Notice No. 176: Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits, and Malt Beverage; Docket No. TTB-2018-0007

While the Proposed Rule’s liberalization of Certificate of Label Approval (“COLA”) regulations reforms an overly burdensome regulatory system, the Labeling Rule fails to address two principal defects in the Bureau’s COLA scheme. First, at its core, the current COLA process is nothing more than the licensing of speech. As such, COLAs are unconstitutional prior restraints on liberties guaranteed to all Americans by the First Amendment. To ameliorate the unconstitutional impact of restraints on speech, the Rule should apply the process and post-publication enforcement of the proposed labeling requirements for COLAs related to personalized labels (Proposed Rule §§ 4.29, 5.29, and 7.29) to all COLAs.

Second, while the Proposed Rule incorporates approximately forty guidance documents— including some dating back to the 1950s—the Rule does not abandon TTB’s regulation-by-guidance practice. Federal agencies run afoul of APA requirements when they create rights or obligations binding on regulated persons or entities without engaging in notice-and-comment rulemaking. To correct this oversight in the Proposed Rule, the Bureau should adopt the rule proposed by NCLA to the Department of the Treasury on January 25, 2019, which petitioned the Treasury to engage in APA NCLA Page 2 of 12 notice-and-comment rulemaking to prohibit issuing, relying on, or defending the validity of improper guidance. The Labeling Rule may have other practical and legal defects beyond the two upon which this NCLA comment focuses, such as the pre-COLA product evaluation process, the compelled speech labeling requirements, or the compelled and restricted speech in advertisements. NCLA reserves the right to comment further or to challenge practical, statutory, or constitutional defects associated with the Proposed Rule in any appropriate venue of competent jurisdiction in the future.

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