[Federal Register Volume 76, Number 164 (Wednesday, August 24, 2011)]
[Proposed Rules]
[Pages 52913-52915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-21612]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 40, 41, 44, 45, and 46

[Docket No. TTB-2010-0004; Notice No. 120; re: Notice No. 106]
RIN 1513-AB78


Standards for Pipe Tobacco and Roll-Your-Own Tobacco; Request for 
Public Comment

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Advance notice of proposed rulemaking; reopening of comment 
period.

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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) is 
reopening the comment period for Notice No. 106, which requested public 
comments on standards to distinguish between pipe tobacco and roll-
your-own tobacco for Federal excise tax purposes based on certain 
physical characteristics of the two products. This reopening of the 
comment period solicits comments from the public on certain issues that 
were raised in public comments received in response to Notice No. 106. 
This notice also sets forth for possible public comment the results of 
preliminary laboratory analyses conducted by TTB.

DATES: We must receive written comments on or before October 24, 2011.

ADDRESSES: You may send comments on this notice to one of the following 
addresses:
     http://www.regulations.gov: Use the comment form for 
Notice No. 106 as posted within Docket No. TTB-2010-0004 on 
``Regulations.gov,'' the Federal e-rulemaking portal, to submit 
comments via the Internet;
     Mail: Director, Regulations and Rulings Division, Alcohol 
and Tobacco Tax and Trade Bureau, P.O. Box 14412, Washington, DC 20044-
4412.
     Hand Delivery/Courier in Lieu of Mail: Alcohol and Tobacco 
Tax and Trade Bureau, 1310 G Street, NW., Suite 200-E, Washington, DC 
20005.
    See the Public Participation section of this notice for specific 
instructions and requirements for submitting comments, and for 
information on how to request a public hearing.
    You may view copies of all published notices, selected supporting 
materials, and the comments received about this proposal within Docket 
No. TTB-2010-0004 at http://www.regulations.gov. A link to this 
Regulations.gov docket is posted on the TTB Web site at http://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No. 
106. You also may view copies of all published notices, all supporting 
materials, and any comments we receive about this proposal by 
appointment at the TTB Information Resource Center, 1310 G Street, NW., 
Washington, DC 20220. Please call 202-453-2270 to make an appointment.

FOR FURTHER INFORMATION CONTACT: Christopher M. Thiemann, Regulations 
and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G 
Street, NW., Suite 200E, Washington, DC 20220; telephone 202-453-1039, 
Ext. 138.

SUPPLEMENTARY INFORMATION: 

TTB Authority

    Chapter 52 of the Internal Revenue Code of 1986 (IRC) sets forth 
the Federal excise tax and related provisions that apply to tobacco 
products and processed tobacco manufactured, or imported into, the 
United States. Section 5702(c) of the IRC (26 U.S.C. 5702(c)) defines 
the term ``tobacco products'' as ``cigars, cigarettes, smokeless 
tobacco, pipe tobacco, and roll-your-own tobacco.'' Each of these terms 
is also separately defined in section 5702. Section 5702(p) states that 
a manufacturer of processed tobacco is ``any person who processes any 
tobacco other than tobacco products'' and that ``the processing of 
tobacco shall not include the farming or growing of tobacco or the 
handling of tobacco solely for sale, shipment, or delivery to a 
manufacturer of tobacco products or processed tobacco.''
    Regulations implementing the provisions of chapter 52 of the IRC 
are contained in 27 CFR parts 40 (Manufacture of tobacco products, 
cigarette papers and tubes, and processed tobacco), 41 (Importation of 
tobacco products, cigarette papers and tubes, and processed tobacco), 
44 (Exportation of tobacco products and cigarette papers and tubes, 
without payment of tax, or with drawback of tax), 45 (Removal of 
tobacco products and cigarette papers and tubes, without payment of 
tax, for use of the United States), and 46 (Miscellaneous regulations 
relating to tobacco products and cigarette papers and tubes). These 
statutory and regulatory provisions are administered by the Alcohol and 
Tobacco Tax and Trade Bureau (TTB).

Publication of Notice No. 106

    On July 22, 2010, TTB published in the Federal Register (75 FR 
42659) an advance notice of proposed rulemaking, Notice No. 106, in 
response to changes made to the IRC tobacco provisions by sections 701 
and 702 of the Children's Health Insurance Program Reauthorization Act 
of 2009 (CHIPRA). These changes to the IRC included an expansion of the 
definition of ``roll-your-own tobacco'' and an increase in the tax rate 
applicable to pipe tobacco and roll-your-own tobacco that resulted in a 
significant difference in the tax rates applicable to the two groups of 
products. In Notice No. 106, TTB described the heightened need for more 
regulatory detail to clarify the difference between pipe tobacco and 
roll-your-own tobacco as a result of the tax rate changes adopted by 
CHIPRA. In that notice, TTB also described and requested comments on 
six written submissions concerning the distinctions between pipe 
tobacco and roll-your-own tobacco that it had received in response to 
earlier rulemaking action regarding CHIPRA.

Comments Received

    TTB received 24 comments from groups and individuals in response to 
Notice No. 106. Commenters provided input on the distinctions between 
pipe tobacco and roll-your-own tobacco based on physical 
characteristics as described by the original six submissions noted 
above. Commenters also provided suggestions on other characteristics 
which would be useful for distinguishing between pipe tobacco and roll-
your-own tobacco, and made other substantive comments about the issues 
involved in the rulemaking. One of the 24 comments was withdrawn by the 
commenter after the close of the comment period, and two of the 
comments were not suitable for public posting because they did not 
address the issues presented for public comment. The remaining 21 
comments may be viewed at the Regulations.gov Web site referred to in 
the ADDRESSES section of this document.
    After the close of the Notice No. 106 comment period, TTB received 
a request to meet with attorneys from Patton Boggs LLP and their 
client, Liggett Vector Brands LLC. At this meeting, which took place on 
June 13, 2011, Liggett Vector's chief executive officer and other 
company representatives presented TTB with a proposal to use certain 
physical characteristics to distinguish between pipe tobacco and roll-
your-own tobacco that differ from the standards proposed by other

[[Page 52914]]

commenters, described in Notice No. 106. The new proposal, which was 
submitted as a slide presentation, is now posted with the comments on 
Notice No. 106 as Comment 23 and may be viewed at the Regulations.gov 
Web site referred to above.
    Additionally, TTB believes it would be appropriate to bring to the 
attention of the public the results of preliminary laboratory tests 
that TTB conducted on a number of products labeled as pipe tobacco and 
as roll-your-own tobacco purchased by TTB from stores in the 
Beltsville, Maryland, area on February 13, 2009. TTB subjected the 
samples to a series of experiments to determine whether there were 
analytical markers that might be appropriate for further evaluation as 
a means of distinguishing between pipe tobacco and roll-your-own 
tobacco, and to evaluate standards submitted by industry members in 
response to the CHIPRA rulemaking actions in order to identify any 
methodological issues with those standards. A posting summarizing the 
results of these laboratory tests may be viewed at the Regulations.gov 
Web site referred to under the ADDRESSES section of this document. 
These posted results do not constitute a TTB conclusion regarding the 
distinction between pipe tobacco and roll-your-own tobacco but rather 
are merely intended as an additional point of reference for comments 
that the public may wish to make regarding the basic issue raised in 
Notice No. 106.

Determination To Re-Open Public Comment Period

    Because some of the comments received in response to Notice No. 106 
raise points that were not specifically addressed in that notice, and 
in view of the subsequent proposal from Liggett Vector Brands LLC, TTB 
has determined that it would be appropriate to reopen the comment 
period for Notice No. 106 in order to afford industry members and other 
interested parties an opportunity to submit comments on those 
additional points and proposals. In addition, the Bureau believes that 
it would be appropriate to make available for comment preliminary 
results of the laboratory procedures referred to above.
    Accordingly, TTB is reopening the comment period for Notice No. 106 
for an additional 60 days from the date of publication of this 
document. After the close of that 60-day comment period, TTB will 
carefully review the comments previously submitted in response to 
Notice No. 106, the Liggett Vector Brands LLC proposal, and any 
additional comments submitted in response to this document, in order to 
determine whether there is a sufficient basis for the publication of a 
notice of proposed rulemaking regarding specific regulatory changes to 
clarify the distinction between pipe tobacco and roll-your-own tobacco.

Public Participation

Comments Invited

    As discussed above, in addition to the questions originally 
presented in Notice No. 106, TTB invites interested members of the 
public to comment on the proposals made by various commenters and on 
whether the proposed standards are appropriate and sufficient for 
distinguishing between pipe tobacco and roll-your-own tobacco. Further, 
we continue to invite commenters to opine on how many of the physical 
characteristics in a given proposal should be present in order for the 
product to be classified as ``pipe tobacco'' (e.g., 2 of 5, 3 of 6). 
Finally, because we recognize that roll-your-own tobacco and pipe 
tobacco must be classified relative to processed tobacco, which is not 
taxed, we also invite comments on how processed tobacco may differ from 
the other two named commodities.
    If any comments include the results of any analytical procedures by 
or on behalf of the commenter, please provide the specific analytical 
data on which the comment is based. All comments previously submitted 
to TTB regarding Notice No. 106 will be given full consideration, so 
there is no need to resubmit such comments.

Submitting Comments

    You may submit comments on this notice by using one of the 
following three methods:
     Federal e-Rulemaking Portal: You may send comments via the 
online comment form linked to Notice No. 106 as posting in Docket No. 
TTB-2010-0004 on ``Regulations.gov,'' the Federal e-rulemaking portal, 
at http://www.regulations.gov. A link to the docket is posted on the 
TTB Web site at http://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No. 106. Supplemental files may be 
attached to comments submitted via Regulations.gov. For information on 
how to use Regulations.gov, click on the site's Help or FAQ tabs.
     U.S. Mail: You may send comments via postal mail to the 
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and 
Trade Bureau, P.O. Box 14412, Washington, DC 20044-4412.
     Hand Delivery/Courier: You may hand-carry your comments or 
have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 
1310 G Street, NW., Suite 200-E, Washington, DC 20005.
    Please submit your comments by the closing date shown above in this 
notice. Your comments must reference Notice No. 106 and include your 
name and mailing address. Your comments also must be made in English, 
be legible, and be written in language acceptable for public 
disclosure. TTB does not acknowledge receipt of comments, and the 
Bureau considers all comments as originals.
    If you are commenting on behalf of an association, business, or 
other entity, your comment must include the entity's name as well as 
your name and position title. If you comment via Regulations.gov, 
please include the entity's name in the ``Organization'' blank of the 
comment form. If you comment via postal mail, please submit your 
entity's comment on letterhead.
    You may also write to the Administrator before the comment closing 
date to ask for a public hearing. The Administrator reserves the right 
to determine whether to hold a public hearing.

Confidentiality

    All submitted comments and attachments are part of the public 
record and subject to disclosure. Do not enclose any material in your 
comments that you consider to be confidential or that is inappropriate 
for public disclosure.

Public Disclosure

    On the Federal e-rulemaking portal, Regulations.gov, TTB will post, 
and the public may view, copies of all published notices, selected 
supporting materials, and all comments received in response to this 
proposal within Docket No. TTB-2010-0004. A link to this docket is 
posted on the TTB Web site at http://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No. 106. You may also reach Docket 
No. TTB-2010-0004 through the Regulations.gov search page at http://www.regulations.gov.
    All posted comments will display the commenter's name, organization 
(if any), city, and State, and, in the case of mailed comments, all 
address information, including e-mail addresses. TTB may omit 
voluminous attachments or material that the Bureau considers unsuitable 
for posting.
    You and other members of the public may view copies of all 
published notices, all supporting materials, and all electronic or 
mailed comments TTB has received or will receive in response to

[[Page 52915]]

this proposal by appointment at the TTB Information Resource Center, 
1310 G Street, NW., Washington, DC 20220. You may also obtain copies at 
20 cents per 8.5- x 11-inch page. Contact the TTB information 
specialist at the above address or by telephone at 202-453-2270 to 
schedule an appointment or to request copies of comments or other 
materials.

Drafting Information

    Christopher M. Thiemann of the Regulations and Rulings Division 
drafted this notice.

    Signed: August 10, 2011.
Mary G. Ryan,
Acting Administrator.
[FR Doc. 2011-21612 Filed 8-23-11; 8:45 am]
BILLING CODE 4810-31-P