The Constitutional Issues With TTB's Proposed Alcohol Labeling Rules


Late last year, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a proposed rulemaking to reform regulations surrounding the advertising and labeling of alcohol products. Marc Robertson of the Washington Legal Foundation writes for Forbes about the constitutionally suspect parts of the agency’s proposal:

TTB’s efforts to streamline the rules and finally recognize long-standing First Amendment precedents are welcome. But parts of the proposed rule do not adequately protect the commercial speech rights of alcohol-beverage producers and consumers. We’ll focus here (as WLF will in its forthcoming public comment) on the prohibition of statements on labels or in advertisements that are disparaging, false, misleading, obscene, or indecent…

While the TTB’s proposal would prohibit false speech (unprotected under the First Amendment), it also targets truthful commercial speech that may tend to mislead or offend consumers. This provision accords the TTB a great deal of latitude to subjectively judge alcohol producers’ speech. While there is bound to be discretion and subjective review of any agency regulation, the TTB’s prohibition of certain disparaging statements or indecent labels or advertisements goes too far…

In addition to the constitutional concerns with its vague, subjective standards for alcohol labels and advertisements, the TTB must consider the message such paternalistic rules sends to state beverage control boards, which also review alcohol product labels. Such regulators have taken aim at craft beer names like “Dirty Bastard,” “Backwoods Bastard,” and “Raging Bitch,” as well as label images like a cartoon frog with its middle finger extended. Some of those decisions were successfully challenged under the First Amendment, but states would be better off helping their local businesses than forcing them into lawsuits…

The whole article is well worth a read here.

Spiked Seltzer: How is it Regulated?


There has been a lot of buzz around hard sparkling seltzer this year. This has left some people wondering if it is regulated any differently than other alcoholic beverages. Frank Knizer of Lehrman Beverage Law explains below:

The majority of hard seltzer is produced from either a brewed-malt (“clear malt”) or brewed-sugar (where 100% of the fermentables are derived from non-malt sugar) base, with carbonated water and added flavor. Under Alcohol and Tobacco Tax and Trade Bureau (TTB) regulations, both malt- and sugar-based hard seltzers are considered “beer,” but only malt-based hard seltzers are also considered “malt beverages.” This means that federal beer rules (27 CFR Part 25) apply to both malt- and sugar-based hard seltzers, but federal malt beverage labeling and advertising rules (27 CFR Part 7) apply only to malt-based hard seltzers.

The upshot of all this is that producing a hard seltzer with either type of base requires a Brewer’s Notice, and – if you’re adding flavor or color – TTB formula approval. Likewise, both malt- and sugar-based hard seltzers are taxed federally as “beer.” But, of these two types, only malt-based hard seltzers need to conform to federal malt beverage labeling rules (i.e., require a Certificate of Label Approval (COLA)). By contrast, sugar-based hard seltzers do not require a COLA, but do need to comply with FDA labeling rules (21 CFR Part 101)...

Read more details about its regulations here

Breweries Face Class Action Suits for Alleged False Advertising


In recent years, numerous breweries have found themselves facing lawsuits for alleged false advertising and labeling on their beer products. One prominent recent example is Kona Brewing Company, which features maps of Hawaii (as well as other island-themed images) on its packaging. Because its beer is not actually made in Hawaii, Kona has found itself on the receiving end of a class action lawsuit--even though its beer labels specifically disclose this fact. Greg Herbers of the Washington Legal Foundation writes about the judge's recent ruling in this case, which appears set to go to trial:

"We have been covering a legal action against Kona Brewing Company (now renamed Broomfield v. Craft Brew Alliance), which is one suit in the larger trend of class actions against breweries alleging misleading or false labeling and advertising.  In that suit, Judge Beth Labson Freeman, who sits on the U.S. District Court for the Northern District of California (a.k.a. the “Food Court”), recently ruled on Kona’s motion to dismiss.

Though the court trimmed the complaint, dismissing several of the plaintiffs’ causes-of-action and requests for relief, it held that the crux of the allegations could proceed.  The result is that, through strategic pleading, Kona must spend its time and resources fighting a lawsuit with questionable merits.  Judge Freeman created perverse incentives for future litigants by choosing to become, in essence, a product-packaging regulator..."

Read the whole article here.