[Federal Register Volume 81, Number 127 (Friday, July 1, 2016)]
[Rules and Regulations]
[Pages 43062-43065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15636]


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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Part 16
[Docket No. TTB-2016-0006; T.D. TTB-138]
RIN 1513-AC28


Civil Monetary Penalty Inflation Adjustment--Alcoholic Beverage 
Labeling Act

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

ACTION: Interim final rule (Treasury decision); Request for comments.

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SUMMARY: This interim final rule implements the provisions of the 
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by 
the Debt Collection Improvement Act of 1996 and the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, with 
respect to the civil penalty provision of the Alcoholic Beverage 
Labeling Act of 1988 (ABLA). Specifically, this interim final rule 
increases the maximum civil monetary penalty for violations of the 
provisions of the ABLA from $10,000 to $19,787, in accordance with 
Federal law.

DATES: The effective date of this interim final rule is July 1, 2016. 
Comments on this interim final rule must be received by August 30, 
2016.

ADDRESSES: Please send your comments on the interim final rule to one 
of the following addresses:
     http://www.regulations.gov (via the online comment form 
for this document as posted within Docket No. TTB-2016-0006 at 
Regulations.gov, the Federal e-rulemaking portal);
     U.S. Mail: Director, Regulations and Rulings Division, 
Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, 
Washington, DC 20005; or
     Hand delivery/courier in lieu of mail: Alcohol and Tobacco 
Tax and Trade Bureau, 1310 G Street NW., Suite 400, Washington, DC 
20005.
    See the Public Participation section of this document for specific 
instructions and requirements for submitting comments.

FOR FURTHER INFORMATION CONTACT: Andrew L. Malone, Public Guidance 
Program Manager, Regulations and Rulings Division, Alcohol and Tobacco 
Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; 
(202) 453-1039, ext. 188.

SUPPLEMENTARY INFORMATION: 

Background

Statutory Authority for Federal Civil Monetary Penalty Inflation 
Adjustments

    The Federal Civil Penalties Inflation Adjustment Act of 1990 (the 
Inflation Adjustment Act), Public Law 101-410, 104 Stat. 890, 28 U.S.C. 
2461 note, requires the regular adjustment and evaluation of civil 
monetary penalties to maintain their deterrent effect and helps to 
ensure that penalty amounts imposed by the Federal Government are 
properly accounted for and collected. A ``civil monetary penalty'' is 
defined in the Inflation Adjustment Act as any penalty, fine, or other 
such sanction that is: (1) For a specific monetary amount as provided 
by Federal law, or has a maximum amount provided for by Federal law; 
(2) assessed or enforced by an agency pursuant to Federal law; and (3) 
assessed or enforced pursuant to an administrative proceeding or a 
civil action in the Federal courts.
    The Debt Collection Improvement Act of 1996 (the Improvement Act of 
1996), Public Law 104-134, section 31001(s), 110 Stat. 1321, enacted on 
April 26, 1996, amended the Inflation Adjustment Act by requiring civil 
monetary penalties to be adjusted for inflation. Specifically, the 
Improvement Act of 1996 required, among other things, that the head of 
each Federal agency adjust each civil monetary penalty provided by law 
within the jurisdiction of the

[[Page 43063]]

respective agency by the inflation adjustment described under section 5 
of the Inflation Adjustment Act. The Improvement Act of 1996 required 
the adjustment of the civil monetary penalty to be done by regulation 
and published in the Federal Register.
    Under the Improvement Act of 1996, any increase in a civil monetary 
penalty made pursuant to the amendment applied only to violations which 
occur after the date the increase takes effect. The act also provided 
that the first adjustment of a penalty made pursuant to the amendment 
may not exceed 10 percent of such penalty.
    The Inflation Adjustment Act has been further amended by the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (the Improvements Act of 2015), Public Law 114-74, section 701, 
129 Stat. 584, enacted on November 2, 2015. The Improvements Act of 
2015 changed the method agencies use to calculate inflation adjustments 
to civil monetary penalties, as well as the method and frequency of 
future adjustments. The Improvements Act of 2015 also instructed 
agencies to apply its method of calculating the inflation adjustment to 
the original statutory penalty, rather than to penalties as they were 
adjusted under the Improvement Act of 1996. To account for inflation 
that took place between the enactment of the original penalties and the 
enactment of the Improvements Act of 2015, agencies must make a 
``catch-up'' first adjustment through an interim final rulemaking that 
is published no later than July 1, 2016, and takes effect no later than 
August 1, 2016. Agencies shall adjust civil monetary penalties no later 
than January 15 of every year thereafter. The Improvements Act of 2015 
also provides that any increase in a civil monetary penalty shall apply 
only to civil monetary penalties, including those whose associated 
violation predated such an increase, which are assessed after the date 
the increase takes effect.
    As amended, the Inflation Adjustment Act provides that the 
inflation adjustment does not apply to civil monetary penalties under 
the Internal Revenue Code of 1986 or the Tariff Act of 1930.

Alcoholic Beverage Labeling Act

    The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the 
Federal Alcohol Administration Act (FAA Act) pursuant to section 
1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 
531(d). The Secretary has delegated various authorities through 
Treasury Department Order 120-01, dated December 10, 2013, (superseding 
Treasury Department Order 120-01, dated January 24, 2003), to the TTB 
Administrator to perform the functions and duties in the administration 
and enforcement of this law.
    The FAA Act contains the Alcoholic Beverage Labeling Act (ABLA) of 
1988, Public Law 100-690, 27 U.S.C. 213-219a, which was enacted on 
November 18, 1988. Section 204 of the ABLA, codified in 27 U.S.C. 215, 
requires that a health warning statement appear on the labels of all 
containers of alcoholic beverages manufactured, imported, or bottled 
for sale or distribution in the United States, as well as on containers 
of alcoholic beverages that are manufactured, imported, bottled, or 
labeled for sale, distribution, or shipment to members or units of the 
U.S. Armed Forces, including those located outside the United States.
    The health warning statement requirement applies to containers of 
alcoholic beverages manufactured, imported, or bottled for sale or 
distribution in the United States on or after November 18, 1989. The 
statement reads as follows:

    GOVERNMENT WARNING: (1) According to the Surgeon General, women 
should not drink alcoholic beverages during pregnancy because of the 
risk of birth defects. (2) Consumption of alcoholic beverages 
impairs your ability to drive a car or operate machinery, and may 
cause health problems.

    Section 204 of the ABLA also specifies that the Secretary of the 
Treasury shall have the power to ensure the enforcement of the 
provisions of the ABLA and issue regulations to carry out them out. In 
addition, section 207 of the ABLA, codified in 27 U.S.C. 218, provides 
that any person who violates the provisions of the ABLA is subject to a 
civil penalty of not more than $10,000, with each day constituting a 
separate offense.
    Most of the civil monetary penalties administered by TTB are 
imposed by the Internal Revenue Code of 1986, and thus are not subject 
to the inflation adjustment mandated by the Inflation Adjustment Act. 
The only civil monetary penalty enforced by TTB that is subject to the 
inflation adjustment is the penalty imposed by the ABLA at 27 U.S.C. 
218.

Previous Civil Monetary Penalty Adjustment for Violations of the ABLA

    In accordance with the Improvement Act of 1996, TTB's predecessor 
agency, the Bureau of Alcohol, Tobacco, and Firearms (ATF), issued a 
final rule that was published in the Federal Register and effective on 
October 23, 1996 (61 FR 54935, T.D. ATF-385), that adjusted the civil 
monetary penalty provision by increasing the maximum penalty for 
violations of the ABLA from $10,000 to $11,000.
    The TTB regulations implementing the ABLA are found in 27 CFR part 
16, Alcoholic Beverage Health Warning Statement. The 1996 final rule 
established a new section, 27 CFR 16.33, addressing the penalty 
provision. Specifically, paragraph (a) of Sec.  16.33 codified the 
statutory $10,000 penalty set forth in the ABLA, and paragraph (b) 
addressed the Improvement Act of 1996 requirement, stating that the 
penalty provided for in paragraph (a) shall be periodically adjusted in 
accordance with inflation, with the civil penalty for violations 
occurring after October 23, 1996, not to exceed $11,000.
    As noted earlier, the Improvements Act of 2015 changed the 
Inflation Adjustment Act's method of calculating the inflation 
adjustment and the method and frequency of future adjustments. 
Accordingly, this interim final rule revises Sec.  16.33 to reflect the 
amendments to the Inflation Adjustment Act.

Cost-of-Living Adjustment

    As mentioned earlier, the ABLA contains a maximum civil monetary 
penalty, rather than a range of minimum and maximum civil monetary 
penalties. For such penalties, the Inflation Adjustment Act, as 
amended, provides that the first adjustment will be determined by 
increasing the maximum civil monetary penalty by the cost-of-living 
adjustment. For the first adjustment after the date of enactment of the 
Improvements Act of 2015, the cost-of-living adjustment means the 
percentage (if any) for each civil monetary penalty by which the 
Consumer Price Index for all-urban consumers (CPI-U) for the month of 
October, 2015, exceeds the CPI-U for the month of October of the 
calendar year in which the amount of such civil penalty was last 
established or adjusted under a provision of law other than the 
Inflation Adjustment Act. This means that the inflation adjustment must 
be applied to the original statutory penalty (for the ABLA, $10,000), 
and not to any increases promulgated under the Inflation Adjustment 
Act, as amended by the Improvement Act of 1996. Any increase determined 
under section 5 of the Inflation Adjustment Act, as amended, must be 
rounded to the nearest multiple of $1.
    The CPI-U in October 1988, the year in which the ABLA was enacted 
and its civil monetary penalty was established, was 120.2, and the CPI-
U for October 2015 was 237.838. The rate of inflation

[[Page 43064]]

for the period between October 1988 and October 2015 is therefore 
97.8686 percent. When applied to the original ABLA civil monetary 
penalty of $10,000, this rate of inflation yields a raw (unrounded) 
inflation adjustment of $9,786.86. Rounded to the nearest dollar, the 
inflation adjustment is $9,787, meaning that the new maximum civil 
monetary penalty for violations of the ABLA will be $19,787.
    The Inflation Adjustment Act, as amended, provides that the amount 
of increase in the initial adjustment of a civil monetary penalty shall 
not exceed 150 percent of the amount of that civil monetary penalty on 
the date of enactment of the Improvements Act of 2015; this penalty 
adjustment does not exceed the maximum. The Inflation Adjustment Act, 
as amended, also provides that, for the initial adjustment, an agency 
may adjust the amount of a civil monetary penalty by less than the 
otherwise required amount if the agency, after publishing a notice of 
proposed rulemaking and providing an opportunity for comment, 
determines that (1) increasing the civil monetary penalty by the 
otherwise required amount will have a negative economic impact or (2) 
the social costs of increasing the civil monetary penalty by the 
otherwise required amount outweigh the benefits. The Office of 
Management and Budget must concur with such a determination. However, 
TTB has determined that neither of these circumstances apply to the 
initial cost-of-living adjustment described above.

Notice of Future Increases

    After the initial ``catch-up'' adjustment, section 4 of the 
Inflation Adjustment Act, as amended, requires heads of agencies to 
adjust civil monetary penalties and to make the adjustments 
notwithstanding section 553 of title 5, United States Code. Section 553 
of title 5 is the rulemaking provision of the Administrative Procedure 
Act, which requires notice-and-comment rulemaking for certain agency 
actions and requires agencies to provide interested parties the right 
to petition for the issuance, amendment, or repeal of a rule.
    Until the Improvements Act of 2015, the Inflation Adjustment Act 
required agencies to adjust their civil monetary penalties by 
regulation. For all adjustments after the initial adjustment via 
interim final rule, the amendments in the Improvements Act of 2015 
allow agencies to apply the cost-of-living adjustment formula in the 
Inflation Adjustment Act and publish the resulting civil monetary 
penalty without establishing it by regulation. As the Inflation 
Adjustment Act, as amended, now requires annual cost-of-living 
adjustments, to be applied no later than January 15 of every year after 
2016, TTB has determined that it is most expedient to publish the new 
penalty on its Web site, rather than in Sec.  16.33. TTB will announce 
future adjustments to the maximum civil monetary penalty in the ABLA 
through notices published in the Federal Register and update its Web 
site when adjustments are announced.

TTB Determination

    Accordingly, this interim final rule revises Sec.  16.33 to reflect 
the changes to the Inflation Adjustment Act made by the Improvements 
Act of 2015. Paragraph (a) of Sec.  16.33 states that the ABLA provides 
that any person who violates the provisions of 27 CFR part 16 shall be 
subject to a civil penalty of not more than $10,000. However, pursuant 
to the provisions of the Inflation Adjustment Act, as amended, the 
civil penalty provided in the ABLA is subject to periodic cost-of-
living adjustment. Accordingly, any person who violates the provisions 
of 27 CFR part 16 shall be subject to a civil penalty of not more than 
the amount listed at https://www.ttb.gov/regulation_guidance/ablapenalty.html. Paragraph (a) also states that each day shall 
constitute a separate offense.
    Paragraph (b) of the revised Sec.  16.33 indicates that TTB will 
provide notice in the Federal Register and at the Web site above of 
cost-of-living adjustments to the civil penalty for violations of 27 
CFR part 16.
    Paragraph (c) of the revised Sec.  16.33 reflects the changes the 
Improvements Act of 2015 made with respect to the applicability of 
adjusted penalties. As mentioned earlier, before the Improvements Act 
of 2015, an adjusted penalty only applied to violations that occurred 
after the date the increase took effect; this language had been 
reflected in the previous Sec.  16.33(b). Consistent with section 6 of 
the Inflation Adjustment Act, as amended, new paragraph (c) states that 
any increase in the penalty described in paragraph (a) shall apply only 
to penalties, including those whose associated violation predated such 
an increase, which are assessed after the date the increase takes 
effect. An increase will take effect on the date a notice is published 
in the Federal Register announcing the increase. The effective date of 
the increase also will be listed at the Web site mentioned above.

Public Participation

Comments Invited

    TTB invites comments from interested members of the public on the 
cost-of-living adjustment to the ABLA civil monetary penalty.

Submitting Comments

    You may submit comments on this proposed rule by using one of the 
following three methods (please note that TTB has a new address for 
comments submitted by U.S. Mail):
     Federal e-Rulemaking Portal: You may send comments via the 
online comment form posted with this proposed rule within Docket No. 
TTB-2016-0006 on ``Regulations.gov,'' the Federal e-rulemaking portal, 
at http://www.regulations.gov. A direct link to that docket is 
available under T.D. TTB-138 on the TTB Web site at http://www.ttb.gov/rrd/decisions.shtml. Supplemental files may be attached to comments 
submitted via Regulations.gov. For complete instructions on how to use 
Regulations.gov, visit the site and click on the ``Help'' tab.
     U.S. Mail: You may send comments via postal mail to the 
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and 
Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005.
     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 400, Washington, DC 20005.
    Please submit your comments by the closing date shown above in this 
proposed rule. Your comments must reference T.D. TTB-138 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 TTB 
considers all comments as originals.
    In your comment, please clearly indicate if you are commenting on 
your own behalf or on behalf of an association, business, or other 
entity. If you are commenting on behalf of an entity, your comment must 
include the entity's name, as well as your name and position title. If 
you comment via Regulations.gov, please enter the entity's name in the 
``Organization'' blank of the online comment form. If you comment via 
postal mail or hand delivery/courier, please submit your entity's 
comment on letterhead.
    You may also write to the Administrator before the comment

[[Page 43065]]

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 inappropriate for 
public disclosure.

Public Disclosure

    TTB will post, and you may view, copies of this interim final rule, 
selected supporting materials, and any online or mailed comments 
received about this interim final rule within Docket No. TTB-2016-0006 
on the Federal e-rulemaking portal, Regulations.gov, at http://www.regulations.gov. A direct link to that docket is available on the 
TTB Web site at http://www.ttb.gov/rrd/decisions.shtml under T.D. TTB-
138. You may also reach the relevant docket through the Regulations.gov 
search page at http://www.regulations.gov. For information on how to 
use Regulations.gov, click on the site's ``Help'' tab.
    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 email addresses. TTB may omit voluminous 
attachments or material that the Bureau considers unsuitable for 
posting.
    You may also view copies of this interim final rule and any 
electronic or mailed comments that TTB receives about this interim 
final rule by appointment at the TTB Information Resource Center, 1310 
G Street NW., Washington, DC 20005. You may also obtain copies at 20 
cents per 8.5- x 11-inch page. Contact TTB's 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.

Administrative Procedure Act

    TTB is issuing this interim final rule without prior notice and 
opportunity for public comment in accordance with provisions of the 
Improvements Act of 2015, which directs agencies to make the ``catch-
up'' adjustment through interim final rulemaking. In addition, TTB 
finds good cause under 5 U.S.C. 553(d)(3) to dispense with the 
effective date limitation in 5 U.S.C. 553(d) because this interim final 
rule merely implements the provisions of the Inflation Adjustment Act, 
as amended, and does not change TTB's interpretation of any regulation 
or the requirements of any recordkeeping provision.

Regulatory Flexibility Act

    Because the agency was not required to publish a notice of proposed 
rulemaking, the provisions of the Regulatory Flexibility Act relating 
to an initial and final regulatory analysis (5 U.S.C. 603, 604) are not 
applicable to this interim final rule. Accordingly, a regulatory 
flexibility analysis is not required.

Executive Order 12866

    It has been determined that this interim final rule is not a 
significant regulatory action as defined in Executive Order 12866. 
Therefore, a regulatory assessment is not required.

Drafting Information

    Andrew L. Malone of the Regulations and Rulings Division, Alcohol 
and Tobacco Tax and Trade Bureau, drafted this document.

List of Subjects in 27 CFR Part 16

    Alcohol and alcoholic beverages, Consumer protection, Health, 
Labeling, Penalties.

Amendment to the Regulations

    For the reasons set forth in the preamble, TTB is amending 27 CFR, 
chapter I, part 16 as follows:

PART 16--Alcoholic Beverage Health Warning Statement

0
1. The authority citation for part 16 continues to read as follows:

    Authority: 27 U.S.C. 205, 215, 218; 28 U.S.C. 2461 note.


0
2. Section 16.33 is revised to read as follows:


Sec.  16.33  Civil penalties; adjustments.

    (a) General. The Act provides that any person who violates the 
provisions of this part shall be subject to a civil penalty of not more 
than $10,000. However, pursuant to the provisions of the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended, this civil 
penalty is subject to periodic cost-of-living adjustment. Accordingly, 
any person who violates the provisions of this part shall be subject to 
a civil penalty of not more than the amount listed at https://www.ttb.gov/regulation_guidance/ablapenalty.html. Each day shall 
constitute a separate offense.
    (b) Notice of cost-of-living adjustment. TTB will provide notice in 
the Federal Register and at the Web site referenced in paragraph (a) of 
this section of cost-of-living adjustments to the civil penalty for 
violations of this part.
    (c) Applicability of increases in penalty. Any increase in the 
penalty described in paragraph (a) of this section shall apply only to 
penalties, including those whose associated violation predated such an 
increase, which are assessed after the date the increase takes effect. 
An increase will take effect on the date a notice is published in the 
Federal Register announcing the increase. The effective date of the 
increase also will be listed at the Web site in paragraph (a) of this 
section.

    Dated: May 16, 2016.
Mary G. Ryan,
Acting Administrator.
    Approved: May 27, 2016.
Timothy E. Skud,
Deputy Assistant Secretary, (Tax, Trade, and Tariff Policy).
[FR Doc. 2016-15636 Filed 6-30-16; 8:45 am]
BILLING CODE 4810-31-P