Standards of Fill for Wine and Distilled Spirits

<RULE> DEPARTMENT OF THE TREASURY <SUBAGY>Alcohol and Tobacco Tax and Trade Bureau</SUBAGY> <CFR>27 CFR Parts 4, 5, and 24</CFR> <DEPDOC>[Docket No. TTB-2022-0004; T.D. TTB-200; Re: Notice Nos. 210 and 210A]</DEPDOC> <RIN>RIN 1513-AC86</RIN> <SUBJECT>Standards of Fill for Wine and Distilled Spirits</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Alcohol and Tobacco Tax and Trade Bureau, Treasury. <HD SOURCE="HED">ACTION:</HD> Final rule; Treasury decision. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule amends the Alcohol and Tobacco Tax and Trade Bureau (TTB) regulations that govern wine and distilled spirits containers to add 13 standards of fill for wine and 15 for distilled spirits. TTB is also amending its regulations to eliminate the distinction between standards of fill for distilled spirits in cans and those for distilled spirits in containers other than cans. TTB had also proposed to generally eliminate the standards of fill for wine and distilled spirits, as an alternative to approving specific new standards of fill. Upon careful consideration of comments received, however, TTB is not adopting that proposal at this time. The amendments described in this final rule respond to industry member requests for additional flexibility to use a wider range of container sizes and are expected to facilitate the movement of goods in domestic and international commerce while also providing consumers broader purchasing options. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective January 10, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Caroline Hermann, Alcohol and Tobacco Tax and Trade Bureau, Regulations and Rulings Division; telephone 202-453-2265. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> <HD SOURCE="HD2">A. TTB Authority</HD> The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers regulations setting forth standards of fill for containers of beverage distilled spirits and wine products distributed within the United States. The authority to establish standards of fill is based on two provisions of law: (1) section 5301(a) of the Internal Revenue Code of 1986 (IRC), codified at 26 U.S.C. 5301(a) in the case of distilled spirits, <SU>1</SU> <FTREF/> and (2) section 105(e) of the Federal Alcohol Administration Act (FAA Act), codified at 27 U.S.C. 205(e), for both distilled spirits and wine. 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. The FAA Act at 27 U.S.C. 205(e) 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 . . . .” The FAA Act at 27 U.S.C. 206 generally prohibits the sale to consumers of distilled spirits “in bulk” which is defined as containers over one wine gallon. <FTNT> <SU>1</SU>  Sections 5041(e) and 5368 of the IRC also provide the Secretary the authority to set forth tax tolerances for containers of wine products. </FTNT> TTB administers the IRC and FAA Act 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 Department Order 120-01. <HD SOURCE="HD2">B. Current Standards of Fill for Distilled Spirits</HD> 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 “standard of fill” interchangeably. The standards of fill for distilled spirits are contained in subpart K of part 5 of the TTB regulations (27 CFR part 5). Within subpart K, paragraph (a)(1) of § 5.203 (27 CFR 5.203(a)(1)) specifies the following metric standards of fill for containers other than those described in paragraph (a)(2) of that section: • 1.8 Liters. • 1.75 Liters. • 1 Liter. • 900 mL. • 750 mL. • 720 mL. • 700 mL. • 375 mL. • 200 mL. • 100 mL. • 50 mL. 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 § 5.203 authorizes the use of the following metric standards of fill: • 355 mL. • 200 mL. • 100 mL. • 50 mL. For better readability this document will refer to the containers referenced in 27 CFR 5.203(a)(1) as “containers other than cans” and those referenced in § 5.203(a)(2) as “cans.” In addition to the metric standards specified above, § 5.203 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 § 5.203 metric standards). <HD SOURCE="HD2">C. Current Standards of Fill for Wine</HD> The standards of fill for wine are contained in subpart H of part 4 of the TTB regulations (27 CFR part 4). Within subpart H, paragraph (a) of § 4.72 (27 CFR 4.72(a)) authorizes the use of the following metric standards of fill for containers, in addition to those described in paragraph (b) which are discussed further below: • 3 liters; • 1.5 liters; • 1 liter; • 750 milliliters; • 500 milliliters; • 375 milliliters; • 355 milliliters; • 250 milliliters; • 200 milliliters; • 187 milliliters; • 100 milliliters; and • 50 milliliters. Paragraph (b) of § 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.). <HD SOURCE="HD1">II. Notices of Proposed Rulemaking</HD> <HD SOURCE="HD2">A. Notice No. 210</HD> On May 25, 2022, TTB published Notice No. 210 in the <E T="04">Federal Register</E> (87 FR 31787) proposing to add 10 authorized standards of fill for wine and, as an alternative, to eliminate all but a minimum standard of fill for wine containers. The 10 standards of fill proposed for wine were: 2.25 and 1.8 liters; and 720, 700, 620, 550, 360, 330, 300, and 180 milliliters. TTB also proposed to eliminate all but a minimum and maximum standard of fill for distilled spirits but did not propose to authorize any specific standards of fill for distilled spirits as an alternative. The proposed rule followed, and took into consideration, a Department of the Treasury report on competition in the markets for alcohol beverages that recommended rulemaking to “again consider eliminating the standards of fill requirements.” See Treasury Report on Competition in the Markets for Beer, Wine, and Spirits (February 9, 2022), available at <E T="03">https://home.treasury.gov/system/files/136/Competition-Report.pdf.</E> That report (referred to in this document as the “Competition Report”), which was produced in response to Executive Order 14036, “Promoting Competition in the American Economy” (published in the <E T="04">Federal Register</E> on July 9, 2021, at 86 FR 36987), noted that “[c]ontainer size requirements can be a barrier to innovation and competition, insofar as producers must conform their packaging to the Treasury-mandated sizes.” Further, TTB had received questions regarding standards of fill from industry members noting difficulty in sourcing compliant containers during certain periods. In response to Notice No. 210, TTB received 76 comments. Commenters included national trade associations, the European Union (EU), congressional representatives, individuals, and alcohol beverage companies. Most of the comments addressed the proposals, providing support for or opposition to them. However, many commenters requested that TTB consider adding certain additional authorized standards of fill for distilled spirits and wine that were not included in Notice No. 210, as either a preferred alternative to generally eliminating the standards of fill or, even if their preference was to eliminate the standards of fill, as an option for consideration in the event that the standards of fill were not eliminated. Several commenters also suggested TTB eliminate the distinction between standards of fill that apply to distilled spirits in cans and those that apply to distilled spirits in containers other than cans, which was also not proposed in Notice No. 210. <HD SOURCE="HD2">B. Notice No. 210A</HD> Because TTB received comments that requested amendments beyond the scope of the original request, and recognizing that these requests should be considered in the context of the proposals in Notice No. 210, TTB issued Notice No. 210A on September 9, 2024 (89 FR 73050), which reopened the comment period on Notice No. 210. In Notice No. 210A, TTB specifically requested comments on whether to authorize the following new standards of fill for distilled spirits: For both cans and containers other than cans, 3.75, 3, 2, and 1.5 liters and 500, 350, 250, and 187 milliliters; for cans, 945, 710, 700, 570, 475, and 331 milliliters; and for containers other than cans, 355 milliliters. TTB also requested comments on whether it should main ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 57k characters. 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