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REGISTER

FEDERAL

VOLUME 2

1934

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/AITEO

NUMBER 192

Washington, Tuesday, October 5, 1937
TREASURY DEPARTMENT.
Federal Alcohol Administration Division.
D ecision
on
R eused C ooperage H earing C onducted Ju n e
28, 1937
O ctober 1, 1937.

To A ll Bottlers o f Distilled Spirits:
On June 28, 1937, the Adm inistration conducted a public hearing1 in W ashington fo r the purpose o f taking evidence upon a proposal to amend Regulations No. 5, relating to the labeling and advertising of distilled spirits, in such manner as to require the labels fo r American type whiskey, other than com whiskey, produced on or after July 1, 1936, and stored in reused cooperage, to bear the follow ing statement, or some sim ilar statement: This whiskey was stored in re used cooperate and is not entitled to claim age under govern ment regulations.
W ith respect to American type whiskey, other than com whiskey, produced on or after July 1, 1936, and stored in reused cooperage, the regulations as originally issued in January, 1930, and as now in effect, do not require or permit the labels fo r such products to contain any statement with reference to the age thereof. In thus restricting the use o f age claims to whiskey stored in new oak containers, the Administration relied upon evidence adduced a t public hear ings to the effect that American type whiskey stored in new oak containers matures more satisfactorily and more uniformly than whiskey stored in second-hand barrels, and that consumers can be assured of uniform quality only when new containers are used.
It was upon this premise, to which the Adm inistration still adheres, and with a view to complying w ith the mandate of Congress as expressed in Section 5 e of the Federal Alcohol Adm inistration Act, that the regulations as originally issued differentiated, fo r the protection o f the consuming public, between whiskey stored in new and second-hand containers. As a result of this action the follow ing privi leges have incidentally accrued to the benefit of those who use new cooperage:
1 The exclusive right to market their product as straight whiskey , straight rye whiskey , straight bour bon whiskey and a blend of straight whiskies ; and the denial of the designation straight , in any form , to whiskey stored in second-hand cooperate.
2 The exclusive right to use their product as a base for the production of blended whiskey , blended rye whiskey , blended bourbon whiskey and all other types of blends, under standards of identity which require all blended whiskies to contain a minimum o f 20% straight whiskey, namely, whiskey which has been stored and aged in new barrels.
3 The exclusive right to claim age fo r their product, on the label thereof and in the advertising m atter relating 2 P. R. 1241 D I.

thereto; with a resulting denial to the used cooperage user o f any permission to claim fo r his product, either upon the label or in advertising matter, any age or maturity.
W ith fu ll advance notice of these requirements o f the labeling regulations a large m ajority of the distillers of the United States, on and after July 1, 1936, used only new oak containers. As a result, they w ill expect to derive the m ar keting advantages accruing from such use. On the other hflnrj a com paratively small number of distillers, w ith equal notice o f the regulations, chose to use, either wholely or in part, second-hand barrels fo r storage purposes. Some of the distillers in the latter category decided upon reused cooperage, feeling that their particular type of product was better in quality by reason o f such storage than if new barrels were used. However, many of the second-hand bar rel users resorted to the use of such barrels solely fo r com petitive purposes. It appears from reports filed with the Adm inistration by the distilling industry that there were in storage, in bonded warehouses in the United States, on July 1, 1937, approximately 8,905,715 barrels o f American type whiskey. O f this quantity 279,855 barrels, or approxi m ately 3 per cent of all American type whiskey then in storage, consisted of whiskey, other than corn whiskey, which was produced on or after July 1, 1936 and stored in reused cooperage.
It was represented to the Adm inistration in June, 1937, that the existing regulations perm itted this used cooperage whiskey to compete unfairly with whiskey stored in new barrels. In this connection it was said that retail dis pensers o f liquor, in the absence o f explanatory label in form ation, were in a position to make extravagant claims with respect to the characteristics o f the product. It was upon the basis of this representation that the Adm inistra tion, w ith a view to protecting the consumer from decep tion, conducted its hearing on June 28, 1937, and took testi mony upon the proposal to amend the labeling regulations so as to require the labels upon reused cooperage whiskey to contain the statement This whiskey was stored in re used cooperage and is not entitled to claim age under Government regulations or some sim ilar statement.
The Administration has carefully studied the transcript o f the public hearing record and is not convinced by the facts available that sufficient reason exists fo r requiring the labels upon used cooperage whiskey to contain the legend quoted above. In arriving at this conclusion, the Adm inistration is mindful o f the follow ing facts:
1 Th at under the present regulations the consumer is ade quately protected from deception w ith respect to the age o f used cooperage whiskey by the prohibition against the use of any age claim in connection with such product; and he is adequately inform ed as to the identity o f the product by those provisions of the regulations which require it to be desig nated merely as whiskey , and preclude it from being desig2425