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TTB Publishes Semi-Annual Regulatory Agenda with Plans and Goals for the Coming Year

Late last year, the Alcohol & Tobacco Tax & Trade Bureau (TTB) published its semi-annual regulatory agenda in the Federal Register.  The agenda provides useful insights into TTB’s regulatory plans and goals for the coming year.  As in prior years, however, observers should recognize that TTB often announces ambitious regulatory plans and deadlines that it does not meet.

TTB identified five priority projects for 2015.  First, TTB wishes to update and modernize its regulations on the labeling and advertising of wine (Pt. 4), distilled spirits (Pt. 5) and beer (Pt. 7).  In describing the initiative, TTB seems most interested in simplification and streamlining, not in the imposition of significant new labeling and advertising requirements.  Second, TTB seeks to further de-regulate and streamline its oversight of denatured alcohol and rum, a move that could help the competitiveness of U.S. industrial operations that employ alcohol.  Third, TTB wishes to amend its export and import regulations to harmonize them with the International Trade Data System (ITDS), thereby transitioning to an all-electronic import and export environment.  Fourth, TTB hopes to implement self-certification of the formulas for flavors, extracts and other non-beverage products made with alcohol.  Fifth, TTB plans to review its distilled spirits plant regulations (Pt. 19) in order to replace the current four monthly report forms required for reporting with two forms.

Leaving priorities aside, the semi-annual agenda reports on a number of rulemaking initiatives that should attract the interest of regulated industry members.  This note will group the most significant based on the affected industry:

Multiple Alcohol Beverage Categories

  1. TTB pledges to publish a Notice of Proposed Rulemaking (NPRM) to modernize its wine, spirits, and beer labeling and advertising regulations.  As noted above, this is a 2015 priority item for the Agency.
  2. TTB plans to issue an NPRM late in 2015 to explore whether to retain, revise or repeal the current standards of fill requirements for both wine and distilled spirits.
  3. TTB plans to issue a Final Rule requiring the electronic submission of many applications, including those for original and amended basic permits.
  4. TTB expects to issue an NPRM in April 2015 to amend its import and export regulations to make them compatible with ITDS.  This is a 2015 priority item.

Wine Projects

  1. TTB hopes to issue an NPRM on certain wine terms that were first raised to the industry in an Advanced Notice of Proposed Rulemaking published by TTB in 2010.
  2. TTB plans an NPRM in July 2015 to propose authorizing additional treatments for use in winemaking.
  3. TTB expects to publish an NPRM late in 2015 to clarify the labeling of certain flavored wines.

Distilled Spirits Project

  1. TTB hopes to issue a supplemental NPRM late in 2015 to propose replacing the current four monthly forms filed by distilled spirits plant operators with two forms, thereby streamlining distillers’ reporting burdens.  TTB views this project as a 2015 priority.

Non-Beverage and Industrial Alcohol Projects

  1. TTB plans to issue an NPRM on the self-certification of non-beverage product [...]

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TTB Proposal on Industrial Alcohol

On June 27, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a Notice of Proposed Rulemaking (NPRM) on specially denatured alcohol (SDA), completely denatured alcohol (CDA) and related amendments to federal regulations governing non-beverage “industrial” alcohol.  In the NPRM, the TTB makes a host of proposals to reduce regulatory burdens on the industrial alcohol industry and update regulations to align with current practice.

The NPRM contains a great many recommendations that you or someone on your staff should review with care.  Primary among the changes, however, are the following:

  1. Reclassifying two often-used SDA formulas, SDA # 12-A and SDA #35, as CDA formulas.  This change considerably reduces the regulatory burden associated with using these formulas.
  2. Issuing “general use” formulas for articles made with any of 15 SDA formulas.  Again, this change greatly reduces the regulatory burdens associated with using these SDA formulas.
  3. Issuing three new “general use” formulas for uses involving duplicating fluids, ink solvents and certain proprietary solvents.
  4. Authorizing the export of SDA by dealers, instead of only distilled spirits plants as currently authorized.
  5. Authorizing the export of articles that would not qualify for domestic distribution because they are not sufficiently denatured.  This change may substantially impact ethanol export operations, as some other countries’ standards for the denaturing of fuel alcohol are not as stringent as the TTB standard.
  6. Removing from the regulations SDA formulas no longer in use.

Taken together, the proposals represent a significant step towards simplifying TTB’s regulation of industrial alcohol production and distribution.  One can certainly envision a bolder liberalization, but in many instances Internal Revenue Code statutes prevent more radical changes to current regulations and policies.  Although not likely a high priority in today’s political environment, Congress would be wise to revisit those statutes, as many date back to Prohibition or just after repeal.

Current SDA and CDA producers and users should examine their current operations in light of the proposed regulations and should consider submitting comments to TTB, which are due on or before August 26, 2013.

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