Procedures for the Issuance, Denial, and Revocation of Certificates of Label Approval, Certificates of Exemption From Label Approval, and Distinctive Liquor Bottle Approvals (93F-029P)

DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 4, 5, 7, 13, and 19

[Notice No. 815]

RIN 1512-AB34

Procedures for the Issuance, Denial, and Revocation of

Certificates of Label Approval, Certificates of Exemption From Label

Approval, and Distinctive Liquor Bottle Approvals (93F-029P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Treasury.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Alcohol, Tobacco and Firearms (ATF) is proposing

to issue regulations specifically setting forth the procedures for the

issuance, denial, and revocation of certificates of label approval

(COLAs), certificates of exemption from label approval, and distinctive

liquor bottle approvals. The proposed denial and revocation regulations

are new, whereas the proposed issuance regulations are more specific

than the current regulations. The proposed regulations would also

codify the procedures for administratively appealing the denial or

revocation of certificates of label approval, exemptions from label

approval, or distinctive liquor bottle approvals.

DATES: Written comments to this proposed rule must be received by

December 12, 1995.

ADDRESSES: Send written comments to: Chief, Wine, Beer and Spirits

Regulations Branch, Bureau of Alcohol, Tobacco and Firearms, P.O. Box

50221, Washington, DC 20091-0221 (Attn: Notice No. 815).

Copies of the proposed regulation and any written comments received

will be available for public inspection during normal business hours

at: ATF Reading Room, Office of Public Affairs and Disclosure, Room

6480, 650 Massachusetts Avenue NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Robert White, Coordinator, Wine, Beer

and Spirits Regulations Branch, Bureau of Alcohol, Tobacco and

Firearms, 650 Massachusetts Avenue NW., Washington, DC 20226 (202-927-

8230).

SUPPLEMENTARY INFORMATION:

Background

The Federal Alcohol Administration (FAA) Act, 27 U.S.C.

Sec. 205(e), provides ATF, as the delegate of the Secretary of the

Treasury, with authority to promulgate regulations with respect to the

bottling, packaging, and labeling of distilled spirits, wine, and malt

beverages in order to prohibit deception of the consumer, and provide

the consumer with adequate information as to the identity and quality

of the product.

In order to carry out such requirements, domestic bottlers and

producers are prohibited from bottling distilled spirits, wines, or

malt beverages, and importers are prohibited from removing bottled

distilled spirits, wines, or malt beverages from Customs custody,

unless they have in their possession a certificate of label approval

covering such products, ``issued by the Secretary in such manner and

form as he shall by regulations prescribe.'' 27 U.S.C. Sec. 205(e). The

law provides an exemption from these requirements for products which

are not to be sold, offered for sale, or shipped or delivered for

shipment, or otherwise introduced in interstate or foreign commerce.

The regulations implementing these statutory provisions provide

that no person shall bottle or pack wine, distilled spirits, or malt

beverages unless application is made to the Director and an approved

certificate of label approval, ATF Form 5100.31, is issued. 27 CFR

Secs. 4.50(a), 5.55(a), and 7.41. The regulations also provide that no

bottled wines, distilled spirits, or malt beverages shall be released

from Customs custody for consumption unless an approved certificate of

label approval, ATF Form 5100.31, is deposited with the appropriate

Customs officer at the port of entry. 27 CFR Secs. 4.40(a), 5.51(a),

and 7.31(a).

A bottler of wine or distilled spirits who can show to the

satisfaction of the Director that the product is not to be sold,

offered for sale, or shipped or delivered for shipment or otherwise

introduced in interstate or foreign commerce, must make application for

exemption from the labeling requirements of the FAA Act on ATF Form

5100.31 in accordance with the instructions on the form. If the

application is approved, a certificate of exemption from label approval

will be issued on the same form. 27 CFR Secs. 4.50(b) and 5.55(b).

Certificates of exemption from label approval are not issued for malt

beverages.

Finally, the ATF Form 5100.31 is also used to obtain approval for

distinctive liquor bottles, pursuant to the regulations appearing at 27

CFR Sec. 19.633(a). ATF's authority to regulate liquor bottles is

derived from section 5301 of the Internal Revenue Code of 1986, 26

U.S.C. Sec. 5301. However, the approval of a distinctive liquor bottle

also includes the approval of the label on that bottle, pursuant to the

FAA Act.

Revocation of COLAs

ATF reviews over 60,000 applications for certificates of label

approval, exemptions from label approval, and distinctive liquor bottle

approvals every year. There is no doubt that errors will occasionally

occur in the approval process. Thus, there is clearly a necessity for

some type of revocation procedure.

Since the enactment of the FAA Act in 1935, ATF and its predecessor

agencies have taken the position that the statutory authority to issue

certificates of label approval also included an implied statutory

authority to cancel or revoke such certificates in the event that such

certificates were approved in error. There have never been formal

procedures in the regulations for denial or revocation of certificates

of label approval. However, ATF has utilized informal procedures for

denials and revocations, where applicants or certificate holders who

wished to contest a denial or revocation were given an opportunity to

do so in writing, or through informal meetings with Bureau officials.

The certificate of label approval was never intended to convey any

type of proprietary interest to the certificate holder. On the

contrary, Paragraph III(1)(c) of Form 5100.31 provides that ``[t]his

certificate is issued for Bureau of Alcohol, Tobacco and Firearms use

only and does not constitute trademark protection, or relieve any

person from liability for violations of the FAA Act and related

regulations and rulings.'' The certificate of label approval is a

statutorily mandated tool used to help ATF in its enforcement of the

labeling requirements of the FAA Act.

[[Page 47507]]

Recently, however, ATF's procedures for revocation of COLAs were

subject to challenge in the Federal District Court for the Northern

District of California. In Cabo Distributing Co. v. Brady, 821 F. Supp.

601 (N.D. Cal. 1992), the court set aside ATF's revocation of labels

for ``Black Death'' vodka on several grounds. The court held that there

was no express statutory or regulatory authority for the Bureau to

cancel certificates of label approval, and that the Bureau had implied

authority to reverse its actions only in limited circumstances. The

court thus concluded that ``[w]ithout statutory authority or regulatory

authority, the BATF [sic] cannot cancel a certificate of label

approval.'' 821 F. Supp. at 612. The court also held that the Bureau's

informal procedures for revoking the ``Black Death'' certificates of

label approval had not afforded the certificate holders their

constitutional right to procedural due process. 821 F. Supp. at 612.

ATF does not agree with the court's decision on either of these two

holdings. ATF believes that a right to cancel certificates of label

approval is implied from the statute's delegation to the Secretary of

the authority to issue certificates of label approval ``in such manner

and form as he shall by regulations prescribe* * *'' The statute thus

explicitly authorizes ATF, as a delegate of the Secretary, to issue

regulations governing the procedure for the issuance of certificates of

label approval. There is also implicit statutory authority to issue

regulations governing the procedures for denying and revoking

certificates of label approval.

ATF believes that the procedures which it has been using for

revoking certificates of label approval, although not codified in the

regulations, have provided certificate holders with due process of law.

However, in order to clarify its authority and procedures for

revocation of label approvals, ATF is proposing to adopt new

regulations in a new Part 13 which will set forth procedures for

revoking such approvals and for appealing such revocations. The

procedures will also provide applicants with the opportunity to

administratively appeal the denial of applications for label approval.

Finally, the procedures will also cover certificates of exemption from

label approval and distinctive liquor bottle approvals, since these are

issued on the same form as certificates of label approval.

Proposed Procedures

ATF is proposing to issue regulations specifically setting forth

the procedures for the issuance, denial, and revocation of certificates

of label approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals. The proposed denial and revocation

regulations are new, whereas the proposed issuance regulations are more

specific than the current regulations. The proposed regulations would

also codify the procedures for administratively appealing the denial or

revocation of certificates of label approval, exemptions from label

approval, and distinctive liquor bottle approvals. ATF believes that

the proposed regulations would afford applicants and certificate

holders with more than adequate due process of law. ATF also believes

that the codification of these procedures in regulations will eliminate

any questions as to its authority to revoke certificates of label

approval, exemptions from label approval, and distinctive liquor bottle

approvals.

Under current regulations, the authority to approve certificates of

label approval, exemptions from label approval, and distinctive liquor

bottle applications rests with the Director. When an application for

label approval, exemption from label approval, or distinctive liquor

bottle approval is approved, the signature of the Director is affixed

to the form, with the date, and any qualifications are marked in the

appropriate space on the form. The approved ATF Form 5100.31 is then

sent to the applicant. If an application is denied for any reason, the

applicant is sent an ATF Form 5190.1, ``ATF F 5100.31 Correction

Sheet,'' with the reasons for the denial briefly noted on the form. The

proposed regulations will codify this practice.

The proposed regulations afford the applicant an opportunity to

file a written appeal of the denial of an application for a certificate

of label approval, certificate of exemption from label approval, or

distinctive liquor bottle approval, with the Chief, Labeling Section,

Product Compliance Branch, within 45 days after the date of the notice

of denial. Such an appeal should explain the basis for the applicant's

belief that the denial was erroneous, and that the subject label or

bottle is in compliance with all applicable laws and regulations. After

considering all relevant facts and issues presented in writing by the

applicant, the Chief, Labeling Section, shall issue a final decision on

the denial of the application.

With respect to revocations of certificates of label approval,

certificates of exemption from label approval, or distinctive liquor

bottle approvals, the proposed regulations provide that the Chief,

Product Compliance Branch, shall provide the certificate holder with a

notice of proposed revocation prior to taking any action with respect

to the label or distinctive liquor bottle. The certificate holder shall

have 45 days from the date of the notice in which to present written

arguments as to why the revocation should not occur. After considering

any arguments or facts presented during this 45-day period, the Chief,

Product Compliance Branch, shall issue a decision. If the decision is

to revoke the label or distinctive liquor bottle approval, the

certificate holder shall then have 45 days from the date of the

decision of the Chief, Product Compliance Branch, to file a written

appeal with the Chief, Alcohol and Tobacco Programs Division. The

written appeal should include all pertinent arguments and evidence

which the certificate holder wishes to present. The decision of the

Chief, Alcohol and Tobacco Programs Division, shall be the final

decision of the Bureau.

The proposed regulations authorize applicants or certificate

holders to request informal conferences at each stage of the

administrative appeal process. The decision whether to grant such

requests lies entirely within the discretion of the official

considering the administrative appeal. It should be noted that the

issue of informal conferences arose during the litigation over the

``Black Death'' labels. To avoid any possible misunderstandings which

might arise out of inconsistent recollections by meeting participants,

the proposed regulations will clarify that informal conferences are not

on the record. To the extent that an applicant or certificate holder

wishes to rely on arguments or evidence presented at an informal

conference, he or she must present such arguments or evidence in

writing to the decision maker within 10 days after the date of the

conference.

Exception to Notice of Proposed Revocation Requirement

The proposed regulations provide that where there is a change in

labeling requirements by operation of law or regulation, there is no

requirement to issue a notice of proposed revocation prior to notifying

a certificate holder of the revocation of a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval. In these cases, the burden of ensuring that

affected labels are in compliance with the new requirements imposed by

statute or regulation should be on the certificate holder, not ATF. If

ATF determines that a label or bottle which is not in

[[Page 47508]]

compliance with the new statutory or regulatory requirements is still

being used, the Chief, Product Compliance Branch, will issue a letter

notifying the certificate holder that the certificate has been revoked

by operation of law or regulation. If the certificate holder wishes to

challenge the application of the law or regulation to the particular

label or bottle, he or she may appeal the decision, in writing, to the

Chief, Alcohol and Tobacco Programs Division.

If the proposals in this notice are adopted, regulations in Parts

4, 5, 7, and 19 will be amended to cross reference the procedures

enumerated in Part 13.

Public Participation

ATF requests all interested parties to submit written comments

concerning the issuance, denial, revocation, and appeal procedures

proposed in this notice of proposed rulemaking. Comments received on or

before the closing date will be carefully considered. Comments received

after that date will be given the same consideration if it is practical

to do so, but assurance of consideration cannot be given except as to

comments received on or before the closing date.

ATF will not recognize any material or comment as confidential.

Comments may be disclosed to the public. Any material which the

respondent considers to be confidential or inappropriate for disclosure

to the public should not be included in the comment. The names of

commenters are not exempt from disclosure.

Written comments will be available for public inspection during

normal business hours at the following address: ATF Reading Room,

Office of Public Affairs and Disclosure, Room 6480, 650 Massachusetts

Avenue, NW., Washington, DC.

Regulatory Flexibility Act

It is hereby certified that this regulation will not have a

significant economic impact on a substantial number of small entities.

The regulation will give ATF specific regulatory authority to issue,

deny or revoke certificates of label approval, exemptions from label

approval, and distinctive liquor bottle approvals. The regulation will

not increase recordkeeping or reporting requirements. Accordingly, a

regulatory flexibility analysis is not required because the proposal,

if promulgated as a final rule, is not expected (1) to have significant

secondary, or incidental effects on a substantial number of small

entities; or (2) to impose, or otherwise cause a significant increase

in the reporting, recordkeeping, or other compliance burdens on a

substantial number of small entities.

Executive Order 12866

It has been determined that this proposed regulation is not a

significant regulatory action as defined by Executive Order 12866.

Accordingly, this proposal is not subject to the analysis required by

this Executive Order.

Paperwork Reduction Act

The provisions of the Paperwork Reduction Act of 1980, Pub. L. 96-

511, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR Part

1320, do not apply to this notice because no requirement to collect

information is proposed.

Drafting Information

The principal author of this document is Robert L. White, Wine,

Beer and Spirits Regulations Branch, Bureau of Alcohol, Tobacco and

Firearms.

27 CFR Part 4

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Packaging and containers, Wine.

27 CFR Part 5

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Liquors, Packaging and containers, Reporting and

recordkeeping requirements, Trade practices.

27 CFR Part 7

Advertising, Beer, Consumer protection, Customs duties and

inspection, Imports, Labeling.

27 CFR Part 13

Administrative practice and procedure, Alcohol and alcoholic

beverages, Appeals, Applications, Certificates of label approval,

Certificates of exemption from label approval, Denials, Distinctive

liquor bottle approvals, Informal conferences, Labeling, Revocations.

27 CFR Part 19

Administrative practice and procedure, Alcohol and alcoholic

beverages, Authority delegations, Claims, Chemicals, Customs duties and

inspection, Electronic fund transfers, Excise taxes, Exports, Gasohol,

Imports, Labeling, Liquors, Packaging and containers, Puerto Rico,

Reporting and recordkeeping requirements, Research, Security measures,

Spices and flavorings, Surety bonds, Transportation, Virgin Islands,

Warehouses, Wine.

Authority and Issuance

Chapter I of Title 27, Code of Federal Regulations, is proposed to

be amended as follows:

PART 4--LABELING AND ADVERTISING OF WINE

Paragraph 1. The authority citation for part 4 continues to read as

follows:

Authority: 27 U.S.C. 205, unless otherwise noted.

Par. 2. Section 4.40 is amended to add paragraph (d) to read as

follows:

Sec. 4.40 Label approval and release.

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval, as well as appeal

procedures, see Part 13 of this chapter.

Par. 3. Section 4.50 is amended to add paragraph (c) to read as

follows:

Sec. 4.50 Certificates of label approval.

* * * * *

(c) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval, and certificates of

exemption from label approval, as well as appeal procedures, see Part

13 of this chapter.

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

Par. 4. The authority citation for part 5 continues to read as

follows:

Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.

Par. 5. Section 5.46 is amended to revise paragraph (d) to read as

follows:

Sec. 5.46 Standard liquor bottles.

* * * * *

(d) Exceptions--(1) Distinctive Liquor Bottles. The headspace and

design requirements in paragraphs (b) and (c) of this section do not

apply to liquor bottles which are specifically exempted by the

Director, pursuant to an application filed by the bottler or importer.

(2) Cross reference. For procedures regarding the issuance, denial

and revocation of distinctive liquor bottle approvals, as well as

appeal procedures, see Part 13 of this chapter.

Par. 6. Section 5.51 is amended to add paragraph (e) to read as

follows:

Sec. 5.51 Label approval and release.

* * * * *

(e) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

[[Page 47509]]

Par. 7. Section 5.55 is amended to add paragraph (d) to read as

follows:

Sec. 5.55 Certificates of label approval.

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval and certificates of

exemption from label approval, as well as appeal procedures, see Part

13 of this chapter.

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

Par. 8. The authority citation for Part 7 continues to read as

follows:

Authority: 27 U.S.C. 205.

Par. 9. Section 7.31 is amended to add paragraph (d) to read as

follows:

Sec. 7.31 Label approval and release.

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

Par. 10. Section 7.41 is revised to read as follows:

Sec. 7.41 Certificates of label approval.

(a) Requirement. No person shall bottle or pack malt beverages, or

remove malt beverages from the plant where bottled or packed unless

application is made to the Director, and an approved certificate of

label approval, ATF Form 5100.31, is issued by the Director.

(b) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

Par. 11. Part 13 is added to read as follows:

PART 13--LABELING PROCEEDINGS

Subpart A--Scope and Construction of Regulations

Sec.

13.1 Scope of part.

Subpart B--Definitions

13.5 Meaning of terms.

Subpart C--Applications

13.11 Application for certificate.

13.12 Notice of denial.

13.13 Appeal of denials.

13.14 Final decision after appeal of denial.

Subpart D--Revocations

13.20 Revocation of certificates.

13.21 Notice of proposed revocation.

13.22 Decision after notice of proposed revocation.

13.23 Appeal of revocation.

13.24 Final decision after appeal.

Subpart E--Revocation by Operation of Law or Regulation

13.35 Revocation by operation of law or regulation.

13.36 Notice of revocation.

13.37 Appeal of notice of revocation.

13.38 Decision after appeal.

Subpart F--Miscellaneous

13.40 Informal conferences.

13.45 Effective dates of revocations.

13.50 Effect of revocations.

13.55 Service on applicant or certificate holder.

13.60 Representation before the Bureau.

13.65 Computation of time.

13.70 Extensions.

Authority: 270 U.S.C. 205(e) and 26 U.S.C. 5301.

Subpart A--Scope and Construction of Regulations

Sec. 13.1 Scope of part.

The regulations in this part govern the procedure and practice in

connection with the issuance, denial, and revocation of certificates of

label approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals under 27 U.S.C. 205(e) and 26

U.S.C. 5301. The regulations in this part also provide for appeal

procedures when applications for label approval, exemptions from label

approval, or distinctive liquor bottle approvals are denied, or when

these applications are approved and then subsequently revoked.

Subpart B--Definitions

Sec. 13.5 Meaning of terms.

Where used in this part and in forms prescribed under this part,

where not otherwise distinctly expressed or manifestly incompatible

with the intent thereof, terms shall have the meaning ascribed in this

subpart. Words in the plural form shall include the singular, and vice

versa, and words importing the masculine gender shall include the

feminine. The terms ``include'' and ``including'' do not exclude things

not enumerated which are in the same general class.

Act. The Federal Alcohol Administration Act.

Applicant. The permittee or brewer whose name, address, and basic

permit number, or plant registry number, appears on an unapproved ATF F

5100.31, application for a certificate of label approval, certificate

of exemption from label approval, or distinctive liquor bottle

approval.

ATF. The Bureau of Alcohol, Tobacco and Firearms, Department of the

Treasury, Washington, DC 20226.

Brewer. Any person who brews beer (except a person who produces

only beer exempt from tax under 26 U.S.C. 5053(e)) and any person who

produces beer for sale.

Certificate holder. The permittee or brewer whose name, address,

and basic permit number, or plant registry number, appears on an

approved ATF F 5100.31, certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval.

Certificate of exemption from label approval. A certificate issued

on ATF F 5100.31 which authorizes the bottling of wine or distilled

spirits, under the condition that the product will under no

circumstances be sold, offered for sale, shipped, delivered for

shipment, or otherwise introduced by the applicant, directly or

indirectly, into interstate or foreign commerce.

Certificate of label approval. A certificate issued on ATF F

5100.31 which authorizes the bottling or packing of wine, distilled

spirits, or malt beverages, or the removal of bottled wine, distilled

spirits, or malt beverages from Customs custody for introduction into

commerce, as long as the product bears labels identical to the labels

affixed to the face of the certificate, or labels with changes

authorized by the certificate.

Chief, Alcohol and Tobacco Programs Division. The ATF official

responsible under this part for deciding appeals of revocations of:

(1) Certificates of label approval;

(2) Certificates of exemption from label approval; and

(3) Distinctive liquor bottle approvals.

Chief, Labeling Section, Product Compliance Branch.

The ATF official responsible under this part for deciding appeals

of denials of applications for:

(1) Certificates of label approval;

(2) Certificates of exemption from label approval; and

(3) Distinctive liquor bottle approvals.

Chief, Product Compliance Branch. The ATF official responsible

under this part for issuing revocations of

(1) Certificates of label approval;

(2) Certificates of exemption from label approval; and

(3) Distinctive liquor bottle approvals.

Director. The Director, Bureau of Alcohol, Tobacco and Firearms,

the Department of the Treasury, Washington, DC.

Distilled spirits. Ethyl alcohol, hydrated oxide of ethyl, spirits

of wine, whisky, rum, brandy, gin, and other distilled spirits,

including all dilutions and mixtures thereof for nonindustrial use. The

term ``distilled spirits'' shall not include mixtures containing wine,

[[Page 47510]]

bottled at 48 degrees of proof or less, if the mixture contains more

than 50 percent wine on a proof gallon basis.

Distinctive liquor bottle. A liquor bottle of distinctive shape or

design.

Distinctive liquor bottle approval. Approval issued on ATF F

5100.31 which authorizes the bottling of distilled spirits, or the

removal of bottled distilled spirits from Customs custody for

introduction into commerce, as long as the bottle is identical to the

photograph affixed to the face of the form.

Interstate or foreign commerce. Commerce between any State and any

place outside thereof, or commerce within any Territory or the District

of Columbia, or between points within the same State but through any

place outside thereof.

Liquor bottle. A bottle made of glass or earthenware, or of other

suitable material approved by the Food and Drug Administration, which

has been designed or is intended for use as a container for distilled

spirits for sale for beverage purposes and which has been determined by

the Director to protect the revenue adequately.

Malt beverage. A beverage made by the alcoholic fermentation of an

infusion or decoction, or combination of both, in potable brewing

water, of malted barley with hops, or their parts, or their products,

and with or without other malted cereals, and with or without the

addition of unmalted or prepared cereals, other carbohydrates, or

products prepared therefrom, and with or without the addition of carbon

dioxide, and with or without other wholesome products suitable for

human food consumption.

Permittee. Any person holding a basic permit under the Federal

Alcohol Administration Act.

Person. Any individual, partnership, joint stock company, business

trust, association, corporation, or other form of business enterprise,

including a receiver, trustee, or liquidating agent and including an

officer or employee of any agency of a State or political subdivision

thereof.

Product Compliance Branch Specialist. An ATF official--

(1) Responsible under this part for reviewing initial applications

for:

(i) Certificates of label approval;

(ii) Certificates of Exemption from label approval; and

(iii) Distinctive liquor bottle approvals; and

(2) With authority to affix the Director's signature to approved

certificates and to issue an ``ATF F 5100.31 Correction Sheet'' along

with any denial of an application.

United States. The several States and Territories and the District

of Columbia; the term ``State'' includes a Territory and the District

of Columbia; and the term ``Territory'' means the Commonwealth of

Puerto Rico.

Use of other terms. Any other term defined in the Federal Alcohol

Administration Act and used in this part shall have the same meaning

assigned to it by the Act.

Wine. (1) Wine as defined in section 610 and section 617 of the

Revenue Act of 1918 (26 U.S.C. 3036, 3044, 3045) and

(2) Other alcoholic beverages not so defined, but made in the

manner of wine, including sparkling and carbonated wine, wine made from

condensed grape must, wine made from other agricultural products than

the juice of sound, ripe grapes, imitation wine, compounds sold as

wine, vermouth, cider, perry, and sake; in each instance only if

containing not less than 7 percent, and not more than 24 percent of

alcohol by volume, and if for nonindustrial use.

Subpart C--Applications

Sec. 13.11 Application for certificate.

An applicant for a certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval,

shall send signed duplicate copies of ATF Form 5100.31, ``Application

for and Certification/Exemption of Label/Bottle Approval'' to the

Product Compliance Branch, Bureau of Alcohol, Tobacco and Firearms,

Washington, D.C. 20226. If the application evidences compliance with

all applicable laws and regulations, a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval shall be issued, and the Director's signature shall be

affixed to the form. If the approval is qualified in any manner, such

qualifications shall be set forth in the appropriate space on the form.

Sec. 13.12 Notice of denial.

Whenever an application for a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval is denied, a Product Compliance Branch Specialist shall

issue to the applicant a notice of denial on ATF Form 5190.1, entitled

``ATF F 5100.31 Correction Sheet,'' briefly setting forth the reasons

why the label or bottle is not in compliance with the applicable laws

or regulations. The applicant may then submit a new application for

approval after making the necessary corrections.

Sec. 13.13 Appeal of denials.

If an applicant for a certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval

wishes to appeal the denial of an application, he or she may file a

written appeal with the Chief, Labeling Section, Product Compliance

Branch, within 45 days after the date of the notice of denial. Such an

appeal should explain the basis for the applicant's belief that the

subject label or bottle is in compliance with the applicable laws and

regulations. If no appeal is filed within 45 days after the date of the

notice of denial, such notice of denial shall be the final decision of

the Bureau.

Sec. 13.14 Final decision after appeal of denial.

After considering any written arguments or evidence presented by

the applicant or his or her representative, the Chief, Labeling

Section, Product Compliance Branch, shall issue a written decision to

the applicant. If the decision is that the denial should stand, a copy

of the application, marked ``appeal denied,'' shall be returned to the

applicant, along with a brief explanation of the basis for the denial

and the specific laws or regulations relied upon in denying the

application. If the decision is that the certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle application should be approved, ATF Form 5100.31 shall be issued

in accordance with usual procedures. The decision of the Chief,

Labeling Section, Product Compliance Branch, shall be the final

decision of the Bureau.

Subpart D--Revocations

Sec. 13.20 Revocation of certificates.

Certificates of label approval, certificates of exemption from

label approval, and distinctive liquor bottle approvals, previously

approved on ATF Form 5100.31, may be revoked by the Chief, Product

Compliance Branch, upon a finding that the label or bottle at issue is

not in compliance with the applicable laws or regulations.

Sec. 13.21 Notice of proposed revocation.

Except as provided in Sec. 13.35, when the Chief, Product

Compliance Branch, determines that a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval has been issued for a label or bottle which is not in

compliance with the laws or regulations, he or she shall issue to the

certificate holder a notice of proposed

[[Page 47511]]

revocation which shall set forth the basis for the proposed revocation

and shall provide the certificate holder with 45 days from the date of

the notice in which to present written arguments or evidence as to why

the revocation should not occur.

Sec. 13.22 Decision after notice of proposed revocation.

After considering any written arguments or evidence presented by

the certificate holder or his or her representative, the Chief, Product

Compliance Branch, shall issue a decision. If the decision is to revoke

the certificate, a letter shall be issued explaining the basis for the

revocation of the certificate, and the specific laws or regulations

relied upon in determining that the label or bottle was not in

conformance with law or regulations. If the decision is to withdraw the

proposed revocation, a letter to that effect shall be issued.

Sec. 13.23 Appeal of revocation.

A certificate holder who wishes to appeal the decision of the

Chief, Product Compliance Branch, to revoke a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, may file a written appeal with the Chief,

Alcohol and Tobacco Programs Division, setting forth the grounds on

which he or she believes that the decision of the Chief, Product

Compliance Branch, was erroneous. Such appeal must be filed with the

Chief, Alcohol and Tobacco Programs Division, within 45 days after the

date of the decision of the Chief, Product Compliance Branch.

Sec. 13.24 Final decision after appeal.

After considering any written arguments or evidence presented by

the certificate holder or his or her representative, the Chief, Alcohol

and Tobacco Programs Division, shall issue a written decision to the

certificate holder. If the decision is to revoke the certificate of

label approval, certificate of exemption from label approval, or

distinctive liquor bottle approval, a letter shall be issued explaining

the basis for the revocation, and the specific laws or regulations

relied upon in determining that the label or bottle was not in

conformance with law or regulations. If the decision is to withdraw the

proposed revocation, a letter to that effect shall be sent to the

certificate holder. The decision of the Chief, Alcohol and Tobacco

Programs Division, shall be the final decision of the Bureau.

Subpart E--Revocation by Operation of Law or Regulation

Sec. 13.35 Revocation by operation of law or regulation.

ATF will not individually notify all holders of certificates of

label approval, certificates of exemption from label approval, or

distinctive liquor bottle approvals, that such approvals have been

revoked in situations where such revocation occurs by operation of law

or regulation.

Where changes in labeling or other requirements are made as a

result of amendments or revisions to the law or regulations, it is the

responsibility of the certificate holder to voluntarily surrender all

certificates which are no longer in compliance, and to submit

applications for new certificates in compliance with the new

requirements; Provided, that in certain circumstances, ATF may announce

that the submission of new applications for label approval is not

necessary in order to implement a new requirement in the law or

regulations. In such circumstances, it is the responsibility of the

certificate holder to ensure that labels are in compliance with the

requirements of the new regulations or law, notwithstanding the fact

that new applications for label approval were not required.

Sec. 13.36 Notice of revocation.

If ATF determines that a certificate holder is still using a

certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval which is no longer in

compliance due to amendments or revisions in the law or regulations,

the Chief, Product Compliance Branch, will notify the certificate

holder in writing that the subject certificate has been revoked by

operation of law or regulations, with a brief description of the

grounds for such revocation.

Sec. 13.37 Appeal of notice of revocation.

Within 45 days after the date of a notice of revocation by

operation of law or regulations, the certificate holder may file a

written appeal with the Chief, Alcohol and Tobacco Programs Division.

The appeal should set forth the reasons why the certificate holder

believes that the regulation or law at issue does not require the

revocation of the certificate.

Sec. 13.38 Decision after appeal.

After considering all written arguments and evidence submitted by

the certificate holder, the Chief, Alcohol and Tobacco Programs

Division, shall issue a final decision regarding the revocation by

operation of law or regulation of the certificate. If the decision is

that the law or regulation at issue requires the revocation of the

certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval, a letter shall be

issued explaining the basis for the revocation, and citing the specific

laws or regulations which required the revocation of the certificate.

If the decision is that the law or regulation at issue does not require

the revocation of such certificate, a letter to that effect shall be

sent to the certificate holder. The decision of the Chief, Alcohol and

Tobacco Programs Division, shall be the final decision of the Bureau.

Subpart F--Miscellaneous

Sec. 13.40 Informal conferences.

(a) General. As part of a timely filed written appeal of a notice

of denial, a notice of proposed revocation, or a decision of the Chief,

Product Compliance Branch, to revoke a certificate, an applicant or

certificate holder may file a written request for an informal

conference with the ATF official deciding the appeal. However, the

decision whether to hold an informal conference is at the sole

discretion of the deciding official.

(b) Informal conference procedures. If the deciding official

determines that the holding of an informal conference would be

beneficial, he or she shall inform the applicant or certificate holder,

and a date shall be agreed upon. The informal conference is for

purposes of discussion only, and no transcript shall be made. If the

applicant or certificate holder wishes to rely upon arguments, facts,

or evidence presented at the informal conference, he or she has 10 days

after the date of the conference to incorporate such arguments, facts,

or evidence in a written submission to the deciding official.

Sec. 13.45 Effective dates of revocations.

With the exception of revocations occurring pursuant to Sec. 13.35,

ATF shall allow at least 45 days between the issuance of a decision to

revoke a certificate, and the actual revocation of the certificate. The

deciding official may, at his or her discretion, allow the certificate

holder a longer period of time in which to use up the existing stock of

labels or distinctive liquor bottles. The decision to allow such a

``use-up'' period, and the length of the ``use-up'' period allowed, are

matters committed entirely to the discretion of the deciding official,

based on the circumstances of the case.

[[Page 47512]]

Sec. 13.50 Effect of revocations.

(a) General. On the effective date of a final decision which has

been issued by the Chief, Product Compliance Branch, or the Chief,

Alcohol and Tobacco Programs Division, to revoke a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, the certificate holder shall be asked to

surrender the original of such certificate to ATF for manual

cancellation. Regardless of whether the original certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval has been manually cancelled or not, the

certificate shall be null and void after the effective date of the

certificate's revocation. It shall be a violation of this section for

any certificate holder to present a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval to an official of the United States Government as a

valid certificate, after the effective date of the revocation of the

certificate, if the certificate holder has been previously notified

that such certificate has been revoked by ATF.

(b) Use of certificate during period of appeal. If a certificate

holder files a timely appeal after receipt of a notice of revocation

from the Chief, Product Compliance Branch pursuant to section 13.22, he

or she may continue to use the certificate at issue until the effective

date of a final decision issued by the Chief, Alcohol and Tobacco

Programs Division. However, the effective date of a notice of

revocation by operation of law or regulations, issued pursuant to

Sec. 13.36, is not stayed during the pendency of an appeal.

Sec. 13.55 Service on applicant or certificate holder.

Notices of denial, notices of proposed revocation, and notices of

revocation shall be served on an applicant or a certificate holder by

first class mail, or by personal delivery. When service is by mail, a

signed duplicate original copy of the document shall be mailed to the

applicant or certificate holder at the address stated in the

application for a certificate of label approval, or at the last known

address. If authorized by the applicant or certificate holder, the

signed duplicate original copy of the document may be mailed to a

designated representative. Where service is by personal delivery, a

signed duplicate original copy of the document shall be delivered to

the certificate holder or to a designated representative, or, in the

case of a corporation, partnership, or association, by delivering it to

an officer, manager, or general agent thereof, or to its attorney of

record.

Sec. 13.60 Representation before the Bureau.

An applicant or certificate holder may be represented by an

attorney, certified public accountant, or other person recognized to

practice before the Bureau of Alcohol, Tobacco and Firearms as provided

in 31 CFR Part 8 (Practice Before the Bureau of Alcohol, Tobacco and

Firearms), if he or she has otherwise complied with the applicable

requirements of 26 CFR 601.521 through 601.527 (conference and practice

requirements for alcohol, tobacco, and firearms activities).

Sec. 13.65 Computation of time.

In computing any period of time prescribed or allowed by this part,

the day of the act, event or default after which the designated period

of time is to run, is not to be included. The last day of the period to

be computed is to be included, unless it is a Saturday, Sunday, or

legal holiday, in which event the period runs until the next day which

is neither a Saturday, Sunday, or legal holiday. Papers or documents

which are required or permitted to be filed under this part must be

received for filing at the appropriate office within the time limits,

if any, for such filing.

Sec. 13.70 Extensions.

For good cause shown, the Chief, Labeling Section, Product

Compliance Branch, the Chief, Product Compliance Branch, or the Chief,

Alcohol and Tobacco Programs Division, may grant extensions as to any

time limits prescribed by the regulations in this part.

PART 19--DISTILLED SPIRITS PLANTS

Par. 12. The authority citation for part 19 continues to read as

follows:

Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006,

5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5113, 5142,

5143, 5146, 5171-5173, 5175, 5176, 5178-5181, 5201-5204, 5206, 5207,

5211-5215, 5221-5223, 5231, 5232, 5235, 5236, 5241-5243, 5271, 5273,

5301, 5311-5313, 5362, 5370, 5373, 5501-5505, 5551-5555, 5559, 5561,

5562, 5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806,

7011, 7510, 7805; 31 U.S.C. 9301, 9303, 9304, 9306.

Par. 13. Section 19.633 is amended to add paragraph (c) to read as

follows:

Sec. 19.633 Distinctive liquor bottles.

* * * * *

(c) Cross reference. For procedures regarding issuance, denial and

revocation of distinctive liquor bottle approvals, as well as appeal

procedures, see part 13 of this chapter.

Par. 14. Section 19.641 is revised to read as follows:

Sec. 19.641 Certificate of label approval or exemption.

(a) Requirement. Proprietors are required by 27 CFR part 5 to

obtain approval of labels, or exemption from label approval, for any

label to be used on bottles of spirits for domestic use and shall

exhibit evidence of label approval, or of exemption from label

approval, on request of an ATF officer.

(b) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval and certificates of

exemption from label approval, as well as appeal procedures, see part

13 of this chapter.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended (26 U.S.C.

5201))

Signed: July 26, 1995.

Daniel R. Black,

Acting Director.

Approved: August 17, 1995.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 95-22577 Filed 9-12-95; 8:45 am]

BILLING CODE 4810-31-U