Registration of Formulas and Statements of Process for Certain Domestically Produced Wines, Distilled Spirits and Beer (95R-019P)

DEPARTMENT OF THE TREASURY

27 CFR Parts 5, 19, 24, 25, 70, and 250

[Notice No. 816]

RIN 1512-AB40

Registration of Formulas and Statements of Process for Certain

Domestically Produced Wines, Distilled Spirits and Beer (95R-019P)

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

the Treasury.

ACTION: Notice of proposed rulemaking.

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

to amend the regulations to require the registration, rather than

approval, of formulas and statements of process for certain

domestically produced wines, distilled spirits, and beer. ATF believes

that the proposed regulations will provide greater flexibility to the

industry by enabling proprietors to commence production in a more

expeditious manner.

The proposed amendments are part of the Administration's

Reinventing Government effort to reduce burden and streamline

requirements.

DATES: Written comments must be received on or before January 26, 1996.

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. 816.

FOR FURTHER INFORMATION CONTACT: James P. Ficaretta, 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

Under the current regulations, approved formulas or statements of

process are required for certain domestically produced distilled

spirits, wines, and beer. Pursuant to regulations in 27 CFR Part 5, an

approved formula on ATF Form 5110.38 (Formula For Distilled Spirits

Under The Federal Alcohol Administration Act) is required to blend,

mix, purify, refine, compound, or treat distilled spirits in a manner

which results in a change of character, composition, class or type of

the spirits. The formula requirement applies to: (1) Proprietors of

distilled spirits plants qualified as processors under 27 CFR Part 19;

(2) Persons in Puerto Rico who manufacture distilled spirits products

for shipment to the United States in accordance with 27 CFR Part 250;

and (3) Persons who ship Virgin Islands distilled spirits products into

the United States in accordance with 27 CFR Part 250.

As it relates to wine, the regulations in 27 CFR Part 24 provide

that a proprietor must, before commencing production, obtain approval

of the formula and process by which special natural wine, agricultural

wine, and certain other than standard wines (e.g., Spanish type

blending sherry) are to be made. An approved formula is also required

under certain conditions in the production of an effervescent

(sparkling) wine. Wine formulas are filed on ATF Form 5120.29, Formula

And Process For Wine.

With regard to beer, the regulations in 27 CFR Part 25 require that

a brewer file a statement of process for any fermented beverage which

the proprietor intends to produce and market under a name other than

``beer,'' ``ale,'' ``porter,'' ``stout,'' ``lager,'' or ``malt

liquor.'' The statement of process, which is contained in the Brewer's

Notice, ATF Form 5130.10, includes the name or designation of the

product, the kinds and quantities of materials to be used, the method

of manufacture, and the approximate alcohol content of the finished

product.

ATF reviews approximately 1,700 formulas and statements of process

annually. The Bureau examines the formulas and statements of process to

ensure that, among other things, the ingredients used are not only

approved by the Food and Drug Administration (FDA), but are used within

prescribed limitations established by the FDA. The average turnaround

time for processing a formula or statement of process is approximately

3 weeks.

The majority of formulas and statements of process that ATF

examines are approved without any substantive changes. The Bureau

attributes this, in part, to its continued efforts at providing

guidance and information to members of the alcoholic beverage industry.

Through the publication of industry circulars and other publications,

such as the ``Compliance Matters'' bulletin, ATF is able to apprise the

industry of policies or procedures which might affect them. With regard

to formulas for wine and distilled spirits, specifically, the Bureau

recommends that proprietors review Industry Circular 89-3. This

circular clarifies and provides information and guidelines for the

completion and submission of formulas. This circular can also be

utilized by brewers in the

[[Page 58312]]

preparation of statements of process for flavored malt beverage

products.

Proposed Registration of Formulas and Statements of Process

ATF is proposing to amend the regulations to provide for the

registration, rather than approval, of formulas and statements of

process. ATF believes that a registration system will provide greater

flexibility to the industry by enabling proprietors to commence

production in a more expeditious manner. As indicated, ATF's current

average turnaround time for processing a formula or statement of

process is 3 weeks. Under a registration system, the turnaround time

would be less than 1 week. The proposed amendments are part of the

Administration's Reinventing Government effort to reduce burden and

streamline requirements.

Registration merely indicates that a formula or statement of

process is on file with ATF. For formulas and statements of process

registered on or after the effective date of the final rule,

registration does not mean that ATF has determined that the formula or

statement of process complies with the laws and regulations enforced by

ATF.

If the proposed regulations are adopted, the forms which are

currently used by proprietors for filing distilled spirits and wine

formulas (ATF F 5110.38 and ATF F 5120.29, respectively) will be

revised accordingly. No additional information will be required on the

revised forms. With regard to distilled spirits and wine, the

procedures for filing the revised forms will be the same as is

currently required. For beer products, the statement of process will no

longer be included as part of the Brewer's Notice, Form 5130.10.

Rather, brewers will prepare the statement of process on letterhead

stationery, in triplicate. The statement will be filed with the Chief,

Product Compliance Branch.

Once received, ATF will register the formula or statement of

process and include the date of registration. The registered formula or

statement of process will then be forwarded to the proprietor.

Production may commence upon the receipt by the proprietor of a

registered formula or statement of process.

With the exception of special natural wines, ATF will register all

formulas for distilled spirits and wine as well as statements of

process for beer. In the case of special natural wine, section 5386 of

the Internal Revenue Code of 1986, 26 U.S.C. 5386, requires that such

wine be made pursuant to an approved formula. Therefore, ATF will

continue to approve formulas for special natural wine filed on ATF Form

5120.29.

Each applicant submitting a formula or statement of process for

registration should ensure that such formula or statement of process is

properly completed. In addition to following the guidelines presented

in Industry Circular 89-3, the instructions on the reverse side of the

forms should be followed carefully. ATF will continue to provide

guidance to proprietors, as needed, through the publication of its

``Compliance Matters'' bulletin and through other methods.

Previously approved formulas and statements of process will not

have to be submitted to ATF for registration. These will continue to be

valid and, except for special natural wines, will automatically be

deemed and included as registered formulas and statements of process

for all purposes. When a change is made in the registered formula or

statement of process (including those previously approved), the new

formula or statement of process must be registered. When a change is

made in an approved special natural wine formula, the new formula must

be approved.

Cancellation of Registered Formulas and Statements of Process

The proposed regulations also set forth the procedures for the

cancellation of registered formulas and statements of process

(including those previously approved). These procedures will appear in

27 CFR Part 70, Procedure and Administration. The establishment of

these procedures in the regulations will ensure that all industry

members are aware of this practice and will afford due process of a

notice and opportunity to present their position before their

registered formula or statement of process is cancelled. The proposed

cancellation procedures do not apply to approved formulas for special

natural wines. ATF is considering whether these procedures should apply

to such approved formulas and is interested in comments on this

question.

Executive Order 12866

It has been determined that this proposed rule is not a significant

regulatory action as defined in E.O. 12866. Therefore, a regulatory

assessment is not required.

Regulatory Flexibility Act

It is hereby certified that this proposed regulation will not have

a significant economic impact on a substantial number of small

entities. The proposed rule is liberalizing in nature in that domestic

proprietors will be able to commence production in a more timely manner

for those wines, distilled spirits, and beers which require a

registered formula or statement of process. Accordingly, a regulatory

flexibility analysis is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, this

proposed regulation has been submitted to the Chief Counsel for

Advocacy of the Small Business Administration for comment on its impact

on small business.

Paperwork Reduction Act

The collections of information contained in this notice of proposed

rulemaking have been previously reviewed and approved by the Office of

Management and Budget in accordance with the requirements of the

Paperwork Reduction Act of 1980 (44 U.S.C. 3504(h)) under the following

control numbers: 1512-0045, 1512-0058, 1512-0059, 1512-0192, 1512-0198,

1512-0203, 1512-0204, 1512-0205, 1512-0206, 1512-0207, 1512-0216, 1512-

0250, 1512-0298, 1512-0352, 1512-0461, 1512-0462, 1512-0503. These

control numbers were in effect on October 1, 1995, the effective date

of the Paperwork Reduction Act of 1995. Comments on the collections of

information should be sent to the Office of Management and Budget,

Attention: Desk officer for the Department of the Treasury, Bureau of

Alcohol, Tobacco and Firearms, Office of Information and Regulatory

Affairs, Washington, DC 20503, with copies to the Chief, Document

Services Branch, Room 3450, Bureau of Alcohol, Tobacco, and Firearms,

650 Massachusetts Avenue, NW., Washington, DC 20226.

Public Participation

ATF requests comments on the proposed regulations from all

interested persons. 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 in comments as confidential.

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

commenter considers to be confidential or inappropriate for disclosure

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

person submitting a comment is not exempt from disclosure.

Any interested person who desires an opportunity to comment orally

at a public hearing should submit his or her request, in writing, to

the Director within the 60-day comment period. The

[[Page 58313]]

Director, however, reserves the right to determine, in light of all

circumstances, whether a public hearing is necessary.

Disclosure

Copies of this notice and the written comments will be available

for public inspection during normal business hours at: ATF Public

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

Drafting Information:

The author of this document is James P. Ficaretta, Wine, Beer, and

Spirits Regulations Branch, Bureau of Alcohol, Tobacco and Firearms.

List of Subjects

Part 5

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Liquors, and Packaging and containers.

Part 19 q02

Administrative practice and procedure, Alcohol and alcoholic

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

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

Imports, Labeling, Liquors, Packaging and containers, Reporting

requirements, Research, Security measures, Spices and flavorings,

Surety bonds, Transportation, U.S. possessions, Warehouses, and Wine.

Part 24

Administrative practice and procedure, Authority delegations,

Claims, Electronic funds transfers, Excise taxes, Exports, Food

additives, Fruit juices, Labeling, Liquors, Packaging and containers,

Reporting and recordkeeping requirements, Research, Scientific

equipment, Spices and flavorings, Surety bonds, Taxpaid wine bottling

house, Transportation, Vinegar, Warehouses, and Wine.

Part 25

Administrative practice and procedure, Authority delegations, Beer,

Claims, Electronic funds transfers, Excise taxes, Labeling, Packaging

and containers, Reporting and recordkeeping requirements, Research,

Surety bonds, and Transportation.

Part 70

Administrative practice and procedure, Alcohol and alcoholic

beverages, Appeals, Authority delegations, Cancellations, Claims,

Government employees, Informal conferences, Law enforcement, and Law

enforcement officers.

Part 250

Administrative practice and procedure, Alcohol and alcoholic

beverages, Authority delegations (Government agencies), Beer, Claims,

Customs duties and inspection, Drugs, Electronic funds transfers,

Excise taxes, Foods, Liquors, Packaging and containers, Puerto Rico,

Reporting and recordkeeping requirements, Spices and flavorings, Surety

bonds, Transportation, Virgin Islands, Warehouses, and Wine.

Authority and Issuance

27 CFR Parts 5, 19, 24, 25, 70, and 250 are amended as follows:

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

Paragraph 1. The authority citation for 27 CFR Part 5 continues to

read as follows:

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

Par. 2. Section 5.11 is amended by adding a definition for

``registered formula'' to read as follows:

Sec. 5.11 Meaning of terms.

* * * * *

Registered formula. A distilled spirits formula which has been

filed with the Director and bears the signature of the Director or the

Director's delegate.

* * * * *

Par. 3. Section 5.26 is revised to read as follows:

Sec. 5.26 Formula requirements.

(a) General. A registered formula is required to blend, mix,

purify, refine, compound, or treat spirits in a manner which results in

a change of character, composition, class or type of the spirits. Form

5110.38 (formerly 27-B Supplemental) shall be filed with the Director

in accordance with the instructions on the form and shall designate all

ingredients and, if required, the process used. Any approved formula on

Form 27-B Supplemental and any approved or registered formula on Form

5110.38 shall remain in effect until canceled, superseded, or

voluntarily surrendered. Any existing qualifying statements as to the

rate of tax or the limited use of drawback flavors appearing on a Form

27-B Supplemental are obsolete.

(b) Registration of formulas approved before (effective date of

final rule). Any formula on Form 27-B Supplemental or Form 5110.38 that

was approved before (effective date of final rule) is included as a

registered formula, as required by paragraph (a) of this section,

without any resubmission by the holder of the approved formula or

notification by ATF.

(c) Change in formula. Any change in a registered formula shall

require the filing of a new Form 5110.38. After a change in a formula

has been registered, the original formula shall be surrendered to the

Director.

(d) Cancellation of registered formula. The procedures for the

cancellation of a registered formula are prescribed in 27 CFR Part 70,

Subpart E.

Par. 4. Section 5.28 is revised to read as follows:

Sec. 5.28 Adoption of predecessor's formulas.

The adoption by a successor of registered Forms 5110.38 shall be in

the form of an application filed with the Director. The application

shall clearly show that the predecessor has authorized the use of its

previously approved or registered formulas by the successor. The

application shall list the formulas for adoption by:

(a) Formula number,

(b) Name of product, and

(c) Date of registration (or original date of approved formula, if

any).

PART 19--DISTILLED SPIRITS PLANTS

Par. 5. The authority citation for 27 CFR 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,

5211-5223, 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. 6. Section 19.11 is amended by adding a definition for

``registered formula'' to read as follows:

Sec. 19.11 Meaning of terms.

* * * * *

Registered formula. A distilled spirits formula which has been

filed with the Director and bears the signature of the Director or the

Director's delegate.

* * * * *

Par. 7. Section 19.187(a) is revised to read as follows:

Sec. 19.187 Adoption of formulas.

(a) Forms 5110.38. The adoption by a successor of registered Forms

5110.38 shall be in the form of an application, filed with the

Director. The application shall list the formulas for adoption by

formula number, name of product, and date of registration (or original

date of

[[Page 58314]]

the approved formula, if any). The application shall clearly show that

the predecessor has authorized the use of its previously registered

formulas by the successor.

* * * * *

Par. 8. Section 19.324(b), under the undesignated center heading

``FORMULA'', is revised to read as follows:

Formula

Sec. 19.324 Statement of production procedure or Form 5110.38.

* * * * *

(b) As provided in 27 CFR 5.27, a registered formula on Form

5110.38 is required for the redistillation of spirits in the production

account. Any formula on Form 5110.38 that was approved before

(effective date of final rule) is included as a registered formula, as

required by this paragraph, without any resubmission by the holder of

the approved formula or notification by ATF. The procedures for the

cancellation of a registered formula are prescribed in 27 CFR Part 70,

Subpart E.

* * * * *

Par. 9. Section 19.331 is revised to read as follows:

Sec. 19.331 General.

Distillers or processors may redistill spirits, denatured spirits,

articles, and spirits residues. Certain products may only be

redistilled pursuant to a registered formula on Form 5110.38, as

specified in 27 CFR 5.27. Any formula on Form 5110.38 that was approved

before (effective date of final rule) is included as a registered

formula, as required by this paragraph, without any resubmission by the

holder of the approved formula or notification by ATF. The procedures

for the cancellation of a registered formula are prescribed in 27 CFR

Part 70, Subpart E.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1365, as amended (26 U.S.C.

5223))

Par. 10. Section 19.378, under the undesignated center heading

``FORMULAS'', is revised to read as follows:

Formulas

Sec. 19.378 Formula requirements.

A registered formula on ATF Form 5110.38 must be secured for

spirits for domestic use or export as provided in 27 CFR 5.26-5.27

before processors may blend, mix, purify, refine, compound or treat

spirits in any manner which results in a change of character,

composition, class or type of the spirits including redistillation as

provided in Sec. 19.331, and the production of gin or vodka by other

than original and continuous distillation. Any formula on ATF Form

5110.38 that was approved before (effective date of final rule) is

included as a registered formula, as required by this paragraph,

without any resubmission by the holder of the approved formula or

notification by ATF. The procedures for the cancellation of a

registered formula are prescribed in 27 CFR part 70, Subpart E.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended, 1395, as

amended (26 U.S.C. 5201, 5555))

Par. 11. Section 19.596(b)(6) is amended by removing the words ``an

approved'' and adding the words ``a registered'' in their place.

Par. 12. Section 19.723(c)(2) is amended by removing the word

``approved'' and adding in its place the word ``registered'' in the

first sentence.

Par. 13. Section 19.778(b) is amended by removing the word

``approved'' and adding in its place the word ``registered''.

PART 24--WINE

Par. 14. The authority citation for 27 CFR Part 24 continues to

read as follows:

Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042,

5044, 5061, 5062, 5081, 5111-5113, 5121, 5122, 5142, 5143, 5173,

5206, 5214, 5215, 5351, 5353, 5354, 5356-5357, 5361, 5362, 5364-

5373, 5381-5388, 5391, 5392, 5551, 5552, 5661, 5662, 5684, 6065,

6091, 6109, 6301, 6302, 6311, 6651, 6676, 7011, 7302, 7342, 7502,

7503, 7606, 7805, 7851; 31 U.S.C. 9301, 9303, 9304, 9306.

Par. 15. Section 24.10 is amended by adding the words ``or

registered'' after the word ``approved'' in the definition for

``formula wine'' and by adding a definition for ``registered formula''

to read as follows:

Sec. 24.10 Meaning of terms.

* * * * *

Registered formula. A wine formula which has been filed with the

Director and bears the signature of the Director or the Director's

delegate.

* * * * *

Par. 16. Sections 24.80, 24.81, and 24.82, under the designated

heading ``FORMULAS'', are revised and new section 24.83 is added to

read as follows:

Formulas

Sec. 24.80 General.

The proprietor shall, before production, register the formula and

process by which agricultural wine and other than standard wine (except

distilling material or vinegar stock) are to be made. Any formula for

an agricultural wine and other than standard wine that was approved

before (effective date of final rule) is included as a registered

formula, as required by this section, without any resubmission by the

holder of the approved formula or notification by ATF. For special

natural wine, the proprietor shall, before production, obtain approval

of the formula and process by which such wine is to be made. The

formula shall be prepared and filed with the Director on ATF F 5120.29,

Formula and Process for Wine, in accordance with the instructions on

the form. A nonbeverage wine formula shall show the intended use of the

finished wine or wine product. Any formula registered or approved under

this section shall remain in effect until revoked, cancelled,

superseded, or voluntarily surrendered. Except for research,

development, and testing, no special natural wine, agricultural wine

or, if required to be covered by a registered formula, other than

standard wine may be produced prior to approval or registration by the

Director of a formula covering each ingredient and process (if the

process requires approval or registration) used in the production of

the product.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1380, as amended, 1381, as

amended, 1386, as amended, 1395, as amended (26 U.S.C. 5361, 5367,

5386, 5387, 5555))

(Approved by the Office of Management and Budget under control

number 1512-0059)

Sec. 24.81 Filing of formulas.

The proprietor shall designate on each formula filed all

ingredients and, if required, describe each process used to produce the

wine. The addition or elimination of ingredients, changes in quantities

used, and changes in the process of production or any other change in

an approved or registered formula shall require the filing of a new ATF

F 5120.29. After a change in formula is approved or registered, the

original formula shall be surrendered to the Director. The proprietor

shall serially number each formula, commencing with ``1'' and

continuing thereafter in numerical sequence. Nonbeverage wine formulas

shall be prefixed with the symbol ``NB.'' The Director or the regional

director (compliance) may at any time require the proprietor to file a

statement of process in addition to that required by the ATF F 5120.29

or any other data to determine whether the formula should be approved,

registered, revoked, or cancelled.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1381, as amended, 1395, as

amended (26 U.S.C. 5367, 5555))

[[Page 58315]]

(Approved by the Office of Management and Budget under control

number 1512-0059)

Sec. 24.82 Samples.

The Director or the regional director (compliance) may, at any

time, require the proprietor to submit samples of any wine or wine

product made in accordance with an approved or registered formula or of

any materials used in production.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1380, as amended (26 U.S.C.

5351, 5361, 5362))

(Approved by the Office of Management and Budget under control

number 1512-0059)

Sec. 24.83 Cancellation of registered formulas.

The procedures for the cancellation of a registered formula are

prescribed in 27 CFR part 70, subpart E.

Par. 17. Section 24.127 is revised to read as follows:

Sec. 24.127 Adoption of formulas.

The adoption of approved or registered formulas by a successor

proprietor shall be in the form of an application, filed with the

Director. The application shall list the formulas for adoption by

formula number, name of product, and date of approval or registration

(or original date of the approved formula for an agricultural wine or

other than standard wine, if any). The application shall clearly show

that the outgoing proprietor has authorized the successor proprietor's

use of the approved or registered formulas.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1379, as amended (26 U.S.C.

5356))

(Approved by the Office of Management and Budget under control

number 1512-0058)

Par. 18. Section 24.192 is amended by removing the word

``approval'' in the third sentence and by adding in its place the word

``registration''.

Par. 19. Section 24.201 is revised to read as follows:

Sec. 24.201 Formula required.

Before producing any agricultural wine, the proprietor shall

register with the Director the formula and process by which it is to be

made pursuant to the provisions of Sec. 24.80. Any change in a formula

shall be registered in advance as provided by Sec. 24.81. The

procedures for the cancellation of a registered formula are prescribed

in 27 CFR part 70, subpart E.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1386, as amended (26 U.S.C.

5387))

(Approved by the Office of Management and Budget under control

number 1512-0059)

Par. 20. Section 24.211 is revised to read as follows:

Sec. 24.211 Formula required.

A proprietor who desires to produce other than standard wine shall

first register the formula by which it is to be made, except that no

formula is required for distilling material or vinegar stock. The

formula shall be filed with the Director as provided by Sec. 24.80. Any

change in the formula shall be registered in advance as provided by

Sec. 24.81. The procedures for the cancellation of a registered formula

are prescribed in 27 CFR part 70, subpart E.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1387, as amended (26 U.S.C.

5388))

(Approved by the Office of Management and Budget under control

number 1512-0059)

Par. 21. Section 24.214 is amended by removing the words ``an

approved'' in the fourth sentence and by adding in its place the words

``a registered''.

Par. 22. Section 24.303(b) is amended by adding the words ``or

registered'' after the word ``approved''.

PART 25--BEER

Par. 23. The authority citation for 27 CFR part 25 continues to

read as follows:

Authority: 19 U.S.C. 81c; 26 U.S.C. 5002, 5051-5054, 5056, 5061,

5091, 5111, 5113, 5142, 5143, 5146, 5222, 5401-5403, 5411-5417,

5551, 5552, 5555, 5556, 5671, 5673, 5684, 6011, 6061, 6065, 6091,

6109, 6151, 6301, 6302, 6311, 6313, 6402, 6651, 6656, 6676, 6806,

7011, 7342, 7606, 7805; 31 U.S.C. 9301, 9303-9308.

Par. 24. Section 25.11 is amended by adding definitions for

``Chief, Product Compliance Branch'' and ``registered statement of

process'' to read as follows:

Sec. 25.11 Meaning of terms.

* * * * *

Chief, Product Compliance Branch. The ATF official responsible for

registering statements of process under this part.

* * * * *

Registered statement of process. A statement of process under

Sec. 25.67 which has been filed with ATF and bears the signature of the

Chief, Product Compliance Branch or his or her delegate.

* * * * *

Par. 25. Section 25.62 is amended by removing paragraph (a)(7) and

by redesignating paragraphs (a)(8) through (a)(12) as paragraphs (a)(7)

through (a)(11).

Par. 26. Section 25.67 is amended by revising paragraphs (a) and

(c), and by adding new paragraph (d) to read as follows:

Sec. 25.67 Statement of process.

(a) A statement of process shall be prepared on letterhead

stationery, in triplicate, and filed and registered with the Chief,

Product Compliance Branch for any fermented beverage which the brewer

intends to produce and market under a name other than ``beer,''

``ale,'' ``porter,'' ``stout,'' ``lager,'' or ``malt liquor.'' Each

statement of process shall include a serial number and shall identify

each of the brewer's breweries for which it is filed. The brewer may

not commence production of such beverages until the statement of

process has been registered. Any statement of process that was approved

before (effective date of final rule) is included as a registered

statement of process, as required by this paragraph, without any

resubmission by the holder of the approved statement of process or

notification by ATF.

* * * * *

(c) The base product for any fermented beverage (other than sake or

cereal beverage) requiring a statement of process shall have the

characteristics of beer as defined in Sec. 25.11.

(d) The procedures for the cancellation of a registered statement

of process are prescribed in 27 CFR part 70, Subpart E.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1333, as amended, 1388, as

amended (26 U.S.C. 5052, 5401))

Par. 27. Section 25.71(b)(2) is revised to read as follows:

Changes After Original Qualification

Sec. 25.71 Amended or superseding notices.

* * * * *

(b) * * *

(2) If the information required by Sec. 25.62(a)(4), (5), (6), (8),

and (9) is on file as part of an approved Form 5130.10 and is current,

the brewer may incorporate by reference those documents as part of any

superseding notice.

* * * * *

Par. 28. Section 25.76 is revised to read as follows:

Sec. 25.76 Change in statement of process.

When there is a change in the information in a statement of process

required by Sec. 25.67 for any fermented beverage produced and marketed

under a name other than ``beer,'' ``ale,'' ``porter,'' ``stout,''

``lager,'' or ``malt liquor,'' the brewer shall file and register an

amended statement of process with the Chief, Product Compliance Branch

prior to using such changed statement.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1388, as amended (26 U.S.C.

5401))

[[Page 58316]]

PART 70--PROCEDURE AND ADMINISTRATION

Par. 29. The authority citation for 27 CFR Part 70 continues to

read as follows:

Authority: 5 U.S.C. 301, 552; 26 U.S.C. 4181, 4182, 5146, 5203,

5207, 5275, 5367, 5415, 5504, 5555, 5684(a), 5741, 5761(b), 6020,

6021, 6064, 6102, 6155, 6159, 6201, 6203, 6204, 6301, 6303, 6311,

6313, 6314, 6321, 6323, 6325, 6326, 6331-6343, 6401-6404, 6407,

6416, 6423, 6501-6503, 6511, 6513, 6514, 6532, 6601, 6602, 6611,

6621, 6622, 6651, 6653, 6656, 6657, 6658, 6665, 6671, 6672, 6701,

6723, 6801, 6862, 6863, 6901, 7011, 7101, 7102, 7121, 7122, 7207,

7209, 7214, 7304, 7401, 7403, 7406, 7423, 7424, 7425, 7426, 7429,

7430, 7432, 7502, 7503, 7505, 7506, 7513, 7601-7606, 7608-7610,

7622, 7623, 7653, 7805.

Par. 30. Section 70.11 is amended by adding definitions for

``Chief, Alcohol and Tobacco Programs Division'', ``Chief, Product

Compliance Branch'', ``registered formula'', and ``registered statement

of process'' to read as follows:

Sec. 70.11 Meaning of terms.

* * * * *

Chief, Alcohol and Tobacco Programs Division. The Bureau official

responsible for deciding appeals of cancellations of registered

formulas and registered statements of process under this part.

Chief, Product Compliance Branch. The Bureau official responsible

for issuing cancellations of registered formulas and registered

statements of process under this part.

* * * * *

Registered formula. A distilled spirits or wine formula which has

been filed with the Bureau and bears the signature of the Director or

the Director's delegate.

Registered statement of process. A statement of process under 27

CFR 25.67 which has been filed with the Bureau and bears the signature

of the Chief, Product Compliance Branch or his or her delegate.

* * * * *

Par. 31. Sections 70.421 through 70.428, under the new undesignated

center heading ``CANCELLATION OF REGISTERED FORMULAS OR STATEMENTS OF

PROCESS FOR DISTILLED SPIRITS, WINES AND BEER'', are added to Subpart E

to read as follows:

Cancellation of Registered Formulas or Statements of Process for

Distilled Spirits, Wines and Beer

Sec. 70.421 Cancellation of registration.

(a) Cancellation of registered formulas or statements of process.

Formulas registered on ATF Form 5110.38 or ATF Form 5120.29 and

registered statements of process, may be cancelled by the Chief,

Product Compliance Branch, upon a finding that the formula or statement

of process is not in compliance with the applicable laws or

regulations.

(b) Notice of proposed cancellation. Except as provided in section

70.422(a), when the Chief, Product Compliance Branch, determines that a

formula or statement of process which has been registered is not in

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

holder of the formula or statement of process a notice of proposed

cancellation which shall set forth the basis for the proposed

cancellation. The notice of proposed cancellation will advise the

holder of the formula or statement of process that he or she has 45

days from the date of the notice in which to present written arguments

or evidence as to why the cancellation should not occur. If the holder

of the formula or statement of process does not respond to the notice

of proposed cancellation within 45 days of such notice, the holder will

be deemed to concur with the finding of non-compliance, and the formula

or statement of process will be cancelled. In either case, the right of

appeal afforded in paragraph (d) of this section applies.

(c) Decision after notice of proposed cancellation. After

considering any written arguments or evidence presented by the holder

of the registered formula or statement of process, the Chief, Product

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

the registered formula or statement of process, a letter shall be

issued explaining the basis for the cancellation and the specific laws

or regulations relied upon in determining that the registered formula

or statement of process was not in conformance with law or regulations.

If the decision is to withdraw the proposed cancellation, a letter to

that effect shall be issued.

(d) Appeal of cancellation. A holder of a registered formula or

statement of process who wishes to appeal the decision of the Chief,

Product Compliance Branch, may file a written appeal with the Chief,

Alcohol and Tobacco Programs Division. The written appeal should set

forth in detail the reasons he or she believes the decision of the

Chief, Product Compliance Branch, was in error. 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.

(e) Final decision after appeal. After considering any written

arguments or evidence presented by the holder of the registered formula

or statement of process the Chief, Alcohol and Tobacco Programs

Division, shall issue a written decision to the holder of the

registered formula or statement of process. If the decision is to

cancel the registered formula or statement of process, a letter shall

be issued explaining the basis for the cancellation and the specific

laws or regulations relied upon in determining that the registered

formula or statement of process was not in conformance with law or

regulations. If the decision is to withdraw the proposed cancellation,

a letter to that effect shall be sent to the holder of the registered

formula or statement of process. The decision of the Chief, Alcohol and

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

Sec. 70.422 Cancellation of registration by operation of law or

regulation.

(a) Cancellation by operation of law or regulation. The Bureau will

not individually notify all holders of registered formulas or

statements of process that such registrations have been canceled in

situations where such cancellation occurs by operation of law or

regulation. Where changes in requirements are made as a result of

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

responsibility of the holder of the registered formula or statement of

process to surrender voluntarily all registered formulas or statements

of process which are no longer in compliance and to submit new formulas

and statements of process that are in compliance with the new

requirements; Provided, that in certain circumstances, the Bureau may

announce that the submission of new formulas or statements of process

for registration is not necessary in order to implement a new

requirement in the law or regulations. In such circumstances, it is the

responsibility of the holder of the registered formula or statement of

process to ensure that formulas and statements of process are in

compliance with the requirements of the new regulations or law,

notwithstanding the fact that registration of new formulas or

statements of process was not required.

(b) Notice of cancellation. If the Bureau determines that a holder

of a registered formula or statement of process is using such

registered formula or statement of process when it is no longer in

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

the Chief, Product Compliance Branch, will notify the holder of the

registered formula or statement of process in writing that the

[[Page 58317]]

subject formula or statement of process has been canceled by operation

of law or regulations, with a brief description of the grounds for such

cancellation.

(c) Appeal of notice of cancellation. Within 45 days after the date

of a notice of cancellation by operation of law or regulations, the

holder of a registered formula or statement of process may file a

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

The appeal should set forth the reasons why the holder of the

registered formula or statement of process believes that the regulation

or law at issue does not require the cancellation of the registered

formula or statement of process.

(d) Decision after appeal. After considering all written arguments

and evidence submitted by the holder of the registered formula or

statement of process, the Chief, Alcohol and Tobacco Programs Division,

shall issue a decision regarding the cancellation by operation of law

or regulation of the registered formula or statement of process. If the

decision is that the law or regulation at issue requires the

cancellation of the registered formula or statement of process, a

letter shall be issued explaining the basis for the cancellation and

citing the specific laws or regulations which required the cancellation

of the registered formula or statement of process. If the decision is

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

of such registered formula or statement of process, a letter to that

effect shall be sent to the holder of the registered formula or

statement of process. The decision of the Chief, Alcohol and Tobacco

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

Sec. 70.423 Informal conferences.

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

of proposed cancellation, notice of cancellation by operation of law or

regulations, or a decision of the Chief, Product Compliance Branch, to

cancel a registered formula or statement of process, a holder of a

registered formula or statement of process may file a written request

for an informal conference with the Chief, Alcohol and Tobacco Programs

Division. The decision whether to hold an informal conference is at the

sole discretion of the Chief, Alcohol and Tobacco Programs Division.

(b) Informal conference procedures. If the Chief, Alcohol and

Tobacco Programs Division determines that the holding of an informal

conference would be beneficial, he or she shall inform the holder of

the registered formula or statement of process and a date shall be

agreed upon. The informal conference is for purposes of discussion only

and no transcript shall be made. If the holder of the registered

formula or statement of process 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 Chief, Alcohol and Tobacco

Programs Division.

Sec. 70.424 Effective dates of cancellations.

With the exception of cancellations occurring pursuant to section

70.422(a), the Bureau shall allow at least 45 days between the issuance

of a decision to cancel a registered formula or statement of process

and the actual cancellation of the registered formula or statement of

process. The deciding official may, at his or her discretion, allow the

holder of the registered formula or statement of process a longer

period of time in which to use the registered formula or statement of

process. 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.

Sec. 70.425 Effect of cancellations.

(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 cancel a registered formula

or statement of process, the holder of the registered formula or

statement of process shall be asked to surrender the original of such

registered formula or statement of process to the Bureau for manual

cancellation. Whether or not the original registered formula or

statement of process has been manually cancelled, the formula or

statement of process shall be null and void after the effective date of

the cancellation of the registered formula or statement of process. It

shall be a violation of this section for any holder of a registered

formula or statement of process to present a registered formula or

statement of process to an official of the United States Government as

a valid registered formula or statement of process if the holder of the

registered formula or statement of process has been previously notified

that such registered formula or statement of process has been cancelled

by the Bureau or the formula or statement of process was cancelled by

operation of law or regulation.

(b) Use of registered formula or statement of process during period

of appeal. If a holder of a registered formula or statement of process

files a timely appeal after receipt of a notice of cancellation from

the Chief, Product Compliance Branch pursuant to section 70.421(c), he

or she may continue to use the registered formula or statement of

process 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 cancellation by operation of law or

regulations, issued pursuant to section 70.422(b), is not stayed during

the pendency of an appeal.

Sec. 70.426 Service on holder of registered formula or statement of

process.

Notices of proposed cancellation and notices of cancellation shall

be served on a holder of a registered formula or statement of process

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

holder of the registered formula or statement of process at the address

stated on the registered formula or statement of process or at the last

known address. If authorized by the holder of the registered formula or

statement of process, 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 holder of the registered formula or statement

of process 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. 70.427 Representation before the Bureau.

A holder of a registered formula or statement of process may be

represented by an attorney, certified public accountant, or other

person recognized to practice before the Bureau 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. 70.428 Computation of time.

(a) Computation. In computing any period of time prescribed or

allowed by sections 70.421 through 70.425, 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

[[Page 58318]]

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 the aforementioned sections

of regulations must be received for filing at the appropriate office

within the time limits, if any, for such filing.

(b) Extensions. For good cause shown, the Chief, Product

Compliance Branch, or the Chief, Alcohol and Tobacco Programs Division,

may grant extensions as to any time limits prescribed in sections

70.421 through 70.425.

PART 250--LIQUORS AND ARTICLES FROM PUERTO RICO AND THE VIRGIN

ISLANDS

Par. 32. The authority citation for 27 CFR Part 250 continues to

read as follows:

Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010,

5041, 5051, 5061, 5081, 5111, 5112, 5114, 5121, 5122, 5124, 5131-

5134, 5141, 5146, 5207, 5232, 5271, 5276, 5301, 5314, 5555, 6001,

6301, 6302, 6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205;

31 U.S.C. 9301, 9303, 9304, 9306.

Par. 33. Section 250.50 is amended by revising paragraph (b) and by

adding new paragraph (c) to read as follows:

Sec. 250.50 Formula for liquors.

* * * * *

(b) Wine. Persons in Puerto Rico who ship wine to the United States

shall comply with the formula requirements of 27 CFR Part 24. If any

wine contains liquors made outside of Puerto Rico, the country of

origin for each such liquor shall be stated on the formula. All

formulas required by this paragraph shall be submitted on ATF Form

5120.29, in accordance with Sec. 250.54.

(c) Cancellation of registered formulas. The procedures for the

cancellation of a registered distilled spirits or wine formula are

prescribed in 27 CFR Part 70, Subpart E.

* * * * *

(Approved by the Office of Management and Budget under control

number 1512-0204)

Par. 34. Section 250.51(b)(2) is revised to read as follows:

Sec. 250.51 Formulas for articles, eligible articles and products

manufactured with denatured spirits.

* * * * *

(b) * * *

(2) Products made with specially denatured spirits shall be made in

accordance with a general-use formula approved as provided in Part 20

of this chapter, or an approved formula on Form 5150.19, or previously

approved on ATF Form 1479-A or registered on 27-B Supplemental.

* * * * *

Par. 35. Sections 250.53 and 250.54 are amended by adding the words

``or registered'' after the word ``approved'' wherever it appears.

Par. 36. Section 250.55 is revised to read as follows:

Sec. 250.55 Previously approved formulas.

(a) Any formula on Form 27-B Supplemental that was approved before

(effective date of final rule) is included as a registered formula as

required by 27 CFR 5.26(a) and shall remain in effect until cancelled

or voluntarily surrendered. Except as provided in paragraph (b) of this

section, any person holding such a formula is not required to submit a

new formula.

(b) Any change in a registered formula shall require the filing of

a new Form 5110.38. After a change in a formula has been registered,

the original formula shall be surrendered to the Director.

(c) If a registered formula on Form 27-B Supplemental indicates

that carbon dioxide will be added to, or retained in, still wine, the

notice requirement of Sec. 250.52 shall not apply.

Par. 37. Section 250.173(b)(4) is amended by adding the words ``or

registered'' after the word ``approved''.

Par. 38. Section 250.197 is amended by removing the word

``approved'' and adding in its place the word ``registered'', and by

adding a second sentence to read as follows:

Sec. 250.197 Furnishing formula to consignee.

* * * Any formulas that were approved before (effective date of

final rule) are included as registered formulas, without any

resubmission by the holder of the approved formula or notification by

ATF.

* * * * *

Par. 39. Sections 250.205(a)(4) (i) and (ii) are amended by adding

the words ``or registered'' after the word ``approved''.

Par. 40. Section 250.220 is amended by revising paragraph (b) and

by adding new paragraph (c) to read as follows:

Sec. 250.220 Formulas for liquors.

* * * * *

(b) Wine. Persons in the Virgin Islands who ship wine to the

United States shall comply with the formula requirements of Part 24 of

this chapter. If any wine contains liquors made outside of the Virgin

Islands, the country of origin for each such liquor shall be stated on

the formula. All formulas required by this paragraph shall be submitted

on ATF Form 5120.29, in accordance with Sec. 250.224.

(c) Cancellation of registered formulas. The procedures for the

cancellation of a registered distilled spirits or wine formula are

prescribed in 27 CFR Part 70, Subpart E.

Par. 41. Section 250.221(b)(2) is revised to read as follows:

Sec. 250.221 Formulas for articles, eligible articles and products

manufactured with denatured spirits.

* * * * *

(b) * * *

(2) Products made with specially denatured spirits shall be made in

accordance with a general-use formula approved as provided in Part 20

of this chapter, or an approved formula on Form 5150.19, or previously

approved on ATF Form 1479-A or registered on 27-B Supplemental.

* * * * *

Par. 42. Sections 250.223 and 250.224 are amended by adding the

words ``or registered'' after the word ``approved'' wherever it

appears.

Par. 43. Section 250.225 is revised to read as follows:

Sec. 250.225 Previously approved formulas.

(a) Any formula on Form 27-B Supplemental that was approved before

(effective date of final rule) is included as a registered formula as

required by 27 CFR 5.26(a) and shall remain in effect until cancelled

or voluntarily surrendered. Except as provided in paragraph (b) of this

section, any person holding such a formula is not required to submit a

new formula.

(b) Any change in a registered formula shall require the filing of

a new Form 5110.38. After a change in a formula has been registered,

the original formula shall be surrendered to the Director.

(c) If a registered formula on Form 27-B Supplemental indicates

that carbon dioxide will be added to, or retained in, still wine, the

notice requirement of Sec. 250.222 shall not apply.

Par. 44. Section 250.309(b)(4) is amended by adding the words ``or

registered'' after the word ``approved''.

Signed: October 17, 1995.

John W. Magaw,

Director.

Approved: October 24, 1995.

Dennis M. O'Connell,

Acting Deputy Assistant Secretary (Regulatory, Tariff and Trade

Enforcement).

[FR Doc. 95-28471 Filed 11-24-95; 8:45 am]

BILLING CODE 4810-31-U