Federal Register / Vol. 61, No. 115 / Thursday, June 13, 1996 / Proposed Rules 30017

Tequila, except that an appropriate

statement with respect to age shall

appear on the brand label in the case of

brandy (other than immature or unaged

brandies, as provided in § 5.22(d)(1),

and fruit brandies which are not

customarily stored in oak containers)

not stored in oak containers for a period

of at least 2 years. * * *

* * * * *

(e) * * *

(2) * * * And provided further, That

the labels of whiskies and brandies

(except immature or unaged brandies, as

provided in § 5.22(d)(1)) not required to

bear a statement of age, and rum and

Tequila aged for not less than 4 years,

may contain general inconspicuous age,

maturity or similar representations

without the label bearing an age

statement.

Par. 4. Section 5.65(c) is amended by

revising the last sentence to read as

follows:

§ 5.65 Prohibited practices.

* * * * *

(c) Statement of age. * * * An

advertisement for any whisky or brandy

(except immature or unaged brandies, as

provided in § 5.22(d)(1)) which is not

required to bear a statement of age on

the label or an advertisement for any

rum or Tequila, which has been aged for

not less than 4 years may, however,

contain inconspicuous, general

representations as to age, maturity or

other similar representations even

though a specific age statement does not

appear on the label of the advertised

product and in the advertisement itself.

* * * * *

Signed: April 25, 1996.

Bradley A. Buckles,

Acting Director.

Approved: May 15, 1996.

Dennis M. O’Connell,

Acting Deputy Assistant Secretary,

(Regulatory, Tariff and Trade Enforcement).

[FR Doc. 96–14859 Filed 6–12–96; 8:45 am]

BILLING CODE 4810–31–U

Bureau of Alcohol, Tobacco and

Firearms

27 CFR Part 18

[Notice No. 823]

RIN 1512–AB59

Production of Volatile Fruit-Flavor

Concentrate (95R–026P)

AGENCY: Bureau of Alcohol, Tobacco

and Firearms (ATF), Department of the

Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: Pursuant to the President’s

regulatory reform initiative, the Bureau

of Alcohol, Tobacco and Firearms (ATF)

is proposing to amend the regulations in

27 CFR Part 18. The proposed

amendment would specifically

authorize the transfer of volatile fruitflavor concentrate (VFFC) unfit for

beverage use from one VFFC plant to

another for further processing. The

proposed amendment would clarify the

regulations in order to allow greater

flexibility in the production processes of

VFFC plants.

DATES: Written comments must be

received on or before August 12, 1996.

ADDRESSES: Submit 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. 823.

FOR FURTHER INFORMATION CONTACT:

Mary A. Wood, Wine, Beer, and Spirits

Regulations Branch, Bureau of Alcohol,

Tobacco and Firearms, 650

Massachusetts Avenue NW.ca

a13jn2.071, Washington, DC 20226;

(202) 927–8210.

SUPPLEMENTARY INFORMATION:

Background

On February 21, 1995, President

Clinton announced a regulatory reform

initiative. As part of this initiative, each

Federal agency was instructed to

conduct a page by page review of all

agency regulations to identify those

which are obsolete or burdensome and

those whose goals could be better

achieved through the private sector,

self-regulation or state and local

governments. In cases where the

agency’s review disclosed regulations

which should be revised or eliminated,

the agency would, as soon as possible,

propose administrative changes to its

regulations.

The page by page review of all

regulations was completed as directed

by the President. In addition, on April

13, 1995, the Bureau published Notice

No. 809 (60 FR 18783) in the Federal

Register requesting comments from the

public regarding which ATF regulations

could be improved or eliminated. No

comments were received regarding 27

CFR part 18, Production of Volatile

Fruit-Flavor Concentrate; however, ATF

is proposing a clarifying amendment to

this part based on a variance request

received from a volatile fruit-flavor

concentrate (VFCC) producer.

The Internal Revenue Code of 1986,

26 U.S.C. 5511, authorizes the

manufacture of volatile fruit-flavor

concentrate by any process which

includes evaporations from the mash or

juice of any fruit. Section 5511 also

places certain restrictions on the

manufacture of volatile fruit-flavor

concentrate. Pursuant to section

5511(1), the concentrate, and the mash

or juice from which it is produced, must

contain no more alcohol than is

reasonably unavoidable in the

manufacture of such concentrate.

Section 5511(2) provides that the

concentrate must be rendered unfit for

use as a beverage before removal from

the place of manufacture; however,

concentrate which is fit for beverage use

and which does not exceed 24 percent

alcohol by volume may be transferred to

a bonded wine cellar for use in

production of natural wine. Finally,

section 5511(3) authorizes the Secretary

to prescribe such regulations as are

necessary for the protection of the

revenue regarding applications, records,

reports, bonds, and other requirements

with respect to the production, removal,

sale, transportation, and use of

concentrate and the mash or juice from

which the concentrate is produced.

Volatile fruit-flavor concentrate which

is produced in accordance with the

requirements of the regulations is not

subject to the distilled spirits or wine

excise tax. However, section 5001(a)(6)

provides for the imposition of tax on

any volatile fruit-flavor concentrate (or

any fruit mash or juice from which such

concentrate is produced) containing

one-half of 1 percent or more of alcohol

by volume, which is manufactured free

from tax under section 5511, and is then

sold, transported, or used by any person

in violation of Chapter 51 or the

regulations promulgated thereunder.

Proposed Amendment

The current regulations in 27 CFR

18.54(a) allow the transfer of volatile

fruit-flavor concentrate (‘‘concentrate’’)

which is unfit for beverage use for any

purpose authorized by law. However,

ATF recently received a request from a

VFFC producer as to whether a

concentrate unfit for beverage use could

be transferred from one VFFC plant to

another for further processing.

Apparently it was more cost-effective

for the second VFFC plant to conduct

the processing operation at issue. While

the transfer of the concentrate was

clearly authorized by current

regulations, since the concentrate was

unfit for beverage use, there was nothing

in the current regulations which

specifically authorized the second VFFC

plant to receive concentrate for further

processing.

The existing regulations in section

18.51 allow proprietors to receive

processing material which is produced

elsewhere, subject to certain restrictions
30018 Federal Register / Vol. 61, No. 115 / Thursday, June 13, 1996 / Proposed Rules

and recordkeeping requirements.

However, the term ‘‘processing

material’’ is defined in section 18.11 to

mean ‘‘[t]he fruit mash or juice from

which concentrate is produced.’’ This

definition does not include concentrate

intended for further processing. The

regulations in section 18.56 authorize a

VFFC producer to accept the return of

a shipment of concentrate shipped by it,

and provide recordkeeping and

reporting requirements regarding the

returned concentrate. However, these

regulations do not specifically authorize

the proprietor to accept concentrate

from another proprietor for further

processing.

In response to the request from the

VFFC producer, ATF determined that

nothing in the Internal Revenue Code or

existing regulations precludes one VFFC

proprietor from accepting concentrate

from another VFFC proprietor for

further processing. However, since the

existing regulations do not specifically

authorize such an operation, ATF is

proposing to amend section 18.56 to

specifically allow a proprietor to accept

concentrate which is unfit for beverage

use for further processing. Such

concentrate will be subject to the

existing recordkeeping and reporting

requirements for concentrate which is

returned to the proprietor. ATF believes

that the proposed amendment will

clarify to VFFC proprietors that the

transfer of concentrate from one plant to

another for further processing is

allowed, as long as the concentrate

meets the definition of a concentrate

unfit for beverage use at the time it

leaves the place of manufacture. This

liberalizing amendment will allow

VFFC proprietors greater flexibility in

production operations without

jeopardizing the revenue in any way.

Other Possible Changes

ATF also solicits public comment

concerning other possible changes to the

regulations in Part 18, such as

amendments which would authorize

VFFC plants to alternate the use of their

premises so as to operate temporarily as

a distilled spirits plant, bonded winery,

or other regulated facility. Comments on

this proposal, as well as any other

suggestions, are welcome.

Public Participation

ATF requests written comments from

all interested persons. All 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

as confidential. Any material which the

commenter considers to be confidential

or inappropriate for disclosure should

not be included in the comment. The

name of the person submitting the

comment is not exempt from disclosure.

Any interested person who desires an

opportunity to comment orally at a

public hearing should submit a request,

in writing, to the Director within the 60-

day comment period. The Director,

however, reserves the right to

determine, in light of all circumstances,

whether a public hearing will be

scheduled.

Written comments will be available

for public inspection during normal

business hours at the following address:

ATF Reading Room, Office of Public

Affairs and Disclosure, Room 6480, 650

Massachusetts Avenue, NW,

Washington, DC.

Regulatory Flexibility Act

It is hereby certified that this

proposed regulation, if implemented as

a final rule, will not have a significant

economic impact on a substantial

number of small entities. The proposed

amendment would liberalize the

regulations to add a provision that will

allow for the transfer of concentrate

from one VFFC plant to another for

further processing. Accordingly, a

regulatory flexibility analysis is not

required because the proposal, if

promulgated as a final rule, will not

have a significant economic impact on

a substantial number of small entities.

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.

Executive Order 12866

It has been determined that this

proposed regulation is not a significant

regulatory action as defined in

Executive Order 12866. Accordingly,

this proposal is not subject to the

analysis required by this Executive

Order.

Paperwork Reduction Act

Under the Paperwork Reduction Act

of 1995, no persons are required to

respond to a collection of information

unless it displays a valid OMB control

number. The collections of information

contained in the regulations proposed to

be amended by this notice have been

previously reviewed and approved by

the Office of Management and Budget in

accordance with the Paperwork

Reduction Act of 1980 (44 U.S.C.

3504(h)) under control numbers 1512–

0046 and 1512–0098. The proposed

amendment is not expected to result in

any change in the total number of

burden hours.

Drafting Information: The principal author

of this document is Mary A. Wood of the

Wine, Beer, and Spirits Regulations Branch,

Bureau of Alcohol, Tobacco and Firearms.

List of Subjects in 27 CFR Part 18

Administrative practice and

procedure, Authority delegations,

Excise taxes, Exports, Labeling,

Reporting requirements, Security

measures, Spices and flavorings, Stills,

and Surety bonds.

Authority and Issuance

ATF is proposing to amend Part 18 in

Title 27 of the Code of Federal

Regulations as follows:

PART 18—PRODUCTION OF

VOLATILE FRUIT-FLAVOR

CONCENTRATE

Par. 1. The authority citation for Part

18 continues to read as follows:

Authority: 26 U.S.C. 5001, 5172, 5178,

5179, 5203, 5511, 5552, 6065, 7805; 44 U.S.C.

3504(h).

Par. 2. Section 18.56 is revised to read

as follows:

§ 18.56 Receipt of concentrate.

(a) General. The proprietor of a

concentrate plant may accept the return

of concentrate that it shipped. In

addition, concentrate that is unfit for

beverage use may be received from

another concentrate plant for further

processing in accordance with this part.

(b) Record of concentrate received.

When concentrate is received, the

proprietor shall record the receipt,

including the name of the consignor and

a notation regarding any loss in transit

or other discrepancy.

(c) Report of concentrate received.

The quantity of concentrate received

shall be reported on an unused line on

the annual report, ATF Form 1695

(5520.2).

(Approved by the Office of Management and

Budget under control numbers 1512–0046

and 1512–0098).

Signed: May 20, 1996.

John W. Magaw,

Director.

Approved: May 24, 1996.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff

and Trade Enforcement).

[FR Doc. 96–14860 Filed 6–12–96; 8:45 am]

BILLING CODE 4810–31–U