ATF News
January 22, 2002
ATF Settles Wine Mislabeling Cases
In November 2001, ATF settled cases against Rabbit Ridge winery and Chambers
& Chambers wholesale company in related claims of mislabeling of wine
bottles. ATF opened the federal case against Rabbit Ridge in December of 1999
after receiving a tip that the winery and wholesaler were removing the labels
from some bottles of wine and replacing them with different labels.
ATF agents stated that they found violations at the winery from 1994 to 2000
in several areas. Rabbit Ridge settled for $750,000 mislabeling claims including
erroneous vintage dates, geographical information, and brand names; claims
regarding inaccurate recordkeeping; and claims of failure to obtain proper
permits required by the Federal Alcohol Administration Act. Rabbit Ridge also
settled claims of improper tax reporting procedures for $60,000. By settling the
claims, the winery may continue normal operations and does not admit any
wrongdoing. The settlement also closes the ATF investigation.
Chambers & Chambers, a San Francisco-based wholesaler with operations in
Hawaii, settled for $35,000 claims that it removed wine labels and replaced them
with different labels, in order to meet a particular demand in the Hawaiian
market.
Harriet Bobo, Director of Industry Operations at ATF, commented that
"the case reiterates the critical importance of record-keeping systems and
controls that substantiate label claims."
ATF spokeswoman Marti McKee stated that Rabbit Ridge's settlement with ATF
was the largest ever for a California winery. McKee also expressed hope that the
settlement would deter future violations.
ATF Proposes Changes to COLA
The ATF has proposed two significant changes to its Form 5100.31, the
Application for and Certification/Exemption of Label/Bottle Approval, known in
the alcohol beverage industry as COLA. Earlier this year, the Alcohol Labeling
& Formulation Division (ALFD) published a notice proposing to rewrite the
COLA in "plain language" in order to comply with government standards.
The notice also proposed eliminating the current ATF requirement that a COLA be
filed when non-mandatory items on a previously approved label are added, changed
or deleted.
In response to the notice, the ALFD received 15 comments. The sole comment on
the "plain language" proposal was favorable; however a majority of the
comments regarding the non-mandatory information criticized the proposed rule.
The Joint Committee of the States, which represents state liquor authorities
from control and non-control states, opposed the changes but specifically stated
that they would support a rule allowing entities to delete non-mandatory label
information without ATF approval.
The ATF intends to publish a second notice of the proposed changes that also
will include suggestions for facilitation of electronic filing of the COLA.
Electronic Filing and Copies of COLA Applications
The ATF is developing a system of electronic filing of COLAs. The Bureau is
currently working with a contractor to provide a means of electronic
communication between alcohol beverage industry members and the ATF. Industry
members will be able to submit COLA and formulas, and the ATF will be able to
return approved or rejected applications, on-line. Applicants also will be able
to obtain status updates on electronically filed forms.
Once the ATF has identified requirements for online filing, it will meet with
industry members and state regulatory agencies to discuss the requirements. ATF
hopes that industry members will participate in testing the electronic filing
system before it is made generally available in 2003. Electronic filing will
remain optional and the ATF will continue to accept paper copies of the forms.
Industry members also should note that beginning January 31, 2002, ATF will
only accept exact copies of the COLA applications. In the past, the ATF accepted
copies of Form 5100.31 that contained smaller fonts, misspelled or missing
words, illegible print, and other variations. This led to inaccuracies in the
applications and longer processing times. Use of the original forms or exact
copies thereof should benefit both the alcohol beverage industry and the Bureau.
The forms can be downloaded from the ATF Web site: www.atf.treas.gov/forms/pdfs/f5100.31.pdf.
Beverage Alcohol Manual Available Online
The long-awaited Beverage Alcohol Manual (BAM) is now available on the ATF's
Web site. The BAM is available in three volumes: Volume 1 Wine, Volume 2
Distilled Spirits, and Volume 3 Malt Beverages.
The BAM provides basic mandatory labeling information for domestic and
imported alcohol beverages. Industry members and importers should receive copies
of the applicable volumes, but additional copies can be obtained by contacting
the ATF Distribution Center at 703-455-7810. Copies are also available from
ATF's Web site at http://www.aft.treas.gov/pub/alctobpub/bevalmanual/index.htm.
Randy Pollard is a Governmental Consultant with the Alcohol Beverage Group.
Contact Randy Pollard at 888-688-8500 or rpollard@hklaw.com.