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P. 1Rule: Alcoholic beverages: Imported natural wine; certification requirementsRule: Alcoholic beverages: Imported natural wine; certification requirementsRatings: (0)|Views: 22|Likes: 0Published by Justia.comRule: Alcoholic beverages:Imported natural wine; certification requirements, 49479-49486 [05-16772] Alcohol and Tobacco Tax and Trade BureauRule: Alcoholic beverages:Imported natural wine; certification requirements, 49479-49486 [05-16772] Alcohol and Tobacco Tax and Trade BureauMore info:Published by: Justia.com on May 02, 2008Copyright:Public DomainAvailability:Read on Scribd mobile: iPhone, iPad and Android.download as PDF, TXT or read online from ScribdFlag for inappropriate content|Add to collectionSee moreSee lesshttps://www.scribd.com/doc/2840782/Rule-Alcoholic-beverages-Imported-natural-wine-certification-requirements10/14/2013pdftextoriginal This section of the FEDERAL REGISTER
Vol. 70, No. 163
27 CFR Parts 4, 24 and 27
[T.D. TTB\u201331]
RIN 1513\u2013AB00
Imported Natural Wine (2005R\u2013002P)
AGENCY:Alcohol and Tobacco Tax and
Trade Bureau, Treasury.
ACTION:Temporary rule; Treasury
SUMMARY:This temporary rule
implements the new certification
requirements regarding production
practices and procedures for imported
natural wine contained in section 2002
of the Miscellaneous Trade and
Technical Corrections Act of 2004,
which amended section 5382 of the
Internal Revenue Code of 1986. We are
amending the wine regulations to
incorporate these changes. We also are
soliciting comments from all interested
parties on the implementation of these
new requirements through a notice of
proposed rulemaking published
elsewhere in this issue of theFe d e ra l
DATES:Temporary rule effective August
FOR FURTHER INFORMATION CONTACT:Gail
Davis, International Trade Division,
Bureau (202\u2013927\u20138110).
This temporary rule implements
section 2002 of the Miscellaneous Trade
and Technical Corrections Act of 2004,
Public Law 108\u2013429, 118 Stat. 2434
(\u2018\u2018the Act\u2019\u2019), signed by President Bush
on December 3, 2004. Section 2002 of
the Act revised section 5382(a) of the
Internal Revenue Code of 1986 (IRC), 26
U.S.C. 5382(a), which sets forth
standards regarding what constitutes
proper cellar treatment of natural wine.
The Alcohol and Tobacco Tax and
Trade Bureau (TTB) is responsible for
the administration of the IRC provisions
The revision of section 5382(a) took
effect on January 1, 2005, and involved
the following two principal substantive
changes: (1) The addition of a new
paragraph (1)(B) to provide that, in the
case of wine produced and imported
subject to an international agreement or
treaty, proper cellar treatment of natural
wine includes those practices and
procedures acceptable to the United
States under the agreement or treaty;
and (2) the addition of a paragraph (3)
setting forth a new certification
requirement regarding production
natural wine produced after December
31, 2004. The new certification
provision directs the Secretary of the
Treasury to accept the practices and
procedures used to produce the wine if,
at the time of importation, one of the
1. The Secretary has on file or is
provided with a certification from the
government of the producing country,
accompanied by an affirmed laboratory
analysis, that the practices and
procedures used to produce the wine
constitute proper cellar treatment under
regulations prescribed by the Secretary;
2. The Secretary has on file or is
provided with a certification required
by an international agreement or treaty
covering proper cellar treatment, or the
wine is covered by an international
agreement or treaty covering proper
cellar treatment that does not require a
3. In the case of an importer that owns
or controls or that has an affiliate that
owns or controls a winery operating
under a basic permit issued by the
Secretary, the importer certifies that the
practices and procedures used to
produce the wine constitute proper
cellar treatment under regulations
prescribed by the Secretary. For
purposes of this provision, the new
paragraph (3) text also defines
\u2018\u2018affiliate\u2019\u2019 as having the meaning
contained in section 117(a)(4) of the
Federal Alcohol Administration Act (27
U.S.C. 211(a)(4)) and as including \u2018\u2018a
winery\u2019s parent or subsidiary or any
other entity in which the winery\u2019s
parent or subsidiary has an ownership
interest.\u2019\u2019
Based on the January 1, 2005,
effective date of the section 2002
statutory change and the fact that the
new requirements apply to natural wine
produced on or after that date, TTB
believes that proper administration and
enforcement of those requirements
necessitates the adoption of
implementing regulations as a
temporary rule with immediate effect.
TTB believes that such implementing
action will ensure that affected industry
members have sufficient advance
knowledge of the regulatory
requirements, and TTB notes in this
regard that, given the \u2018\u2018produced\u2019\u2019
statutory standard, the vast majority of,
if not all, wine importers will not have
to meet the certification requirements
until the summer of 2005.
Public Meeting; Submission of
TTB held a public meeting regarding
these new requirements on December
15, 2004, in Washington, DC, which was
announced in Notice No. 26, published
in the Federal Register (69 FR 71873) on
December 10, 2004. The purpose of the
meeting was to advise the public of
TTB\u2019s plans for implementation of the
certification requirements and to answer
questions from the public regarding
these provisions. TTB also encouraged,
both at the meeting and in Notice No.
26, the submission of written comments
regarding its implementation plans. The
public comment period ended January
TTB received eleven comments
regarding implementation of the new
requirements. Comments were received
from: Allied Domecq, on behalf of
Allied Domecq Wines USA; the
government of Australia; the California
Fine Wine Alliance; the government of
Canada; the Comite\u00b4
Europe\u00b4
Entreprises Vins; the Distilled Spirits
Council of the United States; the
Fe\u00b4
de\u00b4
ration des Exportateurs de Vins et
Spiritueux de France; Green Mountain
Beverage; Kalik Lewin, on behalf of the
Wine Institute; the National Association
of Beverage Importers, Inc.; and the
TTB took into consideration the
comments of the parties mentioned
above in drafting this document. The
principal points made by the comment
submitters, TTB\u2019s responses regarding
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Federal Register/ Vol. 70, No. 163/ Wednesday, August 24, 2005/ Rules and Regulations
those comments, and TTB\u2019s
observations on other aspects of the
implementing regulatory texts are set
The regulatory text to implement the
section 2002 statutory changes is set
forth in this document as a new \u00a7 27.140
within subpart I (Importer\u2019s Records and
Reports) of part 27 of the TTB
regulations, which concerns the
importation of distilled spirits, wines,
The document includes conforming
cross-reference changes to \u00a7\u00a7 24.301 and
24.302 of the TTB regulations (27 CFR
24.301 and 24.302), which concern
records applicable to imported bulk still
and effervescent wines received in
The document also includes a new
requirement in our regulations
promulgated under the labeling
provisions of the Federal Alcohol
Administration Act (FAA Act), 27
U.S.C. 205(e). This new provision is in
a new paragraph (b) of 27 CFR 4.45, and
provides that importers must submit
copies of certifications to TTB for use in
enforcing the labeling provisions of the
FAA Act. These certifications will be
made available to the public on the TTB
1. Filing of Certifications
During the public meeting, TTB stated
its intention not to require presentation
of the certification as part of the
customs entry process. TTB took this
position based on the view that
compliance with the statutory
requirement could be adequately
assured if importers simply maintain
the certifications in their records where
TTB officers can inspect them as may be
Most of the comment submitters
addressing this issue agreed with TTB\u2019s
position, stating that it will be less
burdensome to importers. However, two
of them dissented. One contended that
the statute requires importers to provide
the certification, or at least proof that
the certification is on file, to U.S.
Customs and Border Protection at the
time of importation. The second
dissenting comment submitter argued
that importers should file certifications
with TTB, which would then maintain
them in a database that would be
available to other importers. On the
other hand, another commenter urged
TTB to confirm that the affirmed
laboratory analyses would be treated as
confidential information, asserting that
such analyses would necessarily
include sensitive proprietary
TTB does not agree that the statutory
language requires the certification to be
presented as part of the customs entry
process. Instead, we believe that the
requirements of the amended IRC
provision will be satisfied if importers
maintain copies of the certifications in
their records. Moreover, noting that the
statute requires that the Secretary have
\u2018\u2018on file\u2019\u2019 or be \u2018\u2018provided with\u2019\u2019 a
certification, we believe the \u2018\u2018provided
with\u2019\u2019 standard is satisfied by a
retention requirement because, under 27
CFR 27.137, any record required under
part 27 must be retained and made
available to TTB for inspection. Finally,
we believe the record retention
approach will be least burdensome for
both the U.S. Government and the
However, as stated above, we have
decided to require importers to submit
a copy of the certification to TTB under
regulations promulgated under the FAA
Act. Section 105(e) of the FAA Act, 27
U.S.C. 205(e), authorizes TTB, as the
delegate of the Secretary of the
Treasury, to issue regulations that will
ensure that alcohol beverage labels
provide adequate information to
consumers as to the identity and quality
of the product. Pursuant to this
authority, we have issued regulations
requiring both domestic and imported
wines to be labeled with information
regarding the class and type designation
of the product.S e e 27 CFR part 4,
subparts C and D. These regulations also
set forth rules regarding the blending
and cellar treatment of wine.S e e 27
CFR 4.22.
An importer\u2019s inability to provide a
certification regarding proper cellar
treatment may indicate that the wine
has been treated in a fashion that would
change the class and type designation
under the pertinent regulations in part
4. Moreover, Congress by amending
section 5382 has indicated an increased
concern with such treatment.
Consequently, TTB will also require
importers to submit certifications of
natural wine as part of the label
approval process and TTB may use such
information for purposes of verifying
the appropriate class and type
designation of the wine under the
labeling provisions of part 4.
While TTB is requiring that the
certification be submitted as part of the
label approval process, labels for wines
for which a certification is not yet
available will be provisionally approved
pending submission of the certification
prior to the time of release from
Customs custody. Certifications that are
submitted subsequent to provisional
approval must include the label
approval number. Certifications
approval of the label approval should be
submitted to the Director, Knowledge
Management Staff, with the mailing
address as Alcohol and Tobacco Tax
and Trade Bureau, 1310 G Street NW.,
Suite 200E, Attention: Wine
Certification Docket, Washington, DC
Furthermore, an importer may rely on
a certificate of label approval approved
prior to the effective date of this
regulatory change. In such a case, the
importer consequently would not be
required to obtain a new certificate of
label approval, but must instead submit
the required certification to the Director,
Knowledge Management Staff, at the
address indicated above before the wine
in question is released from Customs
The temporary rule also provides that
certifications submitted under section
\u00a7 4.45 shall be made available to the
public on the TTB Internet Web site at
www.ttb.gov, in the same way that
approved labels are made available to
the public. Consistent with the
objectives of the FAA Act, TTB believes
that making this information available
to the public provides assurance to
consumers that the wine was produced
in accordance with acceptable practices.
However, in order to minimize
implementation time and costs,
certifications will be displayed on a
separate Web page. The certifications on
the Web will be indexed to the label
approval by the label approval number.
We do not agree with the comment
that suggested that the affirmed
laboratory analyses necessarily included
sensitive proprietary information that
should be kept confidential. Unlike
formulas, which include sensitive and
confidential data about the formulation
of products, the laboratory analysis
merely sets out in summary form the
percentage alcohol by volume, the total
sulphur dioxide content (ppm), and the
volatile acidity of the product. This is
information that could be obtained by
anyone who bought a bottle of the
product in the marketplace and
submitted the sample to a private
In many cases, the alcohol content of
the wine is already on the label. TTB
does not believe that the information
included in the analysis is confidential
or proprietary, and thus we have
concluded that it may be made available
Several comment submitters asked if
the importer must obtain a certification
for each shipment, or merely for the
initial shipment of a specific wine.
Others proposed that once one importer
has imported a specific wine, other
importers should be able to use the
same certification.
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TTB believes if an importer has an
original or copy of the certification in
his or her possession at the time of the
initial importation the statutory
requirement will be met for multiple
shipments of the same wine (that is,
wine of the same brand, class or type,
producer, and cellar treatment). Thus,
the importer could import additional
shipments of the same wine without
obtaining a new certification, as long as
the certification for the initial shipment
is maintained in his or her records and
continues to accurately apply to the
wine in the subsequent shipments. In
addition, because importers may use
either an original or copy of a
certification, different importers may
use copies of the same certification.
2. Wines Produced Under an
International Agreem ent
Some comment submitters requested
clarification on the scope of the
provision regarding wine produced and
imported subject to an international
agreement or treaty. In response, the
TTB position is that wines fall under
this provision if they are imported from
a country that has ratified an agreement
that provides for acceptance by the
United States of the enological practices
of the exporting country. On the other
hand, wines covered by agreements that
do not provide for acceptance of
enological practices will not qualify for
inclusion under this provision.
The comments also revealed some
confusion over whether TTB would
require some type of government
certification for wines falling under this
provision. In response, TTB notes that
while the statute does mention a
certification in this context, it refers
only to a \u2018\u2018certification, if any, as may
be required by an international
agreement or treaty under paragraph
(1)(B).\u2019\u2019 TTB does not believe that it is
necessary to require retention of a
certification if the terms of such an
international agreement or treaty do not
require a certification, because the
existence of the agreement or treaty is
sufficient for purposes of verification of
the statutory standard by TTB. However,
a different approach appears to be
necessary under the terms of the statute
if the international agreement or treaty
provides for a certification. Accordingly,
in this case the regulatory text requires
the importer to have only the
certification required under the
agreement or treaty.
3. Im porters A ffiliated With a U.S.
A number of commenters requested
clarification of what qualifies as an
\u2018\u2018affiliate,\u2019\u2019 while others stated that the
statutory definition of affiliate is clear
and does not need explanation. One
commenter interpreted this provision as
permitting an importer in this category
to self-certify only wines produced by
an affiliated winery. Another
commenter questioned whether TTB
would allow self-certification by an
importer when the importer is
controlled by the winery rather than the
TTB has included in the regulatory
text a definition of \u2018\u2018affiliate\u2019\u2019 that
includes the terms of section 117(a)(4)
of the Federal Alcohol Administration
(FAA) Act as well as the additional
definitional language added by section
2002 of the Act. The following points
are noted regarding this definition:
\u2022The language added by section 2002
of the Act is included with the first part
of the FAA Act definition because it
appears to be more relevant there.
\u2022We have added the word
\u2018\u2018controlling\u2019\u2019 before the words
\u2018\u2018ownership interest\u2019\u2019 to ensure
consistency with the \u2018\u2018control\u2019\u2019 concept
in the existing FAA Act definition. In
this regard, we do not believe that
Congress intended to create an
ambiguity by having a definition that
contradicts its own terms.
TTB believes that the statute allows
an importer that has an affiliate that
Secretary to self-certify any natural wine
he or she imports, not just wine
produced by its affiliated winery. With
regard to the other comment, TTB
believes that the statutory language does
not provide for self-certification when
the winery controls the importer.
4. Definition of Natural Wine
As the new requirements apply only
to \u2018\u2018natural\u2019\u2019 wine, a number of
comment submitters requested that TTB
clarify the definition of natural wine.
For example, some commenters
questioned whether non-grape wines,
wines under 7 percent alcohol by
volume, or wines that are not
\u2018\u2018standard\u2019\u2019 wines are included in the
TTB has included in the \u00a7 27.140 text
the definition of natural wine currently
found in 27 CFR 24.10, which is based
on the definition contained in section
5381 of the IRC. Although Congress had
the opportunity to amend the definition
of natural wine for purposes of the
amendment made by section 2002 of the
Act, it did not do so. Accordingly, the
current definition of natural wine,
which includes some wines made from
fruits other than grapes as well as wines
under 7 percent alcohol by volume,
applies in this regulatory context.
Whether a wine falls within the
definition of \u2018\u2018natural\u2019\u2019 wine or not
depends on how it is produced. Because
the definition of \u2018\u2018standard\u2019\u2019 wine under
section 24.10 includes \u2018\u2018natural wine,\u2019\u2019 a
wine that is not a \u2018\u2018standard wine\u2019\u2019
cannot be a \u2018\u2018natural wine.\u2019\u2019
Two comment submitters asked if the
alcohol content limitations in the
definition of natural wine refer to
\u2018\u2018acquired\u2019\u2019 or \u2018\u2018actual\u2019\u2019 alcohol, or to
\u2018\u2018total\u2019\u2019 alcohol (which includes the
alcohol equivalent of residual sugar
contained in the wine). Consistent with
the approach taken throughout the U.S.
wine regulations, the alcohol content
limitations contained in the definition
of natural wine have reference to the
wine\u2019s \u2018\u2018actual\u2019\u2019 alcohol by volume
content, which does not include the
alcohol equivalent of the residual sugar.
5. Certifying Governm ent A gencies and
A few comment submitters suggested
that TTB allow the required government
certification to be from a quasi-
governmental organization having a
regulatory role in the country of origin.
They pointed out that in some countries
such organizations have significant
regulatory authority. They also
suggested that TTB should accept
analyses not just from government
laboratories, but also from laboratories
that have been certified by the country
of origin to conduct the analyses.
TTB is aware of the fact that quasi-
governmental organizations play a
significant role in regulating some
countries\u2019 wine industries. For this
reason, TTB will accept the required
certification from either a governmental
or government-approved entity,
provided that the entity has oversight or
control over enological practices in the
producing country under the laws of the
producing country. Likewise, TTB
understands that government
laboratories in some countries may not
easily be able to handle the additional
work required by this certification
requirement. TTB will therefore accept
a laboratory analysis conducted by a
laboratory certified by the government
of the producing country.
TTB expects that each country
exporting wine to the United States that
is subject to the government
certification and laboratory analysis
requirements of the statute will make
available to TTB and the general public
a list of its governmental or government-
approved certifying entities and a list of
its government or government-certified
laboratories. To assist importers in
verifying that the certification and
laboratory analysis are from a proper
source, TTB will maintain a list
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