The Regulation of Packaging by the Alcohol and Tobacco Tax and Trade Bureau: An Added Level of Complexity
You are a product steward for a company that manufactures packaging for a wide range of food applications, and your company devotes significant resources to ensuring that your products comply with the laws and regulations administered by the U.S. Food and Drug Administration (FDA). For example, your company's laboratory conducts extraction testing on your products; outside laboratories are hired to perform toxicology testing, when necessary, on components of your products; and you obtain legal opinion letters to establish product compliance with FDA regulations. You have done everything necessary to ensure that your company complies with the laws applicable to the use of your products to package food, right?
Not necessarily. Government agencies other than FDA sometimes have concurrent jurisdiction over food packaging products. One area where concurrent jurisdiction raises particularly interesting issues is the regulation of packaging for alcoholic beverages by the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB)[1]. The Federal Alcohol Administration Act (FAAA), which provides for the federal regulation of beer, wine, and distilled spirits, establishes requirements for packaging used to hold alcohol over and above those imposed by FDA for foods generally under the Federal Food, Drug, and Cosmetic Act (FFDCA). The FAAA is administered not by the FDA, but by the TTB, an agency within the Department of the Treasury. The alcohol division of TTB regulates the production, distribution, and labeling of beer, wine, and distilled spirits (hereafter referred to as alcoholic beverages)[2]. While production, distribution, and labeling are the same types of activities that FDA regulates with respect to food, TTB's focus on these activities is very different.
FDA Regulation of Food Packaging
The Federal Food, Drug, and Cosmetic Act defines a "food additive" as a substance that is reasonably expected to become a component of food under the intended conditions of use[3]. A substance that meets the FFDCA's food additive definition will be considered "unsafe" unless it is used in accordance with the FFDCA. Consequently, any substance—including a component of food packaging—that is reasonably expected to become a component of food must comply with the FFDCA.
There are various ways to demonstrate that a food additive complies with the laws and regulations administered by the FDA. For example, a substance may be deemed to be in compliance because it is being used in accordance with a food additive regulation, a Threshold of Regulation exemption letter, an effective food contact notification (FCN), a prior sanction or approval, or it is deemed "generally recognized as safe" (GRAS). If a substance is not reasonably expected to become a component of food under the intended conditions of use, it is not a food additive by definition and may be used on this basis without any prior action by, or consultation with, the FDA.
Thus, for packaging components that are not reasonably expected to become components of food--because, for instance, no migration is detected at an appropriate analytical sensitivity—no premarket approval from FDA is necessary.
TTB Regulation of Alcohol Packaging
The FAAA and certain Internal Revenue Code provisions authorize TTB to regulate the alcohol industry and to provide protection for consumers of alcoholic beverages. In addition to law enforcement and tax collection activities, TTB is responsible for testing alcoholic beverages to determine potential adulteration problems. TTB's Scientific Services Division (SSD) operates four laboratories: the Beverage Alcohol Laboratory, the Nonbeverage Alcohol Laboratory, the Compliance Laboratory, and the Tobacco Laboratory. The Beverage Alcohol Laboratory tests new alcohol products that enter the marketplace. TTB's Compliance Laboratory samples alcoholic beverages in the stream of commerce in an effort to identify contaminants and adulterants, and to monitor for accurate alcohol labeling.
While TTB has primary jurisdiction over the alcoholic beverage industry, the bureau has consistently utilized the scientific and public health expertise of FDA to ensure the protection of consumers of alcoholic beverages. In fact, TTB is authorized by law to utilize the services of any government department or agency to carry out its powers and duties under the FAAA. TTB regularly consults with FDA regarding the approval of ingredients in alcoholic beverages and the requirements of label disclosure for certain substances.
TTB also has developed a consultative approach to adulteration problems. For example, a memorandum of understanding (MOU) issued in 1987 authorizes FDA to assist TTB (known at that time as the BATF (see footnote 1)) in ensuring the public safety of alcoholic beverages. More specifically, the MOU directs FDA to contact TTB when FDA learns or is advised that an alcoholic beverage is or may be adulterated. FDA must also provide laboratory services and health hazards evaluations at TTB's request.
With regard to packaging, the FAAA authorizes the TTB to regulate the bottle sizes for alcoholic beverages. Further, the Internal Revenue Code of 1986 authorizes regulations on the kind and size of containers for distilled spirits. According to the TTB, the purpose of the regulations establishing uniform standards of fill for alcoholic beverages is "to prevent a proliferation of bottle sizes and shapes which would inevitably result in consumer confusion and deception with regard to the quantity and net contents of the alcohol beverage package."[4] Of utmost importance (keep in mind that TTB is a part of the Treasury Department), the "uniformity in bottle sizes required by these standards also facilitates the proper calculation of Federal excise tax."[5] A key issue related to these concepts is the potential loss of water and the resulting increase in alcohol concentration or "proof"; the water loss and increase in proof may be affected by the packaging.
Unlike the FFDCA, which focuses FDA's attention on whether the packaging components are safe, the FAAA focuses TTB's attention on whether the packaging affects the alcohol proof and taxation of the product (although TTB does concern itself with making sure alcohol packaging is safe). There are two aspects to TTB's regulation of packaging: The first is whether the structure or form of the package raises problems with respect to the bureau carrying out its statutory duties. The second aspect—potentially burdensome for manufacturers of innovative packaging—is whether the composition of the package contemplated for specific alcohol is an approved type of packaging.
Structure or Form of Packaging
TTB may raise questions about unconventional alcohol beverage packaging because the container may not comply with, or at least appear not to comply with, "standard of fill" requirements. TTB maintains that noncompliance makes the bureau's job of calculating and collecting excise taxes more difficult and may cause consumer confusion.
Unconventional packaging is also a concern to TTB because of the potential for misleading consumers as to the nature of the product, thereby resulting in too much unwitting consumption of an alcoholic beverage. For example, in evaluating the sale of alcohol in packages resembling coffee creamers or children's frozen gelatin confections, TTB stated that the packages "either confuse the fact that they contain alcohol beverages or ... otherwise ... encourage alcohol consumption by both eligible and underage consumers, trivialize the dangers associated with inappropriate consumption, or are easily confused with other food products."[6] It should be noted, however, that much of the issue with these products involves the labeling as well.
Composition of the Package
As previously stated, TTB has the authority to regulate the kind of containers used to package alcohol. Although TTB essentially defers to FDA with regard to safety, the bureau has expressed interest in the composition of new substances used in alcoholic beverage containers.
Certainly, TTB will accept without difficulty the use in alcoholic beverage containers of substances explicitly cleared by FDA in food additive regulations covering the intended conditions of use or substances cleared under FDA's food-contact notification (FCN) system for the specific use.
For new container materials that are claimed to be GRAS, TTB requires producers to declare that the substance is listed as GRAS in Parts 182, 184, or 186 of the food additive regulations; for self-determined GRAS substances, the bureau may not permit their use without some confirmation or consultation with FDA on the matter[7].
The approval process becomes much more laborious when alcohol producers intend to use new materials that are not cleared for use under indirect food additive or GRAS regulations, or by FCNs. In such instances, TTB requires producers to obtain an "opinion" from FDA stating that the uncleared material is not expected to become a component of the alcoholic beverage. However, since FDA will rarely issue such opinion letters, this means that manufacturers may need to file a food-contact notification (FCN) with FDA. Once an FCN becomes effective, TTB will concur with FDA's determination on the safe use of the material by issuing a letter to the producer stating that the substance may be used to produce the bottle or package of interest.
Apart from the safety issues with respect to new food-contact materials, TTB will also want to ensure that materials used in contact with alcoholic beverages—either during production or packaging—will not adversely affect the beverage identity or the proof. Thus, TTB may require proof that a material used during production does not have untoward effects on the fermentation or aging process of a distilled spirit. For new packaging materials, TTB will also typically require data to demonstrate that the proof of the beverage is not significantly affected over time by the use of the material involved.
Bureau's Rulings on Specific Types of Packaging for Alcohol
While unconventional forms of packaging or new materials may attract the attention of TTB, there are many types of packaging that the agency has found acceptable for use with alcoholic beverages. The BATF (TTB's predecessor) addressed the use of specific types of packaging in a number of rulings. Several of those rulings are summarized below[8].
In BATF Ruling 82-12, BATF held that polyethylene terephthalate (PET) is an approved consumer packaging material for distilled spirits. In the ruling, the BATF stated that a proof gain of up to two degrees per year (and a corresponding water loss) may occur when using PET liquor bottles, but that this effect may be minimized by avoiding high storage temperatures, ensuring uniform wall thickness, and ensuring adequate market turnover. The bottles are required to be rigid or semi-rigid with molded shape or design, and the wall thickness of the bottle must be as uniform as possible.
Polyethylene liners as liquor bottles were addressed in BATF Ruling 85-1. BATF stated that it recognized that a proof gain of two-tenths of a degree (and a corresponding very small water volume loss) might occur, but concluded that because the alcohol does not travel through the container, the quantity of alcohol does not change between the time of bottling and the point of tax determination. The container must be manufactured in accordance with an approved standard of fill.
BATF has accepted more complex forms of packaging as well. For example, in BATF Ruling 86-1, the bureau evaluated the use of a multilayer package with polypropylene in contact with the alcohol, and with a core of ethylene-vinyl acetate-vinyl alcohol encased entirely within a layer of polypropylene-maleic anhydride adduct. BATF concluded that although a slight proof loss occurs, the slight loss has no negative impact on the revenue. Additional rulings may be found on TTB's Web site, by clicking here.
Conclusion
For a packaging manufacturer that intends to sell into the alcohol beverage container market, the regulatory hurdles do not end with establishing a suitable FDA status for a product. While conventional beverage container forms and components generally are acceptable to TTB, the use of innovative packaging for alcohol and the introduction of new packaging materials may require that you and your customers invest some time and effort in making sure the product is acceptable.
[1] The Bureau of Alcohol, Tobacco, and Firearms (BATF) was the predecessor to TTB, which remained with the Department of the Treasury, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which was moved to the Department of Justice, in 2003. ATF retained the law enforcement function that it had at Treasury.
[2] FDA retains primary jurisdiction over cooking wines and certain other wine beverages, such as diluted wine beverages and cider beverages with less than 7 percent alcohol by volume.
[3] FFDCA Section 201(s).
[4] 64 Fed. Reg. 6486, 6487 (Feb. 9, 1999).
[5] Id.
[6] 64 Fed. Reg. at 6487.
[7] See https://www.ttb.gov/formulation/determining-if-and-how-ingredients-may-be-used-in-your-beverage.
[8] These rulings have been summarized for this article; the full rulings should be reviewed before putting a packaging product on the market for use with alcoholic beverages.