[Federal Register Volume 60, Number 227 (Monday, November 27, 1995)]
[Proposed Rules]
[Pages 58311-58318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-28471]



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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