TTB Proposes to Overhaul Labeling and Advertising Regulations
On November 26, 2018, the Tobacco Tax and Trade Bureau (TTB) issued a major proposed rule to overhaul and “modernize” the federal regulations that govern the labeling and advertising of beer, wine, and distilled spirits. The proposed rule would, among other things, (1) integrate certain Industry Circulars and TTB rulings into the base level regulations on labeling and advertising; (2) re-organize the current labeling regulations for beer, wine, and spirits to create more uniform/understandable language and structure across all classes of alcohol and separate out the advertising regulations into a new standalone part; and (3) introduce certain substantive changes as required by international agreements, case law, and the legislative mandate of the TTB. The proposed rule is currently under a 90 day Notice and Comment period that was extended until March 26th, due to the federal shutdown. Interested parties can submit their comments by going to the following Regulations.gov link. Public comments are essential for a federal agency and often help to inform the choices it makes regarding new regulations. Furthermore, submitting comments about the proposed rule creates certain legal requirements for the TTB that may allow parties to challenge a Final Rule.
The below parts summarize the most important proposed changes for domestic manufacturers across all alcohol categories, and then those that specifically apply to beer. However, it is not an exhaustive review of every change. Proposed regulatory amendments that are not likely to substantively impact a business have been excluded.
1) The proposed rule would change or eliminate a number of definitions (“container,” “interstate commerce,” and “person”), and update several references to terms used in the Internal Revenue Code (IRC) to match the contemporary use of those terms in the IRC. The new definition for container will be “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[…].” This will clarify that every vessel, regardless of type, that contains an alcoholic beverage has to meet the labeling requirements. Additionally, “person,” will now include LLCs. The change would clarify that both natural and corporate persons are subject to the labeling requirements.
2) Any “adulterated alcoholic beverage,” as determined by the Food and Drug administration (FDA), would be considered automatically mislabeled, even if the brand owner had obtained a COLA, and such a product would be banned from sale in any instance in which the TTB has jurisdiction.In relevant part, the Federal Food, Drug, and Cosmetic Act, defines an adulterated alcoholic beverage as anything that contains, a substance (in sufficient quantity) to be poisonous or detrimental to health or otherwise “unsafe,” or any food additive that is “unsafe.”For example, in 2010, both the TTB and FDA determined that adding caffeine directly to an alcoholic product (as opposed to coffee being used in the manufacturing process), rendered that product adulterated.It is unclear what the full scope of such a change could be. The proposed rule does not make reference to certain relevant TTB circulars and rulings. For example, would any ingredient or process that is currently considered traditional and therefore exempt from recipe approval, still be allowed?Would a wine or spirit that complies with the formula guidelines in TTB Rulings 2016-2 and 2016-3, respectively, also remain permitted?
3) The proposed rule would allow wine, spirits, and beer that are directly sold into export by a winery, distillery, or brewery to be exempt from domestic labeling requirements, however; products that are first sold onto another party, prior to export, will be subject to domestic labeling requirements.
4) The proposed rule would expand the applicability of FDA regulations on alcohol manufacturers, and authorize the TTB to require that companies provide evidence that they are complying with FDA rules related to the safety of food ingredients and additives, as well as, the safety of any packaging materials and processes. The rules would also make clear that complying with TTB requirements for label and formula approval doesn’t relieve a manufacturer from its obligations under FDA regulations.
5) Regulations governing Certificates of Exemption for label approval, which are granted to wine and spirit bottlers, would require the bottler to demonstrate that (A) the product is not being sold outside the State that in which it is produced and (B) require “For sale in [name of State] solely,” be added to any label for a product covered under the certificate of exemption. It essentially just codifies the current requirements under Form 5100.31
6) The proposed rule would allow a TTB officer to require that a distiller, vintner, or brewer to submit a formula for review either prior to the or after the issuance of a COLA. It also simplifies and standardizes the process for submission across all alcohol types and provides that a regulated party may submit formula information via Formulas Online.
7) A new set of rules governing relabeling would permit all classes of manufacturer to re-label products, after they have left the bonded premises, without obtaining additional permission from the TTB to do so, as long as the new label has a COLA. This would allow a manufacturer to replace damaged labels on products that are already at a wholesaler or retailer or “fix” labels that are not consistent with new branding.
8) With exception to brand names and certain optional phrases (ex. Premium malt beverage, proudly brewed by, etc.), the proposed changes will require that any additional descriptive or explanatory information on a label be kept “separate and apart” from mandatory information, such as the health warning statement or disclosure of specified ingredients. Additionally, the TTB proposes to expand on requirements that mandatory information appear on a contrasting background.
9) The proposed rule would make it clear that any statement or representations that are currently prohibited to appear on the label of a container may not appear on any other packaging that accompanies the product for sale at retail. Additionally, any closed packaging that accompanies the product for sale at retail will be required to bear all the same mandatory information required on the label for the product itself. For example, any box, carton, case, or carrier (excluding something like a standard 6-pack holder where the container can be lifted out) would now need to feature all the same mandatory label information as the bottle or can have.
10) The proposed rule would explicitly allow certain statements related to the sustainable environmental or agricultural practices, social justice principles, and similar sentiments of a manufacturer to appear on a label, as long as those statements are truthful, specific, and not misleading. Additionally, manufacturers may feature statements or logos of any certifications they obtain from an organization that reflect adherence to the aforementioned principles.
11) The TTB proposes to add a new requirement that would prohibit statements on labels that are “misleading” as to the age, origin, identity, or other characteristics, even if the content of the statement is technically true. As an example, the TTB describes a statement that is true, but which lacks material information, in a way that hides the complete truth from a consumer. This proposed rule is vague, and it is unclear whether using a term such as “oak aged” for a process that involves the addition of oak chips, as opposed to aging in a barrel, would be considered to violate such a provision.
12) The rule would amend the current regulations that prohibit the use of the American flag, or other symbols tied to the United States or the American armed forces, as long as the use of these symbols does not mislead consumers that the product in question is somehow endorsed by or affiliated with the United States government or its armed forces. Furthermore, the proposed regulations would allow use of the American flag to indicate country of origin. Alcohol manufacturers in the DMV area may be particularly interested in this provision, as it opens up all sorts of possibilities for labeling that are currently prohibited.
13) The TTB has expressed concern in the notice regarding the use of terms in regards to an alcohol product, that is commonly associated with another type of alcohol, i.e. the use of terms such as bourbon on labels associated with beer products, or sherry on labels associated with a distilled spirit. The proposed rule would clarify when such terminology could and could not be used. As a general rule, true statements of process or ingredients would not be prohibited, so long as they do not tend to mislead customers as to the contents of a product. For example, a whiskey label could say “sherry cask aged,” but not, “sherry flavored.”
1) The TTB proposes to modify the definition of “age” to require that any use of the term on a label only refer to the time that a spirit is stored in an oak barrel with direct contact to the wood. This would suggest that any spirit that is stored in a waxed barrel, or any spirit that goes through some of the “quick aging” processes that are now being employed in the industry, could not be referred to as aged. Additionally, every whiskey, with the exception of straight corn whiskey, will need to be aged in charred new oak barrels to carry that designation. The definition of “grain” would also be modified to include the seeds of psuedocereals, such as quinoa. This will expand what types of agricultural products that can be used in a spirit and still allow it to carry a traditional designation such as whisky.
2) The TTB is also seeking input on whether to introduce a definition for “oak barrel,” which would limit that term to “cylindrical oak drums of approximately 50 gallons capacity.” If the definition is introduced, spirits aged in vessels of a different size or shape would no longer meet any requirement where aging in an oak barrel is part of the definition. The agency would like to feedback on whether these limits should be adopted.
3) The proposed rule would provide distillers with an allowance in the statement of the alcohol content of their spirit. The stated alcohol content would now be allowed to deviate from the actual alcohol content up to 0.3% above or below what is stated on the bottle. Currently, distillers are subject to a strict accuracy requirement that may not coincide with the reality of ethyl alcohol volatility. 
4) Proposed Section 5.66(f) would introduce a new requirement that the State of original distillation be shown on the label. Since many new distilleries source older spirits from other facilities, and then further age or finish them at their own facility, this would introduce a requirement that those distilleries disclose where the spirit was originally made. Additionally, the proposed rule would allow distilleries to include aging statements for all types of spirts, except neutral grain spirits. So an aged flavored rum or gin could now be designated as such.
5) The TTB is proposing to introduce a new requirement for whisky, whereby any spirit that meets a specific sub-type of whisky (bourbon, rye, etc.) would need to use that designation rather than the more generic designation of whisky. Furthermore, the TTB is soliciting comments on whether to introduce a new class for “white or unaged whisky,” that could be used on labels. This would potentially allow newer distilleries more flexibility in how to label their products, where the grain bill and distillation process would otherwise qualify that spirt to be designated as a whisky.
6) A new definition for “gin,” would now make the use of other aromatics, besides juniper, optional. It would also remove a designation for Geneva (Holland) gin.Additionally, the TTB proposes to add specific designations for a large number of cordials and liqueurs, allowing them to be labeled under the traditional name alone (ex. Ouzo, Sambuca, Crème de, Schnapps, etc.).
7) The TTB proposes to change the rules for geographical designations. A spirit would be allowed to bear a geographic designation, even if it is not considered generic, if they geographic indicator represents a type of spirit, and the label includes a qualifier such as “style or type.” Additionally, the TTB would introduce a list of terms it considers to have become generic, even when those designations used to be associated with a specific location, i.e. Aquavit.
8) The TTB is considering whether to eliminate the current requirements regarding maximum head space in a bottle and obtaining prior approval when a distiller wants to use a bottle with a distinctive shape. Under the proposed standard, a distiller would only need to abide by standard fill requirements and clearly mark the net contents of the bottle.
By way of disclaimer, the above summary only looked at how the proposed rule would change requirements relative to current regulations. However, it did not analyze all the proposed changes against existing TTB and federal court rulings, or TTB industry circulars, to determine if the legal effects are indeed the same as claimed in the Notice of Proposed Rulemaking. Furthermore, there may be state level definitions and requirements that are tied to changes in federal law. A proposed rule of this magnitude involves a lot of nuance and complexity. If you have any specific questions about how a proposed change will affect your business, please consult with an attorney.
Gregory Parnas is an alcoholic beverage attorney based in Washington, DC. His practice focuses on craft alcohol producers in the DC Metro area. If you have any further questions, please feel free to contact him at Greg.Parnas@DCBeveragelaw.com
83 Fed. Reg. 60,569 (Nov. 26, 2018)
21 CFR §342(a)(1) (2005)
See TTB Industry Circular 2010-8, https://www.ttb.gov/rulings/ttb-ruling-2015-1-attachment-1.pdf
See TTB Ruling 2015-1, Attachment 1, https://www.ttb.gov/rulings/ttb-ruling-2015-1-attachment-1.pdf
 83 Fed Reg. 60,570
Supra at 60,571
Id. at 60,572
Id. at 60,573
Id. at 60,574
Id. at 60,577
Id. at 60,577
Id. at 60,578
Id. at 60,645
Id. at 60,653
Id. at 60,597
Id. at 60,666
Id. at 60,667
Id. at 60,599