>My understand is it comes from the FDA from the 
Code of Federal Regulations that discusses foods 
less than 2% and how they are to be labeled.<

Well, more specifically, you're thinking of CFR 21 parts 100 to 169, 
with part 101 devoted to Food Labeling. This contains FDA 
regulations pertaining to Food for Human Consumption.

Part 101.4 contains the 2% rule.  There is nothing in it that 
I see that allows for milk to go unlabeled.  In fact, it is that 
section that requires casein to be labeled a 
milk-derivative.

I admit I haven't read all CFR 21's 530 mind-numbing pages, so 
I still may have missed it, which is why I ask.  At this point, 
though, I'm wondering whether you may have been given 
misleading information about its existence in the first place.

Steve Carper