the requirement poses any potential barriers to 
international trade.
    Regarding Sec.  7.53, TTB permits, but does not require, alcohol 
content statements on malt beverage labels, unless the malt beverage 
``contain[s] any alcohol derived from added flavors or other added 
nonbeverage ingredients (other than hops extract) containing alcohol,'' 
in which case an alcohol content statement is required. See Sec. Sec.  
7.63(a)(3) and 7.65(a), as finalized below, and T.D. TTB-21, 70 FR 194, 
January 3, 2005. Section 7.53(a) provides for minimum type size 
requirements for mandatory information on malt beverage labels. In 
response to the comment from Beverly Brewery Consultants, TTB is adding 
to this section a reference to Sec.  7.63(a)(3) to clarify that these 
requirements extend to mandatory statements of alcohol content. 
Consistent with current policy, TTB is also clarifying that the maximum 
type size limitations in Sec.  7.53(b) apply to all statements of 
alcohol content.
    Regarding the Brewers Association comment requesting that TTB 
remove the maximum type size restriction for alcohol content statements 
on malt beverages, which TTB has applied to both mandatory and optional 
alcohol content labeling statements, TTB believes such a regulatory 
change should not be adopted without providing more specific notice 
(and an opportunity to comment) to interested parties. TTB did not 
propose to remove the maximum type size requirements for alcohol 
content statements on all alcohol beverages containers in Notice No. 
176. TTB therefore declines in this rule to change the maximum type 
size requirements. TTB may consider changes to this standard in a 
future rulemaking. This final rule clarifies current policy with regard 
to maximum type size requirements applying to alcohol content 
statements.
e. Visibility of Mandatory Information
    Proposed Sec. Sec.  4.54, 5.54, and 7.54 explicitly required that 
mandatory information on labels must be readily visible and may not be 
covered or obscured in whole or in part. DISCUS expressed support for 
this proposal. Beverly Brewery Consultants commented that ``[i]n view 
of TTB's proposal not to require certain mandatory information to 
appear on a `brand label,' I strongly recommend that a `conspicuous' 
requirement be added to sec. 7.54 to ensure consumers will be able to 
distinguish mandatory label information from other information on the 
label.''
TTB Response
    TTB is finalizing Sec. Sec.  5.54 and 7.54 as proposed. In response 
to the comment from Beverly Brewery Consultants suggesting that 
mandatory information must be ``conspicuous,'' current regulations do 
not impose such a requirement. Instead, both the current regulations 
and the proposed regulations provide that mandatory information must be 
``readily visible'' on distilled spirits and malt beverage labels. TTB 
does not believe that the commenter supplied an adequate basis for 
revising this requirement, and any such change might require revisions 
to existing labels. Accordingly, TTB is not adopting this comment. See 
Section II.C.4.a below for discussion of the removal of the requirement 
that mandatory labeling information appear on the ``brand label'' of 
malt beverages.
f. Language Requirements
    Consistent with current regulations, proposed Sec. Sec.  4.55, 
5.55, and 7.55 generally require mandatory information, other than the 
brand name, to appear in the English language. Also consistent with 
current malt beverage and distilled spirits requirements, but as a 
liberalization for wine, the proposed regulations provided that all 
mandatory information may appear solely in Spanish when products are 
bottled for sale in the Commonwealth of Puerto Rico. The proposed 
regulations allowed for additional statements in foreign languages, 
including translations of mandatory information, and the country of 
origin, when allowed by CBP regulations. DISCUS expressed support for 
this proposal.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.55 and 7.55 as set forth in 
Notice No. 176.
g. Additional Information (Non-Mandatory Information) on Labels
    Proposed Sec. Sec.  4.56, 5.56, and 7.56, set out current TTB 
policy on the appearance of additional information on labels (that is, 
information that is not mandatory information). Specifically, the 
proposed provisions provided that additional information that is 
truthful, accurate, and specific, and that does not violate the 
restricted, prohibited, and prohibited if misleading provisions in 
subparts F, G, or H of part 4, 5, or 7, for wine, distilled spirits, or 
malt beverages, respectively, may appear on labels. Such additional 
information may not conflict with, modify, qualify, or restrict 
mandatory information in any manner.
    NABI noted that proposed Sec. Sec.  4.56, 5.56, and 7.56 did not 
specify type size requirements for additional information, but 
suggested that, in the experience of its members, TTB specialists often 
require the additional information to appear in uniform type size. NABI 
stated that the regulations should ``codify clearly the fact that 
uniformity is not required absent a TTB showing that the lack of 
uniformity itself results in a statement or representation that 
misleads the consumer.''

[[Page 7540]]

    Beverly Brewery Consultants expressed concern about the provisions 
in proposed Sec.  7.56, suggesting that the proposed regulation would 
impose a new requirement that additional information be specific, and 
providing examples of additional information that is not specific, such 
as ``full of flavor'' and ``we have started a revolution with this 
beer.''
    DISCUS opined that proposed Sec.  5.56 should be struck on the 
grounds that it is duplicative of proposed Sec.  5.122.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.56 and 7.56 without change.
    In response to the comment from NABI, TTB notes that neither the 
current regulations nor the regulations adopted in this final rule 
require that additional information be in a uniform type size. TTB does 
not have a policy of requiring uniform type size on a general basis but 
does sometimes evaluate the type size of additional information in 
determining whether it qualifies mandatory information in a misleading 
fashion. The prominence and type size of the optional information is 
one factor in evaluating whether the information creates a misleading 
impression as to the identity of the product. TTB will continue this 
policy.
    In response to the comment from Beverly Brewery Consultants, which 
suggested that the proposed regulation would impose a new requirement 
that additional information be specific, TTB emphasizes that the 
regulations as finalized do not prohibit the inclusion of puffery (such 
as ``full of flavor'') that is not specific. The proposed provisions in 
Sec. Sec.  4.56, 5.56, and 7.56 authorize the use of additional 
information that is truthful, accurate, and specific provided that it 
is used in accordance with subparts F, G, and H. This does not prohibit 
the use of non-specific ``puffery'' on labels.
    In response to DISCUS, TTB does not agree that proposed Sec. Sec.  
5.55 and 5.122 are duplicative. Proposed Sec.  5.55 is explicit in 
authorizing the use of additional information, whereas proposed Sec.  
5.122 sets out some of the parameters for all information on a 
container, including additional information.
6. Subpart E--Mandatory Label Information
    Proposed subpart E in parts 4, 5 and 7 sets forth the information 
that is required to appear on alcohol beverage labels (otherwise known 
as ``mandatory information''). This subpart also prescribes where and 
how mandatory information must appear on such labels.
a. What Constitutes a Label
    In Sec. Sec.  4.61, 5.61, and 7.61 TTB set out its current policy 
specifying what is considered to be the ``label'' for purposes of 
mandatory information placement.
    DISCUS, WineAmerica, and the New York Farm Bureau expressed support 
for the proposed provisions. NABI requested that TTB clarify in the 
regulations whether or not TTB considers QR codes to be labeling or 
advertising. They also suggested that TTB remove ``plastic film'' from 
the proposed regulations that read ``[w]hen used in this part for 
purposes of determining where mandatory information must appear, the 
term ``label'' includes: (1) Material affixed to the container, whether 
made of paper, plastic film, or other matter'' [emphasis added], and 
replace it with ``plastic, metal * * *.''
TTB Response
    TTB is finalizing Sec. Sec.  5.61, and 7.61 as proposed with the 
exception that the finalized regulations will make clear that labels 
can be made from plastic and/or metal, in addition to paper and ``other 
matter.'' While a QR code itself is part of a label, TTB evaluates the 
material it points to under its advertising regulations, as explained 
in TTB Industry Circular 2013-1, ``Use of Social Media in the 
Advertising of Alcohol Beverages,'' which provides as follows:

    Industry members may also enable consumers to access content by 
including a quick response code (or QR Code) on a label or 
advertisement. Consumers can scan the QR Code with their mobile 
device to access the additional content. Depending on the type of 
media that is linked to by the QR Code (such as the industry 
member's web page, mobile application, or blog), the relevant 
regulations and TTB public guidance documents will apply. If, for 
example, the QR code links to a document, such as a drink recipe 
using an industry member's product, the recipe will be considered an 
advertisement because it is a written or verbal statement, 
illustration, or depiction that is in, or calculated to induce sales 
in interstate or foreign commerce.

    TTB believes that TTB Industry Circular 2013-1 covers this matter 
adequately and there is no need to incorporate this policy into the 
regulations.
b. Closed Packaging
    Current regulations in Sec. Sec.  4.38a and 5.41 set out rules for 
the placement of information on bottle cartons, booklets, and leaflets. 
Briefly, these regulations provide that individual coverings, cartons, 
or other containers of the bottle used for sale at retail (that is, 
other than a shipping container), as well as any written, printed, 
graphic, or other matter accompanying the bottle to the consumer shall 
not contain any statement, design, device or graphic, pictorial, or 
emblematic representation prohibited by the labeling regulations.
    The current regulations also require the placement of mandatory 
label information on sealed opaque coverings, cartons, or other 
containers used for sale at retail (but not shipping containers). 
Coverings, cartons, or other containers of the bottle used for sale at 
retail that are designed so that the bottle is easily removable may 
display any information that is not in conflict with the label on the 
bottle contained therein. However, labels must display any brand names 
or designations in their entirety, with any required modifications and/
or statements of composition.
    Thus, the prohibited practices for labeling set forth in existing 
Sec. Sec.  4.39(a) and 5.42(a) apply to bottles, labels on bottles, any 
individual covering, carton, or other container of such bottles used 
for sale at retail, and any written, printed, graphic, or other matter 
accompanying such bottles to the consumer. The current labeling 
regulations in part 7 do not include regulations similar to current 
Sec. Sec.  4.38a and 5.41. However, as set forth at current Sec.  
7.29(a) and (h), the prohibited practices in the labeling regulations 
for malt beverages apply to containers, any labels on such containers, 
or any cartons, cases, or individual coverings of such containers used 
for sale at retail, as well as to any written, printed, graphic, or 
other material accompanying malt beverage containers to the consumer.
    In Notice No. 176, TTB stated that the existing regulations create 
some confusion as to when a case constitutes labeling and when it 
constitutes advertising. Accordingly, TTB proposed identical 
regulations in proposed Sec. Sec.  4.62, 5.62, and 7.62 to address 
packaging. The proposed regulations provided, consistent with existing 
regulations in parts 4, 5 and 7, that packaging may not include any 
statements or representations prohibited by the labeling regulations 
from appearing on containers or labels. The proposed regulations also 
provided, consistent with existing regulations in parts 4 and 5 but as 
a new requirement for part 7, that closed packaging, including sealed 
opaque coverings, cartons, cases, carriers, or other packaging used for 
sale at retail, must include all mandatory information

[[Page 7541]]

required to appear on the label. The rationale for requiring mandatory 
information on sealed opaque coverings is that the consumer is not able 
to see the label on the container under normal conditions of retail 
sale. This rationale would not extend to shipping containers that do 
not accompany the container to the retail shelf.
    Furthermore, the proposed regulations provided greater clarity than 
the current provisions about when packaging is considered closed. 
Proposed Sec. Sec.  4.62, 5.62, and 7.62 provide that packaging is 
considered closed if the consumer must open, rip, untie, unzip, or 
otherwise manipulate the package to remove the container in order to 
view any of the mandatory information. Packaging is not considered 
closed if a consumer could view all of the mandatory information on the 
container by merely lifting the container up, or if the packaging is 
transparent or designed in a way that all of the mandatory information 
can easily be read by the consumer without having to open, rip, untie, 
unzip, or otherwise manipulate the package. TTB sought comment on 
whether TTB should require mandatory or dispelling information to 
appear on open packaging when part of the label is obscured.
    TTB solicited comments on whether the proposed rules would require 
significant change to labels, containers, or packaging materials. TTB 
also solicited comments on whether the proposed revisions would provide 
better information to the consumer and make it easier to find mandatory 
information on labels, containers, and packages.
    The comments on this issue were split between those that supported 
the proposed change and those that stated that the proposed amendments 
would change TTB policies and impose new costs on industry members. 
Some commenters, including the Oregon Winegrowers Association and the 
Willamette Valley Wineries Association, supported the proposed 
amendments and urged TTB to go even further, by providing that ``any 
consumer facing information on a label or packaging cannot: (1) Be 
misleading; and (2) convey any information that is unsupportable by the 
label claims.''
    The Williams Group supported the proposed provisions as providing 
more information to consumers; however, they also indicated that the 
amendments might require changes to some packaging.
    The Brewers Association specifically expressed support for proposed 
Sec.  7.62(c), which sets out provisions for closed packaging because 
``[c]onsumers should be able to view the mandatory information at the 
point of purchase.'' The Brewers Association further noted that many 
brewers already place mandatory information on packaging.
    The Beer Institute appeared to support proposed Sec.  7.62, 
provided that ``TTB clarify the term `opaque packaging' as packaging 
through which individual malt beverage bottles/cans (and mandatory 
information contained thereon) cannot be seen by the consumer.''
    However, other commenters, including Heavy Seas Beer, DISCUS, and 
the Wine Institute, opposed proposed Sec. Sec.  4.62, 5.62, and 7.62, 
on the basis that the new requirements would require changes to current 
packaging and would thus impose financial burdens. Heavy Seas Beer 
commented as follows:

    [C]hanging all secondary packaging to meet label requirements, 
meaning can wraps and mother cartons, this would be a significant 
financial burden for smaller suppliers, as the origin plates would 
need to be remade. The cost per plate can run from $1,500-$4,000 per 
package. We estimate that the financial burden for this change would 
cost our brewery about $75,000, which we simply don't have. If this 
new section were to be put into place, we would need 2-4 years to 
implement 100%.

    Wine Institute and DISCUS argued, without providing specific data, 
that the proposal would impose a financial burden. DISCUS argued that 
the proposed amendments would ``adversely affect packaging such as gift 
boxes, gift bags, tubes, etc.'' because this type of packaging would be 
required to bear mandatory information. DISCUS further requested that--
if the proposed rule is adopted--TTB use the language ``sealed'' and 
``otherwise manipulate'' rather than ``closed.'' Wine Institute 
suggested that the proposed clarifications to TTB policy on what type 
of packaging was ``closed'' represented a change in policy, and stated 
that ``TTB should not change its policy on containers that can be 
opened and restored to its original condition; in other words, without 
breaking any type of seal, glue or similar type of permanent closure.''
    The New York Farm Bureau, WineAmerica, Heavy Seas Beer, and a 
member of the public raised concerns about the cost of having to place 
mandatory information on ``shipping containers'' and ``mother 
cartons,'' and also discussed the use of this type of packaging for 
direct-to-consumer sales (such as sales by wine clubs). Beverly Brewery 
Consultants made the observation that proposed Sec.  7.62 would result 
in modification or redesign of packaging. Finally, Senator Kennedy 
commented in opposition to this proposal as one of many that could be 
confusing for consumers and lead to label resubmission.
TTB Response
    After carefully considering the comments, it is TTB's conclusion 
that the proposed amendment caused confusion on the part of industry 
members with regard to whether the proposed amendment would apply to 
shipping cartons; this was not the intent of the proposed revision. 
However, based on the comments, TTB cannot determine with any certainty 
the extent to which the proposed new requirements would require 
industry members (in particular, brewers) to change their packaging 
materials and incur new costs. TTB does not believe that this can be 
resolved without undergoing additional notice and comment rulemaking on 
a more specific proposal regarding this issue.
    Accordingly, TTB will consider the new requirements for malt 
beverages as suggestions for future rulemaking but will not adopt these 
requirements at this time. Instead, TTB will retain the current 
regulations with regard to parts 5 and 7, with minor modifications to 
section 7.62 to clarify that the prohibition against statements or 
representations that would be prohibited on a label would include 
misleading brand names and class/type designations. This is consistent 
with current TTB policy. TTB recognizes that this means the regulations 
will not require malt beverages to display mandatory information on 
closed cartons. However, malt beverage cartons, cases, or other 
coverings of the container used for sale at retail will continue to be 
subject to the prohibited practices provisions. With regard to 
clarification of current policy as to what constitutes sealed packaging 
for industry members, TTB is not changing its current interpretation of 
the existing regulations.
c. Brand Names and Trademarks
    Proposed Sec. Sec.  4.64, 5.64, and 7.64 set forth requirements for 
brand names of wine, distilled spirits, and malt beverages, 
respectively. The proposed regulations simply clarify the current 
regulations by providing that a brand name is misleading if it creates 
(by itself or in association with other printed or graphic matter) any 
erroneous impression or inference as to the age, origin, identity, or 
other characteristics of the distilled spirits. A brand name that would 
otherwise be misleading may be qualified with the word ``brand'' or

[[Page 7542]]

with some other qualification, if the appropriate TTB officer 
determines that the qualification dispels any misleading impression 
that the label might otherwise create.
    The Mexican Chamber of the Tequila Industry commented that proposed 
Sec.  5.64 should be revised to include more specific criteria for 
determining whether a brand name is misleading, and that legal or 
administrative instruments should be established to resolve any 
disagreement in this regard between the TTB official and the brand 
owner.
TTB Response
    TTB is finalizing Sec. Sec.  5.64 and 7.64 as proposed. TTB is not 
making the change suggested by the Mexican Chamber of the Tequila 
Industry regarding the inclusion of more specific criteria, and the 
notice did not solicit comments on more specific language. TTB will 
consider this comment as a suggestion for future action. With regard to 
the process for resolving disagreements between TTB and brand owners, 
TTB notes that the procedures in part 13 regarding administrative 
appeals of the denial or revocation of label approval would apply to 
brand name issues as well as any other labeling issue that an applicant 
or certificate holder wishes to contest through the administrative 
process.
d. Name and Address
    In the regulations on the name and address of bottlers and 
producers of domestically bottled wine, distilled spirits, and malt 
beverages, Notice No. 176 proposed clarifying changes to existing 
requirements.
    The FAA Act provides that wine, distilled spirits, and malt 
beverage labels must contain certain mandatory information, including 
the name of the manufacturer, bottler, or importer of the product. See 
27 U.S.C. 205(e)(2). Under current regulations, bottlers of distilled 
spirits and malt beverages may list either the place of bottling, every 
location at which the same industry member bottles the product, or, 
under certain circumstances, the principal place of business of the 
industry member that is bottling the product. Bottlers of distilled 
spirits or malt beverages that utilize one of the latter two options 
must mark the labels using a coding system that enables the bottler and 
TTB to trace the actual place of bottling of each container. This both 
protects the revenue and allows for the tracing of containers in the 
event of a product recall.
    In Notice No. 176, TTB noted that, with the growing number of craft 
brewers and craft distillers in the marketplace, there may be more 
interest among consumers as to where malt beverages are brewed and 
where distilled spirits are distilled. On the other hand, TTB also 
wished to provide industry members with flexibility in their labeling 
statements, to accommodate the growing number of arrangements where 
products are produced or bottled pursuant to contractual arrangements. 
One of the major reasons for allowing the use of principal places of 
business and multiple addresses on labels is to allow industry members 
to use the same approved label for their products that are bottled or 
imported at different locations rather than having to seek approval of 
multiple labels. In Notice No. 176, TTB noted that, under both the 
existing and proposed regulations, industry members are always free to 
include optional statements that provide consumers with more 
information about their production and bottling processes if they wish. 
Accordingly, TTB sought comments from all interested parties, including 
industry members and consumers, on whether the proposed labeling 
requirements provided adequate information to the consumer while 
avoiding undue burdens on industry members.
    With regard to alcohol beverages imported in containers, the name 
and address inform the consumer of the identity of the importer of the 
alcohol beverage product and the location of the importer's principal 
place of business. The current regulations at Sec. Sec.  4.35(b), 
5.36(b), and 7.25(b) provide that, on labels of imported wines, 
distilled spirits, and malt beverages, respectively, the words 
``imported by,'' or a similar appropriate phrase, must be stated, 
followed immediately by the name of the permittee who is the importer, 
or exclusive agent, or sole distributor, or other person responsible 
for the importation, together with the principal place of business in 
the United States of such person.
    Like the current regulations, the proposed regulations in 
Sec. Sec.  4.68, 5.68, and 7.68 required the name and address of the 
importer when the product is imported in containers. The proposed 
regulations clarified that for purposes of these sections, the importer 
is the holder of an importer's basic permit making the original customs 
entry into the United States, or is the person for whom such entry is 
made, or the holder of an importer's basic permit who is the agent, 
distributor, or franchise holder for the particular brand of imported 
alcohol beverages and who places the order abroad. These provisions 
mirror the policy set forth in Revenue Ruling 71-535 with regard to the 
name and address requirements applicable to importers.
    Proposed Sec. Sec.  4.67, 5.67, and 7.67 addressed the labeling of 
products bottled after importation, in a manner largely consistent with 
current regulations. If the product is bottled after importation in 
bulk, by or for the importer thereof, the proposed rules required an 
``imported and bottled by'' or ``imported by and bottled for'' 
statement, as appropriate.
    The proposed regulations in Sec. Sec.  4.67, 5.67, and 7.67 
specifically addressed, for the first time, the name and address 
requirements applicable to wine, distilled spirits, and malt beverages 
that are imported in bulk and then subject to further production or 
blending activities in the United States.
    In section 1421 of the Taxpayer Relief Act of 1997, Public Law 105-
34, Congress enacted a new IRC provision that permits the transfer of 
beer in bulk containers from customs custody to internal revenue bond 
at a brewery. After transfer to internal revenue bond at a brewery, 
imported beer may be bottled or packed without change or with only the 
addition of water and carbon dioxide, or may be blended with domestic 
or other imported beer and bottled or packed.
    In ATF Procedure 98-1, TTB's predecessor agency provided guidance 
to brewers and bottlers for the labeling of imported malt beverages 
bottled in the United States. This guidance was necessary because the 
existing regulations in part 7 do not address the labeling of imported 
malt beverages that are bottled in the United States, or the labeling 
of imported malt beverages that are blended with other imported malt 
beverages or with domestic malt beverages, and then bottled or packed 
in the United States.
    Similarly, the current regulations in part 5 provide for the 
labeling of distilled spirits bottled after importation, but do not 
provide rules concerning the labeling of spirits that were subject to 
production activities in the United States after importation.
    Thus, proposed Sec. Sec.  4.67, 5.67, and 7.67 provide rules for 
the labeling of wine, distilled spirits, and malt beverages, 
respectively, that are imported in bulk and are then blended with wine, 
distilled spirits, or malt beverages of a different country of origin, 
or subjected to production activities in the United States that would 
alter the class or type of the product. The proposed rules provide that 
such products must be labeled with a ``bottled by'' statement, rather 
than an ``imported by'' statement.

[[Page 7543]]

    The proposed regulations also included new provisions on the use of 
trade names, and the name and address requirements for ``contract 
bottling'' situations, in which products are produced and/or bottled by 
a third party pursuant to a contact with the brand owner. While these 
provisions were new to the regulations, they reflect current TTB 
policy. Finally, to reflect current TTB policy, TTB proposed new 
language in the regulations regarding the use of misleading trade 
names.
    In response to the proposed regulations, TTB received comments from 
various interested parties, including alcohol beverage producers, trade 
associations, and individual commenters. Some of the commenters 
addressed wine-specific issues, which TTB is not addressing in this 
document.
e. Organization and General Comments
    Regarding the reorganization of existing 27 CFR 5.36 into three 
distinct sections, DISCUS stated that it opposed the proposed 
Sec. Sec.  5.66, 5.67, and 5.68 because ``[t]here is no reason to 
divide the existing rule into three separate proposals'' and that the 
proposed regulations ``are convoluted and inconsistent with the 
direction of providing essential, understandable information for 
consumers.'' DISCUS also stated that current Sec.  5.36(a)(6) and 
current Sec.  5.36(b)(2)(iii) sufficed for purposes of identifying the 
proprietor and importer, respectively, and their principal place of 
business.
    With regard to proposed 27 CFR 5.66, specifically, DISCUS opposed 
the proposal on the ground that it ``not only fails to modernize the 
labeling and advertising rules but also is out of sync with historic 
industry practices and today's economy. There is no evidence to suggest 
that consumers are confused with the existing name and address rules 
and this new proposal only would serve to further confuse consumers.''
    The Beer Institute commented that it was ``generally concerned 
about the changes proposed,'' as TTB did not explain why current 
regulations are inadequate and that ``speculation that more activity in 
the malt beverage sector `may' lead consumers to want more information 
about where malt beverages are brewed simply isn't enough to justify 
regulatory change.'' The Beer Institute noted that industry members may 
choose to provide consumers with more information about their 
production and bottling process and urged TTB to allow market and 
consumer demands ``to dictate the level of specificity.''
TTB Response
    In response to the DISCUS comment regarding TTB's proposed division 
of Sec.  5.36 into three distinct sections, TTB notes that the proposed 
regulations are intended to more clearly distinguish between the 
regulatory requirements for domestically produced distilled spirits, 
distilled spirits imported in containers, and distilled spirits bottled 
after importation by separating the current name and address section 
into three separate sections. TTB believes that setting out these 
requirements in separate sections promotes ease of compliance for 
industry members.
    Furthermore, the new regulations offer greater clarity and promote 
compliance by incorporating previously issued guidance documents. For 
instance, the proposed regulations clarify what is meant by 
``importer'' for purposes of these sections by incorporating Revenue 
Ruling 71-535 into the regulations. The new regulations offer further 
clarity by setting out new regulatory requirements for distilled 
spirits that were bottled after importation and that were subject to 
further production or blending activities in the United States.
f. Distinguishing Between Imported and Domestic Products
    NABI expressed its support for proposed 27 CFR 4.68. 5.68, and 7.68 
and stated that the proposed sections are ``helpful'' because they 
provide ``greater specificity of the parties that may appear on the 
label [and] names of the importer in the `imported by' statement than 
does the current sections 4.25(b)(1), 5.36(b)(1), and 7.25(b).'' 
Concerning proposed 27 CFR 7.67, Beverly Brewery Consultants expressed 
its support for the incorporation of TTB Procedure 98-1 in the 
regulations, as it ``has existed far too long without being 
incorporated into the CFR.''
    However, DISCUS raised objections to the introduction of the term 
``wholly made'' when referring to products made in the United States 
without imported distilled spirits, commenting as follows:

    The existing name and address rule has worked well for industry 
members and the introduction of the term ``wholly made'' only serves 
to confuse matters. TTB requests comments regarding whether these 
proposals provide adequate information to consumers and avoid undue 
burdens on industry members--we respectfully submit that the 
existing language better balances these concerns.

    With regard to proposed 27 CFR 5.67, alcohol beverage attorney 
Steven Masket commented as follows:

    Both Section 5.67(a) and Section 5.69 reflect the intention of 
the TTB to defer to [CBP] with respect to country of origin marking, 
but the bald enumeration of processes in 5.67(c), results in the 
possibility that a product of foreign origin will be marked as 
domestic. I ask that the TTB further clarify that a product that is 
foreign should be treated and marked as imported and not considered 
domestic by the sheer action of simply blending or production 
activities conducted after importation in bulk, unless those 
activities meet the [CBP] rules related to country of origin 
marking.

    Mr. Masket suggested that TTB revise the regulations to either 
distinguish between imported products that TTB considers to have 
undergone a substantial transformation in the United States under CBP 
rules and those that have not. Or, alternatively, Mr. Masket suggests 
that, if TTB ``does not believe that the identity of the importer is 
relevant after any of those certain processing activities enumerated in 
Sec.  5.67(c) are conducted in the United States, whether substantial 
transformation [has occurred] or not under CBP regulations,'' that TTB 
should amend section 5.67(c) to add a reference to the CBP marking 
requirements.
TTB Response
    In response to the DISCUS comment, TTB believes that the proposed 
regulatory text regarding products that are ``wholly made'' in the 
United States without imported distilled spirits clearly distinguishes 
those products from domestic distilled spirits that are blended with 
imported distilled spirits. TTB addresses the latter category of 
products in the section pertaining to imported spirits that are blended 
with domestic spirits after importation.
    In response to Mr. Masket's comments on Sec.  5.67(c), TTB does not 
believe it is necessary to revise the proposed Sec.  5.67(c) to 
distinguish between products that have undergone a substantial 
transformation under CBP rules and those that have not. The TTB 
regulation does not require the use of the term ``imported by'' to 
describe beverages that have undergone production activities in the 
United States. This in no way implies that such products may not be 
considered to have a foreign country of origin under CBP rules, and in 
fact consistent with current regulations, the regulations at Sec.  5.69 
include a cross-reference to CBP regulations regarding country of 
origin marking requirements at 19 CFR parts 102 and 134. This section 
reflects TTB's intention to defer to CBP on the determination of 
whether a country of origin statement is required to appear on 
distilled spirits bottled after importation that are subject to further 
production or blending activities in the United States

[[Page 7544]]

and, if a statement is required, on determinations of the appropriate 
country of origin. Accordingly, when CBP requires a country of origin 
statement to appear on a distilled spirits container, such labeling 
statements must be consistent with CBP regulations.
    As to Mr. Masket's comment on Sec.  5.67(c)'s prohibition on 
placing an ``imported by'' statement on a label of distilled spirits 
bottled after importation and subject to certain processes in the 
United States, it is TTB's position that a ``bottled by'' statement is 
more appropriate for the labeling of such products in order to 
adequately distinguish such products from alcohol beverages that are 
imported in containers.
g. Comments in Favor of Imposing New Requirements With Regard to Names 
and Addresses on Labels
    In addition to comments on the proposed regulations, several 
comments provided suggestions for further amendments to the 
regulations. The Brewers Association requested that TTB require labels 
to disclose whether brewers are part of a controlled group, as defined 
in 26 U.S.C. 5051(a) if the name of the controlled group is different 
from the brewery or its trade name as it appears on the label. As a 
basis for this proposal, the Brewers Association stated that disclosing 
brewery ownership is fundamental to TTB's responsibilities in 
implementing the FAA Act and that current regulations allow large 
companies to hide their ownership and control over multiple brands. 
NBWA commented in favor of strengthening transparency with regard to 
the identity of alcohol beverage producers.
TTB Response
    In response to comments that advocate for new regulatory 
requirements within the name and address sections, TTB considers such 
comments as outside the scope of this rulemaking as Notice No. 176 did 
not solicit comments from industry or the general public on these 
specific proposals. For example, the Brewers Association comment in 
favor of requiring brewers to identify whether they are members of 
``controlled groups'' under tax laws would represent a new requirement. 
Such a requirement would go beyond the longstanding policy of TTB and 
its predecessor agencies to allow the use of trade names, rather than 
the actual corporate names of bottlers or importers (much less the 
status of such companies as members of controlled groups) in the 
labeling of alcohol beverages. TTB's statutory mandate is to ensure 
that the labels identify the bottler or importer of the product. 
Accordingly, TTB is not adopting regulations that would go beyond the 
identification of the bottler or importer by requiring additional 
information about producers, bottlers, or importers in the name and 
address regulations.
h. Misleading Trade Names
    The Beer Institute expressed its concern about TTB's proposal to 
prohibit the use of trade names that would create a misleading 
impression as to the age, origin, or identify of the product. The Beer 
Institute stated that TTB did not provide a specific explanation of the 
need for this proposal and that it ``would be a dramatic change to the 
long-standing practice for contract production brewers to adopt and use 
the customer's name/trade name on the labels.'' DISCUS also raised 
concerns about the provisions regarding the use of trade names, 
commenting as follows:

    The requirement in subsection (g)(2) regarding trade names is 
unnecessary. Some trade names have been used for years and could be 
impacted solely because TTB deems them to be misleading 
(irrespective of whether consumers are misled). TTB has limited 
resources and is not equipped to make determinations as to what is 
and is not misleading in this context and TTB should not make 
arbitrary changes to longstanding trade names. Separately, requiring 
changes to brand names could cause immense harm and have untold 
financial and marketplace impacts for industry members.
TTB Response
    TTB intended the provision on misleading trade names to reflect 
current policy with regard to the misleading use of trade names. 
However, TTB did not intend to prohibit, for example, the adoption of 
one industry member's trade name on the basic permit or brewer's notice 
of another industry member in the context of a contract bottling or 
production arrangement.
    TTB is finalizing the provision that allows for the use of trade 
names. This is consistent with current regulations in part 5 for 
distilled spirits and current policy for malt beverages. However, TTB 
is not adopting the proposed language specifying that trade names may 
not be used in a misleading manner. However, TTB is maintaining its 
current policy on this issue, and will view the comments as suggestions 
for further public guidance on this issue to clarify TTB's policy. TTB 
notes that the general prohibition on the use of misleading statements 
on labels suffices to provide TTB with authority to regulate the 
misleading use of trade names; however, we also stress that TTB does 
not consider the use of identical trade names by different permittees 
in a contract bottling or production context misleading, in and of 
itself.
7. Subparts F, G, and H--Statements That Are Restricted, Prohibited, or 
Prohibited if Misleading
    The current regulations include a single section titled 
``Prohibited Practices'' that sets forth a number of prohibited 
practices, and it also describes certain labeling practices that TTB 
regulates in various ways. To make regulatory provisions easier to 
find, and to improve readability, TTB proposed to divide the 
regulations addressing prohibited practices into three subparts: (1) 
Subpart F, practices that may be used under certain conditions, (2) 
subpart G, practices that are always prohibited, and (3) subpart H, 
practices that are prohibited only if they are used in a misleading 
manner on labels.
    Proposed subparts F, G, and H each contain language to clarify that 
the prohibitions in these subparts apply to any label, container, or 
packaging, and define those terms as used in these subparts. 
Specifically, for purposes of proposed subparts F, G, and H, the term 
``label'' includes all labels on alcohol beverage containers on which 
mandatory information may appear, as set forth in proposed Sec. Sec.  
4.61, 5.61, and 7.61, as well as any other label on the container. 
These proposed sections also set out the parts of the container on 
which mandatory information may appear.
    The proposed text defines ``packaging'' for purposes of proposed 
subparts F, G, and H as any carton, case, carrier, individual covering, 
or other packaging of such containers used for sale at retail. It does 
not include shipping cartons or cases that are not intended to 
accompany the container to the consumer. The proposed rule also 
provides that the term ``statement or representation'' as used in those 
subparts includes any statement, design, device, or representation, and 
includes pictorial or graphic designs or representations as well as 
written ones. It also includes both explicit and implicit statements 
and representations. This provision avoids the need to repeat the 
reference to each type of statement or representation in every section 
in these subparts.
a. Subpart F--Restricted Labeling Statements in General
    Proposed Sec. Sec.  4.81, 5.81, and 7.81 set out that the labeling 
practices covered under subpart F (such as organic claims or food 
allergen labeling) may be used

[[Page 7545]]

on labeling only when used in compliance with the provisions set out in 
subpart F.
    DISCUS expressed support for this section. Beverly Brewery 
Consultants stated that Sec.  7.81(a)(1) was unnecessary and commented 
that there was no explanation as to why the definition of ``container'' 
in paragraph (a)(2) differs from the provision in the definitions 
section.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.81 and 7.81 as proposed. 
TTB disagrees with the comment from Beverly Brewery Consultants with 
regard to each section's paragraph (a)(1), which sets forth the general 
requirements applicable to restricted labeling statements, and makes 
the regulations easier to understand. With regard to each section's 
paragraph (a)(2), its purpose is not to define what a container is, but 
to clarify that the provisions regarding restricted labeling statements 
apply to all parts of the container, including those parts of the 
container on which information would not satisfy mandatory labeling 
requirements. For example, the regulations in Sec. Sec.  5.61 and 7.61 
provide that information appearing on the bottom surface of a container 
would not satisfy mandatory labeling requirements. However, pursuant to 
the language in Sec. Sec.  5.81(a)(2) and 7.81(a)(2), information 
appearing on the bottom surface of the container would nonetheless be 
subject to the provisions on restricted labeling practices. Thus, for 
example, the regulations would prohibit use of an optional ``organic'' 
claim on the bottom surface of a container unless the use of the claim 
met the requirements set forth in the regulations. The final 
regulations do not include any changes to the language of the proposed 
regulations.
b. Voluntary Disclosure of Major Food Allergens
    TTB received two comments that are specific to the proposed 
regulations pertaining to voluntary allergen labeling in Sec. Sec.  
4.82, 5.82, and 7.82, which set out the current regulatory provisions 
without change. DISCUS commented in support of the provisions as 
proposed. The Brewers Association commented in favor of mandatory 
allergen labeling, and stated that ``[i]n the event that TTB decides to 
maintain the existing voluntary allergen disclosure policy, the BA 
believes that this issue warrants a separate rulemaking in the 
future.'' In addition, as noted in section I.E.1.a of this document, 
TTB received several comments from consumers and consumer groups in 
support of mandatory allergen labeling.
TTB Response
    TTB is finalizing Sec. Sec.  5.82 and 7.82 as proposed. As 
explained in section I.E.1.a. of this document, comments about 
mandatory allergen labeling are beyond the scope of this rulemaking. In 
the preamble to Notice No. 176, TTB specifically stated that there were 
a number of ongoing rulemaking initiatives related to labeling and 
advertising of alcohol beverages, including any substantive changes to 
the allergen labeling requirements, which TTB stated it would handle 
separately from the proposed rule due to their complexity. TTB will 
treat comments in favor of mandatory allergen labeling as suggestions 
for future rulemaking.
c. Environmental, Sustainability, and Similar Statements
    In Notice No. 176, TTB proposed a new section in parts 4, 5, and 7 
(see proposed Sec. Sec.  4.85, 5.85, and 7.85) on the use of statements 
relating to environmental and sustainability practices. The proposed 
rule allowed statements related to environmental or sustainable 
agricultural practices, social justice principles, and other similar 
statements (such as, ``Produced using 100% solar energy'' or ``Carbon 
Neutral'') to appear on labels as long as the statements are truthful, 
specific, and not misleading. Similarly, the proposed regulations 
provided that statements or logos indicating environmental, sustainable 
agricultural, or social justice certification (such as, ``Biodyvin,'' 
``Salmon-Safe,'' or ``Fair Trade Certified'') may appear on labels of 
products that are actually certified by the appropriate organization.
    WineAmerica, the New York Farm Bureau, and Sazerac expressed 
support for the proposed regulations. However, some commenters, 
including the Brewers Association, DISCUS, and Comit[eacute] European 
des Enterprises Vins opposed the proposed provisions as unnecessary and 
unduly restrictive, and commented that they would delay the label 
review process.
TTB Response
    TTB has determined that some commenters misunderstood the effect of 
the proposed regulations, and misconstrued the proposed regulation to 
require additional steps to the label review process, whereas the 
proposal simply clarified that the identified claims must be truthful, 
specific, and non-misleading, and that certification claims must be 
truthful. Nonetheless, TTB is not finalizing proposed Sec. Sec.  5.85 
and 7.85 because TTB agrees that the general regulations on false or 
misleading claims adequately cover this issue.
d. Use of the Term ``Organic''
    Current TTB labeling regulations do not define the term 
``organic,'' but instead provide that the optional use of the term 
``organic'' in labeling and advertising must comply with regulations 
issued by the United States Department of Agriculture's (USDA's) 
National Organic Program (7 CFR part 205), as the USDA interprets those 
regulations. Proposed Sec. Sec.  4.84, 5.84, and 7.84 would clarify 
current TTB regulations by editing existing language specifically 
stating that organic claims must conform with USDA regulations 
concerning the National Organic Program. DISCUS expressed support for 
the proposed regulation. TTB also received comments with regard to 
certification requirements that are specific to imported wine, which 
TTB will address when it finalizes the proposed wine regulations.
TTB Response
    TTB is Finalizing Sec. Sec.  5.84, and 7.84 as Proposed.
e. Prohibited Labeling Practices in General
    Subpart G sets forth the prohibited labeling practices. Proposed 
Sec. Sec.  4.101, 5.101, and 7.101 provide that the prohibitions set 
forth in this subpart apply to any label, container, or packaging, and 
then sets out the definitions of those terms for purposes of this 
subpart. The prohibited practices include false statements and obscene 
or indecent depictions. The proposed rule restated and reorganized 
prohibitions currently found in the TTB regulations.
    DISCUS commented that this provision was unnecessary on the basis 
that it is ``repetitive and addressed elsewhere.''
TTB Response
    TTB is finalizing Sec. Sec.  5.101, and 7.101 as proposed. As 
previously noted, TTB proposed to divide the regulations addressing 
prohibited practices into three subparts: (1) Subpart F, practices that 
may be used under certain conditions, (2) subpart G, practices that are 
always prohibited, and (3) subpart H, practices that are prohibited 
only if they are used in a misleading manner on labels. This final rule 
adopts this organization; accordingly, it is necessary to provide for 
the substantive prohibitions in each subpart so that the reader does 
not need to refer to a

[[Page 7546]]

different subpart to understand the scope of the regulation. TTB 
believes this organization makes it easier for industry members to 
locate and understand necessary information.
f. False or Untrue Statements
    Current regulations prohibit labeling statements that are false or 
untrue in any particular, or that, irrespective of falsity, directly, 
or by ambiguity, omission, or inference, or by the addition of 
irrelevant, scientific, or technical matter, tends to create a 
misleading impression. The FAA Act, 27 U.S.C. 205(e), authorizes the 
issuance of regulations to prohibit statements that are either false or 
misleading. As previously noted, TTB's proposed reorganization of the 
regulations places the prohibitions against false statements and 
misleading statements in separate subparts. Thus, the regulations on 
false statements were proposed in Sec. Sec.  4.102, 5.102, and 7.102 
within Subpart G, Prohibited Labeling Practices, while the prohibitions 
on misleading statements were proposed in Subpart H, Labeling Practices 
That Are Prohibited If They Are Misleading. The American Craft Spirits 
Association (ACSA) expressed support for proposed Sec.  5.102. However, 
DISCUS expressed opposition to the proposed restatement of existing 
regulations.
TTB Response
    TTB is finalizing Sec. Sec.  5.102 and 7.102 as proposed. TTB 
believes that the reorganization of the existing prohibition will make 
the regulations easier to read and understand. The restatement of this 
statutory prohibition does not change current requirements or policy, 
but it does conform more closely to how commercial speech is analyzed 
under the First Amendment, which distinguishes between false commercial 
speech (which is not protected) and misleading commercial speech 
(which, if it is only potentially misleading, may be qualified in a 
manner that dispels the otherwise misleading impression created by the 
claim). See Pearson v. Shalala, 164 F.3d 650 (D.C. Cir. 1999).
g. Obscene or Indecent
    Consistent with current regulations, proposed Sec. Sec.  4.103, 
5.103, and 7.103 provide that wine, distilled spirits, and malt 
beverage labels, containers, or packaging may not contain any statement 
or representation that is obscene or indecent.
    The ACSA commented that they are ``neutral'' on this provision. 
Sazerac commented that TTB was approving labels that, in its view, were 
``fairly obviously'' obscene.
    Several commenters asserted that there were First Amendment 
concerns with the regulatory prohibition on ``obscene and indecent'' 
materials on labels. DISCUS and the Brewers Association urged TTB to 
amend the regulations to remove the prohibition altogether. DISCUS 
suggested that the terms are ``subjective concepts'' and questioned 
``who will be the judge of what is indecent or obscene in the context 
of TTB labeling or advertising regulations.'' The Brewers Association 
included this prohibition along with other regulations that it 
suggested were ``subject to First Amendment challenges as an agency of 
the federal government is forced to make subjective decisions approving 
or disapproving messages that brewers are communicating to consumers.'' 
The Brewers Association suggested that this type of regulation would be 
better left to self-enforcement through trade associations. The New 
Civil Liberties Alliance commented that the proposed regulation 
provided discretion to TTB that was ``inherently boundless because a 
licensing official must make his or her own ad hoc subjective 
determination as to whether the content of the COLA application meets 
his or her standards for decency.''
    The Wine Institute suggested amending the regulations to prohibit 
only obscene material, noting that indecent speech receives protection 
under the First Amendment, and suggesting that the relevant case law 
indicates ``that such regulations are vulnerable to a First Amendment 
challenge.'' In particular, the Wine Institute pointed to the decisions 
in two cases involving First Amendment challenges to efforts by States 
to ban alcohol beverage labels with vulgar or offensive images. See Bad 
Frog Brewery, Inc. v. N.Y. State Liquor Auth., 134 F.3d 87 (2d Cir. 
1998), and Flying Dog Brewery, LLLP v. Michigan Liquor Control Com'n, 
597 Fed. Appx. 342 (6th Cir. 2015).
TTB Response
    TTB is not adopting the suggestion to eliminate the prohibition on 
``obscene'' material on labels or advertisements because the current 
regulatory prohibition simply incorporates the statutory prohibitions 
in 27 U.S.C. 205(e)(4). Furthermore, it is well recognized that the 
First Amendment does not protect ``obscene'' speech or child 
pornography. See Sable Communications v. FCC, 492 U.S. 115, 124 (1989). 
Thus, the statutory and regulatory prohibitions on ``obscene'' labels 
and advertisements do not violate the First Amendment.
    In evaluating whether labels are ``obscene,'' TTB is mindful of the 
three-pronged test established by the U.S. Supreme Court in Miller v. 
California, 413 U.S. 15, 24-25 (1973). TTB recognizes that applying 
this test in a prior approval context is a difficult challenge.
    TTB agrees that the Wine Institute has raised a valid point about 
whether there is a distinction between ``obscene'' and ``indecent'' 
speech under the FAA Act. TTB is aware that offensive speech that is 
not obscene receives protection under the First Amendment, and TTB is 
mindful of these First Amendment limitations when reviewing labels and 
advertisements. In Iancu v. Brunetti, 139 S. Ct. 2294, 2299 (2019), the 
Supreme Court struck down a provision of the Lanham Act that barred the 
registration of ``immoral'' or ``scandalous'' trademarks, finding it to 
be a viewpoint-based ban. The Court also noted that the Justices, in 
Matal v. Tam, 137 S. Ct. 1744 (2017), had ``found common ground in a 
core postulate of free speech law--the government may not discriminate 
against speech based on the ideas or opinions it conveys.'' However, 
the FAA Act's restriction on obscene and indecent speech is not a 
viewpoint-based restriction. TTB does not reject labels on the sole 
grounds that they might be offensive. Instead, as the Sazerac 
acknowledges, TTB has approved labels including content that some 
people may find offensive, including labels that include expletives or 
nudity in certain contexts, based on the First Amendment protections 
afforded to such speech under current case law.
    Because TTB did not seek specifically comments on this issue in 
Notice No. 176, TTB believes that it cannot make any substantive 
changes to the existing standard without engaging in notice and comment 
rulemaking on the issue. TTB will treat the comments on this issue as 
suggestions for future rulemaking action, and will retain the statutory 
prohibition in existing regulations. Nonetheless, in applying that 
standard, TTB will continue to apply current case law under the First 
Amendment, and will not reject labels on the sole grounds that they may 
be offensive. As always, TTB urges industry members to consider that, 
while their products are intended only for adult consumption, labels on 
containers may be visible to children on store shelves.
h. Subpart H--Labeling Practices Prohibited as Misleading
    Proposed Sec. Sec.  4.122(a), 5.122(a), and 7.122(a) set out the 
general prohibition against any statement or representation,

[[Page 7547]]

irrespective of falsity, that is misleading to consumers as to the age, 
origin, identity, or other characteristics of the wine, distilled 
spirits, or malt beverages, or with regard to any other material 
factor. Proposed Sec. Sec.  4.122(b), 5.122(b), and 7.122(b) also 
provided as follows: ``For example, an otherwise truthful statement may 
be misleading because of the omission of material information, the 
disclosure of which is necessary to prevent the statement from being 
misleading.'' This is not a new policy, but the proposed rule sets it 
out more clearly.
    The Wine Institute urged TTB to eliminate the examples in proposed 
Sec.  4.122 and elsewhere in the Code of Federal Regulations, 
suggesting that examples are better conveyed to industry via written 
guidance documents made available on the agency's website. The Wine 
Institute stated that ``[b]y providing examples of permissible or 
impermissible label statements in written guidance, TTB will be able to 
create or change examples and communicate this information to industry 
members in an expeditious manner as opposed to making further points of 
clarification or adjustments to the Code of Federal Regulations.''
TTB Response
    This final rule adopts proposed Sec. Sec.  5.122 and 7.122 as 
proposed. In this case, the example simply illustrates an important 
principle to facilitate industry understanding of the regulations, 
rather than a factual situation that might change with other 
circumstances. Accordingly, the final rule retains this example.
i. General First Amendment Concerns
    Subject to certain limited exceptions, the FAA Act specifically 
requires industry members to obtain a certificate of label approval in 
order to prevent the introduction into interstate commerce of alcohol 
beverage containers that are not labeled in accordance with the 
implementing regulations. See 27 U.S.C. 205(e). Nonetheless, TTB 
received some comments that raised general First Amendment concerns 
about the pre-approval of labels to enforce the statutory prohibition 
on misleading statements on alcohol beverage labels subject to the FAA 
Act.
    NABI commented that while current case law does not protect 
misleading commercial speech, ``it sets a high bar for the Federal 
Government in backing up and proving its claim that any one specific 
representation on a label or in an advertisement is misleading.'' NABI 
further suggested that ``waiting for consumer complaints about specific 
labels or advertisements may be the better approach than purely 
speculating in advance of approving a certificate of label approval 
(COLA) or pre-clearing a proposed advertisement.''
    The New Civil Liberties Alliance (NCLA), which describes itself as 
``a nonprofit civil rights organization founded to defend 
constitutional rights,'' commented on several First Amendment issues. 
The NCLA stated that the proposed rule reformed ``an overly burdensome 
regulatory system.'' However, its comment also argues that ``COLAs are 
unconstitutional prior restraints on liberties guaranteed to all 
Americans by the First Amendment. To ameliorate the unconstitutional 
impact of restraints on speech, the Rule should apply the process and 
post-publication enforcement of the proposed labeling requirements for 
COLAs related to personalized labels * * * to all COLAs.'' [Emphasis in 
original.]
    The NCLA comment questioned the distinction between the treatment 
of labels (which TTB reviews prior to the introduction of the product 
in interstate commerce) and advertisements (for which TTB does not 
require prior review). NCLA suggested that TTB instead amend the 
regulations to allow the approval of COLAs that include a ``template'' 
of mandatory information, and stated that this approach would be a 
logical extension of TTB's current and proposed policies regarding 
allowable revisions to approved labels and approval of personalized 
labels.
    The Washington Legal Foundation (WLF), a nonprofit, public-interest 
law firm and policy center, stated that while TTB's proposed rule is in 
many ways clarifying, it ``inadequately protects commercial-speech 
rights. TTB is interested in promoting marketplace civility and 
ensuring that consumers are not misled, but rules promoting these 
laudable aims must still avoid unduly chilling free speech rights under 
the First Amendment.''
    The Brewers Association (BA) submitted a comprehensive comment on 
this issue, stating as follows:

    As a basic policy, the BA respectfully suggests that TTB treat 
all types of label claims and trade dress in a similar manner. If 
claims, graphics, or other content on a label are misleading on the 
label as submitted, or if claims obscure or improperly modify 
mandatory information, TTB should address whatever elements of the 
label are misleading. Otherwise, the BA believes that TTB should 
maintain its focus on mandatory information concerning malt 
beverages. TTB could expressly reserve the right to initiate label 
revocation proceedings or enforcement action to seek corrections if 
claims on labels are determined to be false or misleading via 
competitor complaints or other credible sources, such as the Federal 
Trade Commission or recognized third party accreditation 
organizations.
    Various proposals in Notice 176 impose content restrictions 
based on existing TTB regulations that are difficult or impossible 
for TTB to enforce in an evenhanded manner and may violate 
commercial speech protections guaranteed by the First Amendment. 
See, e.g., Cabo Distributing Co., Inc. v. Brady, 821 F. Supp. 601 
(N.D. Cal. 1992); Bad Frog Brewery v. New York State Liquor 
Authority, 134 F.3d 87 (1998). The recent U.S. Supreme Court opinion 
in Iancu v. Brunetti, decided on June 24, 2019 is also instructive 
on the topic of regulation of potentially offensive speech.
    Specific restrictions proposed Sec.  7.126 (use of flags); Sec.  
7.127 (use of certain seals), Sec.  7.124 (disparaging competitors), 
and Sec.  7.103 (obscene or indecent statements or representations) 
are all subject to First Amendment challenges as an agency of the 
federal government is forced to make subjective decisions approving 
or disapproving messages that brewers are communicating to 
consumers. The BA recommends that TTB delete these sections from the 
final regulations.
    Hundreds of examples exist of labels approved by TTB that 
arguably violate existing regulations as well as the proposed 
regulations. This reality places TTB in an untenable situation. To 
the extent that any of the restrictions referenced above pose 
legitimate government concerns, they can be addressed under proposed 
Sec.  7.122, which lays out a solid approach to making 
determinations on false and misleading labels. If TTB attempts to 
enforce Sec. Sec.  7.126, 7.127, 7.124, and 7.103, a First Amendment 
challenge is possible, and the archaic restrictions seem unlikely to 
survive. In the past when confronted by an analogous situation, TTB 
properly identified health claims as a legitimate policy concern, 
engaged in rulemaking, and promulgated a comprehensive and 
defensible regulation that is included in Notice 176 at Sec.  7.129.
TTB Response
    After carefully reviewing the comments, TTB has concluded that its 
proposed regulations comply with First Amendment case law regarding 
regulation of commercial speech and the statutory requirement to pre-
approve labels to prevent misleading claims.
    In Central Hudson Gas & Electric Corp. v. Public Services 
Commission, 447 U.S. 557, 563-566 (1980), the Supreme Court held that 
in order to regulate commercial speech, the Government must satisfy a 
four-prong test. First, the First Amendment protects expression only if 
it concerns lawful activity and is not misleading. Second, the 
Government must establish a substantial interest. Third, the regulation 
must directly advance the governmental interest asserted. Finally, the 
regulation must be no more

[[Page 7548]]

extensive than necessary to serve the interest asserted.
    In two cases involving alcohol beverages, the Supreme Court struck 
down bans on truthful and non-misleading commercial speech. In Rubin v. 
Coors Brewing Co., 514 U.S. 476, 491 (1995), the Supreme Court applied 
the Central Hudson analysis in striking down the FAA Act's prohibition 
of statements of alcohol content on malt beverage labels unless 
required by State law. In 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 
484 (1996), the Supreme Court struck down Rhode Island's ban on 
advertising the price of alcohol beverages on First Amendment grounds. 
However, these decisions did not address the Government's authority to 
regulate actually or potentially misleading commercial speech regarding 
alcohol consumption. TTB also notes that courts have expressed a 
general First Amendment preference for additional disclosure over bans 
on potentially misleading commercial speech. See, e.g., Pearson v. 
Shalala, 164 F.3d 650, 656 (D.C. Cir. 1999), citing Bates v. State Bar 
of Arizona, 433 U.S. 350, 376 (1977) (where attorney advertising was 
not inherently misleading, ``the preferred remedy is more disclosure, 
rather than less.'').
    To the extent that some comments are suggesting that the FAA Act's 
COLA requirements are unconstitutional, TTB disagrees. A law acts as a 
prior restraint when it mandates that a speaker seek government 
permission before engaging in protected expression; however, the 
Supreme Court has indicated that the prior-restraint doctrine may not 
apply to commercial speech. See Central Hudson Gas & Elec. Corp v. 
Public Serv. Comm'n, 447 U.S. 557, 571 n. 13 (1990) (stating that 
``commercial speech is such a sturdy brand of expression that 
traditional prior restraint doctrine may not apply to it'').
    In a recent case involving a First Amendment challenge to TTB's 
denial of a petition to allow specific health claims in the labeling 
and advertising of distilled spirits regarding the alleged DNA-
protective properties of an ingredient added to alcohol beverages, the 
D.C. Circuit declined again to rule on the issue of whether traditional 
prior restraint doctrine applies to commercial speech. See Bellion 
Spirits, LLC v. United States, 7 F.4th 1201, 1213 (D.C. Cir. Aug. 6, 
2021) (``We have previously left open whether the prior-restraint 
doctrine applies in the context of commercial speech * * * and we do so 
again here. Even assuming the applicability of prior-restraint 
principles, Bellion fails to demonstrate an unconstitutional prior 
restraint.''). With respect to a facial challenge to TTB's COLA system, 
the court held as follows:

    By imposing sufficiently ``narrow, objective, and definite 
standards,'' Shuttlesworth v. City of Birmingham, 394 U.S. 147, 151, 
89 S.Ct. 935, 22 L.Ed.2d 162 (1969), the COLA scheme adequately 
channels TTB's discretion. The COLA regulation provides that TTB 
``will approve'' specific health claims ``only if the claim is 
truthful and adequately substantiated by scientific or medical 
evidence; sufficiently detailed and qualified with respect to the 
categories of individuals to whom the claim applies; adequately 
discloses the health risks associated with both moderate and heavier 
levels of alcohol consumption; and outlines the categories of 
individuals for whom any levels of alcohol consumption may cause 
health risks.'' See 27 CFR 5.42(b)(8)(ii)(B)(2). Those conditions of 
approval are ``sufficiently definite to constrain [TTB] within 
reasonable bounds.'' See Nutritional Health Alliance v. Shalala, 144 
F.3d 220, 228 (2d Cir. 1998).
    In addition, the COLA process * * * channels TTB's 
decisionmaking through adequately strict deadlines. See Freedman v. 
Maryland, 380 U.S. 51, 58, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965). The 
regulation states that TTB must respond to an application within 90 
days, unless it elects to use one 90-day extension. See 27 CFR 
13.21(b). Indeed, applicants who do not receive a decision from TTB 
within the specified time period may file an administrative appeal. 
Id. We find no ``unbridled'' discretion in that scheme. See City of 
Lakewood, 486 U.S. at 757, 108 S.Ct. 2138.

See Bellion Spirits at 1213.
    Accordingly, it is TTB's position that the COLA regulations do not 
represent an unconstitutional prior restraint on commercial speech.
j. Guarantees
    The FAA Act specifically authorizes the issuance of regulations to 
prohibit, irrespective of falsity, such statements relating to 
``guarantees'' as the Secretary of the Treasury ``finds to be likely to 
mislead the consumer.'' See 27 U.S.C. 205(e). Proposed Sec. Sec.  
4.123, 5.123 and 7.123 prohibit the use of guarantees that are likely 
to mislead the consumer. However, TTB does not prohibit money-back 
guarantees. This is a restatement of existing policy currently found in 
Sec. Sec.  4.39(a)(5), 5.42(a)(5), and 7.39(a)(5), with minor 
modifications for clarity.
    In addition to the First Amendment general concerns that commenters 
raised about this provision and other provisions relating to misleading 
speech, TTB received two comments in opposition to the proposed 
provisions on guarantees on the ground that they were unnecessary. ADSA 
commented that the provisions are from a bygone era, and DISCUS 
suggested that the proposals were vague and unnecessary.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.123 and 7.123 without 
change. TTB agrees that the general provisions on misleading statements 
might cover this issue; however, the intent of the regulation is to 
implement the specific statutory language on this issue. Accordingly, 
TTB believes that these specific regulations still serve a useful 
purpose.
k. Statements That Are Disparaging of a Competitor's Products
    Current regulations mirror the language in the FAA Act, 27 U.S.C. 
205(e), which simply prohibits labeling and advertising statements that 
``are disparaging of a competitor's products.'' See 27 U.S.C. 205(e) 
and (f). In proposed Sec. Sec.  4.124, 5.124, and 7.124, TTB sought to 
clarify longstanding ATF and TTB policy (as expressed in T.D. ATF-180, 
49 FR 31667, August 8, 1984) that a competitor's product is disparaged 
within the meaning of the statutory prohibition only when statements or 
claims about the product, or relating to the product, are false or 
would tend to mislead the consumer. This policy does not preclude 
additional information such as ``puffery'' statements made about one's 
own product, nor does it prohibit truthful and nonmisleading 
comparative statements or claims that place the competitor's product in 
an unfavorable light. TTB's intention was to clarify the prohibition in 
a manner that conformed to current case law about protections afforded 
to truthful and non-misleading commercial speech.
    In the proposed regulatory text, TTB also included examples of 
statements that would, or would not, be prohibited under this 
provision. For example, TTB would not prohibit a statement of opinion 
such as ``We think our [product] tastes better than any other [product] 
on the market.'' However, TTB would consider a truthful statement such 
as ``We do not add arsenic to our [product]'' to be disparaging because 
it falsely implies that other producers do add arsenic to their 
products. Furthermore, the proposed regulations provide that labels may 
not include statements that disparage their competitor's products by 
making specific allegations, such as ``Brand X is not aged in oak 
barrels,'' when such statements are untrue.
    In its comment, the Washington Legal Foundation (WLF) suggested 
that the prohibition on false or misleading ``disparaging'' statements 
about a competitor's products would ``violate commercial-speech rights 
under the First Amendment.'' WLF pointed out

[[Page 7549]]

that a recent Supreme Court case, Matal v. Tam, 137 S. Ct. 1744 (2017), 
struck down the ``disparagement clause'' of the Lanham Act, which 
prohibited Federal trademark registration for marks that might 
disparage any persons living or dead. WLF noted that the Court held 
that the ban ``offends a bedrock First Amendment principle: Speech may 
not be banned on the ground that it expresses ideas that offend.'' 137 
S. Ct. at 1751. WLF noted that the Court emphasized that heightened 
scrutiny applies when a law or regulation engages in viewpoint 
discrimination.
    The comment from NABI noted that as a general matter, the Supreme 
Court has rejected ``paternalism'' on the part of the Federal 
Government in prohibiting commercial speech, and suggested that review 
by TTB of consumer deception after receipt of consumer complaints might 
be a better approach than ``purely speculating'' in advance of 
approving a label. The NABI comment specifically referenced the 
proposed rule on ``disparaging'' statements. DISCUS commented in favor 
of removing both the proposed and existing language on disparaging 
statements, and suggested that proposed ``Section 5.122 should serve as 
the only regulation governing truthful and misleading labeling claims. 
In that regard, the instant rulemaking has several proposed rules 
governing truthful, non-misleading statements regarding distilled 
spirits labels, containers, and packaging when only one rule is 
necessary.''
    The Brewers Association suggested that the rule on disparaging 
statements was one of several issues that were better left to self-
regulation by the alcohol beverage industries, noting that the Brewers 
Association and other industry trade associations maintain advertising 
codes that address obscene, indecent, and disparaging materials. The 
Association also noted that the ``Federal Trade Commission has 
repeatedly expressed support for voluntary industry initiatives to 
regulate offensive alcohol beverage advertising and for advertising of 
many other consumer products and services. See, e.g., Federal Trade 
Commission, Self-Regulation in the Alcohol Industry: March 2014, p. 
34.''
    TTB received a comment in support of the proposed language on 
disparaging statements from ACSA. Other trade associations suggested 
amendments to the proposed revision on disparaging statements. Wine 
Institute commented in support of the proposed amendments, but stated 
that the codified regulations should not include examples of 
permissible or impermissible label statements, believing that written 
guidance on TTB's website better conveys such examples to industry. 
Accordingly, Wine Institute recommended removing the examples from the 
proposed regulation.
    ADSA questioned the continued need for any specific regulation that 
prohibits false or misleading statements that are disparaging about 
competitors, and suggested that such statements would be covered by the 
general prohibition on false or misleading statements. ADSA was 
particularly concerned that the second example in the proposed rule, 
about not adding arsenic to a distilled spirits product, was capable of 
misinterpretation and ``could be construed as suggesting that any claim 
about the absence of an ingredient or feature (e.g., `gluten-free') 
constitutes a prohibited disparaging claim.'' Accordingly, ADSA stated 
that ``[a]t a minimum, TTB should delete and not replace the examples 
in the current proposal.''
TTB Response
    TTB notes that it designed the proposed amendment to the 
prohibition on statements that are ``disparaging'' of a competitor's 
products to address First Amendment issues and clarify longstanding 
policy that the prohibition applies only to false or misleading 
statements.
    Unlike the ``disparagement clause'' of the Lanham Act, which 
applied to marks that might disparage any individuals, living or dead, 
regardless of whether the information conveyed was truthful and non-
misleading, TTB narrowly focused the proposed rule on statements that 
are false or misleading, and the disparage the products of a 
competitor. Under the first prong of the Central Hudson test, the First 
Amendment does not protect false or misleading commercial speech. The 
language of the FAA Act does not specify this important qualification, 
but, as explained above, this has been the position of TTB and its 
predecessor agency since the 1980s. Unlike the provision of the Lanham 
Act that was struck down in Matal v. Tam, the disparagement prohibition 
in the proposed rule was thus specifically aimed at commercial speech 
(relating to the products of a competitor) that is false or misleading, 
and thus serves the dual purpose under the FAA Act of protecting fair 
competition and preventing consumer deception.
    Based on the comments regarding the examples, TTB agrees that in 
this particular situation, the proposed examples seemed to confuse 
people rather than shed light on its position. Accordingly, TTB is 
removing the examples from the language of the final rule. Instead, the 
final rule prohibits only false or misleading statements that 
explicitly or implicitly disparage a competitor's product, and does not 
prohibit statements of opinion or truthful and non-misleading 
comparisons between products. This language is entirely consistent with 
current case law under the First Amendment.
l. Tests or Analyses
    Proposed Sec. Sec.  4.125, 5.125 and 7.125 prohibit statements or 
representations of, or relating to, analyses, standards, or tests, 
whether or not truthful, that are likely to mislead the consumer. These 
proposed provisions incorporate current policy, but also provide new 
examples of misleading statements or representations under these 
sections, which TTB intends to illustrate the principle that a truthful 
statement about a test or standard may nonetheless be misleading as 
presented.
    The ACSA expressed its support for the proposed regulation. Wine 
Institute suggested the removal of the example of a misleading 
statement regarding a test or analysis. The Mexican Chamber of the 
Tequila Industry and the Tequila Regulatory Council supported the 
inclusion of examples, and requested inclusion of a new example 
relating specifically to the testing of tequila by anyone other than an 
authorized conformity assessment body. Furthermore, the Tequila 
Regulatory Council proposed that ``in the case of tequila, no 
statements or declaration of test, other than the one provided by the 
conformity assessment body in the form of a NOM [Norma Oficial 
Mexicana] mark, be allowed'' and that TTB should require a NOM mark on 
any label of Tequila bottled in the United States. The comment states 
that this mark, which includes the four-digit code assigned to the 
distiller, is a sign of quality and product assurance. Finally, DISCUS 
and ADSA opposed the inclusion of Sec.  5.125, on the same grounds that 
they opposed the provisions on guarantees. Among other things, they 
commented that the general provisions on misleading statements would 
cover misleading statements relating to analyses, standards, or tests.
TTB Response
    TTB is finalizing proposed Sec. Sec.  5.125 and 7.125 without 
change. TTB agrees with DISCUS and ADSA that the general provisions on 
misleading statements might cover this issue; however, the intent of 
the regulation is to provide guidance that is more specific to

[[Page 7550]]

industry members and consumers as to how they may depict statements 
about standards, analyses, and tests on a label without running afoul 
of the statute and regulations. Accordingly, TTB believes that these 
specific regulations, including the example provided, serve a useful 
purpose.
    TTB is not adopting the suggestions made in the comments from the 
Mexican Chamber of the Tequila Industry and the Tequila Regulatory 
Council for the inclusion of a new example in the regulation regarding 
testing by anyone other than an authorized conformity assessment body. 
Similarly, TTB is not adopting the Tequila Regulatory Council's 
suggestion that a NOM mark be required on labels of Tequila bottled in 
the United States, as this would require more mandatory information to 
appear on Tequila labels. TTB believes that these comments relate 
specifically to Tequila rather than to the general prohibition on 
misleading testing claims, and that they fall outside of the scope of 
the proposals on which TTB solicited comments in Notice No. 176.
m. Depictions of Government Symbols
    Under current regulations, TTB prohibits representations relating 
to the American flag or the U.S. armed forces from appearing on alcohol 
beverage labels in order to prevent misconceptions that the U.S. 
government or its armed forces endorse, or otherwise supervised the 
production of, the alcohol beverage. However, the regulations prohibit 
the use of flags from other countries only where it would be 
misleading. The regulations on U.S. and foreign flags are based on the 
same statutory provision of the FAA Act at 27 U.S.C. 205(e)(5), which 
prohibits deception of the consumer by use of a name or representation 
of individuals or organizations when such use creates a misleading 
impression of endorsement.
    Consistent with the statutory prohibition on which TTB bases these 
regulations, it is TTB's current policy to enforce this regulatory 
prohibition only where such representations might tend to mislead 
consumers. Thus, TTB proposed to amend the regulations to remove the 
blanket prohibition against the use of representations of, or relating 
to, the American flag, the armed forces of the United States, or other 
symbols associated with the American flag or armed forces. Therefore, 
proposed Sec. Sec.  4.126, 5.126, and 7.126, retain the prohibition 
against the use of such symbols or images where they create the false 
or misleading impression that the government entity represented has 
endorsed or was otherwise affiliated with the labeled product. 
Furthermore, each of these proposed sections specifically provides that 
the section does not prohibit the use of a flag as part of a claim of 
American origin or a claim of another country of origin.
    TTB received several comments in support of removing the blanket 
ban on the use of flags on alcohol beverage labels, including comments 
from WineAmerica, the New York Farm Bureau, DISCUS, ACSA, and an 
attorney in the alcohol beverage field. ADSA suggested that as amended, 
the provision was meaningless. Wine Institute commented that a specific 
provision on flags was unnecessary and should be covered by a general 
misleading provision. Comments from the Brewers Association and the New 
Civil Liberties Alliance raised First Amendment concerns about several 
regulatory provisions, including this one.
    On the other hand, TTB received two comments that favored a blanket 
ban on the use of the American flag on labels or in advertisements. One 
of these comments, from the Missouri Craft Distillers, raised concerns 
about using national symbols for marketing purposes. The other comment, 
from Sazerac, suggested that TTB's proposal is contrary to the Federal 
Flag Code.
TTB Response
    TTB is finalizing Sec. Sec.  5.126 and 7.126 as proposed. The 
regulations on depictions of government symbols are based on the 
statutory provisions of the FAA Act (27 U.S.C. 205(e)(5)) that prohibit 
deception of the consumer by use of name or representation of 
individuals or organizations when such use creates a misleading 
impression of endorsement or affiliation. As stated in Notice No. 176 
and above, the proposed regulations remove the blanket ban on use of 
flags and other symbols of the United States and Armed Forces. Rather, 
the proposed regulations set out TTB's current policy prohibiting the 
use of these symbols only when they create a misleading impression that 
there was some sort of endorsement by, or affiliation with, the 
governmental entity represented.
    With regard to Sazerac's comment, TTB notes that the Federal Courts 
have not ruled on the validity of the Flag Code or other criminal 
provisions with regard to the use of the image of the American flag for 
marketing purposes. TTB believes that the use of an image of a flag as 
part of a general message of patriotism may be protected under the 
First Amendment, even if that message appears on a product label. For 
more information, see the general discussion in the Congressional 
Research Service's ``Frequently Asked Questions About Flag Law,'' dated 
October 7, 2019, which can be found on the website at https://crsreports.congress.gov/product/pdf/R/R45945.
    In any case, TTB's regulations implementing the FAA Act's ban on 
the use of images that create a misleading impression that an alcohol 
beverage is endorsed or otherwise affiliated with any private or public 
organization does not intersect with or otherwise affect the 
enforcement of the Flag Code, which governs the handling and display of 
the United States flag. Thus, TTB does not address the Flag Code in its 
analysis of this regulation.
n. Depictions Simulating Government Stamps Relating to Supervision
    Proposed Sec. Sec.  4.127, 5.127, and 7.127 retain prohibitions 
against depictions simulating government stamps or relating to 
government supervision but provide that these representations are only 
prohibited if they create the misleading impression that the alcohol 
beverage is manufactured under government authority. In Notice No. 176, 
TTB specifically solicited comments on whether there is still a need 
for regulations on this issue.
    DISCUS and the ACSA commented in favor of the proposal. However, 
several commenters, including Wine Institute, ADSA, and the Williams 
Group expressed the view that specific provisions on this issue were no 
longer necessary, as they reflected a ``bygone era'' and it is 
questionable as to whether such stamps or other symbols retain any 
meaning for consumers today. The Brewers Association included this 
provision in its general comment raising First Amendment concerns.
TTB Response
    Based on the comments, TTB agrees that there is no longer a need to 
include specific prohibitions on this issue. TTB will continue to cover 
misleading representations on this issue via the general prohibition on 
misleading labeling statements. Accordingly, this final rule does not 
include proposed Sec. Sec.  5.127 and 7.127.
o. Health-Related Claims
    In proposed Sec. Sec.  4.129, 5.129, and 7.129, TTB set out current 
regulations pertaining to health-related statements without change. 
ACSA expressed support for these provisions as proposed. The Wine 
Institute and St. George Spirits sought clarification on the use of 
specific terms used in these provisions, and the Wine Institute 
suggested that TTB publish guidance

[[Page 7551]]

with regard to specific issues that the regulations present.
TTB Response
    TTB is finalizing Sec. Sec.  5.129 and 7.129 as proposed. However, 
TTB will consider the comments it received regarding the issuance of 
public guidance on issues pertaining to the regulations on health-
related statements.
p. Appearance of Endorsement
    Consistent with current regulations, proposed Sec. Sec.  4.130, 
5.130, and 7.130 maintains TTB's prohibition on the use of the name of 
a living person or existing private or public organization if the use 
of that name or a representation misleads the consumer to believe that 
the product has been endorsed, made, or used by, or produced for, or 
under the supervision of, or in accordance with the specifications of, 
such individual or organization. The difference between the current and 
proposed regulations is that proposed Sec. Sec.  4.130, 5.130, and 
7.130 made it more clear that actual endorsements are permitted and 
that TTB may request documentation supporting a claim of endorsement.
    DISCUS commented in favor of retaining the existing regulations, 
without explaining the basis for this comment.
TTB Response
    TTB believes the proposed regulations reflect the same policy as 
the current regulations but are easier to understand. Accordingly, TTB 
is finalizing Sec. Sec.  5.130 and 7.130 as proposed, but without the 
language that TTB may request documentation supporting a claim of 
endorsement. TTB is removing this language because it is true of any 
claim.
    The final rule also includes language in Sec. Sec.  5.130 and 7.130 
that was inadvertently omitted from the proposed rule, for consistency 
with the statutory provisions at 27 U.S.C. 205(e)(5). As amended, the 
regulatory language, like the statutory language, specifically provides 
that the provisions on implied endorsements do not apply to the use of 
the name of any person engaged in business as a distiller, brewer, 
rectifier, blender, or other producer, or as an importer, wholesaler, 
retailer, bottler, or warehouseman of distilled spirits, wine, or malt 
beverages. The legislative history of the FAA Act, as reflected in the 
Report of the House Committee on Ways and Means (H.R. Rep. No. 1542, 
74th Cong., 1st Sess., at 13), explains that this ``provision does not 
extend to cases of conflict within the industry as to proprietary 
rights in trade or brand names.'' This is consistent with TTB's 
longstanding position, as stated on the COLA form, that its issuance of 
a COLA in no way confers trademark protection.
    The final rule also includes a ``grandfathering'' provision that is 
found in the statutory language, regarding names that were in use by 
the industry member or its predecessors in interest prior to August 29, 
1935, the date that the FAA Act was enacted. While TTB believes it is 
unlikely that such ``grandfathered' names are still being used, we are 
retaining the statutory language in the final rule out of an abundance 
of caution.
8. Subpart I--Standards of Identity
a. Geographic Names
    In Notice No. 176, TTB proposed to reorganize and amend existing 
regulations setting out the conditions under which geographic names for 
distilled spirits and malt beverages may be used on a label as, or as 
part of, the designation of the product.
    For distilled spirits, the proposed regulations at Sec.  5.154 
sought to clarify and update the rules currently found in 27 CFR 
5.22(k) and (l). These regulations allow ``generic'' names (i.e., names 
that have lost their geographical significance by usage and common 
knowledge) to be used to designate products from places other than the 
geographic areas otherwise indicated by the name. Current regulations 
provide that ``London dry gin'' and ``Geneva (Hollands) gin'' are 
examples of generic names. This means, for example, that ``London dry 
gin'' may be used on the label of a product that is produced somewhere 
other than London, and no modifier such as ``type'' would be required 
for such a product.
    The proposed regulations provided that geographic names that have 
not been found to be ``generic'' may not be used on products made 
outside of the place indicated by the name, unless TTB determines that 
the name represents a type of distilled spirit, in which case the 
designation must include a qualifier such as ``type'' or ``style'' or a 
statement indicating the true place of production. TTB proposed to list 
names of specific products that fall within the categories of products 
without geographical designations that are associated with a particular 
geographical region. Similarly, for malt beverages, TTB proposed to 
clarify the requirements for the use of geographical names, which are 
currently set out in 27 CFR 7.24(f) though (h), and to add to the 
regulations several established generic names as well as names of types 
of malt beverages that require a qualification that indicates the true 
place of production.
    In response to these proposals, TTB received a significant number 
of comments from various interested parties, including distilled 
spirits and malt beverage producers, domestic and foreign trade 
associations, and foreign governments. The European Union (EU) 
expressed concern that certain names of distilled spirits and malt 
beverages listed in TTB's regulations ``correspond to EU [geographical 
indications].'' Likewise, Spirits Europe commented that ``a number of 
names quoted are registered as geographical indications in the EU (for 
example Ouzo, Aquavit).'' Furthermore, many commenters, including the 
EU, opposed certain aspects of TTB's proposal that allowed for the use 
of the terms ``type'' and ``style'' on the grounds that it would 
violate provisions of the Agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPS). For instance, DISCUS commented 
that the proposed regulations appear inconsistent with Article 23 of 
the Agreement and ``quer[ied] whether TTB has considered its 
applicability.'' Likewise, the NABI encouraged TTB to ``review the U.S. 
obligations [under TRIPS] to ensure that the U.S. is in compliance.''
    Furthermore, several commenters suggested that the use of the terms 
``type'' and ``style'' in conjunction with a geographical designation 
creates potential for consumer confusion. For example, FEVS commented 
that allowing for the use of ``type'' or ``style'' would be ``extremely 
confusing and misleading to consumers as to the nature and essential 
qualities of the product'' being purchased. Similarly, DISCUS commented 
that ``the use of the terms `style' and `type' would be extremely 
misleading to consumers in particular as it relates to the distinctive 
products of other nations.'' The Mexican Chamber of the Tequila 
Industry stated its belief that the use of the terms ``type'' or 
``style'' on distinctive products ``undermines the traditional culture 
and social context associated with it'' and that ``labels using the 
name of the distinctive product should only be allowed when certified 
according to its standard of identity.'' The Republic of Ireland stated 
that ``use of the words `Irish type' or `Irish style' on whiskey-
related goods will convey an improper association with Irish Whiskey 
and is an evocation of Ireland when such products will not have been 
produced in Ireland.''
    Several commenters proposed further amendments to the regulations. 
For instance, an individual commenter requested that ``Berliner weiss 
[be]

[[Page 7552]]

added to the list of recognized non-geographical beer styles'' and 
Sazerac requested that TTB ``move `Ojen' and `Swedish Punch' to the 
list of products that are associated with a particular place that have 
become generic, and therefore may be manufactured in any place.'' The 
BNIC requested that TTB add language to its regulations to ``[make] 
absolutely clear that when a geographical designation is also a 
standard of identity (e.g., a type designation), that designation 
cannot be used on a label or in advertising except in conformity with 
that standard of identity.'' ACSA supported the intent of TTB's 
proposal but stated that ``clarification and additional protections are 
necessary in order to avoid misleading consumers and to protect 
regional and national American spirit designations.'' Specifically, 
ACSA recommended that ``TTB recognize and protect any spirits 
designations that are a product of a specific geographic region and 
whose production standard have been formally agreed by an organized 
cohort of producers in that region such that their products are 
genuinely differentiated from the category.'' Furthermore, ACSA 
suggested that the terms ``type'' and ``style'' be required to appear 
``on the same line and in the same font as the geographical designation 
stated.''
    With regard to the proposed regulations for malt beverages, Beverly 
Brewery Consultants questioned whether ``Munich,'' ``Munchner,'' and 
``Kulmbacher'' should still be recognized as being distinctive types 
that may be qualified with the word ``type'' or ``American'' or some 
other statement indicating the true place of production. On the other 
hand, the Brewers Association suggested that the proposed rule would 
require labeling changes and suggested that ``[a]ny attempt at this 
point in time to disentangle American and European geographic 
designations for beer styles is almost certain to result in arbitrary 
decisions.'' Finally, an owner of Schilling Beer Co. asked why TTB had 
not yet recognized ``IPA'' (which is an abbreviation of the designation 
``India Pale Ale'') as a recognized style of beer.
TTB Response
    After reviewing and considering the comments received, TTB will not 
move forward, at this time, with the proposed reorganization and 
clarifying amendments to the existing regulations on geographical names 
for distilled spirits and malt beverages. Instead, the final 
regulations for distilled spirits (Sec.  5.154) and malt beverages 
(Sec.  7.146) retain the provisions of the current regulations as they 
appear in sections 27 CFR 5.22(k)-(l) and 27 CFR 7.24(f)-(h), 
respectively. As several commenters raised issues relating to 
compliance with international agreements to which the United States is 
a Party, TTB believes that it must engage in further consultation with 
other government agencies on these matters prior to taking further 
action on the proposed amendments. For this reason, TTB will also 
evaluate the comments that address existing regulations as suggestions 
for further rulemaking.
    TTB notes that its decision to retain the current regulations 
without incorporating the proposed amendments does not represent any 
change in TTB's current policy on the matter of geographical names, as 
set forth in TTB guidance or otherwise. Thus, for example, while the 
final rule does not specifically include Scotch ale (Scottish ale), and 
Russian Imperial Stout (Imperial Russian Stout) as examples of generic 
designations for malt beverages, TTB has already issued public guidance 
recognizing these names as generic. Accordingly, brewers may continue 
to use ``Imperial Russian Stout'' or ``Russian Imperial Stout'' and 
``Scotch Ale'' or ``Scottish Ale'' on labels to describe this type of 
malt beverage without the addition of any qualifying statements, such 
as ``type,'' ``American,'' etc. Similarly, this final rule will not 
affect the continued validity of any certificates of label approval 
that TTB has issued for malt beverage or distilled spirits labels that 
include geographical names (such as approvals issued for ``Ojen'' 
products made in the United States).
    TTB is finalizing the proposed change regarding the recognition of 
``Andong Soju'' in the regulations in Sec.  5.154. Pursuant to Article 
2.13.2 of the United States-Korea Free Trade Agreement, the United 
States agreed to recognize Andong Soju as a distinctive product of the 
Republic of Korea. See TTB Ruling 2012-3.
    Accordingly, the final rule includes Andong Soju in the examples of 
geographical names that may not be used on labels for distilled spirits 
produced in any other place than the particular place of region 
indicated in the name. With regard to the comment about recognition of 
``IPA'' as a type of malt beverage, TTB notes that the designation 
``India Pale Ale'' has been recognized as a generic designation since 
the issuance of the first malt beverage labeling rules under the FAA 
Act in 1936. However, the abbreviation ``IPA'' is not recognized as a 
designation for a malt beverage. It is TTB's policy is to allow ``IPA'' 
to appear as additional information on malt beverage labels; however, 
TTB has not allowed this abbreviation to suffice as the class/type 
designation without an additional designation (such as ``ale,'' 
``beer,'' or ``India Pale Ale''). Because TTB did not solicit comments 
on whether the industry and consumers recognize the term ``IPA'' 
(standing alone on a label) to mean the same thing as ``India Pale 
Ale,'' TTB will not adopt the comment on this issue, but will instead 
consider it as a suggestion for future action.
9. Subpart L--Recordkeeping and Substantiation Requirements
    Proposed Subpart L of parts 4, 5, and 7 provided rules for 
recordkeeping and substantiation requirements for alcohol beverages.
a. Recordkeeping Requirements and Retention Period
    Current regulations require bottlers holding an original or 
duplicate original of a certificate of label approval (COLA) or a 
certificate of exemption to exhibit such certificates, upon demand, to 
a duly authorized representative of the United States Government (see 
27 CFR 4.51, 5.55, and 7.42). Current regulations also require 
importers to provide a copy of the applicable COLA upon the request of 
the appropriate TTB officer or a customs officer (see 27 CFR 4.40, 
5.51, and 7.31). However, these regulations do not state how long 
industry members should retain their COLA. Furthermore, since the 
current regulations were originally drafted, TTB has implemented the 
electronic filing of applications for label approval. Now, applicants 
electronically submit over 98 percent of new applications for label 
approval, and TTB electronically processes the remainder. Industry 
members have asked for clarification as to whether they have to retain 
paper copies of certificates that TTB electronically processed. 
Finally, because industry members may make certain specified revisions 
to approved labels without obtaining a new COLA, it is important that 
industry members keep track of which label approval they are using when 
they make such revisions.
    Accordingly, proposed Sec. Sec.  4.211, 5.211, and 7.211 provided 
that, upon request by the appropriate TTB officer, bottlers and 
importers must provide evidence of label approval for a label that is 
used on an alcohol beverage container and that is subject to the COLA 
requirements of the applicable part. The proposed regulations stated 
that bottlers and importers could satisfy the requirement by providing 
original certificates, photocopies, or electronic

[[Page 7553]]

copies of COLAs, or records showing the TTB identification number 
assigned to the approved COLA. Where labels on containers reflect 
revisions to the approved label that have been made in compliance with 
allowable revisions authorized to be made on the COLA form or otherwise 
authorized by TTB, the bottler or importer must be able to identify the 
COLA covering the product, upon request by the appropriate TTB officer. 
Bottlers and importers must be able to provide this information for a 
period of 5 years from the date the products covered by the COLAs were 
removed from the bottler's premises or from customs custody, as 
applicable.
    TTB proposed 5 years as a reasonable period for regulated industry 
members to retain records because this period covers both the civil and 
criminal statute of limitations for violations of the FAA Act. TTB 
noted that the proposed rule would not require industry members to 
retain paper copies of each certificate. They should simply be able to 
track a particular removal to a particular certificate, and they may 
rely on electronic copies of certificates, including copies contained 
in the TTB Public COLA Registry.
    DISCUS expressed support for the recordkeeping requirement 
provisions, but raised a separate issue regarding how long TTB kept 
records of approved COLAs and formulas, suggesting that TTB should 
retain them in perpetuity. WineAmerica expressed support for the 
inclusion of a recordkeeping requirement in the regulations but asked 
that if such a form is not physically locatable, TTB should not 
penalize the producer, ``as virtually all TTB related documents can be 
accessed via online sources.'' NABI recommended that there be no 
mandatory retention period for COLAs available on COLAs Online, or in 
the alternative, stated that the retention period should be 3 years 
with a2-year optional extension. NABI stated that retention of 
certificates for every shipment imposed an undue burden on importers 
that a shorter retention period would be lessen, while the Williams 
Group believed 5 years was a reasonable record retention period for 
substantiating documentation. Wine Institute stated that maintaining 
the records required under Sec. Sec.  4.212 and 5.212 for 5 years would 
create a significant recordkeeping and, therefore, financial burden on 
smaller wineries. Wine Institute recommended a3-year retention period, 
which was in line with other TTB record retention requirements and the 
period reviewed by TTB during audits.
    Beverly Brewery Consultants suggested removing as redundant from 
Sec.  7.211(b) the words ``if the product is required to be covered by 
a COLA,'' because the other text in the paragraph already establishes 
that the products and label revisions would be covered by a COLA. 
Beverly Brewery Consultants also recommend removing from Sec.  7.211(c) 
a reference to Sec.  7.26, which does not appear in the proposed 
regulations.
    The New York Farm Bureau commented as follows:

    Beverage producers must provide proof of COLA approval at TTB's 
request. NYFB supports the idea that each producer keeps their own 
records of TTB approved forms, but if such form is not physically 
able to be located, the TTB does not penalize the producer, as 
virtually all TTB related documents can be accessed via online 
sources.
TTB Response
    After reviewing the comments, TTB believes that the proposed 
recordkeeping provisions caused some confusion; therefore, the final 
rule does not adopt Sec. Sec.  5.211 and 7.211 as proposed. Instead, 
TTB is finalizing the provision in current regulations that imposes a 
5-year record retention period for certificates of age and origin for 
imported distilled spirits. These requirements are finalized in new 
Sec.  5.30.
    TTB is also finalizing the provision in the current regulations 
that requires certificate holders to produce COLAs upon demand from an 
appropriate TTB official.
    TTB notes the proposed rule did not require industry members to 
retain paper copies of each certificate. Rather they may rely on 
electronic copies of certificates, including copies contained in the 
TTB Public COLA Registry. TTB is adopting final regulations that 
reflect the use of modern, online systems as it will no longer require 
certificate holders to provide original certificates in response to 
such requests. Instead of consolidating these requirements into a 
recordkeeping subpart, TTB will simply retain the requirements in the 
appropriate sections of the regulations in new Sec. Sec.  5.21(c), 
5.23, 5.24(d), 7.21, and 7.24.
    The DISCUS comment about TTB's own schedule for retaining records 
in its online systems is beyond the scope of this rulemaking, and TTB 
will consider it as a request for further action. Because TTB is not 
adopting the proposed regulations in this final rule, TTB is not 
addressing editorial comments from Beverly Brewery Consultants.
b. Substantiation Requirements
    Proposed Sec. Sec.  4.212, 5.212, and 7.212 set forth specific 
substantiation requirements, which are new to the regulations, but 
which reflect TTB's current policies as to the level of evidence that 
industry members are expected to have to support labeling claims. The 
proposed regulations provided that all claims, whether implicit or 
explicit, must have a reasonable basis in fact. Claims that contain 
express or implied statements regarding the amount of support for the 
claim (e.g., ``tests provide'' or ``studies show'') must have the 
claimed level of substantiation.
    Furthermore, the proposed regulations provided for the first time 
that any labeling claim that does not have a reasonable basis in fact, 
or cannot be adequately substantiated upon the request of the 
appropriate TTB officer, would be considered misleading. The proposed 
regulations in subpart H similarly included the same requirement. TTB 
proposed these revisions to the regulations to clarify that industry 
members are responsible for ensuring that all labeling and advertising 
claims have adequate substantiation.
    NABI raised due process concerns and stated that proposed 
Sec. Sec.  4.212, 5.212, and 7.212 must be clarified and narrowed to 
inform industry members of their obligations. Specifically, NABI 
commented that the provisions allowing TTB to request substantiation 
for any claim, implicit or explicit, did not adequately inform industry 
members of their obligations, and would require importers to maintain 
an indeterminate amount of information for every product they import.
    Wine Origins Alliance (WOA) expressed support for the proposed 
section and noted that the term ``claim'' was not defined in existing 
or proposed regulations, and expected that it would have the same broad 
meaning used by the Federal Trade Commission and Lanham Act 
jurisprudence, i.e., text ``that states or implies a particular fact.'' 
WOA stated that under current TTB regulations, there is no specific 
obligation for an industry member to substantiate a claim on labeling, 
and therefore ``a claim could be based on mere supposition or 
speculation.'' According to WOA, it is currently TTB's burden to prove 
that an unsubstantiated claim is false or misleading, whereas under the 
proposal, TTB could request substantiation for any claim and take 
enforcement action if it found the support inadequate. With this 
understanding, WOA supported the proposed requirements to the extent 
they would cause industry members to be more conservative in deciding 
which claims to put on labels, and thus

[[Page 7554]]

``reduce the chances of claims that falsely or misleadingly suggest a 
connection to one of our member regions.''
    Oregon Winegrowers Association and Willamette Valley Wineries 
Association supported proposed Sec.  4.212 for similar reasons, 
believing it would help avoid consumer confusion by leading to fewer 
false or misleading labeling claims. The Williams Group supported 
requiring substantiation and a reasonable basis in fact for all 
labeling claims.
    Wine Institute recommended removing Sec.  4.122(b)(2) as 
duplicative of Sec.  4.212(b). Proposed 4.122 states TTB's general 
prohibition of misleading statements or representations on wine labels, 
containers, or packaging, and references the substantiation requirement 
in Sec.  4.212(b).
    DISCUS opposed Sec.  5.212 because substantiation requests by TTB 
may delay label approvals. According to DISCUS, TTB faces a significant 
and increasing label review burden and lacks the capacity and expertise 
to determine the sufficiency of scientific or other substantiation of 
claims on distilled spirits labels. DISCUS also expressed concern that 
subjective rejections of labels by label specialists could impede 
product launches or lead to other commercial impacts. The DISCUS 
comment also stated that the proposal may ``affect or delay historical 
labels to the detriment of industry members without commensurate 
benefit to TTB.''
    ADSA similarly believed that TTB lacked expertise to police 
labeling substantiation. ADSA expressed concern that TTB personnel 
would allege substantiation failures that would result in either 
expensive legal proceedings or offers in compromise to resolve the 
allegations. ADSA stated that its member companies already must 
substantiate labeling claims to avoid potential civil and governmental 
liability, including actions by competitors, consumers, State attorneys 
general, and the Federal Trade Commission, so additional requirements 
from TTB were unnecessary.
    Beer Institute believed the phrase ``adequately substantiated,'' 
the standard by which TTB official would determine if a claim was 
misleading under proposed Sec.  7.212, was too vague and required 
clarification. Beverly Brewing Consultants opposed the proposed 
regulation at Sec.  7.212 because it did not distinguish between 
potentially false and misleading claims and generally accepted 
advertising puffery, such as ``Vermont's Favorite Beer'' or ``Great 
Tasting Beer.'' Beverly Brewing Consultants stated that the proposed 
regulation did not have a basis in the current regulations or past 
practice or usage.
TTB Response
    After careful review of the comments, TTB has concluded that the 
proposed language caused confusion among industry members. TTB did not 
intend the proposed regulations to slow down the label review process 
by requiring COLA applicants to substantiate all claims prior to label 
approval, but some commenters incorrectly interpreted them as such. 
Accordingly, TTB is not adopting the proposed regulations on 
substantiation of claims. TTB stresses that it continues to expect 
certificate holders to be able to provide substantiation of both 
implicit and explicit labeling claims upon request.
    It is worth noting that while TTB has not issued regulations on 
``puffery,'' TTB generally follows the FTC's policy under which the 
agency does not expect ``puffery,'' in the form of statements of 
opinion or hyperbolic claims regarding the quality of the product, to 
be substantiated. See ``FTC Policy Statement on Deception,'' dated 
October 14, 1983 (appended to Cliffdale Assoc., Inc., 103 F.T.C. 110, 
185 (1984), which states, ``The Commission generally will not pursue 
cases involving obviously exaggerated or puffing representations, i.e., 
those that the ordinary consumers do not take seriously''). See also 
Pfizer, Inc, 81 F.T.C. 23, 64 (1972) (``[t]he term ``puffing'' refers 
generally to an expression of opinion not made as a representation of 
fact'').
10. Subpart M--Penalties and Compromise
a. Criminal Penalties
    Consistent with statutory provisions of 27 U.S.C. 205(e), proposed 
Sec. Sec.  4.221, 5.221 and 7.221 state that a violation of the 
labeling provisions is punishable as a misdemeanor and refer readers to 
27 U.S.C. 207 for the statutory provisions relating to criminal 
penalties, consent decrees, and injunctions.
    DISCUS, Willamette Valley Wineries Association (WVWA), Oregon 
Winegrower's Association (OWA) and the New York Farm Bureau expressed 
support for this proposal. WVWA and OWA also requested an amendment to 
the proposed penalty regulations, providing that TTB would refer 
permittees who have repeated or egregious labeling violations for 
further investigation.
TTB Response
    The proposed regulatory language simply refers readers to the 
statutory provisions about criminal penalties, as it is not appropriate 
to codify the suggested enforcement policies in the regulations. 
Accordingly, TTB is finalizing Sec. Sec.  5.221 and 7.221 as proposed.
b. Conditions of Basic Permits
    Proposed Sec. Sec.  4.222, 5.222, and 7.222 provide that basic 
permits are conditioned on compliance with the provisions of 27 U.S.C. 
205, including the labeling provisions of parts 4, 5 and 7. The 
proposed regulations state that a willful violation of the conditions 
of a basic permit provides grounds for the revocation or suspension of 
the permit, as applicable, as set forth in 27 CFR part 1.
    DISCUS, Willamette Valley Wineries Association, and the Oregon 
Winegrower's Association expressed support for the regulations as 
proposed. Beverly Brewery Consultants, however, requested that TTB 
delete Sec.  7.222 because part 7 ``does not describe or regulate FAA 
Basic Permits.'' Similarly, the National Beer Wholesalers Association 
questioned whether TTB was proposing to create such a permit 
requirement for brewers.
TTB Response
    Brewers are not required to obtain a basic permit under the FAA 
Act. Instead, the Internal Revenue Code at 26 U.S.C. 5401 requires 
brewers to file a notice of intent to operate a brewery. Under this 
authority, TTB requires brewery applicants to submit TTB Form 5130.10, 
the Brewer's Notice, which collects information similar to that 
collected on a permit application and, when approved by TTB, is a 
brewer's authorization to operate. The requirements for filing and a 
maintaining a brewer's notice are located at 27 CFR part 25, subpart G.
    While brewers are not required to obtain a permit, importers and 
wholesalers of malt beverages are subject to this requirement of the 
FAA Act. See 27 U.S.C. 203-204; 27 CFR 1.21 and 1.23. Because the FAA 
Act provides the authority for part 7 and sets forth the basic permit 
requirements for importers and wholesalers of malt beverages, TTB 
proposed, similar to the parallel provisions for wine and distilled 
spirits, to provide a reference to the basic permit requirement in part 
7. Section 7.222 does not imply that brewers must obtain a basic 
permit, but simply states that possession of a basic permit is 
conditioned upon compliance with 27 U.S.C. 205. TTB is therefore 
finalizing Sec. Sec.  5.222 and 7.222 as proposed.

[[Page 7555]]

c. Compromise
    Proposed Sec. Sec.  4.223, 5.223, and 7.223 set forth TTB's 
authority to compromise liability for a violation of 27 U.S.C. 205 upon 
payment of a sum not in excess of $500 for each offense. The 
appropriate TTB officer will collect this payment and deposit it into 
the Treasury as miscellaneous receipts.
    DISCUS, Willamette Valley Wineries Association, and the Oregon 
Winegrower's Association expressed support for the regulations as 
proposed.
TTB Response
    TTB is finalizing Sec. Sec.  5.223 and 7.223 as proposed.

B. Amendments Specific to 27 CFR Part 5 (Distilled Spirits)

    In addition to the changes discussed in section II.A. of this 
document that apply to more than one commodity, TTB proposed editorial 
and substantive changes specific to the distilled spirits labeling 
regulations in part 5. This section will not repeat the changes already 
discussed in section II.A. of this document, which relate to more than 
one commodity. Furthermore, the proposed changes regarding part 5 on 
which TTB received no comments, and that TTB has adopted without change 
in this final rule, will not be discussed in this section. The 
substantive changes that are unique to part 5, on which TTB received 
comments, are described below. They are organized by subpart.
1. Subpart A--General Provisions
    In Notice No. 176, TTB proposed in Sec.  5.1 a list of definitions. 
These were largely consistent with current regulations but included 
some proposed revisions. TTB addressed some of the proposed amendments 
in T.D. TTB-158. As explained in that final rule, TTB adopted the 
proposed definition of ``distilled spirits'' to codify its longstanding 
position that products containing less than 0.5 percent alcohol by 
volume are not regulated as ``distilled spirits'' under the FAA Act. 
TTB also stated in that final rule that it had decided not to move 
forward with the proposed new definition of the term ``oak barrel.'' 
TTB noted that in the absence of a regulatory definition for ``oak 
barrel'' or ``oak container,'' it will be TTB's policy that these terms 
include oak containers of varying shapes and sizes. However, T.D. TTB-
158 did not address many of the other proposed amendments to the 
definitions. We address the comments on those proposed amendments here. 
Additionally TTB made minor clarifying edits in subpart A for 
consistency with statutory language and current requirements.
Comments on Definitions in Sec.  5.1
    TTB proposed to modify the definition of ``age'' to include the 
concept that the distilled spirits must have been stored in oak barrels 
``in such a manner that chemical changes take place as a result of 
direct contact with the wood.'' TTB received several comments that 
objected to this standard on the grounds that it was subjective, vague, 
arbitrary, and/or unnecessary.
    In Notice No. 176, TTB proposed to add a definition of ``American 
proof,'' which cross references the definition of ``proof,'' which is 
unchanged from the current regulations. TTB uses the term ``American 
proof'' in some circumstances to clarify that the proof listed on a 
certificate should be calculated using the standards in the part 5 
regulations, not under another country's standards. TTB received two 
comments with regard to this proposed definition. One commenter stated 
that the term ``proof'' does not need a regulatory definition because 
it is well understood. The Distilled Spirits Council of the United 
States (DISCUS) commented in support of defining ``proof'' but urged 
TTB to change the temperature at which alcohol content is measured from 
60 degrees Fahrenheit to 68 degrees Fahrenheit (20 degrees Celsius), 
stating that ``[m]oving the U.S. to a 68 [deg]F (20 [deg]C) standard 
would allow U.S. manufacturers to calculate proof in a manner similar 
to the rest of world and reduce production burdens.'' DISCUS also 
commented that it opposed the proposed definition of ``American proof'' 
because it is unnecessary and confusing. TTB also proposed to add a 
definition of ``grain,'' which would define the term to include cereal 
grains as well as the seeds of three pseudocereal grains: Amaranth, 
buckwheat, and quinoa. (A ``pseudocereal'' is not a grass, but its 
seeds may be ground into flour and otherwise used as cereals). TTB has 
received a number of applications for label approval for products using 
these pseudocereals, and TTB also notes that the FDA has proposed draft 
guidance regarding ``whole grain'' claims that include amaranth, 
buckwheat, and quinoa as ``cereal grains.'' See 71 FR 8597 (February 
17, 2006).
    TTB received seven comments in support of allowing the use of 
pseudocereals as grains for the purposes of distilled spirits labeling. 
One distiller suggested that pseudocereals are different from 
traditional cereal grains, and if they are permitted to be used in the 
distillation of whisky, they should be specifically identified on the 
label. DISCUS suggested that TTB include the grains listed in the 
definition of grain set forth in the U.S. Department of Agriculture 
(USDA) regulations at 7 CFR 810.101 (which includes barley, canola, 
corn, flaxseed, mixed grain, oats, rye, sorghum, soybeans, sunflower 
seed, triticale, and wheat) and that the TTB definition should also 
include other grains not listed in the USDA regulations, such as rice, 
millet, and heirloom grains. DISCUS supported the language regarding 
pseudocereals.
    The Kentucky Distillers Association (KDA) supported the inclusion 
of pseudocereals as grains but requested the inclusion of, and 
clarification of, the status of sorghum, proposing a distinction 
between sorghum grains vs. cane sorghum and sorghum stalks (which the 
commenter argued should not be allowed to be considered as grains for 
purposes of distilling whiskey).
    The American Craft Spirits Association (ACSA) supported the 
inclusion of the three pseudo cereals, but also requested the specific 
addition of millet and sorghum, and requested that TTB revise the 
definition to clearly provide that it did not exclude cereals or 
pseudocereals that were not specifically listed. ACSA also requested 
that TTB revise the definition of a ``distiller,'' which is found in 27 
CFR part 19.
TTB Response
    After reviewing the comments on the proposed changes to the 
definition of ``age,'' TTB is retaining the current definition in the 
regulations. The comments suggested that the reference to chemical 
changes was vague, and TTB did not mean to introduce a subjective 
element to the definition. TTB notes that it retains its current policy 
that storage in paraffin-lined oak barrels does not meet regulatory 
requirements for ``aging'' distilled spirits in oak barrels. Finally, 
as proposed in Notice No. 176, the definition of ``age'' in the final 
rule refers to ``oak barrels'' rather than ``oak containers,'' to avoid 
confusion with the new definition of ``container'' in the final rule, 
which includes cans, bottles, and other closed receptacles that are for 
use in the sale of distilled spirits at retail. As previously noted, in 
T.D. TTB-158, TTB explained that in the absence of a regulatory 
definition for ``oak barrel'' or ``oak container,'' it will be TTB's 
policy that these terms include oak containers of varying shapes and 
sizes.
    TTB is finalizing the proposed definition of ``American proof,'' 
because

[[Page 7556]]

in certain contexts, the use of this term makes it clear that the proof 
should be measured under American standards, which (as the DISCUS 
comment noted) differ from those of several other countries. TTB also 
notes that the measurement of proof at 60 degrees Fahrenheit in the 
current and proposed definitions of ``proof'' and ``proof gallon'' in 
part 5 is consistent with the statutory definition of ``proof spirits'' 
in the IRC (see 26 U.S.C. 5002(a)(10)), and adopting a different 
standard in the FAA Act regulations would cause confusion. Accordingly, 
TTB is finalizing the proposed definitions of ``proof,'' ``proof 
gallon,'' and ``American proof.''
    TTB is also adopting the proposed definition of ``grain.'' TTB 
believes this definition will expand options for distillers by 
clarifying that they may use the seeds of amaranth, buckwheat, and 
quinoa to distill spirits (such as ``grain spirits'' or ``whisky'') 
that are required to be distilled from grain. TTB is not adopting the 
DISCUS suggestion to specifically list each type of cereal grain in the 
definition because such specificity is unnecessary. The definition 
includes all cereal grains; as such, TTB does not need to specifically 
list those grains. Furthermore, TTB sees no reason to implement 
specific labeling disclosure requirements for the seeds of the 
pseudocereals amaranth, buckwheat, and quinoa, beyond the labeling 
requirements that currently apply to grains. For example, if a 
commodity statement is required for a spirit distilled from buckwheat, 
the statement could be worded as either ``Distilled from Grain'' or 
``Distilled from Buckwheat.'' This maintains labeling flexibility for 
the bottler or importer.
    With regard to ACSA's suggestion that the regulation be revised to 
provide that all pseudocereals are included within the definition of 
grain, TTB currently has only addressed the status of the three 
pseudocereals that were listed in the proposed regulation (amaranth, 
buckwheat, and quinoa). The commenters did not identify any specific 
pseudocereals that they wished to use in distilled spirits, other than 
the three identified in the proposed rule, and thus TTB sees no reason 
to address this issue in the current rulemaking. Similarly, the 
proposed definition of ``grain'' did not address the issue of whether 
stalks and cane from certain agricultural products (such as sorghum) 
qualify as grains. Thus, the KDA comment proposing that the regulations 
exclude cane sorghum and sorghum stalks is outside the scope of this 
proposal. TTB will treat this comment as a suggestion for future 
rulemaking. TTB also notes that the definition adopted in this final 
rule in no way changes its current policy, which is that sorghum and 
corn syrups are not grains.
    The ACSA comment on amending the definition of ``distiller'' in 27 
CFR part 19 is outside the scope of this rulemaking document, which is 
not amending the part 19 regulations.
    Finally, TTB is making a technical amendment to the definition of 
``distilled spirits.'' As amended by T.D. TTB-158, the definition 
listed the maximum alcohol content of a distilled spirit containing 
wine as ``48 degrees of proof'' and the minimum alcohol content for any 
distilled spirits as ``0.5 percent alcohol by volume.'' For clarity and 
consistency, this final rule amends the definition to express both of 
these values in degrees of proof, with a parenthetical reference to the 
equivalent percentage of alcohol by volume. As amended, the two 
sentences in question state that ``[t]he term `distilled spirits' does 
not include mixtures containing wine, bottled at 48 degrees of proof 
(24 percent alcohol by volume) or less, if the mixture contains more 
than 50 percent wine on a proof gallon basis. The term `distilled 
spirits' also does not include products containing less than one degree 
of proof (0.5 percent alcohol by volume).''
Subpart E--Mandatory Label Information
a. Single Field of Vision Labeling
    In Notice No. 176, TTB proposed to clarify where mandatory 
information must appear on a container by replacing the ``brand label'' 
concept with a requirement that three elements of mandatory information 
(the brand name; the class, type, or other designation; and the alcohol 
content) must appear within the same field of vision. TTB intended the 
proposed amendments to increase flexibility for placing such 
information on a distilled spirits container.
    Previously, the term ``brand label'' was defined in current Sec.  
5.11 as the principal display panel that is most likely to be 
displayed, presented, shown, or examined under normal retail display 
conditions. Further, the definition stated that ``[t]he principal 
display panel appearing on a cylindrical surface is that 40 percent of 
the circumference which is most likely to be displayed, presented, 
shown, or examined under normal and customary conditions of display for 
retail sale.''
    TTB proposed, in proposed Sec.  5.63(a), to allow this mandatory 
information to appear anywhere on the labels, as long as it is within 
the same field of vision, which means a single side of a container 
(which for a cylindrical container is 40 percent of the circumference), 
where all pieces of information can be viewed simultaneously without 
the need to turn the container. TTB explained that requiring that this 
information appear in the same field of vision, rather than on the 
display panel ``most likely to be displayed, presented, shown, or 
examined'' at retail, is a more objective and understandable standard, 
particularly as applied to cylindrical bottles.
    TTB received five comments related to this proposal. A distiller 
and the American Craft Spirits Association each supported the change to 
a ``single field of vision'' concept. Another distiller commented in 
favor of allowing the alcohol content statement to appear on either the 
front label or the back label. Diageo commented in favor of allowing 
all information required by TTB regulations to appear on a single 
label, stating that ``if TTB were to permit all mandatory information 
to appear on a single label, U.S. consumers almost certainly would 
quickly become accustomed to the new label and shop accordingly.'' 
DISCUS supported the increased flexibility that the proposal would 
allow, bringing distilled spirits more in line with current 
requirements for wine. However, DISCUS also recommended that TTB 
liberalize placement rules further, allowing mandatory information to 
appear anywhere on distilled spirits labels.
TTB Response
    In T.D. TTB-158, TTB liberalized the placement rules as proposed by 
allowing the brand name, class and type designation, and alcohol 
content to appear anywhere on the container as long as those three 
pieces of information are in the same field of vision. TTB did not 
adopt the DISCUS comment to eliminate all placement standards for 
mandatory information, based upon TTB's position that it is important 
to keep these three closely-related elements of information together on 
the label since they express vital, related information that, taken 
together, conveys important facts to consumers about the identity of 
the product. With regard to the comment from Diageo, TTB notes that 
under the final rule, industry members may, if they wish, include 
additional optional or mandatory statements on the same label as the 
three pieces of information that are required to appear in the same 
field of vision.
    In this final rule, TTB is finalizing its regulation for mandatory 
information as proposed in Notice No. 176, which

[[Page 7557]]

maintains the substance of the rule as finalized in T.D. TTB-158, but 
also eliminates the ``brand label'' concept from the regulations in 
part 5. As finalized, Sec.  5.63 does not include the term ``brand 
label,'' and thus the definition of the term is also removed from the 
regulations. This amendment is a liberalizing change that will not 
require any changes to labels, but will allow further flexibility in 
the placement of labeling information on distilled spirits containers. 
TTB notes that it may take some time to make conforming changes to the 
COLAs Online system to remove references to a ``brand label,'' but, in 
the interim, COLA applicants may simply designate in COLAs Online the 
label(s) bearing the brand name, class and type designation, and 
alcohol content within a single field of vision as the ``brand label.''
b. Alcohol Content Statement--Proof
    In Notice No. 176, TTB proposed to clarify the existing requirement 
that, if the alcohol content is stated as degrees of proof, that 
statement must appear in direct conjunction with the mandatory alcohol 
content statement. Proposed Sec.  5.65 provided that the statement of 
proof must appear immediately adjacent to the mandatory alcohol content 
statement.
    The proposed rule kept the current requirement that the mandatory 
alcohol content statement must be stated on the label as a percentage 
of alcohol by volume, and provided that a proof statement may, but need 
not, appear on the label. In ATF Ruling 88-1, TTB's predecessor agency 
clarified that an optional proof statement must appear in direct 
conjunction with the mandatory statement only once on the label or in 
an advertisement, specifically, in the place where the alcohol by 
volume statement is serving as the mandatory alcohol content statement. 
Accordingly, the proposed rule clarified that additional statements of 
proof need not be accompanied by the alcohol by volume statement.
    TTB received one comment on this issue, from a distiller (SanTan) 
arguing that there was no need for an optional statement of proof to be 
in direct conjunction with the required statement of alcohol content as 
a percentage of alcohol by volume.
TTB Response
    It is TTB's view that, if an optional proof statement appears on 
the label, it should be in the same field of vision as the required 
alcohol content statement to avoid confusing consumers. The proof of a 
distilled spirit is defined as being twice the ethyl alcohol content as 
a percentage of alcohol by volume, at 60 degrees Fahrenheit. Consumers 
who are used to seeing the alcohol content labeled as a percentage of 
alcohol by volume, however, may be confused if the only alcohol content 
statement on the label is, for example, ``80 proof.'' In contrast, if 
the ``80 proof'' statement appears in the same field of vision as the 
mandatory alcohol content statement (``40 percent alcohol by volume''), 
consumers will understand the relationship between proof and alcohol 
content as a percentage of alcohol by volume.
    Accordingly, as finalized by this document, Sec.  5.65 provides 
that, if a single optional proof statement appears on the label, it 
must be in the same field of vision as the required alcohol content 
statement, expressed as a percentage of alcohol by volume. This change 
liberalizes the placement requirements in the current regulations, 
which provide that there may be no intervening material between the 
mandatory alcohol content statement and the optional proof statement. 
The final rule also provides that additional statements of proof may 
appear on the label in different locations, without an accompanying 
alcohol by volume statement. The final rule adopts the proposal to 
allow other truthful, accurate, and specific factual representations of 
alcohol content, such as alcohol by weight, as long as they appear 
together with, and as part of, the statement of alcohol content as a 
percentage of alcohol by volume; however, it removes, as unnecessary, 
language clarifying that the mandatory statement may not be expressed 
as a range or by maximums or minimums. As discussed later in this 
document, similar language has also been removed from the malt beverage 
regulations at Sec.  7.65.
c. Terms Used in Name and Address Statement
    In Notice No. 176, TTB explained that the current regulations in 27 
CFR 5.36 allow for various statements as part of the name and address 
statement, and limit the use of certain phrases, depending upon the 
party seeking to use those phrases. In general, a ``bottled by'' 
statement must appear on the label of domestically bottled distilled 
spirits, followed by the name and address of the bottler. In lieu of 
this statement, as explained elsewhere in this document, the phrase 
``distilled by'' may appear on the label to describe the original 
distiller of the distilled spirits, where the spirits are bottled by or 
for that distiller. Current Sec.  5.36(a)(4) provides that certain 
other terms may be used to describe the ``rectifier'' of the distilled 
spirits--these terms are ``blended by,'' ``made by,'' ``prepared by,'' 
``manufactured by,'' and ``produced by.'' The current regulations do 
not define these terms. Because there is no longer a rectification tax 
on distilled spirits, and thus these terms have lost their significance 
under the IRC, some industry members and consumers are confused as to 
when the use of those terms is appropriate.
    Accordingly, proposed Sec.  5.66(b)(2) used the term ``processor'' 
of distilled spirits, rather than ``rectifier'' to be consistent with 
current IRC use. The proposed regulation also clarified that the term 
``produced by,'' when applied to distilled spirits, does not refer to 
the original distillation of the spirits, but instead indicates a 
processing operation (formerly known as rectification) that involves a 
change in the class or type of the product through the addition of 
flavors or some other processing activity. TTB solicited comments on 
whether the proposed definitions of these terms are consistent with 
trade and consumer understanding.
    TTB received several comments on this issue that raised questions 
as to whether the terms used in the regulations reflected current 
consumer understanding.
TTB Response
    TTB is finalizing the proposed regulation, which accurately 
reflects current TTB policy as to the meaning of the term 
``production,'' but does not define the other terms that describe 
processing operations (formerly known as rectification operations). TTB 
believes that several commenters raised valid points as to consumer 
understanding of these terms. The proposed rule, however, did not 
solicit specific comments on precise definitions for terms other than 
``produced by,'' so incorporating new definitions for these terms would 
be outside the scope of the rulemaking. Accordingly, TTB will treat 
these comments as suggestions for future rulemaking.
d. State of Distillation
    TTB noted in Notice No. 176 that it has received several inquiries 
about its existing regulations on labeling certain whisky products with 
the name of the State where distillation occurred. Current Sec.  
5.36(d) requires the State of distillation to be listed on the label if 
it is not included in the mandatory name and address statement. 
However, because the name and address statement may be satisfied with a 
bottling statement, there is no way to know, simply by reviewing a 
proposed label, if

[[Page 7558]]

distillation actually occurred in the same State as the bottling 
location. For example, a whisky label may indicate that the product was 
bottled in Kentucky, even if it was distilled in another State and 
transferred in bond to Kentucky for bottling.
    Accordingly, TTB proposed, in Sec.  5.66(f), an updated regulation 
that would provide that, where required, the State of original 
distillation for certain whisky products must be shown on the label in 
at least one of the following ways:
     By including a ``distilled by'' (or ``distilled and 
bottled by'' or any other phrase including the word ``distilled'') 
statement as part of the mandatory name and address statement, followed 
by a single location. This means that a principal place of business or 
a list with multiple locations would not suffice;
     By including the name of the State in which original 
distillation occurred immediately adjacent to the class or type 
designation (such as ``Kentucky Bourbon whisky''), as long as 
distillation and any required aging occurred in that State; or
     By including a separate statement, such as ``Distilled in 
[name of State].''
    TTB received 47 comments on the proposal to clarify the State of 
distillation. Of those, 45 comments supported the proposal to require 
the State of distillation to be indicated on the label in one of the 
three ways proposed. For example, the Texas Whiskey Association stated 
that ``[w]e applaud the clarity in new proposals on listing the State 
of Distillation on a label where it is not the same as bottling or 
business address. We strongly support that distillation and aging must 
take place in the actual state where the whiskey is distilled for a 
whiskey to carry a state designation.'' The American Single Malt 
Whiskey Commission stated that ``[w]e are in favor of the current 
propos[ed] Sec.  5.66(f) requiring that the state of distillation for 
certain whisky products be shown on the label in at least one of the 
three ways outlined.'' Heaven Hill Brands commented that: ``[w]e 
strongly support distillation and aging being labeled per the actual 
state where this occurs so that consumers know exactly what product 
they are buying, especially as it relates to Kentucky Bourbon Whisky.''
    Some commenters suggested that TTB impose tighter restrictions on 
State of distillation labeling. For example, the Texas Whiskey 
Association commented as follows:

    We strongly support that distillation and aging must take place 
in the actual State where the whiskey is distilled for a whiskey to 
carry a state designation. We would go further and request that it 
be mashed, fermented, distilled and aged in that State before it 
carries a State designation. We would further support that if a 
whiskey is distilled more than once, with distillation occurring in 
more than one state, that no State designation be permitted.

    TTB received two comments opposed to the proposal. The Confederated 
Tribes of the Chehalis Reservation explained that:

    Because tribes literally were barred from opening and operating 
distilleries until just recently, the Chehalis Tribe has had no 
ability to create and stockpile our own aging supply of products. We 
should be allowed to negotiate with older participants in the 
industry in creating and blending products without having to 
disclose confidential information about our sources, partners or 
partnerships * * *. At a minimum, the Chehalis Tribe and other 
tribes should be exempt from such requirements.

    DISCUS, in its comment, urged TTB to eliminate the requirement to 
include a State of distillation on labels. DISCUS commented that State 
of distillation statements should be optional and subject to the 
relevant business circumstances of each supplier.
TTB Response
    After carefully considering the comments, TTB has decided not to 
finalize the proposed changes to the State of distillation labeling 
requirement. While most of the comments from distillers supported the 
position that consumers should be provided with this information, 
DISCUS commented that TTB should eliminate the requirement altogether, 
allowing such statements as optional information on labels. This 
represents a new option that TTB did not air for comment in Notice No. 
176. Because adoption of the amendment proposed in Notice No. 176 could 
reasonably be expected to require some labeling changes by bottlers of 
certain types of whisky, TTB has determined that, before adopting any 
substantive changes to this longstanding requirement, it might be 
appropriate to air, for public comment, the relative merits of making 
the State of distillation labeling statement optional rather than 
mandatory. This would also allow TTB to solicit comments on the costs 
and burdens of the different options. Accordingly, TTB will treat the 
comments on this issue as suggestions for future rulemaking.
    Instead of mandating changes to labels, the final rule maintains 
the current requirements for labeling of the State of distillation on 
certain whisky products by continuing to allow the bottling statement 
to suffice where the whisky was in fact distilled in the State shown on 
the label, even though the label does not make any representation as to 
the place of distillation. However, the final rule further clarifies 
current requirements by revising the current language to provide that 
if the address shown in the ``bottled by'' statement includes the State 
in which distillation occurred, the requirement may be satisfied by 
including a ``bottled by'' statement as part of the mandatory name and 
address statement, followed by a single location. TTB believes this 
clarification will assist industry members in complying with the 
requirements, but it will not change the substance of the current 
labeling requirement.
    With regard to the Texas Whiskey Association comment about when a 
whiskey may use a State designation, this document finalizes the 
proposed language clarifying that the use of, for example, ``Texas Rye 
Whisky'' means that the product was both distilled and aged in Texas. 
With regard to any additional redistillations in a second State, it has 
been the longstanding position of TTB and its predecessors that the 
State where the original distillation occurred is the State of 
distillation for purposes of the labeling regulations. See Rev. Rul. 
54-416, 1954-2 C.B. 470. TTB is adopting this position in the final 
rule.
e. Coloring Materials
    In Notice No. 176, TTB proposed to maintain the substantive 
requirements for disclosure, on labels, of the use of certain coloring 
materials used in the production of distilled spirits, including the 
provision (found in current Sec.  5.39(b)(3)) that the use of caramel 
need not be indicated on labels of brandy, rum, Tequila, or whisky 
other than straight whisky. Pursuant to current Sec.  5.23, caramel may 
be used in distilled spirits products if this use is customarily 
employed in them in accordance with established trade usage, and if the 
caramel is used at not more than 2.5 percent by volume of the finished 
product.
    TTB received four comments related to coloring materials. Two 
distillers asked for more stringent labeling rules for the use of 
caramel in the categories of distilled spirits products that are 
currently exempted from the caramel disclosure requirements. Of these, 
Sazerac commented that ``[i]n order to respond to reasonable consumer 
expectations for consistency across products, Sazerac asks that TTB 
require consistent disclosure of caramel color.'' Privateer Rum 
commented in favor of the proposal and suggested that the

[[Page 7559]]

regulation should require disclosure of the use of caramel in rum.
    ACSA commented that it was ``in favor and supportive of the 
language on coloring materials and feels strongly the provision should 
be applied equally to imported spirits.'' The European Union (EU) asked 
for an explanation as to the general rule on disclosure of caramel on 
distilled spirits, and the basis for the exceptions.
TTB Response
    After careful consideration, TTB is finalizing the coloring 
materials labeling regulation as proposed in Sec.  5.72, which 
clarifies current regulations but does not impose additional labeling 
requirements. TTB did not propose any changes to the current 
requirements, and believes that the addition of new labeling disclosure 
requirements for coloring materials such as caramel is beyond the scope 
of this rulemaking. The exception to the caramel disclosure requirement 
for brandy, rum, Tequila, and whisky other than straight whisky is a 
longstanding policy of TTB and its predecessors.
3. Subparts F, G, and H
a. Barrel Proof and Similar Terms
    In Notice No. 176, TTB proposed in Sec.  5.87 to set forth 
definitions for the terms ``barrel proof'', ``cask strength'', 
``original proof'', ``original barrel proof'', ``original cask 
strength'', and ``entry proof'' on distilled spirits labels. The 
proposed rule also added ``cask strength'' as a term that means the 
same as ``barrel proof'' and ``original cask strength'' as a term that 
means the same as ``original barrel proof.''
    The proposed rule incorporated the holding, set forth in ATF Ruling 
79-9, that the terms ``original proof,'' ``original barrel proof,'' and 
``entry proof,'' when appearing on a distilled spirits product label, 
indicate that the proof of the spirits entered into the barrel and the 
proof of the bottled spirits are the same. The ruling further held that 
the term ``barrel proof'' appearing on a distilled spirits label 
indicates that the bottling proof is not more than two degrees lower 
than the proof established at the time the spirits were gauged for tax 
determination.
    The proposed regulations updated the description of the term 
``barrel proof'' to take into account changes in the operation of 
distilled spirits plants as a result of the Distilled Spirits Tax 
Revision Act of 1979. The reference to the time of tax determination is 
no longer the applicable standard under the current tax determination 
system. Since the term ``barrel proof'' is intended to indicate that 
the spirit is approximately the same proof as when it is dumped from 
the barrel, the proposed regulations state that the term may be used on 
a label when the alcohol content (proof) of distilled spirits when 
bottled is not more than two degrees of proof lower than the proof of 
the spirit when the spirit was dumped from the barrel. Proposed Sec.  
5.87 accordingly provided that the term ``barrel proof'' or ``cask 
strength'' may be used to refer to distilled spirits that had been 
stored in wood barrels, and the proof when bottled is not more than two 
degrees lower than the proof of the spirits when the spirits are dumped 
from the barrels. TTB noted that it rarely sees such terms on distilled 
spirits labels and specifically sought comments on whether they still 
have relevance and provide meaningful information to the consumer and 
whether TTB should regulate their use on labels.
    TTB received several comments on this proposal. Some of the 
comments reflected disagreement on the two different concepts that TTB 
addressed in proposed Sec.  5.87. Proposed Sec.  5.87(a) defined terms 
that may be used on a label when the proof at which the product is 
bottled is within 2 degrees of the proof of the product when the 
spirits were dumped from the barrel into the bottling tank. Proposed 
Sec.  5.87(b) defined terms that refer to the proof of the spirits when 
entered into the barrels for aging.
    DISCUS and the ACSA commented that all of the terms refer to proof 
at bottling, with the exception of ``entry proof,'' which it states is 
``clearly understood as the proof at which the spirit was entered into 
the barrel and would therefore be confusing to define in relation to 
final proof post-maturation, which can be very different than the entry 
proof into the barrel.'' Therefore, ACSA recommended that ``entry 
proof'' not be included in this list of definitions, and instead be 
allowed as an applicable descriptor of the proof of entry into the 
barrels regardless of bottling proof.
    On the other hand, DISCUS commented that ``Original proof'' and 
``barrel proof'' are two distinct and separate concepts, as proof can 
go up or down during aging. DISCUS suggested that the two degree 
variance for ``cask strength'' and ``barrel proof'' is too narrow, 
suggesting that at a minimum, ``the standard should be set at a 7 
percent differential and should be measured when the product is dumped 
from the barrel. Water is used as part of production, for example, to 
flush the production lines and other technical needs. This amount of 
water may differ based upon the length of the production line and other 
factors specific to each producer's facility. Based upon these 
realties, TTB should amend this proposal to establish that ``barrel 
proof'' may be within 7 percent of proof at dump.''
    The Scotch Whisky Association commented that ``original proof'' is 
not a useful term for labeling. Spirits Canada commented in opposition 
to defining what they referred to as marketing terms. Two individual 
commenters also wrote in support of the proposed definitions.
TTB Response
    After careful consideration of the comments, TTB is finalizing 
Sec.  5.87 as proposed. TTB believes that it is useful to consumers to 
have uniform standards for these terms appearing on labels, and most of 
these terms have been subject to the definitions in ATF Ruling 79-9 for 
over 40 years. Many industry members rely on these labeling terms for 
their products.
b. Terms Related to Scotland
    In Notice No. 176, TTB proposed rules that maintain and clarify 
standards for the use of terms related to Scotland on distilled spirits 
labels. Such rules currently appear only in the regulatory sections 
related to product standards of identity and class and type, at current 
Sec. Sec.  5.22(k)(4) and 5.35, respectively. The proposed provision 
retained the current rule set forth at current Sec.  5.22(k)(4), that 
the words ``Scotch,'' ``Scots,'' ``Highland,'' or ``Highlands'' and 
similar words connoting, indicating, or commonly associated with 
Scotland may be used only on a product wholly produced in Scotland. It 
moves this rule to the provisions on restricted labeling practices in 
the new subpart F. However, regardless of where the finished products 
are produced, the regulations would not prohibit the term ``Scotch 
Whisky'' from appearing on the label in the statement of composition 
for distilled spirits specialty products that use Scotch Whisky or in 
the statement of composition on the label of Flavored Scotch Whisky. 
(While the finished product may be produced anywhere, the Scotch Whisky 
component must continue to be made in Scotland under the rules of the 
United Kingdom.) In addition, proposed Sec.  5.90(b) clarified (in 
accordance with current regulations as well as proposed Sec.  5.127) 
that phrases related to government supervision may be allowed only if 
required or specifically authorized by the regulations of the United 
Kingdom. This supersedes Revenue Ruling 61-15, which applied that rule 
to specific

[[Page 7560]]

language on labels of Scotch whisky bottled in the United States.
    The Scotch Whisky Association commented in support of the existing 
prohibition. Several commenters commented that the terms ``highlands'' 
and ``lowlands'' should not be restricted to Scotch Whisky products, as 
other areas of the world have highlands and lowlands areas. The Irish 
Whiskey Association and the Ireland Department of Agriculture commented 
that TTB should impose new restrictions on terms related to Ireland.
TTB Response
    After careful consideration, TTB is finalizing Sec.  5.90, on terms 
related to Scotland, as proposed, with a minor editorial change. TTB 
believes that these longstanding restrictions ensure that consumers are 
fully informed about the meanings of the regulated terms. TTB will 
consider comments about allowing the use of the terms ``highlands'' and 
``lowlands'' in other contexts for potential future rulemaking.
c. Pure
    In Notice No. 176, TTB proposed to maintain its longstanding 
restrictions on the use of the term ``pure'' on distilled spirits 
labels. The rule provides that the term ``pure'' may not be used unless 
it is a truthful representation about a particular ingredient, is part 
of the name of a permittee or retailer for whom the spirits are 
bottled, or is part of the name of the permittee who bottled the 
spirits.
    While TTB did not specifically request comments on this issue, TTB 
received six comments regarding ``pure.'' Three commenters, Diageo, 
DISCUS, and the American Distilled Spirits Association (ADSA), urged 
TTB to eliminate the prohibition on the term ``pure.'' Diageo stated 
that allowing the use of the term on wine and malt beverages but not 
distilled spirits is inconsistent. SanTan Spirits suggested that TTB's 
definition of ``pure'' should include products that consist of 
distillate and water, such as, for example, ``pure whisky.'' St. George 
Spirits commented in support of the proposed regulation. ACSA commented 
that the term ``pure'' is vague and sought further clarification.
TTB Response
    After careful consideration, TTB is finalizing the current 
regulations on the term ``pure'' as proposed in Sec.  5.91. Thus, the 
final rule retains the longstanding restrictions on the use of the term 
``pure'' on distilled spirits labels. The rule provides that the term 
``pure'' may not be used unless it is a truthful representation about a 
particular ingredient, is part of the name of a permittee or retailer 
for whom the spirits are bottled, or is part of the name of the 
permittee who bottled the spirits.
    This issue has been the subject of separate rulemaking, and TTB 
published an advance notice of proposed rulemaking (Notice No. 53, 
December 7, 2005, 70 FR 72731), soliciting comments on whether it or 
not it should revise the standard. TTB did not specifically solicit 
comments on this issue as part of the recodification, and it will 
consider the comments that it did receive as suggestions for future 
rulemaking.
4. Subpart I
    In Notice No. 176, TTB set forth, in subpart I, the standards of 
identity for distilled spirits. The standards of identity are divided 
into classes and more specific types. TTB proposed certain revisions to 
the standards of identity, described in more detail below. In addition 
to comments on TTB's proposed revisions, TTB received a number of 
suggestions for new standards of identity, both classes and types, that 
had not been proposed in Notice No. 176. Examples of standards of 
identity that commenters advocated for include standards for Straight 
Applejack, Juniper Processed Spirits (including Genever), Straight Rum, 
Rum Agricole, Queen's Share Rum, Irish Cream Liqueur, and others. 
Additionally, TTB received comments supporting the creation of a type 
of whisky, American Single Malt Whisky. Because other commenters could 
not anticipate creation of new standards that were not initially 
proposed, TTB is not finalizing any of these suggested standards in 
this rulemaking. It will keep the comments for consideration for future 
rulemaking focused on the standards of identity for distilled spirits.
a. The Standards of Identity in General
    In Notice No. 176, TTB stated that some distilled spirits products 
may conform to the standards of identity of more than one class. 
Consistent with longstanding policy, TTB proposed to clarify, in Sec.  
5.141(b)(3), that such a product may be designated with any class 
designation to which the product conforms. For example, a vodka with 
added natural orange flavor and sugar bottled at 45 percent alcohol by 
volume may meet the standard of identity for a flavored spirit or for a 
liqueur. Accordingly, the product may be designated as either ``orange 
flavored vodka'' or ``orange liqueur'' at the option of the bottler or 
importer. Under current policy, TTB would not allow a product to be 
designated on a single label as both ``orange flavored vodka'' and 
``orange liqueur,'' because TTB views it as misleading for a label to 
bear two different class designations. TTB specifically sought comments 
on whether the TTB regulations should permit a distilled spirits label 
to bear more than one class designation if the product conforms to the 
standards of identity for more than one class.
    TTB received three comments related to this issue. All three 
commenters wrote that TTB should allow labels to bear only one 
designation.
TTB Response
    TTB will finalize this regulation as proposed, in Sec.  
5.141(b)(3), to allow industry members the flexibility of designating 
their products with any single class designation to which the product 
conforms, but not to use multiple designations. It was not TTB's 
intention to allow multiple designations on labels. A product that may 
meet the definition for two or more classes or types must still be 
designated with a single class or type.
b. Neutral Spirits
    In Notice No. 176, TTB proposed to provide that the source material 
of the neutral spirits may be specifically included in the designation 
on the label of the product. Thus, the bottler would have the option of 
labeling a product as ``Apple Neutral Spirits'' (in addition to 
``neutral spirits distilled from apples'' as the required commodity 
statement) or ``Grape Vodka,'' (in addition to ``vodka distilled from 
fruit'' as the required commodity statement) as long as such statements 
accurately describe the source materials.
    TTB received four comments on this issue. Three commenters 
supported allowing the source material to provide better clarity to 
consumers and would allow for labeling flexibility. DISCUS commented 
that it opposes allowing the source material as part of the designation 
as it would affect current products that use terms such as ``Grape 
Vodka'' as the distinctive or fanciful name for a distilled spirits 
specialty product.
TTB Response
    TTB agrees that allowing the source material as part of the 
designation for neutral spirits may cause confusion with distilled 
spirits specialty products that use similar statements as distinctive 
or fanciful names. As DISCUS pointed out, TTB has allowed terms such as 
``grape vodka'' as the distinctive or fanciful name for specialty 
products--such a product is different from a vodka distilled from 
grapes. Accordingly, TTB

[[Page 7561]]

will not move forward with finalizing the proposed rule. TTB notes, 
however, that industry members are not precluded from placing 
information about the source materials on the label. For example, a 
phrase such as ``Distilled from grapes'' or ``Distilled from Washington 
apples'' would be allowed on vodka labels.
c. Whisky
    In Notice No. 167, TTB proposed to set forth an updated standard of 
identity for whisky. Among other things, TTB proposed clarifying that 
Bourbon Whisky may not contain coloring, flavoring, or blending 
materials. TTB also proposed to specifically note that ``whisky'' may 
be spelled either ``whisky'' or ``whiskey,'' which is longstanding 
policy.
    TTB received four comments supporting the clarification that 
bourbon whisky may not contain coloring, flavoring, or blending 
materials. Six commenters supported the clarification that whisky may 
be spelled ``whisky'' or ``whiskey'', while SanTan Spirits commented 
that whisky should only be spelled as ``whiskey''.
    In Notice No. 176, TTB also proposed to provide for a new type 
designation of ``white whisky or unaged whisky.'' TTB has seen a marked 
increase in the number of products on the market that are distilled 
from grain but are unaged or that are aged for very short periods of 
time. Under current regulations, unaged products would not be eligible 
for a whisky designation (other than corn whisky) and would have to be 
labeled with a distinctive or fanciful name, along with a statement of 
composition.
    Accordingly, TTB proposed new standards of identity for products 
that are either unaged (so they are colorless) or aged and then 
filtered to remove color; these products would be designated as 
``unaged whisky'' or ``white whisky,'' respectively. This proposal 
represented a change in policy because, currently, all whiskies (except 
corn whisky) must be aged, although there is no minimum time 
requirement for such aging. TTB believes that, currently, some 
distillers may be using a barrel for a very short aging process solely 
for the purpose of meeting the requirement to age for a minimal time. 
Consequently, TTB proposed the new type designation of ``white whisky 
or unaged whisky'' and specifically requested comments on this new type 
and its standards.
    TTB received 22 comments on the proposal to add the new ``white 
whisky or unaged whisky'' type. Twelve commenters wrote in support of 
the proposal. For example, Stoutridge Distillery commented in support 
of the change, suggesting that ``there are many craft distillers 
creating these products and `passing them through' an oak container to 
meet the `letter of the law'. This change would acknowledge that this 
is a legitimate whisky type and encourage further development of the 
commercial category.''
    TTB also received 10 comments opposed to the creation of this new 
type. For example, Diageo objected to:

the creation of a ``white whiskey'' or ``unaged whiskey'' categor[y] 
. . . Consumers expect whiskey to be aged. This is backed by 
hundreds of years of whiskey production domestically and 
internationally. Such products could be misleading by labeling as 
``whiskey'' spirits that are otherwise neutral or bear no whiskey 
characteristics unless artificially imparted.

ADSA also opposed the new type, stating that its member companies have 
spent years building whisky brands based on aged liquids that are 
synonymous with quality. ADSA stated that the proposed category might 
cause consumer confusion.
TTB Response
    After careful consideration, TTB is not finalizing the proposal to 
create a new type of ``white whisky or unaged whisky''. Both the 
current and amended standards for types of whisky adequately inform 
consumers of products that are aged for short periods of time and any 
whisky aged less than 4 years must include an age statement. TTB agrees 
that adding unaged whiskies to the ``whisky'' class may cause consumer 
confusion. Such products may continue to be labeled as distilled 
spirits specialty products with a statement of composition.
    TTB is finalizing the proposals that whisky may be spelled as 
``whisky'' or ``whiskey'' and that bourbon whisky must not contain any 
coloring, flavoring, or blending materials. These amendments reflect 
current policy and were supported by commenters. While there was one 
comment that advocated the use of a single spelling of ``whiskey,'' it 
has been longstanding policy to recognize either spelling, and TTB sees 
no basis for revising that policy and requiring changes to labels to 
enforce a single spelling for this term.
d. Cordials and Liqueurs
    In Notice No. 167, TTB proposed to set out minor changes to the 
standards for cordials and liqueurs. Among other changes, TTB proposed 
to prohibit the terms ``distilled,'' ``compound,'' or ``straight'' from 
appearing on labels for cordials and liqueurs, on the grounds that the 
terms were misleading on labels for cordials and liqueurs, which are by 
definition blended (rectified) compounds. The proposed rule thus 
incorporated into this section the following holding in Revenue Ruling 
61-71:

    In view of the fact that the term `straight,' in relation to 
American types of whisky, can be employed on labels only if the 
product is a single distillate or a homogeneous mixture not subject 
to rectification tax, and as the term `straight,' in every-day trade 
parlance, is regarded in much the same sense as `unblended' in 
relation to distilled spirits, in general, the use of the term 
`straight' on labels on rectified compounds, known as `cordials' or 
`liqueurs,' would be deceptive or misleading to the consumer with 
respect to the actual identity of the product thus labeled or 
advertised.

    Current regulations also provide that certain cordials or liqueurs 
may be designated with a name known to consumers as referring to a 
cordial or liqueur and therefore need not use the word ``cordial'' or 
``liqueur'' as part of their designation. Thus, pursuant to TTB's 
Beverage Alcohol Manual (TTB P 5110.7), several cordials and liqueurs--
specifically, Kummel, Ouzo, Anise, Anisette, Sambuca, Peppermint 
Schnapps, Triple Sec, Cura[ccedil]ao, Goldwasser, and Cr[egrave]me de 
[predominant flavor]--currently may be designated by those names on the 
labels of those products. TTB proposed to codify this policy by adding 
these names as type designations under proposed Sec.  5.150.
    TTB received several comments related to this proposal. The 
American Distilling Institute commented that if a producer ferments and 
distills the base spirit used in the creation of the liqueur, they 
should be able to state that fact on their label along with other 
relevant production functions. Sazerac pointed out that ``Revenue 
Ruling 61-71, which TTB cites as the basis for this proposed change, 
only addresses the claim `straight' and does not address `distilled' or 
`compound' '' and suggested that TTB had not provided an adequate basis 
for providing that terms like ``distilled'' imply original distillation 
and are misleading when used on cordials or liqueurs.
    ACSA commented that it supports the proposed Sec.  5.150 without 
further detail.
TTB Response
    After considering the comments, TTB is finalizing Sec.  5.150 with 
modifications. The final rule incorporates the holding of Rev. Rul. 61-
71 with regard to the prohibition on the use of misleading claims that 
a cordial or liqueur is ``straight.'' For the reasons set forth in

[[Page 7562]]

that ruling, a cordial or liqueur cannot be ``straight.'' TTB agrees 
with the comment that stated that the proposed regulation went further 
than Rev. Rul. 61-71 but notes that the current regulations at 27 CFR 
5.22(h)(6) provide that cordials and liqueurs ``shall not be designated 
as `distilled' or `compound.' '' However, TTB is not adopting the 
proposed amendment to prohibit the use of the term ``distilled'' or 
``compound'' on cordial or liqueur labels. Additionally, TTB will 
consider for future rulemaking whether to expand the allowable sugars 
to other types of sweeteners.
e. Flavored Spirits
    The TTB regulations currently list flavored brandy, flavored gin, 
flavored rum, flavored vodka, and flavored whisky as the class 
designations under Class 9. Currently, other types or classes of 
distilled spirits that are flavored must generally be labeled with a 
statement of composition in accordance with 27 CFR 5.35(a).
    In Notice No. 176, TTB proposed to expand the current Class 9 by 
establishing a standard of identity for ``flavored spirits.'' The 
current Class 9 covers only five classes of distilled spirits (brandy, 
gin, rum, vodka and whisky) as ``base spirits'' to which flavoring 
materials may be added. As proposed, the base spirits for the new 
``flavored spirits'' class would include types within these classes 
(such as corn whisky), as well as other classes of base spirits covered 
by a standard of identity (and types within those classes), such as 
agave spirits (or Tequila).
    The proposed rule also included a clarification of current TTB 
policy, which is that a person may not add additional spirits to a base 
spirit in a flavored spirits product, even if the additional spirits 
are mixed into an intermediate product. As TTB explained in more detail 
in T.D. TTB-158, TTB's longstanding policy is that Class 9 flavored 
spirits must derive all of their spirits content from the base spirit 
of the product, in contrast with those products that are labeled with 
statements of composition in lieu of a class or type.
    While TTB allows for any spirit to appear as part of a truthful 
statement of composition, TTB stated in Notice No. 176 that it did not 
believe that consumers perceive a distinction between, for example 
``Orange Flavored Tequila''--which is how a flavored spirit would be 
designated under the proposed rule--and ``Tequila with Orange 
Flavor''--which is how the statement of composition would appear for a 
distilled spirits specialty product. TTB therefore proposed to allow 
any type of base spirit to be flavored in accordance with the flavored 
spirits standard instead of just brandy, gin, rum, vodka, and whisky, 
as permitted by the current regulations. Accordingly, proposed Sec.  
5.151 provided a class of flavored spirits that could be made by adding 
flavors to any base spirit made in accordance with the standards of 
identity set forth in the regulation. TTB proposed to maintain a 
minimum alcohol content at bottling of 30 percent (60[deg] proof) for 
this revised and expanded class. Flavored spirits may contain added 
wine. TTB proposes to maintain the requirement that wine content above 
2.5 percent (or 15 percent for brandy) must be disclosed on a label.
    TTB received six comments related to this issue. ACSA, the Tequila 
Regulatory Council, and the Mexican Chamber of the Tequila Industry 
supported the proposed regulation. The Tequila Regulatory Council noted 
that it would lessen the administrative burden for Tequila bottlers in 
the United States if TTB allows any base spirits to be flavored. The 
Irish Whiskey Association and the Ireland Department of Agriculture 
commented in opposition to the proposal, stating that flavored Irish 
Whiskey would be misleading. Heritage Distilling commented in favor of 
amendments to clarify that flavored Bourbon whisky is a recognized type 
of flavored whisky. The Scotch Whisky Association opposed allowing 
``flavored Scotch Whisky'' on labels because the United Kingdom does 
not allow for such a product under its laws and regulations.
TTB Response
    After careful consideration of the comments, TTB is finalizing the 
flavored spirits regulations as proposed except that TTB is modifying 
the standards of identity to provide that the base spirit must be a 
distilled spirit conforming to one of the standards of identity set 
forth in Sec. Sec.  5.142 through 5.148. This does not include liqueurs 
or distilled spirits specialty products, because these products may 
already contain natural flavors, so there is no need to have 
``flavored'' versions of them. As a clarifying change, TTB is also 
adding the word ``natural'' to ``nonbeverage flavors'' to clarify that 
there is no change to the requirement in TTB's current regulations at 
Sec.  5.22(i) that only natural (and not artificial) flavoring 
materials may be used in Class 9 flavored spirits.
    The final rule will not require label changes, and simply clarifies 
current TTB policy. Industry members who choose to maintain their 
product as a distilled spirits specialty product will not need to 
change their labels, but may choose to label their products as, for 
example, ``Bourbon whisky with cherry flavor'' rather than ``Cherry 
flavored bourbon whisky.'' In response to the comment regarding the use 
of terms related to Scotland, under the final rule, TTB would approve 
the use of ``Scotch Whisky'' in a designation such as ``Cherry Flavored 
Scotch Whisky'' if the base spirit meets the standards of identity for 
Scotch Whisky, regardless of whether the United Kingdom would allow 
this type of designation. In such a case, TTB notes that the product 
may be flavored in the United States or another country after 
exportation from the United Kingdom. TTB notes that it is also 
finalizing without change the standard of identity for distilled 
spirits specialty products in Sec.  5.156.
f. Diluted Spirits
    In Notice No. 176, TTB proposed to codify standards for the use of 
the term ``diluted.'' As set forth in ATF Ruling 75-32, TTB currently 
requires that distilled spirits bottled at below the specified alcohol 
content for that particular class be designated on the label as 
``diluted'' in direct conjunction with the statement of class and type 
to which it refers. For example, under the standard of identity for 
vodka set forth at current Sec.  5.22(a), vodka must be bottled at 
``not less than 80[deg] proof.'' As a result, a vodka bottled at 
60[deg] proof must bear the statement ``diluted vodka'' on the label. 
TTB proposed, in Sec.  5.153, to incorporate this policy into the 
regulations by establishing a class of spirits known as ``diluted 
spirits.'' This applies to products that would otherwise meet one of 
the class or type designations specified in subpart I except that it 
does not meet the minimum alcohol content, usually because of reduction 
of proof through the addition of water. Although the ruling states that 
the word ``diluted'' must be readily legible and as conspicuous as the 
statement of class to which it refers and in no case smaller than 8-
point Gothic caps (except on small bottles), TTB proposed to require 
that the word ``diluted'' appear in readily legible type at least half 
the size of the class and type designation to which it refers. For 
example, but for the fact that a product is 70[deg] proof, it would be 
eligible to be designated as ``Vodka.'' However, because of its lower 
proof, it must instead be designated as ``Diluted Vodka''.
    TTB received ten comments opposed to the creation of the ``diluted 
spirits'' class. For example, Spirits Europe questioned whether the 
class would undermine certain traditional products

[[Page 7563]]

and confuse consumers. DISCUS and ACSA opposed the proposed language 
and believe that consumers would prefer a ``lite'', ``low alcohol'' or 
``under-proof'' label rather than a ``diluted'' designation.
TTB Response
    TTB has decided not to move forward with the creation of the 
``diluted spirits'' class. TTB will maintain the comments related to 
other ways to label diluted products as suggestions for future 
rulemaking. The holding of ATF Ruling 75-32, including those relating 
to type size, will remain in effect.
5. Subpart J--Formulas for Distilled Spirits
    With regard to the formula requirements in part 5, in Notice No. 
176, TTB stated:

    The current regulations in subpart C of part 5 set forth 
requirements for formulas for distilled spirits. In the present 
rulemaking, TTB proposes to maintain the formula requirements with 
minor changes to reflect current policy as set forth in TTB Industry 
Circular 2007-4. However, TTB believes there may be formula 
requirements that no longer serve a labeling purpose. TTB seeks 
specific comments on whether certain formula requirements should be 
eliminated and the rationale for such a change. TTB may address 
these issues in the final rule or in a separate rulemaking document.

    TTB received two comments on the distilled spirits formula 
regulations in proposed subpart J. ADSA commented in opposition to 
formula requirements for spirits that are first aged in an oak barrel 
and then aged in a different type of barrel, such as a barrel 
previously used to age wines or other types of spirits. ADSA stated 
that interest in this type of innovative production has grown in the 
past decade. Accordingly, ADSA urged TTB to delete from its final 
regulations the prohibition on claiming age for time spent in a second 
(or third, or fourth, etc.) barrel and the presumption that aging in a 
second barrel of different wood alters a product's class or type. For 
the same reasons, ADSA urged TTB to eliminate the proposed formula 
requirement for the mixing of spirits subject to different aging 
methods (charred and non-charred barrels, etc.). At a minimum, ADSA 
stated that proposed Sec.  5.193 requires substantial revisions to 
better clarify exactly when a formula is required.
    The National Association of Beverage Importers (NABI) noted that 
proposed Sec.  5.193 requires a formula where, among other things, 
distilled spirits are ``mingled,'' and that the regulations do not 
define the term ``mingling.'' NABI suggested that if TTB is using the 
term ``mingling'' to cover mixing or blending activities, then it would 
be clearer to use those terms. NABI noted that the term ``mingling'' 
dates back to the pre-1980 regulatory framework, when the IRC imposed a 
rectification tax, and that the term lost its significance after the 
repeal of the rectification tax. NABI stated that clarification of the 
term is important to importers as they need to decide whether they must 
apply for formula approval for specific imported distilled spirits 
products.
TTB Response
    With regard to the ADSA comment regarding formula requirements for 
aging in different types of barrels, and the NABI comment requesting 
clarification of when a formula is require for ``mingling,'' TTB 
believes that the commenters have raised valid concerns about whether 
the formula requirements are current and easy to understand.
    As noted in the NABI comment, many of the formula requirements in 
part 5 date back to pre-1980 requirements. In recent years, it has been 
TTB's goal to update formula requirements on a regular basis through 
the issuance of public guidance. See, e.g., Industry Circular 2020-1, 
dated February 12, 2020, Industry Circular 2018-6, dated September 18, 
2018, and TTB Ruling 2016-3, dated September 29, 2016.
    Accordingly, rather than revising the regulations in subpart J to 
address the specific issues that the commenters addressed, TTB is 
keeping the current regulations in place, with a change that will allow 
TTB to clarify or eliminate formula requirements for distilled spirits 
through public guidance, without amending the regulations. In this 
final rule, Sec.  5.193 provides general rules for distilled spirits 
formulas, but also provides that TTB may exempt categories of distilled 
spirits products from specific regulatory formula requirements upon a 
finding that the filing of a formula is no longer necessary in order to 
properly classify the finished product. TTB will review the comments on 
this issue as suggestions for exemptions from the formula requirements 
when it issues new guidance on this issue, and as suggestions for 
future rulemaking to update the formula regulations.
    TTB has also revised the language in Sec.  5.193(a) to provide that 
while the compounding of distilled spirits through the mixing of a 
distilled spirits product with any coloring or flavoring material, 
wine, or other material containing distilled spirits generally requires 
a formula, there is an exception if TTB has issued public guidance 
recognizing that such ingredients are harmless coloring, flavoring or 
blending materials that do not alter the class or type pursuant to the 
standards set forth in Sec.  5.155. This language is added for 
consistency with the provisions of TTB Ruling 2016-3, dated September 
29, 2016, in which TTB approved general formulas for vodka and rum, and 
certain types of whisky and brandy, made with certain specified 
harmless coloring, flavoring, or blending materials, in accordance with 
the ruling. TTB referred to these formulas as ``general-use formulas'' 
and industry members who produce distilled spirits in conformance with 
a general-use formula do not need to submit a formula to TTB for 
approval.

C. Amendments Specific to 27 CFR Part 7 (Malt Beverages)

    In addition to the changes discussed in Section II.A. of this 
document that apply to more than one commodity, this section discusses 
proposed editorial and substantive changes specific to the malt 
beverage labeling regulations in part 7. It will not repeat the changes 
already discussed in Section II.A. of this document, which relate to 
more than one commodity. The substantive changes that are unique to 
part 7, on which TTB received comments, are described below, and are 
organized by subpart. Unless otherwise stated, TTB is finalizing the 
proposals in Notice No. 176 specific to the malt beverage regulations 
in part 7.
1. Subpart A--General Provisions
    In Notice No. 176, TTB proposed to set forth, in subpart A, several 
provisions with general applicability to part 7, including a list of 
defined terms, territorial limits of the regulations, a section setting 
forth to whom and to which products the regulations apply, and sections 
addressing administrative items such as forms used and delegations of 
the Administrator. For more information on the specific proposals for 
subpart A of part 7, please refer to Notice No. 176, section II.E.1. As 
explained below, TTB is finalizing the specific proposals for subpart A 
of part 7, with certain changes. Among other things, certain minor 
clarifying edits have been made for consistency with statutory language 
and current requirements.
a. Comments on Definitions in Sec.  7.1
    In Notice No 176, TTB proposed in Sec.  7.1 a list of definitions 
largely consistent with the current regulations. TTB proposed to add 
definitions for the terms ``keg collar'' and ``tap cover,'' consistent 
with a proposed amendment,

[[Page 7564]]

discussed later in this document in Section II.C.3., to allow mandatory 
label information to appear on non-firmly affixed keg collars and tap 
covers, subject to certain conditions. See Sec.  7.51, as finalized 
below. TTB is also finalizing its proposals to amend the definition of 
the term ``bottler'' to include any brewer or wholesaler who places 
malt beverages in containers (regardless of size), and to remove the 
definition of ``packer,'' consistent with amendments that remove from 
TTB's current name and address regulations a distinction between 
``bottling'' malt beverages in containers of a capacity of one gallon 
or less and ``packing'' them in containers in excess of one gallon. See 
Section II.A.6.d.
    TTB received several comments related to definitions in proposed 
Sec.  7.1. Beverly Brewery Consultants approved of the proposal to 
remove the definition of ``packer.'' In a comment submitted previously 
in response to the Treasury Department's RFI, the Brewers Association 
had recommended elimination of the distinction between ``bottler'' and 
``packer,'' although the Brewers Association did not address this issue 
in its comments on Notice No. 176.
    Beverly Brewery Consultants also requested that TTB delete the 
definition of ``Certificate of exemption from label approval'' because 
the term is not used in part 7, and also suggested that TTB add a 
definition of ``packaging,'' noting that the term was defined nearly 
identically in proposed Sec. Sec.  7.62(a), 7.81(a)(3), 7.101(a)(3), 
and 7.121(a)(3). In addition, Beverly Brewery Consultants suggested 
adding a definition for ``industry member.''
TTB Response
    TTB is finalizing its proposal to eliminate the definition of 
``packer'' from its part 7 regulations. TTB received two comments in 
support of this change and none opposed. In Sec.  7.1, TTB is 
finalizing its proposed definition of ``bottler'' as ``Any brewer or 
wholesaler who places malt beverages in containers.'' Also in Sec.  
7.1, TTB is finalizing the proposed definition of ``Certificate of 
exemption from label approval'' to clarify that such certificates are 
available for wine and distilled spirits products only. See TTB Ruling 
2013-1 (noting that, ``unlike the regulations for wine and distilled 
spirits (set forth in 27 CFR parts 4 and 5, respectively) the part 7 
regulations do not require certificates of exemption for malt beverages 
sold exclusively in intrastate commerce. TTB and its predecessor 
agencies have never issued certificates of exemption for malt 
beverages.''). As discussed in Section II.C.2 below, the holdings of 
this ruling are being incorporated into the regulations, and thus this 
ruling is superseded by this final rule.
    In response to the comment regarding the definition for 
``packaging,'' TTB included the definition of packaging separately in 
subparts E, F, G, and H for ease of reference and along with other 
definitions relevant to those subparts. TTB is finalizing those 
definitions as proposed. In response to Beverly Brewery Consultants' 
request that TTB add a definition of ``industry member,'' TTB does not 
believe the definition is necessary because this term does not appear 
in the part 7 regulations. Where the term is used in relation to part 7 
in the preamble of this final rule, it refers generally to the brewers, 
wholesalers, and importers of malt beverages to whom part 7 applies.
b. Minimum Quantities of Barley and Hops
    In Sec.  7.1, TTB proposed to retain the current definition of 
``malt beverage,'' but requested comments on whether it should set 
forth any minimum standards for the quantity of malted barley or hops 
used in the production of malt beverages. The current definition states 
that malt beverages must be made with malted barley and hops but does 
not set forth minimum quantities.
    Two commenters opposed establishing minimum standards for the 
quantity of malted barley or hops needed for an alcohol beverage to be 
considered a malt beverage. The Brewers Association supported TTB's 
decision not to include a minimum standard for use of barley and hops 
in its definition of ``malt beverage,'' noting that ``[a]t this point 
in the evolution of the brewing industry, new standards for use of 
barley and hops would necessitate reformulation of thousands of malt 
beverages.'' The Beer Institute also submitted a comment opposing 
minimum standards. TTB received no comments in support of establishing 
minimum standards.
TTB Response
    TTB is not moving forward with minimum standards in this final 
rule. TTB will continue to enforce its current policy on this issue, as 
stated in TTB Ruling 2008-3. Under this policy, TTB does not mandate 
minimum quantities of malted barley and hops to meet the definition of 
a malt beverage.
c. Comments on Requirement To Obtain a COLA
    In proposed Sec.  7.3, TTB described the general requirements and 
prohibitions under the FAA Act, including the requirement for brewers, 
wholesalers, and importers to obtain from TTB a COLA covering the 
labeling on each container of a malt beverage. An owner of Schilling 
Beer Co. requested that TTB allow malt beverages to be shipped in 
interstate commerce after submitting labels to TTB, but before a COLA 
is issued, or alternatively, that TTB cease issuing COLAs but instead 
conduct periodic compliance checks of labels that are submitted. The 
commenter stated that a shutdown in government operations severely 
impacted the brewer and caused a delay in obtaining TTB label 
approvals.
TTB Response
    TTB recognizes that label approvals are critical to brewers and 
that any disruption to normal TTB operations may increase label 
processing times. However, this comment is beyond the scope of the 
current rulemaking. Accordingly, TTB is not incorporating any special 
rules to address compliance with labeling requirements during 
government shutdowns in this final rule.
    Separately, TTB finalized technical changes in Sec.  7.3(d), which 
generally describes the regulatory requirements under each subpart of 
part 7. First, Sec.  7.3(d)(3) and (5) contain editorial changes for 
consistency within Sec.  5.3(d). Second, three references to regulatory 
definitions in Sec.  7.3(d)(3)-(4) are updated to correspond to the 
correct definitions and subparts.
d. Comments on ``Similar'' State Law
    In Notice No. 176, TTB proposed at Sec.  7.4 a regulation setting 
forth the jurisdictional limits of the FAA Act found in 27 U.S.C. 205. 
Generally, the labeling and advertising provisions of the FAA Act apply 
only to malt beverages shipped in interstate commerce. However, the 
penultimate paragraph of 27 U.S.C. 205 includes an additional 
limitation, stating the labeling provisions apply ``to malt beverages 
sold or shipped or delivered for shipment or otherwise introduced into 
or received in any State'' from any place outside of that State only 
``only to the extent that the law of such State imposes similar 
requirements with respect to the labeling . . . of malt beverages not 
sold or shipped or delivered for shipment or otherwise introduced into 
or received in such State'' from any place outside that State. Section 
7.4(a)(1) sets forth this requirement in the regulations, while Sec.  
7.4(a)(2) defines ``similar'' State law as applying to those 
requirements ``found in State laws or regulations that apply

[[Page 7565]]

specifically to malt beverages or in State laws or regulations that 
provide general labeling requirements that are not specific to malt 
beverages.''
    Separately, TTB proposed, at Sec. Sec.  7.21(a) and 7.24(a), to 
require that bottlers and importers obtain a COLA for domestically 
bottled and imported malt beverages, respectively, subject to certain 
exceptions, which are addressed in Sec. Sec.  7.21(b) and 7.24(f). 
These proposed regulations clarified, consistent with current 
regulations, that COLAs are required only if the laws or regulations of 
the State into which the malt beverages are being shipped ``require 
that all malt beverages sold or otherwise disposed of in such State be 
labeled in conformity with the requirements of subparts D through I of 
this part.'' These provisions specify that this condition is met ``when 
the State has either adopted subparts D through I of this part in their 
entireties or has adopted requirements identical to those set forth in 
subparts D through I of this part.'' Consistent with Sec. Sec.  7.4, 
7.21(b), and 7.24(f), TTB also notes that malt beverages not subject to 
the COLA requirements may still be subject to the substantive labeling 
provisions of the part 7 labeling regulations.
    For example, under both current regulations and the final rule, a 
brewer may not need a COLA to ship malt beverages, in interstate 
commerce, into a State that has adopted some, but not all, of the 
labeling requirements of part. However, if the regulations of that 
State require the name and address of the bottler to appear on the 
label, in a manner that is similar to TTB requirements, and the 
container bears no information as to the name and address of the 
bottler, then the brewer shipping that malt beverage has violated both 
State regulations and the FAA Act, even though it was not required to 
obtain a COLA for the malt beverage.
    Beverly Brewery Consultants stated that proposed Sec. Sec.  
7.4(a)(2), 7.21(b), and 7.24(f) were inconsistent in their discussion 
of State law. The commenter stated that while Sec.  7.4 refers to 
``similar'' State laws, Sec. Sec.  7.21(b) and 7.24(f) refer to 
``identical'' State laws. Beverly Brewery Consultants stated that each 
section relates to the extent that malt beverages are subject to the 
provisions of the FAA Act, and therefore should use consistent 
language. NABI requested that TTB clarify in Sec.  7.4 that similar 
State law refers only to State law that applies to alcohol beverages. 
For example, the NABI comment distinguished between a State consumer 
protection law relating to the labeling of foods in general that is 
broad enough to include alcohol beverages and a State labeling law that 
only applies to carbonated soft drinks, and thus would not be a similar 
State law.
TTB Response
    TTB is finalizing Sec. Sec.  7.4, 7.21(b), and 7.24(f) as proposed, 
with minor editorial revisions that are discussed below. Other comments 
received on Sec.  7.21 are discussed in Section II.C.2 below. Other 
comments received on Sec.  7.24 are discussed in Section II.A.3.b. and 
c. above.
    As previously noted, Beverly Brewery Consultants commented that TTB 
was inconsistent in using the term ``similar'' State laws in Sec.  7.4, 
while using the term ``identical'' State regulations in Sec. Sec.  
7.21(b) and 7.24(f). However, TTB intended to use different standards 
in these regulations. TTB reiterates that Sec.  7.4 describes the 
jurisdictional limits of the labeling and advertising provisions of the 
FAA Act, whereas Sec. Sec.  7.21 and 7.24 relate to the regulatory 
requirement to obtain a COLA. The statutory limits with regard to 
compliance with the substantive labeling requirements of the FAA Act 
for malt beverages shipped in interstate commerce provide there is no 
violation of the FAA Act unless the State into which the malt beverage 
is shipped has ``similar'' State law. However, the regulations have 
always provided that no COLA is required for malt beverages shipped, in 
interstate commerce, into a State that has not adopted the labeling 
regulations in part 7. TTB and its predecessor agencies have 
interpreted this to mean that a COLA is required only if the State into 
which the malt beverages are being introduced has either adopted the 
Federal malt beverage labeling regulations (specifically or by 
reference) or has adopted labeling requirements that are identical in 
effect (not just similar) to those in part 7. As described above, the 
relationship to State law is different for each of these situations.
    This provision is consistent with current regulations at 27 CFR 
7.40, and with the malt beverage COLA regulations since they were first 
adopted in 1936, both of which provided that the COLA requirement 
applied only where the State into which the malt beverages are being 
shipped had adopted the Federal malt beverage labeling regulations. In 
the proposed rule, TTB clarified the language further by specifically 
providing that this included the adoption of regulations identical to 
the labeling regulations in part 7. Because the comments indicate that 
this language may have been confusing, TTB is incorporating a minor 
technical change in the language of sections 7.21(b) and 7.24(f), which 
now state that the COLA requirement applies when malt beverages are 
being shipped from one State into another State, and the destination 
State has either adopted subparts D through I of this part in their 
entireties or has adopted requirements identical in effect to those set 
forth in subparts D through I of this part. This editorial change 
clarifies that the regulations of the destination State need not 
replicate the exact text of the Federal regulations, word for word, but 
simply must be identical in effect to the labeling regulations in part 
7.
    In response to NABI, TTB also finds that Sec.  7.4, as proposed, 
accurately describes the relationship between ``similar'' State law and 
the labeling and advertising provisions of the FAA Act applicable to 
malt beverages. Section 7.4(a)(2) sets out the longstanding Bureau 
interpretation of ``similar'' State law by stating that if a malt 
beverage label does not violate the laws or regulations of the State or 
States into which the malt beverages are being shipped, it does not 
violate part 7. The similar State law referred to in Sec.  7.4(a)(2) 
therefore includes State laws and regulations that apply specifically 
to malt beverages and those general labeling requirements that are not 
specific to malt beverages, but which apply to malt beverages.
    TTB agrees with NABI's comment to the effect that a State law that 
specifically applied only to, for example, carbonated soft drinks, and 
did not apply to malt beverages, would not be a ``similar'' State law 
for this purpose. Accordingly, the regulatory text in Sec.  7.4(a)(2) 
has been revised to include the clarification that in order to be 
``similar,'' the State requirements need to apply to malt beverages, 
even if their application extends more broadly to non-alcoholic 
beverages as well. As revised, the regulations provide that a 
``similar'' State law may be found in State laws or regulations that 
apply specifically to malt beverages or in State laws or regulations 
that provide general labeling requirements that are not specific to 
malt beverages but that do apply to malt beverages.
e. Other Editorial Changes
    Beverly Brewery Consultants suggested other editorial and 
clarifying changes in Sec. Sec.  7.7 and 7.10. For example, Beverly 
Brewery Consultants suggested that TTB remove a reference to 
``alcoholic beverages'' from Sec.  7.7(a)'s description of the health 
warning statement required under the Alcoholic Beverage Labeling Act of 
1988 (ABLA).

[[Page 7566]]

TTB Response
    TTB considered these recommendations of technical and clarifying 
changes and concluded that the text of the regulations as originally 
proposed clearly communicates TTB's requirements. In Sec.  7.7(a), TTB 
accurately describes the requirements of the ABLA as applicable to 
alcoholic beverages, including malt beverages, that contain at least 
0.5 percent alcohol by volume. See 27 U.S.C. 214. Separately, TTB 
corrected a minor spelling error corrected in Sec.  7.10, as finalized 
below.
2. Subpart B--Certificates of Label Approval
    In Notice No. 176, TTB proposed to consolidate the regulations 
related to TTB label approval in a new subpart B for each commodity in 
parts 4, 5, and 7. TTB further proposed in Sec.  7.21 to clarify that 
certificates of label approval (COLAs) are not required for malt 
beverages sold exclusively in the State in which the malt beverages 
were bottled.
    Proposed Sec.  7.21(a) set forth the general requirement for 
bottlers of malt beverages to obtain a COLA. Section 7.21(b) clarified 
that a COLA is required for malt beverages shipped into a State from 
outside of the State only where the laws or regulations of the 
receiving State require that all malt beverages sold or otherwise 
disposed of in such State be labeled in conformity with the 
requirements of part 7, subparts D through I. Proposed Sec.  7.21(b) 
also noted that malt beverages that are not subject to the COLA 
requirements of current Sec.  7.21 may still be subject to the 
substantive labeling provisions of part 7, subparts D through I, to the 
extent that the State into which the malt beverages are being shipped 
has similar State laws or regulations. As previously noted, these 
requirements are consistent with the longstanding policy of TTB and its 
predecessor agencies.
    Proposed Sec.  7.21(c) clarified that persons bottling malt 
beverages that will not be shipped, or delivered for sale or shipment, 
in interstate or foreign commerce, are not required to obtain a COLA or 
a certificate of exemption from label approval, along with a note 
explaining what constitutes a certificate of exemption from label 
approval. As noted in the NPRM, TTB has never issued certificates of 
exemption for malt beverages. TTB issues certificates of exemption from 
label approval to cover a wine or distilled spirits product that will 
not be introduced in interstate or foreign commerce. TTB solicited 
comments on whether the issuance of a certificates of exemption for 
malt beverages in such circumstances (for products that will not be 
sold outside of the State of the bottling brewery) would be useful to 
industry members, and whether the regulations should allow a 
certificate of exemption for such products.
    TTB received four comments on the proposed regulations at Sec.  
7.21. The Brewers Association interpreted the proposed regulation as 
requiring brewers to obtain COLAs if they are located in States that 
incorporate TTB regulations by reference or have identical regulations, 
even if the product was bottled for intrastate sale. The Brewers 
Association stated that the proposal would have the effect of requiring 
brewers and brewpubs who only sell malt beverages in their home States 
to now obtain a COLA.
    The Williams Group suggested that TTB allow industry members who 
are exempt from COLA requirements to request and obtain a COLA or a 
certificate of exemption ``in the rare instance that it might be 
required or otherwise helpful.'' NABI stated it would be valuable for 
brewers to obtain certificates of exemption so that the labels would 
appear on the COLA Public Registry, which would confirm that products 
were legally produced in the United States. Beverly Brewery Consultants 
suggested removing the note in Sec.  7.21(c) explaining what a 
certificate of exemption from label approval is and replacing it with a 
statement that TTB does not issue certificates of exemption for malt 
beverages.
TTB Response
    TTB is finalizing Sec.  7.21 as proposed, except for the addition, 
at paragraph (d), of a provision originally proposed at Sec.  7.211, 
regarding the presentation of evidence of label approval upon request 
by an appropriate TTB official. See Section II.A.9.a. Section 7.21 does 
not create any new COLA requirements for brewers. Consistent with TTB's 
current regulations, Sec.  7.21 requires brewers or wholesalers 
bottling malt beverages to obtain a COLA prior to bottling the malt 
beverages or removing them from the bottling premises if the product is 
intended for sale in interstate commerce and if the State in which the 
product is to be sold incorporates TTB labeling regulations by 
reference or has identical regulations. Malt beverages intended only 
for sale intrastate are not required to obtain a COLA, as stated in 
Sec.  7.21(c).
    In response to the comment from the Williams Group, requesting that 
COLAs or certificates of exemption be available for malt beverages that 
will not be shipped or delivered for sale or shipment, in interstate or 
foreign commerce, TTB notes that bottlers may currently apply for COLAs 
on a voluntary basis. Brewers may therefore apply for COLAs covering 
malt beverages currently sold in intrastate commerce if, for example, 
they believe the State may require such documentation, or to cover the 
possibility that such products may be sold in interstate commerce in 
the future.
    Because COLAs are granted based on the label's compliance with 
TTB's regulations in part 7, some malt beverages that are only 
distributed intrastate and are labeled in conformance with State law 
may not be eligible to obtain a COLA, such as where State law creates a 
conflicting requirement. This is why TTB sought comments on whether 
certificates of exemption should be available for malt beverages that 
are only distributed intrastate. While the Williams Group recommended 
making them available in the ``rare case that it might be required or 
otherwise helpful,'' it also stated that it was not aware of State 
requirements for COLAs or certificates of exemption for malt beverages 
only distributed intrastate. Because TTB did not receive comments 
referring to State requirements for TTB documentation for these types 
of malt beverages, this final rule does not include any provisions for 
allowing certificates of exemption for malt beverages on an optional 
basis.
    NABI suggested that requiring certificates of exemption for malt 
beverages sold in intrastate commerce would be useful, so that industry 
members could confirm, via the COLA Public Registry, that products were 
legally produced in the United States. However, the NABI comment did 
not provide any evidence to establish that the theoretical benefit from 
such a requirement would justify the additional regulatory burden. TTB 
notes that such a requirement would constitute a new burden on bottlers 
of malt beverages distributed only in intrastate commerce and would 
represent a change to longstanding TTB policy to not require 
certificates of exemption for malt beverages sold exclusively in 
intrastate commerce. Accordingly, this final rule does not adopt the 
NABI comment.
    Finally, TTB disagrees with the comment from Beverly Brewery 
Consultants, requesting that TTB remove from Sec.  7.21(c) the 
parenthetical statement explaining what constitutes a certification of 
exemption from label approval. TTB believes this note in paragraph (c) 
provides useful information because it provides context

[[Page 7567]]

for the earlier statement in Sec.  7.21 that bottlers of malt beverages 
that will not be shipped or delivered for sale or shipment in 
interstate or foreign commerce are not required to obtain a COLA or a 
certificate of exemption from label approval.
3. Subpart D--Label Standards
    In Notice No. 176, TTB proposed a subpart D in each of parts 4, 5, 
and 7, containing regulations governing the placement of, and other 
requirements applicable to, mandatory and additional information on 
labels and containers. Most of the proposals applied similarly to the 
labels of the wine, distilled spirits, and malt beverage products. 
Specific to part 7, TTB proposed, and is now finalizing, an exception, 
for certain kegs, to the requirement that labels be firmly affixed to 
malt beverage containers.
    Generally, TTB requires that labels be ``firmly affixed'' to malt 
beverage containers, that is, that they must be affixed in such manner 
that they cannot be removed without the thorough application of water 
or other solvents. Under Sec.  7.51(b), TTB proposed an exception to 
this requirement for kegs that have a capacity of 10 gallons or more. 
The exception provided that a label in the form of a keg collar or a 
tap cover was not required to be firmly affixed, provided that the name 
of the brewer or bottler of the malt beverage was permanently or semi-
permanently stated on the keg in the form of embossing, engraving, or 
stamping, or through the use of a sticker or ink jet method. (TTB notes 
that it inadvertently described the proposal as contingent on the name 
of the brewer appearing on the keg, but proposed regulatory text that 
provided that the name of the bottler appear on the keg.)
    TTB proposed this exception in response to requests from brewers, 
who have asserted that the requirement for firmly affixed labels is 
unduly burdensome as applied to kegs. Brewers have noted that kegs are 
intended to be reused, but that it takes considerable time and effort 
to scrape off the label each time a keg is to be reused. For this 
reason, brewers requested that TTB authorize the use of keg collars 
that are not firmly affixed to the keg, or a tap cover, to bear 
mandatory labeling information.
    Seven commenters addressed proposed Sec.  7.51, including the 
proposed exception and the general requirement that labels must 
otherwise be firmly affixed to malt beverage containers. The commenters 
provided important information, including current practices of affixing 
labels to kegs, the burden of compliance with current and proposed 
regulations, and the prevalence of keg sharing programs. In light of 
those comments, TTB is finalizing the requirement that labels be firmly 
affixed to containers, as proposed at Sec.  7.51(a), and is expanding 
the exception to this requirement from what was proposed at Sec.  
7.51(b).
    Only the Williams Group appeared to support, without reservation, 
the proposed exception, for certain keg collars and tap covers, to the 
requirement that labels be firmly affixed to containers. The six other 
commenters raised one or more specific objections. The Brewers 
Association, the Beer Institute, and MicroStar Logistics opposed making 
the exception to the firmly affixed label requirement for keg collars 
and tap covers contingent upon permanently or semi-permanently marking 
the keg with the name of the bottler. The Brewers Association and 
MicroStar Logistics stated that many brewers rely on third-party keg-
sharing programs and that the exception, as proposed, would not provide 
any additional flexibility in such circumstances. The Brewers 
Association, MicroStar Logistics, NBWA, and the Confederated Tribes of 
the Chehalis Reservation described the exception, with its reliance on 
identifying the brewer through marking on the keg, as a new requirement 
that would add costs to industry members. The Confederated Tribes of 
the Chehalis Reservation stated that ``the current use of keg collars 
with the brewery information is a system that is working'' and does not 
need to be changed. They stated that the proposed rule would impose 
costs on brewers and force them to purchase additional kegs. The Beer 
Institute requested that TTB clarify that brewers may use trade names 
in lieu of actual corporate names and provide guidance on the proposal 
as applied to contract brewing. NBWA requested that TTB clarify that 
brewers are responsible for affixing keg collars before kegs leave the 
brewery.
    The Brewers Association and MicroStar Logistics also objected to 
the existing requirement that labels must be ``firmly affixed'' to malt 
beverages containers such that they ``cannot be removed without 
thorough application of water or other solvents.'' They described this 
requirement, proposed at Sec.  7.51(a) and derived from TTB's prior 
regulations, as ``out of date and unnecessary in light of the 
significant adoption of keg sharing programs by the beer industry.'' 
The Brewers Association additionally opposed the ``unnecessary use of 
additional water or solvents'' out of concern for workplace safety and 
environmental protection.
    The Brewers Association, the Beer Institute, and MicroStar 
Logistics suggested that TTB allow firmly affixed, non-adhesive keg 
collars that ``are specifically designed to affix to the neck of the 
keg and cannot be removed without deliberate effort.'' They stated that 
the use of such collars would save brewers from the burden and expense 
of scraping off old labels and would still maintain appropriate 
consumer protections. The Brewers Association stressed that TTB should 
allow the use of such non-adhesive keg collars because other aspects of 
malt beverage distribution and sale ensure that the proper products are 
delivered from brewers to wholesalers, retailers, and consumers. The 
Brewers Association stated that kegs are transported by licensed 
carriers and wholesalers, who have an economic motivation to deliver 
the proper product to retailers and consumers. It stated that kegs are 
typically shipped from packaging breweries shrink wrapped and on 
pallets, which deters tampering with keg collars. Once in commerce, the 
Brewers Association stated that State laws require retailers, bars, and 
restaurants to supply the correct product and that permanent keg 
marking would not serve to ameliorate any attempts to deceive consumers 
because kegs typically are not visible to consumers.
    The Beer Institute, along with Beverly Brewery Consultants, also 
proposed extending the exception for keg collars to kegs with a 
capacity of less than 10 gallons. The Beer Institute favored a minimum 
capacity of 5.2 gallons, while Beverly Brewery Consultants recommended 
allowing keg collars on kegs with a capacity greater than 1 gallon. 
Both commenters stated that, because brewers frequently use a variety 
of keg sizes, these suggestions would allow brewers greater flexibility 
in labeling their kegs.
    Finally, the Confederated Tribes of the Chehalis Reservation 
questioned the impact that the requirement, in proposed Sec.  7.51(a), 
to firmly affix labels would have on growlers. The commenter asked that 
the regulations clarify that refillable beer containers, such as 
growlers, which are refilled at the request of consumers at the point 
of sale, do not need to be firmly affixed with product information.
TTB Response
    After reviewing the comments, TTB has decided to finalize, as 
proposed in Sec.  7.51(a), the requirement that labels be firmly 
affixed to containers, and expand

[[Page 7568]]

the exception for keg labels proposed in Sec.  7.51(b). Recognizing the 
points made in the comments by the Beer Institute, the Brewers 
Association, and MicroStar Logistics, TTB is providing an exception to 
the ``firmly affixed'' requirement for kegs to incorporate certain 
types of non-adhesive keg collars or tap covers.
    This final rule provides that a keg collar or tap cover is 
considered to be firmly affixed if removal would break or destroy the 
keg collar or tap cover in such a way that it cannot be reused. Because 
any attempt at removal will break the keg collar or tap cover, or 
render it unfit for reuse, this provision allows non-adhesive keg 
collars and tap covers but mitigates the risk that labels simply could 
be switched between kegs. TTB believes this additional option will 
reduce the burden on breweries of removing and replacing keg labels and 
recognizes the use of third party keg providers. Although the Brewers 
Association described various controls and requirements that deter 
intentional mislabeling of kegs in commerce, TTB believes that allowing 
keg labels that could be switched from one keg to another with minimal 
effort presents an undue risk of fraud or deliberate tampering that 
would result in consumer deception.
    Any keg collar or tap cover that is either broken or destroyed and 
rendered unfit for reuse upon removal would be eligible for the 
exception under Sec.  7.51(b)(1), including those that utilize tamper-
resistant or tamper-evident seals, leave evidence of tampering behind, 
or are intended to be self-adhering as opposed to adhering directly to 
a keg. While some commenters suggested that TTB allow keg collars and 
tap covers that cannot be removed without ``deliberate effort,'' TTB 
finds that such a standard would be difficult to define and 
communicate, and would risk being unenforceable in practice.
    TTB is also finalizing the exception proposed in Notice No. 176 
that allows for placement of mandatory information on keg collars and 
tap covers that are not firmly affixed. The exception is now set forth 
below at Sec.  7.51(b)(2). It provides that a keg collar or tap cover 
is not required to be firmly affixed if the name of the bottler or 
importer is permanently or semi-permanently stated on the keg in the 
form of embossing, engraving, or stamping, or through the use of a 
sticker or ink jet method. TTB has added the words ``or importer'' to 
clarify that the exception applies both to domestically brewed and 
imported malt beverages.
    In both Sec.  7.51(b)(1) and (b)(2), TTB is clarifying that these 
provisions apply only to keg collars and tap covers that meet the 
definitions of these terms in Sec.  7.1, as finalized by this rule. TTB 
did not receive comments in response to the proposed definitions of 
``keg collar'' or ``tap cover'' in Sec.  7.1, which were proposed to 
provide clarity on the meaning of these terms in the context of the 
exception proposed at Sec.  7.51(b).
    In response to comments by the Beer Institute and Beverly Brewery 
Consultants, TTB is providing additional flexibility by reducing the 
minimum capacity of kegs to which Sec.  7.51(b)(1) and (b)(2) apply, 
from the proposed 10 gallons to 5.16 gallons. Both of these commenters 
described common keg sizes used by brewers with a capacity of less than 
ten gallons, including ``sixth barrel'' kegs, which have a capacity of 
one-sixth of a 31-gallon barrel (or approximately 5.16 gallons). In 
Notice No. 176, TTB proposed the exception to the requirement that 
labels be firmly affixed to containers because kegs are intended to be 
reused and brewers had expressed that it takes considerable effort to 
remove and replace adhesive labels on kegs. TTB stressed that the 
proposed exception would afford additional flexibility without 
sacrificing consumer protection. This remains the case for kegs with a 
minimum capacity of 5.16 gallons. Such kegs are generally reused by 
brewers and delivered to bars or restaurants that dispense malt 
beverages to consumers, whereas smaller containers, such as one gallon 
kegs, typically are not reused and are often sold directly to 
consumers. For these reasons, TTB believes reducing the minimum keg 
capacity from the proposed 10 gallons to 5.16 gallons will ease the 
burden on industry members, particularly small brewers, of labeling and 
relabeling kegs while maintaining adequate consumer protections.
    In response to the Brewers Association and MicroStar Logistics 
comments requesting changes to the requirement that labels be firmly 
affixed to containers, which appears in Sec.  7.51(a), TTB notes that 
it did not propose changes to this standard. The standard, that 
generally labels must be affixed such that they ``cannot be removed 
without thorough application of water or other solvents,'' represents 
TTB's general requirement for labels in the malt beverage industry. 
This standard also exists in the wine and distilled spirits 
regulations. Because TTB did not propose changes to this standard, it 
finds that this option was not adequately aired for comment in the 
notice, and thus will consider it for further rulemaking.
    The Confederated Tribes of the Chehalis Reservation asked TTB to 
clarify what impact the requirement to firmly affixed labels to 
containers under proposed Sec.  7.51 would have on growlers. Section 
7.51 does not create new requirements for growlers, which TTB considers 
to be bottles or glasses, depending on how they are used. See TTB Beer 
FAQs B9, What is TTB's policy with respect to ``growlers''?,'' 
available at https://www.ttb.gov/beer/beer-faqs.
    Proposed Sec.  7.51(a), requiring that labels be firmly affixed to 
containers of malt beverage, was derived from current TTB regulatory 
requirements. The exception described above only applies to malt 
beverages in kegs of 5.16 gallons or more.
    In response to the Beer Institute's request that TTB clarify that 
brewers may use trade names in lieu of actual corporate names and 
provide guidance on the proposal as applied to contract brewing, TTB 
notes that Sec.  7.51 only addresses how labels must be affixed to 
containers. The name and address statements required to appear on 
labels are described in part 7, subpart E, in Sec. Sec.  7.66-7.68. TTB 
is therefore addressing this comment in the discussion of those 
sections below. In response to the NBWA request that TTB clarify that 
brewers are responsible for affixing keg collars before kegs leave the 
brewery, TTB refers the commenter to the discussion above under part 7 
subpart A. Section 7.3(c) of that subpart states in relevant part that 
brewers and wholesalers may only introduce in interstate or foreign 
commerce malt beverages in containers that are marked, labeled, and 
branded in accordance with the labeling requirements of part 7. TTB 
notes that subject to the jurisdictional limits of the FAA Act, the law 
clearly prohibits the sale or shipment in interstate or foreign 
commerce of wine, distilled spirits, or malt beverages that are not 
bottled, packaged, and labeled in accordance with regulations issued by 
the Secretary. See 27 U.S.C. 205(e).
    TTB is making two additional technical changes to proposed Sec.  
7.51. First, for clarity, TTB is changing the title of Sec.  7.51 from 
``Firmly affixed requirements.'' to ``Requirements for firmly affixed 
labels.'' Second, TTB is moving the second sentence from proposed Sec.  
7.51(b) to a separate paragraph (c). This provision states, ``This 
section in no way affects the requirements of part 16 of this chapter 
regarding the mandatory health warning statement.'' Part 16 contains 
TTB's requirements implementing the Alcoholic Beverage Labeling Act of 
1988

[[Page 7569]]

(ABLA), which requires that a specific health warning statement appear 
on the labels of all containers of alcohol beverages for sale or 
distribution in the United States. See 27 U.S.C. 215. Part 16 contains 
a separate requirement that the health warning statement be firmly 
affixed to alcohol beverage containers. See Sec.  16.22(c). TTB is 
therefore making this change to further clarify that none of the 
provisions in Sec.  7.51 affect the regulatory requirements under part 
16.
4. Subpart E--Mandatory Label Information
    Subpart E in part 7 sets forth the information that is required to 
appear on malt beverage labels (otherwise known as ``mandatory 
information''). Proposed changes specific to malt beverages included 
removing restrictions on where mandatory information may appear on malt 
beverage labels, allowing alternative statements of alcohol content 
(such as alcohol by weight), expanding the tolerance for statements of 
alcohol content, clarifying the permissible name and address statements 
for brewers and bottlers, and codifying TTB's policy that statements of 
net contents may be expressed in metric units in addition to U.S. 
standard measures. For more information on the specific part 7 subpart 
E proposals, please refer to Notice No. 176, Section II.E.4. In the 
case of allowing alternative statements of alcohol content (such as 
alcohol by weight), TTB finalized this change in T.D. TTB-158. 
Regarding name and address statements for brewers and bottlers of malt 
beverages, TTB discussed these requirements along with similar 
requirements for wine and distilled spirits regulations above in 
Section II.A.6.d.
a. Placement of Mandatory Information
    In Notice No. 176, TTB proposed in Sec.  7.63 a provision to allow 
mandatory information to appear on any label on a malt beverage 
container. TTB is finalizing this proposal. TTB's current regulations 
require certain mandatory information to appear on a ``brand label,'' 
while other mandatory information or additional information could 
appear on any label. Our current regulations define brand label as 
``[t]he label carrying, in the usual distinctive design, the brand name 
of the malt beverage.'' TTB proposed to remove this requirement because 
in practice, many malt beverage labels wrap around the container. As a 
result, mandatory information often appears anywhere on certain cans or 
bottles.
    TTB did not receive any comments for or against this change 
specifically as applied to malt beverages. Therefore Sec.  7.63 is 
finalized as proposed.
    TTB notes that it may take some time to make conforming changes to 
the COLAs Online system to remove references to a ``brand label.'' COLA 
applicants may, in the interim, simply designate in COLAs Online any 
label bearing the brand name as the ``brand label.''
b. Alcohol Content Statements for Malt Beverage Labels
    In Notice No. 176, TTB proposed to increase the alcohol content 
tolerance for malt beverages from 0.3 percent above or below the 
labeled alcohol content to 1 percent above or below. However, TTB is 
not finalizing this proposal. TTB made this proposal with the 
understanding that some brewers, especially small brewers, avoid 
putting optional alcohol content statements on malt beverage labels 
because of difficulty maintaining precise alcohol content from batch to 
batch. Currently, alcohol content statements must only be included on 
malt beverage labels if the product contains alcohol derived from added 
flavors or other added nonbeverage ingredients (other than hops 
extract) containing alcohol. TTB stated that it believed increasing the 
tolerance for malt beverage alcohol content statements would encourage 
more brewers to include such statements when they are otherwise 
optional. TTB stated that it did not believe that a one percentage 
point variation from the labeled alcohol content would significantly 
impact consumers. TTB noted that under both its current regulations, 
and those finalized by this rule at Sec.  7.65(c)-(e) below, the 
alcohol content tolerance is restricted in the case of malt beverages 
labeled with the statements ``low alcohol,'' ``reduced alcohol,'' 
``non-alcoholic,'' and ``alcohol free.'' For example, alcohol content 
for malt beverages labeled as ``low alcohol'' or ``reduced alcohol'' 
must be less than 2.5 percent alcohol by volume. Likewise, malt 
beverages labeled ``non-alcoholic'' must contain less than 0.5 percent 
alcohol, and ``alcohol free'' malt beverages must contain no alcohol.
    Four commenters, the Brewers Association, the Beer Institute, 
Beverly Brewery Consultants, and a team of professors from Abertay 
University and Heriot Watt University in Scotland, commented on TTB's 
proposed alcohol content tolerance for malt beverages in Sec.  7.65. 
Beverly Brewery Consultants supported the proposed increase, noting 
that fermentation may result in batches of the same product that vary 
by alcohol content. The Brewers Association also supported the proposed 
increase in the alcohol content tolerance. The Brewers Association 
proposed that TTB require disclosure of alcohol content on malt 
beverage labels, provided it increased the tolerance as proposed. Prior 
to the publication of Notice No. 176, in its response to the Treasury 
Department's RFI, the Brewers Association also suggested maintaining 
the existing tolerance of plus or minus 0.3 percent for malt beverages 
below 5 percent alcohol-by-volume (ABV) and increasing the tolerance to 
plus or minus 0.5 percent for malt beverages with an alcohol content at 
or above 5 percent ABV.
    The Beer Institute opposed the proposed increase of the alcohol 
tolerance for malt beverages. It stated that the proposed increase was 
too great and would undermine provisions of the FAA Act that direct the 
Secretary to promulgate regulations that prevent consumer deception, 
provide adequate information to consumers, and prohibit false or 
misleading statements. Further, the Beer Institute stated that the 
increase could confuse, mislead, and possibly endanger consumers due to 
higher than labeled alcohol content. The Beer Institute also expressed 
concern about the relationship of an increased tolerance to other TTB 
requirements, such as the labeling of low or reduced alcohol malt 
beverages and the use of optional Serving Facts statements. It raised 
concerns that brewers might use the increased tolerance to either save 
costs by brewing near the low end of the tolerance, or provide more 
alcohol than is labeled by brewing at the high end. The Beer Institute 
recommended keeping the current tolerance, which it stated balances the 
technical challenges of brewing with the consumer interest in 
predictable alcohol content.
    The team of professors supported the proposed increase and 
submitted the results of a study of beers brewed in the United Kingdom 
showing that a significant fraction fell outside a tolerance of plus or 
minus 0.3 percent.
TTB Response
    TTB is not finalizing the proposal to increase the alcohol content 
tolerance for malt beverages from 0.3 percent to 1 percent. Commenters 
have raised important issues in support of, and in opposition to, the 
proposal. The comments from the Brewers Association, Beverly Brewery 
Consultants, and the team of professors supported an expanded tolerance 
and observed that some brewers have difficulty maintaining precise 
alcohol content in malt beverages from batch to batch. However, TTB 
notes that the

[[Page 7570]]

Brewers Association's comment to the RFI sought a smaller increase (to 
plus or minus 0.5 percent) for those malt beverages with an alcohol 
content at or above 5 percent alcohol by volume, and no increase at all 
for other malt beverages.
    TTB notes that it does not agree with a comment from the Beer 
Institute, which stated that an increased alcohol content tolerance 
would allow malt beverages labeled as ``low alcohol'' to contain one 
percentage point more alcohol than is labeled. This is not the case. As 
noted above, Sec.  7.65 maintains the alcohol tolerance limitations 
from TTB's current regulations, including for malt beverages labeled as 
low or reduced alcohol. Under Sec.  7.65(d), as finalized, alcohol 
content for such malt beverages must be less than 2.5 percent alcohol 
by volume regardless of the otherwise permitted tolerance.
    Regarding the issue of increasing the tolerance for alcohol 
content, the Brewers Association appeared to request that disclosure of 
alcohol content be made mandatory for all malt beverages, and that TTB 
should increase the tolerance as part of such a change. In Notice No. 
176, TTB stated that it was not proposing to expand the types of malt 
beverages for which an alcohol content statement would be mandatory. 
Accordingly, TTB finds that aspect of the Brewers Association comment 
to be outside the scope of this rulemaking.
    Based on the comments received in response to the proposal on 
alcohol content tolerances, TTB has concluded that whether the alcohol 
content tolerance for malt beverages should be increased requires 
further consideration. As a result, TTB is finalizing Sec.  7.65 
without changing the alcohol content tolerance for malt beverages. The 
tolerance remains 0.3 percent above or below the stated alcohol 
content, subject to the limitations described in Sec.  7.65. TTB will 
treat the Brewers Association comment as a request for further 
rulemaking on this issue.
    TTB is also finalizing proposed Sec.  7.65(b) with minor 
modifications. In T.D. TTB--158, TTB amended existing regulations on 
alcohol content statements to provide that, while a statement of 
alcohol content must be expressed as a percentage of alcohol by volume, 
other truthful, accurate, and specific factual representations of 
alcohol content, such as alcohol by weight, may be made, as long as 
they appear together with, and as part of, the statement of alcohol 
content as a percentage of alcohol by volume. This document 
incorporates this amendment, with minor clarifying changes. Consistent 
with current regulations, the final rule clarifies that Sec.  7.65 
applies only where State law does not either prohibit alcohol content 
statements or provide its own requirements for the manner of such 
statements. The final rule also removes, as unnecessary, language 
clarifying that a mandatory alcohol content statement may not be 
expressed as a range or by maximums or minimums.
c. Net Content Labeling for Malt Beverages
    In Notice No. 176, TTB proposed at Sec.  7.70 to amend the net 
content labeling regulations for malt beverages to reflect current 
policy by specifically stating in the regulations that malt beverages 
may be labeled with the equivalent metric measure in addition to the 
mandatory U.S. measure. (As explained further below, the notice 
referred to ``U.S. standard measures'' to mean U.S. customary units of 
measurement, e.g., U.S. gallons, quarts, pints, and fluid ounces). TTB 
noted that current regulations allow for the use of U.S. standard 
measures, but do not address whether metric contents also may be 
displayed. Because current TTB policy is to allow net contents to be 
expressed in both formats, TTB proposed that Sec.  7.70 allow for the 
statement of net contents of metric measurements in addition to, but 
not in lieu of, the U.S. standard measures. TTB did not receive 
comments for or against this proposal.
    In the interim, this change was adopted in the current malt 
beverage net content labeling regulations by T.D. TTB-165. The summary 
of that final rule explained that: ``TTB is also amending the labeling 
regulations for distilled spirits and malt beverages to reflect current 
policy by specifically stating in the regulations that distilled 
spirits may be labeled with the equivalent standard United States 
(U.S.) measure in addition to the mandatory metric measure, and that 
malt beverages may be labeled with the equivalent metric measure in 
addition to the mandatory U.S. measure.''
    Separately, in response to the Treasury Department's RFI, the 
Brewers Association suggested that, for malt beverage containers with 
volumes of between one pint and one quart, TTB should allow the 
expression of net contents as fluid ounces only. Currently, net 
contents for containers of this size must be expressed as fractions of 
a quart, or in pints and fluid ounces.
TTB Response
    Because TTB did not receive comments on its proposal to allow the 
statement of net contents in metric measurements in addition to, but 
not in lieu of, the U.S. standard measures, and because this change has 
already been made in the regulations as amended by T.D. TTB-165, TTB is 
finalizing Sec.  7.70 as proposed. TTB is making a minor editorial 
revision to refer to the U.S. standard measures as ``U.S. customary 
units of measurement.'' While both terms have the same meaning, TTB 
finds that the term ``customary'' describes this system of measurement 
more accurately than the term ``standard.''
    In response to the RFI comment from the Brewers Association, TTB 
notes that it did not propose changes to the permissible format of U.S. 
standard units. It is not clear whether industry members and consumers 
were given adequate notice that such formatting requirements were 
subject to change. TTB is therefore not adopting this suggestion from 
the Brewers Association. TTB may consider changes to the permissible 
formats for net contents statements in a future rulemaking.
5. Subpart H--Labeling Practices That Are Prohibited if They Are 
Misleading
    In Notice No. 176, TTB proposed, in subpart H of parts 4, 5, and 7, 
regulations on labeling practices that are prohibited if they are 
misleading. See section II.B.6. TTB responds above to comments on 
proposals that apply similarly to wine, distilled spirits, and malt 
beverages. See section II.A.7.h. Regarding malt beverages specifically, 
TTB is incorporating in Sec.  7.128 text from TTB's current 
regulations, which prohibits malt beverage labels from containing 
statements or representations that tend to create a false or misleading 
impression that a malt beverage contains distilled spirits or is a 
distilled spirits product. TTB is also adding in Sec.  7.128(b)(4), 
based on current guidance, a provision that truthful and accurate 
statements about production of a malt beverage, such as ``aged in 
whisky barrels,'' do not violate this standard. See TTB Ruling 2015-1.
    Finally, based on comments received, TTB is not finalizing proposed 
Sec.  7.131, which contained a prohibition from TTB's current 
regulations on the use of the term ``bonded'' or similar terms that may 
imply governmental supervision over the production, bottling, or 
packing of a malt beverages product. TTB does not believe a separate 
regulation is necessary in this area and is opting to rely on its 
general prohibition against statements or representations, irrespective 
of falsity, that tend to mislead consumers.

[[Page 7571]]

a. Claims Related to Distilled Spirits
    In Notice No. 176, TTB proposed regulations at Sec. Sec.  4.128, 
5.128, and 7.128 prohibiting labeling statements that tended to create 
a false or misleading impression that products of one commodity contain 
or are themselves a different commodity. In the case of malt beverages, 
the proposed regulation at Sec.  7.128 prohibited labeling statements 
that would create a misleading impression that a malt beverage product 
contained or was itself a distilled spirit or wine product. The 
proposed regulations also would have prohibited homophones or coined 
words that simulate or imitate a class or type designation of a 
different commodity. TTB proposed this requirement based on its receipt 
of increasing numbers of applications for approval of labels that 
contained such terms.
    In T.D. TTB-158, TTB decided not to finalize proposed Sec. Sec.  
4.128, 5.128, and 7.128, stating in response to comments that ``a 
blanket approach to cross-commodity terms * * * could unnecessarily 
restrict creativity in the use of truthful and non-misleading 
representations on labels.'' However, as discussed in Notice No. 176, 
current TTB regulations continue to prohibit misleading representations 
that a malt beverage product contains or is itself a distilled spirit 
product. See 27 CFR 7.29(a)(7). TTB received two comments in relation 
to this current regulation. The Beer Institute, although it opposed the 
language in proposed Sec.  7.128, which took a more expansive approach 
to cross-commodity terms in general, supported TTB's current 
regulation. The Williams Group, however, commented that both TTB's 
current and proposed regulations limit producers' freedom to be 
creative. The Williams Group also stated that consumers are able to 
read labels and determine the type of commodity.
    Both proposed Sec.  7.128 and TTB's current regulation at Sec.  
7.29(a)(7) listed three types of labeling statements that TTB does not 
consider to create a false or misleading impression that a malt 
beverage contains distilled spirits or is a distilled spirits product. 
They are truthful and accurate statements of alcohol content, the use 
of a brand name of a distilled spirits product as a malt beverage brand 
name, or the use of a cocktail name as a brand name or distinctive or 
fanciful name. In Notice No. 176, TTB proposed to add items to this 
list. First, TTB proposed to allow truthful and accurate statements 
about the production of a malt beverage, such as ``aged in whisky 
barrels'' or ``Beer brewed with chardonnay grapes.'' This provision was 
based on labeling guidance in TTB Ruling 2014-4. TTB notes that Ruling 
2014-4 was superseded by TTB Ruling 2015-1, which includes the content 
of Ruling 2014-4 in its entirety. Second, based on provisions in the 
Beverage Alcohol Manual for malt beverages, TTB proposed to allow the 
use of the designations ``barley (or wheat or rye) wine ale'' or 
``barley (or wheat or rye) style wine ale.'' Third, TTB proposed to add 
a new provision, permitting ``[t]he use of terms that simply compare 
malt beverage products to wine or distilled spirits products without 
creating a misleading impression as to the identity of the product.''
    The Beer Institute opposed adding these three items, on the grounds 
that TTB personnel in the future may interpret the exceptions as 
defining the limits of what labeling claims or statements related to 
non-malt beverage products may be used. In contrast, Beverly Brewery 
Consultants supported listing specific terms in the regulations to 
clarify to brewers that use of these terms on labels is permissible. 
TTB notes that while the Beer Institute opposed proposed Sec.  7.128, 
it did not oppose the existing restrictions from the prior regulation 
at Sec.  7.29(a)(7) and recommended that such restrictions be extended 
to wine product labels. Finally, Beverly Brewery Consultants expressed 
concern that the proposed regulation could impact currently permissible 
statements on malt beverage labels, such as those comparing malt 
beverage products to ``champagne.''
TTB Response
    TTB is finalizing at Sec.  7.128 its current regulation from Sec.  
7.29(a)(7), which prohibits malt beverage labels from containing 
statements or representations that tend to create a false or misleading 
impression that a malt beverage contains distilled spirits or is 
distilled spirits product.'' In response to the Williams Group, TTB 
believes its current regulation does not limit product innovation, 
because statements or representations related to distilled spirits are 
still permitted, provided they do not create a false or misleading 
impression about the identity of the product. For the same reason, TTB 
believes this provision is necessary for consumer protection.
    TTB is also finalizing the provision proposed at Sec.  7.128(b)(4), 
which incorporates current guidance to state that truthful and accurate 
statements about the production of a malt beverage, such as ``aged in 
whisky barrels'' are not prohibited. However, TTB is not including the 
proposed examples relating to the use of grapes in the production of 
beer (``fermented with grapes'' and ``Beer brewed with chardonnay 
grapes''), because they relate to the proposed regulatory language 
about misleading cross-commodity comparisons with wine, which was not 
finalized. Similarly, this final rule makes conforming changes to Sec.  
7.143(h)(3), which describes designations related to barrel aging that 
TTB would consider misleading, to remove examples of designations that 
mention wine or grapes. These types of claims remain subject to the 
general prohibition against misleading labeling statements.
    TTB is also not finalizing in Sec.  7.128 the proposed provision 
permitting terms ``barley (or wheat or rye) wine ale'' or ``barley (or 
wheat or rye) style wine ale,'' because they also relate specifically 
to claims related to wine. TTB's policy permitting these terms remains 
in effect, as reflected in the class and type regulations that are 
finalized at Sec.  7.143(g).
    TTB is also not finalizing the provision permitting labeling 
statements that simply compare malt beverage products to wine or 
distilled spirits products, without creating a misleading impression as 
to the identity of the product. Upon further review, this provision 
does not provide additional clarity over and above the general 
prohibition in Sec.  7.128(a), that labels may not create a false or 
misleading impression that a malt beverage contains distilled spirits 
or is a distilled spirits product.
b. Use of the Term ``Bonded''
    In proposed Sec.  7.131, TTB maintained a provision from its 
current regulations that prohibited the use on malt beverage labels of 
the term ``bonded'' or similar terms that may imply governmental 
supervision over the production, bottling, or packing of the product. 
TTB sought comments, however, on whether it should continue to prohibit 
the use of such terms on malt beverage labels.
    Two commenters responded to TTB's proposal. The Williams Group and 
Beverly Brewery Consultants both stated that the prohibition is 
unnecessary and outdated. The Williams Group stated that the term had 
little meaning and would not mislead consumers or cause them to believe 
that distilled spirits had been added to a malt beverage. Beverly 
Brewery Consultants stated that there did not appear to be a need to 
retain the prohibition. TTB also notes that the Brewers Association 
submitted a comment in response to the Treasury Department's RFI 
stating that there is no reason to prohibit the use of the word

[[Page 7572]]

``bonded'' on malt beverage labels because the word ``has no meaning 
related to malt beverages.''
TTB Response
    Based on the comments received, TTB is eliminating the prohibition 
on the use of the word ``bonded'' or similar terms on malt beverage 
labels. Commenters generally stated that use of the term ``bonded'' or 
similar terms on malt beverages labels would not tend to mislead 
consumers. TTB notes that the general prohibition in Sec.  7.122 
against statements or representations, irrespective of falsity, that 
mislead consumers is finalized as proposed. This provision extends to 
labeling statements that use the term ``bonded'' or similar terms in a 
misleading fashion, for example, implying government supervision or 
certification that actually was not provided. Such uses would be 
prohibited under TTB's general prohibition on misleading labeling. See 
27 CFR 7.102.
6. Subpart I--Class and Type
    In Notice No. 176, TTB proposed to reorganize and amend its class 
and type designations for malt beverages. These regulations appear in 
current Sec.  7.24 and were proposed to be reorganized into part 7 
subpart I, Sec. Sec.  7.141-7.147.
    Part 7 does not prescribe standards of identity for malt beverages. 
Instead, current Sec.  7.24(a) provides that statements of class and 
type for malt beverages shall conform to the designation of the product 
as known to the trade. If the product is not known to the trade under a 
particular designation, a distinctive or fanciful name, together with 
an adequate and truthful statement of composition of the product, shall 
be stated, and such statement is treated as a statement of class and 
type for purposes of part 7.
    TTB did not propose now to include specific standards of identity. 
Proposed Sec.  7.141 is derived from 27 CFR 7.24(a) and sets out 
standards for class and type designations on malt beverages. This 
section explains that the class of the malt beverage must be stated on 
the label. The type may optionally be stated. Statements of class and 
type must conform to the designation of the product as known to the 
trade. If the product is not known to the trade, the product must 
contain a distinctive or fanciful name as well as a statement of 
composition.
    Proposed Sec.  7.141 differs from the current regulations in that 
it proposes to define a ``malt beverage specialty'' as a malt beverage 
that does not fall under any of the class designations set forth in 
part 7 and is not known to the trade under a particular designation, 
usually because of the addition of ingredients such as colorings, 
flavorings, or food materials, or the use of certain types of 
production processes. Such beverages will not be designated as ``malt 
beverage specialties'' on the label, but the term reflects current 
usage and is a convenient way to refer to such products in the 
regulations.
    Proposed Sec.  7.142 sets out class designations. Any malt beverage 
may be designated simply as a ``malt beverage.'' The designations 
``beer'', ``ale'', ``porter'', ``stout'', ``lager'', and ``malt 
liquor'' may be used to designate malt beverages that contain at least 
0.5 percent alcohol by volume and that conform to the trade's 
understanding of those designations. TTB proposes to allow these 
designations to be preceded or followed by descriptions of the color of 
the product (such as brown, red, or golden).
    Proposed Sec.  7.143 is largely consistent with existing 
regulations on class and type designations. There are new proposed 
provisions for ``ice beer,'' ``wheat beer,'' ``rye beer,'' and ``barley 
wine ale,'' consistent with existing TTB policy.
    The proposed regulations in proposed Sec. Sec.  7.143(h) and 7.144 
reflect changes adopted in TTB Ruling 2014-4 (which was then superseded 
by TTB Ruling 2015-1) with respect to the labeling of malt beverage 
products fermented or flavored with honey, certain fruits, and certain 
spices. In response to a petition from the Brewers Association, TTB 
exempted certain malt beverages from the formula requirements under 
part 25, and liberalized the labeling rules applicable to these 
products. We proposed to codify these labeling standards in the 
regulations.
    Malt beverages that are not ``known to the trade'' are required to 
be labeled with a statement of composition. Proposed Sec.  7.147 sets 
forth provisions for statements of composition on malt beverages. These 
provisions reflect current policy. Specifically, a statement of 
composition is required to appear on the label for malt beverage 
specialty products, as defined in proposed Sec.  7.141(b), which are 
not known to the trade under a particular designation. For example, the 
addition of flavoring materials, colors, or artificial sweeteners may 
change the class and type of the malt beverage. The statement of 
composition along with a distinctive or fanciful name serves as the 
class and type designation for these products.
    TTB notes that this final rule does not adopt the proposed 
regulations regarding the use of geographical names on malt beverage 
labels in Sec. Sec.  7.142(c) and 7.146.
    Instead, due to issues raised by commenters relating to compliance 
with international agreements to which the United States is a party, 
TTB is retaining its geographical names regulations under current Sec.  
7.24(f)-(h), codifying them at Sec.  7.146 with organizational changes 
only. This determination is discussed in Section II.A.8.a. Otherwise, 
TTB is finalizing Sec. Sec.  7.141-7.147 as proposed, with only minor 
changes as discussed below.
a. General Support and Opposition
    TTB received one comment generally in favor of the reorganized 
class and type regulations changes, and one opposed. Beverly Brewery 
Consultants supported the reorganization of TTB's class and type 
regulations, stating that it was more logical and would enable users to 
find information more easily. Beverly Brewery Consultants also 
supported the proposed definition of ``malt beverage specialty 
products'' at Sec.  7.141. The Brewers Association, however, opposed 
the proposed regulations at Sec. Sec.  7.141-7.144 and 7.147, stating 
that they ``are based on longstanding concepts used in distilled 
spirits labeling and advertising regulations'' which ``are not 
generally understood by brewers and would necessitate many changes in 
existing labels and advertisements.'' The association requested that 
TTB retain the language addressing class and type found in the current 
regulations in Sec.  7.24. Finally, Beverly Brewery Consultants 
suggested editorial changes at Sec.  7.141(b) for clarity by breaking 
up the text into multiple sentences.
TTB Response
    In response to the Brewer's Association's comment questioning the 
use of certain concepts, TTB believes the comment potentially refers to 
the terms ``malt beverage specialty products'' and ``distinctive or 
fanciful name.'' The inclusion of these terms does not reflect 
substantive changes to the class and type regulations for malt 
beverages. Under both TTB's current and proposed regulations, 
statements of class and type must conform to the designation of the 
product as known to the malt beverage trade, and if the product is not 
known to the trade, it must be labeled with a distinctive or fanciful 
name as well as a statement of composition.
    Proposed Sec.  7.141 designated such products not known to the 
trade under a particular designation as ``malt beverage specialty 
products.'' Thus, while the term ``malt beverage specialty

[[Page 7573]]

products'' is new to the regulations, the concept is not new to the 
malt beverage industry. It currently appears in Formulas Online and 
COLAs Online and is merely a way to refer to those products ``not known 
to the trade.'' TTB also notes that the term ``distinctive or fanciful 
name'' appears in TTB's current malt beverage class and type 
regulations. See 27 CFR 7.24(a). The inclusion of these terms will not 
result in changes to existing malt beverage labels or advertising 
because the substantive provisions are the same in both the current and 
proposed regulations and the terms themselves are not required to 
appear on labels.
    In response to Beverly Brewery Consultant's editorial comments, TTB 
reviewed the text for clarity and found that it sufficiently 
communicates TTB's requirements.
b. Oak Barrels
    TTB proposed in Sec.  7.143(h) to expressly permit non-misleading 
labeling statements that describe malt beverages aged in barrels or 
with woodchips, spirals, or staves derived from barrels. TTB is 
finalizing Sec.  7.143(h) as proposed. Paragraph (h)(2) of this section 
provided examples of acceptable designations such as ``beer aged in an 
oak barrel,'' ``bourbon barrel aged honey ale,'' and ``wine barrel aged 
beer.'' NABI noted that in Notice No. 176, TTB proposed a definition of 
``oak barrel'' in its part 5 regulations regarding the labeling of 
distilled spirits and asked that TTB clarify what is meant by the term 
``oak barrel'' as it appears in Sec.  7.143(h).
TTB Response
    TTB does not believe it is necessary to add a separate definition 
of ``oak barrel'' in part 7. Section 7.143(h) describes statements 
relating to barrel aging of malt beverages, and is not limited to oak 
barrels. TTB also notes that it previously declined to finalize the 
proposed definition of ``oak barrel'' for purposes of distilled spirits 
labeling. See T.D. TTB-158.
c. Comments on Existing and Additional Designations
    As noted above, TTB proposed in Sec.  7.142(b)(1) to expressly 
allow descriptions of color (e.g., ``amber,'' ``brown,'' or ``red'') 
and descriptive terms (e.g., ``dry,'' ``cream,'' or ``pale''). TTB also 
proposed to recodify at Sec.  7.142(b)(2) a provision from TTB's 
current regulations at Sec.  7.24(e) stating the requirement that: ``No 
product other than a malt beverage fermented at a comparatively high 
temperature, possessing the characteristics generally attributed to 
`ale,' `porter,' or `stout' and produced without the use of coloring or 
flavoring materials (other than those recognized in standard brewing 
practices) may bear any of these class designations.'' Among other type 
designations, proposed Sec.  7.143 included a new proposed definition 
for ``black and tan,'' describing it as a product containing two 
classes of malt beverage with the names of the two classes displayed 
together along with the term ``black and tan,'' for example, ``Black 
and Tan, Stout and Ale.''
    Beverly Brewery Consultants suggested adding the terms ``session'' 
and ``imperial'' to the descriptive terms allowed with class 
designations included in proposed Sec.  7.142. The Brewers Association 
submitted comments relating to class-and-type issues in its response to 
the Treasury Department's RFI. In those comments, the association 
recommended removing the requirement that products labeled as ``ale,'' 
``porter,'' and ``stout'' must be fermented at a comparatively high 
temperature. The Brewers Association states that ale may be brewed at 
lower temperatures than in the past because ``modern brewing practice 
utilizes many yeast strands.'' TTB notes that the association did not 
specifically address this issue in its comments on Notice No. 176.
    Finally, Beverly Brewery Consultants suggested that TTB amend its 
definition of ``black and tan'' in proposed Sec.  7.143. The comment 
recommended that because this designation does not imply equal parts of 
the two classes, a minimum quantity of at least 25 percent of one of 
the classes should be a requirement for this designation.
TTB Response
    TTB did not propose to incorporate into the regulations the 
additional descriptive terms that Beverly Brewery Consultants requested 
(``session'' and ``imperial''), but will consider this as a suggestion 
for future rulemaking. TTB will continue its policy of allowing such 
terms on labels.
    TTB also declines to remove the requirement that ales, porters, and 
stouts be fermented at a comparatively high temperature, which was 
simply a reissuing of TTB's current regulation, set forth with only a 
minor typographical change. Because TTB did not air for public comment 
any revisions to these longstanding regulatory provisions, it would not 
be appropriate to adopt changes in this final rule. TTB will consider 
these comments as suggestions for future rulemaking.
    Regarding the proposed type designation for ``black and tan,'' 
TTB's Beverage Alcohol Manual for Malt Beverages (TTB P 5130.3) 
currently provides that this type designation covers products where two 
classes of malt beverage are present in the product, and both classes 
are stated on the label in conjunction with the words ``black and 
tan.''
    The comment from Beverly Brewery Consultants suggested that a 
minimum quantity of at least 25 percent of one of the classes should be 
a requirement for this designation. However, by definition, if the 
product is composed of only two different classes, at least one of the 
classes would always make up at least 25 percent of the product. If the 
commenter meant to instead suggest that each one of the classes should 
make up at least 25 percent of the finished product, TTB notes that 
Beverly Brewery Consultants did not articulate, and TTB is not aware 
of, any reason to believe that such a requirement is necessary in order 
to avoid consumer deception. Furthermore, such a requirement would also 
restrict industry flexibility. TTB sees no reason to further restrict 
the use of the term. Accordingly, TTB is finalizing the proposed type 
designation in Sec.  7.143.

D. Amendments of the Advertising Regulations

    In Notice No. 176, TTB proposed to consolidate its alcohol beverage 
advertising regulations in a new part, 27 CFR part 14, Advertising of 
Wine, Distilled Spirits, and Malt Beverages. The proposed part 14 
contained only those updates needed to conform certain regulated 
practices to the updates being proposed for the labeling provisions. 
Additional updates to the regulations on advertising to address 
contemporary issues, such as social media, in more detail were not 
proposed, but TTB stated that such amendments might be proposed in 
future rulemaking initiatives.
    In this final rule, TTB is not moving forward with the 
reorganization of the advertising regulations into a part 14. Instead, 
this final rule simply retains the existing regulations on advertising 
in parts 5 and 7 with minor modifications. As explained earlier, this 
final rule does not amend the labeling or advertising regulations in 
part 4, which relate to wine. Instead, TTB plans to address these 
issues in a future rulemaking, which will reorganize part 4 in a manner 
similar to the way in which parts 5 and 7 are being reorganized, and 
which will also address the substantive issues raised by the commenters 
on the labeling and advertising of wine. At that

[[Page 7574]]

time, TTB will also pursue the reorganization of the advertising 
regulations pertaining to wine, distilled spirits, and malt beverages 
in a new part 14, as proposed in Notice No. 176.
    Pending the reorganization of the advertising regulations into a 
proposed part 14, this final rule simply retains the existing 
regulations on advertising in parts 5 and 7, with minor modifications 
for consistency with changes that were made to the labeling regulations 
in this final rule. For example, this final rule adopts changes to the 
advertising regulations to conform to amendments made to the labeling 
regulations on the use of flags, the use of disparaging statements 
about competitors, and statements relating to guarantees. These changes 
are liberalizing in nature. The final rule also includes minor 
clarifications in Sec.  7.235, consistent with the proposed rule, to 
clarify that the advertising regulations do not require use of an 
approved label where a malt beverage container is not subject to the 
COLA requirements under part 7.
    TTB is adding a paragraph to Sec.  5.235 and Sec.  7.235 stating 
that the use of the term ``organic'' in advertising must comply with 
the United States Department of Agriculture's National Organic Program 
rules. This is consistent with the current advertising regulations and 
is consistent with the finalized labeling regulations.
    In Sec. Sec.  5.234 and 7.234, the provision on the legibility of 
mandatory information is revised to include clarifying changes from the 
proposed rule.
    The advertising regulations have also been amended to modify the 
definition of ``Advertisement or Advertising'' to include internet and 
social media advertisements, as proposed in Notice No. 176. The 
inclusion of internet and social media advertisements in the definition 
of ``advertisement'' reflects current TTB policy, and is simply a 
clarifying change in the part 5 and part 7 regulations. See TTB 
Industry Circular 2013-1, ``Use of Social Media in the Advertising of 
Alcohol Beverages,'' dated May 13, 2013, in which TTB noted that the 
``regulations list specific types of advertising, including `any other 
media.' TTB interprets `any other media' in the regulations to apply to 
advertising in all types of media, including types of media that did 
not exist when the regulations were originally adopted.'' The Industry 
Circular clarifies that internet advertising and social media 
advertising, among other types of advertising, are subject to the 
requirements of the FAA Act and its implementing regulations. That 
policy will continue to apply to advertisements of wine, distilled 
spirits, and malt beverages. At this time, TTB is not addressing the 
more substantive comments that were received with regard to ways in 
which the TTB regulations should address those issues.
    Finally, the numbering of the sections in the subparts on the 
advertising regulations has changed, due to the reorganization of the 
labeling regulations in parts 5 and 7.

E. Impact on Public Guidance Documents

    The chart below describes the impact of this final rule on rulings, 
industry circulars, and other public guidance documents issued over the 
years by TTB and its various predecessor agencies. The following public 
guidance documents will be superseded by the publication of a final 
rule:

----------------------------------------------------------------------------------------------------------------
             Document No.                      Subject               Incorporated into proposed sections at:
----------------------------------------------------------------------------------------------------------------
                                                  Cross Cutting
----------------------------------------------------------------------------------------------------------------
Industry Circular 1963-23............  Use of Disparaging       Not incorporated.
                                        Themes or References
                                        in Alcoholic Beverage
                                        Advertising is
                                        Prohibited.
----------------------------------------------------------------------------------------------------------------
                                                Distilled Spirits
----------------------------------------------------------------------------------------------------------------
Revenue Ruling 54-592................  Relabeling Tax Paid      Sec.   5.42.
                                        Distilled Spirits.
Revenue Ruling 55-399................  Straight Whiskey.......  Not Incorporated.
Revenue Ruling 61-15.................  Labeling of Scotch       Sec.   5.90(b).
                                        Whisky.
Revenue Ruling 61-25.................  Distilled Spirits        Sec.  Sec.   5.141 and 5.143.
                                        Labeling.
Revenue Ruling 61-71.................  Use of the Word          Sec.   5.150(a).
                                        Straight in Labeling
                                        and Advertising of
                                        Liqueurs or Cordials.
Revenue Ruling 62-224................  Relabeling by Wholesale  Sec.   5.42.
                                        Liquor Dealer.
Revenue Ruling 68-502................  Light Whisky from        Sec.   5.66(f)(3).
                                        Kentucky.
Revenue Ruling 71-535................  Labels on Imported       Sec.   5.68.
                                        Alcohol Beverages.
ATF Ruling 79-9......................  Distilled Spirits        Sec.   5.87.
                                        Labels.
ATF Ruling 88-1......................  Alcohol Content on       Sec.   5.65.
                                        Labels and in
                                        Advertisements of
                                        Distilled Spirits.
ATF Ruling 93-3......................  Age Statements on        Sec.   5.74(c).
                                        Grappa Brandy.
ATF Ruling 94-5......................  Geographical Names.....  Sec.   5.143 and Sec.   5.145(c)(2)-(5).
ATF Ruling 2001-2....................  Country of Origin        Sec.   5.69.
                                        Statements on
                                        Distilled Spirits
                                        Labels.
Industry Circular 1971-7.............  Protection of Names of   Sec.  Sec.   5.143 and 5.145.
                                        Bourbon Whiskey and
                                        Certain French
                                        Brandies.
Industry Circular 76-28..............  Production of New        Not Incorporated.
                                        Charred Barrels using
                                        Used Heads.
----------------------------------------------------------------------------------------------------------------
                                                 Malt Beverages
----------------------------------------------------------------------------------------------------------------
Revenue Ruling 71-535................  Labels on Imported       Sec.   7.68.
                                        Alcohol Beverages.
ATF Ruling 76-13.....................  Malt Beverages of Less   Sec.   7.145.
                                        Than \1/2\ of 1%
                                        Alcohol by Volume
                                        Subject to FAA Act.
ATF Ruling 94-3 (superseded only with  Ice Beer...............  Sec.   7.143.
 respect to the provisions related to
 part 7. The part 25 provisions
 remain in effect.).

[[Page 7575]]

 
ATF Procedure 98-1...................  Labeling of Imported     Sec.  Sec.   7.67 and 7.69.
                                        Malt Beverages Bottled
                                        or Packed in the
                                        United States, and
                                        Labeling of Blends of
                                        Imported and Domestic
                                        Malt Beverages Bottled
                                        or Packed in the
                                        United States.
TTB Ruling 2013-1....................  Malt Beverages Sold      Sec.  Sec.   7.4 and 7.21.
                                        Exclusively in
                                        Intrastate Commerce.
----------------------------------------------------------------------------------------------------------------

III. Derivation Tables for Finalized Parts 5 and 7

                              27 CFR Part 5
------------------------------------------------------------------------
                                              Are derived from current
       Requirements of new section:                   section:
------------------------------------------------------------------------
5.0.......................................  5.1.
------------------------------------------------------------------------
                      Subpart A--General Provisions
------------------------------------------------------------------------
5.1.......................................  5.11.
5.2.......................................  5.1.
5.3.......................................  New.
5.4.......................................  [reserved].
5.5.......................................  [reserved].
5.6.......................................  [reserved].
5.7.......................................  New.
5.8.......................................  5.1.
5.9.......................................  [reserved].
5.10......................................  5.2.
5.11......................................  5.3.
5.12......................................  5.4.
------------------------------------------------------------------------
 Subpart B--Certificates of Label Approval and Certificates of Exemption
                           from Label Approval
------------------------------------------------------------------------
5.21......................................  5.31(a).
5.22......................................  5.55.
5.23......................................  5.55(b).
5.24......................................  5.51(a) and 5.55(c).
5.25......................................  5.51.
5.27......................................  5.51 and 5.55.
5.28......................................  5.33(g).
5.29......................................  5.57.
5.30......................................  5.52.
------------------------------------------------------------------------
  Subpart C--Alteration of Labels, Relabeling and Adding Information to
                               Containers
------------------------------------------------------------------------
5.41......................................  5.31(b).
5.42......................................  5.31(b).
5.43......................................  New.
5.44......................................  5.31(b).
------------------------------------------------------------------------
                       Subpart D--Label Standards
------------------------------------------------------------------------
5.51......................................  5.33(e).
5.52......................................  5.33(a).
5.53......................................  5.33(b)(5) and (6).
5.54......................................  New.
5.55......................................  5.33(c).
5.56......................................  5.33(f).
------------------------------------------------------------------------
                 Subpart E--Mandatory Label Information
------------------------------------------------------------------------
5.61......................................  New.
5.62......................................  5.41.
5.63......................................  5.32.
5.64......................................  5.34.
5.65......................................  5.37.
5.66......................................  5.36.
5.67......................................  5.36.
5.68......................................  5.36.
5.69......................................  5.36(e).
5.70......................................  5.38.
5.71......................................  5.39(a).
5.72......................................  5.39(b).
5.73......................................  5.39(c).
5.74......................................  5.40.
------------------------------------------------------------------------
                Subpart F--Restricted Labeling Statements
------------------------------------------------------------------------
5.81......................................  New.
5.82......................................  5.32a.
5.83......................................  5.32b.
5.84......................................  5.71.
5.85......................................  [reserved].
5.86......................................  [reserved].
5.87......................................  New.
5.88......................................  5.42(b)(4).
5.89......................................  5.42(b)(6).
5.90......................................  5.22(k)(4).
5.91......................................  5.42(b)(5).
------------------------------------------------------------------------
                Subpart G--Prohibited Labeling Practices
------------------------------------------------------------------------
5.101.....................................  New.
5.102.....................................  5.42(a)(1).
5.103.....................................  5.42(a)(3).
------------------------------------------------------------------------
Subpart H--Labeling Practices That are Prohibited if They are Misleading
------------------------------------------------------------------------
5.121.....................................  New.
5.122.....................................  5.42(a)(1).
5.123.....................................  5.42(a)(5).
5.124.....................................  5.42(a)(2).
5.125.....................................  5.42(a)(4).
5.126.....................................  5.42(b)(7).
5.127.....................................  [reserved].
5.128.....................................  [reserved].
5.129.....................................  5.42(b)(8).
5.130.....................................  5.42(a)(6).
------------------------------------------------------------------------
       Subpart I--The Standards of Identity for Distilled Spirits
------------------------------------------------------------------------
5.141.....................................  5.22.
5.142.....................................  5.22(a).
5.143.....................................  5.22(b) and 5.35(c).
5.144.....................................  5.22(c).
5.145.....................................  5.22(d).
5.146.....................................  5.22(e).
5.147.....................................  5.22(f).
5.148.....................................  5.22(g).
5.149.....................................  [reserved].
5.150.....................................  5.22(h).
5.151.....................................  5.22(i).
5.152.....................................  5.22(j).
5.153.....................................  New.
5.154.....................................  5.22(k) and (l).
5.155.....................................  5.23.
5.156.....................................  5.35(a) and (b).
5.157-5.165...............................  [reserved].
5.166.....................................  New.
------------------------------------------------------------------------
                           Subpart J--Formulas
------------------------------------------------------------------------
5.191.....................................  5.25.
5.192.....................................  5.26.
5.193.....................................  5.27.
5.194.....................................  5.28.
------------------------------------------------------------------------
 Subpart K--Distilled spirits containers and Authorized Container Sizes
------------------------------------------------------------------------
5.201.....................................  5.45.
5.202.....................................  5.46.
5.203.....................................  5.47a.
5.204.....................................  [reserved].
5.205.....................................  New.
------------------------------------------------------------------------
                          Subpart L--[Reserved]
------------------------------------------------------------------------
            Subpart M--Penalties and Compromise of Liability
------------------------------------------------------------------------
5.221.....................................  New.
5.222.....................................  New.
5.223.....................................  New.
------------------------------------------------------------------------
               Subpart N--Advertising of Distilled Spirits
------------------------------------------------------------------------
5.231.....................................  5.61.
5.232.....................................  5.62.
5.233.....................................  5.63.
5.234.....................................  5.64.
5.235.....................................  5.65.
5.236.....................................  5.66.
------------------------------------------------------------------------
                   Subpart O--Paperwork Reduction Act
------------------------------------------------------------------------
5.241.....................................  New.
------------------------------------------------------------------------


                              27 CFR Part 7
------------------------------------------------------------------------
                                              Are derived from current
       Requirements of new section:                   section:
------------------------------------------------------------------------
7.0.......................................  7.1.
------------------------------------------------------------------------
                      Subpart A--General Provisions
------------------------------------------------------------------------
7.1.......................................  7.10.
7.2.......................................  7.2.
7.3.......................................  7.20(b) and (c).
7.4.......................................  7.20(a) and New.
7.5.......................................  7.11.
7.6.......................................  7.6.

[[Page 7576]]

 
7.7.......................................  New.
7.8.......................................  7.60.
7.9.......................................  [reserved].
7.10......................................  7.4.
7.11......................................  7.3.
7.12......................................  7.5.
------------------------------------------------------------------------
                Subpart B--Certificates of Label Approval
------------------------------------------------------------------------
7.21......................................  7.20(b), and 7.40-7.42.
7.22......................................  7.40 and 7.41.
7.23......................................  [reserved].
7.24......................................  7.30 and 7.31(b).
7.25......................................  7.30 and 7.31.
7.27......................................  7.42.
7.28......................................  7.31(d).
7.29......................................  7.43.
------------------------------------------------------------------------
 Subpart C--Alteration of Labels, Relabeling, and Adding Information to
                               Containers
------------------------------------------------------------------------
7.41......................................  7.20(c)(1).
7.42......................................  7.20(c)(2).
7.43......................................  New.
7.44......................................  New.
------------------------------------------------------------------------
                       Subpart D--Label Standards
------------------------------------------------------------------------
7.51......................................  7.28(d).
7.52......................................  7.28(a).
7.53......................................  7.28(b).
7.54......................................  New.
7.55......................................  7.28(c).
7.56......................................  7.28(e).
------------------------------------------------------------------------
                 Subpart E--Mandatory Label Information
------------------------------------------------------------------------
7.61......................................  New.
7.62......................................  7.21(b) and 7.29(h).
7.63......................................  7.22.
7.64......................................  7.23.
7.65......................................  7.71.
7.66......................................  7.25(a) and (d).
7.67......................................  7.25(b).
7.68......................................  7.25(b).
7.69......................................  7.25(c).
7.70......................................  7.27.
------------------------------------------------------------------------
                Subpart F--Restricted Labeling Statements
------------------------------------------------------------------------
7.81......................................  New.
7.82......................................  7.22a.
7.83......................................  7.22b.
7.84......................................  7.81.
7.85......................................  [reserved].
7.86......................................  [reserved].
7.87......................................  [reserved].
------------------------------------------------------------------------
                Subpart G--Prohibited Labeling Practices
------------------------------------------------------------------------
7.101.....................................  New.
7.102.....................................  7.29(a)(1).
7.103.....................................  7.29(a)(3).
------------------------------------------------------------------------
Subpart H--Labeling Practices That are Prohibited if They are Misleading
------------------------------------------------------------------------
7.121.....................................  New.
7.122.....................................  7.29(a)(1) and New.
7.123.....................................  7.29(a)(5).
7.124.....................................  7.29(a)(2).
7.125.....................................  7.29(a)(4).
7.126.....................................  7.29(d).
7.127.....................................  [reserved].
7.128.....................................  7.29(a)(7) and New.
7.129.....................................  7.29(e).
7.130.....................................  7.29(a)(6).
7.131.....................................  [reserved].
7.132.....................................  [reserved].
------------------------------------------------------------------------
             Subpart I--Classes and Types of Malt Beverages
------------------------------------------------------------------------
7.141.....................................  7.24(a).
7.142.....................................  7.24(e).
7.143.....................................  7.24(b) and (c) and New.
7.144.....................................  New.
7.145.....................................  7.24(d).
7.146.....................................  7.24(g), (f), and (h).
7.147.....................................  New.
------------------------------------------------------------------------
                        Subparts J-L--[Reserved]
------------------------------------------------------------------------
            Subpart M--Penalties and Compromise of Liability
------------------------------------------------------------------------
7.221.....................................  New.
7.222.....................................  New.
7.223.....................................  New.
------------------------------------------------------------------------
                Subpart N--Advertising of Malt Beverages
------------------------------------------------------------------------
7.231.....................................  7.50.
7.232.....................................  7.51.
7.233.....................................  7.52.
7.234.....................................  7.53.
7.235.....................................  7.54.
7.236.....................................  7.55.
------------------------------------------------------------------------
                   Subpart O--Paperwork Reduction Act
------------------------------------------------------------------------
7.241.....................................  New.
------------------------------------------------------------------------

IV. Regulatory Analyses and Notices

A. Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et. 
seq.), TTB certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities. While TTB 
has determined that the majority of businesses subject to this rule are 
small businesses, the regulatory amendments in this final rule will not 
have a significant impact on those small entities as it will not 
impose, or otherwise cause, an increase in reporting, recordkeeping, or 
other compliance burdens on regulated industry members. As finalized, 
this rule will not require industry members to make changes to labels 
or advertisements. The following analysis provides the factual basis 
for TTB's certification under 5 U.S.C. 605.
1. Background
    In Notice No. 176, published on November 26, 2018, TTB proposed a 
recodification of the labeling and advertising regulations pertaining 
to wine, distilled spirits, and malt beverages. The purpose was to 
clarify and update these regulations to make them easier to understand 
and to incorporate agency policies. TTB determined that the majority of 
businesses subject to the proposed rule were small businesses (see 
Notice No. 176 for more information on this determination). 
Accordingly, TTB sought comments on the impact of the proposals, and on 
ways in which the regulations could be improved. TTB also proposed a 
delayed compliance date to provide all regulated entities 3 years to 
come into compliance with the proposed regulations, to minimize the 
costs associated with any label changes.
    On April 2, 2020, TTB published T.D. TTB-158, (85 FR 18704), which 
finalized certain proposals from Notice No. 176, and announced its 
decision not to move forward with certain other proposals. Generally, 
the amendments that TTB adopted in T.D. TTB-158 were well supported by 
commenters, could be implemented relatively quickly, and would either 
give more flexibility to industry members or help industry members 
understand existing requirements, while not requiring any current 
labels or advertisements to be changed. TTB did not incorporate the 
proposed reorganization of the regulations in T.D. TTB-158 because that 
final rule only addressed a subset of the issues raised in Notice No. 
176. Instead, amendments to the TTB regulations were made within the 
framework of the existing regulations.
    In this rulemaking, TTB is finalizing the reorganization proposed 
in Notice No. 176 for 27 CFR parts 5 and 7. This includes clarifying 
regulatory language and breaking up large sections into smaller 
sections--resulting in a larger number of overall sections, but not a 
larger number of regulatory requirements. TTB is also adopting many 
proposals that include incorporation of current policy. This final rule 
addresses comments that TTB received on the proposed regulatory 
provisions for all of parts 5 and 7 by incorporating changes in the 
regulations, announcing that TTB will not move forward with some 
proposed changes, and identifying proposals or issues commenters raised 
that TTB will consider for future rulemaking.

[[Page 7577]]

2. Comment From SBA Chief Counsel for Advocacy
    As required by section 7805(f) of the Internal Revenue Code (26 
U.S.C. 7805(f)), TTB submitted Notice No. 176 to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA) for comment on the 
impact of these regulations.
    By letter dated August 6, 2019, the Office of Advocacy for the U.S. 
Small Business Administration (``SBA Office of Advocacy'') provided a 
comment on Notice No. 176. The comment stated that ``Advocacy commends 
the TTB on its logical reorganization of the labeling and advertising 
rules and streamlining some of its processes.'' However, the comment 
also indicated that in its discussions with small businesses in the 
alcohol beverage industry, two issues with the proposed rule were 
brought to its attention--the definition of an ``oak barrel,'' and 
creating a separate class and type for mead, a type of wine made from 
honey. The comment suggested that TTB revise the rule to reduce the 
impacts of the proposed definition of ``oak barrel'' and concluded 
that:

    Advocacy is concerned that the agency's certification that the 
rule will not have a significant economic impact on a substantial 
number of small entities lacks a factual basis. Advocacy suggests 
the agency revise the rule to reduce the impacts of the definition 
of `oak barrel' and to establish a new class and type for mead or 
publish a supplemental initial regulatory flexibility analysis 
(IFRA) to propose alternatives to the rule

    In T.D. TTB-158, TTB announced it was not moving forward with a 
number of proposals that received comments raising concerns about 
regulatory costs and burdens, including the proposed definition of an 
``oak barrel.'' The other issue addressed by the comment from the SBA 
Office of Advocacy dealt with the proposed regulations on mead. This 
final rule does not address wine labeling issues; thus, TTB will review 
SBA's comment on mead, along with the other comments received on this 
issue, when it finalizes the rulemaking on wine labeling.
    Because this final rule does not address either of the issues 
raised by the comment from the SBA Office of Advocacy, there is no need 
to conduct a supplemental initial regulatory flexibility analysis to 
propose alternatives to the rule.
3. Other Proposals That Will Not Be Adopted
    In addition to not adopting its proposed definition of an ``oak 
barrel,'' TTB has decided not to adopt certain other proposals, 
including the following:
     A proposal to codify TTB's current policy, as stated on 
the label application form, that the issuance of a COLA does not confer 
trademark protection or relieve the certificate holder from liability 
for violations of the FAA Act, the IRC, ABLA, or related regulations, 
and that products covered by a COLA may still be mislabeled if the 
label contains statements that are false or misleading when applied to 
the beverage in the container.
     A proposed amendment that would clarify and somewhat 
expand existing requirements with regard to placing certain label 
information on closed ``packaging'' of wine, distilled spirits, and 
malt beverage containers.
     A proposal to codify TTB's current policy with respect to 
the allowed use of certain non-misleading labeling claims about 
environmental and sustainability practices.
     A proposal to establish a 5-year retention period for 
required records and to codify TTB's current substantiation 
requirements.
     A proposed amendment that would clarify and expand current 
requirements that certain whisky products distilled in the United 
States must include the State of distillation on the label, by 
providing that a bottling address within the State does not suffice 
unless it includes a representation as to distillation. TTB is not 
moving forward with this proposal because it might require labeling 
changes, but will instead clarify current requirements.
     A proposed amendment that would modify the standard of 
identity for whisky to provide for ``white whisky'' and ``unaged 
whisky.''
     A proposal that would address ``aggregate'' standards of 
fill in a manner that is based on current policy.
     A proposed amendment that would increase the alcohol 
content tolerance for malt beverages from 0.3 percent above or below 
the labeled alcohol content to 1 percent above or below.
    This final rule includes only amendments that TTB believes clarify 
and liberalize requirements for industry members and that do not 
conflict with current labels or business practices, while still 
providing adequate protection for consumers. An example of a 
liberalizing change is the amendment to the malt beverage regulations 
that allows mandatory information to appear on keg collars that are not 
firmly affixed to the keg. Because the final rule will not require 
changes to labels, advertisements, or business practices, no delayed 
compliance date is necessary, and the final rule will take effect 30 
days from publication in the Federal Register.
    The preamble of Notice No. 176 explains in detail the reasons why 
the proposals that have been adopted in this final rule are either 
clarifying or liberalizing. Examples of clarifying changes include:
     Adding examples in the regulations of how certain 
requirements may be satisfied;
     Adding to the regulations guidance that had previously 
been provided in rulings, Industry Circulars, or other documents 
separate from the regulations;
     Addressing questions the public frequently asks TTB;
     Making definitions, organization, numbering of sections, 
and phrasing of requirements within the regulations consistent across 
27 CFR parts 5 and 7 to the extent possible;
     Breaking large subparts and large sections into smaller 
subparts and smaller sections to increase readability;
     Providing more cross references in the regulations to 
relevant regulations and statutes;
     Making it explicit that mandatory information may not be 
covered or obscured in whole or in part;
     Codifying in the regulations the current requirement that 
distilled spirits covered by a certificate of exemption must bear a 
labeling statement that the product is ``For sale in [name of State] 
only'';
     Codifying current TTB guidance with respect to the use of 
a COLA by an importer other than the permittee to whom the COLA was 
issued;
     Codifying current policy with respect to the required name 
and address statement on labels for distilled spirits and malt 
beverages that have been subject to certain production activities after 
importation in bulk;
     Codifying current policy that allows truthful and non-
misleading comparisons on labels and in advertisements without 
violating the prohibition against ``disparaging'' statements;
     Providing that the prohibition against the use of flags 
and other symbols of a government applies whenever the label may create 
a misleading impression that the product is endorsed by, or otherwise 
affiliated with, that government; and
     Specifying how the FAA Act applies to the labeling of malt 
beverages under the penultimate paragraph of 27 U.S.C. 205(f).
    Some examples of liberalizing measures that TTB is finalizing in 
this document include:
     Allowing greater flexibility in the placement of mandatory 
information on labels by eliminating the requirement

[[Page 7578]]

that mandatory information appear on the ``brand label;''
     Allowing wholesalers to relabel distilled spirits when 
necessary and when approved by TTB;
     Allowing the use of designations in accordance with trade 
understanding, rather than statements of composition, in the labeling 
of malt beverages that are flavored or fermented with ingredients that 
TTB has determined are generally recognized as traditional ingredients 
in the production of a fermented beverage designated as ``beer,'' 
``ale,'' ``porter,'' ``stout,'' ``lager,'' or ``malt liquor''; and
     Allowing certain mandatory information to appear on the 
keg collar or tap cover of malt beverage kegs with a capacity of 5.16 
gallons or more, subject to certain requirements.
    In summary, while the entities affected by the amendments in this 
final rule include a substantial number of small entities, the final 
rule does not require labeling or advertising changes by these small 
businesses, but instead offers industry members additional flexibility 
in complying with the regulations. Thus, TTB certifies that this final 
rule will not have a significant economic impact on a substantial 
number of small entities.

B. Executive Order 12866

    It has been determined that this final rule is not a significant 
regulatory action as defined in Executive Order 12866 of September 30, 
1993. Therefore, a regulatory assessment is not necessary.

C. Paperwork Reduction Act

    The Office of Management and Budget (OMB) has previously reviewed 
and approved the eight collections of information in the regulations 
contained in this final rule in accordance with the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3507) and assigned control numbers 1513-0020, 
1513-0064, 1513-0084, 1513-0085, 1513-0087, 1513-0111, 1513-0121, and 
1513-0122. An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid control number assigned by OMB.
    This final rule includes only amendments that TTB believes offer 
clarifications and liberalizations of the TTB regulations, including 
their information collection requirements. The amendments adopted in 
this final rule are well supported by commenters, can be implemented 
relatively quickly, and will give more flexibility to industry members 
or help industry members understand existing regulatory and information 
collection requirements, but will not require industry members to 
change any current alcohol beverage label or advertisement. The 
preamble discussion contained in this final rule document explains in 
detail the reasons why the proposals adopted in this final rule are 
either clarifying or liberalizing.
    The specific regulatory sections in this final rule that contain 
approved collections of information are found in part 5 at Sec. Sec.  
5.11, 5.21, 5.22, 5.23, 5.24, 5.25, 5.27, 5.28, 5.29, 5.30, 5.62, 5.63, 
5.82, 5.83, 5.84, 5.87, 5.88, 5.89, 5.90, 5.91, 5.192, 5.193, 5.194, 
5.203, 5.205, and 5.233, and in part 7 at Sec. Sec.  7.11, 7.21, 7.22, 
7.24, 7.25, 7.27, 7.28, 7.29, 7.62, 7.63, 7.66, 7.67, 7.81, 7.82, 7.83, 
7.84, and 7.233.
    Regarding OMB control number 1513-0020, the regulations in 
Sec. Sec.  5.21, 5.22, 5.23, 5.24, 5.25, 5.29, 5.205, 7.21, 7.22, 7.24, 
7.25, 7.27, and 7.29 set forth information collection requirements 
related to submission of applications for certification of, or 
exemption from, label or bottle approval. These regulations do not add 
any new requirements or respondent burden to this previously-approved 
collection as they merely recodify and clarify existing TTB regulations 
regarding the submission of such certificate of label approval (COLA) 
applications, including those for personalized labels.
    Regarding OMB control number 1513-0064, which is related to 
importer records and reports, the regulations in Sec. Sec.  5.24 and 
7.24 state, respectively, that distilled spirits and malt beverages 
imported in containers are not eligible for release from customs 
custody for consumption unless the importer removing the products has 
obtained a COLA for the products in question, and is able to provide it 
(either electronically or on paper) upon request, which is consistent 
with TTB's current regulations regarding such imports. In addition, 
Sec.  5.30 merely makes clarifications to the existing regulations 
concerning certificates of age and origin for distilled spirits and do 
not affect the information collection's requirements or estimated 
burden.
    OMB control number 1513-0084 concerns the labeling of sulfites in 
alcohol beverages. The current TTB requirements that alcohol beverage 
labels disclose the presence of sulfites (defined as 10 or more parts 
per million of sulfur dioxide or other sulfating agent measured as 
total sulfur dioxide) are recodified in Sec.  5.63(c)(7) for distilled 
spirits and in Sec.  7.63(b)(3) for malt beverages.
    OMB control number 1513-0085 concerns the use of the principal 
place of business of a brewer and place of production coding in lieu of 
the actual place of bottling on malt beverage labels. The existing 
requirements for such labeling are recodified for domestic beverages at 
Sec.  7.66 and for imported beverages at Sec.  7.68. As such, there are 
no changes to this information collection's estimated burden.
    Information collection requirements approved under OMB control 
number 1513-0087, which concerns Federal Alcohol Administration (FAA) 
Act-based labeling and advertising information requirements, are 
contained in Sec. Sec.  5.62, 5.63, 5.84, 5.87, 5.88, 5.89, 5.90, 5.91, 
5.233, 7.62, 7.63, 7.81, 7.84, and 7.233. None of these regulatory 
amendments require changes to any alcohol beverage label or 
advertisement, or increase the requirements or estimated burden 
associated with OMB No. 1513-0087. Rather, these regulations recodify 
existing TTB label and advertising information requirements or allow 
for additional options in displaying or providing the required 
information. For example, Sec.  5.63, which concerns mandatory label 
information, contains liberalizing changes that will not require any 
changes to labels, but will allow further flexibility in the placement 
of labeling information on distilled spirits containers; while 
Sec. Sec.  5.233 and 7.233 will allow alcohol beverage advertisers 
optional ways to provide contact information in their advertisements, 
such as by displaying a telephone number, website, or email address in 
lieu of the advertiser's city and State.
    Applications to request access TTB's COLA Online system are covered 
by OMB control number 1513-0111, and TTB's existing requirements to 
file such applications are recodified in Sec. Sec.  5.11 and 7.11.
    Regarding OMB control number 1513-0121, which covers the label 
disclosures of major food allergens and petitions from exemption from 
such labeling, Sec. Sec.  5.82, 5.83, 7.82, and 7.83 merely recodify 
TTB's existing regulations regarding those matters, and there are no 
changes to this collection's requirements or burden estimate.
    OMB No. 1513-0122, which covers submission of formulas and 
processes for domestic and imported alcohol beverages, is found in 
Sec. Sec.  5.28 and 7.28. There are no changes to this information 
collection's existing requirements or estimated burden.

V. Drafting Information

    Christopher M. Thiemann, Kara T. Fontaine, and Curtis Eilers of the 
Regulations and Rulings Division drafted this document with the 
assistance of other employees of the

[[Page 7579]]

Alcohol and Tobacco Tax and Trade Bureau.

List of Subjects

27 CFR Part 5

    Advertising, Alcohol and alcoholic beverages, Customs duties and 
inspection, Food additives, Grains, Imports, International agreements, 
Labeling, Liquors, Packaging and containers, Reporting and 
recordkeeping requirements, Trade practices.

27 CFR Part 7

    Advertising, Alcohol and alcoholic beverages, Beer, Customs duties 
and inspection, Food additives, Imports, Labeling, Packaging and 
containers, Reporting and recordkeeping requirements, Trade practices.

Regulatory Amendments

    For the reasons discussed in the preamble, TTB amends 27 CFR, 
chapter I, as follows:

0
1. Revise part 5 to read as follows:

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

Sec.
5.0 Scope.
Subpart A--General Provisions
5.1 Definitions.
5.2 Territorial extent.
5.3 General requirements and prohibitions under the FAA Act.
5.4-5.6 [Reserved]
5.7 Other TTB labeling regulations that apply to distilled spirits.
5.8 Distilled spirits for export.
5.9 [Reserved]
5.10 Other related regulations.
5.11 Forms.
5.12 Delegations of the Administrator.
Subpart B--Certificates of Label Approval and Certificates of Exemption 
From Label Approval

Requirements for Distilled Spirits Bottled in the United States

5.21 Requirement for certificates of label approval (COLAs) for 
distilled spirits bottled in the United States.
5.22 Rules regarding certificates of label approval (COLAs) for 
distilled spirits bottled in the United States.
5.23 Application for exemption from label approval for distilled 
spirits bottled in the United States.

Requirements for Distilled Spirits Imported in Containers

5.24 Certificates of label approval (COLAs) for distilled spirits 
imported in containers.
5.25 Rules regarding certificates of label approval (COLAs) for 
distilled spirits imported in containers.

Administrative Rules

5.27 Presenting certificates of label approval (COLAs) to Government 
officials.
5.28 Formulas, samples, and documentation.
5.29 Personalized labels.
5.30 Certificates of age and origin for imported spirits.
Subpart C--Alteration of Labels, Relabeling, and Adding Information to 
Containers
5.41 Alteration of labels.
5.42 Authorized relabeling activities by distillers and importers.
5.43 Relabeling activities that require separate written 
authorization from TTB.
5.44 Adding a label or other information to a container that 
identifies the wholesaler, retailer, or consumer.
Subpart D--Label Standards
5.51 Requirement for firmly affixed labels.
5.52 Legibility and other requirements for mandatory information on 
labels.
5.53 Minimum type size of mandatory information.
5.54 Visibility of mandatory information.
5.55 Language requirements.
5.56 Additional information.
Subpart E--Mandatory Label Information
5.61 What constitutes a label for purposes of mandatory information.
5.62 Packaging (cartons, coverings, and cases).
5.63 Mandatory label information.
5.64 Brand name.
5.65 Alcohol content.
5.66 Name and address for domestically bottled distilled spirits 
that were wholly made in the United States.
5.67 Name and address for domestically bottled distilled spirits 
that were bottled after importation.
5.68 Name and address for distilled spirits that were imported in a 
container.
5.69 Country of origin.
5.70 Net contents.
5.71 Neutral spirits and name of commodity.
5.72 Coloring materials.
5.73 Treatment of whisky or brandy with wood.
5.74 Statements of age, storage, and percentage.
Subpart F--Restricted Labeling Statements
5.81 General.

Food Allergen Labeling

5.82 Voluntary disclosure of major food allergens.
5.83 Petitions for exemption from major food allergen labeling.

Production Claims

5.84 Use of the term ``organic.''
5.85 [Reserved]
5.86 [Reserved]

Other Label Terms

5.87 ``Barrel Proof'' and similar terms.
5.88 Bottled in bond.
5.89 Multiple distillation claims.
5.90 Terms related to Scotland.
5.91 Use of the term ``pure.''
Subpart G--Prohibited Labeling Practices
5.101 General.
5.102 False or untrue statements.
5.103 Obscene or indecent depictions.
Subpart H--Labeling Practices That Are Prohibited If They Are 
Misleading
5.121 General.
5.122 Misleading statements or representations.
5.123 Guarantees.
5.124 Disparaging statements.
5.125 Tests or analyses.
5.126 Depictions of government symbols.
5.127 [Reserved]
5.128 [Reserved]
5.129 Health-related statements.
5.130 Appearance of endorsement.
Subpart I--Standards of Identity for Distilled Spirits
5.141 The standards of identity in general.
5.142 Neutral spirits or alcohol.
5.143 Whisky.
5.144 Gin.
5.145 Brandy.
5.146 Blended applejack.
5.147 Rum.
5.148 Agave spirits.
5.149 [Reserved].
5.150 Cordials and liqueurs.
5.151 Flavored spirits.
5.152 Imitations.
5.153 Diluted spirits.
5.154 Rules for geographical designations.
5.155 Alteration of class and type.
5.156 Distilled spirits specialty products.
5.157-5.165 [Reserved]
5.166 Statement of composition.
Subpart J--Formulas
5.191 Application.
5.192 Formula requirements.
5.193 Operations requiring formulas.
5.194 Adoption of predecessor's formulas.
Subpart K--Standards of Fill and Authorized Container Sizes
5.201 General.
5.202 Standard liquor containers.
5.203 Standards of fill (container sizes).
5.204 [Reserved]
5.205 Distinctive liquor bottle approval.
Subpart L--[Reserved]
5.211 [Reserved]
5.212 [Reserved]
Subpart M--Penalties and Compromise of Liability
5.221 Criminal penalties.
5.222 Conditions of basic permit.
5.223 Compromise.
Subpart N--Advertising of Distilled Spirits
5.231 Application.
5.232 Definitions.
5.233 Mandatory statements.
5.234 Legibility of mandatory information.
5.235 Prohibited practices.
5.236 Comparative advertising.
Subpart O--Paperwork Reduction Act
5.241 OMB control numbers assigned under the Paperwork Reduction 
Act.

    Authority:  26 U.S.C. 5301, 7805, 27 U.S.C. 205 and 207.

[[Page 7580]]

Sec.  5.0   Scope.

    This part sets forth requirements that apply to the labeling and 
packaging of distilled spirits in containers, including requirements 
for label approval and rules regarding mandatory, regulated, and 
prohibited labeling statements. This part also sets forth requirements 
that apply to the advertising of distilled spirits.

Subpart A--General Provisions


Sec.  5.1   Definitions.

    When used in this part and on forms prescribed under this part, the 
following terms have the meaning assigned to them in this section, 
unless the terms appear in a context that requires a different meaning. 
Any other term defined in the Federal Alcohol Administration Act (FAA 
Act) and used in this part has the same meaning assigned to it by the 
FAA Act.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury.
    Advertisement or Advertising. See Sec.  5.232 for meaning of these 
terms as used in subpart N of this part.
    Age. The length of time during which, after distillation and before 
bottling, the distilled spirits have been stored in oak barrels. 
``Age'' for bourbon whisky, rye whisky, wheat whisky, malt whisky, or 
rye malt whisky, and straight whiskies other than straight corn whisky, 
means the period the whisky has been stored in charred new oak barrels.
    American proof. See Proof.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any function 
relating to the administration or enforcement of this part by the 
current version of TTB Order 1135.5, Delegation of the Administrator's 
Authorities in 27 CFR part 5, Labeling and Advertising of Distilled 
Spirits.
    Bottler. Any distiller or processor of distilled spirits who places 
distilled spirits in containers.
    Brand name. The name under which a distilled spirit or a line of 
distilled spirits is sold.
    Certificate holder. The permittee or brewer whose name, address, 
and basic permit number, plant registry number, or brewer's notice 
number appears on an approved TTB Form 5100.31.
    Certificate of exemption from label approval. A certificate issued 
on TTB Form 5100.31, which authorizes the bottling of wine or distilled 
spirits, under the condition that the product will under no 
circumstances be sold, offered for sale, shipped, delivered for 
shipment, or otherwise introduced by the applicant, directly or 
indirectly, into interstate or foreign commerce.
    Certificate of label approval (COLA). A certificate issued on TTB 
Form 5100.31 that authorizes the bottling of wine, distilled spirits, 
or malt beverages, or the removal of bottled wine, distilled spirits, 
or malt beverages from customs custody for introduction into commerce, 
as long as the product bears labels identical to the labels appearing 
on the face of the certificate, or labels with changes authorized by 
TTB on the certificate or otherwise (such as through the issuance of 
public guidance available on the TTB website at https://www.ttb.gov).
    Container. Any can, bottle, box, cask, keg, or other closed 
receptacle, in any size or material, which is for use in the sale of 
distilled spirits at retail. See subpart K of this part for rules 
regarding authorized standards of fill for containers.
    Customs officer. An officer of U.S. Customs and Border Protection 
(CBP) or any agent or other person authorized by law to perform the 
duties of such an officer.
    Distilled spirits. Ethyl alcohol, hydrated oxide of ethyl, spirits 
of wine, whisky, rum, brandy, gin, and other distilled spirits, 
including all dilutions and mixtures thereof, for nonindustrial use. 
The term ``distilled spirits'' does not include mixtures containing 
wine, bottled at 48 degrees of proof (24 percent alcohol by volume) or 
less, if the mixture contains more than 50 percent wine on a proof 
gallon basis. The term ``distilled spirits'' also does not include 
products containing less than one degree of proof (0.5 percent alcohol 
by volume).
    Distilling season. The period from January 1 through June 30, which 
is the spring distilling season, or the period from July 1 through 
December 31, which is the fall distilling season.
    Distinctive or fanciful name. A descriptive name or phrase chosen 
to identify a distilled spirits product on the label. It does not 
include a brand name, class or type designation, or statement of 
composition.
    FAA Act. The Federal Alcohol Administration Act.
    Gallon. A U.S. gallon of 231 cubic inches at 60 degrees Fahrenheit.
    Grain. Includes cereal grains and the seeds of the pseudocereals 
amaranth, buckwheat, and quinoa.
    In bulk. In barrels or other receptacles having a capacity in 
excess of 1 wine gallon (3.785 liters).
    Interstate or foreign commerce. Commerce between any State and any 
place outside of that State or commerce within the District of Columbia 
or commerce between points within the same State but through any place 
outside of that State.
    Liter or litre. A metric unit of capacity equal to 1,000 cubic 
centimeters or 1,000 milliliters (mL) of distilled spirits at 15.56 
degrees Celsius (60 degrees Fahrenheit), and equivalent to 33.814 U.S. 
fluid ounces.
    Net contents. The amount, by volume, of distilled spirits held in a 
container.
    Permittee. Any person holding a basic permit under the FAA Act.
    Person. Any individual, corporation, partnership, association, 
joint-stock company, business trust, limited liability company, or 
other form of business enterprise, including a receiver, trustee, or 
liquidating agent and including an officer or employee of any agency of 
a State or political subdivision of a State.
    Produced at or distilled at. When used with reference to specific 
degrees of proof of a distilled spirits product, the phrases ``produced 
at'' and ``distilled at'' mean the composite proof of the distilled 
spirits after completion of distillation and before reduction in proof, 
if any.
    Proof. The ethyl alcohol content of a liquid at 60 degrees 
Fahrenheit, stated as twice the percentage of ethyl alcohol by volume.
    Proof gallon. A gallon of liquid at 60 degrees Fahrenheit that 
contains 50 percent by volume of ethyl alcohol having a specific 
gravity of 0.7939 at 60 degrees Fahrenheit, referred to water at 60 
degrees Fahrenheit as unity, or the alcoholic equivalent thereof.
    Responsible advertiser. The permittee responsible for the 
publication or broadcast of an advertisement.
    Spirits. See Distilled spirits.
    State. One of the 50 States of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico.
    TTB. The Alcohol and Tobacco Tax and Trade Bureau of the Department 
of the Treasury.
    United States (U.S.). The 50 States, the District of Columbia, and 
the Commonwealth of Puerto Rico.


Sec.  5.2   Territorial extent.

    The provisions of this part apply to the 50 States, the District of 
Columbia, and the Commonwealth of Puerto Rico.


Sec.  5.3   General requirements and prohibitions under the FAA Act.

    (a) Certificates of label approval (COLAs). Subject to the 
requirements and exceptions set forth in the regulations in subpart B 
of this part, any bottler of distilled spirits, and any person who 
removes distilled spirits in containers from customs custody for

[[Page 7581]]

sale or any other commercial purpose, is required to first obtain from 
TTB a COLA covering the label(s) on each container.
    (b) Alteration, mutilation, destruction, obliteration, or removal 
of labels. Subject to the requirements and exceptions set forth in the 
regulations in subpart C of this part, it is unlawful to alter, 
mutilate, destroy, obliterate, or remove labels on distilled spirits 
containers. This prohibition applies to any person, including 
retailers, holding distilled spirits for sale in interstate or foreign 
commerce or any person holding distilled spirits for sale after 
shipment in interstate or foreign commerce.
    (c) Labeling requirements for distilled spirits. It is unlawful for 
any person engaged in business as a distiller, rectifier (processor), 
importer, wholesaler, bottler, or warehouseman and bottler, directly or 
indirectly, or through an affiliate, to sell or ship, or deliver for 
sale or shipment, or otherwise introduce or receive in interstate or 
foreign commerce, or remove from customs custody, any distilled spirits 
in containers unless such containers are marked, branded, labeled, and 
packaged in conformity with the regulations in this part.
    (d) Labeled in accordance with this part. In order to be labeled in 
accordance with the regulations in this part, a container of distilled 
spirits must be in compliance with the following requirements:
    (1) It must bear one or more label(s) meeting the standards for 
``labels'' set forth in subpart D of this part;
    (2) One or more of the labels on the container must include the 
mandatory information set forth in subpart E of this part;
    (3) Claims on any label, container, or packaging (as defined in 
Sec.  5.81) must comply with the rules for restricted label statements, 
as applicable, set forth in subpart F of this part;
    (4) Statements or any other representations on any label, 
container, or packaging (as defined in Sec. Sec.  5.101 and 5.121) may 
not violate the regulations in subparts G and H of this part regarding 
certain practices on labeling of distilled spirits; and
    (5) The class and type designation on any label, as well as any 
designation appearing on containers or packaging, must comply with the 
standards of identity set forth in subpart I of this part.
    (e) Packaged in accordance with this part. In order to be packaged 
in accordance with the regulations in this part, the distilled spirits 
must be bottled in authorized standards of fill in containers that meet 
the requirements of subpart K of this part.


Sec. Sec.  5.4-5.6   [Reserved]


Sec.  5.7   Other TTB labeling regulations that apply to distilled 
spirits.

    In addition to the regulations in this part, distilled spirits must 
also comply with the following TTB labeling regulations:
    (a) Health warning statement. Alcoholic beverages, including 
distilled spirits, that contain at least 0.5 percent alcohol by volume, 
must be labeled with a health warning statement, in accordance with the 
Alcoholic Beverage Labeling Act of 1988 (ABLA). The regulations 
implementing the ABLA are contained in 27 CFR part 16.
    (b) Internal Revenue Code requirements. The labeling and marking 
requirements for distilled spirits under the Internal Revenue Code are 
found in 27 CFR part 19, subpart T (for domestic products) and 27 CFR 
part 27, subpart E (for imported products).


Sec.  5.8   Distilled spirits for export.

    The regulations in this part shall not apply to distilled spirits 
exported in bond.


Sec.  5.9   [Reserved]


Sec.  5.10   Other related regulations.

    (a) TTB regulations. Other TTB regulations that relate to distilled 
spirits are listed in paragraphs (a)(1) through (8) of this section:
    (1) 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;
    (2) 27 CFR part 13--Labeling Proceedings;
    (3) 27 CFR part 16--Alcoholic Beverage Health Warning Statement;
    (4) 27 CFR part 19--Distilled Spirits Plants;
    (5) 27 CFR Part 26--Liquors and Articles from Puerto Rico and the 
Virgin Islands;
    (6) 27 CFR Part 27--Importation of Distilled Spirits, Wines, and 
Beer;
    (7) 27 CFR Part 28--Exportation of Alcohol; and
    (8) 27 CFR Part 71--Rules of Practice in Permit Proceedings.
    (b) Other Federal Regulations. The regulations listed in paragraphs 
(b)(1) through (8) of this section issued by other Federal agencies 
also may apply:
    (1) 7 CFR Part 205--National Organic Program;
    (2) 19 CFR Part 11--Packing and Stamping; Marking;
    (3) 19 CFR Part 102--Rules of Origin;
    (4) 19 CFR Part 134--Country of Origin Marking;
    (5) 21 CFR Part 1--General Enforcement Regulations, Subpart H, 
Registration of Food Facilities, and Subpart I, Prior Notice of 
Imported Food;
    (6) 21 CFR Parts 70-82, which pertain to food and color additives;
    (7) 21 CFR Part 110--Current Good Manufacturing Practice in 
Manufacturing, Packing, or Holding Human Food; and
    (8) 21 CFR Parts 170-189, which pertain to food additives and 
secondary direct food additives.


Sec.  5.11   Forms.

    (a) General. TTB prescribes and makes available all forms required 
by this part. Any person completing a form must provide all of the 
information required by each form as indicated by the headings on the 
form and the instructions for the form. Each form must be filed in 
accordance with this part and the instructions for the form.
    (b) Electronically filing forms. The forms required by this part 
can be filed electronically by using TTB's online filing systems: COLAs 
Online and Formulas Online. Anyone who intends to use one of these 
online filing systems must first register to use the system by 
accessing the TTB website at https://www.ttb.gov.
    (c) Obtaining paper forms. Forms required by this part are 
available for printing through the TTB website (https://www.ttb.gov) or 
by mailing a request to the Alcohol and Tobacco Tax and Trade Bureau, 
National Revenue Center, 550 Main Street, Room 8002, Cincinnati, OH 
45202.


Sec.  5.12   Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained 
in this part are delegated to ``appropriate TTB officers.'' To find out 
which officers have been delegated specific authorities, see the 
current version of TTB Order 1135.5, Delegation of the Administrator's 
Authorities in 27 CFR part 5, Labeling and Advertising of Distilled 
Spirits. Copies of this order can be obtained by accessing the TTB 
website (https://www.ttb.gov) or by mailing a request to the Alcohol 
and Tobacco Tax and Trade Bureau, National Revenue Center, 550 Main 
Street, Room 8002, Cincinnati, OH 45202.

[[Page 7582]]

Subpart B--Certificates of Label Approval and Certificates of 
Exemption from Label Approval

Requirements for Distilled Spirits Bottled in the United States


Sec.  5.21   Requirement for certificates of label approval (COLAs) for 
distilled spirits bottled in the United States.

    (a) Applicability. The certificate of label approval (COLA) 
requirements described in this section apply to distilled spirits 
bottled in the United States, outside of customs custody.
    (b) Distilled spirits shipped or sold in interstate commerce. No 
person may bottle distilled spirits without first applying for and 
obtaining a COLA issued by the appropriate TTB officer. This 
requirement applies to distilled spirits produced and bottled in the 
United States and to distilled spirits imported in bulk, regardless of 
where produced, and bottled in the United States. Bottlers may obtain 
an exemption from this requirement only if they satisfy the conditions 
set forth in Sec.  5.23.
    (c) Evidence of COLA. Upon request by the appropriate TTB officer, 
a bottler or importer must provide evidence that a container of 
distilled spirits is covered by a COLA. This requirement may be 
satisfied by providing original COLAs, photocopies or electronic copies 
of COLAs, or records showing the TTB identification number assigned to 
the approved certificate.


Sec.  5.22   Rules regarding certificates of label approval (COLAs) for 
distilled spirits bottled in the United States.

    (a) What a COLA authorizes. An approved TTB Form 5100.31 authorizes 
the bottling of distilled spirits covered by the certificate of label 
approval (COLA), as long as the container bears labels identical to the 
labels appearing on the face of the COLA, or labels with changes 
authorized by TTB on the COLA or otherwise (such as through the 
issuance of public guidance available on the TTB website at https://www.ttb.gov).
    (b) When to obtain a COLA. The COLA must be obtained prior to 
bottling. No bottler may bottle distilled spirits, or remove distilled 
spirits from the premises where bottled, unless a COLA has been 
obtained.
    (c) Application for a COLA. The bottler may apply for a COLA by 
submitting an application to TTB on Form 5100.31, in accordance with 
the instructions on the form. The bottler may apply for a COLA either 
electronically by accessing TTB's online system, COLAs Online, at 
https://www.ttb.gov, or by submitting the paper form. For procedures 
regarding the issuance of COLAs, see part 13 of this chapter.


Sec.  5.23   Application for exemption from label approval for 
distilled spirits bottled in the United States.

    (a) Exemption. Any bottler of distilled spirits may apply to be 
exempt from the requirements of Sec. Sec.  5.21, 5.22, and 5.30(h), by 
showing to the satisfaction of the appropriate TTB officer that the 
distilled spirits to be bottled are not to be sold, offered for sale, 
or shipped or delivered for shipment, or otherwise introduced, in 
interstate or foreign commerce.
    (b) Application required. The bottler must file an application on 
TTB Form 5100.31 for exemption from label approval before bottling the 
distilled spirits. The bottler may apply for a certificate of exemption 
from label approval either electronically, by accessing TTB's online 
system, COLAs Online, at https://www.ttb.gov, or by using the paper 
form. For procedures regarding the issuance of certificates of 
exemption from label approval, see part 13 of this chapter.
    (c) Labeling of distilled spirits covered by certificate of 
exemption. The application for a certificate of exemption from label 
approval requires that the applicant identify the State in which the 
product will be sold. As a condition of receiving exemption from label 
approval, the label covered by an approved certificate of exemption 
must include the statement ``For sale in [name of State] only.'' See 
Sec. Sec.  19.517 and 19.518 of this chapter for additional labeling 
rules that apply to distilled spirits covered by a certificate of 
exemption.

Requirements for Distilled Spirits Imported in Containers


Sec.  5.24   Certificates of label approval (COLAs) for distilled 
spirits imported in containers.

    (a) Application requirement. Any person removing distilled spirits 
in containers from customs custody for consumption must first apply for 
and obtain a certificate of label approval (COLA) covering the 
distilled spirits from the appropriate TTB officer, or obtain 
authorization to use the COLA from the person to whom the COLA is 
issued.
    (b) Release of distilled spirits from customs custody. Distilled 
spirits, imported in containers, are not eligible for release from 
customs custody for consumption, and no person may remove such 
distilled spirits from customs custody for consumption, unless the 
person removing the distilled spirits has obtained a COLA covering the 
distilled spirits and is able to provide it (either electronically or 
on paper) upon request. Products imported under another person's COLA 
are eligible for release only if each bottle or individual container to 
be imported bears the name (or trade name) and address of the person to 
whom the COLA was issued by TTB, and only if the importer using the 
COLA to obtain release of a shipment can substantiate that the person 
to whom the COLA was issued has authorized its use by the importer.
    (c) Filing requirements. If filing electronically, the importer 
must file with U.S. Customs and Border Protection (CBP), at the time of 
filing the customs entry, the TTB-assigned identification number of the 
valid COLA that corresponds to the label on the product or lot of 
distilled spirits to be imported. If the importer is not filing 
electronically, the importer must provide a copy of the COLA to CBP at 
the time of entry. In addition, the importer must provide a copy of the 
applicable COLA, and proof of the COLA holder's authorization if 
applicable, upon request by the appropriate TTB officer or a customs 
officer.
    (d) Evidence of COLA. Upon request by the appropriate TTB officer, 
an importer must provide evidence that a container of distilled spirits 
is covered by a COLA. This requirement may be satisfied by providing 
original COLAs, photocopies or electronic copies of COLAs, or records 
showing the TTB identification number assigned to the approved 
certificate.
    (e) Scope of this section. The COLA requirement imposed by this 
section applies only to distilled spirits that are removed for sale or 
any other commercial purpose. Distilled spirits that are imported in 
containers are not eligible for a certificate of exemption from label 
approval. See 27 CFR 27.49, 27.74, and 27.75 for labeling exemptions 
applicable to certain imported samples of distilled spirits.
    (f) Relabeling in customs custody. Containers of distilled spirits 
in customs custody that are required to be covered by a COLA but are 
not labeled in conformity with a COLA must be relabeled, under the 
supervision and direction of customs officers, prior to their removal 
from customs custody for consumption.


Sec.  5.25   Rules regarding certificates of label approval (COLAs) for 
distilled spirits imported in containers.

    (a) What COLA authorizes. An approved TTB Form 5100.31 authorizes 
the use of the labels covered by the

[[Page 7583]]

certificate of label approval (COLA) on containers of distilled 
spirits, as long as the container bears labels identical to the labels 
appearing on the face of the COLA, or labels with changes authorized by 
the form or otherwise authorized by TTB (such as through the issuance 
of public guidance available on the TTB website at https://www.ttb.gov).
    (b) When to obtain a COLA. The COLA must be obtained prior to the 
removal of distilled spirits in containers from customs custody for 
consumption.
    (c) Application for a COLA. The person responsible for the 
importation of distilled spirits must obtain approval of the labels by 
submitting an application to TTB on TTB Form 5100.31. A person may 
apply for a COLA either electronically, by accessing TTB's online 
system, COLAs Online, at https://www.ttb.gov, or by submitting the 
paper form. For procedures regarding the issuance of COLAs, see part 13 
of this chapter.

Administrative Rules


Sec.  5.27   Presenting certificates of label approval (COLAs) to 
Government officials.

    A certificate holder must present the original or a paper or 
electronic copy of the appropriate certificate of label approval (COLA) 
upon the request of any duly authorized representative of the United 
States Government.


Sec.  5.28   Formulas, samples, and documentation.

    (a) In addition to any formula specifically required under subpart 
J of this part, TTB may require formulas under certain circumstances in 
connection with the label approval process. Prior to or in conjunction 
with the review of an application for a certificate of label approval 
(COLA) on TTB Form 5100.31, the appropriate TTB officer may require a 
bottler or importer to submit a formula, the results of laboratory 
testing of the distilled spirits, or a sample of any distilled spirits 
or ingredients used in producing a distilled spirit. After the issuance 
of a COLA, or with regard to any distilled spirits required to be 
covered by a COLA, the appropriate TTB officer may require a full and 
accurate statement of the contents of the container.
    (b) A formula may be filed electronically by using Formulas Online, 
or it may be submitted on paper on TTB Form 5100.51. See Sec.  5.11 for 
more information on forms and Formulas Online.


Sec.  5.29   Personalized labels.

    (a) General. Applicants for label approval may obtain permission 
from TTB to make certain changes in order to personalize labels without 
having to resubmit labels for TTB approval. A personalized label is an 
alcohol beverage label that meets the minimum mandatory label 
requirements and is customized for customers. Personalized labels may 
contain a personal message, picture, or other artwork that is specific 
to the consumer who is purchasing the product. For example, a distiller 
may offer individual or corporate customers labels that commemorate an 
event such as a wedding or grand opening.
    (b) Application. Any person who intends to offer personalized 
labels must submit a template for the personalized label as part of the 
application for label approval required under Sec. Sec.  5.21 or 5.24, 
and must note on the application a description of the specific 
personalized information that may change.
    (c) Approval of personalized label. If the application complies 
with the regulations, TTB will issue a certificate of label approval 
(COLA) with a qualification allowing the personalization of labels. The 
qualification will allow the certificate holder to add or change items 
on the personalized label such as salutations, names, graphics, 
artwork, congratulatory dates and names, or event dates without 
applying for a new COLA. All of these items on personalized labels must 
comply with the regulations of this part.
    (d) Changes not allowed to personalized labels. Approval of an 
application to personalize labels does not authorize the addition of 
any information that discusses either the alcohol beverage or 
characteristics of the alcohol beverage or that is inconsistent with or 
in violation of the provisions of this part or any other applicable 
provision of law or regulations.


Sec.  5.30   Certificates of age and origin for imported spirits.

    (a) Scotch, Irish, and Canadian whiskies. (1) Scotch, Irish, and 
Canadian whiskies, imported in containers, are not eligible for release 
from customs custody for consumption, and no person may remove such 
whiskies from customs custody for consumption, unless that person has 
obtained and is in possession of an invoice accompanied by a 
certificate of origin issued by an official duly authorized by the 
appropriate foreign government, certifying:
    (i) That the particular distilled spirits are Scotch, Irish, or 
Canadian whisky, as the case may be; and
    (ii) That the distilled spirits have been manufactured in 
compliance with the laws of the respective foreign governments 
regulating the manufacture of whisky for home consumption.
    (2) In addition, an official duly authorized by the appropriate 
foreign government must certify to the age of the youngest distilled 
spirits in the container. The age certified shall be the period during 
which, after distillation and before bottling, the distilled spirits 
have been stored in oak containers.
    (b) Brandy and Cognac. Brandy (other than fruit brandies of a type 
not customarily stored in oak containers) or Cognac, imported in 
containers, is not eligible for release from customs custody for 
consumption, and no person may remove such brandy or Cognac from 
customs custody for consumption, unless the person so removing the 
brandy or Cognac possesses a certificate issued by an official duly 
authorized by the appropriate foreign country certifying that the age 
of the youngest brandy or Cognac in the container is not less than 2 
years, or if age is stated on the label that none of the distilled 
spirits are of an age less than that stated. The age certified shall be 
the period during which, after distillation and before bottling, the 
distilled spirits have been stored in oak containers. If the label of 
any fruit brandy, not stored in oak containers, bears any statement of 
storage in another type of container, the brandy is not eligible for 
release from customs custody for consumption, and no person may remove 
such brandy from customs custody for consumption, unless the person so 
removing the brandy possesses a certificate issued by an official duly 
authorized by the appropriate foreign government certifying to such 
storage. Cognac, imported in bottles, is not eligible for release from 
customs custody for consumption, and no person may remove such Cognac 
from customs custody for consumption, unless the person so removing the 
Cognac possesses a certificate issued by an official duly authorized by 
the French Government, certifying that the product is grape brandy 
distilled in the Cognac region of France and entitled to be designated 
as ``Cognac'' by the laws and regulations of the French Government.
    (c) Rum. Rum imported in containers that contain any statement of 
age is not eligible to be released from customs custody for 
consumption, and no person may remove such rum from customs custody for 
consumption, unless the person so removing the rum possesses a 
certificate issued by an official duly authorized by the appropriate 
foreign country, certifying to the age of the youngest rum in the 
container. The age certified shall be the period during which, after 
distillation and before

[[Page 7584]]

bottling, the distilled spirits have been stored in oak containers.
    (d) Tequila. (1) Tequila imported in containers is not eligible for 
release from customs custody for consumption, and no person may remove 
such Tequila from customs custody for consumption, unless the person 
removing such Tequila possesses a Certificate of Tequila Export issued 
by an official duly authorized by the Mexican Government or a 
conformity assessment body stating that the product is entitled to be 
designated as Tequila under the applicable laws and regulations of the 
Mexican Government.
    (2) If the label of any Tequila imported in containers contains any 
statement of age, the Tequila is not eligible for release from customs 
custody for consumption, and no person may remove such Tequila from 
customs custody for consumption, unless the person removing the Tequila 
possesses a Certificate of Tequila Export issued by an official duly 
authorized by the Mexican Government or a conformity assessment body as 
to the age of the youngest Tequila in the container. The age certified 
shall be the period during which the Tequila has been stored in oak 
containers after distillation and before bottling.
    (e) Other whiskies. Whisky, as defined in Sec.  5.143(c)(2) through 
(7) and (10) through (14), imported in bottles, is not eligible for 
release from customs custody for consumption, and no person shall 
remove such whiskies from customs custody for consumption, unless that 
person has obtained and is in possession of a certificate issued by an 
official duly authorized by the appropriate foreign government 
certifying:
    (1) In the case of whisky (regardless of whether it is mixed or 
blended) that contains no neutral spirits:
    (i) The type of the whisky as defined in Sec.  5.143;
    (ii) The American proof at which the whisky was distilled;
    (iii) That no neutral spirits (or other whisky in the case of 
straight whisky) have been added or otherwise included in the whisky;
    (iv) The age of the whisky; and
    (v) The type of oak barrel in which the whisky was aged and whether 
the barrel was new or reused, charred or uncharred; and
    (2) In the case of whisky containing neutral spirits:
    (i) The type of the whisky as defined in Sec.  5.143;
    (ii) The percentage of straight whisky used in the blend, if any;
    (iii) The American proof at which any straight whisky in the blend 
was distilled;
    (iv) The percentage of whisky other than straight whisky in the 
blend, if any;
    (v) The percentage of neutral spirits in the blend and the name of 
the commodity from which the neutral spirits were distilled;
    (vi) The age of any straight whisky and the age of any other whisky 
in the blend; and
    (vii) The type of oak barrel in which the age of each whisky in the 
blend was attained and whether the barrel was new or reused and charred 
or uncharred.
    (f) Miscellaneous. Distilled spirits (other than Scotch, Irish, and 
Canadian whiskies, and Cognac) imported in containers are not eligible 
for release from customs custody for consumption, and no person shall 
remove such spirits from customs custody for consumption, unless that 
person has obtained and is in possession of an invoice accompanied by a 
certificate of origin issued by an official duly authorized by the 
appropriate foreign government, if the issuance of such certificates 
with respect to such distilled spirits is required by the foreign 
government concerned, certifying as to the identity of the distilled 
spirits and that the distilled spirits have been manufactured in 
compliance with the laws of the respective foreign government 
regulating the manufacture of such distilled spirits for home 
consumption.
    (g) Retention of certificates--distilled spirits imported in 
containers. The importer of distilled spirits imported in containers 
must retain for 5 years following the removal of the bottled distilled 
spirits from customs custody copies of the certificates (and 
accompanying invoices, if applicable) required by paragraphs (a) 
through (f) of this section, and must provide them upon request of the 
appropriate TTB officer or a customs officer.
    (h) Distilled spirits imported in bulk for bottling in the United 
States. Distilled spirits that would be required under paragraphs (a) 
through (f) of this section to be covered by a certificate of age and/
or a certificate of origin and that are imported in bulk for bottling 
in the United States may be removed from the premises where bottled 
only if the bottler possesses a certificate of age and/or a certificate 
of origin, issued by the appropriate entity as set forth in paragraphs 
(a) through (f) of this section, applicable to the spirits that 
provides the same information as a certificate required under 
paragraphs (a) through (f) of this section, would provide for like 
spirits imported in bottles.
    (i) Retention of distilled spirits certificates--distilled spirits 
in bulk. The bottler of distilled spirits imported in bulk must retain, 
for 5 years following the removal of such distilled spirits from the 
premises where bottled, copies of the certificates required by 
paragraphs (a) through (f) of this section, and must provide them upon 
request of the appropriate TTB officer.

Subpart C--Alteration of Labels, Relabeling, and Adding Information 
to Containers


Sec.  5.41   Alteration of labels.

    (a) Prohibition. It is unlawful for any person to alter, mutilate, 
destroy, obliterate or remove any mark, brand, or label on distilled 
spirits in containers held for sale in interstate or foreign commerce, 
or held for sale after shipment in interstate or foreign commerce, 
except as authorized by Sec. Sec.  5.42, 5.43, or 5.44, or as otherwise 
authorized by Federal law.
    (b) Authorized relabeling. For purposes of the relabeling 
activities authorized by this subpart, the term ``relabel'' includes 
the alteration, mutilation, destruction, obliteration, or removal of 
any existing mark, brand, or label on the container, as well as the 
addition of a new label (such as a sticker that adds information about 
the product or information engraved on the container) to the container, 
and the replacement of a label with a new label bearing identical 
information.
    (c) Obligation to comply with other requirements. Authorization to 
relabel under this subpart:
    (1) In no way authorizes the placement of labels on containers that 
do not accurately reflect the brand, bottler, identity, or other 
characteristics of the product;
    (2) Does not relieve the person conducting the relabeling 
operations from any obligation to comply with the regulations in this 
part and with State or local law; and,
    (3) Does not relieve the person conducting the relabeling 
operations from any obligation to obtain permission from the owner of 
the brand where otherwise required.


Sec.  5.42   Authorized relabeling activities by distillers and 
importers.

    (a) Relabeling at distilled spirits plant premises. A proprietor of 
distilled spirits plant premises may relabel domestically bottled 
distilled spirits prior to removal from, and after return to bond at, 
the distilled spirits plant premises, with labels covered by a 
certificate of label approval (COLA), without obtaining separate 
permission

[[Page 7585]]

from TTB for the relabeling activity, provided that the proprietor is 
the certificate holder (and bottler).
    (b) Relabeling after removal from distilled spirits plant premises. 
A proprietor of distilled spirits plant premises may relabel 
domestically bottled distilled spirits (or direct the relabeling of 
such spirits by an authorized agent) after removal from distilled 
spirits plant premises with labels covered by a COLA, without obtaining 
separate permission from TTB for the relabeling activity, provided that 
the proprietor is the certificate holder (and bottler).
    (c) Relabeling in customs custody. Under the supervision of U.S. 
customs officers, imported distilled spirits in containers in customs 
custody may be relabeled without obtaining separate permission from TTB 
for the relabeling activity. Such containers must bear labels covered 
by a COLA upon their removal from customs custody for consumption. See 
Sec.  5.24(b).
    (d) Relabeling after removal from customs custody. The importer of 
distilled spirits in containers may relabel imported distilled spirits 
(or direct the relabeling of such spirits by an authorized agent) after 
removal from customs custody without obtaining separate permission from 
TTB for the relabeling activity, as long as the labels are covered by a 
COLA.


Sec.  5.43   Relabeling activities that require separate written 
authorization from TTB.

    (a) General. Any permittee holding distilled spirits for sale who 
needs to relabel the containers but is not the original bottler may 
apply for written permission for the relabeling of distilled spirits 
containers. The appropriate TTB officer may permit relabeling of 
distilled spirits in containers if the facts show that the relabeling 
is for the purpose of compliance with the requirements of this part or 
State law, or for the purpose of replacing damaged labels.
    (b) Application. The written application must include:
    (1) Copies of the original and proposed new labels;
    (2) The circumstances of the request, including the reason for 
relabeling;
    (3) The number of containers to be relabeled;
    (4) The location where the relabeling will take place; and
    (5) The name and address of the person who will be conducting the 
relabeling operations.


Sec.  5.44   Adding a label or other information to a container that 
identifies the wholesaler, retailer, or consumer.

    Any label or other information that identifies the wholesaler, 
retailer, or consumer of the distilled spirits may be added to 
containers (by the addition of stickers, engraving, stenciling, etc.) 
without prior approval from TTB and without being covered by a 
certificate of label approval or certificate of exemption from label 
approval. Such information may be added before or after the containers 
have been removed from distilled spirits plant premises or released 
from customs custody. The information added:
    (a) May not violate the provisions of subpart F, G, or H of this 
part;
    (b) May not contain any reference to the characteristics of the 
product; and
    (c) May not be added to the container in such a way that it 
obscures any other labels on the container.

Subpart D--Label Standards


Sec.  5.51   Requirement for firmly affixed labels.

    Any label that is not an integral part of the container must be 
affixed to the container in such a way that it cannot be removed 
without thorough application of water or other solvents.


Sec.  5.52   Legibility and other requirements for mandatory 
information on labels.

    (a) Readily legible. Mandatory information on labels must be 
readily legible to potential consumers under ordinary conditions.
    (b) Separate and apart. Subject to the exceptions below, mandatory 
information on labels, except brand names, must be separate and apart 
from any additional information.
    (1) This does not preclude the addition of brief optional phrases 
of additional information as part of the class or type designation 
(such as, ``premium vodka'' or ``delicious Tequila''), the name and 
address statement (such as, ``Proudly distilled and bottled by ABC 
Distilling Company, Atlanta, GA, for over 30 years'') or other 
information required by Sec.  5.63(a) and (b). The statements required 
by Sec.  5.63(c) may not include additional information.
    (2) Mandatory information (other than an aspartame declaration 
required by Sec.  5.63(c)(8)) may be contained among other descriptive 
or explanatory information if the script, type, or printing of the 
mandatory information is substantially more conspicuous than that of 
the descriptive or explanatory information.
    (c) Contrasting background. Mandatory information must appear in a 
color that contrasts with the background on which it appears, except 
that if the net contents are blown into a glass container, they need 
not be contrasting. The color of the container and of the distilled 
spirits must be taken into account if the label is transparent or if 
mandatory label information is etched, engraved, sandblasted, or 
otherwise carved into the surface of the container or is branded, 
stenciled, painted, printed, or otherwise directly applied on to the 
surface of the container. Examples of acceptable contrasts are:
    (1) Black lettering appearing on a white or cream background; or
    (2) White or cream lettering appearing on a black background.
    (d) Capitalization. Except for the aspartame statement when 
required by Sec.  5.63(c)(8), which must appear in all capital letters, 
mandatory information prescribed by this part may appear in all capital 
letters, in all lower case letters, or in mixed-case using both capital 
and lower-case letters.


Sec.  5.53   Minimum type size of mandatory information.

    All capital and lowercase letters in statements of mandatory 
information on labels must meet the following type size requirements.
    (a) Containers of more than 200 milliliters. All mandatory 
information must be in script, type, or printing that is at least two 
millimeters in height.
    (b) Containers of 200 milliliters or less. All mandatory 
information must be in script, type, or printing that is at least one 
millimeter in height.


Sec.  5.54   Visibility of mandatory information.

    Mandatory information on a label must be readily visible and may 
not be covered or obscured in whole or in part. See Sec.  5.62 for 
rules regarding packaging of containers (including cartons, coverings, 
and cases). See subpart N of this part for regulations pertaining to 
advertising materials.


Sec.  5.55   Language requirements.

    (a) General. Mandatory information must appear in the English 
language, with the exception of the brand name and except as provided 
in paragraph (c) of this section.
    (b) Foreign languages. Additional statements in a foreign language, 
including translations of mandatory information that appears elsewhere 
in English on the label, are allowed on labels and containers as long 
as they do not in any way conflict with, or contradict, the 
requirements of this part.
    (c) Distilled spirits for consumption in the Commonwealth of Puerto 
Rico. Mandatory information may be stated solely in the Spanish 
language on labels of distilled spirits bottled for consumption within 
the Commonwealth of Puerto Rico.

[[Page 7586]]

Sec.  5.56   Additional information.

    Information (other than mandatory information) that is truthful, 
accurate, and specific, and that does not violate subparts F, G, or H 
of this part, may appear on labels. Such additional information may not 
conflict with, modify, qualify or restrict mandatory information in any 
manner.

Subpart E--Mandatory Label Information


Sec.  5.61   What constitutes a label for purposes of mandatory 
information.

    (a) Label. Certain information, as outlined in Sec.  5.63, must 
appear on a label. When used in this part for purposes of determining 
where mandatory information must appear, the term ``label'' includes:
    (1) Material affixed to the container, whether made of paper, 
plastic, metal, or other matter;
    (2) For purposes of the net content statement only, information 
blown, embossed, or molded into the container as part of the process of 
manufacturing the container;
    (3) Information etched, engraved, sandblasted, or otherwise carved 
into the surface of the container; and
    (4) Information branded, stenciled, painted, printed, or otherwise 
directly applied on to the surface of the container.
    (b) Information appearing elsewhere on the container. Information 
appearing on the following parts of the container is subject to all of 
the restrictions and prohibitions set forth in subparts F, G and H of 
this part, but will not satisfy any requirements in this part for 
mandatory information that must appear on labels:
    (1) Material affixed to, or information appearing on, the bottom 
surface of the container;
    (2) Caps, corks or other closures unless authorized to bear 
mandatory information by the appropriate TTB officer; and
    (3) Foil or heat shrink bottle capsules.
    (c) Materials not firmly affixed to the container. Any materials 
that accompany the container to the consumer but are not firmly affixed 
to the container, including booklets, leaflets, and hang tags, are not 
``labels'' for purposes of this part. Such materials are instead 
subject to the advertising regulations in subpart N of this part.


Sec.  5.62   Packaging (cartons, coverings, and cases).

    (a) General. An individual covering, carton, or other container of 
the bottle used for sale at retail (other than a shipping container), 
may not contain any statement, design, device, or graphic, pictorial, 
or emblematic representation that is prohibited on labels by 
regulations in subpart F, G, or H of this part.
    (b) Sealed opaque cartons. If containers are enclosed in sealed 
opaque coverings, cartons, or other containers used for sale at retail 
(other than shipping containers), such coverings, cartons, or other 
containers must bear all mandatory label information.
    (c) Other cartons. (1) If an individual covering, carton, or other 
container of the bottle used for sale at retail (other than a shipping 
container) is so designed that the bottle is readily removable, it may 
display any information which is not in conflict with the label on the 
bottle contained therein.
    (2) Cartons displaying brand names and/or designations must display 
such names and designations in their entirety--brand names required to 
be modified, e.g., by ``Brand'' or ``Product of U.S.A.'', must also 
display such modification.
    (3) Specialty products for which a truthful and adequate statement 
of composition is required must display such statement.
    (d) Labeling of containers within the packaging. The container 
within the packaging is subject to all labeling requirements of this 
part, including mandatory labeling information requirements, regardless 
of whether the packaging bears such information.


Sec.  5.63   Mandatory label information.

    (a) Mandatory information required to appear within the same field 
of vision. Distilled spirits containers must bear a label or labels (as 
defined in Sec.  5.61) containing the following information within the 
same field of vision (which means a single side of a container (for a 
cylindrical container, a side is 40 percent of the circumference) where 
all of the pieces of information can be viewed simultaneously without 
the need to turn the container):
    (1) Brand name, in accordance with Sec.  5.64;
    (2) Class, type, or other designation, in accordance with subpart I 
of this part; and
    (3) Alcohol content, in accordance with Sec.  5.65.
    (b) Other mandatory information. Distilled spirits containers must 
bear a label or labels (as defined in Sec.  5.61) anywhere on the 
container bearing the following information:
    (1) Name and address of the bottler or distiller, in accordance 
with Sec.  5.66, or the importer, in accordance with Sec.  5.67 or 
Sec.  5.68, as applicable; and
    (2) Net contents (which may be blown, embossed, or molded into the 
container as part of the process of manufacturing the container), in 
accordance with Sec.  5.70.
    (c) Disclosure of certain ingredients, processes and other 
information. The following ingredients, processes, and other 
information must be disclosed on a label, without the inclusion of any 
additional information as part of the statement, as follows:
    (1) Neutral spirits. The percentage of neutral spirits and the name 
of the commodity from which the neutral spirits were distilled, or in 
the case of continuously distilled neutral spirits or gin, the name of 
the commodity only, in accordance with Sec.  5.7;
    (2) Coloring or treatment with wood. Coloring or treatment with 
wood, in accordance with Sec. Sec.  5.72 and 5.73;
    (3) Age. A statement of age or age and percentage of type, when 
required or used, in accordance with Sec.  5.74;
    (4) State of distillation. State of distillation of any type of 
whisky defined in Sec.  5.143(c)(2) through (c)(7), which is distilled 
in the United States, in accordance with Sec.  5.66(f);
    (5) FD&C Yellow No. 5. If a distilled spirit contains the coloring 
material FD&C Yellow No. 5, the label must include a statement to that 
effect, such as ``FD&C Yellow No. 5'' or ``Contains FD&C Yellow No. 
5'';
    (6) Cochineal extract or carmine. If a distilled spirit contains 
the color additive cochineal extract or the color additive carmine, the 
label must include a statement to that effect, using the respective 
common or usual name (such as ``contains cochineal extract'' or 
``contains carmine''). This requirement applies to labels when either 
of the coloring materials was used in a distilled spirit that is 
removed from bottling premises or from customs custody on or after 
April 16, 2013;
    (7) Sulfites. If a distilled spirit contains 10 or more parts per 
million of sulfur dioxide or other sulfiting agent measured as total 
sulfur dioxide, the label must include a statement to that effect. 
Examples of acceptable statements are ``Contains sulfites'' or 
``Contains (a) sulfiting agent(s)'' or a statement identifying the 
specific sulfiting agent. The alternative terms ``sulphites'' or 
``sulphiting'' may be used; and
    (8) Aspartame. If the distilled spirit contains aspartame, the 
label must include the following statement, in capital letters, 
separate and apart from all other information:

[[Page 7587]]

``PHENYLKETONURICS: CONTAINS PHENYLALANINE.''
    (d) Distinctive liquor bottles. See Sec.  5.205(b)(2) for exemption 
from placement requirements for certain mandatory information for 
distinctive liquor bottles.


Sec.  5.64   Brand name.

    (a) Requirement. The distilled spirits label must include a brand 
name. If the distilled spirits are not sold under a brand name, then 
the name of the bottler, distiller or importer, as applicable, 
appearing in the name and address statement is treated as the brand 
name.
    (b) Misleading brand names. Labels may not include any misleading 
brand names. A brand name is misleading if it creates (by itself or in 
association with other printed or graphic matter) any erroneous 
impression or inference as to the age, origin, identity, or other 
characteristics of the distilled spirits. A brand name that would 
otherwise be misleading may be qualified with the word ``brand'' or 
with some other qualification, if the appropriate TTB officer 
determines that the qualification dispels any misleading impression 
that might otherwise be created.


Sec.  5.65   Alcohol content.

    (a) General. The alcohol content for distilled spirits must be 
stated on the label as a percentage of alcohol by volume. Products that 
contain a significant amount of material, such as solid fruit, that may 
absorb spirits after bottling must state the alcohol content at the 
time of bottling as follows: ``Bottled at __ percent alcohol by 
volume.''
    (b) How the alcohol content must be expressed. The following rules 
apply to statements of alcohol content.
    (1) A statement of alcohol content must be expressed as a 
percentage of alcohol by volume.
    (i) In addition, the alcohol content in degrees of proof may be 
stated on a label as long as it appears in the same field of vision as 
the mandatory statement of alcohol content as a percentage of alcohol 
by volume. Additional statements of proof may appear on the label 
without being in the same field of vision as the mandatory alcohol by 
volume statement.
    (ii) Other truthful, accurate, and specific factual representations 
of alcohol content, such as alcohol by weight, may be made, as long as 
they appear together with, and as part of, the statement of alcohol 
content as a percentage of alcohol by volume.
    (2)(i) The alcohol content statement must be expressed in one of 
the following formats:
    (A) ``Alcohol __ percent by volume'';
    (B) ``__ percent alcohol by volume''; or
    (C) ``Alcohol by volume __ percent.''
    (ii) Any of the words or symbols may be enclosed in parentheses and 
authorized abbreviations may be used with or without a period. The 
alcohol content statement does not have to appear with quotation marks.
    (3) The statements listed in paragraph (b)(2)(i) of this section 
must appear as shown, except that the following abbreviations may be 
used: Alcohol may be abbreviated as ``alc''; percent may be represented 
by the percent symbol ``%''; alcohol and volume may be separated by a 
slash ``/'' in lieu of the word ``by''; and volume may be abbreviated 
as ``vol''.
    (4) The following are examples of alcohol content statements that 
comply with the requirements of this part:
    (i) ``40% alc/vol'';
    (ii) ``Alc. 40 percent by vol.'';
    (iii) ``Alc 40% by vol''; and
    (iv) ``40% Alcohol by Volume.''
    (c) Tolerances. A tolerance of plus or minus 0.3 percentage points 
is allowed for actual alcohol content that is above or below the 
labeled alcohol content.


Sec.  5.66   Name and address for domestically bottled distilled 
spirits that were wholly made in the United States.

    (a) General. Domestically bottled distilled spirits that were 
wholly made in the United States and contain no imported distilled 
spirits must be labeled in accordance with this section. (See 
Sec. Sec.  5.67 and 5.68 for name and address requirements applicable 
to distilled spirits that are not wholly made in the United States.) 
For purposes of this section, a ``processor'' who solely bottles the 
labeled distilled spirits will be considered the ``bottler.''
    (b) Form of statement. The bottler, distiller, or processor of the 
distilled spirits must be identified by a phrase describing the 
function performed by that person. If that person performs more than 
one function, the label may (but is not required to) so indicate.
    (1) If the name of the bottler appears on the label, it must be 
preceded by a phrase such as ``bottled by,'' ``canned by,'' ``packed 
by,'' or ``filled by,'' followed by the name and address of the 
bottler.
    (2) If the name of the processor appears on the label, it must be 
preceded by a phrase such as ``blended by,'' ``made by,'' ``prepared 
by,'' ``produced by,'' or ``manufactured by,'' as appropriate, followed 
by the name and address of the processor. When applied to distilled 
spirits, the term ``produced by'' indicates a processing operation 
(formerly known as rectification) that involves a change in the class 
or type of the product through the addition of flavors or some other 
processing activity.
    (3) If the name of the distiller appears on the label, it must be 
preceded by a phrase such as ``distilled by,'' followed by the name and 
address of the distiller. If the distilled spirits were bottled for the 
distiller thereof, the name and address of the distiller may be 
preceded by a phrase such as ``distilled by and bottled for,'' or 
``bottled for.''
    (c) Listing of more than one function. If different functions are 
performed by more than one person, statements on the label may not 
create the misleading impression that the different functions were 
performed by the same person.
    (d) Form of address--(1) General. The address consists of the city 
and State where the operation occurred, or the city and State of the 
principal place of business of the person performing the operation. 
This information must be consistent with the information on the basic 
permit. Addresses may, but are not required to, include additional 
information such as street names, counties, zip codes, phone numbers, 
and website addresses. The postal abbreviation of the State name may be 
used; for example, California may be abbreviated as CA.
    (2) More than one address. If the bottler, distiller, or processor 
listed on the name and address statement is the actual operator of more 
than one distilled spirits plant engaged in bottling, distilling, or 
processing operations, as applicable, the label may state, immediately 
following the name of the permittee, the addresses of those other 
plants, in addition to the address of the plant at which the distilled 
spirits were bottled. In this situation, the address where the 
operation occurred must be indicated on the label or on the container 
by printing, coding, or other markings.
    (3) Principal place of business. The label may provide the address 
of the bottler's, distiller's, or processor's principal place of 
business, in lieu of the place where the bottling, distilling, or other 
operation occurred, provided that the address where the operation 
occurred is indicated on the label or on the container by printing, 
coding, or other markings.
    (4) Distilled spirits bottled for another person. (i) If distilled 
spirits are bottled for another person, other than the actual

[[Page 7588]]

distiller thereof, the label may state, in addition to (but not in 
place of) the name and address of the bottler, the name and address of 
such other person, immediately preceded by the words ``bottled for'' or 
another similar appropriate phrase. Such statements must clearly 
indicate the relationship between the two persons (for example, 
contract bottling).
    (ii) If the same brand of distilled spirits is bottled by two 
distillers that are not under the same ownership, the label for each 
distiller may set forth both locations where bottling takes place, as 
long as the label uses the actual location (and not the principal place 
of business) and as long as the nature of the arrangement is clearly 
set forth.
    (5) Additional addresses. No additional places or addresses may be 
stated for the same person unless:
    (i) That person is actively engaged in the conduct of an additional 
bona fide and actual alcohol beverage business at such additional place 
or address, and
    (ii) The label also contains in direct conjunction therewith, 
appropriate descriptive material indicating the function occurring at 
such additional place or address in connection with the particular 
product (such as ``distilled by.'')
    (e) Special rule for straight whiskies. If ``straight whiskies'' 
(see Sec.  5.143) of the same type are distilled in the same State by 
two or more different distillers and are combined (either at the time 
of bottling or at a warehouseman's bonded premises for further storage) 
and subsequently bottled and labeled as ``straight whisky,'' that 
``straight whisky'' must bear a label that contains name and address 
information of the bottler. If that combined ``straight whisky'' is 
bottled by or for the distillers, in lieu of the name and address of 
the bottler, the label may contain the words ``distilled by,'' followed 
immediately by the names (or trade names) and addresses of the 
different distillers who distilled a portion of the ``straight whisky'' 
and the percentage of ``straight whisky'' distilled by each distiller, 
with a tolerance of plus or minus 2 percent. If ``straight whisky'' 
consists of a mixture of ``straight whiskies'' of the same type from 
two or more different distilleries of the same proprietor located 
within the same State, and if that ``straight whisky'' is bottled by or 
for that proprietor, in lieu of the name and address of the bottler, 
the ``straight whisky'' may bear a label containing the words 
``distilled by'' followed by the name (or trade name) of the proprietor 
and the addresses of the different distilleries that distilled a 
portion of the ``straight whisky.''
    (f) State of distillation for whisky. (1) The State of 
distillation, which is the State in which original distillation takes 
place, must appear on the label of any type of whisky defined in Sec.  
5.143(c)(2) through (7), which is distilled in the United States. The 
State of distillation may appear on any label and must be shown in at 
least one of the following ways:
    (i) By including a ``distilled by'' (or ``distilled and bottled 
by'' or any other phrase including the word ``distilled'') statement as 
part of the mandatory name and address statement, followed by a single 
location.
    (ii) If the address shown in the ``bottled by'' statement includes 
the State in which distillation occurred, by including a ``bottled by'' 
statement as part of the mandatory name and address statement, followed 
by a single location;
    (iii) By including the name of the State in which original 
distillation occurred immediately adjacent to the class or type 
designation (such as ``Kentucky bourbon whisky''), as long as the 
product was both distilled and aged in that State in conformance with 
the requirements of Sec.  5.143(b); or
    (iv) By including a separate statement, such as ``Distilled in 
[name of State].''
    (2) The appropriate TTB officer may require that the State of 
distillation or other information appear on a label of any whisky 
subject to the requirements of paragraph (f)(1) of this section (and 
may prescribe placement requirements for such information), even if 
that State appears in the name and address statement, if such 
additional information is necessary to negate any misleading or 
deceptive impression that might otherwise be created as regards the 
actual State of distillation.
    (3) In the case of ``light whisky,'' the State name ``Kentucky'' or 
``Tennessee'' may not appear on any label, except as a part of a name 
and address as specified in paragraph (a)(1), (2), or (4) of this 
section.
    (g) Trade or operating names. The name of the person appearing on 
the label may be the trade name or the operating name, as long as it is 
identical to a trade or operating name appearing on the basic permit. 
In the case of a distillation statement for spirits bottled in bond, 
the name or trade name under which the spirits were distilled must be 
shown.


Sec.  5.67   Name and address for domestically bottled distilled 
spirits that were bottled after importation.

    (a) General. This section applies to distilled spirits that were 
bottled after importation. See Sec.  5.68 for name and address 
requirements applicable to imported distilled spirits that were 
imported in a container. See 19 CFR parts 102 and 134 for U.S. Customs 
and Border Protection country of origin marking requirements.
    (b) Distilled spirits bottled after importation in the United 
States. Distilled spirits bottled, without further blending, making, 
preparing, producing, manufacturing, or distilling activities after 
importation, must bear one of the following name and address 
statements:
    (1) The name and address of the bottler, preceded by the words 
``bottled by,'' ``canned by,'' ``packed by,'' or ``filled by'';
    (2) If the distilled spirits were bottled for the person 
responsible for the importation, the words ``imported by and bottled 
(canned, packed, or filled) in the United States for'' (or a similar 
appropriate phrase) followed by the name and address of the principal 
place of business in the United States of the person responsible for 
the importation;
    (3) If the distilled spirits were bottled by the person responsible 
for the importation, the words ``imported by and bottled (canned, 
packed, or filled) in the United States by'' (or a similar appropriate 
phrase) followed by the name and address of the principal place of 
business in the United States of the person responsible for the 
importation.
    (c) Distilled spirits that were subject to blending or other 
production activities after importation. Distilled spirits that, after 
importation in bulk, were blended, made, prepared, produced, 
manufactured or further distilled, may not bear an ``imported by'' 
statement on the label, but must instead be labeled in accordance with 
the rules set forth in Sec.  5.66 for mandatory and optional labeling 
statements.
    (d) Optional statements. In addition to the statements required by 
paragraph (a)(1) of this section, the label may also state the name and 
address of the principal place of business of the foreign producer.
    (e) Form of address. (1) The address consists of the city and State 
where the operation occurred, or the city and State of the principal 
place of business of the person performing the operation. This 
information must be consistent with the information on the basic 
permit. Addresses may, but are not required to, include additional 
information such as street names, counties, zip codes, phone numbers, 
and website addresses.
    (2) If the bottler or processor listed on the name and address 
statement is the actual operator of more than one distilled spirits 
plant engaged in bottling, distilling, or processing

[[Page 7589]]

operations, as applicable, the label may state, immediately following 
the name of the bottler, the addresses of those other plants, in 
addition to the address of the plant at which the distilled spirits 
were bottled. In this situation, the address where the operation 
occurred must be indicated on the label or on the container by 
printing, coding, or other markings.
    (3) The label may provide the address of the bottler's or 
processor's principal place of business, in lieu of the place where the 
bottling, distilling, or other operation occurred, provided that the 
address where the operation occurred is indicated on the label or on 
the container by printing, coding, or other markings.
    (f) Trade or operating names. A trade name may be used if the trade 
name is listed on the basic permit or other qualifying documentation.


Sec.  5.68   Name and address for distilled spirits that were imported 
in a container.

    (a) General. This section applies to distilled spirits that were 
imported in a container, as defined in Sec.  5.1. See Sec.  5.67 for 
name and address requirements applicable to distilled spirits that were 
domestically bottled after importation. See 19 CFR parts 102 and 134 
for U.S. Customs and Border Protection country of origin marking 
requirements.
    (b) Mandatory labeling statement. Distilled spirits imported in 
containers, as defined in Sec.  5.1, must bear a label stating the 
words ``imported by'' or a similar appropriate phrase, followed by the 
name and address of the importer.
    (1) For purposes of this section, the importer is the holder of the 
importer's basic permit who either makes the original customs entry or 
is the person for whom such entry is made, or the holder of the 
importer's basic permit who is the agent, distributor, or franchise 
holder for the particular brand of imported alcohol beverages and who 
places the order abroad.
    (2) The address of the importer must be stated as the city and 
State of the principal place of business and must be consistent with 
the address reflected on the importer's basic permit. Addresses may, 
but are not required to, include additional information such as street 
names, counties, zip codes, phone numbers, and website addresses. The 
postal abbreviation of the State name may be used; for example, 
California may be abbreviated as CA.
    (c) Optional statements. In addition to the statements required by 
paragraph (b)(1) of this section, the label may also state the name and 
address of the principal place of business of the foreign producer.
    (d) Form of address. The ``place'' stated must be the city and 
State, shown on the basic permit or other qualifying document, of the 
premises at which the operations took place; and the place for each 
operation that is designated on the label must be shown.
    (e) Trade or operating names. A trade name may be used if the trade 
name is listed on the basic permit or other qualifying documentation.


Sec.  5.69   Country of origin.

    For U.S. Customs and Border Protection (CBP) rules regarding 
country of origin marking requirements, see the CBP regulations at 19 
CFR parts 102 and 134.


Sec.  5.70   Net contents.

    The requirements of this section apply to the net contents 
statement required by Sec.  5.63.
    (a) General. The volume of spirits in the container must appear on 
a label as a net contents statement. The word ``liter'' may be 
alternatively spelled ``litre'' or may be abbreviated as ``L''. The 
word ``milliliters'' may be abbreviated as ``ml.,'' ``mL.,'' or ``ML.'' 
Net contents in equivalent U.S. customary units of measurement and in 
metric equivalents such as centiliters may appear on a label and, if 
used, must appear in the same field of vision as the metric net 
contents statement.
    (b) Tolerances. (1) The following tolerances are permissible for 
purposes of applying paragraph (a) of this section:
    (i) Errors in measuring. Discrepancies due to errors in measuring 
that occur in filling conducted in compliance with good commercial 
practice;
    (ii) Differences in capacity. Discrepancies due exclusively to 
differences in the capacity of containers, resulting solely from 
unavoidable difficulties in manufacturing the containers so as to be of 
uniform capacity, provided that the discrepancy does not result from a 
container design that prevents the manufacture of containers of an 
approximately uniform capacity; and
    (iii) Differences in atmospheric conditions. Discrepancies in 
measure due to differences in atmospheric conditions in various places, 
including discrepancies resulting from the ordinary and customary 
exposure of alcohol beverage products in containers to evaporation, 
provided that the discrepancy is determined to be reasonable on a case 
by case basis.
    (2) Shortages and overages. A contents shortage in certain of the 
containers in a shipment may not be counted against a contents overage 
in other containers in the same shipment for purposes of determining 
compliance with the requirements of this section.


Sec.  5.71   Neutral spirits and name of commodity.

    (a) In the case of distilled spirits (other than cordials, 
liqueurs, flavored neutral spirits, including flavored vodka, and 
distilled spirits specialty products) manufactured by blending or other 
processing, if neutral spirits were used in the production of the 
spirits, the percentage of neutral spirits so used and the name of the 
commodity from which the neutral spirits were distilled must appear on 
a label. The statement of percentage and the name of the commodity must 
be in substantially the following form: ``__% neutral spirits distilled 
from__ (insert grain, cane products, fruit, or other commodity as 
appropriate)''; or ``__ % neutral spirits (vodka) distilled from __ 
(insert grain, cane products, fruit, or other commodity as 
appropriate)''; or ``__ % (grain) (cane products), (fruit) neutral 
spirits'', or ``__ % grain spirits.''
    (b) In the case of gin manufactured by a process of continuous 
distillation or in the case of neutral spirits, a label on the 
container must state the name of the commodity from which the gin or 
neutral spirits were distilled. The statement of the name of the 
commodity must appear in substantially the following form: ``Distilled 
from grain'' or ``Distilled from cane products''.


Sec.  5.72   Coloring materials.

    The words ``artificially colored'' must appear on a label of any 
distilled spirits product containing synthetic or natural materials 
that primarily contribute color, or when information on a label conveys 
the impression that a color was derived from a source other than the 
actual source of the color, except that:
    (a) If no coloring material other than a color exempt from 
certification under FDA regulations has been added, a truthful 
statement of the source of the color may appear in lieu of the words 
``artificially colored,'' for example, ``Contains Beta Carotene'' or 
``Colored with beet extract.'' See 21 CFR parts 73 and 74 for the list 
of such colors under Food and Drug Administration (FDA) regulations;
    (b) If no coloring material has been added other than one certified 
as suitable for use in foods by the FDA, the words ``(to be filled in 
with name of) certified color added'' or ``Contains Certified Color'' 
may appear in lieu of the words ``artificially colored''; and
    (c) If no coloring material other than caramel has been added, the 
words ``colored with caramel,'' ``contains caramel color,'' or another 
statement

[[Page 7590]]

specifying the use of caramel color, may appear in lieu of the words 
``artificially colored.'' However, no statement of any type is required 
for the use of caramel color in brandy, rum, or Tequila, or in any type 
of whisky other than straight whisky if used at not more than 2.5 
percent by volume of the finished product.
    (d) As provided in Sec.  5.61, the use of FD&C Yellow No. 5, 
carmine, or cochineal extract must be specifically stated on the label 
even if the label also contains a phrase such as ``contains certified 
color'' or ``artificially colored.''


Sec.  5.73   Treatment of whisky or brandy with wood.

    The words ``colored and flavored with wood__ '' (inserting 
``chips,'' ``slabs,'' etc., as appropriate) must appear immediately 
adjacent to, and in the same size of type as, the class and type 
designation under subpart I of this part for whisky and brandy treated, 
in whole or in part, with wood through percolation or otherwise during 
distillation or storage, other than through contact with an oak barrel. 
However, the statement specified in this section is not required in the 
case of brandy treated with an infusion of oak chips in accordance with 
Sec.  5.155(b)(3)(B).


Sec.  5.74   Statements of age, storage, and percentage.

    (a) General. (1) As defined in Sec.  5.1, age is the length of time 
during which, after distillation and before bottling, the distilled 
spirits have been stored in oak barrels. For bourbon whisky, rye 
whisky, wheat whisky, malt whisky, or rye malt whisky, and straight 
whiskies other than straight corn whisky, aging must occur in charred 
new oak barrels.
    (2) If an age statement is used, it is permissible to understate 
the age of a product, but overstatements of age are prohibited. 
However, the age statement may not conflict with the standard of 
identity, if aging is required as part of the standard of identity. For 
example, the standard of identity for straight rye whisky requires that 
the whisky be aged for a minimum of 2 years, so the age statement 
``Aged 1 year,'' would be prohibited for a product designated as 
``straight'' rye whisky, even if the spirits were actually aged for 
more than 2 years, because it is inconsistent with the standard of 
identity.
    (3)The age may be stated in years, months, or days.
    (b) Age statements and percentage of type statements for whisky. 
For all domestic or foreign whiskies that are aged less than 4 years, 
including blends containing a whisky that is aged less than 4 years, an 
age statement and percentage of types of whisky statement is required 
to appear on a label, unless the whisky is labeled as ``bottled in 
bond'' in conformity with Sec.  5.88. For all other whiskies, the 
statements are optional, but if used, they must conform to the 
formatting requirements listed below. Moreover, if the bottler chooses 
to include a statement of age or percentage on the label of a product 
that is 4 years old or more and that contains neutral spirits, the 
statement must appear immediately adjacent to the neutral spirits 
statement required by Sec.  5.70. The following are the allowable 
formats for the age and percentage statements for whisky:
    (1)(i) In the case of whisky, whether or not mixed or blended but 
containing no neutral spirits, the age of the youngest whisky in the 
product. The age statement must appear substantially as follows: ``__ 
years old''; and
    (ii) If a whisky is aged in more than one container, the label may 
optionally indicate the types of oak containers used.
    (2) In the case of whisky containing neutral spirits, whether or 
not mixed or blended, if any straight whisky or other whisky in the 
product is less than 4 years old, the percentage by volume of each such 
whisky and the age of each such whisky (the age of the youngest of the 
straight whiskies or other whiskies if the product contains two or more 
of either). The age and percentage statement for a straight whisky and 
other whisky must appear immediately adjacent to the neutral spirits 
statement required by Sec.  5.70 and must read substantially as 
follows:
    (i) If the product contains only one straight whisky and no other 
whisky: ``__ percent straight whisky __ years old;''
    (ii) If the product contains more than one straight whisky but no 
other whisky: ``__ percent straight whiskies __ years or more old.'' In 
this case the age blank must state the age of the youngest straight 
whisky in the product. However, in lieu of the foregoing statement, the 
following statement may appear on the label: ``__ percent straight 
whisky __ years old, __ percent straight whisky __ years old, and __ 
percent straight whisky __ years old'';
    (iii) If the product contains only one straight whisky and one 
other whisky: ``__ percent straight whisky __ years old, __ percent 
whisky __ years old''; or
    (iv) If the product contains more than one straight whisky and more 
than one other whisky: ``__ percent straight whiskies __ years or more 
old, __ percent whiskies __ years or more old.'' In this case, the age 
blanks must state the age of the youngest straight whisky and the age 
of the youngest other whisky. However, in lieu of the foregoing 
statement, the following statement may appear on the label: ``__ 
percent straight whisky __ years old, percent straight whisky __ years 
old, __ percent whisky __ years old, and __ percent whisky __ years 
old'';
    (3) In the case of an imported rye whisky, wheat whisky, malt 
whisky, or rye malt whisky, a label on the product must state each age 
and percentage in the manner and form that would be required if the 
whisky had been made in the United States;
    (4) In the case of whisky made in the United States and stored in 
reused oak barrels, other than corn whisky and light whisky, in lieu of 
the words ``__ years old'' specified in paragraphs (b)(1) and (b)(2) of 
this section, the period of storage in the reused oak barrels must 
appear on the label as follows: ``stored __ years in reused 
cooperage.''
    (c) Statements of age for rum, brandy, and agave spirits. A 
statement of age on labels of rums, brandies, and agave spirits is 
optional, except that, in the case of brandy (other than immature 
brandies, fruit brandies, marc brandy, pomace brandy, Pisco brandy, and 
grappa brandy, which are not customarily stored in oak barrels) not 
stored in oak barrels for a period of at least 2 years, a statement of 
age must appear on the label. Any statement of age authorized or 
required under this paragraph must appear substantially as follows: 
``__ years old,'' with the blank to be filled in with the age of the 
youngest distilled spirits in the product.
    (d) Statement of storage for grain spirits. In the case of grain 
spirits, the period of storage in oak barrels may appear on a label 
immediately adjacent to the percentage statement required under Sec.  
5.73, for example: ``__ % grain spirits stored __ years in oak 
barrels.''
    (e) Other distilled spirits. (1) Statements regarding age or 
maturity or similar statements or representations on labels for all 
other spirits, except neutral spirits, are permitted only when the 
distilled spirits are stored in an oak barrel and, once dumped from the 
barrel, subjected to no treatment besides mixing with water, filtering, 
and bottling. If batches are made from barrels of spirits of different 
ages, the label may only state the age of the youngest spirits.
    (2) Statements regarding age or maturity or similar statements of 
neutral spirits (except for grain spirits as stated

[[Page 7591]]

in paragraph (c) of this section) are prohibited from appearing on any 
label.
    (f) Other age representations. (1) If a representation that is 
similar to an age or maturity statement permitted under this section 
appears on a label, a statement of age, in a manner that is conspicuous 
and in characters at least half the type size of the representation 
must also appear on each label that carries the representation, except 
in the following cases:
    (i) The use of the word ``old'' or another word denoting age as 
part of the brand name of the product is not deemed to be an age 
representation that requires a statement of age; and
    (ii) Labels of whiskies and brandies (other than immature brandies, 
pomace brandy, marc brandy, Pisco brandy, and grappa brandy) not 
required to bear a statement of age, and rum and agave spirits aged for 
not less than 4 years, may contain general inconspicuous age, maturity 
or similar representations without the label having to bear an age 
statement.
    (2) Distillation dates (which may be an exact date or a year) may 
appear on a label of spirits where the spirits are manufactured solely 
through distillation. A distillation date may only appear if an 
optional or mandatory age statement is used on the label and must 
appear in the same field of vision as the age statement.

Subpart F--Restricted Labeling Statements.


Sec.  5.81   General.

    (a) Application. The labeling practices, statements, and 
representations in this subpart may be used on distilled spirits labels 
only when used in compliance with this subpart. In addition, if any of 
the practices, statements, or representations in this subpart are used 
elsewhere on containers or in packaging, they must comply with the 
requirements of this subpart. For purposes of this subpart:
    (1) The term ``label'' includes all labels on distilled spirits 
containers on which mandatory information may appear, as set forth in 
Sec.  5.61(a), as well as any other label on the container.
    (2) The term ``container'' includes all parts of the distilled 
spirits container, including any part of a distilled spirits container 
on which mandatory information may appear, as well as those parts of 
the container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  5.61(b).
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering or other packaging of such containers used for sale 
at retail, but does not include shipping cartons or cases that are not 
intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of the practices in 
this subpart, the term ``statement or representation'' includes any 
statement, design, device, or representation, and includes pictorial or 
graphic designs or representations as well as written ones. The term 
``statement or representation'' includes explicit and implicit 
statements and representations.

Food Allergen Labeling


Sec.  5.82   Voluntary disclosure of major food allergens.

    (a) Definitions. For purposes of this section, the following terms 
or phrases have the meanings indicated.
    (1) Major food allergen means any of the following:
    (i) Milk, egg, fish (for example, bass, flounder, or cod), 
Crustacean shellfish (for example, crab, lobster, or shrimp), tree nuts 
(for example, almonds, pecans, or walnuts), wheat, peanuts, and 
soybeans; or
    (ii) A food ingredient that contains protein derived from a food 
specified in paragraph (a)(1)(i) of this section, except:
    (A) Any highly refined oil derived from a food specified in 
paragraph (a)(1)(i) of this section and any ingredient derived from 
such highly refined oil; or
    (B) A food ingredient that is exempt from major food allergen 
labeling requirements pursuant to a petition for exemption approved by 
the Food and Drug Administration (FDA) under 21 U.S.C. 343(w)(6) or 
pursuant to a notice submitted to FDA under 21 U.S.C. 343(w)(7), 
provided that the food ingredient meets the terms or conditions, if 
any, specified for that exemption.
    (2) Name of the food source from which each major food allergen is 
derived means the name of the food as listed in paragraph (a)(1)(i) of 
this section, except that:
    (i) In the case of a tree nut, it means the name of the specific 
type of nut (for example, almonds, pecans, or walnuts); and
    (ii) In the case of Crustacean shellfish, it means the name of the 
species of Crustacean shellfish (for example, crab, lobster, or 
shrimp); and
    (iii) The names ``egg'' and ``peanuts,'' as well as the names of 
the different types of tree nuts, may be expressed in either the 
singular or plural form, and the name ``soy,'' ``soybean,'' or ``soya'' 
may be used instead of ``soybeans.''
    (b) Voluntary labeling standards. Major food allergens used in the 
production of a distilled spirits product may, on a voluntary basis, be 
declared on any label affixed to the container. However, if any one 
major food allergen is voluntarily declared, all major food allergens 
used in production of the distilled spirits product, including major 
food allergens used as fining or processing agents, must be declared, 
except when covered by a petition for exemption approved by the 
appropriate TTB officer under Sec.  5.83. The major food allergens 
declaration must consist of the word ``Contains'' followed by a colon 
and the name of the food source from which each major food allergen is 
derived (for example, ``Contains: egg'').


Sec.  5.83   Petitions for exemption from major food allergen labeling.

    (a) Submission of petition. Any person may petition the appropriate 
TTB officer to exempt a particular product or class of products from 
the labeling requirements of Sec.  5.82. The burden is on the 
petitioner to provide scientific evidence (as well as the analytical 
method used to produce the evidence) that demonstrates that the 
finished product or class of products, as derived by the method 
specified in the petition, either:
    (1) Does not cause an allergic response that poses a risk to human 
health; or
    (2) Does not contain allergenic protein derived from one of the 
foods identified in Sec.  5.82(a)(1)(i), even though a major food 
allergen was used in production.
    (b) Decision on petition. TTB will approve or deny a petition for 
exemption submitted under paragraph (a) of this section in writing 
within 180 days of receipt of the petition. If TTB does not provide a 
written response to the petitioner within that 180-day period, the 
petition will be deemed denied, unless an extension of time for 
decision is mutually agreed upon by the appropriate TTB officer and the 
petitioner. TTB may confer with the Food and Drug Administration (FDA) 
on petitions for exemption, as appropriate and as FDA resources permit. 
TTB may require the submission of product samples and other additional 
information in support of a petition; however, unless required by TTB, 
the submission of samples or additional information by the petitioner 
after submission of the petition will be treated as the withdrawal of 
the initial petition and the submission of a new petition. An approval 
or denial under this section will constitute final agency action.

[[Page 7592]]

    (c) Resubmission of a petition. After a petition for exemption is 
denied under this section, the petitioner may resubmit the petition 
along with supporting materials for reconsideration at any time. TTB 
will treat this submission as a new petition.
    (d) Availability of information--(1) General. TTB will promptly 
post to its website (https://www.ttb.gov) all petitions received under 
this section, as well as TTB's responses to those petitions. Any 
information submitted in support of the petition that is not posted to 
the TTB website will be available to the public pursuant to the Freedom 
of Information Act, at 5 U.S.C. 552, except where a request for 
confidential treatment is granted under paragraph (d)(2) of this 
section.
    (2) Requests for confidential treatment of business information. A 
person who provides trade secrets or other commercial or financial 
information in connection with a petition for exemption under this 
section may request that TTB give confidential treatment to that 
information. A failure to request confidential treatment at the time 
the information in question is submitted to TTB will constitute a 
waiver of confidential treatment. A request for confidential treatment 
of information under this section must conform to the following 
standards:
    (i) The request must be in writing;
    (ii) The request must clearly identify the information to be kept 
confidential;
    (iii) The request must relate to information that constitutes trade 
secrets or other confidential commercial or financial information 
regarding the business transactions of an interested person, the 
disclosure of which would cause substantial harm to the competitive 
position of that person;
    (iv) The request must set forth the reasons why the information 
should not be disclosed, including the reasons why the disclosure of 
the information would prejudice the competitive position of the 
interested person; and
    (v) The request must be supported by a signed statement by the 
interested person, or by an authorized officer or employee of that 
person, certifying that the information in question is a trade secret 
or other confidential commercial or financial information and that the 
information is not already in the public domain.

Production Claims


Sec.  5.84   Use of the term ``organic.''

    Use of the term ``organic'' is permitted if any such use complies 
with United States Department of Agriculture (USDA) National Organic 
Program rules (7 CFR part 205), as interpreted by the USDA.


Sec.  5.85   [Reserved]


Sec.  5.86   [Reserved]

Other Label Terms


Sec.  5.87   ``Barrel Proof'' and similar terms.

    (a) The term ``barrel proof'' or ``cask strength'' may be used to 
refer to distilled spirits stored in wood barrels only when the 
bottling proof is not more than two degrees lower than the proof of the 
spirits when the spirits are dumped from the barrels.
    (b) The term ``original proof,'' ``original barrel proof,'' 
``original cask strength,'' or ``entry proof'' may be used only if the 
distilled spirits were stored in wooden barrels and the proof of the 
spirits entered into the barrel and the proof of the bottled spirits 
are the same.


Sec.  5.88   Bottled in bond.

    (a) The term ``bond,'' ``bonded,'' ``bottled in bond,'' or ``aged 
in bond,'' or phrases containing these or synonymous terms, may be used 
(including as part of the brand name) only if the distilled spirits 
are:
    (1) Composed of the same kind (type, if one is applicable to the 
spirits, otherwise class) of spirits distilled from the same class of 
materials;
    (2) Distilled in the same distilling season (as defined in Sec.  
5.1) by the same distiller at the same distillery.
    (3) Stored for at least 4 years in wooden containers wherein the 
spirits have been in contact with the wood surface, except for vodka, 
which must be stored for at least 4 years in wooden containers coated 
or lined with paraffin or other substance which will preclude contact 
of the spirits with the wood surface, and except for gin, which must be 
stored in paraffin-lined or unlined wooden containers for at least 4 
years;
    (4) Unaltered from their original condition or character by the 
addition or subtraction of any substance other than by filtration, 
chill proofing, or other physical treatments (which do not involve the 
addition of any substance which will remain in the finished product or 
result in a change in class or type);
    (5) Reduced in proof by the addition of only pure water to 50 
percent alcohol by volume (100 degrees of proof); and
    (6) Bottled at 50 percent alcohol by volume (100 degrees of proof).
    (b) Imported spirits labeled as ``bottled in bond'' or other 
synonymous term described above must be manufactured in accordance with 
paragraphs (a)(1) through (6) of this section and may only be so 
labeled if the laws and regulations of the country in which the spirits 
are manufactured authorize the bottling of spirits in bond and require 
or specifically authorize such spirits to be so labeled. The ``bottled 
in bond'' or synonymous statement must be immediately followed, in the 
same font and type size, by the name of the country under whose laws 
and regulations such distilled spirits were so bottled.
    (c) Domestically manufactured spirits labeled as ``bottled in 
bond'' or with some other synonymous statement must bear the real name 
of the distillery or the trade name under which the distiller distilled 
and warehoused the spirits, and the number of the distilled spirits 
plant in which distilled, and the number of the distilled spirits plant 
in which bottled. The label may also bear the name or trade name of the 
bottler.


Sec.  5.89   Multiple distillation claims.

    (a) Truthful statements about the number of distillations, such as 
``double distilled,'' ``distilled three times,'' or similar terms to 
convey multiple distillations, may be used if they are truthful 
statements of fact. For the purposes of this section only, the term 
``distillation'' means a single run through a pot still or a single run 
through a column of a column (reflux) still. For example, if a column 
still has three separate columns, one complete additional run through 
the system would constitute three additional distillations.
    (b) The number of distillations may be understated but may not be 
overstated.


Sec.  5.90   Terms related to Scotland.

    (a) The words ``Scotch,'' ``Scots,'' ``Highland,'' or 
``Highlands,'' and similar words connoting, indicating, or commonly 
associated with Scotland, may be used to designate only distilled 
spirits wholly manufactured in Scotland, except that the term ``Scotch 
whisky'' may appear in the designation for a flavored spirit 
(``Flavored Scotch Whisky'') or in a truthful statement of composition 
(``Scotch whisky with natural flavors'') where the base distilled 
spirit meets the requirements for a Scotch whisky designation, 
regardless of where the finished product is manufactured.
    (b) In accordance with Sec.  5.127, statements relating to 
government supervision may appear on Scotch whisky containers only if 
such labeling statements are required or specifically authorized by the 
applicable regulations of the United Kingdom.

[[Page 7593]]

Sec.  5.91   Use of the term ``pure.''

    Distilled spirits labels, containers, or packaging may not bear the 
word ``pure'' unless it:
    (a) Refers to a particular ingredient used in the production of the 
distilled spirits, and is a truthful representation about that 
ingredient;
    (b) Is part of the bona fide name of a permittee or retailer for 
which the distilled spirits are bottled; or
    (c) Is part of the bona fide name of the permittee that bottled the 
distilled spirits.

Subpart G--Prohibited Labeling Practices


Sec.  5.101   General.

    (a) Application. The prohibitions set forth in this subpart apply 
to any distilled spirits label, container, or packaging. For purposes 
of this subpart:
    (1) The term ``label'' includes all labels on distilled spirits 
containers on which mandatory information may appear, as set forth in 
Sec.  5.61(a), as well as any other label on the container;
    (2) The term ``container'' includes all parts of the distilled 
spirits container, including any part of a distilled spirits container 
on which mandatory information may appear, as well as those parts of 
the container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  5.61(b); and
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering or other packaging of such containers used for sale 
at retail, but does not include shipping cartons or cases that are not 
intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of the practices in 
this subpart, the term ``statement or representation'' includes any 
statement, design, device, or representation, and includes pictorial or 
graphic designs or representations as well as written ones. The term 
``statement or representation'' includes explicit and implicit 
statements and representations.


Sec.  5.102   False or untrue statements.

    Distilled spirits labels, containers, or packaging may not contain 
any statement or representation that is false or untrue in any 
particular.


Sec.  5.103   Obscene or indecent depictions.

    Distilled spirits labels, containers, or packaging may not contain 
any statement, design, device, picture, or representation that is 
obscene or indecent.

Subpart H--Labeling Practices That Are Prohibited If They Are 
Misleading


Sec.  5.121   General.

    (a) Application. The labeling practices that are prohibited if 
misleading set forth in this subpart apply to any distilled spirits 
label, container, or packaging. For purposes of this subpart:
    (1) The term ``label'' includes all labels on distilled spirits 
containers on which mandatory information may appear, as set forth in 
Sec.  5.61(a), as well as any other label on the container;
    (2) The term ``container'' includes all parts of the distilled 
spirits container, including any part of a distilled spirits container 
on which mandatory information may appear, as well as those parts of 
the container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  5.61(b); and
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering or other packaging of such containers used for sale 
at retail, but does not include shipping cartons or cases that are not 
intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of this subpart, the 
term ``statement or representation'' includes any statement, design, 
device, or representation, and includes pictorial or graphic designs or 
representations as well as written ones. The term ``statement or 
representation'' includes explicit and implicit statements and 
representations.


Sec.  5.122   Misleading statements or representations.

    (a) General prohibition. Distilled spirits labels, containers, or 
packaging may not contain any statement or representation, irrespective 
of falsity, that is misleading to consumers as to the age, origin, 
identity, or other characteristics of the distilled spirits, or with 
regard to any other material factor.
    (b) Ways in which statements or representations may be found to be 
misleading. (1) A statement or representation is prohibited, 
irrespective of falsity, if it directly creates a misleading 
impression, or if it does so indirectly through ambiguity, omission, 
inference, or by the addition of irrelevant, scientific, or technical 
matter. For example, an otherwise truthful statement may be misleading 
because of the omission of material information, the disclosure of 
which is necessary to prevent the statement from being misleading.
    (2) All claims, whether implicit or explicit, must have a 
reasonable basis in fact. Any claim on distilled spirits labels, 
containers, or packaging that does not have a reasonable basis in fact, 
or cannot be adequately substantiated upon the request of the 
appropriate TTB officer, is considered misleading.


Sec.  5.123   Guarantees.

    Distilled spirits labels, containers, or packaging may not contain 
any statement relating to guarantees if the appropriate TTB officer 
finds it is likely to mislead the consumer. However, money-back 
guarantees are not prohibited.


Sec.  5.124   Disparaging statements.

    (a) General. Distilled spirits labels, containers, or packaging may 
not contain any false or misleading statement that explicitly or 
implicitly disparages a competitor's product.
    (b) Truthful and accurate comparisons. This section does not 
prevent truthful and accurate comparisons between products (such as, 
``Our liqueur contains more strawberries than Brand X'') or statements 
of opinion (such as, ``We think our rum tastes better than any other 
distilled spirits on the market'').


Sec.  5.125   Tests or analyses.

    Distilled spirits labels, containers, or packaging may not contain 
any statement or representation of or relating to analyses, standards, 
or tests, whether or not it is true, that is likely to mislead the 
consumer. An example of such a misleading statement is ``tested and 
approved by our research laboratories'' if the testing and approval 
does not in fact have any significance.


Sec.  5.126   Depictions of government symbols.

    Representations of the armed forces and flags. Distilled spirits 
labels, containers, or packaging may not show an image of any 
government's flag or any representation related to the armed forces of 
the United States if the representation, standing alone or considered 
together with any additional language or symbols on the label, creates 
a false or misleading impression that the product was endorsed by, made 
by, used by, or made under the supervision of, the government 
represented by that flag or by the armed forces of the United States. 
This section does not prohibit the use of a flag as part of a claim of 
American origin or another country of origin.

[[Page 7594]]

Sec.  5.127   [Reserved]


Sec.  5.128   [Reserved]


Sec.  5.129   Health-related statements.

    (a) Definitions. When used in this section, the following terms 
have the meaning indicated:
    (1) Health-related statement means any statement related to health 
(other than the warning statement required under part 16 of this 
chapter) and includes statements of a curative or therapeutic nature 
that, expressly or by implication, suggest a relationship between the 
consumption of alcohol, distilled spirits, or any substance found 
within the distilled spirits product, and health benefits or effects on 
health. The term includes both specific health claims and general 
references to alleged health benefits or effects on health associated 
with the consumption of alcohol, distilled spirits, or any substance 
found within the distilled spirits, as well as health-related 
directional statements. The term also includes statements and claims 
that imply that a physical or psychological sensation results from 
consuming the distilled spirits, as well as statements and claims of 
nutritional value (for example, statements of vitamin content).
    (2) Specific health claim means a type of health-related statement 
that, expressly or by implication, characterizes the relationship of 
distilled spirits, alcohol, or any substance found within the distilled 
spirits, to a disease or health-related condition. Implied specific 
health claims include statements, symbols, vignettes, or other forms of 
communication that suggest, within the context in which they are 
presented, that a relationship exists between alcohol, distilled 
spirits, or any substance found within the distilled spirits, and a 
disease or health-related condition.
    (3) Health-related directional statement means a type of health-
related statement that directs or refers consumers to a third party or 
other source for information regarding the effects on health of 
distilled spirits or alcohol consumption.
    (b) Rules for labeling--(1) Health-related statements. In general, 
distilled spirits may not contain any health-related statement that is 
untrue in any particular or tends to create a misleading impression as 
to the effects on health of alcohol consumption. TTB will evaluate such 
statements on a case-by-case basis and may require as part of the 
health-related statement a disclaimer or some other qualifying 
statement to dispel any misleading impression conveyed by the health-
related statement.
    (2) Specific health claims. (i) TTB will consult with the Food and 
Drug Administration (FDA), as needed, on the use of a specific health 
claim on the distilled spirits. If FDA determines that the use of such 
a labeling claim is a drug claim that is not in compliance with the 
requirements of the Federal Food, Drug, and Cosmetic Act, TTB will not 
approve the use of that specific health claim on the distilled spirits.
    (ii) TTB will approve the use of a specific health claim on a 
distilled spirits label only if the claim is truthful and adequately 
substantiated by scientific or medical evidence; is sufficiently 
detailed and qualified with respect to the categories of individuals to 
whom the claim applies; adequately discloses the health risks 
associated with both moderate and heavier levels of alcohol 
consumption; and outlines the categories of individuals for whom any 
levels of alcohol consumption may cause health risks. This information 
must appear as part of the specific health claim.
    (3) Health-related directional statements. A health-related 
directional statement is presumed misleading unless it:
    (i) Directs consumers in a neutral or other non-misleading manner 
to a third party or other source for balanced information regarding the 
effects on health of distilled spirits or alcohol consumption; and
    (ii)(A) Includes as part of the health-related directional 
statement the following disclaimer: ``This statement should not 
encourage you to drink or to increase your alcohol consumption for 
health reasons;'' or
    (B) Includes as part of the health-related directional statement 
some other qualifying statement that the appropriate TTB officer finds 
is sufficient to dispel any misleading impression conveyed by the 
health-related directional statement.


Sec.  5.130   Appearance of endorsement.

    (a) General. Distilled spirits labels, containers, or packaging may 
not include the name, or the simulation or abbreviation of the name, of 
any living individual of public prominence, or an existing private or 
public organization, or any graphic, pictorial, or emblematic 
representation of the individual or organization, if its use is likely 
to lead a consumer to falsely believe that the product has been 
endorsed, made, or used by, or produced for, or under the supervision 
of, or in accordance with the specifications of, such individual or 
organization. This section does not prohibit the use of such names 
where the individual or organization has provided authorization for 
their use.
    (b) Disclaimers. Statements or other representations do not violate 
this section if, taken as a whole, they create no misleading impression 
as to an implied endorsement either because of the context in which 
they are presented or because of the use of an adequate disclaimer.
    (c) Exception. This section does not apply to the use of the name 
of any person engaged in business as a distiller, rectifier 
(processor), blender, or other producer, or as an importer, wholesaler, 
retailer, bottler, or warehouseman of distilled spirits. This section 
also does not apply to the use by any person of a trade or brand name 
that is the name of any living individual of public prominence or 
existing private or public organization, provided such trade or brand 
name was used by the industry member or its predecessors in interest 
prior to August 29, 1935.

Subpart I--Standards of Identity for Distilled Spirits


Sec.  5.141   The standards of identity in general.

    (a) General. Distilled spirits are divided, for labeling purposes, 
into classes, which are further divided into specific types. As set 
forth in Sec.  5.63, a distilled spirits product label must bear the 
appropriate class, type or other designation. The standards that define 
the classes and types are known as the ``standards of identity.'' The 
classes and types of distilled spirits set forth in this subpart apply 
only to distilled spirits for beverage or other nonindustrial purposes.
    (b) Rules. (1) Unless otherwise specified, when a standard of 
identity states that a mash is of a particular ingredient (such as 
``fermented mash of grain''), the mash must be made entirely of that 
ingredient without the addition of other fermentable ingredients.
    (2) Some distilled spirits products may conform to the standards of 
identity of more than one class. Such products may be designated with 
any single class designation defined in this subpart to which the 
products conform.
    (c) Designating with both class and type. If a product is 
designated with both the class and the type, the type designation must 
be as conspicuous as the class designation, and must appear in the same 
field of vision.
    (d) Words in a designation. All words in a designation must be 
similarly conspicuous and must appear together.

[[Page 7595]]

Sec.  5.142   Neutral spirits or alcohol.

    (a) The class neutral spirits. ``Neutral spirits'' or ``alcohol'' 
are distilled spirits distilled from any suitable material at or above 
95 percent alcohol by volume (190[deg] proof), and, if bottled, bottled 
at not less than 40 percent alcohol by volume (80[deg] proof). Neutral 
spirits other than the type ``grain spirits'' may be designated as 
``neutral spirits'' or ``alcohol'' on a label. Neutral spirits (other 
than the type ``grain spirits'') may not be aged in wood barrels at any 
time.
    (b) Types. The following chart lists the types of neutral spirits 
and the rules that apply to the type designation.

------------------------------------------------------------------------
           Type designation                        Standards
------------------------------------------------------------------------
(1) Vodka............................  Neutral spirits which may be
                                        treated with up to two grams per
                                        liter of sugar and up to one
                                        gram per liter of citric acid.
                                        Products to be labeled as vodka
                                        may not be aged or stored in
                                        wood barrels at any time except
                                        when stored in paraffin-lined
                                        wood barrels and labeled as
                                        bottled in bond pursuant to Sec.
                                          5.88. Vodka treated and
                                        filtered with not less than one
                                        ounce of activated carbon or
                                        activated charcoal per 100 wine
                                        gallons of spirits may be
                                        labeled as ``charcoal
                                        filtered.'' Addition of any
                                        other flavoring or blending
                                        materials changes the
                                        classification to flavored vodka
                                        or to a distilled spirits
                                        specialty product, as
                                        appropriate. Vodka must be
                                        designated on the label as
                                        ``neutral spirits,''
                                        ``alcohol,'' or ``vodka''.
(2) Grain spirits....................  Neutral spirits distilled from a
                                        fermented mash of grain and
                                        stored in oak barrels. ``Grain
                                        spirits'' must be designated as
                                        such on the label. Grain spirits
                                        may not be designated as
                                        ``neutral spirits'' or
                                        ``alcohol'' on the label.
------------------------------------------------------------------------

Sec.  5.143   Whisky.

    (a) The class whisky. ``Whisky'' or ``whiskey'' is distilled 
spirits that is an alcoholic distillate from a fermented mash of any 
grain distilled at less than 95 percent alcohol by volume (190[deg] 
proof) having the taste, aroma, and characteristics generally 
attributed to whisky, stored in oak barrels (except that corn whisky 
need not be so stored), and bottled at not less than 40 percent alcohol 
by volume (80[deg] proof), and also includes mixtures of such 
distillates for which no specific standards of identity are prescribed.
    (b) Label designations. The word whisky may be spelled as either 
``whisky'' or ``whiskey''. The place, State, or region where the whisky 
was distilled may appear as part of the designation on the label if the 
distillation and any required aging took place in that location (e.g., 
``New York Bourbon Whisky'' must be distilled and aged in the State of 
New York); however, blending and bottling need not have taken place in 
the same place, State, or region. However, if any whisky is made 
partially from whisky distilled in a country other than that indicated 
by the type designation, the label must indicate the percentage of such 
whisky and the country where that whisky was distilled. Additionally, 
the label of whisky that does not meet one of the standards for 
specific types of whisky and that is comprised of components distilled 
in more than one country must contain a statement of composition 
indicating the country of origin of each component (such as ``Whisky--
50% from Japan, 50% from the United States''). The word ``bourbon'' may 
not be used to describe any whisky or whisky-based distilled spirits 
not distilled and aged in the United States. The whiskies defined in 
paragraphs (c)(2) through (6) and (10) through (14) of this section are 
distinctive products of the United States and must have the country of 
origin stated immediately adjacent to the type designation if it is 
distilled outside of the United States, or the whisky designation must 
be proceeded by the term ``American type'' if the country of origin 
appears elsewhere on the label. For example, ``Brazilian Corn Whisky,'' 
``Rye Whisky distilled in Sweden,'' and ``Blended Whisky--Product of 
Japan'' are statements that meet this country of origin requirement. 
``Light whisky'', ``Blended light whisky'', and ``Whisky distilled from 
bourbon (rye, wheat, malt, rye malt, or other named grain) mash'' may 
only be produced in the United States.
    (c) Types of whisky. The following tables set out the designations 
for whisky. Table 1 sets forth the standards for whisky that are 
defined based on production, storage, and processing standards, while 
Table 2 sets forth rules for the types of whisky that are defined as 
distinctive products of certain foreign countries. For the whiskies 
listed in Table 1, a domestic whisky may be labeled with the 
designation listed, when it complies with the production standards in 
the subsequent columns. The ``source'' column indicates the source of 
the grain mash used to make the whisky. The ``distillation proof'' 
indicates the allowable distillation proof for that type. The 
``storage'' column indicates the type of packages (barrels) in which 
the spirits must be stored and limits for the proof of the spirits when 
entering the packages. The ``neutral spirits permitted'' column 
indicates whether neutral spirits may be used in the product in their 
original state (and not as vehicles for flavoring materials), and if 
so, how much may be used. The ``harmless coloring, flavoring, blending 
materials permitted'' column indicates whether harmless coloring, 
flavoring, or blending materials, other than neutral spirits in their 
original form, described in Sec.  5.142, may be used in the product. 
The use of the word ``straight'' is a further designation of a type, 
and is optional.

                               Table 1 to Paragraph (c)--Types of Whisky and Production, Storage, and Processing Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    Allowable coloring,
                Type                         Source            Distillation proof           Storage            Neutral spirits      flavoring, blending
                                                                                                                  permitted         materials permitted
--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Whisky, which may be used as     Fermented grain mash..  Less than 190[deg]....  Oak barrels with no    No...................  Yes.
 the designation for any of the                                                       minimum time
 type designations under the class                                                    requirement.
 ``whisky,'' or may be used as the
 designation if the whisky does not
 meet one of the type designations
 but satisfies the class
 designation.

[[Page 7596]]

 
(2) Bourbon Whisky, Rye Whisky,      Fermented mash of not   160[deg] or less......  Charred new oak        No...................  Yes, except for
 Wheat Whisky, Malt Whisky, Rye       less than 51%,                                  barrels at 125[deg]                           bourbon whisky.
 Malt Whisky, or [name of other       respectively: Corn,                             or less.
 grain] Whisky.                       Rye, Wheat, Malted
                                      Barley, Malted Rye
                                      Grain, [Other grain].
(3) Corn Whisky. (Whisky conforming  Fermented mash of not   160[deg] or less......  Required only if age   No...................  Yes.
 to this standard must be             less than 80% corn.                             is claimed on the
 designated as ``corn whisky.'').                                                     label. If stored,
                                                                                      must be stored at
                                                                                      125[deg] or less in
                                                                                      used or uncharred
                                                                                      new oak barrels.
(4) Straight Whisky................  Fermented mash of less  160[deg] or less......  Charred new oak        No...................  No.
                                      than 51% corn, rye,                             barrels at 125[deg]
                                      wheat, malted barley,                           or less for a
                                      malted rye [or other]                           minimum of 2 years.
                                      grain. (Includes
                                      mixtures of straight
                                      whiskies made in the
                                      same state.).
(5) Straight Bourbon Whisky,         Fermented mash of not   160[deg] or less......  Charred new oak        No...................  No.
 Straight Rye Whisky, Straight        less than 51%,                                  barrels at 125[deg]
 Wheat Whisky, Straight Malt          respectively: Corn,                             or less for a
 Whisky, or Straight Rye Malt         Rye, Wheat, Malted                              minimum of 2 years.
 Whisky.                              Barley, Malted Rye
                                      Grain.
(6) Straight Corn Whisky...........  Fermented mash of not   160[deg] or less......  125[deg] or less in    No...................  No.
                                      less than 80% corn.                             used or uncharred
                                                                                      new oak barrels for
                                                                                      a minimum of 2 years.
(7) Whisky distilled from Bourbon/   Fermented mash of not   160[deg] or less......  Used oak barrels.....  No...................  Yes.
 Rye/Wheat/Malt/Rye Malt/[Name of     less than 51%,
 other grain] mash.                   respectively: Corn,
                                      Rye, Wheat, Malted
                                      Barley, Malted Rye
                                      Grain, [Other grain].
(8) Light Whisky...................  Fermented grain mash..  More than 160[deg]....  Used or uncharred new  No...................  Yes.
                                                                                      oak barrels.
(9) Blended Light Whisky (Light      Light whisky blended    Blend.................  Will contain a blend.  No...................  Yes.
 Whisky--a blend).                    with less than 20%
                                      Straight Whisky on a
                                      proof gallon basis.
(10) Blended Whisky (Whisky--a       At least 20% Straight   160[deg] or less......  Will contain a blend   Maximum of 80% on a    Yes.
 blend).                              Whisky on a proof                               of spirits, some       proof gallon basis.
                                      gallon basis plus                               stored and some not
                                      Whisky or Neutral                               stored.
                                      Spirits alone or in
                                      combination.
(11) Blended Bourbon Whisky,         At least 51% on a       Blend.................  Will contain a blend   Maximum of 49% on a    Yes.
 Blended Rye Whisky, Blended Wheat    proof gallon basis                              of spirits, some       proof gallon basis.
 Whisky, Blended Malt Whisky,         of: Straight Bourbon,                           stored and some not
 Blended Rye Malt Whisky, Blended     Rye, Wheat, Malt, Rye                           stored.
 Corn Whisky (or Whisky--a blend).    Malt, or Corn Whisky;
                                      the rest comprised of
                                      Whisky or Neutral
                                      Spirits alone or in
                                      combination.
(12) Blend of Straight Whiskies      Mixture of Straight     160[deg] or less......  Will contain a blend   No, except as part of  Yes.
 (Blended Straight Whiskies).         Whiskies that does                              of spirits which       a flavor.
                                      not conform to                                  were aged at least 2
                                      ``Straight Whisky''.                            years.
(13) Blended Straight Bourbon        Mixture of Straight     160[deg] or less......  Will contain a blend   No, except as part of  Yes.
 Whiskies, Blended Straight Rye       Whiskies of the same                            of spirits which       a flavor.
 Whiskies, Blended Straight Wheat     named type produced                             were aged at least 2
 Whiskies, Blended Straight Malt      in different states                             years.
 Whiskies, Blended Straight Rye       or produced in the
 Malt Whiskies, Blended Straight      same state but
 Corn Whiskies, (or a blend of        contains coloring,
 straight whiskies).                  flavoring or blending
                                      material.
(14) Spirit Whisky.................  Mixture of Neutral      Blend.................  Will contain a blend   Maximum of 95% on a    Yes.
                                      Spirits and 5% or                               of spirits, some       proof gallon basis.
                                      more on a proof                                 stored and some not
                                      gallon basis of:                                stored.
                                      Whisky or Straight
                                      Whisky or a
                                      combination of both.
                                      The Straight Whisky
                                      component must be
                                      less than 20% on a
                                      proof gallon basis.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 7597]]


 Table 2 to Paragraph (c)--Types of Whisky That Are Distinctive Products
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(16) Scotch whisky...................  Whisky which is a distinctive
                                        product of Scotland,
                                        manufactured in Scotland in
                                        compliance with the laws of the
                                        United Kingdom regulating the
                                        manufacture of Scotch whisky for
                                        consumption in the United
                                        Kingdom: Provided, That if such
                                        product is a mixture of
                                        whiskies, such mixture is
                                        ``blended Scotch whisky'' or
                                        ``Scotch whisky--a blend''.
(17) Irish whisky....................  Whisky which is a distinctive
                                        product of Ireland, manufactured
                                        either in the Republic of
                                        Ireland or in Northern Ireland,
                                        in compliance with their laws
                                        regulating the manufacture of
                                        Irish whisky for home
                                        consumption: Provided, That if
                                        such product is a mixture of
                                        whiskies, such mixture is
                                        ``blended Irish whisky'' or
                                        ``Irish whisky--a blend''.
(18) Canadian whisky.................  Whisky which is a distinctive
                                        product of Canada, manufactured
                                        in Canada in compliance with the
                                        laws of Canada regulating the
                                        manufacture of Canadian whisky
                                        for consumption in Canada:
                                        Provided, That if such product
                                        is a mixture of whiskies, such
                                        mixture is ``blended Canadian
                                        whisky'' or ``Canadian whisky--a
                                        blend''.
------------------------------------------------------------------------

Sec.  5.144   Gin.

    (a) The class gin. ``Gin'' is distilled spirits made by original 
distillation from mash, or by redistillation of distilled spirits, or 
by mixing neutral spirits, with or over juniper berries and, 
optionally, with or over other aromatics, or with or over extracts 
derived from infusions, percolations, or maceration of such materials, 
and includes mixtures of gin and neutral spirits. It must derive its 
main characteristic flavor from juniper berries and be bottled at not 
less than 40 percent alcohol by volume (80[deg] proof). Gin may be aged 
in oak containers.
    (b) Distilled gin. Gin made exclusively by original distillation or 
by redistillation may be further designated as ``distilled,'' ``Dry,'' 
``London,'' ``Old Tom'' or some combination of these four terms.


Sec.  5.145   Brandy.

    (a) The class brandy. ``Brandy'' is spirits that are distilled from 
the fermented juice, mash, or wine of fruit, or from the residue 
thereof, distilled at less than 95 percent alcohol by volume (190[deg] 
proof) having the taste, aroma, and characteristics generally 
attributed to the product, and bottled at not less than 40 percent 
alcohol by volume (80[deg] proof).
    (b) Label designations. Brandy conforming to one of the type 
designations must be designated with the type name or specific 
designation specified in the requirements for that type. The term 
``brandy'' without further qualification (such as ``peach'' or 
``marc'') may only be used as a designation on labels of grape brandy 
as defined in paragraph (c)(1) of this section. Brandy conforming to 
one of the type designations defined in paragraphs (c)(1) through (12) 
of this section must be designated on the label with the type name 
unless a specific designation is included in the requirements for that 
type. Brandy, or mixtures thereof, not conforming to any of the types 
defined in this section must be designated on the label as ``brandy'' 
followed immediately by a truthful and adequate statement of 
composition.
    (c) Types. Paragraphs (c)(1) through (12) of this section set out 
the types of brandy and the standards for each type.

------------------------------------------------------------------------
                 Type                              Standards
------------------------------------------------------------------------
(1) Fruit brandy.....................  Brandy distilled solely from the
                                        fermented juice or mash of
                                        whole, sound, ripe fruit, or
                                        from standard grape or other
                                        fruit wine, with or without the
                                        addition of not more than 20
                                        percent by weight of the pomace
                                        of such juice or wine, or 30
                                        percent by volume of the lees of
                                        such wine, or both (calculated
                                        prior to the addition of water
                                        to facilitate fermentation or
                                        distillation). Fruit brandy
                                        includes mixtures of such brandy
                                        with not more than 30 percent
                                        (calculated on a proof gallon
                                        basis) of lees brandy. Fruit
                                        brandy derived solely from
                                        grapes and stored for at least 2
                                        years in oak containers must be
                                        designated ``grape brandy'' or
                                        ``brandy.'' Grape brandy that
                                        has been stored in oak barrels
                                        for fewer than 2 years must be
                                        designated ``immature grape
                                        brandy'' or ``immature brandy.''
                                        Fruit brandy, other than grape
                                        brandy, derived from one variety
                                        of fruit, must be designated by
                                        the word ``brandy'' qualified by
                                        the name of such fruit (for
                                        example, ``peach brandy''),
                                        except that ``apple brandy'' may
                                        be designated ``applejack,''
                                        ``plum brandy'' may be
                                        designated ``Slivovitz,'' and
                                        ``cherry brandy'' may be
                                        designated ``Kirschwasser.''
                                        Fruit brandy derived from more
                                        than one variety of fruit must
                                        be designated as ``fruit
                                        brandy'' qualified by a truthful
                                        and adequate statement of
                                        composition, for example ``Fruit
                                        brandy distilled from
                                        strawberries and blueberries.''
(2) Cognac or ``Cognac (grape)         Grape brandy distilled
 brandy''.                              exclusively in the Cognac region
                                        of France, which is entitled to
                                        be so designated by the laws and
                                        regulations of the French
                                        government.
(3) Armagnac.........................  Grape brandy distilled
                                        exclusively in France in
                                        accordance with the laws and
                                        regulations of France regulating
                                        the manufacture of Armagnac for
                                        consumption in France.
(4) Brandy de Jerez..................  Grape brandy distilled
                                        exclusively in Spain in
                                        accordance with the laws and
                                        regulations of Spain regulating
                                        the manufacture of Brandy de
                                        Jerez for consumption in Spain.
(5) Calvados.........................  Apple brandy distilled
                                        exclusively in France in
                                        accordance with the laws and
                                        regulations of France regulating
                                        the manufacture of Calvados for
                                        consumption in France.
(6) Pisco............................  Grape brandy distilled in Peru or
                                        Chile in accordance with the
                                        laws and regulations of the
                                        country of manufacture of Pisco
                                        for consumption in the country
                                        of manufacture, including:
                                       (i) ``Pisco Per[uacute]'' (or
                                        ``Pisco Peru''), which is Pisco
                                        manufactured in Peru in
                                        accordance with the laws and
                                        regulations of Peru governing
                                        the manufacture of Pisco for
                                        consumption in that country; and
                                       (ii) ``Pisco Chileno'' (or
                                        ``Chilean Pisco''), which is
                                        Pisco manufactured in Chile in
                                        accordance with the laws and
                                        regulations of Chile governing
                                        the manufacture of Pisco for
                                        consumption in that country.
(7) Dried fruit brandy...............  Brandy that conforms to the
                                        standard for fruit brandy except
                                        that it has been derived from
                                        sound, dried fruit, or from the
                                        standard wine of such fruit.
                                        Brandy derived from raisins, or
                                        from raisin wine, must be
                                        designated ``raisin brandy.''
                                        Dried fruit brandy, other than
                                        raisin brandy, must be
                                        designated by the word
                                        ``brandy'' qualified by the name
                                        of the dried fruit(s) from which
                                        made preceded by the word
                                        ``dried'', for example, ``dried
                                        apricot brandy.''

[[Page 7598]]

 
(8) Lees brandy......................  Brandy distilled from the lees of
                                        standard grape or other fruit
                                        wine, and such brandy derived
                                        solely from grapes must be
                                        designated ``grape lees brandy''
                                        or ``lees brandy.'' Lees brandy
                                        derived from fruit other than
                                        grapes must be designated as
                                        ``lees brandy,'' qualified by
                                        the name of the fruit from which
                                        such lees are derived, for
                                        example, ``cherry lees brandy.''
(9) Pomace brandy or Marc brandy.....  Brandy distilled from the skin
                                        and pulp of sound, ripe grapes
                                        or other fruit, after the
                                        withdrawal of the juice or wine
                                        therefrom. Such brandy derived
                                        solely from grape components
                                        must be designated ``grape
                                        pomace brandy,'' ``grape marc
                                        brandy'', ``pomace brandy,'' or
                                        ``mark brandy.'' Grape pomace
                                        brandy may alternatively be
                                        designated as ``grappa'' or
                                        ``grappa brandy.'' Pomace or
                                        marc brandy derived from fruit
                                        other than grapes must be
                                        designated as ``pomace brandy''
                                        or ``marc brandy'' qualified by
                                        the name of the fruit from which
                                        derived, for example, ``apple
                                        pomace brandy'' or ``pear marc
                                        brandy.''
(10) Residue brandy..................  Brandy distilled wholly or in
                                        part from the fermented residue
                                        of fruit or wine. Such brandy
                                        derived solely from grapes must
                                        be designated ``grape residue
                                        brandy,'' or ``residue brandy.''
                                        Residue brandy, derived from
                                        fruit other than grapes, must be
                                        designated as ``residue brandy''
                                        qualified by the name of the
                                        fruit from which derived, for
                                        example, ``orange residue
                                        brandy.'' Brandy distilled
                                        wholly or in part from residue
                                        materials which conforms to any
                                        of the standards set forth in
                                        paragraphs (b)(1) and (7)
                                        through (9) of this section may,
                                        regardless of such fact, be
                                        designated ``residue brandy'',
                                        but the use of such designation
                                        shall be conclusive, precluding
                                        any later change of designation.
(11) Neutral brandy..................  Any type of brandy distilled at
                                        more than 85% alcohol by volume
                                        (170[deg] proof) but less than
                                        95% alcohol by volume. Such
                                        brandy derived solely from
                                        grapes must be designated
                                        ``grape neutral brandy,'' or
                                        ``neutral brandy.'' Other
                                        neutral brandies, must be
                                        designated in accordance with
                                        the rules for those types of
                                        brandy, and be qualified by the
                                        word ``neutral''; for example,
                                        ``neutral citrus residue
                                        brandy''.
(12) Substandard brandy..............  Any brandy:
                                       (i) Distilled from fermented
                                        juice, mash, or wine having a
                                        volatile acidity, calculated as
                                        acetic acid and exclusive of
                                        sulfur dioxide, in excess of
                                        0.20 gram per 100 cubic
                                        centimeters (20 degrees
                                        Celsius); measurements of
                                        volatile acidity must be
                                        calculated exclusive of water
                                        added to facilitate
                                        distillation.
                                       (ii) Distilled from unsound,
                                        moldy, diseased, or decomposed
                                        juice, mash, wine, lees, pomace,
                                        or residue, or which shows in
                                        the finished product any taste,
                                        aroma, or characteristic
                                        associated with products
                                        distilled from such material.
                                       (iii) Such brandy derived solely
                                        from grapes must be designated
                                        ``substandard grape brandy,'' or
                                        ``substandard brandy.'' Other
                                        substandard brandies must be
                                        designated in accordance with
                                        the rules for those types of
                                        brandy, and be qualified by the
                                        word ``substandard''; for
                                        example, ``substandard fig
                                        brandy''.
------------------------------------------------------------------------

Sec.  5.146   Blended applejack.

    (a) The class blended applejack. ``Blended applejack'' is a mixture 
containing at least 20 percent on a proof gallon basis of apple brandy 
(applejack) that has been stored in oak barrels for not less than 2 
years, and not more than 80 percent of neutral spirits on a proof 
gallon basis. Blended applejack must be bottled at not less than 40 
percent alcohol by volume (80[deg] proof).
    (b) Label designation. The label designation for blended applejack 
may be ``blended applejack'' or ``applejack-a blend.''


Sec.  5.147   Rum.

    (a) The class rum. ``Rum'' is distilled spirits that is distilled 
from the fermented juice of sugar cane, sugar cane syrup, sugar cane 
molasses, or other sugar cane by-products at less than 95 percent 
alcohol by volume (190[deg] proof) having the taste, aroma, and 
characteristics generally attributed to rum, and bottled at not less 
than 40 percent alcohol by volume (80[deg] proof); and also includes 
mixtures solely of such spirits. All rum may be designated as ``rum'' 
on the label, even if it also meets the standards for a specific type 
of rum.
    (b) Types. Paragraph (b)(1) of this section describes a specific 
type of rum and the standards for that type.

------------------------------------------------------------------------
                 Type                              Standards
------------------------------------------------------------------------
(1) Cacha[ccedil]a...................  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''). Cacha[ccedil]a may
                                        be designated as
                                        ``Cacha[ccedil]a'' or ``rum'' on
                                        labels.
(2) [Reserved].......................  .................................
------------------------------------------------------------------------

Sec.  5.148   Agave spirits.

    (a) The class agave spirits. ``Agave spirits'' are distilled from a 
fermented mash, of which at least 51 percent is derived from plant 
species in the genus Agave and up to 49 percent is derived from other 
sugars. Agave spirits must be distilled at less than 95 percent alcohol 
by volume (190[deg] proof) and bottled at or above 40 percent alcohol 
by volume (80[deg] proof). Agave spirits may be stored in wood barrels. 
Agave spirits may contain added flavoring or coloring materials as 
authorized by Sec.  5.155. This class also includes mixtures of agave 
spirits. Agave spirits that meet the standard of identity for 
``Tequila'' or ``Mezcal'' may be designated as ``agave spirits,'' or as 
``Tequila'' or ``Mezcal'', as applicable.
    (b) Types. Paragraphs (b)(1) and (2) of this section describe the 
types of agave spirits and the rules for each type.

[[Page 7599]]



------------------------------------------------------------------------
                 Type                              Standards
------------------------------------------------------------------------
(1) Tequila..........................  An agave spirit that is a
                                        distinctive product of Mexico.
                                        Tequila must be made in Mexico,
                                        in compliance with the laws and
                                        regulations of Mexico governing
                                        the manufacture of Tequila for
                                        consumption in that country.
(2) Mezcal...........................  An agave spirit that is a
                                        distinctive product of Mexico.
                                        Mezcal must be made in Mexico,
                                        in compliance with the laws and
                                        regulations of Mexico governing
                                        the manufacture of Mezcal for
                                        consumption in that country.
------------------------------------------------------------------------

Sec.  5.149   [Reserved]


Sec.  5.150   Cordials and liqueurs.

    (a) The class cordials and liqueurs. Cordials and liqueurs are 
flavored distilled spirits that are made by mixing or redistilling 
distilled spirits with or over fruits, flowers, plants, or pure juices 
therefrom, or other natural flavoring materials, or with extracts 
derived from infusions, percolation, or maceration of such materials, 
and containing sugar (such as sucrose, fructose, dextrose, or levulose) 
in an amount of not less than 2.5 percent by weight of the finished 
product. Designations on labels may be ``Cordial'' or ``Liqueur,'' or, 
in the alternative, may be one of the type designations below. Cordials 
and liqueurs may not be designated as ``straight''. The designation of 
a cordial or liqueur may include the word ``dry'' if sugar is less than 
10 percent by weight of the finished product.
    (b) Types. Paragraph (b)(1) through (12) of this section list 
definitions and standards for optional type designations.

------------------------------------------------------------------------
                 Type                                 Rule
------------------------------------------------------------------------
(1) Sloe gin.........................  A cordial or liqueur with the
                                        main characteristic flavor
                                        derived from sloe berries.
(2) Rye liqueur, bourbon liqueur (or   Liqueurs, bottled at not less
 rye cordial or bourbon cordial).       than 30 percent alcohol by
                                        volume, in which not less than
                                        51 percent, on a proof gallon
                                        basis, of the distilled spirits
                                        used are, respectively, rye or
                                        bourbon whisky, straight rye or
                                        straight bourbon whisky, or
                                        whisky distilled from a rye or
                                        bourbon mash, and which possess
                                        a predominant characteristic rye
                                        or bourbon flavor derived from
                                        such whisky. Wine, if used, must
                                        be within the 2.5 percent
                                        limitation provided in Sec.
                                        5.155 for coloring, flavoring,
                                        and blending materials.
(3) Rock and rye; Rock and bourbon;    Liqueurs, bottled at not less
 Rock and brandy; Rock and rum.         than 24 percent alcohol by
                                        volume, in which, in the case of
                                        rock and rye and rock and
                                        bourbon, not less than 51
                                        percent, on a proof gallon
                                        basis, of the distilled spirits
                                        used are, respectively, rye or
                                        bourbon whisky, straight rye or
                                        straight bourbon whisky, or
                                        whisky distilled from a rye or
                                        bourbon mash, and, in the case
                                        of rock and brandy and rock and
                                        rum, the distilled spirits used
                                        are all grape brandy or rum,
                                        respectively; containing rock
                                        candy or sugar syrup, with or
                                        without the addition of fruit,
                                        fruit juices, or other natural
                                        flavoring materials, and
                                        possessing, respectively, a
                                        predominant characteristic rye,
                                        bourbon, brandy, or rum flavor
                                        derived from the distilled
                                        spirits used. Wine, if used,
                                        must be within the 2.5 percent
                                        limitation provided in Sec.
                                        5.155 for harmless coloring,
                                        flavoring, and blending
                                        materials.
(4) Rum liqueur, gin liqueur, brandy   Liqueurs, bottled at not less
 liqueur.                               than 30 percent alcohol by
                                        volume, in which the distilled
                                        spirits used are entirely rum,
                                        gin, or brandy, respectively,
                                        and which possess, respectively,
                                        a predominant characteristic
                                        rum, gin, or brandy flavor
                                        derived from the distilled
                                        spirits used. In the case of
                                        brandy liqueur, the type of
                                        brandy must be stated in
                                        accordance with paragraph (d) of
                                        this section, except that
                                        liqueurs made entirely with
                                        grape brandy may be designated
                                        simply as ``brandy liqueur.''
                                        Wine, if used, must be within
                                        the 2.5 percent limitation
                                        provided for in Sec.   5.155 for
                                        harmless coloring, flavoring,
                                        and blending materials.
(5) Amaretto.........................  Almond flavored liqueur/cordial
(6) Kummel...........................  Caraway flavored liqueur/cordial
(7) Ouzo, Anise, Anisette............  Anise flavored liqueurs/cordials
(8) Sambuca..........................  Anise flavored liqueur. See Sec.
                                         5.154(b)(2) for designation
                                        rules for Sambuca not produced
                                        in Italy.
(9) Peppermint Schnapps..............  Peppermint flavored liqueur/
                                        cordial
(10) Triple Sec and Curacao..........  Orange flavored liqueurs/
                                        cordials. Curacao may be
                                        preceded by the color of the
                                        liqueur/cordial (for example,
                                        Blue Curacao).
(11) Cr[egrave]me de.................  A liqueur/cordial where the blank
                                        is filled in with the
                                        predominant flavor (for example,
                                        Cr[egrave]me de menthe is mint
                                        flavored liqueur/cordial.)
(12) Goldwasser......................  Herb flavored liqueur/cordial and
                                        containing gold flakes. See Sec.
                                          5.154(b)(2) for designation
                                        rules for Goldwasser not made in
                                        Germany.
------------------------------------------------------------------------

Sec.  5.151   Flavored spirits.

    (a) The class flavored spirits. ``Flavored spirits'' are distilled 
spirits that are spirits conforming to one of the standards of identity 
set forth in Sec. Sec.  5.142 through 5.148 to which have been added 
nonbeverage natural flavors, wine, or nonalcoholic natural flavoring 
materials, with or without the addition of sugar, and bottled at not 
less than 30 percent alcohol by volume (60[deg] proof). The flavored 
spirits must be specifically designated by the single base spirit and 
one or more of the most predominant flavors (for example, ``Pineapple 
Flavored Tequila'' or ``Cherry Vanilla Flavored Bourbon Whisky''). The 
base spirit must conform to the standard of identity for that spirit 
before the flavoring is added. Base spirits that are a distinctive 
product of a particular place must be manufactured in accordance with 
the laws and regulations of the country as designated in the base 
spirit's standard of identity. If the finished product contains more 
than 2.5 percent by volume of wine, the kinds and percentages by volume 
of wine must be stated as a part of the designation (whether the wine 
is added directly to the product or whether it is first mixed into an 
intermediate product), except that a flavored brandy may contain an 
additional 12.5 percent by volume of wine, without label disclosure, if 
the additional wine is derived from the particular fruit corresponding 
to the labeled flavor of the product.

[[Page 7600]]

    (b) [Reserved]


Sec.  5.152   Imitations.

    (a) Imitations must bear, as a part of the designation thereof, the 
word ``imitation'' and include the following:
    (1) Any class or type of distilled spirits to which has been added 
coloring or flavoring material of such nature as to cause the resultant 
product to simulate any other class or type of distilled spirits;
    (2) Any class or type of distilled spirits (other than distilled 
spirits specialty products as defined in Sec.  5.156) to which has been 
added flavors considered to be artificial or imitation.
    (3) Any class or type of distilled spirits (except cordials, 
liqueurs and specialties marketed under labels which do not indicate or 
imply that a particular class or type of distilled spirits was used in 
the manufacture thereof) to which has been added any whisky essence, 
brandy essence, rum essence, or similar essence or extract which 
simulates or enhances, or is used by the trade or in the particular 
product to simulate or enhance, the characteristics of any class or 
type of distilled spirits;
    (4) Any type of whisky to which beading oil has been added;
    (5) Any rum to which neutral spirits or distilled spirits other 
than rum have been added;
    (6) Any brandy made from distilling material to which has been 
added any amount of sugar other than the kind and amount of sugar 
expressly authorized in the production of standard wine; and
    (7) Any brandy to which neutral spirits or distilled spirits other 
than brandy have been added, except that this provision shall not apply 
to any product conforming to the standard of identity for blended 
applejack.
    (b) If any of the standards set forth in paragraphs (a)(1) through 
(7) of this section apply, the ``Imitation'' class designation must be 
used in front of the appropriate class as part of the designation (for 
example, Imitation Whisky).


Sec.  5.153   [Reserved]


Sec.  5.154   Rules for geographical designations.

    (a) Geographical designations. (1) Geographical names for 
distinctive types of distilled spirits (other than names found by the 
appropriate TTB officer under paragraph (a)(2) of this section to have 
become generic) may not be applied to distilled spirits produced in any 
other place than the particular region indicated by the name, unless:
    (i) There appears the word ``type'' or the word ``American'' or 
some other adjective indicating the true place of production, in 
lettering substantially as conspicuous as such name; and
    (ii) The distilled spirits to which the name is applied conform to 
the distilled spirits of that particular region. The following are 
examples of distinctive types of distilled spirits with geographical 
names that have not become generic: Eau de Vie de Dantzig (Danziger 
Goldwasser), Ojen, Swedish punch. Geographical names for distinctive 
types of distilled spirits may be used to designate only distilled 
spirits conforming to the standard of identity, if any, for such type 
specified in this section, or if no such standard is so specified, then 
in accordance with the trade understanding of that distinctive type.
    (2) Only such geographical names for distilled spirits as the 
appropriate TTB officer finds have by usage and common knowledge lost 
their geographical significance to such extent that they have become 
generic shall be deemed to have become generic. Examples are London dry 
gin, Geneva (Hollands) gin.
    (3) Geographical names that are not names for distinctive types of 
distilled spirits, and that have not become generic, shall not be 
applied to distilled spirits produced in any other place than the 
particular place or region indicated in the name. Examples are 
Armagnac, Greek brandy, Jamaica rum, Puerto Rico rum, Demerara rum and 
Andong Soju.
    (b) Products without geographical designations but distinctive of a 
particular place. (1) The whiskies of the types specified in paragraphs 
(c)(2) through (6) and (10) through (14) of Sec.  5.143 are distinctive 
products of the United States and if produced in a foreign country 
shall be designated by the applicable designation prescribed in such 
paragraphs, together with the words ``American type'' or the words 
``produced (distilled, blended) in __'', the blank to be filled in with 
the name of the foreign country: Provided, That the word ``bourbon'' 
shall not be used to describe any whisky or whisky-based distilled 
spirits not produced in the United States. If whisky of any of these 
types is composed in part of whisky or whiskies produced in a foreign 
country there shall be stated, on the brand label, the percentage of 
such whisky and the country of origin thereof.
    (2) The name for other distilled spirits which are distinctive 
products of a particular place or country (such as Habanero), may not 
be given to the product of any other place or country unless the 
designation for such product includes the word ``type'' or an adjective 
such as ``American'', or the like, clearly indicating the true place of 
production. The provision for place of production shall not apply to 
designations which by usage and common knowledge have lost their 
geographical significance to such an extent that the appropriate TTB 
officer finds they have become generic. Examples of generic 
designations are Slivovitz, Zubrovka, Aquavit, Arrack, and 
Kirschwasser.


Sec.  5.155   Alteration of class and type.

    (a) Definitions--(1) Coloring, flavoring, or blending material. For 
the purposes of this section, the term ``coloring, flavoring, or 
blending material'' means a harmless substance that is an essential 
component of the class or type of distilled spirits to which it is 
added; or a harmless substance, such as caramel, straight malt or 
straight rye malt whiskies, fruit juices, sugar, infusion of oak chips 
when approved by the Administrator, or wine, that is not an essential 
component part of the distilled spirits product to which it is added 
but which is customarily employed in the product in accordance with 
established trade usage.
    (2) Certified color. For purposes of this section, the term 
``certified color'' means a color additive that is required to undergo 
batch certification in accordance with part 74 or part 82 of the Food 
and Drug Administration regulations (21 CFR parts 74 and 82). An 
example of a certified color is FD&C Blue No. 2.
    (b) Allowable additions. Except as provided in paragraph (c) of 
this section, the following may be added to distilled spirits without 
changing the class or type designation:
    (1) Coloring, flavoring, and blending materials that are essential 
components of the class or type of distilled spirits to which added;
    (2) Coloring, flavoring, and blending materials that are not 
essential component parts of the distilled spirits to which added, 
provided that such coloring, flavoring, or blending materials do not 
total more than 2.5 percent by volume of the finished product; and
    (3) Wine, when added to Canadian whisky in Canada in accordance 
with the laws and regulations of Canada governing the manufacture of 
Canadian whisky.
    (c) Special rules. The addition of the following will require a 
redesignation of the class or type of the distilled spirits product to 
which added:
    (1) Coloring, flavoring, or blending materials that are not 
essential component parts of the class or type of distilled spirits to 
which they are added, if such coloring, flavoring, and blending

[[Page 7601]]

materials total more than 2.5 percent by volume of the finished 
product;
    (2) Any material, other than caramel, infusion of oak chips, and 
sugar, added to Cognac brandy;
    (3) Any material whatsoever added to neutral spirits or straight 
whisky, except that vodka may be treated with sugar, in an amount not 
to exceed two grams per liter, and with citric acid, in an amount not 
to exceed one gram per liter;
    (4) Certified colors, carmine, or cochineal extract;
    (5) Any material that would render the product to which it is added 
an imitation, as defined in Sec.  5.152; or
    (6) For products that are required to be stored in oak barrels in 
accordance with a standard of identity, the storing of the product in 
an additional barrel made of another type of wood.
    (d) Extractions from distilled spirits. The removal of any 
constituents from a distilled spirits product to such an extent that 
the product no longer possesses the taste, aroma, and characteristics 
generally attributed to that class or type of distilled spirits will 
alter the class or type of the product, and the resulting product must 
be redesignated appropriately. In addition, in the case of straight 
whisky, the removal of more than 15 percent of the fixed acids, 
volatile acids, esters, soluble solids, or higher alcohols, or the 
removal of more than 25 percent of the soluble color, constitutes an 
alteration of the class or type of the product and requires a 
redesignation of the product.
    (e) Exceptions. Nothing in this section has the effect of modifying 
the standards of identity specified in Sec.  5.150 for cordials and 
liqueurs, and in Sec.  5.151 for flavored spirits, or of authorizing 
any product defined in Sec.  5.152 to be designated as other than an 
imitation.


Sec.  5.156   Distilled spirits specialty products.

    (a) General. Distilled spirits that do not meet one of the other 
standards of identity specified in this subpart are distilled spirits 
specialty products and must be designated in accordance with trade and 
consumer understanding, or, if no such understanding exists, with a 
distinctive or fanciful name (which may be the name of a cocktail) 
appearing in the same field of vision as a statement of composition. 
The statement of composition and the distinctive or fanciful name serve 
as the class and type designation for these products. The statement of 
composition must follow the rules found in Sec.  5.166. A product may 
not bear a designation which indicates it contains a class or type of 
distilled spirits unless the distilled spirits therein conform to such 
class and type.
    (b) Products designated in accordance with trade and consumer 
understanding. Products may be designated in accordance with trade and 
consumer understanding without a statement of composition if the 
appropriate TTB officer has determined that there is such 
understanding.


Sec. Sec.  5.157-5.165   [Reserved]


Sec.  5.166   Statements of composition.

    (a) Rules for the statement of composition. When a statement of 
composition is required as part of a designation for a distilled 
spirits specialty product, the statement must be truthful and adequate.
    (b) Cocktails. A statement of the classes and types of distilled 
spirits used in the manufacture thereof will be deemed a sufficient 
statement of composition in the case of highballs, cocktails, and 
similar prepared specialties when the designation adequately indicates 
to the consumer the general character of the product.

Subpart J--Formulas


Sec.  5.191   Application.

    The requirements of this subpart apply to the following persons:
    (a) Proprietors of distilled spirits plants qualified as processors 
under part 19 of this chapter;
    (b) Persons in the Commonwealth of Puerto Rico who manufacture 
distilled spirits products for shipment to the United States. However, 
the filing of a formula for approval by TTB is only required for those 
products that will be shipped to the United States; and
    (c) Persons who ship Virgin Islands distilled spirits products into 
the United States.


Sec.  5.192   Formula requirements.

    (a) General. An approved formula is required to blend, mix, purify, 
refine, compound, or treat distilled spirits in a manner that results 
in a change of class or type of the spirits.
    (b) Preparation and submission. In order to obtain formula 
approval, a person listed in Sec.  5.191 must file a formula in 
accordance with the instructions on TTB Form 5100.51, Formula and 
Process for Domestic and Imported Alcohol Beverages (if filing by 
paper) or on Formulas Online, if filing electronically. When a product 
will be made or processed under the same formula at more than one 
location operated by the distiller or processor, the distiller or 
processor must identify on the form each place of production or 
processing by name and address, and by permit number, if applicable, 
and must ensure that a copy of the approved formula is maintained at 
each location.
    (c) Existing approvals. Any approval of a formula will remain in 
effect until revoked, superseded, or voluntarily surrendered, and if 
the formula is revoked, superseded, or voluntarily surrendered, any 
existing qualifying statements on such approval as to the rate of tax 
or the limited use of alcoholic flavors will be made obsolete.
    (d) Change in formula. Any change in an approved formula requires 
the filing of a new TTB Form 5100.51 for approval of the changed 
formula. After a changed formula is approved, the filer must surrender 
the original formula approval to the appropriate TTB officer.


Sec.  5.193   Operations requiring formulas.

    The following operations change the class or type of distilled 
spirits and therefore require formula approval under Sec.  5.192: 
Provided, That, TTB may exempt categories of distilled spirits products 
from specific regulatory formula requirements upon a finding that the 
filing of a formula is no longer necessary in order to properly 
classify the finished product:
    (a) The compounding of distilled spirits through the mixing of a 
distilled spirits product with any coloring or flavoring material, 
wine, or other material containing distilled spirits, unless TTB has 
issued public guidance recognizing that such ingredients are harmless 
coloring, flavoring or blending materials that do not alter the class 
or type pursuant to the standards set forth in Sec.  5.155;
    (b) The manufacture of an intermediate product to be used 
exclusively in other distilled spirits products on bonded premises;
    (c) Any filtering or stabilizing process that results in a 
distilled spirits product's no longer possessing the taste, aroma, and 
characteristics generally attributed to the class or type of distilled 
spirits before the filtering or stabilizing, or, in the case of 
straight whisky, that results in the removal of more than 15 percent of 
the fixed acids, volatile acids, esters, soluble solids, or higher 
alcohols, or more than 25 percent of the soluble color;
    (d) The mingling of spirits that differ in class or in type of 
materials from which made;
    (e) The mingling of distilled spirits that were stored in charred 
cooperage with distilled spirits that were stored in plain or reused 
cooperage, or the mixing of distilled spirits that have been treated 
with wood chips with distilled spirits not so treated, or the mixing of 
distilled spirits that have been subjected to any treatment which 
changes their character

[[Page 7602]]

with distilled spirits not subjected to such treatment, unless it is 
determined by the appropriate TTB officer in each of these cases that 
the composition of the distilled spirits is the same notwithstanding 
the storage in different kinds of cooperage or the treatment of a 
portion of the spirits;
    (f) Except when authorized for production or storage operations by 
part 19 of this chapter, the use of any physical or chemical process or 
any apparatus that accelerates the maturing of the distilled spirits;
    (g) The steeping or soaking of plant materials, such as fruits, 
berries, aromatic herbs, roots, or seeds, in distilled spirits or wines 
at a distilled spirits plant;
    (h) The artificial carbonating of distilled spirits;
    (i) In Puerto Rico, the blending of distilled spirits with any 
liquors manufactured outside Puerto Rico;
    (j) The production of gin by:
    (1) Redistillation, over juniper berries and other natural 
aromatics or over the extracted oils of such materials, of spirits 
distilled at or above 190 degrees of proof that are free from 
impurities, including such spirits recovered by redistillation of 
imperfect gin spirits; or
    (2) Mixing gin with other distilled spirits;
    (k) The treatment of gin by:
    (1) The addition or abstraction of any substance or material other 
than pure water after redistillation in a manner that would change its 
class and type designation; or
    (2) The addition of any substance or material other than juniper 
berries or other natural aromatics or the extracted oils of such 
materials, or the addition of pure water, before or during 
redistillation, in a manner that would change its class and type 
designation; and
    (l) The recovery of spirits by redistillation from distilled 
spirits products containing other alcoholic ingredients and from 
spirits that have previously been entered for deposit. However, no 
formula approval is required for spirits redistilled into any type of 
neutral spirits other than vodka or for spirits redistilled at less 
than 190 degrees of proof that lack the taste, aroma and other 
characteristics generally attributed to whisky, brandy, rum, or gin and 
that are designated as ``Spirits'' preceded or followed by a word or 
phrase descriptive of the material from which distilled. Such spirits 
may not be designated ``Spirits Grain'' or ``Grain Spirits'' on any 
label.


Sec.  5.194   Adoption of predecessor's formulas.

    A successor to a person listed in Sec.  5.191 may adopt a 
predecessor's approved formulas by filing an application with the 
appropriate TTB officer. The application must include a list of the 
formulas for adoption and must identify each formula by formula number, 
name of product, and date of approval. The application must clearly 
show that the predecessor has authorized the use of the previously 
approved formulas by the successor.

Subpart K--Standards of Fill and Authorized Container Sizes.


Sec.  5.201   General.

    No person engaged in business as a distiller, rectifier 
(processor), importer, wholesaler, bottler, or warehouseman and 
bottler, directly or indirectly, or through an affiliate, may sell or 
ship or deliver for sale or shipment in interstate or foreign commerce, 
or otherwise introduce in interstate or foreign commerce, or receive 
therein, or remove from customs custody for consumption, any distilled 
spirits in containers, unless the distilled spirits are bottled in 
conformity with Sec. Sec.  5.202 and 5.203.


Sec.  5.202   Standard liquor containers.

    (a) General. Except as provided in paragraph (d) of this section 
and in Sec.  5.205, distilled spirits must be bottled in standard 
liquor containers, as defined in this paragraph. A standard liquor 
container is a container that is made, formed, and filled in such a way 
that it does not mislead purchasers as regards its contents. An 
individual carton or other container of a bottle may not be so designed 
as to mislead purchasers as to the size of the bottle it contains.
    (b) Headspace. A filled liquor container of a capacity of 200 
milliliters (6.8 fl. oz.) or more is deemed to mislead the purchaser if 
it has a headspace in excess of 8 percent of the total capacity of the 
container after closure.
    (c) Design. Regardless of the correctness of the stated net 
contents, a liquor container is deemed to mislead the purchaser if it 
is made and formed in such a way that its actual capacity is 
substantially less than the capacity it appears to have upon visual 
examination under ordinary conditions of purchase or use.
    (d) Exception for distinctive liquor bottles. The provisions of 
paragraphs (b) and (c) of this section do not apply to liquor bottles 
for which a distinctive liquor bottle approval has been issued pursuant 
to Sec.  5.205.


Sec.  5.203   Standards of fill (container sizes).

    (a) Authorized standards of fill. The following metric standards of 
fill are authorized for distilled spirits, whether domestically bottled 
or imported:
    (1) Containers other than cans. For containers other than cans 
described in paragraph (a)(2) of this section--
    (i) 1.8 Liters.
    (ii) 1.75 Liters.
    (iii) 1.00 Liter.
    (iv) 900 mL.
    (v) 750 mL.
    (v) 720 mL.
    (vi) 700 mL.
    (vii) 375 mL.
    (viii) 200 mL.
    (ix) 100 mL.
    (x) 50 mL.
    (2) Metal cans. For metal containers that have the general shape 
and design of a can, that have a closure that is an integral part of 
the container, and that cannot be readily reclosed after opening--
    (i) 355 mL.
    (ii) 200 mL.
    (iii) 100 mL.
    (iv) 50 mL.
    (b) Spirits bottled using outdated standards. Paragraph (a) of this 
section does not apply to:
    (1) Imported distilled spirits in the original containers in which 
entered into customs custody prior to January 1, 1980 (or prior to July 
1, 1989 in the case of distilled spirits imported in 500 mL 
containers); or
    (2) Imported distilled spirits bottled or packed prior to January 
1, 1980 (or prior to July 1, 1989 in the case of distilled spirits in 
500 mL containers) and certified as to such in a statement signed by an 
official duly authorized by the appropriate foreign government.


Sec.  5.204   [Reserved]


Sec.  5.205   Distinctive liquor bottle approval.

    (a) General. A bottler or importer of distilled spirits in 
distinctive liquor bottles may apply for a distinctive liquor bottle 
approval from the appropriate TTB officer. The distinctive liquor 
bottle approval will provide an exemption only from those requirements 
that are specified in paragraph (b) of this section. A distinctive 
liquor bottle is a container that is not the customary shape and that 
may obscure the net contents of the distilled spirits.
    (b) Exemptions provided by the distinctive liquor bottle approval. 
The distinctive liquor bottle approval issued pursuant to this section 
will provide that:
    (1) The provisions of Sec.  5.202(b) and (c) do not apply to the 
liquor containers

[[Page 7603]]

for which the distinctive liquor bottle approval has been issued; and
    (2) The information required to appear in the same field of vision 
pursuant to Sec.  5.63(a) may appear elsewhere on a distinctive liquor 
bottle for which the distinctive liquor bottle approval has been 
issued, if the design of the container precludes the presentation of 
all mandatory information in the same field of vision.
    (c) How to apply. A bottler or importer of distilled spirits in 
distinctive liquor bottles may apply for a distinctive liquor bottle 
approval as part of the application for a certificate of label approval 
(COLA).

Subpart L [Reserved]


Sec.  5.211   [Reserved]


Sec.  5.212   [Reserved]

Subpart M--Penalties and Compromise of Liability


Sec.  5.221   Criminal penalties.

    A violation of the labeling provisions of 27 U.S.C. 205(e) is 
punishable as a misdemeanor. See 27 U.S.C. 207 for the statutory 
provisions relating to criminal penalties, consent decrees, and 
injunctions.


Sec.  5.222   Conditions of basic permit.

    A basic permit is conditioned upon compliance with the requirements 
of 27 U.S.C. 205, including the labeling and advertising provisions of 
this part. A willful violation of the conditions of a basic permit 
provides grounds for the revocation or suspension of the permit, as 
applicable, as set forth in part 1 of this chapter.


Sec.  5.223   Compromise.

    Pursuant to 27 U.S.C. 207, the appropriate TTB officer is 
authorized, with respect to any violation of 27 U.S.C. 205, to 
compromise the liability arising with respect to such violation upon 
payment of a sum not in excess of $500 for each offense, to be 
collected by the appropriate TTB officer and to be paid into the 
Treasury as miscellaneous receipts.

Subpart N--Advertising of Distilled Spirits


Sec.  5.231   Application.

    No person engaged in business as a distiller, rectifier 
(processor), importer, wholesaler, bottler, or warehouseman and bottler 
of distilled spirits, directly or indirectly or through an affiliate, 
shall publish or disseminate or cause to be published or disseminated 
by radio or television broadcast, or in any newspaper, periodical, or 
any publication, by any sign or outdoor advertisement, or by electronic 
or internet media, or any other printed or graphic matter, any 
advertisement of distilled spirits, if such advertising is in, or is 
calculated to induce sales in, interstate or foreign commerce, or is 
disseminated by mail, unless such advertisement is in conformity with 
this subpart: Provided, That such sections shall not apply to outdoor 
advertising in place on September 7, 1984, but shall apply upon 
replacement, restoration, or renovation of any such advertising; and 
provided further, that such sections shall not apply to a retailer or 
the publisher of any newspaper, periodical, or other publication, or 
radio or television or internet broadcast, unless such retailer or 
publisher or broadcaster is engaged in business as a distiller, 
rectifier (processor), importer, wholesaler, or warehouseman and 
bottler of distilled spirits, directly or indirectly, or through an 
affiliate.


Sec.  5.232   Definition.

    As used in this subpart, the term ``advertisement'' ``or 
advertising'' includes any written or verbal statement, illustration, 
or depiction which is in, or calculated to induce sales in, interstate 
or foreign commerce, or is disseminated by mail, whether it appears in 
a newspaper, magazine, trade booklet, menu, wine card, leaflet, 
circular, mailer, book insert, catalog, promotional material, sales 
pamphlet, internet or other electronic site or social network, or in 
any written, printed, graphic, or other matter (such as hang tags) 
accompanying, but not firmly affixed to, the bottle, representations 
made on shipping cases or in any billboard, sign, other outdoor 
display, public transit card, other periodical literature, publication, 
or in a radio or television broadcast, or in any other media; except 
that such term shall not include:
    (a) Any label affixed to any bottle of distilled spirits; or any 
individual covering, carton, or other container of the bottle which 
constitute a part of the labeling under this part.
    (b) Any editorial or other reading material (such as a news 
release) in any periodical or publication or newspaper for the 
publication of which no money or valuable consideration or thing of 
value is paid or promised, directly or indirectly, by any permittee, 
and which is not written by or at the direction of the permittee.


Sec.  5.233   Mandatory statements.

    (a) Responsible advertiser. The advertisement must display the 
responsible advertiser's name, city, and State or the name and other 
contact information (such as, telephone number, website, or email 
address) where the responsible advertiser may be contacted.
    (b) Class and type. The advertisement shall contain a conspicuous 
statement of the class to which the product belongs and the type 
thereof corresponding with the statement of class and type which is 
required to appear on the label of the product.
    (c) Alcohol content--(1) Mandatory statement. The alcohol content 
for distilled spirits must be stated as a percentage of alcohol by 
volume, in the manner set forth in Sec.  5.65 of this chapter for 
labels. Products that contain a significant amount of material, such as 
solid fruit, that may absorb spirits after bottling must state the 
alcohol content at the time of bottling as follows: ``Bottled at __ 
percent-alcohol-by-volume.''
    (2) Optional statement. In addition, the advertisement may also 
state the alcohol content in degrees of proof if this information 
appears in the same field of vision as the statement expressed in 
percent-alcohol-by-volume.
    (d) Percentage of neutral spirits and name of commodity.
    (1) In the case of distilled spirits (other than cordials, 
liqueurs, flavored neutral spirits, including flavored vodka, and 
distilled spirits specialty products) produced by blending or 
rectification, if neutral spirits have been used in the production 
thereof, there shall be stated the percentage of neutral spirits so 
used and the name of the commodity from which such neutral spirits have 
been distilled. The statement of percentage and the name of the 
commodity shall be made in substantially the following form: ``__% 
neutral spirits distilled from __ (insert grain, cane products, or 
fruit, or other products as appropriate)''; or __% neutral spirits 
(vodka) distilled from __ (insert grain, cane product, fruit, or other 
commodity, as appropriate)''; or ``__% grain (cane products), (fruit) 
neutral spirits''; or ``__% grain spirits''. The statement used under 
this paragraph must be identical to that on the label of distilled 
spirits to which the advertisement refers.
    (2) In the case of gin manufactured by a process of continuous 
distillation or in the case of neutral spirits, there shall be stated 
the name of the commodity from which such gin or neutral spirits were 
distilled. The statement of the name of the commodity shall be made in 
substantially the following form: ``Distilled from grain'', or 
``Distilled from cane products'', or ``Distilled from

[[Page 7604]]

fruit.'' The statement used under this paragraph must be identical to 
that on the label of distilled spirits to which the advertisement 
refers.
    (e) Exception. (1) If an advertisement refers to a general 
distilled spirits line or all of the distilled spirits products of one 
company, whether by the company name or by the brand name common to all 
the distilled spirits in the line, the only mandatory information 
necessary is the responsible advertiser's name, city, and State or the 
name and other contact information (such as telephone number, website, 
or email address) where the responsible advertiser may be contacted. 
This exception does not apply where only one type of distilled spirits 
is marketed under the specific brand name advertised.
    (2) On consumer specialty items (such as T-shirts, hats, bumper 
stickers, or refrigerator magnets), the only information necessary is 
the company name of the responsible advertiser or brand name of the 
product.


Sec.  5.234   Legibility of mandatory information.

    (a) Statements required under this subpart to appear in any 
written, printed, or graphic advertisement shall be in lettering or 
type size sufficient to be conspicuous and readily legible.
    (b) In the case of signs, billboards, and displays the name and 
address or name and other contact information (such as, telephone 
number, website, or email) of the permittee responsible for the 
advertisement may appear in type size of lettering smaller than the 
other mandatory information, provided such information can be 
ascertained upon closer examination of the sign or billboard.
    (c) Mandatory information shall be so stated as to be clearly a 
part of the advertisement and shall not be separated in any manner from 
the remainder of the advertisement.
    (d) Mandatory information for two or more products shall not be 
stated unless clearly separated.
    (e) Mandatory information shall be so stated in both the print and 
audio-visual media that it will be readily apparent to the persons 
viewing the advertisement.


Sec.  5.235   Prohibited practices.

    (a) Restrictions. An advertisement of distilled spirits shall not 
contain:
    (1) Any statement that is false or untrue in any material 
particular, or that, irrespective of falsity, directly, or by 
ambiguity, omission, or inference, or by the addition of irrelevant, 
scientific or technical matter tends to create a misleading impression.
    (2) Any false or misleading statement that explicitly or implicitly 
disparages a competitor's product. This does not prevent truthful and 
accurate comparisons between products (such as, ``Our liqueur contains 
more strawberries than Brand X'') or statements of opinion (such as, 
``We think our rum tastes better than any other distilled spirits on 
the market'').
    (3) Any statement, design, device, or representation which is 
obscene or indecent.
    (4) Any statement, design, device, or representation of or relating 
to analyses, standards or tests, irrespective of falsity, which the 
appropriate TTB officer finds to be likely to mislead the consumer.
    (5) Any statement, design, device, or representation of or relating 
to any guarantee, irrespective of falsity, which the appropriate TTB 
officer finds to be likely to mislead the consumer. Money-back 
guarantees are not prohibited.
    (6) The words ``bond'', ``bonded'', ``bottled in bond'', ``aged in 
bond'', or phrases containing these or synonymous terms, unless such 
words or phrases appear, pursuant to Sec.  5.88, on labels of the 
distilled spirits advertised, and are stated in the advertisement in 
the manner and form in which they are permitted to appear on the label.
    (7) The word ``pure'' unless:
    (i) It refers to a particular ingredient used in the production of 
the distilled spirits, and is a truthful representation about the 
ingredient; or
    (ii) It is part of the bona fide name of a permittee or retailer 
from whom the distilled spirits are bottled; or
    (iii) It is part of the bona fide name of the permittee who bottled 
the distilled spirits.
    (8) The words ``double distilled'' or ``triple distilled'' or any 
similar terms unless it is a truthful statement of fact. For purposes 
of this paragraph only, a distillation means a single run through a pot 
still or a single run through a column of a column (reflux) still. The 
number of distillations may be understated but may not be overstated.
    (b) Statements inconsistent with labeling. (1) Advertisements shall 
not contain any statement concerning a brand or lot of distilled 
spirits that is inconsistent with any statement on the labeling 
thereof.
    (2) Any label depicted on a container in an advertisement shall be 
a reproduction of an approved label.
    (c) Statement of age. The advertisement shall not contain any 
statement, design, or device directly or by implication concerning age 
or maturity of any brand or lot of distilled spirits unless a statement 
of age appears on the label of the advertised product. When any such 
statement, design, or device concerning age or maturity is contained in 
any advertisement, it shall include (in direct conjunction therewith 
and with substantially equal conspicuousness) all parts of the 
statement, if any, concerning age and percentages required to be made 
on the label under the provisions of Sec.  5.74. An advertisement for 
any whisky or brandy (except immature brandies, pomace brandy, marc 
brandy, Pisco brandy, and grappa brandy) which is not required to bear 
a statement of age on the label or an advertisement for any rum or 
agave spirits, which has been aged for not less than 4 years may, 
however, contain inconspicuous, general representations as to age, 
maturity or other similar representations even though a specific age 
statement does not appear on the label of the advertised product and in 
the advertisement itself.
    (d) Health-related statements--(1) Definitions. When used in this 
paragraph (d), terms are defined as follows:
    (i) Health-related statement means any statement related to health 
and includes statements of a curative or therapeutic nature that, 
expressly or by implication, suggest a relationship between the 
consumption of alcohol, distilled spirits, or any substance found 
within the distilled spirits, and health benefits or effects on health. 
The term includes both specific health claims and general references to 
alleged health benefits or effects on health associated with the 
consumption of alcohol, distilled spirits, or any substance found 
within the distilled spirits, as well as health-related directional 
statements. The term also includes statements and claims that imply 
that a physical or psychological sensation results from consuming the 
distilled spirits, as well as statements and claims of nutritional 
value (e.g., statements of vitamin content). Statements concerning 
caloric, carbohydrate, protein, and fat content do not constitute 
nutritional claims about the product.
    (ii) Specific health claim is a type of health-related statement 
that, expressly or by implication, characterizes the relationship of 
the distilled spirits, alcohol, or any substance found within the 
distilled spirits, to a disease or health-related condition. Implied 
specific health claims include statements, symbols, vignettes, or other 
forms of communication that suggest, within the context in which they 
are presented, that a relationship exists between distilled spirits, 
alcohol, or any substance found within the distilled spirits, and a 
disease or health-related condition.
    (iii) Health-related directional statement is a type of health-
related

[[Page 7605]]

statement that directs or refers consumers to a third party or other 
source for information regarding the effects on health of distilled 
spirits or alcohol consumption.
    (2) Rules for advertising--(i) Health-related statements. In 
general, advertisements may not contain any health-related statement 
that is untrue in any particular or tends to create a misleading 
impression as to the effects on health of alcohol consumption. TTB will 
evaluate such statements on a case-by-case basis and may require as 
part of the health-related statement a disclaimer or some other 
qualifying statement to dispel any misleading impression conveyed by 
the health-related statement. Such disclaimer or other qualifying 
statement must appear as prominent as the health-related statement.
    (ii) Specific health claims. A specific health claim will not be 
considered misleading if it is truthful and adequately substantiated by 
scientific or medical evidence; sufficiently detailed and qualified 
with respect to the categories of individuals to whom the claim 
applies; adequately discloses the health risks associated with both 
moderate and heavier levels of alcohol consumption; and outlines the 
categories of individuals for whom any levels of alcohol consumption 
may cause health risks. This information must appear as part of the 
specific health claim and in a manner as prominent as the specific 
health claim.
    (iii) Health-related directional statements. A statement that 
directs consumers to a third party or other source for information 
regarding the effects on health of distilled spirits or alcohol 
consumption is presumed misleading unless it--
    (A) Directs consumers in a neutral or other non-misleading manner 
to a third party or other source for balanced information regarding the 
effects on health of distilled spirits or alcohol consumption; and
    (B)(1) Includes as part of the health-related directional 
statement, and in a manner as prominent as the health-related 
directional statement, the following disclaimer: ``This statement 
should not encourage you to drink or increase your alcohol consumption 
for health reasons;'' or
    (2) Includes as part of the health-related directional statement, 
and in a manner as prominent as the health-related directional 
statement, some other qualifying statement that the appropriate TTB 
officer finds is sufficient to dispel any misleading impression 
conveyed by the health-related directional statement.
    (e) Place of origin. The advertisement shall not represent that the 
distilled spirits were manufactured in or imported from a place or 
country other than that of their actual origin, or were produced or 
processed by one who was not in fact the actual producer or processor.
    (f) Confusion of brands. Two or more different brands or lots of 
distilled spirits shall not be advertised in one advertisement (or in 
two or more advertisements in one issue of a periodical or newspaper, 
or in one piece of other written, printed, or graphic matter) if the 
advertisement tends to create the impression that representations made 
as to one brand or lot apply to the other or others, and if as to such 
latter the representations contravene any provisions of this subpart or 
are in any respect untrue.
    (g) Representations of the armed forces or flags. Advertisements 
may not show an image of any government's flag or any representation 
related to the armed forces of the United States if the representation, 
standing alone or considered together with any additional language or 
symbols, creates a false or misleading impression that the product was 
endorsed by, made by, used by, or made under the supervision of, the 
government represented by that flag or by the armed forces of the 
United States. This section does not prohibit the use of a flag as part 
of a claim of American origin or another country of origin.
    (h) Deceptive advertising techniques. Subliminal or similar 
techniques are prohibited. ``Subliminal or similar techniques,'' as 
used in this subpart, refers to any device or technique that is used to 
convey, or attempts to convey, a message to a person by means of images 
or sounds of a very brief nature that cannot be perceived at a normal 
level of awareness.
    (i) Any use of the term ``organic'' in the 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.


Sec.  5.236   Comparative advertising.

    (a) General. Comparative advertising shall not be disparaging of a 
competitor's product in a manner that is false or misleading.
    (b) Taste tests. (1) Taste test results may be used in 
advertisements comparing competitors' products unless they are 
disparaging in a false or misleading manner; deceptive; or likely to 
mislead the consumer.
    (2) The taste test procedure used shall meet scientifically 
accepted procedures. An example of a scientifically accepted procedure 
is outlined in the Manual on Sensory Testing Methods, ASTM Special 
Technical Publication 434, published by the American Society for 
Testing and Materials, 1916 Race Street, Philadelphia, Pennsylvania 
19103, ASTM, 1968, Library of Congress Catalog Card Number 68-15545.
    (3) A statement shall appear in the advertisement providing the 
name and address of the testing administrator.

Subpart O--Paperwork Reduction Act


Sec.  5.241   OMB control numbers assigned under the Paperwork 
Reduction Act.

    (a) Purpose. This subpart displays the control numbers assigned to 
information collection requirements in this part by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 
Public Law 104-13.
    (b) Table. The following table identifies each section in this part 
that contains an information collection requirement and the OMB control 
number that is assigned to that information collection requirement.

                        Table 1 to Paragraph (b)
------------------------------------------------------------------------
                                                            Current OMB
                 Section where contained                    control No.
------------------------------------------------------------------------
5.11....................................................       1513-0111
5.21....................................................       1513-0020
5.22....................................................       1513-0020
5.23....................................................       1513-0020
5.24....................................................       1513-0020
                                                               1513-0064
5.25....................................................       1513-0020
5.27....................................................       1513-0020
5.28....................................................       1513-0122
5.29....................................................       1513-0020
5.30....................................................       1513-0064
5.62....................................................       1513-0087
5.63....................................................       1513-0084
                                                               1513-0087
5.82....................................................       1513-0121
5.83....................................................       1513-0121
5.84....................................................       1513-0087
5.87....................................................       1513-0087
5.88....................................................       1513-0087
5.89....................................................       1513-0087
5.90....................................................       1513-0087
5.91....................................................       1513-0087
5.192...................................................       1513-0122
5.193...................................................       1513-0122
5.194...................................................       1513-0122
5.203...................................................       1513-0064
5.205...................................................       1513-0020
5.233...................................................       1513-0087
------------------------------------------------------------------------


0
2. Revise part 7 to read as follows:

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

Sec.
7.0 Scope.
Subpart A--General Provisions
7.1 Definitions.

[[Page 7606]]

7.2 Territorial extent.
7.3 General requirements and prohibitions under the FAA Act.
7.4 Jurisdictional limits of the FAA Act.
7.5 Ingredients and processes.
7.6 Brewery products not covered by this part.
7.7 Other TTB labeling regulations that apply to malt beverages.
7.8 Malt beverages for export.
7.9 [Reserved]
7.10 Other related regulations.
7.11 Forms.
7.12 Delegations of the Administrator.
Subpart B--Certificates of Label Approval

Requirements for Malt Beverages Bottled in the United States

7.21 Requirement for certificates of label approval (COLAs) for malt 
beverages bottled in the United States.
7.22 Rules regarding certificates of label approval (COLAs) for malt 
beverages bottled in the United States.
7.23 [Reserved]

Requirements for Malt Beverages Imported in Containers

7.24 Certificates of label approval (COLAs) for malt beverages 
imported in containers.
7.25 Rules regarding certificates of label approval (COLAs) for malt 
beverages imported in containers.

Administrative Rules

7.27 Presenting certificates of label approval (COLAs) to Government 
officials.
7.28 Formulas, samples, and documentation.
7.29 Personalized labels.
Subpart C--Alteration of Labels, Relabeling, and Adding Information to 
Containers
7.41 Alteration of labels.
7.42 Authorized relabeling activities by brewers and importers.
7.43 Relabeling activities that require separate written 
authorization from TTB.
7.44 Adding a label or other information to a container that 
identifies the wholesaler, retailer, or consumer.
Subpart D--Label Standards
7.51 Requirement for firmly affixed labels.
7.52 Legibility and other requirements for mandatory information on 
labels.
7.53 Type size of mandatory information and alcohol content 
statements.
7.54 Visibility of mandatory information.
7.55 Language requirements.
7.56 Additional information.
Subpart E--Mandatory Label Information
7.61 What constitutes a label for purposes of mandatory information.
7.62 Packaging (cartons, coverings, and cases).
7.63 Mandatory label information.
7.64 Brand name.
7.65 Alcohol content.
7.66 Name and address for domestically bottled malt beverages that 
were wholly fermented in the United States.
7.67 Name and address for domestically bottled malt beverages that 
were bottled after importation.
7.68 Name and address for malt beverages that are imported in a 
container.
7.69 Country of origin.
7.70 Net contents.
Subpart F--Restricted Labeling Statements
7.81 General.

Food Allergen Labeling

7.82 Voluntary disclosure of major food allergens.
7.83 Petitions for exemption from major food allergen labeling.

Production and Other Claims

7.84 Use of the term ``organic.''
7.85 [Reserved]
7.86 [Reserved]
7.87 [Reserved]
Subpart G--Prohibited Labeling Practices
7.101 General.
7.102 False or untrue statements.
7.103 Obscene or indecent depictions.
Subpart H--Labeling Practices That Are Prohibited if They Are 
Misleading
7.121 General.
7.122 Misleading statements or representations.
7.123 Guarantees.
7.124 Disparaging statements.
7.125 Tests or analyses.
7.126 Depictions of government symbols.
7.127 [Reserved]
7.128 Claims related to distilled spirits.
7.129 Health-related statements.
7.130 Appearance of endorsement.
7.131 [Reserved]
7.132 [Reserved]
Subpart I--Classes and Types of Malt Beverages
7.141 Class and type.
7.142 Class designations.
7.143 Class and type--special rules.
7.144 Malt beverages fermented or flavored with certain traditional 
ingredients.
7.145 Malt beverages containing less than 0.5 percent alcohol by 
volume.
7.146 Geographical names.
7.147 Statement of composition.
Subparts J-L--[Reserved]
Subpart M--Penalties and Compromise of Liability
7.221 Criminal penalties.
7.222 Conditions of basic permit.
7.223 Compromise.
Subpart N--Advertising of Malt Beverages
7.231 Application.
7.232 Definitions.
7.233 Mandatory statements.
7.234 Legibility of mandatory information.
7.235 Prohibited practices.
7.236 Comparative advertising.
Subpart O--Paperwork Reduction Act
7.241 OMB control numbers assigned under the Paperwork Reduction 
Act.

    Authority:  27 U.S.C. 205 and 207.


Sec.  7.0   Scope.

    This part sets forth requirements that apply to the labeling and 
packaging of malt beverages in containers, including requirements for 
label approval and rules regarding mandatory, regulated, and prohibited 
labeling statements. This part also sets forth requirements that apply 
to the advertising of malt beverages.

Subpart A--General Provisions


Sec.  7.1   Definitions.

    When used in this part and on forms prescribed under this part, the 
following terms have the meaning assigned to them in this section, 
unless the terms appear in a context that requires a different meaning. 
Any other term defined in the Federal Alcohol Administration Act (FAA 
Act) and used in this part has the same meaning assigned to it by the 
FAA Act.
    Administrator. The Administrator, Alcohol and Tobacco Tax and Trade 
Bureau, Department of the Treasury.
    Advertisement or Advertising. See Sec.  7.232 for meaning of these 
terms as used in subpart N of this part.
    Appropriate TTB officer. An officer or employee of the Alcohol and 
Tobacco Tax and Trade Bureau (TTB) authorized to perform any function 
relating to the administration or enforcement of this part by the 
current version of TTB Order 1135.7, Delegation of the Administrator's 
Authorities in 27 CFR part 7, Labeling and Advertising of Malt 
Beverages.
    Bottler. Any brewer or wholesaler who places malt beverages in 
containers.
    Brand name. The name under which a malt beverage or a line of malt 
beverages is sold.
    Certificate holder. The permittee or brewer whose name, address, 
and basic permit number, plant registry number, or brewer's notice 
number appears on an approved TTB Form 5100.31.
    Certificate of exemption from label approval. A certificate issued 
on TTB Form 5100.31, which authorizes the bottling of wine or distilled 
spirits, under the condition that the product will under no 
circumstances be sold, offered for sale, shipped, delivered for 
shipment, or otherwise introduced by the applicant, directly or 
indirectly, into interstate or foreign commerce.
    Certificate of label approval (COLA). A certificate issued on form 
TTB Form 5100.31 that authorizes the bottling of wine, distilled 
spirits, or malt beverages, or the removal of bottled wine, distilled 
spirits, or malt beverages from customs custody for introduction into 
commerce, as long as the product bears labels

[[Page 7607]]

identical to the labels appearing on the face of the certificate, or 
labels with changes authorized by TTB on the certificate or otherwise 
(such as through the issuance of public guidance available on the TTB 
website at https://www.ttb.gov).
    Container. Any can, bottle, box, cask, keg, barrel or other closed 
receptacle, in any size or material, which is for use in the sale of 
malt beverages at retail.
    Customs officer. An officer of U.S. Customs and Border Protection 
(CBP) or any agent or other person authorized by law to perform the 
duties of such an officer.
    Distinctive or fanciful name. A descriptive name or phrase chosen 
to identify a malt beverage product on the label. It does not include a 
brand name, class or type designation, statement of composition, or 
designation known to the trade or consumers.
    FAA Act. The Federal Alcohol Administration Act.
    Gallon. A U.S. gallon of 231 cubic inches of malt beverages at 39.1 
degrees Fahrenheit (4 degrees Celsius). All other liquid measures used 
are subdivisions of the gallon as defined.
    Interstate or foreign commerce. Commerce between any State and any 
place outside of that State or commerce within the District of Columbia 
or commerce between points within the same State but through any place 
outside of that State.
    Keg collar. A disk that is pushed down over the keg's bung or tap 
cover.
    Malt beverage. A beverage made by the alcoholic fermentation of an 
infusion or decoction, or combination of both, in potable brewing 
water, of malted barley with hops, or their parts, or their products, 
and with or without other malted cereals, and with or without the 
addition of unmalted or prepared cereals, other carbohydrates or 
products prepared therefrom, and with or without the addition of carbon 
dioxide, and with or without other wholesome products suitable for 
human food consumption. See Sec.  7.5 for standards applying to the use 
of processing methods and flavors in malt beverage production.
    Net contents. The amount, by volume, of a malt beverage held in a 
container.
    Permittee. Any person holding a basic permit under the FAA Act.
    Person. Any individual, corporation, partnership, association, 
joint-stock company, business trust, limited liability company, or 
other form of business enterprise, including a receiver, trustee, or 
liquidating agent and including an officer or employee of any agency of 
a State or political subdivision of a State.
    Responsible advertiser. The permittee or brewer responsible for the 
publication or broadcast of an advertisement.
    State. One of the 50 States of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico.
    Tap cover. A cap, usually made of plastic, that fits over the top 
of the tap (or bung) of a keg.
    TTB. The Alcohol and Tobacco Tax and Trade Bureau of the Department 
of the Treasury.
    United States (U.S.). The 50 States, the District of Columbia, and 
the Commonwealth of Puerto Rico.


Sec.  7.2   Territorial extent.

    The provisions of this part apply to the 50 States, the District of 
Columbia, and the Commonwealth of Puerto Rico.


Sec.  7.3   General requirements and prohibitions under the FAA Act.

    (a) Certificates of label approval (COLAs). Subject to the 
requirements and exceptions set forth in the regulations in subpart B 
of this part, any brewer or wholesaler who bottles malt beverages, and 
any person who removes malt beverages in containers from customs 
custody for sale or any other commercial purpose, is required to first 
obtain from TTB a certificate of label approval (COLA) covering the 
label(s) on each container.
    (b) Alteration, mutilation, destruction, obliteration, or removal 
of labels. Subject to the requirements and exceptions set forth in the 
regulations in subpart C of this part, it is unlawful to alter, 
mutilate, destroy, obliterate, or remove labels on malt beverage 
containers. This prohibition applies to any person, including 
retailers, holding malt beverages for sale in interstate or foreign 
commerce or any person holding malt beverages for sale after shipment 
in interstate or foreign commerce.
    (c) Labeling requirements for malt beverages. Subject to the 
jurisdictional limits of the FAA Act, as set forth in Sec.  7.4, it is 
unlawful for any person engaged in business as a brewer, wholesaler, or 
importer of malt beverages, directly or indirectly, or through an 
affiliate, to sell or ship, or deliver for sale or shipment, or 
otherwise introduce or receive in interstate or foreign commerce, or 
remove from customs custody, any malt beverages in containers unless 
such containers are marked, branded, labeled, and packaged in 
conformity with the regulations in this part.
    (d) Labeled in accordance with this part. In order to be labeled in 
accordance with the regulations in this part, a container of malt 
beverages must be in compliance with the following requirements:
    (1) It must bear one or more labels meeting the standards for 
``labels'' set forth in subpart D of this part;
    (2) One or more of the labels on the container must include the 
mandatory information set forth in subpart E of this part;
    (3) Claims on any label, container, or packaging (as defined in 
Sec.  7.81) must comply with the rules for restricted label statements, 
as applicable, set forth in subpart F of this part;
    (4) Statements or any other representations on any malt beverage 
label, container, or packaging (as defined in Sec. Sec.  7.101 and 
7.121) may not violate the regulations in subparts G and H of this part 
regarding certain practices on labeling of malt beverages; and
    (5) The class and type designation on any label, as well as any 
designation appearing on containers or packaging, must comply with the 
standards for classes and types set forth in subpart I of this part.


Sec.  7.4   Jurisdictional limits of the FAA Act.

    (a) Malt beverages sold in interstate or foreign commerce--(1) 
General. The labeling provisions of this part apply to malt beverages 
sold or shipped or delivered for shipment, or otherwise introduced into 
or received in any State from any place outside thereof, only to the 
extent that the laws or regulations of such State impose requirements 
similar to the requirements of the regulations in this part, with 
respect to the labels and labeling of malt beverages not sold or 
shipped or delivered for shipment or otherwise introduced into or 
received in such State from any place outside thereof.
    (2) Similar State law. For purposes of this section, a ``similar'' 
State law may be found in State laws or regulations that apply 
specifically to malt beverages or in State laws or regulations that 
provide general labeling requirements that are not specific to malt 
beverages but that do apply to malt beverages. In order to be 
``similar'' to the Federal requirements, the State requirements need 
not be identical to the Federal requirements. Nonetheless, if the label 
in question does not violate the laws or regulations of the State or 
States into which the brewer, wholesaler, or importer is shipping the 
malt beverages, it does not violate this part.
    (b) Malt beverages not sold in interstate or foreign commerce. The 
labeling regulations in this part do not apply to domestically bottled 
malt beverages that are not and will not be sold, or offered for sale, 
or shipped or delivered for shipment, or otherwise

[[Page 7608]]

introduced in interstate or foreign commerce.


Sec.  7.5   Ingredients and processes.

    (a) Use of nonbeverage flavors and other nonbeverage ingredients 
containing alcohol. (1) Nonbeverage flavors and other nonbeverage 
ingredients containing alcohol may be used in producing a malt beverage 
(sometimes referred to as a ``flavored malt beverage''). Except as 
provided in paragraph (a)(2) of this section, no more than 49 percent 
of the overall alcohol content (determined without regard to any 
tolerance otherwise allowed by this part) of the finished product may 
be derived from the addition of nonbeverage flavors and other 
nonbeverage ingredients containing alcohol. For example, a finished 
malt beverage that contains 5.0 percent alcohol by volume must derive a 
minimum of 2.55 percent alcohol by volume from the fermentation of 
barley malt and other materials and may derive not more than 2.45 
percent alcohol by volume from the addition of nonbeverage flavors and 
other nonbeverage ingredients containing alcohol.
    (2) In the case of malt beverages with an alcohol content of more 
than 6 percent by volume (determined without regard to any tolerance 
otherwise allowed by this part), no more than 1.5 percent of the volume 
of the malt beverage may consist of alcohol derived from added 
nonbeverage flavors and other nonbeverage ingredients containing 
alcohol.
    (b) Processing. Malt beverages may be filtered or otherwise 
processed in order to remove color, taste, aroma, bitterness, or other 
characteristics derived from fermentation.


Sec.  7.6   Brewery products not covered by this part.

    Certain fermented products that are regulated as ``beer'' under the 
Internal Revenue Code (IRC) do not fall within the definition of a 
``malt beverage'' under the FAA Act and thus are not subject to this 
part. See Sec.  7.7 for related TTB regulations that may apply to these 
products. See Sec. Sec.  25.11 and 27.11 of this chapter for the 
definition of ``beer'' under the IRC.
    (a) Sak[eacute] and similar products. Sak[eacute] and similar 
products (including products that fall within the definition of 
``beer'' under parts 25 and 27 of this chapter) that fall within the 
definition of a ``wine'' under the FAA Act are covered by the labeling 
regulations for wine in 27 CFR part 4.
    (b) Other beers not made with both malted barley and hops. The 
regulations in this part do not cover beer products that are not made 
with both malted barley and hops, or their parts or their products, or 
that do not fall within the definition of a ``malt beverage'' under 
Sec.  7.1 for any other reason. Bottlers and importers of alcohol 
beverages that do not fall within the definition of malt beverages, 
wine, or distilled spirits under the FAA Act should refer to the 
applicable labeling regulations for foods issued by the U.S. Food and 
Drug Administration. See 21 CFR part 101.


Sec.  7.7   Other TTB labeling regulations that apply to malt 
beverages.

    In addition to the regulations in this part, malt beverages must 
also comply with the following TTB labeling regulations:
    (a) Health warning statement. Alcoholic beverages, including malt 
beverages, that contain at least 0.5 percent alcohol by volume, must be 
labeled with a health warning statement in accordance with the 
Alcoholic Beverage Labeling Act of 1988 (ABLA). The regulations 
implementing the ABLA are contained in 27 CFR part 16.
    (b) Internal Revenue Code requirements. The labeling and marking 
requirements for beer under the Internal Revenue Code are found in 27 
CFR part 25, subpart J (for domestic breweries) and 27 CFR part 27, 
subpart E (for importers).


Sec.  7.8   Malt beverages for export.

    The regulations in this part shall not apply to malt beverages 
exported in bond.


Sec.  7.9   [Reserved]


Sec.  7.10   Other related regulations.

    (a) TTB regulations. Other TTB regulations that relate to malt 
beverages are listed in paragraphs (a)(1) through (8) of this section:
    (1) 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;
    (2) 27 CFR part 13--Labeling Proceedings;
    (3) 27 CFR part 16--Alcoholic Beverage Health Warning Statement;
    (4) 27 CFR part 25--Beer;
    (5) 27 CFR part 26--Liquors and Articles from Puerto Rico and the 
Virgin Islands;
    (6) 27 CFR part 27--Importation of Distilled Spirits, Wines, and 
Beer;
    (7) 27 CFR part 28--Exportation of Alcohol; and
    (8) 27 CFR part 71--Rules of Practice in Permit Proceedings.
    (b) Other Federal regulations. The regulations listed in paragraphs 
(b)(1) through (8) of this section issued by other Federal agencies 
also may apply:
    (1) 7 CFR part 205--National Organic Program;
    (2) 19 CFR part 11--Packing and Stamping; Marking;
    (3) 19 CFR part 102--Rules of Origin;
    (4) 19 CFR part 134--Country of Origin Marking;
    (5) 21 CFR part 1--General Enforcement Provisions, Subpart H, 
Registration of Food Facilities, and Subpart I, Prior Notice of 
Imported Food;
    (6) 21 CFR parts 70-82, which pertain to food and color additives;
    (7) 21 CFR part 110--Current Good Manufacturing Practice in 
Manufacturing, Packing, or Holding Human Food; and
    (8) 21 CFR parts 170-189, which pertain to food additives and 
secondary direct food additives for human consumption.


Sec.  7.11   Forms.

    (a) General. TTB prescribes and makes available all forms required 
by this part. Any person completing a form must provide all of the 
information required by each form as indicated by the headings on the 
form and the instructions for the form. Each form must be filed in 
accordance with this part and the instructions for the form.
    (b) Electronically filing forms. The forms required by this part 
can be filed electronically by using TTB's online filing systems: COLAs 
Online and Formulas Online. Anyone who intends to use one of these 
online filing systems must first register to use the system by 
accessing the TTB website at https://www.ttb.gov.
    (c) Obtaining paper forms. Forms required by this part are 
available for printing through the TTB website (https://www.ttb.gov) or 
by mailing a request to the Alcohol and Tobacco Tax and Trade Bureau, 
National Revenue Center, 550 Main Street, Room 8002, Cincinnati, OH 
45202.


Sec.  7.12   Delegations of the Administrator.

    Most of the regulatory authorities of the Administrator contained 
in this part are delegated to ``appropriate TTB officers.'' To find out 
which officers have been delegated specific authorities, see the 
current version of TTB Order 1135.7, Delegation of the Administrator's 
Authorities in 27 CFR part 7, Labeling and Advertising of Malt 
Beverages. Copies of this order can be obtained by accessing the TTB 
website (https://www.ttb.gov) or by mailing a request to the Alcohol 
and Tobacco Tax

[[Page 7609]]

and Trade Bureau, National Revenue Center, 550 Main Street, Room 8002, 
Cincinnati, OH 45202.

Subpart B--Certificates of Label Approval

Requirements for Malt Beverages Bottled in the United States


Sec.  7.21   Requirement for certificates of label approval (COLAs) for 
malt beverages bottled in the United States.

    (a) COLA requirement. Subject to the requirements and exceptions 
set forth in paragraphs (b) and (c) of this section, a brewer or 
wholesaler bottling malt beverages must obtain a certificate of label 
approval (COLA) covering the malt beverages from TTB prior to bottling 
the malt beverages or removing the malt beverages from the premises 
where they were bottled.
    (b) Malt beverages shipped or sold in interstate commerce. Persons 
bottling malt beverages (other than malt beverages in customs custody) 
for shipment, or delivery for sale or shipment, into a State (from 
outside of that State) are required to obtain a COLA covering those 
malt beverages only if the laws or regulations of the State require 
that all malt beverages sold or otherwise disposed of in such State be 
labeled in conformity with the requirements of subparts D through I of 
this part. This requirement applies when the State has either adopted 
subparts D through I of this part in their entireties or has adopted 
requirements that are identical in effect to those set forth in 
subparts D through I of this part. In accordance with Sec. Sec.  7.3 
and 7.4, malt beverages that are not subject to the COLA requirements 
of this section may still be subject to the substantive labeling 
provisions of subparts D through I of this part to the extent that the 
State into which the malt beverages are being shipped has similar State 
laws or regulations.
    (c) Products not shipped or sold in interstate commerce. Persons 
bottling malt beverages that will not be shipped or delivered for sale 
or shipment in interstate or foreign commerce are not required to 
obtain a COLA or a certificate of exemption from label approval. (Note: 
A certificate of exemption from label approval is a certificate issued 
by TTB to cover a wine or distilled spirits product that will not be 
sold, offered for sale, shipped, delivered for shipment, or otherwise 
introduced, in interstate or foreign commerce.)
    (d) Evidence of COLA. Upon request by the appropriate TTB officer, 
a bottler or importer must provide evidence of label approval for a 
label used on a container of malt beverages that is subject to the COLA 
requirements of this part. This requirement may be satisfied by 
providing original COLAs, photocopies, or electronic copies of COLAs, 
or records showing the TTB identification number assigned to the 
approved COLA.


Sec.  7.22   Rules regarding certificates of label approval (COLAs) for 
malt beverages bottled in the United States.

    (a) What a COLA authorizes. An approved TTB Form 5100.31 authorizes 
the bottling of malt beverages covered by the certificate of label 
approval (COLA), as long as the container bears labels identical to the 
labels appearing on the face of the COLA, or labels with changes 
authorized by TTB on the COLA or otherwise, (such as through the 
issuance of public guidance available on the TTB website at https://www.ttb.gov).
    (b) When to obtain a COLA. The COLA must be obtained prior to 
bottling. No brewer or wholesaler may bottle malt beverages or remove 
malt beverages from the premises where bottled unless a COLA has been 
obtained.
    (c) Application for a COLA. The bottler may apply for a COLA by 
submitting an application to TTB on Form 5100.31, in accordance with 
the instructions on the form. The bottler may apply for a COLA either 
electronically by accessing TTB's online system, COLAs Online, at 
https://www.ttb.gov, or by submitting the paper form. For procedures 
regarding the issuance of COLAs, see part 13 of this chapter.


Sec.  7.23   [Reserved]

Requirements for Malt Beverages Imported in Containers


Sec.  7.24   Certificates of label approval (COLAs) for malt beverages 
imported in containers.

    (a) Application requirement. Any person removing malt beverages in 
containers from customs custody for consumption must first apply for 
and obtain a certificate of label approval (COLA) covering the malt 
beverages from the appropriate TTB officer, or obtain authorization to 
use the COLA from the person to whom the COLA is issued.
    (b) Release of malt beverages from customs custody. Malt beverages, 
imported in containers, are not eligible for release from customs 
custody for consumption, and no person may remove such malt beverages 
from customs custody for consumption, unless the person removing the 
malt beverages has obtained a COLA covering the malt beverages and is 
able to provide it (either electronically or on paper) upon request. 
Products imported under another person's COLA are eligible for release 
only if each bottle or individual container to be imported bears the 
name (or trade name) and address of the person to whom the COLA was 
issued by TTB, and only if the importer using the COLA to obtain 
release of a shipment can substantiate that the person to whom the COLA 
was issued has authorized its use by the importer.
    (c) Filing requirements. If filing electronically, the importer 
must file with U.S Customs and Border Protection (CBP), at the time of 
filing the customs entry, the TTB-assigned identification number of the 
valid COLA that corresponds to the label on the product or lot of malt 
beverages being imported. If the importer is not filing electronically, 
the importer must provide a copy of the COLA to CBP at the time of 
entry. In addition, the importer must provide a copy of the applicable 
COLA, and proof of the COLA holder's authorization if applicable, upon 
request by the appropriate TTB officer or a customs officer.
    (d) Evidence of COLA. Upon request by the appropriate TTB officer, 
an importer must provide evidence of label approval for a label used on 
a container of malt beverages that is subject to the COLA requirements 
of this part. This requirement may be satisfied by providing original 
COLAs, photocopies, or electronic copies of COLAs, or records showing 
the TTB identification number assigned to the approved COLA.
    (e) Scope of this section. The COLA requirement imposed by this 
section applies only to malt beverages that are removed for sale or any 
other commercial purpose. See 27 CFR 27.49, 27.74, and 27.75 for 
labeling exemptions applicable to certain imported samples of malt 
beverages.
    (f) Relabeling in customs custody. Containers of malt beverages in 
customs custody that are required to be covered by a COLA but are not 
labeled in conformity with a COLA must be relabeled, under the 
supervision and direction of customs officers, prior to their removal 
from customs custody for consumption.
    (g) State law. Paragraphs (a) through (c) of this section apply 
only if the laws or regulations of the State in which the malt 
beverages are withdrawn require that all malt beverages sold or 
otherwise disposed of in such State be labeled in conformity with the 
requirements of subparts D through I of this part. A State

[[Page 7610]]

requires that malt beverages be labeled in conformity with the 
requirements of subparts D through I of this part when the State has 
either adopted subparts D through I of this part in their entireties or 
has adopted requirements identical in effect to those set forth in 
subparts D through I in this part. In accordance with Sec. Sec.  7.3 
and 7.4, malt beverages that are not subject to the COLA requirements 
of this section may still be subject to the substantive labeling 
provisions of subparts D through I of this part to the extent that the 
State into which the malt beverages are being shipped has similar State 
law or regulation.


Sec.  7.25   Rules regarding certificates of label approval (COLAs) for 
malt beverages imported in containers.

    (a) What a COLA authorizes. An approved TTB Form 5100.31 authorizes 
the use of the labels covered by the certificate of label approval 
(COLA) on containers of malt beverages, as long as the container bears 
labels identical to the labels appearing on the face of the COLA, or 
labels with changes authorized by the form or otherwise authorized by 
TTB (such as through the issuance of public guidance available on the 
TTB website at https://www.ttb.gov).
    (b) When to obtain a COLA. The COLA must be obtained prior to the 
removal of malt beverages in containers from customs custody for 
consumption.
    (c) Application for a COLA. The person responsible for the 
importation of malt beverages must obtain approval of the labels by 
submitting an application to TTB on Form 5100.31. A person may apply 
for a COLA either electronically by accessing TTB's online system, 
COLAs Online, at https://www.ttb.gov or by submitting the paper form. 
For procedures regarding the issuance of COLAs, see part 13 of this 
chapter.

Administrative Rules


Sec.  7.27   Presenting certificates of label approval (COLAs) to 
Government officials.

    A certificate holder must present the original or a paper or 
electronic copy of the appropriate certificate of label approval (COLA) 
upon the request of any duly authorized representative of the United 
States Government.


Sec.  7.28   Formulas, samples, and documentation.

    (a) Prior to or in conjunction with the review of an application 
for a certificate of label approval (COLA) on TTB Form 5100.31, the 
appropriate TTB officer may require a bottler or importer to submit a 
formula, the results of laboratory testing of the malt beverage, or a 
sample of any malt beverage or ingredients used in producing a malt 
beverage. After the issuance of a COLA, or with regard to any malt 
beverage required to be covered by a COLA, the appropriate TTB officer 
may require a full and accurate statement of the contents of the 
container.
    (b) A formula may be filed electronically by using Formulas Online, 
or it may be submitted on paper on TTB Form 5100.51. See Sec.  7.11 for 
more information on forms and Formulas Online.


Sec.  7.29   Personalized labels.

    (a) General. Applicants for label approval may obtain permission 
from TTB to make certain changes in order to personalize labels without 
having to resubmit labels for TTB approval. A personalized label is an 
alcohol beverage label that meets the minimum mandatory label 
requirements and is customized for customers. Personalized labels may 
contain a personal message, picture, or other artwork that is specific 
to the consumer who is purchasing the product. For example, a brewer 
may offer individual or corporate customers labels that commemorate an 
event such as a wedding or grand opening.
    (b) Application. Any person who intends to offer personalized 
labels must submit a template for the personalized label as part of the 
application for label approval required under Sec. Sec.  7.21 or 7.24, 
and must note on the application a description of the specific 
personalized information that may change.
    (c) Approval of personalized label. If the application complies 
with the regulations, TTB will issue a certificate of label approval 
(COLA) with a qualification allowing the personalization of labels. The 
qualification will allow the certificate holder to add or change items 
on the personalized label such as salutations, names, graphics, 
artwork, congratulatory dates and names, or event dates without 
applying for a new COLA. All of these items on personalized labels must 
comply with the regulations of this part.
    (d) Changes not allowed to personalized labels. Approval of an 
application to personalize labels does not authorize the addition of 
any information that discusses either the alcohol beverage or 
characteristics of the alcohol beverage or that is inconsistent with or 
in violation of the provisions of this part or any other applicable 
provision of law or regulations.

Subpart C--Alteration of Labels, Relabeling, and Adding Information 
to Containers


Sec.  7.41   Alteration of labels.

    (a) Prohibition. It is unlawful for any person to alter, mutilate, 
destroy, obliterate or remove any mark, brand, or label on malt 
beverages in containers held for sale in interstate or foreign 
commerce, or held for sale after shipment in interstate or foreign 
commerce, except as authorized by Sec. Sec.  7.42, 7.43, or 7.44, or as 
otherwise authorized by Federal law.
    (b) Authorized relabeling. For purposes of the relabeling 
activities authorized by this subpart, the term ``relabel'' includes 
the alteration, mutilation, destruction, obliteration, or removal of 
any existing mark, brand, or label on the container, as well as the 
addition of a new label (such as a sticker that adds information about 
the product or information engraved on the container) to the container, 
and the replacement of a label with a new label bearing identical 
information.
    (c) Obligation to comply with other requirements. Authorization to 
relabel under this subpart:
    (1) In no way authorizes the placement of labels on containers that 
do not accurately reflect the brand, bottler, identity, or other 
characteristics of the product;
    (2) Does not relieve the person conducting the relabeling 
operations from any obligation to comply with the regulations in this 
part and with State or local law: and,
    (3) Does not relieve the person conducting the relabeling 
operations from any obligation to obtain permission from the owner of 
the brand where otherwise required.


Sec.  7.42   Authorized relabeling activities by brewers and importers.

    (a) Relabeling at brewery premises. A brewer may relabel 
domestically bottled malt beverages prior to removal from, and after 
return to bond at, the brewery premises, with labels covered by a 
certificate of label approval (COLA) without obtaining separate 
permission from TTB for the relabeling activity, provided that the 
brewer is the certificate holder (and bottler).
    (b) Relabeling after removal from brewery premises. A brewer may 
relabel domestically bottled malt beverages (or direct the relabeling 
of such malt beverages by an authorized agent) after removal from 
brewery premises with labels covered by a COLA, without obtaining 
separate permission from TTB for the relabeling activity, provided that

[[Page 7611]]

the brewer is the certificate holder (and bottler).
    (c) Relabeling in customs custody. Under the supervision of U.S. 
customs officers, imported malt beverages in containers in customs 
custody may be relabeled without obtaining separate permission from TTB 
for the relabeling activity. Such containers must bear labels covered 
by a certificate of label approval (COLA) upon their removal from 
customs custody for consumption. See Sec.  7.24(b).
    (d) Relabeling after removal from customs custody. The importer of 
malt beverages in containers may relabel such malt beverages (or direct 
the relabeling of such malt beverages by an authorized agent) after 
removal from customs custody without obtaining separate permission from 
TTB for the relabeling activity, as long as the labels are covered by a 
COLA.


Sec.  7.43   Relabeling activities that require separate written 
authorization from TTB.

    (a) General. Any permittee or brewer holding malt beverages for 
sale who needs to relabel the containers but is not the original 
bottler may apply for written permission for the relabeling of malt 
beverage containers. The appropriate TTB officer may permit relabeling 
of malt beverages in containers if the facts show that the relabeling 
is for the purpose of compliance with the requirements of this part or 
State law, or for the purpose of replacing damaged labels.
    (b) Application. The written application must include:
    (1) Copies of the original and proposed new labels;
    (2) The circumstances of the request, including the reason for 
relabeling;
    (3) The number of containers to be relabeled;
    (4) The location where the relabeling will take place; and,
    (5) The name and address of the person who will be conducting the 
relabeling operations.


Sec.  7.44   Adding a label or other information to a container that 
identifies the wholesaler, retailer, or consumer.

    Any label or other information that identifies the wholesaler, 
retailer, or consumer of the malt beverage may be added to containers 
(by the addition of stickers, engraving, stenciling, etc.) without 
prior approval from TTB and without being covered by a certificate of 
label approval. Such information may be added before or after the 
containers are removed from brewery premises or released from customs 
custody. The information added:
    (a) May not violate the provisions of subparts F, G, and H of this 
part;
    (b) May not contain any reference to the characteristics of the 
product; and
    (c) May not be added to the container in such a way that it 
obscures any other label on the container.

Subpart D--Label Standards


Sec.  7.51   Requirement for firmly affixed labels.

    (a) General rule. Except as otherwise provided in paragraph (b) of 
this section, any label that is not an integral part of the container 
must be affixed to the container in such a way that it cannot be 
removed without thorough application of water or other solvents.
    (b) Exception for keg labels. The following provisions apply to 
labels on kegs with a capacity of 5.16 gallons or more that bear 
mandatory information, as defined by Sec.  7.61(a)(5), and are in the 
form of a keg collar or tap cover, as defined in Sec.  7.1.
    (1) Such keg collars or tap covers are considered to be firmly 
affixed if removal would break or destroy the keg collar or tap cover 
in such a way that it cannot be reused.
    (2) Such keg collars or tap covers are not required to be firmly 
affixed, provided that the name of the bottler or importer of the malt 
beverage, as applicable under Sec. Sec.  7.66-7.68, is permanently or 
semi-permanently stated on the keg in the form of embossing, engraving, 
stamping, or through the use of a sticker or ink jet method.
    (c) This section in no way affects the requirements of part 16 of 
this chapter regarding the mandatory health warning statement.


Sec.  7.52   Legibility and other requirements for mandatory 
information on labels.

    (a) Readily legible. Mandatory information on labels must be 
readily legible to potential consumers under ordinary conditions.
    (b) Separate and apart. Subject to the exceptions below, mandatory 
information on labels, except brand names, must be separate and apart 
from any additional information.
    (1) This does not preclude the addition of brief optional phrases 
of additional information as part of the class or type designation 
(such as ``premium malt beverage''), the name and address statement 
(such as ``Proudly brewed and bottled by ABC Brewing Co. in Pittsburgh, 
PA, for over 30 years''), or other information required by Sec.  
7.63(a). The statements required by Sec.  7.63(b) may not include 
additional information.
    (2) Mandatory information (other than an aspartame declaration 
required by Sec.  7.63(b)(4)) may be contained among other descriptive 
or explanatory information if the script, type, or printing of the 
mandatory information is substantially more conspicuous than that of 
the descriptive or explanatory information.
    (c) Contrasting background. Mandatory information must appear in a 
color that contrasts with the background on which it appears, except 
that if the net contents or the name and address are blown into a glass 
container, they need not be contrasting. The color of the container and 
of the malt beverages must be taken into account if the label is 
transparent or if mandatory label information is etched, engraved, 
sandblasted, or otherwise carved into the surface of the container or 
is branded, stenciled, painted, printed, or otherwise directly applied 
on to the surface of the container. Examples of acceptable contrasts 
are:
    (1) Black lettering appearing on a white or cream background; or
    (2) White or cream lettering appearing on a black background.
    (d) Capitalization. Except for the aspartame statement when 
required by Sec.  7.63(b)(4), which must appear in all capital letters, 
mandatory information may appear in all capital letters, in all lower 
case letters, or in mixed-case using both capital and lower-case 
letters.


Sec.  7.53   Type size of mandatory information and alcohol content 
statements.

    (a) All capital and lowercase letters in statements of mandatory 
information on labels must meet the following type size requirements.
    (1) Minimum type size--Containers of more than one-half pint. All 
mandatory information (including an alcohol content statement required 
by Sec.  7.63(a)(3)) must be in script, type, or printing that is at 
least two millimeters in height.
    (2) Minimum type size--Containers of one-half pint or less. All 
mandatory information (including an alcohol content statement required 
by Sec.  7.63(a)(3)) must be in script, type, or printing that is at 
least one millimeter in height.
    (b) Maximum type size for mandatory and optional alcohol content 
statements--(1) Containers of more than 40 fluid ounces. An alcohol 
content statement, whether required or optional under this part, may 
not appear in script, type, or printing that is more than four 
millimeters in height on containers of malt beverages of more than 40 
fluid ounces.
    (2) Containers of 40 fluid ounces or less. An alcohol content 
statement, whether required or optional under this

[[Page 7612]]

part, may not appear in script, type, or printing that is more than 
three millimeters in height on containers of malt beverages of 40 fluid 
ounces or less.


Sec.  7.54   Visibility of mandatory information.

    Mandatory information on a label must be readily visible and may 
not be covered or obscured in whole or in part. See Sec.  7.62 for 
rules regarding packaging of containers (including cartons, coverings, 
and cases). See subpart N of this part for regulations pertaining to 
advertising materials.


Sec.  7.55   Language requirements.

    (a) General. Mandatory information must appear in the English 
language, with the exception of the brand name and except as provided 
in paragraph (c) of this section.
    (b) Foreign languages. Additional statements in a foreign language, 
including translations of mandatory information that appears elsewhere 
in English on the label, are allowed on labels and containers as long 
as they do not in any way conflict with, or contradict, the 
requirements of this part.
    (c) Malt beverages for consumption in the Commonwealth of Puerto 
Rico. Mandatory information may be stated solely in the Spanish 
language on labels of malt beverages bottled for consumption within the 
Commonwealth of Puerto Rico.


Sec.  7.56   Additional information.

    Information (other than mandatory information) that is truthful, 
accurate, and specific, and that does not violate subpart F, G, or H of 
this part, may appear on labels. Such additional information may not 
conflict with, modify, qualify or restrict mandatory information in any 
manner.

Subpart E--Mandatory Label Information


Sec.  7.61   What constitutes a label for purposes of mandatory 
information.

    (a) Label. Certain information, as outlined in Sec.  7.63, must 
appear on a label. When used in this part for purposes of determining 
where mandatory information must appear, the term ``label'' includes:
    (1) Material affixed to the container, whether made of paper, 
plastic, metal, or other matter;
    (2) For purposes of the net contents statement and the name and 
address statement only, information blown, embossed, or molded into the 
container as part of the process of manufacturing the container;
    (3) Information etched, engraved, sandblasted, or otherwise carved 
into the surface of the container;
    (4) Information branded, stenciled, painted, printed, or otherwise 
directly applied on to the surface of the container; and
    (5) Information on a keg collar or a tap cover of a keg, only if it 
includes mandatory information that is not repeated elsewhere on a 
label firmly affixed to the container and only if it meets the 
requirements of Sec.  7.51.
    (b) Information appearing elsewhere on the container. Information 
appearing on the following parts of the container is subject to all of 
the restrictions and prohibitions set forth in subparts F, G, and H of 
this part, but will not satisfy any requirements in this part for 
mandatory information that must appear on labels:
    (1) Material affixed to, or information appearing on, the bottom 
surface of the container;
    (2) Caps, corks, or other closures unless authorized to bear 
mandatory information by the appropriate TTB officer; and
    (3) Foil or heat shrink bottle capsules.
    (c) Materials not firmly affixed to the container. Any materials 
that accompany the container to the consumer but are not firmly affixed 
to the container, including booklets, leaflets, and hang tags, are not 
``labels'' for purposes of this part. Such materials are instead 
subject to the advertising regulations in subpart N of this part.


Sec.  7.62   Packaging (cartons, coverings, and cases).

    (a) General. The term ``packaging'' includes any covering, carton, 
case, carrier, or other packaging of malt beverage containers used for 
sale at retail, but does not include shipping cartons or cases that are 
not intended to accompany the container to the consumer.
    (b) Prohibition. Any packaging of malt beverage containers may not 
contain any statement, design, device, or graphic, pictorial, or 
emblematic representation that is prohibited on labels by regulations 
in subpart F, G, or H of this part.
    (c) Other information on packaging. The following requirements 
apply to optional information on packaging.
    (1) The packaging may display any information that is not in 
conflict with the labeling on the container or containers within the 
packaging.
    (2) If the packaging displays a brand name, it must display the 
brand name in its entirety. For example, if a brand name is required to 
be modified with additional information on the container or containers 
within the packaging, the packaging must also display the same 
modifying language.
    (3) If the packaging displays a class or type designation it must 
be identical to the class or type designation appearing on the 
container or containers within the packaging. For example, if the 
packaging displays a class or type designation for a specialty product 
for which a statement of composition is required on the container, the 
packaging must include the statement of composition as well.
    (d) Labeling of containers within the packaging. The container or 
containers within the packaging are subject to all labeling 
requirements of this part, including mandatory labeling information 
requirements, regardless of whether the packaging bears such 
information.


Sec.  7.63   Mandatory label information.

    (a) Mandatory information. Malt beverage containers must bear a 
label or labels (as defined in Sec.  7.61(a)) containing the following 
information:
    (1) Brand name, in accordance with Sec.  7.64;
    (2) Class, type, or other designation, in accordance with subpart I 
of this part;
    (3) Alcohol content, in accordance with Sec.  7.65, for malt 
beverages that contain any alcohol derived from added nonbeverage 
flavors or other added nonbeverage ingredients (other than hops 
extract) containing alcohol;
    (4) Name and address of the bottler or importer (which may be 
blown, embossed, or molded into the container as part of the process of 
manufacturing the container), in accordance with Sec.  7.66, 7.67, or 
7.68, as applicable; and
    (5) Net contents (which may be blown, embossed, or molded into the 
container as part of the process of manufacturing the container), in 
accordance with Sec.  7.70.
    (b) Disclosure of certain ingredients. Certain ingredients must be 
declared on a label without the inclusion of any additional information 
as part of the statement as follows:
    (1) FD&C Yellow No. 5. If a malt beverage contains the coloring 
material FD&C Yellow No. 5, the label must include a statement to that 
effect, such as ``FD&C Yellow No. 5'' or ``Contains FD&C Yellow No. 
5.''
    (2) Cochineal extract or carmine. If a malt beverage contains the 
color additive cochineal extract or the color additive carmine, the 
label must include a statement to that effect, using the respective 
common or usual name (such as, ``contains cochineal extract'' or 
``contains carmine''). This requirement applies to labels when either 
of the

[[Page 7613]]

coloring materials is used in a malt beverage that is removed from 
bottling premises or from customs custody on or after April 16, 2013.
    (3) Sulfites. If a malt beverage contains 10 or more parts per 
million of sulfur dioxide or other sulfiting agent(s) measured as total 
sulfur dioxide, the label must include a statement to that effect. 
Examples of acceptable statements are ``Contains sulfites'' or 
``Contains (a) sulfiting agent(s)'' or a statement identifying the 
specific sulfiting agent. The alternative terms ``sulphites'' or 
``sulphiting'' may be used.
    (4) Aspartame. If the malt beverage contains aspartame, the label 
must include the following statement, in capital letters, separate and 
apart from all other information: ``PHENYLKETONURICS: CONTAINS 
PHENYLALANINE.''


Sec.  7.64   Brand name.

    (a) Requirement. The malt beverage label must include a brand name. 
If the malt beverage is not sold under a brand name, then the name of 
the bottler or importer, as applicable, appearing in the name and 
address statement is treated as the brand name.
    (b) Misleading brand names. Labels may not include any misleading 
brand names. A brand name is misleading if it creates (by itself or in 
association with other printed or graphic matter) any erroneous 
impression or inference as to the age, origin, identity, or other 
characteristics of the malt beverage. A brand name that would otherwise 
be misleading may be qualified with the word ``brand'' or with some 
other qualification if the appropriate TTB officer determines that the 
qualification dispels any misleading impression that might otherwise be 
created.


Sec.  7.65   Alcohol content.

    (a) General. Alcohol content and the percentage and quantity of the 
original gravity or extract may be stated on any malt beverage label, 
unless prohibited by State law. When alcohol content is stated, and the 
manner of statement is not required under State law, it must be stated 
as prescribed in paragraph (b) of this section.
    (b) How the alcohol content must be expressed. The following rules 
apply to both mandatory and optional statements of alcohol content.
    (1) A statement of alcohol content must be expressed as a 
percentage of alcohol by volume. Other truthful, accurate, and specific 
factual representations of alcohol content, such as alcohol by weight, 
may be made, as long as they appear together with, and as part of, the 
statement of alcohol content as a percentage of alcohol by volume.
    (2) For malt beverages containing one half of one percent (0.5 
percent) or more alcohol by volume, statements of alcohol content must 
be expressed to the nearest one-tenth of a percentage point, subject to 
the tolerance permitted by paragraph (c) of this section. For malt 
beverages containing less than 0.5 percent alcohol by volume, alcohol 
content may be expressed either to the nearest one-tenth or the nearest 
one-hundredth of a percentage point, and such statements are not 
subject to any tolerance. See paragraph (e) of this section for the 
rules applicable to such statements.
    (3)(i) The alcohol content statement must be expressed in one of 
the following formats:
    (A) ``Alcohol percent by volume'';
    (B) ``percent alcohol by volume''; or
    (C) ``Alcohol by volume: percent.''
    (ii) Any of the words or symbols may be enclosed in parentheses and 
authorized abbreviations may be used with or without a period. The 
alcohol content statement does not have to appear with quotation marks.
    (4) The statements listed in paragraph (b)(3) of this section must 
appear as shown, except that the following abbreviations may be used: 
Alcohol may be abbreviated as ``alc''; percent may be represented by 
the percent symbol ``%''; alcohol and volume may be separated by a 
slash ``/'' in lieu of the word ``by''; and volume may be abbreviated 
as ``vol''.
    (5) Examples. The following are examples of alcohol content 
statements that comply with the requirements of this part:
    (i) ``4.2% alc/vol'';
    (ii) ``Alc. 4.0 percent by vol.'';
    (iii) ``Alc 4% by vol''; and
    (iv) ``5.9% Alcohol by Volume.''
    (c) Tolerances. Except as provided by paragraph (d) of this 
section, a tolerance of 0.3 percentage points will be permitted, either 
above or below the stated alcohol content, for malt beverages 
containing 0.5 percent or more alcohol by volume. However, any malt 
beverage that is labeled as containing 0.5 percent or more alcohol by 
volume may not contain less than 0.5 percent alcohol by volume, 
regardless of any tolerance. The tolerance provided by this paragraph 
does not apply in determining compliance with the provisions of Sec.  
7.5 regarding the percentage of alcohol derived from added nonbeverage 
flavors and other nonbeverage ingredients containing alcohol.
    (d) Low alcohol and reduced alcohol. The terms ``low alcohol'' or 
``reduced alcohol'' may be used only on labels of malt beverages 
containing less than 2.5 percent alcohol by volume. The actual alcohol 
content may not equal or exceed 2.5 percent alcohol by volume, 
regardless of any tolerance permitted by paragraph (c) of this section.
    (e) Non-alcoholic. The term ``non-alcoholic'' may be used on labels 
of malt beverages only if the statement ``contains less than 0.5 
percent (or .5%) alcohol by volume'' appears immediately adjacent to 
it, in readily legible printing, and on a completely contrasting 
background. No tolerances are permitted for malt beverages labeled as 
``non-alcoholic'' and containing less than 0.5 percent alcohol by 
volume. A malt beverage may not be labeled with an alcohol content of 
0.0 percent alcohol by volume, unless it is also labeled as ``alcohol 
free'' in accordance with paragraph (f) of this section, and contains 
no alcohol.
    (f) Alcohol free. The term ``alcohol free'' may be used only on 
malt beverages containing no alcohol. No tolerances are permitted for 
``alcohol free'' malt beverages.


Sec.  7.66   Name and address for domestically bottled malt beverages 
that were wholly fermented in the United States.

    (a) General. Domestically bottled malt beverages that were wholly 
fermented in the United States and contain no imported malt beverages 
must be labeled in accordance with this section. (See Sec. Sec.  7.67 
and 7.68 for name and address requirements applicable to malt beverages 
that are not wholly fermented in the United States.)
    (b) Mandatory statement. A label on the container must state the 
name and address of the bottler, in accordance with the rules set forth 
in this section.
    (c) Form of address. The address consists of the city and State and 
must be consistent with the information reflected on the brewer's 
notice required under part 25 of this chapter. Addresses may, but are 
not required to, include additional information such as street names, 
counties, zip codes, phone numbers, and website addresses. The postal 
abbreviation of the State name may be used; for example, California may 
be abbreviated as CA.
    (d) Optional statements. The bottler may, but is not required to, 
be identified by a phrase describing the function performed by that 
person, such as ``bottled by,'' ``canned by,'' ``packed by,'' or 
``filled by,'' followed by the name and address of the bottler. If one 
person performs more than one function, the label may so indicate (for

[[Page 7614]]

example, ``brewed and bottled by XYZ Brewery.'') If different functions 
are performed by more than one person, statements on the label may not 
create the misleading impression that the different functions were 
performed by the same person. The appropriate TTB officer may require 
specific information about the functions performed if necessary to 
prevent a misleading impression on the label.
    (e) Principal place of business. The bottler's principal place of 
business may be shown in lieu of the actual place where the malt 
beverage was bottled if the address shown is a location where a 
bottling operation takes place. The appropriate TTB officer may 
disapprove the listing of a principal place of business if its use 
would create a false or misleading impression as to the geographic 
origin of the malt beverage. See 27 CFR 25.141 and 25.142 for coding 
requirements applicable in these circumstances.
    (f) Multiple breweries under the same ownership. If two or more 
breweries are owned or operated by the same person, the place where the 
malt beverage is bottled within the meaning of paragraph (a) of this 
section may be shown in one of the following two ways:
    (1) Listing of where bottled. The place where the malt beverage is 
bottled may be shown as the only location on the label; or
    (2) Listing of all brewer's locations. The place where the malt 
beverage is bottled may appear in a listing of the locations of 
breweries owned by that person if the place of bottling is not given 
less emphasis than any of the other locations. See 27 CFR 25.141 and 
25.142 for coding requirements applicable in these circumstances.
    (g) Malt beverages bottled for another person. (1) If malt 
beverages are bottled for another person, the label may state, in 
addition to (but not in lieu of) the name and address of the bottler, 
the name and address of such other person, immediately preceded by the 
words ``brewed and bottled for'' or ``bottled for'' or another similar 
appropriate phrase. Such statements must clearly indicate the 
relationship between the two persons (for example, contract brewing).
    (2) If the same brand of malt beverage is brewed and bottled by two 
or more breweries that are not under the same ownership, the label for 
each brewery may set forth all the locations where bottling takes 
place, as long as the label uses the actual location (and not the 
principal place of business) and as long as the nature of the 
arrangement is clearly set forth.
    (h) Use of trade names. The name of the person appearing on the 
label may be the trade name or the operating name, as long as it is 
identical to a trade or operating name appearing on the brewer's 
notice.


Sec.  7.67   Name and address for domestically bottled malt beverages 
that were bottled after importation.

    (a) General. This section applies to domestically bottled malt 
beverages that were bottled after importation. See Sec.  7.68 for name 
and address requirements applicable to imported malt beverages that are 
imported in a container. See 19 CFR parts 102 and 134 for U.S. Customs 
and Border Protection country of origin marking requirements.
    (b) Malt beverages that were subject to blending or other 
production activities after importation. Malt beverages that were 
subject, after importation, to blending or other production may not 
bear an ``imported by'' statement on the label, but must instead be 
labeled in accordance with the rules set forth in Sec.  7.66 with 
regard to mandatory and optional labeling statements.
    (c) Malt beverages bottled after importation without blending or 
other production activities. The label on malt beverages that are 
bottled without being subject to blending or other production 
activities in the United States after the malt beverages were imported 
must state the words ``imported by'' or a similar appropriate phrase, 
followed by the name and address of the importer. The label must also 
state the words ``bottled by'' or ``packed by,'' followed by the name 
and address of the bottler, except that the following phrases are 
acceptable in lieu of the name and address of the bottler under the 
circumstances set forth below:
    (1) If the malt beverages were bottled for the person responsible 
for the importation, the words ``imported and bottled (canned, packed 
or filled) in the United States for'' (or a similar appropriate phrase) 
followed by the name and address of the principal place of business in 
the United States of the person responsible for the importation;
    (2) If the malt beverages were bottled by the person responsible 
for the importation, the words ``imported and bottled (canned, packed 
or filled) in the United States by'' (or a similar appropriate phrase) 
followed by the name and address of the principal place of business in 
the United States of the person responsible for the importation;
    (3) In the situations set forth in paragraphs (c)(1) and (2) of 
this section, the address shown on the label may be that of the 
principal place of business of the importer who is also the bottler, 
provided that the address shown is a location where bottling takes 
place.
    (d) Use of trade names. A trade name may be used if the trade name 
is listed on the importer's basic permit.


Sec.  7.68   Name and address for malt beverages that are imported in a 
container.

    (a) General. This section applies to malt beverages that are 
imported in a container, as defined in Sec.  7.1. See Sec.  7.67 for 
rules regarding name and address requirements applicable to malt 
beverages that are domestically bottled after importation. See 19 CFR 
parts 102 and 134 for U.S. Customs and Border Protection country of 
origin marking requirements.
    (b) Mandatory labeling statement. The label on malt beverages 
imported in containers, as defined in Sec.  7.1, must state the words 
``imported by'' or a similar appropriate phrase, followed by the name 
and address of the importer.
    (1) For purposes of this section, the importer is the holder of the 
importer's basic permit that either makes the original customs entry or 
is the person for whom such entry is made, or the holder of the 
importer's basic permit that is the agent, distributor, or franchise 
holder for the particular brand of imported alcohol beverages and that 
places the order abroad.
    (2) The address of the importer must be stated as the city and 
State of the principal place of business and must be consistent with 
the address reflected on the importer's basic permit. Addresses may, 
but are not required to, include additional information such as street 
names, counties, zip codes, phone numbers, and website addresses. The 
postal abbreviation of the State name may be used; for example, 
California may be abbreviated as CA.


Sec.  7.69   Country of origin.

    For U.S. Customs and Border Protection (CBP) rules regarding 
country of origin marking requirements, see the CBP regulations at 19 
CFR parts 102 and 134.


Sec.  7.70   Net contents.

    The following rules apply to the net contents statement required by 
Sec.  7.63.
    (a) The volume of malt beverage in the container must appear on a 
label as a net contents statement using the following measures:
    (1) If less than one pint, the net contents must be stated in fluid 
ounces or fractions of a pint.
    (2) If one pint, one quart, or one gallon, the net contents must be 
so stated.
    (3) If more than one pint, but less than one quart, the net 
contents must be

[[Page 7615]]

stated in fractions of a quart, or in pints and fluid ounces.
    (4) If more than one quart, but less than one gallon, the net 
contents must be stated in fractions of a gallon, or in quarts, pints, 
and fluid ounces.
    (5) If more than one gallon, the net contents must be stated in 
gallons and fractions thereof.
    (b) All fractions must be expressed in their lowest denominations.
    (c) Metric measures may be used in addition to, but not in lieu of, 
the U.S. customary units of measurement and must appear in the same 
field of vision.

Subpart F--Restricted Labeling Statements


Sec.  7.81   General.

    (a) Application. The labeling practices, statements, and 
representations in this subpart may be used on malt beverage labels 
only when used in compliance with this subpart. In addition, if any of 
the practices, statements, or representations in this subpart are used 
elsewhere on containers or in packaging, they must comply with the 
requirements of this subpart. For purposes of this subpart:
    (1) The term ``label'' includes all labels on malt beverage 
containers on which mandatory information may appear, as set forth in 
Sec.  7.61(a), as well as any other label on the container.
    (2) The term ``container'' includes all parts of the malt beverage 
container, including any part of a malt beverage container on which 
mandatory information may appear, as well as those parts of the 
container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  7.61(b).
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering, or other packaging of such containers used for 
sale at retail, but does not include shipping cartons or cases that are 
not intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of this subpart, the 
term ``statement or representation'' includes any statement, design, 
device, or representation, and includes pictorial or graphic designs or 
representations as well as written ones. The term ``statement or 
representation'' includes explicit and implicit statements and 
representations.

Food Allergen Labeling


Sec.  7.82   Voluntary disclosure of major food allergens.

    (a) Definitions. For purposes of this section, the following terms 
have the meanings indicated.
    (1) Major food allergen means any of the following:
    (i) Milk, egg, fish (for example, bass, flounder, or cod), 
Crustacean shellfish (for example, crab, lobster, or shrimp), tree nuts 
(for example, almonds, pecans, or walnuts), wheat, peanuts, and 
soybeans; or
    (ii) A food ingredient that contains protein derived from a food 
specified in paragraph (a)(1)(i) of this section, except:
    (A) Any highly refined oil derived from a food specified in 
paragraph (a)(1)(i) of this section and any ingredient derived from 
such highly refined oil; or
    (B) A food ingredient that is exempt from major food allergen 
labeling requirements pursuant to a petition for exemption approved by 
the Food and Drug Administration (FDA) under 21 U.S.C. 343(w)(6) or 
pursuant to a notice submitted to the FDA under 21 U.S.C. 343(w)(7), 
provided that the food ingredient meets the terms or conditions, if 
any, specified for that exemption.
    (2) Name of the food source from which each major food allergen is 
derived means the name of the food as listed in paragraph (a)(1)(i) of 
this section, except that:
    (i) In the case of a tree nut, it means the name of the specific 
type of nut (for example, almonds, pecans, or walnuts);
    (ii) In the case of Crustacean shellfish, it means the name of the 
species of Crustacean shellfish (for example, crab, lobster, or 
shrimp); and
    (iii) The names ``egg'' and ``peanuts,'' as well as the names of 
the different types of tree nuts, may be expressed in either the 
singular or plural form, and the names ``soy,'' ``soybean,'' or 
``soya'' may be used instead of ``soybeans.''
    (b) Voluntary labeling standards. Major food allergens used in the 
production of a malt beverage product may, on a voluntary basis, be 
declared on a label. However, if any one major food allergen is 
voluntarily declared, all major food allergens used in production of 
the malt beverage product, including major food allergens used as 
fining or processing agents, must be declared, except when covered by a 
petition for exemption approved by the appropriate TTB officer under 
Sec.  7.83. The major food allergens declaration must consist of the 
word ``Contains'' followed by a colon and the name of the food source 
from which each major food allergen is derived (for example, 
``Contains: egg'').
    (c) Cross reference. For mandatory labeling requirements applicable 
to malt beverage products containing FD&C Yellow No. 5, sulfites, 
aspartame, and cochineal extract or carmine, see Sec.  7.63(b).


Sec.  7.83   Petitions for exemption from major food allergen labeling.

    (a) Submission of petition. Any person may petition the appropriate 
TTB officer to exempt a particular product or class of products from 
the labeling requirements of Sec.  7.82. The burden is on the 
petitioner to provide scientific evidence (as well as the analytical 
method used to produce the evidence) that demonstrates that the 
finished product or class of products, as derived by the method 
specified in the petition, either:
    (1) Does not cause an allergic response that poses a risk to human 
health; or
    (2) Does not contain allergenic protein derived from one of the 
foods identified in Sec.  7.82(a)(1)(i), even though a major food 
allergen was used in production.
    (b) Decision on petition. TTB will approve or deny a petition for 
exemption submitted under paragraph (a) of this section in writing 
within 180 days of receipt of the petition. If TTB does not provide a 
written response to the petitioner within that 180-day period, the 
petition will be deemed denied unless an extension of time for decision 
is mutually agreed upon by the appropriate TTB officer and the 
petitioner. TTB may confer with the Food and Drug Administration (FDA) 
on petitions for exemption, as appropriate and as FDA resources permit. 
TTB may require the submission of product samples and other additional 
information in support of a petition; however, unless required by TTB, 
the submission of samples or additional information by the petitioner 
after submission of the petition will be treated as the withdrawal of 
the initial petition and the submission of a new petition. An approval 
or denial under this section will constitute final agency action.
    (c) Resubmission of a petition. After a petition for exemption is 
denied under this section, the petitioner may resubmit the petition 
along with supporting materials for reconsideration at any time. TTB 
will treat this submission as a new petition.
    (d) Availability of information--(1) General. TTB will promptly 
post to its website (https://www.ttb.gov) all petitions received under 
this section as well as TTB's responses to those

[[Page 7616]]

petitions. Any information submitted in support of the petition that is 
not posted to the TTB website will be available to the public pursuant 
to the Freedom of Information Act (5 U.S.C. 552), except where a 
request for confidential treatment is granted under paragraph (d)(2) of 
this section.
    (2) Requests for confidential treatment of business information. A 
person who provides trade secrets or other commercial or financial 
information in connection with a petition for exemption under this 
section may request that TTB give confidential treatment to that 
information. A failure to request confidential treatment at the time 
the information in question is submitted to TTB will constitute a 
waiver of confidential treatment. A request for confidential treatment 
of information under this section must conform to the following 
standards:
    (i) The request must be in writing;
    (ii) The request must clearly identify the information to be kept 
confidential;
    (iii) The request must relate to information that constitutes trade 
secrets or other confidential, commercial, or financial information 
regarding the business transactions of an interested person, the 
disclosure of which would cause substantial harm to the competitive 
position of that person;
    (iv) The request must set forth the reasons why the information 
should not be disclosed, including the reasons the disclosure of the 
information would prejudice the competitive position of the interested 
person; and
    (v) The request must be supported by a signed statement by the 
interested person, or by an authorized officer or employee of that 
person, certifying that the information in question is a trade secret 
or other confidential, commercial, or financial information and that 
the information is not already in the public domain.

Production and Other Claims


Sec.  7.84   Use of the term ``organic.''

    Use of the term ``organic'' is permitted if any such use complies 
with the United States Department of Agriculture (USDA) National 
Organic Program rules (7 CFR part 205), as interpreted by the USDA.


Sec.  7.85   [Reserved]


Sec.  7.86   [Reserved]


Sec.  7.87   [Reserved]

Subpart G--Prohibited Labeling Practices


Sec.  7.101   General.

    (a) Application. The prohibitions set forth in this subpart apply 
to any malt beverage label, container, or packaging. For purposes of 
this subpart:
    (1) The term ``label'' includes all labels on malt beverage 
containers on which mandatory information may appear, as set forth in 
Sec.  7.61(a), as well as any other label on the container;
    (2) The term ``container'' includes all parts of the malt beverage 
container, including any part of a malt beverage container on which 
mandatory information may appear, as well as those parts of the 
container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  7.61(b); and
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering, or other packaging of such containers used for 
sale at retail but does not include shipping cartons or cases that are 
not intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of the practices in 
this subpart, the term ``statement or representation'' includes any 
statement, design, device, or representation, and includes pictorial or 
graphic designs or representations as well as written ones. The term 
``statement or representation'' includes explicit and implicit 
statements and representations.


Sec.  7.102   False or untrue statements.

    Malt beverage labels, containers, or packaging may not contain any 
statement or representation that is false or untrue in any particular.


Sec.  7.103   Obscene or indecent depictions.

    Malt beverage labels, containers, or packaging may not contain any 
statement or representation that is obscene or indecent.

Subpart H--Labeling Practices That Are Prohibited if They Are 
Misleading


Sec.  7.121   General.

    (a) Application. The labeling practices that are prohibited if 
misleading set forth in this subpart apply to any malt beverage label, 
container, or packaging. For purposes of this subpart:
    (1) The term ``label'' includes all labels on malt beverage 
containers on which mandatory information may appear, as set forth in 
Sec.  7.61(a), as well as any other label on the container;
    (2) The term ``container'' includes all parts of the malt beverage 
container, including any part of a malt beverage container on which 
mandatory information may appear, as well as those parts of the 
container on which information does not satisfy mandatory labeling 
requirements, as set forth in Sec.  7.61(b); and
    (3) The term ``packaging'' includes any carton, case, carrier, 
individual covering, or other packaging of such containers used for 
sale at retail but does not include shipping cartons or cases that are 
not intended to accompany the container to the consumer.
    (b) Statement or representation. For purposes of this subpart, the 
term ``statement or representation'' includes any statement, design, 
device, or representation, and includes pictorial or graphic designs or 
representations as well as written ones. The term ``statement or 
representation'' includes explicit and implicit statements and 
representations.


Sec.  7.122   Misleading statements or representations.

    (a) General prohibition. Malt beverage labels, containers, or 
packaging may not contain any statement or representation, irrespective 
of falsity, that is misleading to consumers as to the age, origin, 
identity, or other characteristics of the malt beverage, or with regard 
to any other material factor.
    (b) Ways in which statements or representations may be found to be 
misleading. (1) A statement or representation is prohibited, 
irrespective of falsity, if it directly creates a misleading impression 
or if it does so indirectly through ambiguity, omission, inference, or 
by the addition of irrelevant, scientific, or technical matter. For 
example, an otherwise truthful statement may be misleading because of 
the omission of material information, the disclosure of which is 
necessary to prevent the statement from being misleading.
    (2) All claims, whether implicit or explicit, must have a 
reasonable basis in fact. Any claim on malt beverage labels, 
containers, or packaging that does not have a reasonable basis in fact 
or cannot be adequately substantiated upon the request of the 
appropriate TTB officer is considered misleading.


Sec.  7.123   Guarantees.

    Malt beverage labels, containers, or packaging may not contain any 
statement relating to guarantees if the appropriate TTB officer finds 
it is likely

[[Page 7617]]

to mislead the consumer. However, money-back guarantees are not 
prohibited.


Sec.  7.124   Disparaging statements.

    (a) General. Malt beverage labels, containers, or packaging may not 
contain any false or misleading statement that explicitly or implicitly 
disparages a competitor's product.
    (b) Truthful and accurate comparisons. This section does not 
prevent truthful and accurate comparisons between products (such as 
``Our ale contains more hops than Brand X'') or statements of opinion 
(such as ``We think our beer tastes better than any other beer on the 
market'').


Sec.  7.125   Tests or analyses.

    Malt beverage labels, containers, or packaging may not contain any 
statement or representation of or relating to analyses, standards, or 
tests, whether or not it is true, that is likely to mislead the 
consumer. An example of a misleading statement is ``tested and approved 
by our research laboratories'' if the testing and approval does not in 
fact have any significance.


Sec.  7.126   Depictions of government symbols.

    Representations of the armed forces or flags. Malt beverage labels, 
containers, or packaging may not show an image of any government's flag 
or any representation related to the armed forces of the United States 
if the representation, standing alone or considered together with any 
additional language or symbols on the label, creates a false or 
misleading impression that the product was endorsed by, made by, used 
by, or made under the supervision of the government represented by that 
flag or by the armed forces of the United States. This section does not 
prohibit the use of a flag as part of a claim of American origin or 
another country of origin.


Sec.  7.127   [Reserved]


Sec.  7.128   Claims related to distilled spirits.

    (a) General. Except as provided in paragraph (b) of this section, 
containers of malt beverages, or any labels on such containers, or any 
carton, case, or individual covering of such containers, used for sale 
at retail, or any written, printed, graphic, or other material 
accompanying such containers to the consumer, must not contain any 
statement, design, device, or representation that tends to create a 
false or misleading impression that the malt beverage contains 
distilled spirits or is a distilled spirits product.
    (b) Exceptions. This section does not prohibit:
    (1) A truthful and accurate statement of alcohol content, in 
conformity with Sec.  7.65;
    (2) The use of a brand name of a distilled spirits product as a 
malt beverage brand name, provided that the overall label does not 
create a misleading impression as to the identity of the product;
    (3) The use of a cocktail name as a brand name or a distinctive or 
fanciful name of a malt beverage, provided that the overall labeling 
does not present a misleading impression about the identity of the 
product; or
    (4) The use of truthful and accurate statements about the 
production of the malt beverage as part of a statement of composition 
or otherwise, such as ``aged in whisky barrels,'' as long as such 
statements do not create a misleading impression as to the identity of 
the product.


Sec.  7.129   Health-related statements.

    (a) Definitions. When used in this section, the following terms 
have the meaning indicated:
    (1) Health-related statement means any statement related to health 
(other than the warning statement required under part 16 of this 
chapter) and includes statements of a curative or therapeutic nature 
that, expressly or by implication, suggest a relationship between the 
consumption of alcohol, malt beverages, or any substance found within 
the malt beverage, and health benefits or effects on health. The term 
includes both specific health claims and general references to alleged 
health benefits or effects on health associated with the consumption of 
alcohol, a malt beverage, or any substance found within the malt 
beverage product, as well as health-related directional statements. The 
term also includes statements and claims that imply that a physical or 
psychological sensation results from consuming the alcohol beverage 
product, as well as statements and claims of nutritional value (for 
example, statements of vitamin content). Numerical statements of the 
calorie, carbohydrate, protein, and fat content of the product do not 
constitute claims of nutritional value.
    (2) Specific health claim means a type of health-related statement 
that, expressly or by implication, characterizes the relationship of 
malt beverages, alcohol, or any substance found within the malt 
beverage, to a disease or health-related condition. Implied specific 
health claims include statements, symbols, vignettes, or other forms of 
communication that suggest, within the context in which they are 
presented, that a relationship exists between alcohol, malt beverages, 
or any substance found within the malt beverage, and a disease or 
health-related condition.
    (3) Health-related directional statement means a type of health-
related statement that directs or refers consumers to a third party or 
other source for information regarding the effects on health of malt 
beverage or alcohol consumption.
    (b) Rules for malt beverage labels, containers, and packaging--(1) 
Health-related statements. In general, malt beverage labels, 
containers, or packaging may not contain any health-related statement 
that is untrue in any particular or tends to create a misleading 
impression as to the effects on health of alcohol consumption. TTB will 
evaluate such statements on a case-by-case basis and may require as 
part of the health-related statement a disclaimer or some other 
qualifying statement to dispel any misleading impression conveyed by 
the health-related statement.
    (2) Specific health claims. (i) TTB will consult with the Food and 
Drug Administration (FDA) as needed on the use of specific health 
claims on labels, containers, or packaging. If FDA determines that the 
use of such a claim is a drug claim that is not in compliance with the 
requirements of the Federal Food, Drug, and Cosmetic Act, TTB will not 
approve the use of that specific health claim on the malt beverage 
label.
    (ii) TTB will approve the use of a specific health claim on a malt 
beverage label only if the claim is truthful and adequately 
substantiated by scientific or medical evidence; is sufficiently 
detailed and qualified with respect to the categories of individuals to 
whom the claim applies; adequately discloses the health risks 
associated with both moderate and heavier levels of alcohol 
consumption; and outlines the categories of individuals for whom any 
levels of alcohol consumption may cause health risks. This information 
must appear as part of the specific health claim.
    (3) Health-related directional statements. A health-related 
directional statement is presumed misleading unless it:
    (i) Directs consumers in a neutral or other non-misleading manner 
to a third party or other source for balanced information regarding the 
effects on health of malt beverage or alcohol consumption; and
    (ii)(A) Includes as part of the health-related directional 
statement the following disclaimer: ``This statement

[[Page 7618]]

should not encourage you to drink or to increase your alcohol 
consumption for health reasons''; or
    (B) Includes as part of the health-related directional statement 
some other qualifying statement that the appropriate TTB officer finds 
is sufficient to dispel any misleading impression conveyed by the 
health-related directional statement.


Sec.  7.130   Appearance of endorsement.

    (a) General. Malt beverage labels, containers, or packaging may not 
include the name, or the simulation or abbreviation of the name, of any 
living individual of public prominence or an existing private or public 
organization, or any graphic, pictorial, or emblematic representation 
of the individual or organization if its use is likely to lead a 
consumer to falsely believe that the product has been endorsed, made, 
or used by, or produced for, or under the supervision of, or in 
accordance with the specifications of, such individual or organization. 
This section does not prohibit the use of such names where the 
individual or organization has provided authorization for their use.
    (b) Disclaimers. Statements or other representations do not violate 
this section if, taken as a whole, they create no misleading impression 
as to an implied endorsement either because of the context in which 
they are presented or because of the use of an adequate disclaimer.
    (c) Exception. This section does not apply to the use of the name 
of any person engaged in business as a producer, importer, bottler, 
packer, wholesaler, retailer, or warehouseman, of malt beverages. This 
section also does not apply to the use by any industry member of a 
trade or brand name that is the name of any living individual of public 
prominence, or existing private or public organization, provided such 
trade or brand name was used by the industry member or its predecessors 
in interest prior to August 29, 1935.


Sec.  7.131   [Reserved]


Sec.  7.132   [Reserved]

Subpart I--Classes and Types of Malt Beverages


Sec.  7.141   Class and type.

    (a) Products known to the trade. The class of the malt beverage 
must be stated on the label (see Sec.  7.63). The type of the malt 
beverage may be stated, but is not required to appear on the label. 
Statements of class and type must conform to the designation of the 
product as known to the trade. All parts of the designation must appear 
together.
    (b) Malt beverage specialty products--(1) General. A malt beverage 
specialty product is a malt beverage that does not fall under any of 
the class designations set forth in Sec. Sec.  7.142 through 7.144 and 
is not known to the trade under a particular designation, usually 
because of the addition of ingredients such as colorings, flavorings, 
or food materials or the use of certain types of production processes 
where the appropriate TTB officer has not determined that such 
ingredients or processes are generally recognized as traditional in the 
production of a fermented beverage designated as ``beer,'' ``ale,'' 
``porter,'' ``stout,'' ``lager,'' or ``malt liquor.''
    (2) Designation. A malt beverage specialty product must be 
designated with a distinctive or fanciful name, together with a 
statement of the composition of the product, in accordance with Sec.  
7.147. This statement will be considered the class designation for the 
purposes of this part. All parts of the designation must appear 
together.


Sec.  7.142   Class designations.

    The following class designations may be used in accordance with 
this section:
    (a) Any malt beverage, as defined in Sec.  7.1, may be designated 
simply as a ``malt beverage.''
    (b)(1) The class designations ``beer,'' ``ale,'' ``porter,'' 
``stout,'' ``lager,'' and ``malt liquor'' may be used to designate malt 
beverages that contain at least 0.5 percent alcohol by volume and that 
conform to the trade understanding of those designations. These 
designations may be preceded or followed by descriptions of the color 
of the product (such as ``amber,'' ``brown,'' ``red,'' or ``golden'') 
as well as descriptive terms such as ``dry,'' ``export,'' ``cream,'' 
and ``pale.''
    (2) No product other than a malt beverage fermented at a 
comparatively high temperature, possessing the characteristics 
generally attributed to ``ale,'' ``porter,'' or ``stout'' and produced 
without the use of coloring or flavoring materials (other than those 
recognized in standard brewing practices) may bear any of these class 
designations.


Sec.  7.143   Class and type--special rules.

    The following special rules apply to specified class and type 
designations:
    (a) Reconstituted malt beverages. Malt beverages that have been 
concentrated by the removal of water therefrom and reconstituted by the 
addition of water and carbon dioxide must for the purpose of this part 
be labeled in the same manner as malt beverages which have not been 
concentrated and reconstituted, except that there must appear 
immediately adjacent to, and as a part of, the class designation the 
statement ``PRODUCED FROM__ _CONCENTRATE'' (the blank to be filled in 
with the appropriate class designation). All parts of the class 
designation must appear in lettering of substantially the same size and 
kind. However, ice beers, described in paragraph (c) of this section, 
which are produced by the removal of less than 0.5 percent of the 
volume of the beer in the form of ice crystals and that retain beer 
character are not considered concentrated.
    (b) Half and half. No product may be designated with the type 
designation ``half and half'' unless it is in fact composed of equal 
parts of two classes of malt beverages, the names of which are 
conspicuously stated immediately adjacent to the designation ``half and 
half'' (for example, ``Half and Half, Porter and Stout''). This does 
not preclude the use of terms such as ``half and half'' as part of a 
distinctive or fanciful name that refers to flavors added to a malt 
beverage designated in accordance with trade understanding or with a 
statement of composition.
    (c) Ice beer. Malt beverages supercooled during the brewing process 
to form ice crystals may be labeled with the type designation ``ice'' 
preceding the class designation (beer, ale, etc.).
    (d) Black and tan. A product composed of two classes of malt 
beverages may be designated with the type designation ``black and 
tan,'' and the class and type designation is the names of the two 
classes of malt beverages in conjunction with ``black and tan'' (for 
example, ``Black and Tan, Stout and Ale'').
    (e) Wheat beer. Any ``beer,'' ``ale,'' ``porter,'' ``stout,'' 
``lager,'' ``malt liquor,'' or other malt beverage made from a 
fermentable base that consists of at least 25 percent by weight malted 
wheat may be designated with the type designation ``wheat'' preceding 
the applicable class designation.
    (f) Rye beer. Any ``beer,'' ``ale,'' ``porter,'' ``stout,'' 
``lager,'' ``malt liquor,'' or other malt beverage made from a 
fermentable base that consists of at least 25 percent by weight malted 
rye may be designated with the type designation ``rye'' preceding the 
applicable class designation.
    (g) Barley wine ale. The term ``barley (or wheat or rye) wine ale'' 
or ``barley (or wheat or rye) wine style ale'' may be used in 
accordance with trade understanding.
    (h) Malt beverages aged in barrels--(1) General. Label designations 
for malt beverages aged in barrels or with woodchips, spirals, or 
staves derived

[[Page 7619]]

from barrels may, but are not required to, include a description of how 
the product was aged. Thus, for example, acceptable designations for a 
standard beer aged in an oak barrel would include ``beer,'' ``oak aged 
beer,'' and ``beer aged in an oak barrel.''
    (2) Barrels previously used in the production or storage of wine or 
distilled spirits. Malt beverages aged in barrels previously used in 
the production or storage of wine or distilled spirits, or with 
woodchips, spirals, or staves derived from barrels previously used in 
the production or storage of wine or distilled spirits, or from 
woodchips previously used in the aging of distilled spirits or wine 
may, but are not required to, include a description of how the product 
was aged.
    (i) Examples of acceptable designations for a standard beer aged in 
a wine barrel include ``beer,'' ``beer aged in a wine barrel,'' and 
``wine barrel aged beer.''
    (ii) Examples of acceptable designations for an ale brewed with 
honey and aged in a bourbon barrel include ``honey ale'' and ``bourbon 
barrel aged honey ale'' but not simply ``ale'' or ``bourbon barrel aged 
ale.''
    (3) Misleading designations. Designations that create a misleading 
impression as to the identity of the product by emphasizing certain 
words or terms are prohibited. As set forth in Sec.  7.122, 
designations may not mislead consumers as to the age, origin, identity, 
or other characteristics of the malt beverage. Examples of designations 
that would be prohibited under this provision are ``bourbon ale,'' 
``bourbon-flavored lager,'' ``Chardonnay lager,'' or ``lager with 
whisky flavors.''
    (i) Other designations. Other type designations (such as ``milk'' 
preceding the class designation ``stout'') may be applied in 
conformance with trade understanding.


Sec.  7.144   Malt beverages fermented or flavored with certain 
traditional ingredients.

    (a) General. Any malt beverage that has been fermented or flavored 
only with one or more ingredients (such as honey or certain fruits) 
that the appropriate TTB officer has determined are generally 
recognized as traditional ingredients in the production of a fermented 
beverage designated as ``beer,'' ``ale,'' ``porter,'' ``stout,'' 
``lager,'' or ``malt liquor'' may be labeled in accordance with trade 
understanding following the rules set forth in this section.
    (1) A list of such traditional ingredients may be found on the TTB 
website (https://www.ttb.gov).
    (2) If the malt beverage has also been fermented or flavored with 
ingredients that the appropriate TTB officer has not determined are 
generally recognized as traditional ingredients in the production of a 
fermented beverage designated as ``beer,'' ``ale,'' ``porter,'' 
``stout,'' ``lager,'' or ``malt liquor,'' it is a malt beverage 
specialty and must be labeled in accordance with the statement of 
composition rules in Sec.  7.147.
    (b) Rules for designation. (1) A designation in accordance with 
trade understanding must identify the base product, such as ``malt 
beverage,'' ``beer,'' ``ale,'' ``porter,'' ``stout,'' ``lager,'' or 
``malt liquor'' along with a modifier or explanation that provides the 
consumer with adequate information about the fruit, honey, or other 
food ingredient used in production of the malt beverage. The label may 
include additional information about the production process (such as 
``beer fermented with cherry juice'').
    (2) Where more than one exempted ingredient is included, a 
designation in accordance with trade understanding may identify each 
ingredient (such as ``Ale with cherry juice, cinnamon, and nutmeg''), 
refer to the ingredients by category (such as ``Fruit ale,'' ``Spiced 
ale,'' or ``Ale with natural flavors''), or simply include the 
ingredient or ingredients that the bottler or importer believes best 
identify the product (such as ``Cherry ale,'' ``Cinnamon ale,'' or 
``Nutmeg ale''). The designation must distinguish the product from a 
malt beverage, beer, ale, porter, stout, lager, or malt liquor that is 
not brewed or flavored with any of these ingredients; thus, unmodified 
designations such as ``beer,'' ``stout,'' or ``ale'' would not be 
acceptable.
    (c) Other requirements. All parts of the designation must appear 
together and must be readily legible on a contrasting background. 
Designations that create a misleading impression as to the identity of 
the product by emphasizing certain words or terms are prohibited.


Sec.  7.145   Malt beverages containing less than 0.5 percent alcohol 
by volume.

    (a) Products containing less than 0.5 percent of alcohol by volume 
must bear the class designation ``malt beverage,'' ``cereal beverage,'' 
or ``near beer.''
    (b) If the designation ``near beer'' is used, both words must 
appear in the same size and style of type, in the same color of ink, 
and on the same background.
    (c) No product containing less than 0.5 percent of alcohol by 
volume may bear the class designations ``beer,'' ``lager beer,'' 
``lager,'' ``ale,'' ``porter,'' ``stout,'' or any other class or type 
designation commonly applied to malt beverages containing 0.5 percent 
or more of alcohol by volume.


Sec.  7.146   Geographical names.

    (a) Geographical names for distinctive types of malt beverages 
(other than names found under paragraph (b) of this section to have 
become generic) shall not be applied to malt beverages produced in any 
place other than the particular region indicated by the name unless:
    (1) In direct conjunction with the name there appears the word 
``type'' or the word ``American'', or some other statement indicating 
the true place of production in lettering substantially as conspicuous 
as such name; and
    (2) The malt beverages to which the name is applied conform to the 
type so designated. The following are examples of distinctive types of 
beer with geographical names that have not become generic; Dortmund, 
Dortmunder, Vienna, Wien, Wiener, Bavarian, Munich, Munchner, Salvator, 
Kulmbacher, Wurtzburger, Pilsen (Pilsener and Pilsner): Provided, That 
notwithstanding the foregoing provisions of this section, beer which is 
produced in the United States may be designated as ``Pilsen,'' 
``Pilsener,'' or ``Pilsner'' without further modification, if it 
conforms to such type.
    (b) Only such geographical names for distinctive types of malt 
beverages as the appropriate TTB officer finds have by usage and common 
knowledge lost their geographical significance to such an extent that 
they have become generic shall be deemed to have become generic, e.g., 
India Pale Ale.
    (c) Except as provided in Sec.  7.64(b), geographical names that 
are not names for distinctive types of malt beverages shall not be 
applied to malt beverages produced in any place other than the 
particular place or region indicated in the name.


Sec.  7.147   Statement of composition.

    (a) A statement of composition is required to appear on the label 
for malt beverage specialty products, as defined in Sec.  7.141(b), 
which are not known to the trade under a particular designation. For 
example, the addition of flavoring materials, colors, or artificial 
sweeteners may change the class and type of the malt beverage. The 
statement of composition along with a distinctive or fanciful name 
serves as the class and type designation for these products.
    (b) When required by this part, a statement of composition must 
contain all of the following information, as applicable:

[[Page 7620]]

    (1) Identify the base class and/or type designation. The statement 
of composition must clearly identify the base class and/or type 
designation of the malt beverage product (e.g., ``beer,'' ``lager 
beer,'' ``lager,'' ``ale,'' ``porter,'' ``stout,'' or ``malt 
beverage'').
    (2) Identify added flavoring material(s) used before, during, and 
after fermentation. The statement of composition must disclose 
fermentable or non-fermentable flavoring materials added to the malt 
beverage base class.
    (i) If the flavoring material is used before or during the 
fermentation process, the statement of composition must indicate that 
the malt beverage was fermented or brewed with the flavoring material 
(such as ``Beer Fermented with grapefruit juice'' or ``Grapefruit 
Ale''). If the flavoring material is added after fermentation, the 
statement of composition must describe that process, using terms such 
as ``added,'' ``with,'' ``infused,'' or ``flavored'' (such as 
``Grapefruit-flavored ale.'').
    (ii) If a single flavoring material is used in the production of 
the malt beverage product, the flavoring material may be specifically 
identified (such as ``Ale Fermented with grapefruit juice'') or 
generally referenced (such as ``Ale with natural flavor''). If two or 
more flavoring materials are used in the production of the malt 
beverage, each flavoring material may be specifically identified (such 
as ``lemon juice, kiwi juice'' or ``lemon and kiwi juice'') or the 
characterizing flavoring material may be specifically identified and 
the remaining flavoring materials may be generally referenced (such as 
``kiwi and other natural and artificial flavor(s)''), or all flavors 
may be generally referenced (such as ``with artificial flavors'').
    (3) Identify added coloring material(s). The statement of 
composition must disclose the addition of coloring material(s), whether 
added directly or through flavoring material(s). The coloring materials 
may be identified specifically (such as ``caramel color,'' ``FD&C Red 
#40,'' ``annatto,'' etc.) or as a general statement, such as ``Contains 
certified color'' for colors approved under 21 CFR subpart 74 or 
``artificially colored'' to indicate the presence of any one or a 
combination of coloring material(s). However, FD&C Yellow No. 5, 
carmine, and cochineal extract require specific disclosure in 
accordance with Sec.  7.63(b)(1) and (2) and that specific disclosure 
may appear either in the statement of composition or elsewhere in 
accordance with those sections.
    (4) Identify added artificial sweeteners. The statement of 
composition must disclose any artificial sweetener that is added to a 
malt beverage product, whether the artificial sweetener is added 
directly or through flavoring material(s). The artificial sweetener may 
be identified specifically by either generic name or trademarked brand 
name, or as a general statement (such as ``artificially sweetened'') to 
indicate the presence of any one or combination of artificial 
sweeteners. However, if aspartame is used, an additional warning 
statement is required in accordance with Sec.  7.63(b)(4).

Subparts J-L--[Reserved]

Subpart M--Penalties and Compromise of Liability


Sec.  7.221   Criminal penalties.

    A violation of the labeling provisions of 27 U.S.C. 205(e) is 
punishable as a misdemeanor. See 27 U.S.C. 207 for the statutory 
provisions relating to criminal penalties, consent decrees, and 
injunctions.


Sec.  7.222   Conditions of basic permit.

    A basic permit is conditioned upon compliance with the requirements 
of 27 U.S.C. 205, including the labeling and advertising provisions of 
this part. A willful violation of the conditions of a basic permit 
provides grounds for the revocation or suspension of the permit, as 
applicable, as set forth in part 1 of this chapter.


Sec.  7.223   Compromise.

    Pursuant to 27 U.S.C. 207, the appropriate TTB officer is 
authorized, with respect to any violation of 27 U.S.C. 205, to 
compromise the liability arising with respect to such violation upon 
payment of a sum not in excess of $500 for each offense, to be 
collected by the appropriate TTB officer and to be paid into the 
Treasury as miscellaneous receipts.

Subpart N--Advertising of Malt Beverages


Sec.  7.231   Application.

    No person engaged in business as a brewer, wholesaler, or importer, 
of malt beverages directly or indirectly or through an affiliate, shall 
publish or disseminate or cause to be published or disseminated by 
radio or television broadcast, or in any newspaper, periodical, or any 
publication, by any sign or outdoor advertisement, or by electronic or 
internet media, or in any other printed or graphic matter, any 
advertisement of malt beverages, if such advertising is in, or is 
calculated to induce sales in, interstate or foreign commerce, or is 
disseminated by mail, unless such advertisement is in conformity with 
this subpart: Provided, That such sections shall not apply to outdoor 
advertising in place on September 7, 1984, but shall apply upon 
replacement, restoration, or renovation of any such advertising; and 
provided further, that this subpart shall apply to advertisements of 
malt beverages intended to be sold or shipped or delivered for 
shipment, or otherwise introduced into or received in any State from 
any place outside thereof, only to the extent that the laws of such 
State impose similar requirements with respect to advertisements of 
malt beverages manufactured and sold or otherwise disposed of in such 
State. And provided further that such sections shall not apply to a 
retailer or the publisher of any newspaper, periodical, or other 
publication, or radio or television or internet broadcast, unless such 
retailer or publisher or broadcaster is engaged in business as a 
brewer, wholesaler, bottler, or importer of malt beverages, directly or 
indirectly, or through an affiliate.


Sec.  7.232   Definitions.

    As used in this subpart, the term ``advertisement'' or 
``advertising'' includes any written or verbal statement, illustration, 
or depiction which is in, or calculated to induce sales in, interstate 
or foreign commerce, or is disseminated by mail, whether it appears in 
a newspaper, magazine, trade booklet, menu, wine card, leaflet, 
circular, mailer, book insert, catalog, promotional material, sales 
pamphlet, internet or other electronic site or social network, or in 
any written, printed, graphic, or other matter (such as hang tags) 
accompanying, but not firmly affixed to, the container, representations 
made on shipping cases, or in any billboard, sign, or other outdoor 
display, public transit card, other periodical literature, publication, 
or in a radio or television broadcast, or in any other media; except 
that such term shall not include:
    (a) Any label affixed to any container of malt beverages; or any 
coverings, cartons, or cases of containers of malt beverages used for 
sale at retail which constitute a part of the labeling under this part.
    (b) Any editorial or other reading material (such as a news 
release) in any periodical or publication or newspaper, for the 
publication of which no money or valuable consideration or thing of 
value is paid or promised, directly or indirectly, by any permittee or 
brewer, and which is not written by or at the direction of the 
permittee or brewer.

[[Page 7621]]

Sec.  7.233   Mandatory statements.

    (a) Responsible advertiser. The advertisement must display the 
responsible advertiser's name, city, and State or the name and other 
contact information (such as, telephone number, website, or email 
address) where the responsible advertiser may be contacted.
    (b) Class. The advertisement shall contain a conspicuous statement 
of the class to which the product belongs, corresponding to the 
statement of class which is required to appear on the label of the 
product.
    (c) Exception. (1) If an advertisement refers to a general malt 
beverage line or all of the malt beverage products of one company, 
whether by the company name or by the brand name common to all the malt 
beverages in the line, the only mandatory information necessary is the 
responsible advertiser's name, city, and State or the name and other 
contact information (such as telephone number, website, or email 
address) where the responsible advertiser may be contacted. This 
exception does not apply where only one type of malt beverage is 
marketed under the specific brand name advertised.
    (2) On consumer specialty items, the only information necessary is 
the company name or brand name of the product.


Sec.  7.234   Legibility of mandatory information.

    (a) Statements required under this subpart that appear in any 
written, printed, or graphic advertisement must be in lettering or type 
size sufficient to be conspicuous and readily legible.
    (b) In the case of signs, billboards, and displays the name and 
address or name and other contact information (such as, telephone 
number, website, or email) of the permittee responsible for the 
advertisement may appear in type size of lettering smaller than the 
other mandatory information, provided such information can be 
ascertained upon closer examination of the sign or billboard.
    (c) Mandatory information must be so stated as to be clearly a part 
of the advertisement and may not be separated in any manner from the 
remainder of the advertisement.
    (d) Mandatory information for two or more products shall not be 
stated unless clearly separated.
    (e) Mandatory information must be so stated in both the print and 
audiovisual media that it will be readily apparent to the persons 
viewing the advertisement.


Sec.  7.235   Prohibited practices.

    (a) General prohibition. An advertisement of malt beverages must 
not contain:
    (1) Any statement that is false or untrue in any material 
particular, or that, irrespective of falsity, directly, or by 
ambiguity, omission, or inference, or by the addition of irrelevant, 
scientific or technical matter, tends to create a misleading 
impression.
    (2) Any false or misleading statement that explicitly or implicitly 
disparages a competitor's product. This does not prevent truthful and 
accurate comparisons between products (such as ``Our ale contains more 
hops than Brand X'') or statements of opinion (such as ``We think our 
beer tastes better than any other beer on the market'').
    (3) Any statement, design, device, or representation which is 
obscene or indecent.
    (4) Any statement, design, device, or representation of or relating 
to analyses, standards, or tests, irrespective of falsity, which the 
appropriate TTB officer finds to be likely to mislead the consumer.
    (5) Any statement, design, device, or representation of or relating 
to any guarantee, irrespective of falsity, which the appropriate TTB 
officer finds to be likely to mislead the consumer. Money-back 
guarantees are not prohibited.
    (6) [Reserved].
    (7) [Reserved].
    (8) Any statement, design, device, or representation that tends to 
create a false or misleading impression that the malt beverage contains 
distilled spirits or is a distilled spirits product. Advertisements may 
include the types of statements that are listed as being not prohibited 
on labels in Sec.  7.128(b).
    (b) Statements inconsistent with labeling. (1) Advertisements shall 
not contain any statement concerning a brand or lot of malt beverages 
that is inconsistent with any statement on the labeling thereof.
    (2) Any label depicted on a container in an advertisement shall be 
a reproduction of an approved label, except that malt beverage labels 
not required to be covered by a COLA in accordance with the rules in 
Sec.  7.21 of this chapter may also appear on advertisements.
    (c) [Reserved]
    (d) Class. (1) No product containing less than 0.5 percent of 
alcohol by volume shall be designated in any advertisement as ``beer'', 
``lager beer'', ``lager'', ``ale'', ``porter'', or ``stout'', or by any 
other class or type designation commonly applied to fermented malt 
beverages containing 0.5 percent or more of alcohol by volume.
    (2) No product other than a malt beverage fermented at 
comparatively high temperature, possessing the characteristics 
generally attributed to ``ale,'' ``porter,'' or ``stout'' and produced 
without the use of coloring or flavoring materials (other than those 
recognized in standard brewing practices) shall be designated in any 
advertisement by any of these class designations.
    (e) Health-related statements--(1) Definitions. When used in this 
paragraph (e), terms are defined as follows:
    (i) Health-related statement means any statement related to health 
and includes statements of a curative or therapeutic nature that, 
expressly or by implication, suggest a relationship between the 
consumption of alcohol, malt beverages, or any substance found within 
the malt beverage, and health benefits or effects on health. The term 
includes both specific health claims and general references to alleged 
health benefits or effects on health associated with the consumption of 
alcohol, malt beverages, or any substance found within the malt 
beverage, as well as health-related directional statements. The term 
also includes statements and claims that imply that a physical or 
psychological sensation results from consuming the malt beverage, as 
well as statements and claims of nutritional value (e.g., statements of 
vitamin content). Statements concerning caloric, carbohydrate, protein, 
and fat content do not constitute nutritional claims about the product.
    (ii) Specific health claim is a type of health-related statement 
that, expressly or by implication, characterizes the relationship of 
the malt beverage, alcohol, or any substance found within the malt 
beverage, to a disease or health-related condition. Implied specific 
health claims include statements, symbols, vignettes, or other forms of 
communication that suggest, within the context in which they are 
presented, that a relationship exists between malt beverages, alcohol, 
or any substance found within the malt beverage, and a disease or 
health-related condition.
    (iii) Health-related directional statement is a type of health-
related statement that directs or refers consumers to a third party or 
other source for information regarding the effects on health of malt 
beverage or alcohol consumption.
    (2) Rules for advertising--(i) Health-related statements. In 
general, advertisements may not contain any health-related statement 
that is untrue in any particular or tends to create a misleading 
impression as to the effects

[[Page 7622]]

on health of alcohol consumption. TTB will evaluate such statements on 
a case-by-case basis and may require as part of the health-related 
statement a disclaimer or some other qualifying statement to dispel any 
misleading impression conveyed by the health-related statement. Such 
disclaimer or other qualifying statement must appear as prominent as 
the health-related statement.
    (ii) Specific health claims. A specific health claim will not be 
considered misleading if it is truthful and adequately substantiated by 
scientific or medical evidence; sufficiently detailed and qualified 
with respect to the categories of individuals to whom the claim 
applies; adequately discloses the health risks associated with both 
moderate and heavier levels of alcohol consumption; and outlines the 
categories of individuals for whom any levels of alcohol consumption 
may cause health risks. This information must appear as part of the 
specific health claim and in a manner as prominent as the specific 
health claim.
    (iii) Health-related directional statements. A statement that 
directs consumers to a third party or other source for information 
regarding the effects on health of malt beverage or alcohol consumption 
is presumed misleading unless it--
    (A) Directs consumers in a neutral or other non-misleading manner 
to a third party or other source for balanced information regarding the 
effects on health of malt beverage or alcohol consumption; and
    (B)(1) Includes as part of the health-related directional 
statement, and in a manner as prominent as the health-related 
directional statement, the following disclaimer: ``This statement 
should not encourage you to drink or increase your alcohol consumption 
for health reasons;'' or
    (2) Includes as part of the health-related directional statement, 
and in a manner as prominent as the health-related directional 
statement, some other qualifying statement that the appropriate TTB 
officer finds is sufficient to dispel any misleading impression 
conveyed by the health-related directional statement.
    (f) Confusion of brands. Two or more different brands or lots of 
malt beverages shall not be advertised in one advertisement (or in two 
or more advertisements in one issue of a periodical or a newspaper or 
in one piece of other written, printed, or graphic matter) if the 
advertisement tends to create the impression that representations made 
as to one brand or lot apply to the other or others, and if as to such 
latter the representations contravene any provision of this subpart or 
are in any respect untrue.
    (g) Representations of the armed forces or flags. Advertisements 
may not show an image of any government's flag or any representation 
related to the armed forces of the United States if the representation, 
standing alone or considered together with any additional language or 
symbols, creates a false or misleading impression that the product was 
endorsed by, made by, used by, or made under the supervision of, the 
government represented by that flag or by the armed forces of the 
United States. This section does not prohibit the use of a flag as part 
of a claim of American origin or another country of origin.
    (h) Deceptive advertising techniques. Subliminal or similar 
techniques are prohibited. ``Subliminal or similar techniques,'' as 
used in this part, refers to any device or technique that is used to 
convey, or attempts to convey, a message to a person by means of images 
or sounds of a very brief nature that cannot be perceived at a normal 
level of awareness.
    (i) Organic. Any use of the term ``organic'' in the 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.


Sec.  7.236   Comparative advertising.

    (a) General. Comparative advertising shall not be disparaging of a 
competitor's product in a manner that is false or misleading.
    (b) Taste tests. (1) Taste test results may be used in 
advertisements comparing competitors' products unless they are 
disparaging in a false or misleading manner, deceptive, or likely to 
mislead the consumer.
    (2) The taste test procedure used shall meet scientifically 
accepted procedures. An example of a scientifically accepted procedure 
is outlined in the Manual on Sensory Testing Methods, ASTM Special 
Technical Publication 434, published by the American Society for 
Testing and Materials, 1916 Race Street, Philadelphia, Pennsylvania 
19103, ASTM, 1968, Library of Congress Catalog Card Number 68-15545.
    (3) A statement shall appear in the advertisement providing the 
name and address of the testing administrator.

Subpart O--Paperwork Reduction Act


Sec.  7.241   OMB control numbers assigned under the Paperwork 
Reduction Act.

    (a) Purpose. This subpart displays the control numbers assigned to 
information collection requirements in this part by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 
Public Law 104-13.
    (b) Table. The following table identifies each section in this part 
that contains an information collection requirement and the OMB control 
number that is assigned to that information collection requirement.

                        Table 1 to Paragraph (b)
------------------------------------------------------------------------
                                                            Current OMB
                 Section where contained                    Control No.
------------------------------------------------------------------------
7.11....................................................       1513-0111
7.21....................................................       1513-0020
7.22....................................................       1513-0020
7.24....................................................       1513-0020
                                                               1513-0064
7.25....................................................       1513-0020
7.27....................................................       1513-0020
7.28....................................................       1513-0122
7.29....................................................       1513-0020
7.62....................................................       1513-0087
7.63....................................................       1513-0084
                                                               1513-0087
7.66....................................................       1513-0085
7.67....................................................       1513-0085
7.81....................................................       1513-0087
7.82....................................................       1513-0121
7.83....................................................       1513-0121
7.84....................................................       1513-0087
7.233...................................................       1513-0087
------------------------------------------------------------------------


    Signed: January 7, 2022.
Mary G. Ryan,
Administrator.

    Approved: January 7, 2022.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy).
[FR Doc. 2022-00841 Filed 2-8-22; 8:45 am]
BILLING CODE 4810-31-P