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New TTB Final Rule Released on Denatured Alcohol

The new TTB Final Rule that was released in the Federal Register on August 20, 2016 will partially streamline the use of non-beverage alcohol products in the US. While statutory requirements do not permit TTB to completely de-regulate the distribution and sale of denatured alcohol, the attached rule, among other things:

  1. Reclassifies a number of “specially denatured alcohol” (“SDA”) formulas as “completely denatured alcohol” (“CDA”). As the regulatory requirements for distributing CDA are much less stringent than those that apply to SDA, these reclassifications amount to a lessening of regulatory burdens for companies dealing in such products.
  2. Establishes additional “general use formulas,” which permit the production of SDA products without the need for a specific TTB formula approval.
  3. Exempts distilled spirits plant (“DSP”) operators from the requirements to obtain an additional permit to produce and handle SDA products within the bonded premises of a DSP.
  4. Makes a variety of technical changes and deletions to the regulations in order to meet what TTB views as current industry practice.

While the TTB reforms do not deregulate SDA use to the extent that most producers and users would like, the Final Rule represents a welcome step in the direction of deregulation and simplification. A substantially more radical deregulation of such products would require statutory changes and therefore are beyond the realm of what TTB can accomplish on its own.




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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