Current Issues & Policies
At any moment there are dozens of bills in state and federal legislators that would affect your winery. While they vary in region and in scope, many fall under specific policy categories.
Read our policy positions and learn more about the major issues facing the American wine industry. These positions outline the history behind the issues, the significance of the possible changes and the stance WineAmerica has taken on the subject.
The Craft Beverage Modernization and Tax Reform Act (CMBTRA) of 2019 has been introduced in the House and the Senate, the third version of the bill since 2015. The lead sponsors in the Senate are again Senators Ron Wyden (D-OR) and Roy Blunt (R-MO). The lead sponsors in the House are Representatives Ron Kind (D-WI) and Mike Kelly (R-PA). The bill was introduced in the Senate on February 6 and in the House on February 13.
The new version of the CMBTRA (S. 362/H.R. 1175) will make permanent all of the new tax cuts and reforms that passed as part of the Tax Cuts and Jobs Act. This includes the expansion of tax credits for wineries of all sizes, the table wine tax class threshold moving up to 16% alcohol by volume from 14%, the allowance of credits on sparkling wine, and an increased carbonation tolerance for low alcohol (8.5% or less) grape and honey wine. As a reminder, the tax credits established by the Tax Cuts and Jobs Act are:
· $1.00 credit for the first 30,000 wine gallons produced
· $0.90 credit for the next 100,000 wine gallons produced (30,001 to 130,000)
· $0.535 for the next 620,000 wine gallons produced (130,001 to 750,000)
The 2019 version of the CBMTRA will not only make these tax credits permanent, but will also retroactively fix all of the implementation issues with the bill that have impacted the wine industry since early 2018. The current language includes a fix for bonded wine cellars and transfer of wine in bond from winery to winery. It does not currently address the implementation issues related to custom crush facilities, which will be addressed later when there is a vehicle for passage.
Actions: We have reached a critical time of the year regarding the CMBTRA. With less than two months left in the year we have still not seen any real movement towards passage. The bulk of the lobbying work WineAmerica and our colleagues have done has focused on building up the co-sponsor levels in the House and the Senate. As of November 1 there are 316 co-sponsors in the House (160 Democrats/156 Republicans) and 74 co-sponsors in the Senate (38 Democrats/36 Republicans. The bulk of the work that has been done by WineAmerica and our coalition has been to build up that list. It is our hope that we can secure an extension or make the credits permanent as an add-on to a large piece of “must-pass” legislation at the end of the year.
June House Ways and Means Markup and Bill
On Thursday, June 20, the House Ways and Means Committee held a lengthy mark-up of tax legislation. One of the bills they marked up was H.R. 3301: The Taxpayer Certainly and Disaster Relief Act of 2019. The bill, which was introduced by Rep.Mike Thompson (D-CA), would provide disaster relief and would extend many expiring (or ones that have expired already) tax provisions. Mr. Thompson introduced the bill in his capacity as chair of the subcommittee on revenue.
The bill would extend the Craft Beverage Modernization and Tax Reform Act (CMBTRA) for one year, meaning the tax credits would expire on December 31, 2020, rather than this year. It would not fix any of the transfer issues the wine industry has faced with the CBMTRA, but would continue the credits for another calendar year. The reasoning for one year was simple: the Ways and Means Committee Democrats want to be able to cover the costs of the extensions through a phase-out of other tax provisions The bill was reported out of Committee with no Republican support.
The bill went to the full House for consideration, but has little chance for passage in the Senate. If it were to pass, it would allow WineAmerica to continue to work for permanence with another year of cover. We would still have an active bill that would make the changes permanent next year. However, that being an election year, the prospects for passage of a stand alone bill are slim to none. We are not advocating for the passage of H.R. 3301 as our goal remains permanence of the expiring tax provisions. However, we do feel this is a positive first step towards achieving that goal. This is the first time the House Ways and Means Committee has included the CMBTRA in any original piece of legislation. WineAmerica considers this a first step towards a longer extension or permanence. As of this writing, the bill was not taken up by the House.
Senate Task Force Recommends Permanence
Earlier this year the Senate Finance Committee established various “task forces” to examine elements of the tax cut. The “Individual, Excise, and Other Temporary Tax Policy Task Force” was established to examine all expiring tax provisions and their impact on stakeholders and the economy overall. The task force included four senators: Senator Pat Roberts (R-KS), Co-Lead, Senator Robert Menendez (D-NJ), Co-Lead, Senator Steve Daines (R-MT), Task Force Member, and Senator Maggie Hassan (D-NH), Task Force Member.
Back in June, our tax reform coalition held a meeting with the task force staff to ask for permanence (or an extension) of the CMBTRA. The task force also met with TTB about the bill. Of all of the expiring tax provisions from the 2017 Tax Cuts and Jobs Act, the only provision that the task force recommended be permanent is the CMBTRA. The task force had the following to say about the CMBTRA in their report:
“As noted in the Joint Tax Committee pamphlet, several provisions enacted in the 2017 Tax Act temporarily reduced the excise tax imposed on beer, wine, and distilled spirits. The excise tax was further reduced for craft producers.
In addition, the 2017 Tax Act reduced tax and compliance burdens for all producers. The Task Force received a total of 23 submissions from a variety of stakeholders in the beer, wine, and spirits industries. The Task Force held two meetings: one with industry groups supportive of the provision, and another with the Alcohol and Tobacco Tax and Trade Bureau to discuss tax administration.
All members of this Task Force are cosponsors of the Craft Beverage Modernization and Tax Reform Act, S.362, which permanently reduces the excise tax for breweries, distilleries, and wineries to help these entrepreneurial small businesses succeed. A provision similar to the Craft Beverage Modernization and Tax Reform Act was included in the 2017 Tax Act, but authorized the reduced excise rate for two years. This provision is set to expire on December 31, 2019. The Task Force would like not only to have this provision extended, but furthermore see the Craft Beverage Modernization and Tax Reform Act enacted on a permanent basis.
The Craft Beverage Modernization and Tax Reform Act was introduced by Senator Wyden and Senator Blunt. The bill has broad bipartisan support with 66 cosponsors. In addition, the House companion bill has 258 cosponsors.
All industry stakeholders who submitted comments to the Task Force expressed support for permanence of the provisions. Senator Blunt sent a letter to the Task Force in support of the Craft Beverage Modernization and Tax Reform Act.”
National Day of Action
On Tuesday, October 15, WineAmerica members engaged in a “Day of Action” for the Craft Beverage Modernization and Tax Reform Act (CMBTRA). A website was established by the Distilled Spirits Council that enabled breweries cideries, distilleries and wineries to contact both of their state’s Senators and their House Member. The website sent an automatic message to all three of those offices directly from the producer. The automatic message urged support for an extension of the Craft Beverage Modernization and Tax Reform Act.
This “Day of Action” was a coordinated effort by the majority of our tax reform trade association coalition. The participating organizations were:
· American Craft Spirits Association
· Brewers Association
· Distilled Spirits Council
· United States Association of Cider Makers
Late last year the Trump Administration announced that the United States has reached an agreement with Canada and Mexico to join in a new free trade agreement. The new agreement, known as the United States-Mexico-Canada Agreement (USMCA) will replace the existing North American Free Trade Agreement (NAFTA), which was first ratified in 1993.
One of the top international trade priorities for the Trump Administration in these first two years was to reform NAFTA and sign a new agreement with both Canada and Mexico. The Administration had set a deadline of September 30 for the three-way agreement. Earlier in September it was announced that Mexico and the United States had reached an agreement, but Canada had not agreed to join. The US then confirmed the deadline of September 30 for Canada to join. If the US and Canada did not come to terms by the 30th, the United States and Mexico would sign a new, bilateral agreement without Canada. That did not come to fruition as all parties came to an agreement close to midnight on September 30.
What does it mean for wine?
First and foremost, what the USMCA will mean for wine is simple: the second and seventh largest export markets for American wine will remain open and free. All told, American wineries sent approximately $467 million of wine to Canada and Mexico in 2017, with $444 million of that exported into Canada. This is very important for the overall industry, as that wine will not be forced to be sold elsewhere.
WineAmerica is pleased that the US negotiators were able to secure a resolution of the British Columbia grocery store issue. As we have been reporting throughout our coverage of the NAFTA renegotiations, one of WineAmerica’s chief priorities was removing the restrictions of American wine sales in British Columbia–that is, the policy that only wine produced in British Columbia may be sold in British Columbia grocery stores. The US had filed a complaint against Canada at the World Trade Organization to remedy this issue. It was announced as part of the agreement between the United States and Canada that the British Columbia issue has been resolved through the USMCA agreement and that British Columbia has until November 1, 2019 to be compliant and allow sales of US wine on provincial grocery store shelves.
WineAmerica was instrumental in fixing the British Columbia grocery store issue. Early in 2017, the Office of the United States Trade Representative (USTR) requested comments from all industries regarding NAFTA priorities. While our chief priority was to keep the market open for US wine, we also outlined our concern with some Canadian provincial issues. While not all of those were considered, the British Columbia issue was picked up as a priority. WineAmerica and the Wine Institute submitted comments to USTR outlining our priorities for a “new” NAFTA. Additionally, we met with officials at USTR in the summer of 2017 on this issue. Concurrently we are part of the North American Market Working group, a coalition of various agriculture interests. Our work in that coalition involved Congressional outreach throughout most of 2017.
WineAmerica supports the full ratification of the USMCA and has been a part of the Pass USMCA Coalition and its efforts to secure passage.
The World Trade Organization has granted the United States permission to impose tariffs on the European Union as part of a prolonged dispute over subsidies given to European plane maker Airbus, a move that is likely to escalate trade tensions between the US and the EU.
The ruling is the global trade body’s final decision in a 15-year old dispute over the government assistance that Europe provides to its major plane manufacturer. It will clear the way for the United States to impose tariffs on European goods.
A 25% tariff will be applied to bottled table wine from France, Spain, Germany and the United Kingdom. The new tariffs have been authorized by the World Trade Organization (WTO). WineAmerica is part of a coalition that opposes these new tariffs for fear of retaliation. The European Union is the largest overseas market for US wines in the world. According to our colleagues at the Wine Institute, the EU accounted for $469 million in sales for US wineries in 2018.
Congressman Jimmy Panetta (D-CA), Congresswoman Zoe Lofgren (D-CA), and Senator Dianne Feinstein (D-CA) introduced legislation to shield farmworkers from deportation and put them on a path toward earned legal status and eventual citizenship.
Under the Agricultural Worker Program Act (H.R. 641), farmworkers who have worked in agriculture for at least 100 days in the past two years may earn “blue card” status that allows them to continue to legally work in the United States. Farmworkers who maintain blue card status for the next three years or five years—depending on hours worked in agriculture—would be eligible to adjust to lawful permanent residence (green card).
The bill currently has no Republican sponsors.
Actions: WineAmerica is a member of the Agriculture Workforce Coalition and the Coalition for Agriculture Labor Reform, through which we support comprehensive reform. The Agriculture Worker Program Act does address one aspect of the immigration issue, but is not comprehensive and has little or no chance to become law.
The Federal Budget process and the Appropriations process are in constant flux. The wine and grape industries need to have certain federal programs and agencies funded to maintain positive growth.
House and Senate Appropriations Status
The House has completed and passed ten of its twelve appropriations bills largely on a party line basis. The Senate Appropriations Committee has completed ten of its twelve appropriations bills, largely on a bi-partisan basis. While the Senate Appropriations Committee has finished their work on those ten bills, the full Senate has not passed any of the bills. This has set up a situation where the bills need to be consolidated before the President can sign them into law. Before adjourning for the late summer recess, the House and the Senate agreed to a bill that raised the debt ceiling and set federal spending levels for the next two years. This avoided a showdown over spending levels and a potential default on the federal debt.
Continuing Resolution Passed in September
In early September, the House of Representatives passed a continuing resolution (CR) to keep the federal government open until November 21. This CR continues to fund the government at the current Fiscal Year 2019 levels.
After a 301-123 vote, the House-approved funding bill was sent to the Senate, and as expected, passed the bill by a vote of 82-15. This set up another funding deadline right before Thanksgiving. It is currently unclear if another continuing resolution will be needed then or if work will be completed on all of the appropriations bills. If that is the case, there is a good chance those bills will be combined into a larger, omnibus appropriations bill that will fund the government through September 30, 2020.
With this new deadline, Congress has once again backed itself into a corner. While the House has finished virtually all of their appropriations work (see above) for the year, the Senate has yet to take up one bill. With the November 21 deadline right before Thanksgiving, the odds are high that there will just be another CR then that will go until right before Christmas. It has been commonplace that we have seen these large omnibus appropriations bills passed at the end of each year, leading to more and more legislative brinkmanship.
Additionally, this CR is setting up another fight for border security funding. President Trump has requested more funding for a border wall, and the House Democrats are not exactly willing to give it to him. The record-setting 35 day partial government shutdown from earlier this year was over border security, and we could be heading down that road again.
WineAmerica is a member of the MIC Coalition, a group of associations whose members provide music over the nation’s airwaves, through the Internet and in stores, hotels, restaurants, bars, wineries, breweries and taverns throughout the country. Our top priority is maintaining a functional music marketplace for the benefit of consumers. The most critical step to do that is preservation of the protections of the consent decrees that govern the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).
The head of the Antitrust Division at the Department of Justice, Assistant Attorney General Makan Delrahim, has indicated plans to terminate or substantially alter the ASCAP and BMI decrees. Terminating these decrees, without an effective alternative framework in place, would be extraordinarily disruptive for the entire music marketplace and would jeopardize the licensing system that enables millions of businesses across the country to efficiently play and pay for music performed publicly. This would result in substantial consumer harm.
As DOJ assesses these consent decrees, the MIC Coalition has identified the following critical features to inform policymakers’ consideration of a fair, efficient, transparent and effective music licensing framework.
License on application: Both decrees currently require ASCAP and BMI to provide a license to any potential licensee that applies for one, even if the parties cannot agree on a rate prior to the license grant. This prevents the threat of statutory damages for copyright infringement from being leveraged by ASCAP and BMI to extract monopoly rates.
Nondiscrimination: Both decrees prohibit discrimination with the result that ASCAP and BMI must offer similar licenses to similarly situated licensees. There is mutual benefit from this nondiscrimination. Licensees benefit from designating a non-exclusive licensing committee to negotiate industry-wide rates, and ASCAP and BMI benefit from lowered transaction costs by avoiding individual negotiations with every potential licensee of a particular type.
Transparency: Licensors should be required to provide accurate and comprehensive copyright ownership and licensing information, ideally in a public, centralized and easily accessible database. Licensees should know precisely which songs they are licensing in exchange for payment and be protected under the terms of their licenses for reliance on a licensor’s representations of what is contained in its catalog. The database should include the works of all PROs and have the ability to calculate the share of each PRO within various media e.g. radio – both terrestrial and digital, TV, restaurant venues, etc. Over a year ago ASCAP and BMI promised that they were moving forward with a combined database, but we have seen no evidence that progress is being made.
Prohibition on engaging in abusive, coercive or other unfair or deceptive practices: In recent years, states including Nebraska, Colorado, Oregon, Washington, and Virginia have enacted laws at the state level that are designed to reign in abusive, coercive or other forms of troubling behavior carried out by PROs. To prevent such behavior from occurring in the future, any new framework should require all PROs to abide by a predetermined “code of conduct” that would be subject to enforcement by the Federal Trade Commission.
Remedies for small and medium sized businesses that are not “take it or leave it”: Although some licensees have successfully obtained alternatives to blanket licensing, businesses that play music in their establishments occasionally do not have the option to pay based on use and must agree to licenses that cover more substantial music usage. The lack of options tailored for each business forces proprietors to stop providing music for the enjoyment of their customers.
In October 2018, wineries in New York alerted us to an issue regarding access to winery websites and the Americans with Disabilities Act (ADA). One of the provisions of the ADA requires that those with vision impairments have access to the same facilities as everyone else. A law firm in New York City has initiated lawsuits with New York wineries due to lack of access. WineAmerica recommends that all wineries make sure their websites are accessible for those individuals with vision impairments. In order to correctly do this we do recommend wineries consult both a lawyer and an IT professional. The regulations are not clear about what is actually legally required, but we recommend wineries follow the Web Content Accessibility Guidelines (WCAG).
The ADA does not clearly discuss website access, but the act does make it illegal for any public or private entity to provide goods and services to the public that are not also accessible to individuals with disabilities. In the lawsuits regarding website access, the plaintiffs are claiming that disability-based discrimination that applies to a place of “public accommodation” also applies to a website that may also advertise to that same place.
The Justice Department under the Obama Administration had established guidelines for websites to be ADA compliant, but the Trump Administration withdrew those guidelines in December 2017. The Justice Department has recommended that websites follow the Web Content Accessibility Guidelines (WCAG) that will conform with the World Wide Web Consortium standards.
TTB Notices 176:
Modernizing Labeling and Advertising Standards
WineAmerica submitted the following comments to the TTB on Notice 176.
On November 26, 2018 the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a notice of proposed rulemaking: Notice 176: Modernizing of the Labeling and Advertising Regulations for Wine, Distilled Spirits and Malt Beverages. This is the latest step in TTB’s years- long project to streamline the Certificate of Label Approval (COLA) process. The goal of this project is to make compliance easier and less burdensome for industry members. Notice 176 is intended to amend the regulations for the labeling and advertising of beverage alcohol, including proposing a new subpart of 27 CFR (the section of the US code that contains the labeling and advertising regulations) to contain the advertising subparts of the regulations. It will also officially define many labeling terms that have not been specifically codified in the past. We applaud and support TTB’s efforts to streamline and modernize the COLA, formulation, and advertising codes.
We will now address many of the general, as well as wine-specific, provisions of Notice 176.
Compliance With State and Other Federal Rules
TTB proposes codifying that wineries must comply with state and federal label requirements.
WineAmerica Comment: WineAmerica encourages its members to follow federal and state laws and regulations regarding labeling and advertising. We also support that the producer follow the state labeling requirements for any product finished in a particular state.
General COLA Changes
Notice 176 Proposes Several General Revisions to COLAs:
- What a COLA Does Not Do: Proposed text specifies that COLAs do not offer copyright protection. Additionally, the producer must guarantee that the container’s product meets what is stated on the label
WineAmerica Comment: WineAmerica does not believe that a COLA should offer copyright protection. We support that the product within the container match what the label states without exception.
- COLA Exemption: Under existing rules, the statement, “For sale in (name of state) only,” can be added after submittal, while the proposed rule requires it to be on the label when submitted for approval.
WineAmerica Comment: WineAmerica supports this change as it would protect against abuse and conforms with the requirement that any submitted label be what will be on the finished product.
- Formula Submittals and Approvals: Proposed text standardizes formula submittals for all commodities.
WineAmerica Comment: WineAmerica supports formula standardization for ease of submission and approval.
- Personalized labels: Currently, “template” labels are allowed for personalized labels. All of the required information can be put on one standardized label, and the artwork can change without re-submitting. This is not codified in the regulations, and Notice 176 would make that part of the regulations.
WineAmerica Comment: WineAmerica supports the codification of this in TTB labeling regulations as it has been an allowable practice for several years.
In general the TTB does not allow a product to be relabeled unless a producer receives explicit permission. The TTB is proposing that an entity that cannot obtain a COLA may request permission from the TTB to relabel a product. 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.
WineAmerica Comment: WineAmerica supports this proposed change as it will reduce the regulatory burden for TTB, so long as the relabeling is truthful and accurate.
- Currently, all beverage alcohol labels have required information that needs to be “separate and apart” from all other items on the label.
WineAmerica Comment: WineAmerica continues to support this standard for beverage alcohol labels.
- Type Size: TTB proposes that the minimum type size be for upper and lower case letters
WineAmerica Comment: WineAmerica supports that all label writing meet the type size requirements.
- Mandatory Information: Proposed text codifies that mandatory information must be separate and apart from all other information and on a contrasting background.
WineAmerica Comment: WineAmerica supports this codification as this is a standard requirement for all COLAs.
Mandatory Label Information
- What Constitutes a Label: The TTB proposes that a label be considered anything that is affixed to the container, or carved, or embossed. This explicitly does not include anything such as corks, capsules, and other items on the container.
WineAmerica Comment: WineAmerica supports that anything that is “affixed, carved, or embossed” be considered the “label.”
- Packaging: The TTB seeks to clarify when something that is “hung” on a container is considered labeling as opposed to advertising. The rulemaking proposes that any closed packaging (such as a case or a carton) must include all mandatory information required to appear on a label. A closed package is anything a consumer must “open, rip, untie, unzip, or manipulate” to remove the container to view the mandatory information.
WineAmerica Comment: WineAmerica does not believe that anything that is “hung” on a container and not affixed be considered labeling (see above comment). A label should be classified as anything that is affixed, carved, or embossed. Most wineries are small, family owned businesses that use generic packaging for shipping and other sales. It would be an unnecessary burden to require that all other “closed packaging” also require the mandatory information. Also, in the case of direct-to-consumer sales, such as a wine club, many “closed packages” used for shipping contain a variety of different finished products. This proposal would require that the label information for every product included in the “closed package” be included in said packaging.
- Packaging Placement: TTB proposes eliminating the requirement that mandatory information on a label be in “direct conjunction” with other mandatory information. The proposal states they need to be in the same “field of vision” or “immediately adjacent.”TTB also proposes eliminating the concept of a “brand” label and allowing mandatory information to be on any label affixed to a container. Appellations of origin will need to be in the same “field of vision” as the class/type of the wine.
WineAmerica Comment: WineAmerica supports the elimination of the requirement for “direct conjunction,” with the exception of the use of appellations of origin and the class/type of the wine. This would avoid undue consumer confusion. Additionally, if the requirement for a “brand or front” label is eliminated, the grape (or fruit) source could be placed elsewhere on the bottle or packaging and mislead consumers on the proper origin of the wine.
- Name and Address: TTB is seeking comments on whether it should delete the bottling location requirement for wine, or start to require it for beer and spirits, which it currently does not.
WineAmerica Comment: WineAmerica does not support removing the bottling location requirement for wine. It is important for the consumer to know where the product is bottled. We do support that it be required for malt beverages and distilled spirits, as all beverage alcohol products should have the same standards.
“Prohibited,” “Restricted,” and “Prohibited if Misleading” Statements
What has previously been referred to as “prohibited statements” will be split into three different categories under the proposed rulemaking:
- Restricted Statements: This is primarily related to environmental statements. Such statements must be truthful, specific, and not misleading. Logos, or marks such as “Salmon-Safe” or “Fair Trade Certified,” may only appear on labels if actually certified by the organization. Also, includes voluntary allergen statements and organic claims.
WineAmerica Comment: To avoid consumer confusion and deception, WineAmerica supports that any logo or mark that a producer uses on their labels or advertising must be certified by said organization, and with proper backing documentation.
- Prohibited Practices: Proposed text does not change any prohibited practices already outlined in the regulations.
WineAmerica Comment: WineAmerica supports that no further change is needed.
- Prohibited if Misleading: Proposed text deletes the blanket ban on using government symbols, will only be misleading if impressing of endorsement is given. Will prohibit any statement that implies the inclusion of a different commodity.
WineAmerica Comment: WineAmerica supports removing the blanket ban on government symbols as long as no impression is given that there is an explicit endorsement. We support prohibiting statements that imply that there is a separate beverage alcohol commodity in the finished product.
Standards of Fill
- Subject to certain requirements, TTB proposes to formally codify its policy of allowing aggregated packages that meet standards of fill when banded, or wrapped together, and sold as a single product. An example would be four 250 ml cans in a single box that would meet the 1 liter fill requirement. The individual cans would need to be labeled “not for individual sale.”
WineAmerica Comment: WineAmerica supports the TTB codifying its practice of allowing aggregated packages to meet standards of fill when banded or wrapped together. This has been a common allowable practice for some time, but not codified in the rules. We would also suggest that the 250 ml can be added as an accepted standard of fill for wine.
WineAmerica’s position is the wine industry would prefer to be able to sell the 250 ml can as a single serving package separate from a bundled or banded aggregate package. The TTB does permit individual sales of wine in 187 ml cans. The 250 ml can has seen more usage in recent years. Unlike 375 ml cans, the 250 ml size is an accepted single serving.
- Proposed rulemaking will not address any other standard of fill issues.
WineAmerica Comment: WineAmerica realizes that TTB intends to address further standards of fill issues in a later notice of proposed rulemaking. We would like to suggest that the TTB examine allowance of the standard 355 ml can for wine products. Currently, wineries must use a 375 ml can. he 20 ml difference in negligible to the consumer. Breweries and soft drink manufacturers are permitted to use the 355 ml cans for their products. Due to the smaller commercial availability of the 375 ml can, wineries are forced to bear a higher economic burden for canning. We look forward to more discussion on standards of fill.
- Industry members must provide proof of COLA approval at TTB’s request.
WineAmerica Comment: WineAmerica supports the idea that each producer keep 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.
- Non-mandatory label claims must have specific documentation that can be backed up by “basis of fact.”
WineAmerica Comment: While it is unclear what “basis of fact” actually is, WineAmerica supports “truth in labeling” and believes that all producers should have proper documentation to support what is said on their products’ labels and other forms of advertising.
Wine Specific Changes
Several of the changes directly related to wine are based on TTB attempting to bring US rules and regulations in line with the World Wine Trade Group’s international agreement on wine labeling.
- Definitions: Proposed explicit definitions of the terms: brix, county, fully finished, and grape wine.
WineAmerica comment: WineAmerica supports explicit definitions of these terms, as long as they are in line with the accepted definitions of the World Wine Trade Group.
- Brix: The proposed rule defines the term “brix” as “[t]he quantity of dissolved solids expressed as grams of sucrose in 100 grams of solution at 68 degrees Fahrenheit. (20 degrees Celsius) (Percent by weight of sugar).” This changes the typographical error that lists it as 60 degrees Fahrenheit.
WineAmerica Comment: WineAmerica supports the correction of the typographical error in the regulations.
- County: The proposed rule defines the term “county” to include a county or a political subdivision recognized by the State as a county equivalent. This proposed definition will allow the use of names of county equivalents as appellations of origin.
WineAmerica Comment: WineAmerica supports this clarification. As an example, wineries in the state of Louisiana are unable to use the equivalent of a county appellation of origin due to the state’s use of the term “parish” as a county equivalent. This would allow for equal footing with other states.
- Fully Finished: TTB defines the term “fully finished” as “Ready to be bottled, except that it may be further subject to the practices authorized in blending that does not result in an alteration of class or type.”
WineAmerica Comment: WineAmerica supports this definition of “fully finished” wine as wine that is set for bottling, before any changes (such as cellaring or blending) that does not change the class/type of the finished product.
- Grape Wine: The proposed regulatory text uses the term “grape wine” to include still grape wine, sparkling grape wine, and carbonated grape wine. The proposed definition reflects the name change of current class one grape wine to still grape wine, but allows for use of an umbrella term when referring to still grape wine, sparkling grape wine, and carbonated grape wine.
WineAmerica Comment: WineAmerica supports this proposed change.
- Bottler: Proposed text will define this as any person who bottles any size of wine. No limit in container size as currently exists.
WineAmerica Comment: WineAmerica supports this proposed change.
- Mandatory Label Information: Proposed text would eliminate the need for a brand label, allowing required information on any label.
WineAmerica Comment: As noted in an earlier comment, WineAmerica supports removing the need for a brand label, and allowance of mandatory information (such as the health warning statement and sulfite statement) on any label affixed or embossed on a container. However, we believe that the use of an appellation of origin with a grape name continue to be required to be in “direct conjunction”.
- Brand Names: will consolidate the sections on brand names in the regulations into one item. No substantive changes.
WineAmerica Comment: WineAmerica supports this proposed change.
- Alcohol Content: Proposed text would allow alcohol content tolerances of up to +/-1% ABV, so long as the alcohol content statement correctly indicates the tax category. This would be for both table and dessert wines.
WineAmerica Comment: WineAmerica supports uniformity for for both table and dessert wine tolerances. This will provide the consumer with the most accurate information about the finished product.
- Use of Terms “Vineyard,” “Ranch,” and “Farm”: Proposed text would codify current policy that the 95% rule for such terms does not apply to trade names or brand names when the use of the vineyard, orchard, farm, or ranch name is shown in the mandatory name and address statement on the label (except if brand name has viticultural or geographical significance).
WineAmerica Comment: WineAmerica supports this proposed change. Many producers use the terms “vineyard, orchard, farm, or ranch” in their trade name, and they do not meet the 95% rule for such terms when it comes to labeling purposes. With the exception of a brand name, has viticultural significance, we support this proposed codification.
- Appellations of Origin
- Rulemaking proposes splitting of appellation rules of grape wines, fruit, and other wines.
WineAmerica Comment: WineAmerica supports splitting out the rules for grape wines vs. other wines.
- Multi-county or Multi-state Appellations of Origin: Proposed text removes the requirement that states be contiguous for use. Reduces the percentage of grapes from 100% to 85% for use of the appellation. Removes the requirement that the percentage of grapes from each state be listed. Adds the requirement that the amount of wine derived from grapes grown in each State named in the appellation must be greater than the amount of wine derived from grapes grown in any State not named in the appellation. Adds the requirement that States be listed in descending order according to the percentage of wine derived from grapes grown in those States. Wine must conform to the state level rules for production and finishing of product.
WineAmerica Comment: WineAmerica does not support the reduction in grapes from 100% to 85% for the use of multi-county or multi-state AVAs. We believe that if the grapes are listed in such a scenario that all of the grapes be listed and they add up to 100%, as is the current practice.
In the case of a multi-state appellation we do not support removing the requirement that the percentage of grapes from each state be listed on the label.
WineAmerica does support the proposal that the finished wine must conform to the state level rules for production and finishing of a product.
- Estate Grown: Proposed text does not change the rules for “estate bottled,” but codifies what is required for “estate grown.” The wine must be labeled with an appellation of origin, the producing winery is located in that appellation of origin, the producing winery owns or has a controlling stake in the land where the grapes were grown for the wine, and fermented 100% of the wine, and if the bottling (not producing winery) is not located in the appellation, the producing winery must be referenced on the label. This now separates grape growing from bottling operations.
WineAmerica Comment: WineAmerica supports the proposed clarification between “estate bottled” and “estate grown.”
- Late Harvest: Proposed text codifies that the sugar at harvest and residual sugar are listed on the label.
WineAmerica Comment: WineAmerica supports the codification of this in the regulations as it has been a labeling requirement for many years.
- Vintage Dating: Proposed text codifies that the vintage date and appellation be in the same “field of vision” rather than in “direct conjunction.”
WineAmerica Comment: WineAmerica supports the use of “direct conjunction” as the standard for appellations of origin and grape names. We support the use of “field of vision” for vintage dating as TTB proposes.
Prohibited if Misleading Labeling Practices
- Statement of Age/Dates: The proposed new regulation would allow for additional information about the year of the grape (or fruit) harvest. The years of harvest must be presented in descending order based on % of wine derived from grapes or fruit grown each year.
WineAmerica Comment: Several of our members now make muti-vintage blends and have no ability to state that on their wine labeling. While this does not allow them to list a specific vintage date for the finished product, this does allow for some notation as to when the grapes in the blend were harvested. WineAmerica supports this proposed change.
- Indications of Origin: Wine not labeled with an appellation of origin would be allowed to indicate the origin of the grapes as long as the consumer is not given the indication that it is entitled to an appellation of origin. The percentage of the origin must be listed in descending order on the label. The example given by the TTB would be a wine that would be traditionally be labeled as “American.” That is, a wine that is made from 50% New York grapes and 50% Virginia grapes. The proposed regulations would allow the wine to be described as “this wine was produced and bottled in New York from 50% New York grapes and 50% Virginia grapes.”
WineAmerica Comment: WineAmerica supports the proposed change (as illustrated in the scenario listed above). Many wineries would like to be more specific in the labeling of wines with an American appellation. WineAmerica supports the listing of the origin of the grapes as long as it is limited to states and not a more specific region that could be construed as an appellation of origin.
Standards of Identity
- Non-standard Wine: Proposed text will still require a statement of composition, but may also include a requirement to list the base wine.
WineAmerica Comment: WineAmerica believes that the required statement of composition is adequate enough for non-standard wines, but we are not in opposition to the requirement of a base wine.
- Added Brandy/Spirits: TTB is looking to clarify if the brandy or spirits must come from the same fruit as the product it is added into.
WineAmerica Comment: WineAmerica asked our member wineries if they thought this was necessary and the results we received were split evenly. The lack of consensus among the wine industry does not allow for a proper comment on this provision.
- Dessert Wine: Proposed text would prohibit the term “dessert wine” on a label for a wine under 14% abv, but would allow for the term “May be served as a dessert wine.”
WineAmerica Comment: WineAmerica believes the definition of what is a dessert wine by the consumer does not align with the regulatory definition: a wine with an alcohol by volume of 14 to 24%. Recently, the passage of the two-year Craft Beverage Modernization and Tax Reform Act changed the definition of table wine (for taxation purposes) to 7-16% alcohol by volume, which better reflected the definition of table wine. The wine consumer generally considers a dessert wine to be a sweeter wine that would be appropriate to consume after a meal, regardless of alcohol content.
Many “late harvest” or “ice wines” have an alcohol content that is much lower than 14% alcohol by volume, yet are prohibited from even referencing the word “dessert.” We support the TTB suggesting that the phrase “may be served as a dessert wine” be admissible on a label, however we would suggest going one step further by omitting the alcohol content requirement for dessert wine, and instead base it on sugar at harvest and the residual sugar in the finished product.
- Natural Wine: Proposed text would delete the ability to use this term for standard wine without brandy. TTB is seeking comments on the use of “natural” on wine labels, and how industry and consumers interpret “natural” in relation to wine. TTB is proposing to delete use of “natural” on grape or fruit wine.
WineAmerica Comment: In recent years, the consumer has developed a different idea as to what “natural wine” is as opposed to the regulatory definition. It is WineAmerica’s belief that a definition of “natural wine”requires the wine to have no additives (with the exception of sulfur dioxide), and be completely fermented with naturally-occurring, uninoculated yeasts. This definition would fit typical consumer understanding and expectations of what the word “natural” means in relation to wine, as it would describe a wine that was made solely from grapes and fermented using only the natural yeasts present during production.
WineAmerica does not support deleting the use of “natural” as a term on grape or fruit wine labels. The definition as proposed in our comment is a better reflection of the consumer and industry perception of “natural wine.”
- Citrus Wine: Proposed text would remove “citrus wine” as a standard of identity, and move it under the fruit wine classification.
WineAmerica Comment: WineAmerica supports this proposed change.
- Sake: Proposed text would remove this from “wines from other agriculture products” and create a new category of rice wine.
WineAmerica Comment: WineAmerica supports TTB’s proposal to create the category of rice wine.
- Varietal Labeling: Proposal would allow that when multiple varietals are listed on the label, they only need to add up to 85%, rather than the existing 100%, to conform with the World Wine Trade Group standards. Additionally, grape percentages would no longer be required. If labeled with multi-county or multi-state appellation, the TTB is proposing to delete the requirement for % of wine from each county/state. The varietals listed must be in greater proportion than those not listed.
WineAmerica Comment: WineAmerica does not support a change in the rules for varietals and appellations as we have stated in earlier comments. We believe they should continue to add up to 100% in all cases.
- Semi-generic Labels: Proposal would codify the 2006 US/EU trade agreement in regards to labeling and the use of semi-generic labels.
WineAmerica Comment: WineAmerica continues to support the regulations as outlined in the 2006 US/EU trade agreement and would like to see them formally codified to avoid continued confusion regarding the use of those terms.
RE: Docket No. TTB 2019-0004; Notice 182 Elimination of Certain Standards of Fill for Wine
On July 1, 2019 the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a notice of proposed rulemaking: Notice 182: Elimination of Certain Standards of Fill for Wine. This notice was subsequently issued after the closing of the comment period for TTB Notice 176: Modernizing of the Labeling and Advertising Regulations for Wine, Distilled Spirits and Malt Beverages. Notice 176 made a reference to standards of fill for wine, however it explicitly stated that it would not address the issue of amending or changing the current regulations for standards of fill, particularly in relation to wine in cans.
The current approved can sizes for wine are 187 ml, 250 ml, 375 ml, and 500 ml. However, the 250 ml size cans cannot be sold individually as 250 ml is not a current standard of fill for wine. A winery can only sell 250 ml cans in multiple pack containers that add up to the size of an existing standard of fill. As an example, TTB considers the “four pack” a single container, as it adds up to the accepted 1 liter standard of fill. The standard beer and soda can is 355 ml (or 12 ounces). A wine must be sold in a 375 ml (12.7 ounces) can because 355 ml is not currently an approved standard of fill.
Originally, metric standards of fill for wine, established in 1974, were optional. They were then made mandatory in 1979 and have been amended in 1978, 1981 and 1990. The current approved standards of fill for wine are:
- 50 ml
- 100 ml
- 187 ml
- 375 ml
- 500 ml
- 750 ml
- 1 liter
- 1.5 liters
- 3 liters
- Wine may be bottled or packed in containers 4 liters are larger as long as it is in even liters (4 liters, 5 liters, 6 liters, etc.)
WineAmerica’s comments to Notice 176 suggested the TTB allow for 250 ml cans to be sold individually and for the approved use of the 355 ml can. In recent years there has been an upsurge in the use of cans as containers for wine. According to a study published by the Texas Wine Marketing Research Institute at Texas Tech University, the sales of wine in cans has steadily increased from $6.4 million in 2015 to $22.3 million in 2017. To meet this growing market more wineries are utilizing cans as a desired form of packaging. WineAmerica does not advocate for the establishment of standards of fill based on the type of container utilized by the producer, but recognizes the changing business needs of the wine industry based on consumer demand.
We will now address the three specific policy recommendations in TTB Notice 182.
Elimination of all Standards of Fill
The first proposal outlined in Notice 182 would eliminate all existing standards of fill for wine, with the exception of the minimum 50 ml container size. This would completely eliminate the barriers wineries face in terms of package size. In Notice 182, TTB also proposes allowing wine bottled in a clear, 100 ml or smaller container to contain a headspace of not more than 30 percent of the total capacity of the container. The proposed revision would allow more wine products to be bottled in individually sealed glasses. This would be permitted only for wine bottled in a clear container so that the consumer would be able to see the actual contents of the container, thus reducing the possibility of consumer deception.
WineAmerica Comment: WineAmerica is strongly opposed to the portion of the draft rule that would eliminate all standards of fill for wine. We believe that the removal of a uniform federal standard would lead to considerable consumer confusion and cause significant marketplace disruption. Currently, 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.
The proposed deregulation of this federal standard would cause:
- unnecessary consumer confusion;
- significant disruption to business operations;
- difficulty with assuring compliance across state lines; and,
- unnecessary expenditure of state resources to create standards in lieu of the federal standards of fill.
A proliferation of container sizes would likely result from the elimination of standards of fill, which would run directly counter to TTB’s stated mission of prohibiting consumer deception.
If standards of fill are eliminated, it could create an opportunity for some producers to reduce their costs while not reducing their prices. For example, a consumer may not be able to tell the difference between a 700 ml bottle of wine and the standard 750 ml bottle size. Wine bottles currently come in different shapes depending on the style of wine in the bottle, but the consumer can confidently know that each bottle, despite the difference in appearance, holds the same amount of wine when comparing prices and servings per bottle.
Addition of New Standards of Fill
The second proposal outlined in Notice 182 would maintain the existing standards of fill, but would amend the regulations to include the most widely petitioned for sizes. Those sizes include 200 ml, 250 ml, 355 ml, 620 ml, 700 ml, and 2.25 liters.
WineAmerica Comment: We specifically advocate for the inclusion of 250 ml container size as a new standard of fill. Currently, 250 ml cans are only approved to be sold in aggregate packages (as outlined earlier in our comments), which has caused trade enforcement issues at the state level. Many retailers have begun to sell these cans individually despite the aggregate packaging requirement resulting in state regulators having to step in to enforce these laws. Allowing the sale of individual 250 ml cans will help wineries increase consumer selection and bolster price competition.
Expedited Process for New Standards of Fill
The third proposal outlined in Notice 182 would institute an expedited process for considering additional standards of fill. One example TTB suggests is allowing for administrative approval of standards of fill, much like what is currently practiced regarding new grape names. The Administration could then authorize new standards of fill in response to a petition if there is “good cause for approval.”
WineAmerica Comment: WineAmerica does not support any new “administrative approval” process for additional standards of fill. It is unclear how a “good cause” for approval is defined. WIthout a clear definition of “good cause” we do not think this a viable precedent for TTB. The TTB has the authority to issue notice of proposed rulemakings (NPRM) for any new standards of fill that may be petitioned for. WineAmerica feels this is an adequate response for the TTB for new petitions.
It is our understanding that TTB has received numerous petitions to add in new standards of fill for wine, such as 250 ml and 355 ml. We encourage you to adopt new standards of fill through the existing authority you have. However, we strongly believe that the proposed rule should be modified to ensure that federal standards of fill for wine are preserved.
WineAmerica would like to thank TTB for the opportunity to comment on the proposed rulemaking.