[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Rules and Regulations]
[Pages 85514-85520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28747]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 4, 5, and 7

[Docket Nos. TTB-2019-0004 and TTB-2019-0005; T.D. TTB-165; Re: Notice 
Nos. 182, 183, and 184]
RIN 1513-AB56 and 1513-AC45


Addition of New Standards of Fill for Wine and Distilled Spirits; 
Amendment of Distilled Spirits and Malt Beverage Net Contents Labeling 
Regulations

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

ACTION: Final rule; Treasury decision.

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SUMMARY: This final rule amends the Alcohol and Tobacco Tax and Trade 
Bureau (TTB) regulations that govern wine and distilled spirits 
containers to add seven new standards of fill for wine and distilled 
spirits. Although TTB had originally proposed to generally eliminate 
the standards of fill for wine and distilled spirits, TTB is not 
adopting that proposal at this time. The amendments described in this 
final rule will provide bottlers with flexibility by allowing the use 
of the added container sizes, and will facilitate the movement of goods 
in domestic and international commerce, while also providing consumers 
broader purchasing options.
    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.

DATES: This final rule is effective December 29, 2020.

FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco 
Tax and Trade Bureau, Regulations and Rulings Division; telephone 202-
453-1039, ext. 275.

SUPPLEMENTARY INFORMATION: 

Background

TTB Authority

    The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers 
regulations setting forth standards of fill for containers of wine and 
distilled spirits products distributed within the United States. For 
wine, the authority to establish these standards is based on section 
105(e) of the Federal Alcohol Administration Act (FAA Act), codified at 
27 U.S.C. 205(e), which authorizes the Secretary of the Treasury to 
prescribe regulations relating to the ``packaging, marking, branding, 
and labeling and size and fill'' of alcohol beverage containers ``as 
will prohibit deception of the consumer with respect to such products 
or the quantity thereof * * *.'' For distilled spirits, the authority 
to establish standards of fill is based on two provisions of law: (1) 
Section 205(e) of the FAA Act as discussed above, and (2) section 
5301(a) of the Internal Revenue Code of 1986 (IRC), codified at 26 
U.S.C. 5301(a). Section 5301(a) of the IRC authorizes the Secretary of 
the Treasury to prescribe regulations ``to regulate the kind, size, 
branding, marking, sale, resale, possession, use, and reuse of 
containers (of a capacity of not more than 5 wine gallons) designed or 
intended for use for the sale of distilled spirits * * *'' when the 
Secretary determines that such action is necessary to protect the 
revenue. TTB administers these IRC and FAA Act provisions pursuant to 
section 1111(d) of the Homeland Security Act of 2002, as codified at 6 
U.S.C. 531(d). In addition, the Secretary of the Treasury has delegated 
certain administrative and enforcement authorities to TTB through 
Treasury Order 120-01.

Current Standards of Fill for Wine

    The standards of fill for wine are contained in subpart H of part 4 
of the TTB regulations (27 CFR part 4). The term ``standard of fill'' 
is used in the TTB regulations and in this document to refer to the 
authorized amount of liquid in the container, rather than the size or 
capacity of the container itself. For better readability, however, this 
document sometimes uses the terms ``size'' or ``container size'' and 
``standards of fill'' interchangeably. Within subpart H, paragraph (a) 
of Sec.  4.72 (27 CFR 4.72(a)) authorizes the use of the following 
metric standards of fill for containers other than those described in 
paragraph (b) of that section:
    <bullet> 3 liters;
    <bullet> 1.5 liters;
    <bullet> 1 liter;
    <bullet> 750 milliliters;
    <bullet> 500 milliliters;
    <bullet> 375 milliliters;
    <bullet> 187 milliliters;
    <bullet> 100 milliliters; and
    <bullet> 50 milliliters.
    Paragraph (b) of Sec.  4.72 states that wine may be bottled or 
packed in containers of 4 liters or larger if the containers are filled 
and labeled in quantities of even liters (4 liters, 5 liters, 6 liters, 
etc.).

[[Page 85515]]

Current Headspace Requirements for Wine

    Requirements for headspace, the empty space between the top of the 
wine and the top of the container, are also contained in subpart H of 
27 CFR part 4. Within subpart H, paragraph (a)(3) of Sec.  4.71 (27 CFR 
4.71(a)(3)) states that a standard wine container must be made and 
filled so as to have a headspace not in excess of 6 percent of the 
total capacity of the container after closure if the net content of the 
container is 187 milliliters or more and, in the case of all other wine 
containers, a headspace not in excess of 10 percent of such capacity.

Current Standards of Fill for Distilled Spirits

    The standards of fill for distilled spirits are contained in 
subpart E of part 5 of the TTB regulations (27 CFR part 5). Within 
subpart E, paragraph (a)(1) of Sec.  5.47a (27 CFR 5.47a(a)(1)) 
specifies the following metric standards of fill for containers other 
than those described in paragraph (a)(2) of that section:
    <bullet> 1.75 liters;
    <bullet> 1 liter;
    <bullet> 750 milliliters;
    <bullet> 500 milliliters (authorized only until June 30, 1989);
    <bullet> 375 milliliters;
    <bullet> 200 milliliters;
    <bullet> 100 milliliters; and
    <bullet> 50 milliliters.
    In the case of distilled spirits in metal containers that have the 
general shape and design of a can, that have a closure which is an 
integral part of the container, and that cannot be readily reclosed 
after opening, paragraph (a)(2) of Sec.  5.47a authorizes the use of 
the following metric standards of fill:
    <bullet> 355 milliliters;
    <bullet> 200 milliliters;
    <bullet> 100 milliliters; and
    <bullet> 50 milliliters.
    In addition to the metric standards specified above, Sec.  5.47a 
contains provisions regarding tolerances (discrepancies between actual 
and stated fill), unreasonable shortages in fill, and distilled spirits 
bottled or imported before January 1, 1980, and marketed or released 
from customs custody on or after that date (the date on which the U.S. 
volumetric standards were replaced by the Sec.  5.47a metric standards, 
as discussed in more detail below).

Current Headspace Requirements for Distilled Spirits

    Requirements for headspace are contained in 27 CFR 5.46(b), which 
states that a standard liquor bottle of a capacity of 200 milliliters 
or more shall be held to be misleading if it has a headspace in excess 
of 8 percent of the total capacity of the bottle after closure.

Malt Beverages

    Unlike wine and distilled spirits, there are no standards of fill 
prescribed for malt beverages under the FAA Act. However, in the case 
of malt beverages, Sec.  7.22(a)(4) of the TTB regulations (27 CFR 
7.22(a)(4)) requires the display of net contents on the brand label as 
mandatory label information.

Notices of Proposed Rulemaking

    On July 1, 2019, TTB published Notice Nos. 182 and 183 in the 
Federal Register (84 FR 31257 and 84 FR 31264).
    Notice No. 182 proposed to eliminate all but a minimum standard of 
fill for wine containers. The minimum container size was retained to 
ensure the container would be of sufficient size to accommodate 
required labeling. The notice also proposed, in response to a petition, 
to increase the minimum headspace from not in excess of 10 percent of 
the container's capacity to not in excess of 30 percent for clear 
containers 100 milliliters or less. Finally, TTB also sought comments 
on alternatives to eliminating the standards of fill, including 
authorizing some or all of the petitioned-for sizes that were discussed 
in the notice, and developing an expedited administrative process for 
adding new standards in the future.
    Notice No. 183 proposed to eliminate all but minimum and maximum 
standards of fill for distilled spirits. Retaining the minimum was 
proposed to ensure the container would be of sufficient size to 
accommodate required labeling, while the maximum maintains the 
distinction between bottled and bulk products. The FAA Act at 27 U.S.C. 
206(c) establishes a bulk distilled spirits container as one having a 
capacity in excess of one wine gallon, while paragraphs (a) and (b) of 
section 206 do not permit the retail sale of distilled spirits in bulk 
containers to consumers.
    In Notice No. 183, TTB also proposed to amend the labeling 
regulations for distilled spirits and malt beverages to reflect current 
policy by specifically stating that distilled spirits may be labeled 
with the equivalent standard 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. 
Similar labeling is authorized for wine labels in 27 CFR 4.37(b) and 
has been authorized for distilled spirits and malt beverage labels as a 
matter of policy, but has not been explicitly stated in the distilled 
spirits and malt beverage regulations.
    As in Notice No. 182, in Notice No. 183 TTB also sought comments on 
alternatives to eliminating the standards of fill, including 
authorizing some or all of the petitioned-for sizes that were discussed 
in the notice, and developing an expedited administrative process for 
adding new standards in the future.
    In Notice Nos. 182 and 183, TTB provided reasons for proposing the 
elimination of the standards of fill, including the following:
    1. It would address several petitions TTB had received on this 
issue, would eliminate the need for industry members to petition for 
additional authorizations if marketplace conditions favor different 
standards in the future, and would eliminate restrictions on 
competition and the movement of goods in domestic and international 
commerce.
    2. It would address concerns that the current standards of fill 
unnecessarily limit manufacturing options and consumer purchasing 
options, particularly where consumers may seek smaller containers to 
target a specific amount of consumption.
    3. TTB believed that the current and proposed labeling requirements 
regarding net contents (see 27 CFR 4.32(b)(2) and 4.37, 27 CFR 
5.32(b)(3) and 5.38) and those regarding the design and fill of 
containers (see 27 CFR 4.71 and 27 CFR 5.46) provide consumers with 
adequate information about container contents, so standards of fill are 
not necessary to prevent consumer confusion.
    4. Limiting standards of fill is no longer necessary to ensure 
accurate calculation of tax liabilities or to protect the revenue.
    5. TTB's current experience with malt beverages, for which there is 
no Federal standard of fill requirement, shows no disproportionate 
level of revenue compliance or consumer deception issues related to 
bottle sizes.
    The comment periods for Notice Nos. 182 and 183 originally closed 
on August 30, 2019, but TTB reopened and extended the comment periods 
at the request of commenters (see Notice No. 184, 84 FR 39786). The 
extended comment periods ended October 30, 2019. Because Notice Nos. 
182 and 183 proposed similar regulatory amendments and the substance of 
the comments received were similar, TTB is finalizing the two notices 
in one final rule.

Comments

    TTB received 644 comments in response to Notice No. 182 and 603

[[Page 85516]]

comments in response to Notice No. 183, for a total of 1,247 comments. 
Commenters included producers, wholesale distributers, retailers, trade 
associations (domestic and foreign), members of Congress, foreign 
government entities, and members of the public.
    TTB also considered 79 comments concerning standards of fill that 
were submitted in response to Notice No. 176, Modernization of the 
Labeling and Advertising Regulations for Wine, Distilled Spirits, and 
Malt Beverages, published in the Federal Register (83 FR 60562) on 
November 26, 2018. When these additional comments are taken into 
account, TTB reviewed 1,326 comments regarding standard of fill issues 
as summarized below.

Comments on the Proposed Elimination of the Standards of Fill

    Of the 1,326 comments TTB received, 1,251 comments address the 
proposed elimination of the standards of fill. A total of 110 comments 
support the proposal--40 comments to Notice No. 182, 40 comments to 
Notice No. 183, and 30 comments to Notice No. 176. Of the 1,141 
comments opposed to eliminating the standards of fill--575 commenters 
to Notice No. 182, 560 commenters to Notice No. 183, and 6 comments to 
Notice No. 176--960 are nearly identical form letters, a majority of 
which are associated with three wholesale distributing companies and 
their employees.
    Commenters supporting the elimination of the standards of fill 
generally state that the standards are unnecessary, restrictive to 
producers, and out-of-date. They note that there are no standards of 
fill for malt beverages or for other consumer products, and state that 
this does not cause difficulties. They contend that eliminating the 
standards of fill will result in lower costs for producers, will 
facilitate international trade, and will provide consumers with more 
options in beverage alcohol packaging. The American Craft Spirits 
Association (Notice No. 183, comment 78) states that it surveyed its 
membership concerning the rulemaking and ``found overwhelming support 
for elimination of the current standards.'' It adds that ``[i]n order 
to promote innovation within the industry and competitively enter 
products into the global marketplace, smaller spirits producers must 
have maximum flexibility to quickly meet consumer demand as well as 
diverse regulatory standards.''
    Several of the wine commenters who support elimination of the 
standards of fill cite the fact that they are unable to use certain can 
sizes to package wine because they are not among the authorized 
standard sizes. For example, Senator Charles Schumer (Notice No. 182, 
comment 12) cites the inability of New York wineries to package their 
wine in 250 milliliter and 355 milliliter cans as grounds for 
eliminating the standard of fill regulations. The Senator argues that 
these sizes are popular single serving sizes that are readily available 
to producers since they are already mass produced for beer and soda.
    Commenters opposing the elimination of the standards of fill cite a 
number of reasons to retain the standards. The most often cited 
argument is that the standards of fill prevent consumer confusion. For 
example, commenters state that eliminating the standards of fill will 
cause a proliferation of sizes, making it difficult for consumers to 
compare prices on similar products. The Wine Institute (Notice No. 182, 
comment 162) states ``consumers may not be able to tell the difference 
between a 750 milliliter wine bottle and a 700 milliliter bottle, which 
could create an opportunity for producers to reduce costs and taxes 
while not necessarily reducing their prices. The current federal 
standards of fill allow consumers to shop by cost comparison without 
needing to calculate the price per milliliter.''
    A handful of commenters cite the European Union's (EU) experience 
prior to 1990, when it had no standards of fill for distilled spirits. 
Drinks Ireland (Notice No. 183, comment 77) states that without 
standards of fill the market situation was ``complex, expensive, and 
confusing for consumers.'' The American Distilled Spirits Association 
(Notice No. 183, comment 111), citing comments submitted in response to 
the Bureau of Alcohol, Tobacco and Firearm's 1987 Advance Notice of 
Proposed Rulemaking (Notice No. 633, June 24, 1987, 52 FR 23685) on 
standards of fill, notes that the EU's lack of standards resulted in 
``a confusing array of bottle sizes being sold side-by-side on retail 
shelves creating an environment ripe for consumer confusion.''
    A number of commenters state that eliminating the standards of fill 
is inconsistent with the FAA Act. A letter signed by 52 members of the 
Congressional Wine Caucus states it would ``run directly counter to 
TTB's stated mission of prohibiting consumer deception'' (Notice No. 
182, comment 168). Similar comments include that of the Wine Institute, 
which comments that eliminating the standards of fill ``would lead to 
the chaotic consumer marketplace that the FAA Act was intended to 
prevent.'' Six industry associations filing jointly (Notice No. 183, 
comment 108) state that retaining the standards of fill is consistent 
with TTB's statutory authority under the FAA Act to protect consumers.
    Opposing comments also argued that eliminating the standards of 
fill will result in conflicting State requirements. These commenters 
report that a number of States defer to the Federal standard of fill 
requirements, so elimination could result in a patchwork of different 
State rules. The Congressional Wine Caucus states: ``38 states defer to 
the federal standard and if it is eliminated, these states will be 
forced to enact new container size requirements. This will create 
serious disruption to business as wineries would have to overhaul their 
sales, marketing, and compliance models to adjust to 38 varying state 
regulations.''
    No State entity submitted comments to either notice, although TTB 
did request comments in Notice Nos. 182 and 183 from State regulators 
on whether the proposal would present regulatory issues at a State 
level. However, TTB did receive a comment from the National Alcohol 
Beverage Control Association (NABCA), which represents jurisdictions, 
including States, which directly control the distribution and sale of 
beverage alcohol within their borders. NABCA (Notice No. 182, comment 
64; Notice No. 183, comment 55) opposes the elimination of the 
standards of fill and comments that the States currently using the 
Federal standards will enact new standard of fill requirements that 
could be different in each State.
    Numerous commenters state that a proliferation in sizes will cause 
harm to distributors and retailers. According to many of these 
commenters, more sizes will result in additional SKUs, which will 
increase costs for these industry members. Southern Glazer's Wine & 
Spirits (Notice No. 183, comment 66) states that the increase in SKUs 
``will have cascading economic ramifications throughout the entire 
value chain--from supplier to wholesaler to retailer to the end 
consumer. It will require major wholesalers, for example, to invest in 
elevated inventory levels, enhanced material handling capabilities, and 
increased storage space.'' The California Grocers Association (Notice 
No. 182, comment 169) states that ``Eliminating the regulation on 
standard wine and spirits sizes will increase our costs,'' and provides 
examples relating to such things as shelf space and inventory.
    Opponents also contend that eliminating the standards of fill will

[[Page 85517]]

cause an increase in counterfeit and gray market imports that are 
currently prevented because the standards do not include some common 
international sizes, most specifically the 700 milliliter size. A large 
number of commenters state that adulterated products could more easily 
enter the country, resulting in injury and possibly death to consumers. 
This concern is expressed by Mo[euml]t Hennessy USA, Inc. (Notice No. 
183, comment 100) in its comment: ``* * * we wish to express a serious 
concern that will be impacted by changes to the existing standards--
unauthorized importation of distilled spirits and wine products * * *. 
Allowing unauthorized imports robs Mo[euml]t Hennessy USA and other 
authorized importers of the opportunity to protect against those risks 
and to ensure that our products are being sold in the intended state 
and manner. U.S. consumers should never face the risk of injury or 
death due to untraceable adulterated or counterfeit product brought in 
by an unauthorized importer.''
    Finally, a few commenters argue that malt beverages are different 
in meaningful ways from wine and distilled spirits, and the fact that 
there are no standards of fill for malt beverages does not imply that 
there should not be standards of fill for wine and distilled spirits. 
These commenters state that because of historical practices consumers 
have different expectations for malt beverages than they do for wine 
and spirits. Additionally, Sazerac (Notice No. 183, comment 67) reports 
that a number of States mandate specific standards of fill for malt 
beverages, which it argues has driven standardization nationally. 
Heaven Hill Brands (Notice No. 183, comment 96) notes that in most 
states malt beverage distributors have the ability to distribute 
directly. It contends that ``[t]his direct distribution by suppliers 
allows for more flexibility in size due to fewer limitations resulting 
from a distributor's management of malt beverage inventory. Distilled 
spirits, however, must go through the distributor tier and have a much 
longer shelf life creating long periods of storage.''

Comments Regarding the Addition of Specific Sizes

    Both Notice Nos. 182 and 183 stated that TTB was also considering 
maintaining the standards of fill, but ``liberalizing the existing 
regulatory scheme'' by adding certain additional standards of fill. In 
the respective notices, TTB listed sizes for which it had received a 
petition as 200, 250, 355, 620, and 700 milliliters and 2.25 liters for 
wine, and 700, 720, 900 milliliter and 1.8 liters for distilled 
spirits. A large number of commenters expressed support for the 
addition of specific petitioned-for sizes as follows:
    Wine--250 milliliter: This size was supported by 51 commenters. 
Proponents of this size note that some wines are currently being sold 
in aggregate packages of four 250 milliliter cans, which together equal 
one liter, an authorized standard of fill. Industry members state that 
the 250 milliliter is popular with consumers as a single serving size, 
with some further stating that this size promotes portion control and 
responsible drinking. In his comment, Senator Schumer states that ``a 
recent wine consumer survey by WICResearch.com concluded that `the 
total wine market will grow in order to satisfy consumer preferences,' 
if TTB permitted sales of wine-in-a-can in a single 250 milliliter 
size, which the survey revealed is the single-serve size most popular 
with consumers.'' Wine Institute notes that 250 milliliter containers 
are ``ideal serving containers for consumption at certain licensed 
venues such as stadiums, parks and other locations where glass or 
larger containers are not viable,'' and retailers wish to sell them 
individually in such venues.
    Some commenters report that retailers often separate the containers 
from the aggregate packages, causing trade enforcement issues at the 
State level. To remedy this, these commenters recommend TTB approve the 
250 milliliter size as an authorized standard of fill.
    Wine--355 milliliter (12 oz.): This size was supported by 38 
commenters. Several cider producers state that since the 355 milliliter 
(12 oz) can size is standard in the beer industry, their customers want 
and expect that size, making it critical to their commercial success. 
These producers note that, in the production of cider, apples often 
naturally ferment to an alcohol by volume (abv) level just above 7.4%, 
so producers often take steps to lower the abv below 7% so that the 
standards of fill regulations will not apply, enabling them to use 355 
milliliter containers. They state that sugar levels in apples vary 
widely depending on climate and other factors, making final alcohol 
levels difficult to predict. They argue that being able to use the 355 
milliliter container size will eliminate this uncertainty.
    Wine--200 milliliter: This size was supported by 23 commenters. 
Several cider industry members state that their customers are seeking 
products in this size. The Vermont Grape and Wine Council (Notice No. 
182, comment 74) and Presque Isle Wine Cellars (Notice No. 182, comment 
37) state that this size is good for ice wine and is the size used in 
Canada for ice wine. Other commenters note that this size is authorized 
in Europe, so its approval will facilitate trade.
    Other wine sizes: The other container sizes proposed in Notice No. 
182--620 milliliter and 700 milliliter--were supported by two comments 
and one comment, respectively. TTB received no comments specifically 
addressing the proposed 2.25 liter size. However, TTB received comments 
proposing additional wine sizes that had not been proposed in Notice 
No. 182: 20 milliliter, 180 milliliter, 225 milliliter, 255 milliliter, 
300 milliliter, 360 milliliter, 473 milliliter (16 oz), 475 milliliter, 
550 milliliter, 568 milliliter, 650 milliliter, 720 milliliter, 1.8 
liters, and 3.5 liters. Several of these sizes were suggested in Notice 
No. 176 by cider producers who contend that the sizes are important for 
their industry's success. Other proponents state that their proposed 
sizes are authorized in another country, so approval will facilitate 
trade.
    Distilled spirits--700 milliliter: This size was supported by 18 
commenters, who generally state that the 700 milliliter size is popular 
in other countries, so approval will facilitate trade and allow U.S. 
consumers more options in imported distilled spirits. However, several 
other commenters specifically cite the 700 milliliter size as a size 
that should not be approved. These commenters state that 700 milliliter 
is too close to the currently approved 750 milliliter size, and also 
contend that the size is the most popular bottle size worldwide with 
counterfeiters. Constellation Brands, Inc. (Notice No. 183, comment 
107) states that the ``existence of both a 750 ml and 700 ml size in 
the marketplace could lead to consumer confusion and allow for 
confusing or misleading pricing practices. The addition of a 700 ml 
size could also enable sales by unauthorized importers.'' Moet Hennessy 
USA, Inc. (Notice No. 183, comment 100) states that the prohibition 
against the 700 milliliter size has kept many unauthorized spirits 
imports out. Approval, it believes, ``will `open the floodgates' for 
unauthorized spirits imports into the U.S.'' It further states that 
``unreputable operators * * * refill used spirits bottles with 
different liquid, causing potential serious risk to consumers.''
    Other distilled spirits sizes: Three of the petitioned-for sizes--
720 milliliter, 900 milliliter, and 1.8 liters--received

[[Page 85518]]

support from three Japanese trade associations and the Japanese 
National Tax Agency. Several other additional distilled spirits sizes 
were proposed by commenters that had not been proposed in Notice No. 
183: 20 milliliter, 250 milliliter, 350 milliliter, 355 milliliter, 500 
milliliter, 1.5 liters, 2 liters, 3 liters, 3.75 liters, and 5 gallons. 
Five commenters proposed the 1.5 liters size, stating that the size is 
used in other countries, so its approval will align the standards of 
fill more closely with the global marketplace. The EU referenced all 
nine of its authorized sizes (100 milliliter, 200 milliliter, 350 
milliliter, 500 milliliter, 700 milliliter, 1 liter, 1.5 liters, 1.75 
liters and 2 liters) in its comment. The proponents of these sizes cite 
their usage in other countries and state that their approval will 
facilitate trade and offer additional options to U.S. consumers.

Comments Opposing Addition of Any New Sizes

    Numerous commenters to both notices opposed the approval of any new 
sizes, stating that the existing standards of fill already provide a 
wide variety of package sizes. Some of these commenters are not against 
the addition of new sizes per se, but rather believe that the current 
rulemaking did not provide enough opportunity for the public to focus 
on the petitioned-for sizes. E. & J. Gallo Winery (Notice No. 182, 
comment 146) states that ``[e]ach proposed new standard of fill should 
be the subject of a separate rulemaking proceeding so that commenters 
can review each in the context of existing standards of fill and any 
other proposals under consideration. Among other things, those 
rulemakings should address whether a proposed new standard of fill 
should replace an existing standard of fill or whether it should be 
limited to a particular package type such as cans or Tetra Paks. This 
type of deliberation is not possible in the current rulemaking.''

Comments on Proposal for an Expedited Approval Process

    Both Notice Nos. 182 and 183 proposed the option of instituting an 
expedited approval process for standards of fill were TTB to continue 
to approve individual standards. A total of 33 comments from both 
notices specifically address this proposal.
    Only four comments express complete support for an expedited 
approval process. The U.S. Association of Cider Makers (Notice No. 182, 
comment 158) supports an expedited process because ``the industry and 
marketplace change faster than the existing proposed rulemaking process 
can react, and we believe it is unreasonable to rely on NPRMs to 
quickly respond to market innovations.'' The National Association of 
Beverage Importers (Notice No. 182, comment 136 and Notice No. 183, 
comment 105) states that an administrative process would ``enable TTB 
to `test the waters' of multiple sizes.'' It could, for example, permit 
the optional use of a 700 milliliter distilled spirits bottle for a 
limited period of time to determine how consumers react and the 
industry implements the introduction of this standard size from the 
global market.
    Thirteen comments express complete opposition to any administrative 
approval process. These commenters generally state that new sizes 
should be approved by rulemaking, which will allow for public comments 
and transparency. Some of them also comment that it is not clear how 
such a process would work. Sazerac Company, Inc. (Notice No. 182, 
comment 85) states that ``the public should be given a meaningful 
opportunity to comment on potential changes as this should not be 
merely an administrative decision. Without sufficiently clear, 
publically-available standards, these standards could change over time 
without public input as officials change.'' Sazerac also states that it 
believes comment would be required under the Administrative Procedure 
Act (APA) because the standards of fill are binding on industry.
    An additional 16 comments express support for an expedited process 
if it includes a public comment period or an opportunity for ``open 
consultation'' with all stakeholders before new sizes are approved. 
Several of these commenters also state that they would like additional 
information about how an expedited process would work.

Other Comments

    No comments were received regarding the Notice No. 182 proposal to 
increase the minimum headspace for wine containers from not in excess 
of 10 percent of the container's capacity to not in excess of 30 
percent for clear containers 100 milliliters or less.

Comments on Labeling Distilled Spirits With U.S. Measure and Malt 
Beverages With Metric Measure

    Five comments to Notice No. 183 opposed the proposal to amend the 
labeling regulations for distilled spirits and malt beverages to 
specifically provide that distilled spirits may be labeled with the 
equivalent standard 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. Such labeling 
has been allowed under TTB policy, but it has not been explicitly 
authorized in the regulations. These commenters state that such dual 
labeling is unnecessary and will cause ``label clutter.'' Six comments 
to Notice No. 182 expressed opposition to allowing U.S. units on wine 
labels, even though TTB made no proposal on the issue in Notice No. 
182, as the wine labeling regulations already state that wine may be 
labeled with the equivalent U.S. unit in addition to the mandatory 
metric unit. See 27 CFR 4.37(b).

TTB Analysis

    As discussed above, TTB received 110 comments that expressed 
support for eliminating the standards of fill, asserting that 
eliminating the standards will provide them with greater flexibility to 
meet consumer demands and grow their businesses. TTB received 1,141 
comments that oppose eliminating the standards of fill (including the 
937 nearly identical comments from individuals associated with three 
industry members). These commenters contended that eliminating the 
standards of fill would cause consumer confusion and potentially lead 
to a proliferation of differing State container size requirements that 
could cause further consumer confusion. Commenters also expressed 
concern about significant market disruption.
    Based upon these comments, particularly those with regard to the 
potential consumer confusion, TTB believes that the appropriate action 
at this time is not to eliminate all standards of fill but instead to 
identify and authorize specific standards of fill from among those 
sizes that were the subject of notice and comment and for which TTB 
received sufficient information to make a determination.
    TTB notes that, while some commenters expressed support for 
eliminating of the standards of fill (including Senator Charles 
Schumer), the comments themselves focused specifically upon ensuring 
that certain can sizes, such as 250 milliliter and 355 milliliter for 
wine, were authorized. TTB believes that its authorization of these 
sizes largely addresses these commenters' concerns.
    Commenters expressed considerable support for most of the sizes TTB 
included in its proposals. However, few commenters supported 
authorizing the 620 milliliter, 700 milliliter, and 2.25 liter sizes 
for wine (which received specific support from 2, 1, and 0 commenters 
respectively).

[[Page 85519]]

    The 700 milliliter size for distilled spirits was the only proposed 
size, for either wine or distilled spirits, for which some expressed 
opposition. With regard to the 700 milliliter size, TTB received 
supportive comments from industry members who state that approval of 
the 700 milliliter size for distilled spirits will facilitate trade for 
U.S. exporters and importers, because it is commonly used in other 
countries, and none of the commenters opposed to the 700-milliliter 
size provided information that would support a finding that the 700-
milliliter size will be any more misleading to consumers than the other 
sizes supported by commenters generally. While some commenters noted 
that the 700-milliliter size is close to the already authorized 750-
milliter size, as noted above, commenters supported approving the 355-
milliliter size for wine, although 375-milliter is already an 
authorized size, and no commenters suggested that the closeness in size 
would lead to confusion. Additionally, although TTB understands the 
concern that commenters raised with regard to the potential for 
counterfeit products in the 700-milliliter size, TTB believes it is 
appropriate to continue to apply enforcement measures to deal with 
counterfeit products of any size.
    In light of this, TTB believes that the addition of most of the 
petitioned-for sizes will result in many of the same benefits that were 
intended when it proposed eliminating the standards of fill--providing 
bottlers with more flexibility, facilitating the movement of goods in 
domestic and international commerce, and providing additional 
purchasing options to consumers, but without causing the disruption 
commenters expressed concerns over regarding the proposed elimination 
of standards of fill.

U.S.-Japan Trade Agreement

    On October 7, 2019, the United States and Japan reached an 
agreement (the Agreement) on market access for certain agriculture and 
industrial goods. On December 30, 2019, a Federal Register notice (84 
FR 72187) was issued to implement the Agreement. As part of the 
Agreement, the United States reached a side letter agreement with Japan 
dated October 7, 2019, which addresses issues related to alcohol 
beverages, including standards of fill (``Side Letter''). See https://ustr.gov/sites/default/files/files/agreements/japan/Letter_Exchange_on_Alcoholic_Beverages.pdf. The Side Letter states that 
the U.S. Department of the Treasury will take final action on Notice 
Nos. 182 and 183. If the final action does not address certain sizes--
180, 300, 360, 550, 720 milliliters, and 1.8 liters for wine, and 700, 
720, 900 milliliters, and 1.8 liters for distilled spirits--then the 
U.S. Department of the Treasury shall propose new rulemaking to allow 
for those sizes. The Side Letter took effect with the U.S.-Japan Trade 
Agreement, which entered into force on January 1, 2020.
    In Notice No. 183, TTB referenced the distilled spirits sizes 
listed in the Side Letter. It described the petitions from three 
Japanese trade associations and a Japanese government agency for those 
sizes. These entities submitted comments that supported the elimination 
of the standards of fill, but further stated that, if the standards are 
not eliminated, they support the approval of their petitioned-for 
sizes. These proposed sizes for distilled spirits are discussed in 
Notice No. 183. Because TTB had not received petitions for the wine 
sizes listed in the Side Letter, TTB did not reference those sizes for 
wine in Notice No. 182. Nevertheless, TTB did receive comments from a 
Japanese trade association and a Japanese government agency proposing 
the approval of those sizes. The two comments support the elimination 
of the standards of fill, but requested the approval of the 180, 300, 
360, 550, 720 milliliters, and 1.8 liters sizes for wine if the 
standards of fill for wine are not eliminated.

Administrative Approval Process

    TTB requested comments regarding whether it should include in the 
new regulations an expedited administrative approval process that would 
replace the requirement for separate rulemaking in order to add new 
sizes to the standards of fill. This expedited approval process was 
offered as a quicker and less burdensome way to facilitate the 
expansion of bottled sizes without creating unnecessary industry 
burden. However, few commenters supported the process unless it 
included a public comment period or other means to consult with the 
industry, similar to the existing rulemaking process. Other commenters 
expressed support for an administrative approval process provided that 
TTB establishes criteria for approving additional sizes, and stated 
that TTB had not identified appropriate criteria for such a procedure. 
Consequently, TTB believes that an administrative procedure for 
approving new standards of fill is not appropriate at this time.

TTB Finding

    After careful analysis of the comments discussed above, TTB has 
decided not to eliminate the standards of fill for wine and distilled 
spirits. Rather, TTB is adding certain sizes for which TTB had aired 
petitions in Notice Nos. 182 and 183. Based upon the comments received 
to those notices, TTB is authorizing the addition of the 200, 250, and 
355 milliliters sizes for wine to Sec.  4.72, and the 700, 720, 900 
milliliters, and 1.8 liters sizes for distilled spirits to Sec.  5.47a.
    At this time, TTB is not adding the 620 milliliters, 700 
milliliters, and 2.25 liter wine sizes for which it had aired 
petitions, because comments received regarding these sizes did not 
provide sufficient information for TTB to determine that they should be 
authorized standards of fill. TTB will consider including these sizes 
and any new petitions for additional sizes in subsequent rulemaking. 
Moreover, TTB is not adding a 2-milliliter size for distilled spirits 
that was the subject of a petition because, as discussed in Notice No. 
183, TTB believes that a minimum size of 50 milliliters is needed to 
ensure sufficient space on the container for required labeling.
    TTB is adopting the proposal in Notice No. 182 to increase the 
minimum headspace in wine containers from not in excess of 10 percent 
of the container's capacity to not in excess of 30 percent for clear 
containers 100 milliliters or less. TTB is likewise adopting the Notice 
No. 183 proposal to amend the labeling regulations for distilled 
spirits and malt beverages to specifically provide that distilled 
spirits may be labeled with the equivalent standard 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.
    TTB will conduct rulemaking to propose the addition of new 
standards of fill for wine, including the 180, 300, 360, 550, 720 
milliliters, and 1.8 L sizes that Japanese government entities and 
Japanese industry associations requested during the comment period, and 
which were included in the Side Letter signed as part of the U.S.-Japan 
Trade Agreement discussed above.

Regulatory Analysis and Notices

Regulatory Flexibility Act

    TTB certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities. This final 
rule will provide wine and distilled spirits bottlers and importers 
with additional flexibility to use new bottle sizes if they so choose. 
This proposed regulation does not impose any new reporting,

[[Page 85520]]

recordkeeping, or other administrative requirements. Accordingly, a 
regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The collection of information in this rule has been previously 
approved by the Office of Management and Budget (OMB) under the title 
``Labeling and Advertising Requirements Under the Federal Alcohol 
Administration Act,'' and assigned control number 1513-0087. This 
regulation will not result in a substantive or material change in the 
previously approved collection action, since the nature of the 
mandatory information that must appear on labels affixed to the 
container remains unchanged.

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.

Inapplicability of the Delayed Effective Date Requirement

    Because these regulations relieve a restriction by providing wine 
and distilled spirits bottlers and importers with additional 
flexibility to use new bottle sizes if they so choose, and do not 
impose any new reporting, recordkeeping, or other administrative 
requirements, it has been determined, pursuant to 5 U.S.C. 553(d)(1), 
that these regulations will be issued without a delayed effective date.

Drafting Information

    Jennifer Berry of the Regulations and Rulings Division drafted this 
document, along with other Department of the Treasury personnel.

List of Subjects

27 CFR Part 4

    Advertising, Alcohol and alcoholic beverages, Consumer protection, 
Customs duties and inspection, Export, Imports, Labeling, Packaging and 
containers, Reporting and recordkeeping requirements, Wine.

27 CFR Part 5

    Advertising, Alcohol and alcoholic beverages, Consumer protection, 
Customs duties and inspection, Exports, Imports, Labeling, Liquors, 
Packaging and containers, Reporting and recordkeeping requirements.

27 CFR Part 7

    Advertising, Alcohol and alcoholic beverages, Beer, Customs duties 
and inspection, Exports, Imports, Labeling, Malt beverages, Packaging 
and containers. Reporting and recordkeeping requirements.

Amendment to the Regulations

    For the reasons discussed in the preamble, TTB is amending 27 CFR 
parts 4, 5, and 7 as follows:

PART 4--LABELING AND ADVERTISING OF WINE

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

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


0
2. Section 4.71(a)(3) is revised to read as follows:


Sec.  4.71   Standard wine containers.

    (a) * * *
    (3) Headspace. It must be designed and filled so that the 
headspace, or empty space between the top of the wine and the top of 
the container, meets the following specifications:
    (i) 187 mL or more. If the net contents stated on the label are 187 
milliliters or more, the headspace must not exceed 6 percent of the 
container's total capacity after closure.
    (ii) Less than 187 mL. If the net contents stated on the label are 
less than 187 milliliters, except as described in (a)(3)(iii) of this 
section, the headspace must not exceed 10 percent of the container's 
total capacity after closure.
    (iii) Exception. Wine bottled in clear containers with the contents 
clearly visible, with a net content stated on the label of 100 
milliliters or less, may have a headspace that does not exceed 30 
percent of the container's total capacity after closure.

0
3. In Sec.  4.72, amend the table in paragraph (a) by adding to the 
list of authorized standards of fill three new sizes after the entry 
for 375 milliliters, to read as follows:


Sec.  4.72   Metric standards of fill.

    (a) * * *
* * * * *
    355 milliliters.
    250 milliliters.
    200 milliliters.
* * * * *

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

0
4. The authority citation for part 5 continues to read as follows:

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


0
5. In Sec.  5.38, revise paragraph (a) to read as follows:


Sec.  5.38   Net Contents.

    (a) Standards of fill. The net contents of distilled spirits shall 
be stated in metric measure. The equivalent standard U.S. measure may 
also be stated on the container in addition to the metric measure. See 
Sec.  5.47a of this part for tolerances and for regulations pertaining 
to unreasonable shortages.
* * * * *

0
6. In Sec.  5.47a, amend paragraph (a)(1) by adding to the list of 
authorized standards of fill four new entries in numeric order, to read 
as follows:


Sec.  5.47a   Metric standards of fill (distilled spirits bottled after 
December 31, 1979).

    (a) * * *
    (1) * * * 8 liters.
* * * * *
    900 milliliters.
* * * * *
    720 milliliters.
    700 milliliters.
* * * * *

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

0
7. The authority citation for part 7 continues to read as follows:

    Authority: 27 U.S.C. 205.


0
8. In Sec.  7.27, the introductory text of paragraph (a) is revised to 
read as follows:


Sec.  7.27   Net contents.

    (a) Net contents shall be stated in standard U.S. measure as 
follows, and the equivalent metric measure may also be stated:
* * * * *

    Signed: December 22, 2020.
Elisabeth C. Kann,
Acting Administrator.

    Approved: December 22, 2020.
Timothy E. Skud,
Deputy Assistant Secretary, Tax, Trade, and Tariff Policy.
[FR Doc. 2020-28747 Filed 12-28-20; 8:45 am]
BILLING CODE 4810-31-P