Proposed Rule2024-22470
Modernization of Permit Application Requirements for Wine Premises
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 2, 2024
Issuing agencies
Treasury DepartmentAlcohol and Tobacco Tax and Trade Bureau
Abstract
In this notice of proposed rulemaking, the Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes deregulatory amendments to its regulations to modernize and streamline the application requirements for wine premises. The proposed amendments also relax some reporting requirements associated with changes to the business of proprietors of wine premises. The proposed amendments are a result of TTB's evaluation of its permit and registration application requirements and consideration of relevant public comments submitted to the Treasury Department in response to its request for recommendations concerning regulations that can be eliminated, modified, or streamlined to reduce burdens. TTB believes the amendments proposed in this document will significantly reduce the time needed to complete an application to establish and operate wine premises.
Full Text
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<title>Federal Register, Volume 89 Issue 191 (Wednesday, October 2, 2024)</title>
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[Federal Register Volume 89, Number 191 (Wednesday, October 2, 2024)]
[Proposed Rules]
[Pages 80160-80172]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-22470]
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Part 24
[Docket No. TTB-2024-0005; Notice No. 234]
RIN 1513-AC47
Modernization of Permit Application Requirements for Wine
Premises
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this notice of proposed rulemaking, the Alcohol and Tobacco
Tax and Trade Bureau (TTB) proposes deregulatory amendments to its
regulations to modernize and streamline the application requirements
for wine premises. The proposed amendments also relax some reporting
requirements associated with changes to the business of proprietors of
wine premises. The proposed amendments are a result of TTB's evaluation
of its permit and registration application requirements and
consideration of relevant public comments submitted to the Treasury
Department in response to its request for recommendations concerning
regulations that can be eliminated, modified, or streamlined to reduce
burdens. TTB believes the amendments proposed in this document will
significantly reduce the time needed to complete an application to
establish and operate wine premises.
DATES: Comments must be received on or before December 2, 2024.
ADDRESSES: You may electronically submit comments to TTB on this
proposal, and view copies of this document, its supporting materials,
and any comments TTB receives on it within Docket No. TTB-2024-0005 as
posted at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. A direct link to that docket is
available on the TTB website at <a href="https://www.ttb.gov/wine/notices-of-proposed-rulemaking">https://www.ttb.gov/wine/notices-of-proposed-rulemaking</a> under Notice No. 234. Alternatively, you may submit
comments via postal mail to the Director, Regulations and Ruling
Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW,
Box 12, Washington, DC 20005. Please see the Public Participation
section of this document for further information on the comments
requested regarding this proposal and on the submission,
confidentiality, and public disclosure of comments.
FOR FURTHER INFORMATION CONTACT: Christopher Forster-Smith, Regulations
and Rulings Division, Alcohol and
[[Page 80161]]
Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC
20005; telephone (202) 453-1039, extension 150.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. TTB Evaluation of Permit and Registration Application
Requirements
B. TTB Authority
C. Relationship to Other Notices of Proposed Rulemaking
II. Proposed Changes to the Regulations
A. Operational Information Required for Wine Premises
Application
B. Premises Description and Security
C. Statements of Interest
D. 30-Day Filing Requirements for Certain Changes in the
Business
E. Changes in Trade Names
F. Retention of Records Off-Premises
III. Public Participation
A. Comments Invited
B. Submitting Comments
C. Confidentiality and Public Disclosure of Comments
IV. Regulatory Analyses and Notices
A. Executive Order 12866
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
I. Background
A. TTB Evaluation of Permit and Registration Application Requirements
In fiscal year 2017, the Alcohol and Tobacco Tax and Trade Bureau
(TTB) began an evaluation of the information TTB collects from
applicants for permit and registration applications. The purpose was to
identify ways to streamline the application process, reduce burden on
the regulated industry, and ensure that the process collects only
information that is necessary to meet the agency's statutory
obligations. TTB's general approach was to identify information being
collected that could be eliminated without hindering TTB's ability to
evaluate an applicant's qualifications and to more narrowly focus the
application questions to capture only information that is necessary for
that purpose. Additionally, TTB considered whether applicants made any
types of requests that TTB routinely approved such that it might be
reasonable to amend the regulations to remove the need for such
requests.
During this same period, on June 14, 2017, the Treasury Department
(Treasury) published in the Federal Register (82 FR 27217) a Request
for Information inviting members of the public to submit views and
recommendations for Treasury regulations that can be eliminated,
modified, or streamlined to reduce burdens. TTB reviewed comments
received in response to this request and identified proposals that
related to starting a new business in a TTB-regulated industry,
including the qualification process.
Through TTB's internal evaluation and consideration of the public
input, TTB has identified deregulatory actions that TTB can take by
amending regulations and also, where rulemaking is not required, by
amending guidance and forms. While this document addresses wine
premises, TTB is engaging in further rulemaking to address other
regulated industries within the context of their respective statutory
eligibility requirements. Specifically, TTB has already published
rulemaking concerning the Internal Revenue Code (IRC) permit and
registration application requirements for distilled spirits plants (and
users and dealers of specially denatured alcohol and tax-free alcohol)
and application requirements for Federal Alcohol Administration Act
(FAA Act) basic permits (which are submitted by prospective wine
producers and blenders, alcohol beverage importers and wholesalers, and
beverage distilled spirits plants). See Notice No. 207, published in
the Federal Register on December 3, 2021, at 86 FR 68573, as well as
rulemaking concerning Brewer's Notices filed with TTB under the IRC
(Notice No. 212, published in the Federal Register on June 8, 2022, at
87 FR 34819).
With respect to wine premises, this document proposes to amend the
regulations to reduce regulatory burden, increase industry flexibility,
and eliminate or narrow the range of information that applicants must
submit to TTB consistent with TTB's statutory obligations under the
IRC. The proposed amendments include:
<bullet> Eliminating requirements to provide narrative descriptions
of certain operations when applying to establish a wine premises.
<bullet> More narrowly tailoring requirements to describe the wine
premises to specifically correspond with statutory requirements, and
consolidating requirements to provide descriptions of alternation
operations as part of the general wine premises description.
<bullet> Extending deadlines for reporting certain changes in the
business from 30 days to 60 days.
<bullet> Allowing proprietors of wine premises to use new trade
names by notifying TTB in lieu of filing an amended application.
<bullet> Allowing proprietors of wine premises to maintain required
records at a location other than the permitted premises without first
obtaining TTB approval.
Section II of this document includes more in-depth discussion of
the proposed amendments.
As noted above, TTB's deregulatory strategy also includes
streamlining its guidance and forms. TTB is concurrently engaged in a
multiyear initiative to develop and deploy ``myTTB,'' a single, online
interface for all industry transactions with TTB, including
qualification, label approval, and formula applications, as well as tax
filings, payments, and claims. When complete, myTTB will provide both
industry and TTB with online access to each industry member's records,
approvals, and filings, in a single system. With the use of myTTB, and
the planned implementation of these newly streamlined requirements
within myTTB, the bureau anticipates significant improvements to a
permit applicant's user experience and corresponding reductions in
burden.
B. TTB Authority
The Federal Alcohol Administration Act (FAA Act, 27 U.S.C. 201, et
seq.) and chapter 51 of the IRC, 26 U.S.C. chapter 51, require persons
intending to engage in certain wine-related businesses to obtain a
permit and/or permission to operate from the Secretary of the Treasury
(Secretary) before beginning operations. Many proprietors of wine
premises engage in operations that require both an approved permit
application under the FAA Act and an approved application for a
registry number under the IRC. As noted above, TTB has already
published rulemaking proposing amendments to application requirements
for FAA Act basic permit holders, which includes proprietors of bonded
wine premises (see Notice No. 207, published in the Federal Register on
December 3, 2021, at 86 FR 68573). The amendments proposed in this
document relate to the application requirements to establish and
operate wine premises under the IRC, including requirements to report
certain changes in the regulated businesses.
The IRC requires that any person establishing premises for the
production, blending, cellar treatment, storage, bottling, packaging,
or repackaging of untaxpaid wine must, before commencing operations,
make application to the Secretary, file a bond (subject to certain
exceptions), and receive permission to operate. See 26 U.S.C. 5351.
Additionally, the IRC requires that any person bottling, packaging, or
repackaging taxpaid wines must, before commencing operations, make
application to the Secretary and
[[Page 80162]]
receive permission to operate. See 26 U.S.C. 5352. Further,
applications must disclose, as specified in regulations issued by the
Secretary, such information as may be necessary to enable the Secretary
to determine the location and extent of the premises, the type of
operations to be conducted on such premises, and whether the operations
will be in conformity with law and regulations. See 26 U.S.C. 5356. The
IRC also requires that bonded wine premises, including any
noncontiguous portions, must be located, constructed, and equipped to
protect the revenue, in accordance with regulations prescribed by the
Secretary. See 26 U.S.C. 5357.
Chapter 51 also imposes requirements governing the operations of
bonded and taxpaid wine premises, including a requirement that
proprietors keep records and file reports in the form and manner
prescribed by regulation. See 26 U.S.C. 5367. In addition, section
7805(a) of the IRC generally authorizes the Secretary to issue
regulations to carry out the provisions of the IRC. See 26 U.S.C.
7805(a).
TTB administers these IRC and FAA Act provisions pursuant to
section 1111(d) of the Homeland Security Act of 2002, as codified at 6
U.S.C. 531(d). The Secretary has also delegated certain administrative
and enforcement authorities to TTB through Treasury Order 120-01,
including the authority to prescribe and evaluate applications to
establish and operate wine premises covered under this rulemaking.
Pursuant to its delegated IRC authorities, TTB has promulgated
regulations setting forth the application requirements for wine
premises at 27 CFR part 24. TTB's regulations at 27 CFR 24.105 through
24.117 set forth the requirements for the qualifying documents that
proprietors of wine premises must submit to TTB, including form TTB F
5120.25, Application to Establish and Operate Wine Premises
(application). A bonded winery, bonded wine cellar, or taxpaid wine
bottling house may not commence operations until the proprietor has a
valid approved application for the operations. See 27 CFR 24.105. The
electronic version of the application form, TTB F 5120.25, is available
through the TTB Permits Online (PONL) system. In this document, TTB
proposes amendments to the regulations specifying the information
proprietors of wine premises must provide on form TTB F 5120.25 or its
electronic equivalent, as well as in certain supporting documents.
Pursuant to TTB's IRC authorities described above, TTB has also
promulgated regulations imposing procedural and substantive
requirements on proprietors of wine premises. TTB regulations at 27 CFR
24.120 through 24.132 require proprietors of wine premises to report
certain changes in the business affecting the current approved
application (e.g., changes in address or location, changes in
stockholders or corporate officers, changes in proprietorship). In
addition, regulations at 27 CFR 24.300 through 24.323 include
recordkeeping requirements, as authorized by the IRC at 26 U.S.C. 5367.
This notice of proposed rulemaking includes proposed amendments to
these reporting and recordkeeping requirements. With respect to current
reporting requirements, in instances where TTB's regulations refer to
submitting a ``letterhead notice,'' industry members may provide such
letterhead notices electronically. Unlike the proprietor's initial
submission of qualifying documents, these letterhead notices do not
require TTB approval. TTB is proposing an amendment to 27 CFR 24.10 to
add a definition of ``letterhead notice'' to clarify these points.
C. Relationship to Other Notices of Proposed Rulemaking
TTB previously published a notice of proposed rulemaking titled
``Modernization of Permit and Registration Application Requirements for
Distilled Spirits Plants,'' in which TTB proposed amendments, generally
similar to those proposed in this document, in 27 CFR parts 1, 17, 19,
20, 22, 26, 27, 28, and 31. Amendments related to FAA Act basic
permits--including basic permits as producers, blenders, importers, and
wholesalers of wine--were included in that document and are not
included in this document. See Notice No. 207, published in the Federal
Register on December 3, 2021, at 86 FR 68573. TTB also previously
published a notice of proposed rulemaking titled ``Modernization of
Qualification Requirements for Brewer's Notices,'' in which TTB
proposed amendments, generally similar to those proposed in this
document, in 27 CFR part 25. See Notice No. 212, published in the
Federal Register on June 8, 2022, at 87 FR 34819. The comment periods
for Notice Nos. 207 and 212 are closed, and TTB is reviewing the
comments submitted in response.
II. Proposed Changes to the Regulations
TTB intends for the proposed amendments in this document to
modernize and streamline the qualification requirements and processes
under the IRC for proprietors of bonded wineries, bonded wine cellars,
and taxpaid wine bottling houses.\1\ The general approach TTB adopted
in developing the proposed amendments was to identify information
currently collected that could be eliminated without hindering TTB's
ability to protect and ensure collection of the revenue, and to provide
more clarity and specificity in the application questions and
instructions. The proposed amendments also relax reporting requirements
on certain changes to the business.
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\1\ For ease of reference, this rulemaking document will
generally refer to proprietors of bonded wineries, proprietors of
bonded wine cellars, and proprietors of taxpaid wine bottling houses
collectively as ``proprietors of wine premises.''
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A. Operational Information Required for Wine Premises Application
TTB is proposing to eliminate requirements to provide certain
operational information when applying to establish a bonded winery,
bonded wine cellar, or taxpaid wine bottling house. The TTB regulations
at 27 CFR 24.109 prescribe, in general, information that must be
included in an application under the IRC to establish such a wine
premises. Among the information currently required at sections
24.109(f) and 24.111 are narrative descriptions of certain operations
to be conducted on the wine premises. As explained further below, TTB
has determined that these narrative descriptions are not necessary for
TTB to evaluate whether an applicant qualifies for a permit and, as a
result, can either be eliminated or amended to collect a narrower set
of information about the operations.
Section 24.109(h) requires applicants to provide, if applicable, a
``description of spirits operations.'' In general, the requirements
related to the use of spirits in the production of wine are set forth
in TTB's regulations at 27 CFR part 24, subpart K. All proprietors of
bonded wine premises are obligated to comply with the requirements of
subpart K (and of part 24 in general) in their use of spirits, but such
proprietors are not required to obtain authorization from TTB after
their initial qualification to begin spirits operations or change their
spirits operations. TTB has concluded that requiring applicants to
provide a narrative description of spirits operations at the time of
their initial application is not necessary for TTB to evaluate whether
such applicants are qualified to establish a bonded wine premises. This
requirement also places a burden on those applicants who intend to use
spirits at the time of their initial application without a similar
burden on those who decide to use
[[Page 80163]]
spirits after qualifying. As such, TTB is proposing to eliminate
current section 24.109(h).
The current Sec. 24.109(j) requires applicants intending to
conduct volatile fruit-flavor concentrate operations to provide a
description of such operations as set forth at 27 CFR 24.113. Section
24.113 requires a step-by-step description of the production procedure
to be employed, commencing with obtaining fruit juice and continuing
through each step of the process up to the removal of the volatile
fruit-flavor concentrate. For concentrates containing more than 24
percent alcohol, the proprietor must indicate any step in the
production procedure at which any spirits may be fit for beverage use.
The description also must include, among other things, the maximum
quantity in gallons of fruit must used, the amount of concentrate
produced in 24 hours, and the maximum percent of alcohol in the
concentrate for each kind of fruit used.
Similar to the spirits operations previously discussed, all bonded
wine premises proprietors are authorized to engage in volatile fruit-
flavor concentrate operations, specifically the ``preparation, storage,
or removal of commercial fruit products and by-products (including
volatile fruit-flavor concentrate) not taxable as wine.'' See 27 CFR
24.101(b)(4). TTB no longer believes that collecting detailed
information on an applicant's prospective volatile fruit-flavor
concentrate production process is necessary at the time of initial
qualification, and instead could be collected from applicants and
approved wine premises proprietors upon request of the appropriate TTB
officer, as needed to protect the revenue (given the potential to
create taxable distilled spirits during such operations). However,
consistent with the requirement at 27 CFR 24.114 that any still used in
the production of volatile fruit-flavor concentrate be set up on bonded
wine premises and registered with TTB, there remains a need to collect
basic information on whether a bonded wine premises will engage in the
production of volatile fruit-flavored concentrate and, if so, certain
information concerning any still(s) to be used.
As a result, TTB is proposing to amend Sec. 24.109(j) to replace
the required narrative description of volatile fruit-flavor concentrate
operations with a statement of whether the applicant intends to produce
volatile fruit-flavor concentrate and, if so, the kind, capacity, and
intended use of any stills to be used in such production. In addition,
TTB is proposing to amend Sec. 24.113 to provide that bonded wine
premises proprietors who produce volatile fruit-flavor concentrate must
submit the step-by-step production process description currently
required by that section only upon request of the appropriate TTB
officer.
TTB is also proposing a conforming amendment to 27 CFR 24.130,
which currently requires, in general, that proprietors apply for and
receive approval from TTB before beginning new, or changing their
existing, production processes for volatile fruit-flavor concentrate.
TTB is proposing to amend 24.130 to instead require that proprietors
notify TTB when setting up any new still(s) to be used in the
production of volatile fruit-flavor concentrate. The proposed
notification for new stills requires the proprietor to provide the
kind, capacity, and intended use of the still(s).
Finally, Sec. 24.109(k) requires applicants to provide, if
applicable, a description of ``other operations'' not specifically
authorized under TTB's wine premises regulations. TTB has determined
that Sec. 24.109(k) serves a purpose duplicative of Sec. 24.103,
which governs requests to TTB for authorization to conduct on the wine
premises other operations not specifically authorized under part 24
(e.g., at 27 CFR 24.101 and 24.102). Section 24.103 sets forth the
information that must be included in a request as well as the criteria
for TTB approval. TTB believes that the duplicative provisions in
Sec. Sec. 24.103 and 24.109(k) could cause confusion about what
information must be submitted to obtain approval for operations not
authorized under Sec. Sec. 24.101 or 24.102, and when such information
must be submitted. For example, Sec. 24.109(k) could give the
impression that plans for other operations must be finalized at the
time of original application submission. As a result, TTB is proposing
to eliminate Sec. 24.109(k). Requests for approval for other
operations under Sec. 24.103, if known at the time of application, may
still be submitted concurrently with an original application to
establish a wine premises, but they also may be submitted later, as
long as approval is obtained before the proprietor engages in the other
operations.
B. Premises Description and Security
TTB proposes to more narrowly tailor requirements to describe the
wine premises and its security, and to consolidate requirements to
provide descriptions of alternation operations with the general wine
premises description. The TTB regulations generally prescribe the
information that a proprietor must provide in an application for a wine
premises. This includes a description of the wine premises and the
security measures to be employed at the wine premises. See 27 CFR
24.109(f) and 24.111. TTB currently collects these descriptions in an
open-ended narrative format. The regulations require more detailed
narrative descriptions and/or diagrams when a proprietor of a bonded
winery or bonded wine cellar intends to alternate its premises with an
adjacent distilled spirits plant or brewery, or intends to alternate
its premises for use as taxpaid wine premises. See 27 CFR 24.111 and
24.135 (regarding alternation for use as taxpaid wine premises),
19.143(b)(2) (regarding alternation with distilled spirits plants), and
25.81(b)(2) (regarding alternation with breweries). TTB believes that
direct questions identifying the specific information requested--and
associated certifications--will provide greater clarity to applicants
as to the exact information TTB seeks in an application, which will
reduce the need for additional submissions and communication between
TTB and applicants, thus accelerating TTB's review and approval of
applications. TTB therefore proposes amendments, described below, to
alter the format in which descriptions of wine premises, security
measures, and related information are collected, and, where
appropriate, to consolidate the collection of such information.
Amendments to 27 CFR 24.109 and 24.111
Currently, Sec. 24.109(f) requires that an application include a
description of the wine premises in accordance with Sec. 24.111.
Section 24.111 sets forth the specific information to be included in
the description, and includes: (1) a description of each tract of land
comprising wine premises; (2) a diagram of the wine premises drawn to
scale when required by the appropriate TTB officer; (3) a clear
indication of any area of the wine premises to be used as bonded wine
premises, used as taxpaid wine premises, or alternated for use as
bonded wine premises and taxpaid wine premises; (4) a description of
the means employed to afford security and protect the revenue; (5) if
required by the appropriate TTB officer to segregate operations within
the premises, a description of the manner by which the operations are
segregated; (6) a description of each building on wine premises as to
size, construction, and use; and (7) if the wine premises consist
[[Page 80164]]
of a part of a building, a separate description of the rooms or floors,
as well as a description the activities conducted in the adjoining
portions of the building, and the means of ingress and egress from the
wine premises.
TTB proposes to amend Sec. 24.111 to remove the requirement to
provide a description of the tract of land, to limit the required
description to portions of the premises where wine operations will
occur, and to clarify the specific information needed. The proposed
amendments require the premises description to include the following
elements in either narrative or diagram form: (1) The outline and
dimensions of the building(s) where wine operations will occur; (2) if
the wine premises does not occupy the entire building, the outline and
dimensions of the wine premises within the building; (3) if the wine
premises includes both bonded wine premises and taxpaid wine premises,
the outline and dimensions of each; (4) the external doors of the wine
premises; and (5) the outline and dimensions of any portions of the
wine premises that are outdoors, including the location of any outdoor
tanks. TTB believes that these descriptive elements are the minimum
necessary to allow TTB to evaluate whether the premises is adequate to
protect the revenue; the requested information provides TTB the scope
and dimensions of the operations space and the points of access to the
operations. The proposed amendments provide flexibility to submit this
information in narrative form or diagram form, whichever is better
suited to the applicant's circumstances. The proposed amendments also
provide that photographs of any of the required elements must be
submitted upon request of the appropriate TTB officer.
With regard to security, Sec. 24.111 currently requires that the
description of wine premises include a narrative description of ``the
means employed to afford security and protect the revenue.'' TTB
believes that this requirement is overly broad. Accordingly, TTB
proposes to eliminate the required description of security measures
from Sec. 24.111, and to replace it with a new Sec. 24.171
specifically addressing security. Section 24.171 will require that
security measures at the wine premises be of a class and construction
designed to prevent unauthorized access to, and theft of, commercial
property. TTB also proposes to amend Sec. 24.109 to require that an
application include a certification that the premises' security will
meet the requirements of Sec. 24.171. TTB believes that the proposed
amendments clarify that TTB security requirements correspond to current
industry standards and will provide applicants and permittees
flexibility to secure their premises in a manner that is best suited to
their particular circumstances.
Amendments to 27 CFR 24.131
The TTB regulations currently require proprietors of wine premises
to submit a notice to the appropriate TTB officer before making a
change in the construction of buildings located on wine premises, or in
the use of any portion of the wine premises, where such change affects
the accuracy of their current approved application. The notice must
describe the proposed change in detail. Proprietors must also include
the change covered by the notice in the next amended application to be
filed, unless the appropriate TTB officer requires immediate amendment.
See 27 CFR 24.131.
TTB proposes to amend Sec. 24.131 to require that proprietors
submit a new description of the premises, meeting the requirements of
proposed Sec. 24.111, and receive TTB approval prior to making any
change to the premises that would render inaccurate the description of
premises currently on file with TTB. These amendments simplify the
process for obtaining approval for changes in premises and no longer
require proprietors to submit the same information to TTB multiple
times as required in the current Sec. 24.131.
TTB also proposes to add a new paragraph to Sec. 24.131
authorizing the proprietor, in cases of natural disaster or other
similar emergency, to make temporary changes to the premises without
first submitting an updated premises description, provided that the
proprietor reports any such change(s) to TTB through a letterhead
notice within 10 days. Emergency changes to the premises under this new
paragraph are temporary, and the proprietor must return their premises
to the condition reflected in the approved premises description on file
under Sec. 24.111 within 60 days unless the proprietor files for TTB
approval, under the general provisions of the proposed Sec. 24.131, to
make permanent changes to the premises. TTB believes that these
amendments will reduce burdens on proprietors seeking to respond
quickly to situations requiring them to make emergency changes to their
premises.\2\
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\2\ Note that other changes to a proprietor's operations (i.e.,
those other than changes to the physical premises) necessitated by
emergency situations remain governed by 27 CFR 24.25.
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Amendments to 27 CFR 24.135(b)(3), 24.136(a)-(b), and 24.137(b)(2)
Sections 24.135 through 24.137 provide procedures for alternation
of wine premises. Specifically, Sec. 24.135 prescribes procedures
related to the alternation of bonded wine premises for use as taxpaid
wine premises, or alternation for other purposes such as the use of
adjacent or contiguous premises qualified under chapter 51 of the IRC
(i.e., distilled spirits plant, brewery, etc.) for use as wine premises
or vice versa. Section 24.136 prescribes procedures related to
alternation of proprietors, and Sec. 24.137 prescribes procedures
related to alternation for customs purposes.\3\ One of the procedures
prescribed in Sec. Sec. 24.136 and 24.137 to engage in alternation of
wine premises is that the proprietor must submit with their application
a diagram of the part of the premises that will be alternated, as well
as a description of the areas, buildings, floors, or rooms that will be
alternated. TTB believes that the information collected under these
sections can be consolidated into the premises description(s) required
at Sec. 24.109(f). Accordingly, TTB proposes to amend these sections
to require that such information be included in the description
submitted under Sec. 24.109(f).
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\3\ As further described in Sec. 24.137, proprietors may
alternate their wine premises as a Customs Bonded Warehouse under
applicable U.S. Customs and Border Protection laws and regulations,
for the purpose of measuring, gauging, and bottling or packing wine.
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In the case of Sec. 24.135, with respect to alternation as taxpaid
wine premises, the applicant currently must provide a description of
how taxpaid wine or spirits, or untaxpaid wine or spirits, will be
identified and segregated. With respect to alternation with an adjacent
brewery or distilled spirits plant (DSP), Sec. 24.135 does not
explicitly require submission of diagrams or descriptions illustrating
the proposed alternation, but the proprietor of the wine premises
nonetheless must prepare alternation diagrams for submission with the
brewery's or DSP's application for alternation. See 27 CFR 25.81(b)(2)
(requiring ``Special diagrams, in duplicate, delineating the brewery
premises and the bonded or taxpaid wine premises as they will exist
both during extension and curtailment.'') and 27 CFR 19.143(b)(2)
(requiring ``a special diagram, in duplicate, delineating the premises
as they will exist, both during extension and curtailment and clearly
depicting all buildings, floors, rooms, areas, equipment that are to be
subject to alternation, in their relative operating
[[Page 80165]]
sequence.'').\4\ To more clearly convey what information a proprietor
must provide for TTB to authorize an alternating premises, specifically
regarding how the premises will be delineated and how it will be
extended and curtailed, TTB proposes to amend Sec. 24.135(b)(3) to
require ``Additional versions of the description required under Sec.
24.109(f) describing or showing the premises as they will exist, both
during extension and curtailment, and clearly depicting all buildings,
floors, rooms, areas, and equipment that are to be subject to
alternation, in their relative operating sequence.'' As noted above,
this information about the wine premises is generally already required
to be submitted under regulations directed at breweries and distilled
spirits plants that intend to alternate with a wine premises, and is
needed by TTB to ensure well-defined separation of operations,
compliance with statutory and regulatory requirements that apply to the
different operations, and payment of the appropriate Federal excise
tax.
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\4\ Note that, similar to the amendments proposed in this
document, TTB proposed in Notice Nos. 212 and 207, respectively,
amendments to Sec. Sec. 25.81 and 19.143 providing that alternation
descriptions be submitted on additional versions of the premises
description required with the application for the original Brewer's
Notice or DSP permit.
---------------------------------------------------------------------------
C. Statements of Interest
TTB proposes amendments to clarify the scope of the collection of
information related to persons holding ownership interests in an
applicant business. TTB collects these statements of interest in
accordance with TTB's statutory obligation under the IRC to collect
information necessary to determine whether the operations will be in
conformity with law and regulations. See 26 U.S.C. 5356.
To protect and ensure collection of the revenue, TTB must identify
circumstances in which a bonded wine cellar or winery's ownership
structure would affect the bonded wine cellar or winery's required
method of tax payment and/or the bonded wine cellar or winery's
eligibility for certain reduced rates of tax. The IRC provides that any
taxpayer who, in any calendar year, was liable for at least $5,000,000
in taxes on distilled spirits, wines, or beer must pay such taxes in
the following year by electronic fund transfer. See 26 U.S.C. 5061(e).
Furthermore, in the case of a controlled group of corporations, all
component members of the group are treated as one taxpayer.\5\ See 26
U.S.C. 5061(e)(3)(A). To determine whether a bonded wine cellar or
winery belongs to a controlled group, and thereby to enforce section
5061(e), TTB must collect information identifying the persons holding
ownership interests in the business.
---------------------------------------------------------------------------
\5\ For purposes of IRC sections 5061(e) and 5051(a)(5)(A), a
``controlled group of corporations'' has the meaning given to such
term by 26 U.S.C. 1563(a), except that ``more than 50 percent'' must
be substituted for ``at least 80 percent'' each place it appears in
section 1563(a). Section 5061(e)(3)(B) clarifies that rules similar
to paragraph (3)(A) apply to a group of persons under common control
where one or more of such persons is not a corporation.
---------------------------------------------------------------------------
Determining whether a prospective bonded wine cellar or winery is a
member of a controlled group is also necessary to determine whether the
proprietor may be eligible for certain tax credits once they are in
business following TTB approval of an application to establish a wine
premises. The IRC provides a credit against the tax imposed under
section 5041(a) on the first 30,000 wine gallons of wine produced by
the producer and removed during the calendar year for consumption or
sale. See 26 U.S.C. 5041(c)(1)(A). Further, the IRC provides a slightly
lower credit against the tax on the next 100,000 wine gallons removed
during the calendar year, and subsequently an even lower credit against
the tax on the next 620,000 wine gallons removed during the calendar
year. See 26 U.S.C. 5041(c)(1)(A).
The tax credits under section 5041(c)(1)(A) apply to the collective
production and removal activity of a controlled group. See 26 U.S.C.
5041(c)(3). For example, if an application is submitted for a bonded
winery that would produce 25,000 wine gallons of wine per year, but
which will be part of a controlled group with another winery producing
200,000 wine gallons of wine per year, TTB needs to collect information
to identify the controlled group structure and thereby ensure that the
wineries within the controlled group will not claim tax credits for
which they are ineligible.
The TTB regulations promulgated under the above IRC authorities
thus require statements of interest for applications to establish and
operate wine premises. See 27 CFR 24.110(c). TTB proposes amendments to
27 CFR 24.110(c) to clarify and standardize the collection of basic
identifying information of persons with an ownership interest in the
business. The amended Sec. 24.110(c) provides that: (1) the
requirement to disclose basic identifying information (i.e., names and
addresses) of persons with an ownership interest in the business
applies to persons with an interest at least equivalent to that of a
principal stockholder in a corporation, that is, an ownership interest
of 10 percent or greater; and (2) where a ``person'' holding such an
interest is a legal entity other than an individual, the applicant must
provide the name, title, and place of residence (city and State) of a
representative individual for that entity. The ``representative
individual'' generally is the individual that the entity designated to
represent the entity's interest in the business or, in the absence of a
designated individual, an owner, chief officer or manager, or person
with similar authority within the entity. TTB believes that this is the
minimum amount of information required to identify the individuals with
an ownership interest in the business and to evaluate any potential
controlled group affiliations for the applicant. TTB also proposes a
minor conforming amendment to add the word ``ownership'' before
``interest'' in Sec. 24.109(c).
D. 30-Day Filing Requirements for Certain Changes in the Business
TTB proposes to extend the deadline for reporting certain changes
in a proprietor of wine premises' business generally from 30 days to 60
days. The TTB regulations generally require that, when there is a
change in the information submitted to TTB in a current approved
application to establish and operate wine premises, the proprietor of
the business must notify TTB of the change. The timing and form of this
notification differs depending on the type of change.
Proprietors must report some business changes to TTB within a
certain amount of time following the change, generally within 30 days.
For example, the current TTB regulations require that proprietors of
wine premises submit an amended application within 30 days of any
change to the list of corporate officers furnished with the original
application. See 27 CFR 24.124.
Comments received in response to Treasury's request for
information, described above in section I(A), suggest that 30 days is
not enough time for regulated entities to assemble the information that
is required to be filed in connection with various changes in the
business. These comments suggested that such filing deadlines should be
extended to 60 days.
TTB reviewed these proposals and concluded that extending existing
deadlines for reporting certain changes in the business (including in
some cases by amending applications) from 30 to 60 days would not, in
general, pose risk to the revenue or raise other concerns. Accordingly,
TTB proposes to extend such deadlines in 27 CFR 24.120, 24.123, and
24.124. Section 24.120 currently requires that, except as
[[Page 80166]]
otherwise provided in part 24, a proprietor submit an amended
application within 30 days of a change in any of the information
included in the current approved application. Section 24.123 requires a
proprietor to submit an amended application within 30 days of a change
in control of a business caused by the sale or transfer of capital
stock, or the proprietor may submit a new list of stockholders annually
on May 1 where the change in stockholders does not result in a change
of control or management of the business. Similarly, Sec. 24.124
generally requires that a proprietor submit an amended application
within 30 days of a change in the list of corporate officers furnished
with the original application. TTB proposes to extend each of the above
reporting deadlines from 30 to 60 days. TTB also proposes to amend
Sec. 24.124 to require that a proprietor submit a new list of
corporate officers as a letterhead notice rather than submitting it
with an amended application.
TTB also proposes conforming amendments to Sec. 24.123 to update
references to ``stockholders'' to refer instead to ``ownership
interests'' consistent with the proposed amendments to statements of
interest described in Section II(C) of this document. TTB further
proposes amendments to Sec. 24.123 to clarify a proprietor's
obligations where a change in ownership interests does result in a
change in control of the business. For wine premises that do not
require an FAA Act basic permit (i.e., taxpaid wine bottling houses,
bonded wine cellars engaging only in storage), such changes in
ownership interests must be reported to TTB via a letterhead notice
within 60 days of the change.
For wine premises that do require an FAA Act basic permit (i.e.,
bonded wine cellars engaging in production and/or blending), such
changes in ownership interests must be reported to TTB in an amended
application within 30 days of the change. The 30-day deadline is
required by statutory provisions of the FAA Act, which provide that FAA
Act permits cannot be sold or transferred and will automatically
terminate 30 days after a transfer by operation of law or a change in
actual or legal control of the permitted business. See 27 U.S.C.
204(g). Section 204(g)(2) also provides that if an application for a
new permit is submitted within 30 days of such a change, the
outstanding permit remains in effect until TTB takes final action on
the new application. These provisions are implemented in TTB
regulations at 27 CFR 1.44. Because maintenance of an FAA Act basic
permit is a continuing condition of certain IRC wine premises permits
(see 27 CFR 24.106), TTB is proposing to clarify in Sec. 24.123 that
proprietors of wine premises engaging in the production and/or blending
of wine must submit an amended application within 30 days of the change
in control, consistent with the FAA Act requirements previously
described.
E. Changes in Trade Names
TTB proposes to revise the regulations at 27 CFR 24.122 to allow
changes to, or additions of, trade names through a letterhead
notification to TTB rather than through an amended application.\6\ The
TTB regulations currently require that proprietors file an amended
application before engaging in operations under a new trade name. See
27 CFR 24.122. TTB's Permits Online (PONL) system already includes a
function for electronically reporting additional trade names, which
will satisfy the proposed requirement of a letterhead notice.
Consistent with this established policy, TTB's proposed revision would
update regulations to reflect that industry members may begin
operations under the new name immediately after notifying TTB.
---------------------------------------------------------------------------
\6\ Note that, similar to the amendment proposed in this
document, TTB proposed in Notice No. 207 an amendment to the FAA Act
permit regulations at Sec. 1.40 that would allow changes to, or
additions of, trade names to be accomplished by a letterhead notice.
---------------------------------------------------------------------------
TTB notes that, while this amendment would allow industry members
to immediately begin operations under a new trade name upon notifying
TTB, it remains the responsibility of the proprietor to ensure that any
trade name is properly registered with the applicable State or local
government. Industry members should further note that the FAA Act
prohibits false or misleading statements on alcohol beverage labels,
and a trade name may not be used on a label if its use creates a false
or misleading impression as to the age, origin, or identity of the
product. See 27 U.S.C. 205(e). The FAA Act also prohibits the use of
misleading trade names when advertising wine. See 27 U.S.C. 205(f).
F. Retention of Records Off-Premises
TTB is proposing amendments to allow records to be stored at a
location other than the wine premises by notifying TTB of the intention
to store records at an off-premises location, rather than requiring
specific TTB approval. As part of its evaluation of permit and
registration applications, TTB sought to identify any types of requests
to vary from the regulations that applicants commonly submitted with
their permit or registration applications, and that TTB routinely
approved. One common request from proprietors of wine premises has been
for approval to maintain required records at a location other than the
wine premises. As a result, TTB proposes to amend 27 CFR 24.300 to
allow proprietors of wine premises to keep records at another location
upon providing a letterhead notice to TTB. The amendments provide that
required records must still be made available at the wine premises upon
request, but that copies will generally satisfy this requirement
(consistent with current TTB policy, ``copies'' includes electronic
copies).
III. Public Participation
A. Comments Invited
TTB invites comments from interested members of the public on this
proposed rulemaking. TTB also invites comments on any additional means
to streamline application processes within the parameters of TTB's
statutory obligations.
B. Submitting Comments
You may submit comments on this proposal as an individual or on
behalf of a business or other organization via the <a href="http://Regulations.gov">Regulations.gov</a>
website or via postal mail, as described in the ADDRESSES section of
this document. Your comment must reference Notice No. 234 and must be
submitted or postmarked by the closing date shown in the DATES section
of this document. You may upload or include attachments with your
comment. You also may submit a comment requesting a public hearing on
this proposal. The TTB Administrator reserves the right to determine
whether to hold a public hearing. If TTB schedules a public hearing, it
will publish notification of the date, time, and place for the hearing
in the Federal Register.
C. Confidentiality and Disclosure of Comments
All submitted comments and attachments are part of the rulemaking
record and are subject to public disclosure. Do not enclose any
material in your comments that you consider confidential or that is
inappropriate for disclosure.
TTB will post, and you may view, copies of this document, its
supporting materials, and any comments TTB receives about this proposal
within the related <a href="http://Regulations.gov">Regulations.gov</a> docket. In general, TTB will post
comments as submitted, and it will not redact any
[[Page 80167]]
identifying or contact information from the body of a comment or
attachment.
Please contact TTB's Regulations and Rulings division by email
using the web form available at <a href="https://www.ttb.gov/contact-rrd">https://www.ttb.gov/contact-rrd</a>, or by
telephone at 202-453-2265, if you have any questions regarding comments
on this proposal or to request copies of this document, its supporting
materials, or the comments received in response.
IV. Regulatory Analysis and Notices
A. Executive Order 12866
It has been determined that this proposed rule is not a significant
regulatory action as defined by Executive Order 12866 of September 30,
1993, as amended. Therefore, no regulatory assessment is required.
B. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.), TTB has analyzed the potential economic effects of this action
on small entities. In lieu of the initial regulatory flexibility
analysis required to accompany proposed rules under 5 U.S.C. 603,
section 605 allows the head of an agency to certify that a rule will
not, if promulgated, have a significant economic impact on a
substantial number of small entities. The following analysis provides
the factual basis for TTB's certification under section 605.
Impact on Small Entities
While TTB believes the majority of businesses subject to this
proposed rule are small businesses, the changes proposed in this
document will not have a significant economic impact on those small
entities. The proposed amendments are generally aimed at reducing
burden on regulated entities of all sizes by:
(1) Eliminating the collection of certain information from
applications to establish wine premises;
(2) Streamlining requirements to describe the wine premises and its
security;
(3) Extending deadlines for reporting certain changes in the wine
premises proprietor's business;
(4) Streamlining procedures for wine premises proprietors using new
trade names;
(5) Allowing the maintenance of required records at locations other
than the wine premises through a notification rather than an
application for an alternate procedure; and
(6) Clarifying which individuals are required to submit statements
of financial interest in the business in connection with an application
to establish a wine premises.
On June 14, 2017, the Treasury Department (Treasury) published in
the Federal Register (82 FR 27217) a Request for Information inviting
members of the public to submit views and recommendations for Treasury
regulations that can be eliminated, modified, or streamlined to reduce
burdens. TTB reviewed comments received in response to this request and
identified proposals that related to the permit application or, more
generally, to beginning business in a TTB-regulated industry. Many of
the proposed changes are consistent with recommendations submitted by
industry in response to Treasury's request.
To reduce the information collected in applications to establish
wine premises, TTB proposes amendments to 27 CFR 24.109 to eliminate
requirements that applicants provide narrative descriptions of spirits
operations and volatile fruit-flavor concentrate in their applications.
To streamline wine premises description requirements, TTB proposes
amendments to 27 CFR 24.109 and 24.111 to replace requirements for
narrative descriptions of the wine premises with requirements to submit
more specific and narrowly tailored information regarding the premises.
For example, Sec. 24.111 currently requires a detailed narrative
description of the wine premises, including a description of each tract
of land covered by the wine premises and a description of the ``size,
construction, and use'' of each building on the wine premises. The
proposed amendments to Sec. 24.111 remove the narrative description
requirements and instead require the submission of more limited
information illustrating certain specified attributes of the premises.
An example of extending deadlines for reporting changes in a
permitted or registered business is the proposed amendment to Sec.
24.120, which provides the general rules for notifying TTB of any
changes in the information included in an approved application to
establish a wine premises. Section 24.120 generally requires that when
such changes occur, the proprietor of the wine premises must file an
amended application within 30 days. The proposed amendments to Sec.
24.120 extend this deadline to 60 days. TTB proposes similar amendments
at Sec. Sec. 24.123 and 24.124.
Regarding changes in trade names, TTB's regulations at 27 CFR
24.122 currently require that wine premises proprietors submit an
amended application and receive approval from TTB before operating
under a new trade name. The proposed amendments to 27 CFR 24.122
clarify that a proprietor need only notify TTB of the addition of a
trade name prior to using such name for labeling purposes, and the
proprietor may notify TTB through a written notice. TTB's Permits
Online (PONL) system already includes a function for reporting
additional trade names, which will satisfy the proposed Sec. 24.122's
requirement for a written notice.
Concerning records maintenance, current recordkeeping requirements
require that proprietors of wine premises maintain prescribed records
at the wine premises. The proposed amendments to 27 CFR 24.300
generally allow for the maintenance of required records at locations
other than the wine premises upon written notice to TTB.
With respect to the collection of background information, TTB
proposes amendments to 27 CFR 24.110 to clarify the individuals who are
required to submit statements of ownership interest in a business
submitting an application to establish a wine premises. The proposed
amendments clarify that: (1) such statements of interest are required
only from persons with an ownership interest in the applicant business
of 10 percent or greater; and (2) where a ``person'' holding such an
interest is a legal entity other than an individual, the applicant must
submit basic identifying information about a representative individual
for that entity.
In conclusion, while the entities affected by the proposed rule
include a substantial number of small entities, TTB expects the effects
of the changes in this proposed rule to include modest burden
reductions for the affected entities. In accordance with the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.), TTB certifies that this
proposed rule, if promulgated, will not have a significant economic
impact on a substantial number of small entities. The proposed rule
will not impose, or otherwise cause, a significant increase in
reporting, recordkeeping, or other compliance burdens on a substantial
number of small entities. Accordingly, a regulatory flexibility
analysis is not required. Pursuant to 26 U.S.C. 7805(f), TTB will
submit the proposed regulations to the Chief Counsel for Advocacy of
the Small Business Administration for comment on the impact of the
proposed regulations on small businesses.
C. Paperwork Reduction Act
Regulations addressed in this document contain current collections
of information that have been previously reviewed and approved by the
Office of Management and Budget (OMB) in accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
[[Page 80168]]
3504(h)) and assigned control numbers 1513-0009, 1513-0057, and 1513-
0115. The specific regulatory sections in this proposed rule that
contain collections of information, either current or proposed, are
Sec. Sec. 24.109, 24.110, 24.111, 24.113, 24.120, 24.122, 24.123,
24.124, 24.130, 24.131, 24.135, 24.136, 24.137, and 24.300. An agency
may not conduct or sponsor, and a person is not required to respond to,
a collection of information unless it displays a valid control number
assigned by OMB.
The amendments that TTB proposes in this document, along with
certain corresponding policy changes, are designed to reduce the
overall burden associated with the information collections noted above.
In general, the proposed amendments involve:
(1) Eliminating the collection of certain information from
applications to establish wine premises;
(2) Streamlining requirements to describe the wine premises and its
security;
(3) Extending deadlines for reporting certain changes in the wine
premises proprietor's business;
(4) Streamlining procedures for wine premises proprietors using new
trade names;
(5) Allowing the maintenance of required records at locations other
than the wine premises through a notification rather than an
application for an alternate procedure; and
(6) Clarifying which individuals are required to submit statements
of financial interest in the business in connection with an application
to establish a wine premises.
To reduce the information collected in applications to establish
wine premises, TTB proposes amendments to 27 CFR 24.109, paragraphs (h)
and (j), to eliminate requirements that applicants provide in their
application narrative descriptions of spirits operations and volatile
fruit-flavor concentrate applications, respectively. Paragraphs (h) is
eliminated entirely while paragraph (j) is revised to require only
information about the capacity, kind, and intended use of any still(s)
to be used in the production of volatile fruit-flavor concentrate.
Regarding volatile fruit-flavor concentrate operations, TTB is
proposing conforming amendments at 27 CFR 24.113 and 24.130. Instead of
requiring all applicants to submit a description of their volatile
fruit-flavor concentrate production process, the amended Sec. 24.113
would require that applicants and proprietors submit such a description
only upon TTB request. Instead of requiring proprietors to report any
changes to their volatile fruit-flavor concentrate production process,
the amended Sec. 24.130 would only require that proprietors notify TTB
of any new stills to be used in the production of volatile fruit-flavor
concentrate. TTB is also proposing to eliminate the current Sec.
24.109(k) requiring applicants to provide, if applicable, a description
of ``other operations'' not specifically authorized under TTB's wine
premises regulations, as it is duplicative of 27 CFR 24.103. Sections
24.109, 24.113, and 24.130 are currently included in the collection of
information assigned OMB control number 1513-0009. As a result of the
proposed amendments to Sec. 24.130 changing the collection of
information from an amended application to a letterhead notice, TTB
believes it is more appropriate to instead account for that section in
the collection of information assigned OMB control number 1513-0057.
TTB has submitted to OMB revisions of information collections 1513-0009
and 1513-0057 to account for the updated, and overall reduced, burden
of the proposed amendments.
To streamline requirements to describe the wine premises and its
security, TTB proposes amendments to 27 CFR 24.109, 24.111, 24.131,
24.135, 24.136, and 24.137. The proposed amendments to Sec. Sec.
24.109 and 24.111 eliminate requirements to submit detailed narrative
descriptions of the wine premises and certain of its attributes, and
will replace these requirements with a more specific set of information
and a certification as to the premises security. TTB proposed
conforming amendments in Sec. 24.131. The proposed amendments to
Sec. Sec. 24.135-24.137 generally consolidate the requirements to
provide specific descriptions or diagrams of wine premises alternation
into the generally-applicable premises description requirements of
Sec. Sec. 24.209 and 24.111. Sections 24.109, 24.111, 24.131. 24.135,
24.136, and 24.137 are currently included in the collection of
information assigned OMB control number 1513-0009. TTB has submitted to
OMB a revision of that information collection to account for the
reduced burden of the proposed amendments.
To extend deadlines for reporting certain changes in the wine
premises proprietor's business, TTB proposes amendments to 27 CFR
24.120, 24.123, and 24.124. The proposed amendment to Sec. 24.120
extends the generally-applicable deadline for submitting an amended
application from 30 to 60 days following a change in the information
included in the approved application. The proposed amendment to Sec.
24.124 similarly extends the deadline for reporting changes in
corporate officers from 30 to 60 days. The proposed amendments to Sec.
24.123 extend the deadline for reporting certain changes in ownership
of the business from 30 to 60 days, except where the Federal Alcohol
Administration Act establishes by law the 30-day deadline. Sections
24.120, 24.123, and 24.124 are currently included in the collection of
information assigned OMB control number 1513-0009. TTB has submitted to
OMB a revision of that information collection to account for the
reduced burden of the proposed amendments.
The TTB regulations generally require that changes to, or additions
of, the trade names under which a permitted business may operate be
made by filing for an amended permit. Such applications would need to
be approved prior to the applicant beginning operations under the new
trade name. To relax the requirements associated with altering the
trade names available for use by a wine premises proprietor, TTB
proposes amendments to 27 CFR 24.122. The amendments would allow
changes to, or additions of, trade names to be accomplished by a
letterhead notice. Section 24.122 is currently included in the
collection of information assigned OMB control number 1513-0009. As a
result of the proposed amendments changing the collection of
information from an amended application to a letterhead notice, TTB
believes it is more appropriate to instead account for the collection
of trade name information in the collection assigned OMB control number
1513-0057 (note that provisions of Sec. 24.122 relating to amended
permits for changes in legal name will remain accounted for in
collection 1513-0009). TTB has submitted to OMB revisions of
information collections 1513-0009 and 1513-0057 to account for the
updated, and overall reduced, burden of the proposed amendments.
Concerning records maintenance, current recordkeeping requirements
require that proprietors of wine premises maintain prescribed records
at the wine premises. Under current regulation and policy, proprietors
can request, under the authority of 27 CFR 24.22, ``Alternate method or
procedure,'' to maintain records at an off-premises location. Such
request must be approved by TTB before the proprietor can maintain
records at the off-premises location. The proposed amendments to 27 CFR
24.300 generally allow for the maintenance of required records at
locations other than the wine premises immediately upon written notice
to TTB. Section 24.300 is currently included in the collection of
information assigned OMB control
[[Page 80169]]
number 1513-0115. Section 24.22 is currently included in the collection
of information assigned OMB control number 1513-0057. TTB has submitted
to OMB revisions of information collections 1513-0115 and 1513-0057 to
account for the reduced burden of the proposed amendments.
With respect to the collection of applicant background information,
TTB proposes amendments to 27 CFR 24.110 to clarify the individuals who
are required to submit statements of financial interest in the
applicant business. Section 24.110 generally requires statements
disclosing the identities of persons holding certain levels of
ownership in a business applying to establish a wine premises to be
submitted with such applications. The proposed amendments clarify that
(1) Such statements of interest are required only from persons with an
ownership interest in the applicant of 10 percent or greater; and (2)
where a ``person'' holding such an interest is a legal entity other
than an individual, an applicant must submit basic identifying
information about a representative individual for that entity. Section
24.110 is currently included in the collection of information assigned
OMB control number 1513-0009. TTB has submitted to OMB a revision of
that information collection to account for the reduced burden of the
proposed amendments.
As noted above, TTB has submitted the revised information
collection requirements to OMB for review. Comments on these revised
recordkeeping and reporting requirements should be sent to OMB at
Office of Management and Budget, Attention: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503 or by email to
<a href="/cdn-cgi/l/email-protection#92dddbc0d3cde1e7f0fffbe1e1fbfdfce1d2fdfff0bcf7fde2bcf5fde4"><span class="__cf_email__" data-cfemail="c7888e958698b4b2a5aaaeb4b4aea8a9b487a8aaa5e9a2a8b7e9a0a8b1">[email protected]</span></a>. A copy should also be sent to TTB by any
of the methods previously described. Comments on the information
collections should be submitted no later than December 2, 2024.
Comments are specifically requested concerning:
<bullet> Whether the collections of information submitted to OMB
are necessary for the proper performance of the functions of the
Alcohol and Tobacco Tax and Trade Bureau, including whether the
information will have practical utility;
<bullet> The accuracy of the estimated burdens associated with the
collections of information submitted to OMB;
<bullet> How to enhance the quality, utility, and clarity of the
information to be collected;
<bullet> How to minimize the burden of complying with the proposed
revisions of the collections of information, including the application
of automated collection techniques or other forms of information
technology; and
<bullet> Estimates of capital or start-up costs and costs of
operation, maintenance, and purchase of services to provide
information.
List of Subjects in 27 CFR Part 24
Alcohol and alcoholic beverages, Application procedures, Wine,
Notice requirements, Reporting and recordkeeping requirements, Security
requirements, Trade names.
Amendments to the Regulations
For the reasons discussed above in the preamble, TTB proposes to
amend 27 CFR part 24 as follows:
PART 24--WINE
0
1. The authority citation for part 24 is revised to read as follows:
Authority: 5 U.S.C. 552(a); 26 U.S.C. 5001, 5008, 5041, 5042,
5044, 5061, 5062, 5121, 5122-5124, 5173, 5206, 5214, 5215, 5351,
5353, 5354, 5356, 5357, 5361, 5362, 5364-5373, 5381-5388, 5391,
5392, 5511, 5551, 5552, 5556, 5661, 5662, 5684, 6065, 6091, 6109,
6301, 6302, 6311, 6651, 6676, 7302, 7342, 7502, 7503, 7606, 7805,
7851; 31 U.S.C. 9301, 9303, 9304, 9306.
0
2. Section 24.10 is amended by adding, in alphabetical order, a
definition of ``Letterhead notice'' to read as follows:
Sec. 24.10 Meaning of terms.
* * * * *
Letterhead notice. A statement on a company's letterhead or other
piece of paper that clearly shows the company name from a company
representative with signature authority. Letterhead notices may be
filed electronically by any means authorized by the appropriate TTB
officer. Letterhead notices do not require TTB approval.
* * * * *
Sec. 24.22 [Amended]
0
3. Section 24.22 is amended by:
0
a. Removing the parenthetical legal citations at the end of the
section; and
0
b. Removing the OMB control number ``1512-0292'' in the second
parenthetical phrase at the end of the section and adding, in its
place, the OMB control number ``1513-0057''.
0
4. Section 24.109 is amended by:
0
a. Adding the word ``ownership'' before ``interest'' in the first
sentence of paragraph (c);
0
b. Revising paragraphs (g) through (l);
0
c. Removing paragraph (m); and
0
d. Removing the parenthetical legal citations at the end of the
section.
The revisions read as follows:
Sec. 24.109 Data for application.
* * * * *
(g) A certification that the premises' security is in compliance
with Sec. 24.171;
(h) Trade names (see Sec. 24.112);
(i) With respect to wine premises to which the application relates,
a list of the applicant's basic permits and bonds (including those
filed with the application) showing the name of the surety for each
bond;
(j) A statement of whether the applicant intends to produce
volatile fruit-flavor concentrate and, if so, the kind, capacity, and
intended use of any stills to be used in such production;
(k) A statement whether the applicant is required to furnish a bond
under Sec. 24.146; and
(l) The applicant shall, when required by the appropriate TTB
officer, furnish as part of the application, additional information as
may be necessary to determine whether the application should be
approved. If any of the submitted information changes during the
pending application, the applicant shall immediately notify the
appropriate TTB officer of the revised information.
* * * * *
0
5. Section 24.110 is amended by:
0
a. Revising paragraph (c);
0
b. Removing the first parenthetical phrase at the end of the section;
and
0
c. Revising the second parenthetical phrase at the end of the section.
The revisions read as follows:
Sec. 24.110 Organizational documents.
* * * * *
(c) Statement of interest. (1) Sole proprietorships and general
partnerships. In the case of an individual owner or a general
partnership, the name and address of each person having an interest in
the business and a statement indicating whether the interest appears in
the name of the interested person or in the name of another person.
(2) Limited liability entities. In the case of a corporation,
limited liability partnership, limited liability company, or other
legal entity in which some or all of the owners have limited personal
liability for the activities of the entity:
(i) The names and addresses of persons having a 10 percent or more
ownership or other interest in each of the classes of ownership of the
entity, and the nature and amount of ownership or other interest of
each person.
(ii) The name of the person in whose name the interest appears. If
the limited
[[Page 80170]]
liability entity is under actual or legal control of another limited
liability entity, the appropriate TTB officer may request the same
information regarding ownership for the parent limited liability
entity.
(3) If any interested person named under paragraphs (c)(1) and
(c)(2) of this section is a legal entity other than an individual, the
name, title, and city and state of residence of a representative
individual for the entity. The representative individual must be the
individual designated by the entity to represent the entity's interest
in the applicant business or, in the absence of a designated
individual, an owner, chief officer or manager, or person with similar
authority within the entity.
* * * * *
(Approved by the Office of Management and Budget under control
number 1513-0009)
0
6. Section 24.111 is revised to read as follows:
Sec. 24.111 Description of premises.
(a) As required by Sec. 24.109(f), the application for
registration must include a description of wine premises. The
description may be in narrative form or diagram form, and must
illustrate:
(1) The outline and dimensions of the building(s) where wine
operations will occur;
(2) If the wine premises does not occupy the entirety of the
building(s), the outline and dimensions of the wine premises within the
building(s);
(3) If the wine premises includes both bonded wine premises and
taxpaid wine premises, the outline and dimensions of each;
(4) The external doors of the wine premises; and
(5) The outline and dimensions of any portions of the wine premises
that are outdoors, including the location of any outdoor tanks.
(b) Photographs further illustrating any of the elements required
in paragraph (a) of this section must be submitted upon request of the
appropriate TTB officer.
(Approved by the Office of Management and Budget under control
number 1513-0009)
0
7. Section 24.113 is revised to read as follows:
Sec. 24.113 Description of volatile fruit-flavor concentrate
operations.
Each applicant intending to produce volatile fruit-flavor
concentrate and each approved proprietor of a bonded wine premises who
produces volatile fruit-flavor concentrate shall provide, upon request
of the appropriate TTB officer, a step-by-step description of their
production procedure. The description will commence with the obtaining
of juice from the fruit and continue through each step of the process
to removal of volatile fruit-flavor concentrate from the system. If
volatile fruit-flavor concentrate containing more than 24 percent
alcohol (high-proof concentrates (essences)) is to be produced, the
applicant or proprietor shall indicate any step in the production
procedure at which any spirits may be fit for beverage purposes. For
each kind of fruit used, the description must include the maximum
quantity (in gallons) of fruit must used and volatile fruit-flavor
concentrate produced in 24 hours, the maximum and minimum fold, and the
maximum percent of alcohol in the volatile fruit-flavor concentrate.
(Approved by the Office of Management and Budget under control
number 1513-0009)
Sec. 24.120 [Amended]
0
8. Section 24.120 is amended by:
0
a. Removing the phrase ``30 days'' and adding in its place ``60 days''
in the first sentence;
0
b. Removing the first parenthetical phrase at the end of the section;
and
0
c. Removing the OMB control number ``1512-0058'' in the second
parenthetical phrase at the end of the section and adding, in its
place, the OMB control number ``1513-0009''.
0
9. Section 24.122 is revised to read as follows:
Sec. 24.122 Change in name of proprietor or trade name.
(a) Legal name. Where there is to be a change in the name of the
proprietor, the proprietor shall file an amended application and, if a
basic permit has been issued under the Federal Alcohol Administration
Act (49 Stat. 978; 27 U.S.C. 203), an application for amendment of the
basic permit. Operations under a new name may not be conducted before
approval of the amended application or issuance of an amended permit,
as the case may be.
(b) Trade name. Where there is a change in or addition of a trade
name, the proprietor must first file a letterhead notice with the
appropriate TTB officer listing the new names and the offices where
they are registered. The proprietor is not required to file another
letterhead notice of a change in or addition of a trade name if the
proprietor has previously filed a letterhead notice pursuant to 27 CFR
1.40 notifying TTB of the same change in or addition of a trade name.
(Approved by the Office of Management and Budget under control
number 1513-0009 and 1513-0057)
0
10. Section 24.123 is revised to read as follows:
Sec. 24.123 Change in ownership interests.
(a) General. If there is a change in the list of persons with
ownership interests submitted pursuant to Sec. 24.110(c), the
proprietor may, in lieu of submission within 60 days of the change
under the provisions of Sec. 24.120, submit a new list of persons with
ownership interests annually on May 1, or any other approved date, to
the appropriate TTB officer, provided that the change in ownership
interest(s) does not result in a change in control of the business.
(b) Changes in control. (1) Wine premises required to maintain a
basic permit. For wine premises required to obtain and maintain an FAA
Act basic permit as described in Sec. 24.106 and 27 CFR part 1, where
a change in ownership interests results in a change in the actual or
legal control of the business, the proprietor must submit a new list of
persons with ownership interests to the appropriate TTB officer within
30 days of the change. The proprietor's application for a new FAA Act
basic permit, required under 27 CFR 1.44 and 24.121 and containing such
information as required under Sec. 24.110(c), will serve as adequate
notice for purposes of this paragraph.
(2) Wine premises not required to maintain a basic permit. For wine
premises, subject to this part, other than those described in Sec.
24.106 and 27 CFR part 1, where a change in ownership interests results
in a change in legal control of the business, the proprietor must
submit a letterhead notice containing a new list of persons with
ownership interests to the appropriate TTB officer within 60 days of
the change.
(Approved by the Office of Management and Budget under control
number 1513-0009)
Sec. 24.124 [Amended]
0
11. Section 24.124 is amended by:
0
a. Removing the phrase ``30 days'' and adding in its place ``60 days''
in the first sentence;
0
b. Removing the phrase ``an amended application supported by'' and
adding in its place ``a letterhead notice providing'' in the first
sentence;
0
c. Removing the phrase ``an amended application'' and adding in its
place ``a letterhead notice'' in the second sentence;
0
d. Removing the first parenthetical phrase at the end of the section;
and
0
e. Removing the OMB control number ``1512-0058'' in the second
parenthetical phrase at the end of the section and adding, in its
place, the OMB control number ``1513-0009''.
[[Page 80171]]
0
12. Section 24.130 is revised to read as follows:
Sec. 24.130 Change in volatile fruit-flavor concentrate operations.
Prior to using any new still in the production of volatile fruit-
flavor concentrate, the proprietor must submit a letterhead notice to
the appropriate TTB officer describing the kind, capacity, and intended
use of the still. Such letterhead notice will satisfy the still
registration requirement set forth at 27 CFR 24.114.
(Approved by the Office of Management and Budget under control
number 1513-0057)
0
13. Section 24.131 is revised to read as follows:
Sec. 24.131 Change in premises.
(a) Where a proprietor intends to make any change to the wine
premises, other than those covered by Sec. Sec. 24.135--24.137, that
would render inaccurate the description submitted with the application
to establish the wine premises or submitted separately or previously by
the proprietor with another reported change, the proprietor must first
submit to TTB updated information meeting the requirements of Sec.
24.111 and obtain TTB approval prior to making the change. Updated
premises descriptions may be submitted on form TTB F 5120.25 or its
electronic equivalent.
(b) In cases of natural disaster or other similar emergency, the
proprietor may make temporary changes to the premises (as described in
paragraph (a) of this section) without first submitting an updated
premises description. However, the proprietor must report any such
change(s) to the appropriate TTB officer through a letterhead notice
within 10 days. The proprietor must then return their premises to the
condition reflected in the approved premises description on file under
Sec. 24.111 within 60 days unless the proprietor files for TTB
approval to make permanent changes to the premises pursuant to
paragraph (a) of this section.
(Approved by the Office of Management and Budget under control
number 1513-0009)
0
14. Section 24.135 is amended by:
0
a. Revising paragraph (b)(3);
0
b. Removing the first parenthetical phrase at the end of the section;
and
0
c. Removing the OMB control number ``1512-0058'' in the second
parenthetical phrase at the end of the section and adding, in its
place, the OMB control number ``1513-0009''.
The revision reads as follows:
Sec. 24.135 Wine premises alternation.
* * * * *
(b) * * *
(3) Additional versions of the description required under Sec.
24.109(f) describing or showing the premises as they will exist, both
during extension and curtailment, and clearly depicting all buildings,
floors, rooms, areas, and equipment that are to be subject to
alternation, in their relative operating sequence; and
* * * * *
0
15. Section 24.136 is amended by:
0
a. Revising paragraphs (a) and (b); and
0
b. Removing the first parenthetical phrase at the end of the section;
and
0
c. Revising the second parenthetical phrase at the end of the section.
The revisions read as follows:
Sec. 24.136 Procedure for alternating proprietors.
(a) General. Wine premises, or parts thereof, may be operated
alternately by proprietors who have each filed and received approval of
the necessary applications and bonds and have qualified under the
provisions of this part. Where operations by alternating proprietors
are limited to parts of the wine premises, the descriptions required to
be submitted with each proprietor's application for registration under
Sec. 24.109(f) must additionally illustrate the following:
(1) The areas, rooms, or buildings, or combination of rooms and/or
buildings, that will alternate between proprietors; and
(2) The means by which the alternated premises will be separated
from any premises that will not be alternated.
(b) Alternation. Once the qualifying documents have been approved,
and operations initiated, the wine premises, or parts thereof, may be
alternated. Any transfer of wine, spirits, or other accountable
materials from one proprietor to the other proprietor will be indicated
in the records and reports of each proprietor. Operation of a bonded
winery engaged in the production of wine by an alternate proprietor
will be at least one calendar day in length. All operations in any
area, building, floor, or room to be alternated will be completely
finished and all wine, spirits, and other accountable materials will be
removed from the alternated wine premises or transferred to the
incoming proprietor. However, wine, spirits, and other accountable
materials may be retained in locked tanks at wine premises to be
alternated and remain in the custody of the outgoing proprietor.
* * * * *
(Approved by the Office of Management and Budget under control
numbers 1513-0009, 1513-0053, and 1513-0115)
0
16. Section 24.137 is amended by:
0
a. Revising paragraph (b)(2);
0
b. Removing the first parenthetical phrase at the end of the section;
and
0
c. Removing the OMB control number ``1512-0058'' in the second
parenthetical phrase at the end of the section and adding, in its
place, the OMB control number ``1513-0009''.
The revision reads as follows:
Sec. 24.137 Alternate use of the wine premises for customs purposes.
* * * * *
(b) * * *
(2) Additional versions of the description required under Sec.
24.109(f) describing or showing the areas, rooms, or buildings, or
combination of rooms and/or buildings that will be alternated, and the
means by which the alternated premises will be separated from any
premises that will not be alternated; and
* * * * *
0
17. Add Sec. 24.171 to subpart E to read as follows:
Sec. 24.171 Security.
Security measures at the wine premises will be of a class and
construction designed to prevent unauthorized access to, and theft of,
commercial property.
0
18. Section 24.300 is amended by:
0
a. Revising paragraph (e);
0
b. Revising the heading of paragraph (f);
0
c. Removing the first parenthetical phrase at the end of the section;
and
0
d. Revising the second parenthetical phrase at the end of the section.
The revisions read as follows:
Sec. 24.300 General.
* * * * *
(e) Availability of records. The records required by this part must
be available for inspection by the appropriate TTB officer during
normal business hours. If a proprietor desires to keep the required
records at any location other than the wine premises, they must first
provide a letterhead notice to the appropriate TTB officer of the
location where the records are to be kept. Any proprietor keeping
records at a location other than the wine premises where operations or
transactions occur must make them available at the wine premises upon
request of the appropriate TTB officer; however, the proprietor may
supply copies (including electronic copies) of such records as provided
in paragraph (f) of this section.
[[Page 80172]]
(f) Copies of records. * * *.
* * * * *
(Approved by the Office of Management and Budget under control
numbers 1513-0053, 1513-0057, and 1513-0115)
Signed: September 23, 2024.
Mary G. Ryan,
Administrator.
Approved: September 24, 2024.
Aviva R. Aron-Dine,
Deputy Assistant Secretary, Tax Policy.
[FR Doc. 2024-22470 Filed 10-1-24; 8:45 am]
BILLING CODE 4810-31-P
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</html>Indexed from Federal Register on October 2, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.