ATF

Sample Block


Bureau of Alcohol, Tobacco, Firearms and Explosives


DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Parts 4, 5, 7, 13, and 19

[TD ATF-406 Re: Notice No. 815 and Notice No. 819]

RIN: 1512-AB34

Procedures for the Issuance, Denial, and Revocation of

Certificates of Label Approval, Certificates of Exemption From Label

Approval, and Distinctive Liquor Bottle Approvals (93F-029P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Treasury.

ACTION: Final rule, Treasury decision.

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SUMMARY: The Bureau of Alcohol, Tobacco and Firearms (ATF) is issuing

Regulations setting forth the procedures for the issuance, denial, and

revocation of certificates of label approval (COLAs), certificates of

exemption from label approval, and distinctive liquor bottle approvals.

The denial and revocation regulations are new, whereas the issuance

Regulations merely amend current regulations. The new regulations also

codify procedures for administratively appealing the denial or

revocation of certificates of label approval, exemptions from label

approval, or distinctive liquor bottle approvals.

DATES: These regulations are effective March 15, 1999.

ADDRESSES: Copies of the proposed regulation and written comments are

available for public inspection during normal business hours at: ATF

Reading Room, Office of Public Affairs and Disclosure, Room 6480, 650

Massachusetts Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Edward A. Reisman, Jr., Alcohol Labeling and Formulation Branch, Bureau of
Alcohol,

Tobacco and Firearms, 650 Massachusetts Avenue, NW, Washington, DC

20226 (202-927-8140).

SUPPLEMENTARY INFORMATION:

Background

The Federal Alcohol Administration (FAA) Act, 27 U.S.C. 205(e),

provides ATF, as the delegate of the Secretary of the Treasury, with

authority to promulgate regulations with respect to the bottling,

packaging, and labeling of distilled spirits, wine, and malt beverages

in order to prohibit deception of the consumer, and provide the

consumer with adequate information as to the identity and quality of

the product.

In order to carry out such requirements, domestic bottlers and

producers are prohibited from bottling distilled spirits, wines, or

malt beverages, and importers are prohibited from removing bottled

distilled spirits, wines, or malt beverages from customs custody unless

they have in their possession a certificate of label approval covering

such products, "issued by the Secretary in such manner and form as he

shall by regulations prescribe." 27 U.S.C. 205(e). The law provides an

exemption from these requirements for products that are not to be sold,

offered for sale, or shipped or delivered for shipment, or otherwise

introduced, in interstate or foreign commerce.

The regulations implementing these statutory provisions provide

that no person shall bottle or pack wine, distilled spirits, or malt

beverages unless application is made to the Director and an approved

certificate of label approval, ATF Form 5100.31, is issued. 27 CFR

4.50(a), 5.55(a), and 7.41. The regulations also provide that no

bottled wines, distilled spirits, or malt beverages shall be released

from customs custody for consumption unless an approved certificate of

label approval, ATF Form 5100.31, is deposited with the appropriate

customs officer at the port of entry. 27 CFR 4.40(a), 5.51(a), and

7.31(a).

A bottler of wine or distilled spirits who can show to the

satisfaction of the Director that the product is not to be sold,

offered for sale, or shipped or delivered for shipment or otherwise

introduced in interstate or foreign commerce, must make application for

exemption from the labeling requirements of the FAA Act on ATF Form

5100.31 in accordance with the instructions on the form. If the

application is approved, a certificate of exemption from label approval

will be issued on the same form. 27 CFR 4.50(b) and 5.55(b).

Certificates of exemption from label approval are not issued for malt

beverages.

Finally, the ATF Form 5100.31 is also used to obtain approval for

distinctive liquor bottles, pursuant to the regulations appearing at 27

CFR 19.633(a). ATF's authority to regulate liquor bottles is derived

from section 5301 of the Internal Revenue Code of 1986, 26 U.S.C. 5301.

However, the approval of a distinctive liquor bottle also includes the

approval of the label on that bottle, pursuant to the FAA Act.

Revocation of COLAs

ATF reviews approximately 60,000 applications for certificates of

label approval, exemptions from label approval, and distinctive liquor

bottle approvals every year. Because errors occasionally occur in the approval

process, there is a need for some type of revocation procedure.

Since the enactment of the FAA Act in 1935, ATF and its predecessor

agencies have taken the position that the statutory authority to issue

certificates of label approval includes the implied statutory authority

to cancel or revoke the certificates if they were approved in error.

However, there have never been formal procedures in the regulations for

denial or revocation of certificates of label approval. Instead, ATF

has utilized informal procedures for denials and revocations, where

applicants or certificate holders who wished to contest a denial or

revocation are given an opportunity to do so in writing, or through

informal meetings with Bureau officials.

The certificate of label approval was never intended to convey any

type of proprietary interest to the certificate holder. On the

contrary, Paragraph 1 of Form 5100.31 provides that "This certificate

is issued for ATF use only. This certificate does not constitute

trademark protection." Paragraph 2 of this form reminds applicants

that the "certificate does not relieve any person from liability for

violations of the Federal Alcohol Administration Act." The certificate

of label approval is a statutorily mandated tool used to help ATF in

its enforcement of the labeling requirements of the FAA Act.

ATF's informal procedures for revocation of COLAs were subject to

challenge in the Federal District Court for the Northern District of

California. In Cabo Distributing Co. v. Brady, 821 F. Supp. 601 (N.D.

Cal. 1992), the court set aside ATF's revocation of labels for "Black

Death" vodka on several grounds. The court held that there was no

express statutory or regulatory authority for the Bureau to cancel

certificates of label approval, and that the Bureau had implied

authority to reverse its actions only in limited circumstances. The

court thus concluded that "[w]ithout statutory authority or regulatory

authority, the BATF cannot cancel a certificate of label approval."

821 F. Supp. at 612. The court also held that the Bureau's informal

procedures for revoking the "Black Death" certificates of label

approval had not afforded the certificate holders their constitutional

right to procedural due process. 821 F. Supp. at 612.

AFT does not agree with the court's decision on either of these two

holdings. ATF believes that a right to cancel certificates of label

approval is implied from the authority granted by the statute to the

Secretary to issue certificates of label approval "in such manner and

form as he shall by regulations prescribe * * *" The statute

explicitly authorizes ATF, as a delegate of the Secretary, to issue

regulations governing the procedure for the issuance of certificates of

label approval. There is also implicit statutory authority to issue

regulations governing the procedures for denying and revoking

certificates of label approval.

Furthermore, ATF believes that the procedures that it has been

using for revoking certificates of label approval, although not

codified in the regulations , have provided certificate holders with due

process of law. However, ATF determined that rulemaking was appropriate

in order to clarify its authority and procedures for revocation of

label approvals.

Notice of Proposed Rulemaking

On September 13, 1995, ATF published a notice of proposed

rulemaking (Notice No. 815, 60 FR 47506-47512) to solicit public

comment on regulations setting forth procedures for the issuance,

denial, and revocation of certificates of label approval, certificates

of exemption from label approval, and distinctive liquor bottle

approvals. The comment period closed on December 12, 1995, and was

reopened until February 21, 1996, by notice dated January 22, 1996

(Notice No. 819, 61 FR 1545-1546).

Notice No. 815 proposed to make existing regulations covering

issuance of certificates of label approval, certificates of exemption

from label approval, and distinctive liquor bottle approvals more

specific and proposed new regulations to codify existing informal

procedures for denial of applications and revocation of certificates.

The notice also proposed the codification of procedures for

administratively appealing the denial or revocation of certificates of

label approval, exemptions from label approval, and distinctive liquor

bottle approvals. In the notice, ATF restated its position that the

proposed regulations would afford applicants and certificate holders

due process of law, and that the codification of these procedures in

the regulations would eliminate any question as to ATF's authority to

revoke certificates of label approval, exemptions from label approval,

and distinctive liquor bottle approvals.

Under current regulations , the authority to approve certificates of

label approval, exemptions from label approval, and distinctive liquor

bottle applications rests with the Director and has been delegated to

the labeling specialists in the Alcohol Labeling and Formulation Branch. The
proposed

regulations described the process of approval, denial, and

administrative appeal in a new part 13. Proposed revisions to parts 4,

5, 7, and 19 added cross-references to the new part 13.

With respect to revocations of certificates of label approval,

certificates of exemption from label approval, or distinctive liquor

bottle approvals, and administrative appeals of such actions, the

proposed regulations set forth a procedure based on ATF's informal

practices.

In response to Notice 815, ATF received comments from the following

organizations:

Government Liaison Services, Inc.;

Presidents' Forum of the Beverage Alcohol Industry (Presidents'

Forum);

American Brandy Association (ABA);

Wine Institute;

Federation Internationale des Vins et Spiriteux (FIVS);

Federation des Exportateurs de Vins & Spiriteux de France

(FEVS);

National Assocaition of Beverage Importers, Inc. (NABI). Five

importers, Remy Amerique, Inc., Austin Nichols & Co. Inc., Dribeck

Importers, Inc., Guinness Import Company, Kobrand Corporation, and

two associations, The Scotch Whisky Association and the Associacion

de Criadores Exportadores de Sherry, wrote to endorse the comments

of NABI;

The Distilled Spirits Council of the U.S. (DISCUS). Jim Beam

Brands Co., a distiller, wrote to express agreement with the DISCUS

comments;

Beer Institute filed comments on behalf of its senior members:

The Anheuser Busch Companies, Miller Brewing Company, Coors Brewing

Company, Stroh Brewery Company, and G. Heileman Brewing Company;

Ropes & Gray filed comments on behalf of the Institut Nationale

des Appellations d'Origine (INAO) of France, an entity responsible

for protecting French appellations of origin;

The U.S. Department of Commerce transmitted comments from the

European Commission (EC); and

The Embassy of Mexico Trade Office forwarded comments from

Mexico's Direccion General De Normas concerning labeling of tequila

and mezcal. This last comment suggests regulatory changes that are

beyond the scope of Notice Number 815, but may be considered as part

of a future rulemaking.

Analysis of Comments

The majority of the commenters expressed support for ATF's effort

to promulgate regulations covering issuance, denial, and revocation of

certificates of label approval, certificates of exemption from label

approval, and distinctive liquor bottle approvals, though most had

comments on specific proposals.

[[Page 2124]]

Proposals and Comments on Application, Approval and Denial

In Notice No. 815, ATF set forth proposed regulations describing in

detail the steps in applying for a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval, including issuance of approved certificates, denial of

applications, and appeal of such denials. A number of comments

addressed specific items in these proposed regulations .

In its comment, Government Liaison Services, Inc. expressed concern

at the use of the word "send" in proposed Sec. 13.11, which they

interpreted to preclude hand delivery of applications for label

approval. A clarifying change is made to this section, now designated

as Sec. 13.21. ATF did not intend to prohibit hand-delivered

applications.

In the proposed rule, ATF described the approval process, including

the noting of any qualifications to the approval in the appropriate

space on the form. The proposed rule further provided that if an

application is denied for any reason, the applicant is sent an ATF Form

5190.1, "ATF F 5100.31 Correction Sheet," with the reasons for the

denial briefly noted on the form. The proposed regulations afforded the

applicant an opportunity to file an administrative appeal of the denial

of an application for a certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval,

with the Chief, Labeling Section, Alcohol Labeling and Formulation Branch,
who would

make a final decision on the denial of the application.

Government Liaison Services, Inc., the President's Forum, NABI and

DISCUS all commented that the initial correction notice and informal

discussion of technical issues arising from the application that often

occurs between applicants and ATF representatives should be kept

separate from a formal appeal process. DISCUS, in its comment, noted

"these informal consultations and contacts have served and do serve

the interests of all parties, with commensurate savings in expenditures

and manpower for both the government and the industry."

In practice, applicants and ATF representatives often informally

resolve issues related to a qualified approval or a denied application.

ATF does not wish to create the impression that all qualifications or

denials must be formally appealed. Accordingly, we have added a new

subsection Sec. 13.25(b) to confirm that the applicant has the option

of pursuing informal resolution of a labeling issue by requesting an

informal conference with the Alcohol Labeling and Formulation Branch Specialist
or

the Chief, Alcohol Labeling and Formulation Branch.

Government Liaison Services, Inc. also noted that the proposed

regulations did not incorporate ATF's practice of allowing voluntary

withdrawal of applications. A new Sec. 13.22 has been added to cover

withdrawal of applications.

Beer Institute, DISCUS and Government Liaison Services, Inc.

questioned ATF's proposal to authorize the Chief of the Labeling

Section to make final decisions on appeals of denials of applications

for certificates of label approvals, exemptions from label approvals

and distinctive liquor bottles. They suggested review by either a

higher level officials within the Alcohol and Tobacco Programs Division

or by someone outside the Division. Pursuant to these comments, a

second level of appeal has been added in Sec. 13.27 for qualifications

or denials of applications for label approval. The final rule provides

that the first appeal will be decided by the Chief, Alcohol Labeling and Formulation

Branch, and the second appeal will be decided by the Chief, Alcohol and

Tobacco Programs Division.

Appeal of Qualifications

The final rule expands the formal and informal resolution and

appeal procedures for denials to include resolution of disagreements

concerning qualifications on approved certificates. For these purposes,

a qualification is treated like a partial denial, since it limits the

use of the COLA.

Comments on Revocation and Appeal

With respect to revocations of certificates of label approval,

certificates of exemption from label approval, or distinctive liquor

bottle approvals, the proposed regulations divided revocations into two

categories, revocation of specific labels and revocation by operation

of law or regulation. The two types of revocation will be discussed

separately in this background material.

The proposed regulations on revocation of specific approvals gave

the Chief, Alcohol Labeling and Formulation Branch, authority to issue a notice
of

proposed revocation and gave the certificate holder 45 days to present

written arguments as to why the revocation should not occur. In the

proposed rule, the Chief, Alcohol Labeling and Formulation Branch, was authorized
to

decide whether to revoke the certificate. If a label or distinctive

liquor bottle approval were revoked, the certificate holder would have

45 days to file a written appeal with the Chief, Alcohol and Tobacco

Programs Division. In the proposed rule, the decision of the Chief,

Alcohol and Tobacco Programs Division, was the final decision of the

Bureau.

ATF's Authority To Revoke Label Approvals

Most commenters who addressed the issue agreed that ATF had

authority to revoke certificates of label approval, although there was

disagreement on the circumstances where revocation would be

appropriate. DISCUS argued, however, that in the absence of a specific

statutory provision authorizing revocations of approved labels, ATF

lacked authority to take such actions.

ATF does not agree that it lacks statutory authority to revoke

certificates of label approval. Many courts have recognized "an

implied authority in other agencies to reconsider and rectify errors

even though the applicable statute and regulations do not expressly

provide for such reconsideration." Gun South, Inc. v. Brady, 877 F.2d

858, 862 (11th Cir. 1989). For example, in concluding that the

Interstate Commerce Commission could order a refund to correct a prior

error, the Supreme Court stated that "[a]n agency, like a court, can

undo what is wrongfully done by virtue of its order." United Gas

Improvement Co. v. Callery Properties, 382 U.S. 223, 229 (1965). See

also Kudla v. Modde, 537 F. Supp. 87, 89 (E.D. Mich. 1982) ("[t]he

power of the state to require a license implies the power of the state

to revoke a license which has been improperly issued."), aff'd without

opinion, 711 F.2d 1057 (6th Cir. 1983); Century Arms, Inc. v. Kennedy,

323 F. Supp. 1002, 1016-17 (D. Vt. 1971), ("we are aware of no

licenses which once granted, can never be taken away."), aff'd, 449

F.2d 1306 (2d Cir. 1971), cert. denied, 405 U.S. 1065 (1972).

As we explained in the notice, it is ATF's position that its

statutory authority to issue regulations governing the issuance of

COLAs also includes the implied authority to issue regulations setting

forth procedures for the denial and revocation of such COLAs. The

single comment opposed to this position did not provide a persuasive

basis for concluding otherwise.

Due Process Issues

The American Brandy Association (ABA), Beer Institute, Wine

Institute, NABI and DISCUS submitted comments suggesting that ATF's

approval of a certificate of label approval (COLA) does create a

property right subject to the protection of due process of law.

ATF has always maintained that its informal procedures concerning

the

[[Page 2125]]

denial and revocation of COLAs were sufficient to provide procedural

due process to the applicant or certificate holder. Procedural due

process imposes constraints on governmental decisions which deprive

individuals of "liberty" or "property" interests within
the meaning

of the Due Process Clause of the Fifth Amendment. The Supreme Court has

recognized that "due process is flexible and calls for such procedural

protections as the particular situation demands." Morrissey v. Brewer,

408 U.S. 471, 481 (1972).

In determining whether an administrative procedure accords due

process, three factors are considered:

First, the private interest that will be affected by the

official action; second, the risk of an erroneous deprivation of

such interest through the procedures used, and the probable value,

if any, of additional or substitute procedural safeguards; and

finally, the Government's interest, including the function involved

and the fiscal and administrative burdens that the additional or

substitute procedural requirement would entail.

Mathews v. Eldridge, 424 U.S. 319, 334 (1976).

ATF recognizes that brand names and other terms on labels may be

significant elements in the marketing of an alcohol beverage. However,

even assuming that a certificate represents a property interest, we

believe that the procedures set forth in the final rule minimize the

risk of an erroneous deprivation of the interest of the industry

member. The procedures adopted in the final rule ensure that

certificate holders are given prior written notice of a proposed

revocation; the opportunity to meet with agency officials to discuss

the issues; and the opportunity to present written arguments or

evidence before the agency takes final action to revoke a label.

There have been suggestions that an evidentiary hearing, complete

with an Administrative Law Judge and the right to cross-examine

witnesses, is the appropriate model for a revocation proceeding.

However, none of the commenters explained why a written review

procedure involved a risk of erroneous deprivation of the certificate

holder's property interests, or why an evidentiary hearing would shed

further light on the issue of whether a label is in compliance with the

regulations . See Doolin Sec. Sav. Bank v. FDIC, 53 F.3d 1395, 1403 (4th

Cir. 1995), cert. denied 516 U.S. 973 (1995) (finding that an agency

was not required to provide an evidentiary hearing where the plaintiff

did not "offer sufficient evidence demonstrating that an oral hearing

would allow it to present evidence * * * that it could not present in

the written review procedure" and the "determination did not involve

credibility assessments, which would benefit from an oral hearing with

the presentation of witnesses").

Thus, the comments provided no basis for concluding that the

additional procedural safeguards provided by an evidentiary hearing

would be of value. However, such hearings would certainly impose

additional administrative burdens on the agency. After evaluating the

factors set forth in Mathews v. Eldridge, it is clear that due process

does not require a formal evidentiary hearing before the agency revokes

a certificate of label approval. As the Supreme Court noted in the

case, "the judicial model of an evidentiary hearing is neither a

required, nor even the most effective, method of decisionmaking in all

circumstances." 424 U.S. at 348. This is especially true where, as

here, judicial review of the final agency determination is available in

the United States District Court pursuant to the Administrative

Procedure Act (APA). See 27 U.S.C. 205(e); 5 U.S.C. 702. See also

Doolin, 53 F.3d at 1405 ("This opportunity for judicial review of FDIC

reclassification determinations therefore supports our conclusion that

the FDIC's risk classification review procedures satisfy due

process"). Accordingly, the final rule does not provide for

evidentiary hearings in connection with the revocation of certificates.

Level of Appeal

Some commenters suggested that the impact of a revocation on the

industry member warrants review at a higher level than the ATF

officials designated in the proposed rule. A number of commenters,

including Beer Institute, suggested that the officials designated in

the proposed rule to hear appeals are in day-to-day contact with the

persons making the initial decisions and may even have participated in

making those initial decisions. As previously noted, some commenters

even suggested that appeals of revocations should be heard by an

Administrative Law Judge.

The APA, 5 U.S.C. 554, generally requires that an independent

hearing officer preside at formal adjudicatory hearings "in every case

of adjudication required by statute to be determined on the record

after opportunity for an agency hearing." Section 554 also requires

the separation of investigatory and decisionmaking functions for this

type of formal adjudication.

The Federal Alcohol Administration Act does not provide that

proceedings regarding labels must be "determined on the record after

opportunity for an agency hearing." Accordingly, proceedings regarding

the approval or denial of a label do not constitute formal adjudicatory

proceedings under the APA. See Joseph E. Seagram & Sons, Inc. v.

Dillon, 344 F.2d 497 (D.C. Cir. 1965). Similarly, there is no statutory

requirement that appeals of denials or revocations be determined on the

record after opportunity for an agency hearing. Since these proceedings

are not formal adjudications, there is no legal requirement that such

appeals be heard by an independent hearing officer or Administrative

Law Judge.

Nonetheless, ATF recognizes that many industry members believe that

fairness dictates that appeals should be heard at a high enough level

to ensure some division between the initiation of revocation

proceedings and the final appeal. In response to these comments, we

have revised the final rule to designate higher level officials to make

revocation decisions and hear appeals. The Chief, Alcohol Labeling and Formulation

Branch, will issue a notice of proposed revocation, but the decision

whether or not to revoke a certificate will be made by the Chief,

Alcohol and Tobacco Programs Division. Any appeal of such a revocation

will be decided by the Assistant Director, Alcohol and Tobacco.

Time Limits for Initiating Revocation Proceedings

As noted above, many commenters suggested limitations on ATF's

authority to rescind label approvals. Several commenters suggested

setting a time within which ATF must begin revocation proceedings. For

example, Beer Institute suggested a 30-day period during which ATF

could revoke labels to correct agency administrative errors without a

formal administrative hearing, and then "an outer limit of one year"

on any other revocation. Wine Institute suggested that any time limit

(they suggested five years) should be measured from "relatively wide

and bona fide distribution" of a product, rather than from approval of

a label.

It has been ATF's experience that in some cases, errors in the

label approval process are not detected right away. For example, a

label may be approved for a product that is not placed on the market

for some time. ATF believes that the placement of an artificial time

constraint on its ability to take revocation action would not further

the statutory purpose of protecting the consumer from misleading

labels. Accordingly, the final rule does not set forth such a time

limit.

[[Page 2126]]

Standard of Proof for Revocation

The American Brandy Association and DISCUS suggested that the

standard for revocation should be based on "clear and convincing

evidence" that a label is not in compliance with law or regulations .

However, the comment did not provide a legal basis for imposing such a

standard.

Under the APA, an agency action (including an informal adjudication

such as a denial or revocation of a certificate) shall be set aside by

a reviewing court if it is arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law. 5 U.S.C.

706(2)(A). Even an agency's action in a formal adjudicatory proceeding

(which this is not) will be set aside by a reviewing court only if it

is "unsupported by substantial evidence." 5 U.S.C. 706(2)(E). there

is no requirement that an agency establish "clear and convincing

evidence" to justify its actions.

The standard of review set forth in the APA provides sufficient

protection to applicants and certificate holders wishing to contest

agency actions. Accordingly, this comment was not adopted.

Judicial Review

ATF is modifying the final rule to clarify that the administrative

remedies available within ATF must be exhausted prior to application to

the Federal courts for review. Accordingly, Secs. 13.26, 13.27 and

13.44 are amended to reflect this requirement.

Effect of Revocation

There were several comments and questions concerning the effect of

revocation of a certificate. In response, we have added a new

Sec. 13.73 to clarify this issue. Section 13.73 provides that, as of

the effective date of the revocation, a revoked certificate may not be

used to bottle or pack distilled spirits, wine or malt beverages; to

remove such products from the place where they were bottled or packed;

or to remove such products from customs custody for consumption.

Use-Up Period

A number of commenters suggested a longer "use-up" period for

revoked labels. We have revised the section covering this issue, now

designated as Sec. 13.72, to allow 60 days from the date of the initial

revocation of the certificate. Some commenters also did not understand

that the proposed regulations provided that a timely appeal would stay

the effective date of a revocation of a certificate (other than a

revocation by operation of law or regulations ). Accordingly, Sec. 13.72

now incorporates the material on the effect of an appeal on the date of

revocation, which was originally proposed in Sec. 13.50(b).

Revocations by Operation of Law or Regulation

With respect to revocations by operation of law or regulation, the

proposed rule did not require ATF to issue a notice of proposed

revocation prior to notifying a certificate holder of the revocation of

a certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval. The proposed rule

stated that in these cases, the burden of ensuring that affected labels

were in compliance with the new requirements imposed by statute or

regulation was on the certificate holder, not ATF.

The proposed rule provided that if ATF determined that a label or

bottle which was not in compliance with the new statutory or regulatory

requirements was still being used, the Chief, Alcohol Labeling and Formulation

Branch, would issue a letter notifying the certificate holder that the

certificate had been revoked by operation of law or regulation. If the

certificate holder wished to challenge the application of the law or

regulation to the particular label or bottle, the holder would appeal

the decision, in writing, to the Chief, Alcohol and Tobacco Programs

Division.

In its comment, DISCUS expressed its opinion that ATF should

individually notify holders whose labels are revoked by operation of

law, that ATF should never require submission of new COLAs to show

compliance with any new requirement in the law, and further expressed

the opinion that COLAs may not be revoked by operation of regulation.

ATF is not adopting any of these comments.

In the first instance, affected certificate holders will likely

receive notice of a proposed or final change in regulations by the

publication of such notice or regulation in the Federal Register.

Changes in law usually will be accompanied by changes in regulations .

Amendments to both the law and regulations affecting industry members

will be published in the ATF Quarterly Bulletin. Thus, there can be no

argument that industry members do not receive notice of such changes.

In those instances, ATF believes the responsibility for learning about

the changes in the law and regulations and making appropriate changes

to labels properly rests with the certificate holders.

Second, ATF reserves the right to decide, based on the facts and

circumstances of each change in regulations , whether to require

certificate holders to file new applications to show compliance with

new requirements or to excuse holders of approved certificates from

filing new applications, no longer as labels are modified

appropriately.

Finally, on the issue of ATF's authority to revoke labels by

operation of regulations , we believe this is part of our general

authority to promulgate regulations and to revoke labels, which was

discussed earlier in this preamble. Changes in the labeling regulations

usually affect all future labeling activities, regardless of when a

certificate of label approval was originally issued for a particular

label. Such changes to the regulations will usually set forth

specifically whether existing certificates of label approval must be

surrendered, and new certificates obtained. In the event that an

individual change to the labeling regulations is accompanied by a

"grandfathering" provision for previously approved certificates of

label approval, the regulation will so provide.

Time Limits for Appeals

Several commenters, including Beer Institute, DISCUS, FEVS and

NABI, asked ATF to set a time limit for its own actions in response to

appeals. DISCUS, in its comment, suggested that "[c]onsistent with the

tenet of administrative efficiency, we believe that it is appropriate

that the Bureau be required to issue its written decision concerning a

COLA denial within 15 days from the receipt of the applicant's appeal

of the denial." DISCUS made similar recommendations with respect to

deadlines for ATF action on decisions after a COLA holder disputes a

notice of proposed revocation and appeals a revocation. Beer Institute

made the following suggestion: "* * * we propose that ATF adopt a 45-

day period to render decisions on appeals of denials of COLA

applications." With respect to revocations, they recommend that

decisions "be made within 30 days" after a formal appeal by the

holder of the COLA.

Pursuant to the comments received on this issue, ATF has added a

time limit provision to each of the regulatory sections covering

initial approvals, appeals of denials of certificates, decisions

whether or not to revoke a certificate, and appeals of revocations. ATF

does not believe that the time periods suggested by the comments

provide sufficient time for the unusual labeling cases that may require

extensive agency review. Accordingly, the final rule provides that ATF

must

[[Page 2127]]

generally act within 90 days of receiving an application or appeal.

However, the regulations provide that, if an applicant or certificate

holder requests an informal conference as part of an appeal, as

authorized in Sec. 13.71, the 90-day period will begin 10 days after

the date of the conference to allow for consideration of any written

arguments, facts or evidence submitted after the conference. Further,

ATF may exercise an option to extend this period one time for an

additional 90 days, based on unusual circumstances.

It should be emphasized that ATF's current customer service

standards call for action on initial label applications within 9

calendar days; the allowance of 90 days in the regulations does not

reflect any intention to lengthen the average period of time for label

review. Instead, the regulation merely places an outside limit on the

unusual labeling cases that may require additional fact-finding,

consultation with other agencies, or extensive review within the

agency. A new Sec. 13.75 has been added to clarify the beginning date

of this time limit.

Formal Third-Party Involvement in the Label Process

The INAO comment suggested that ATF should recognize the rights of

third parties with respect to certificates of label approval. Once

example given by the INAO was where "a label may contain a brand,

fanciful name, class, type or other designation that is identical or

substantially similar to a term, such as an appellation of origin,

which is protected under U.S. treaties, agreements, laws or

regulations ." The INAO suggested that in such a case, ATF should

implement procedures to ensure that the country of origin was contacted

regarding the use of the term on the label.

In appropriate situations, ATF will contact the country of origin

for more information regarding whether the use of a labeling term would

violate the laws of the country. Accordingly, ATF does not believe it

is necessary to codify such procedures in the regulations .

The INAO also suggested that ATF should implement a system to

publish approved labels, perhaps similar to the Official Gazette of the

Patent and Trademark Office. Their comment suggested that such a

procedure would enable concerned third parties to receive timely notice

of approved labels, and, in the case of an erroneous approval, will

enable the third party to bring the error to ATF's attention promptly.

Certificates of label approval or exemption from label approval,

and approvals of distinctive containers, become public information upon

approval, and can be viewed at the ATF Library or requested by mail

under the Freedom of Information Act. ATF is also working to make these

public records more readily available through electronic means. We hope

to make the approved label database available on the Internet in the

next year or two; we believe that this will provide affected third

parties ample opportunity to inspect approved labels. Thus, we do not

see a need for publishing approved labels on a regular basis.

However, in response to this comment, the final regulations contain

a new Sec. 13.61, which codifies ATF's policy concerning publicity of

information contained in applications for certificates of label

approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals, and the resulting approvals or

administrative actions. The regulations also codify ATF's longstanding

policy that pending and denied applications for label approval are

treated as proprietary information and are not released to the public

without the consent of the submitter.

The INAO and FEVS requested ATF to consider new procedures that

would allow third parties to intervene in proceedings concerning the

denial or revocation of a label. The INAO suggested that if a proposed

revocation of such a label were appealed by the certificate holder, the

third party should have an opportunity during the appeal process to

submit material in support of revocation.

The INAO correctly noted that ATF currently reviews complaints

concerning approved labels where a third party believes that the label

is in violation of the regulations . However, the INAO suggested that

this policy be codified, so that the public would be aware of its

existence. We concur with the suggestion to codify ATF's policy and

informal practice concerning review of third party complaints, and

accordingly have added a new Sec. 13.62 to the final rule. However, the

regulation does not provide for any formal role for third parties

during a revocation proceeding. ATF believes that it may be appropriate

in certain cases to seek the opinions of third parties regarding

whether a particular label is misleading to consumers; however, we

believe that this is best determined on a case-by-case basis.

Service of Notices

In proposed Sec. 13.55, ATF stated that notices of denial, proposed

revocation and revocation will be served by first class mail or by

personal delivery. NABI and several other commenters stated that

service by mail should be by registered mail, return receipt requested.

This section has been renumbered as Sec. 13.76 in the final rule and

modified to require proof of service of notices of proposed revocation

or revocation, either a postal return receipt or equivalent written

acknowledgment obtained from the addressee by a commercial delivery

service or a report of hand delivery by an ATF official. The final rule

does not require proof of service for notices of denial of

applications, since applicants may not use a label until an approved

certificate is received.

Informal Conferences

In proposed Sec. 13.40(a), ATF reserved the right to decide whether

to grant an informal conference to discuss a denial or revocation of a

certificate. Several commenters suggested that such a conference should

be granted as a matter of right, and cited 27 CFR 70.418, which states

that any person may have a conference concerning "any matter arising

in connection with such person's operations" upon request. In the

final rule, the paragraph, now designated as Sec. 13.71, is revised to

show that a conference will be granted upon request.

Proposed paragraph (b) of that section stated that no transcript

would be made of a conference, if one was held, and that any arguments,

facts or evidence on which an applicant or certificate holder wishes to

rely, should be incorporated in a written submission. A number of

commenters expressed the opinion that there should be a formal record

made of such a conference. ATF disagrees. As noted above, proceedings

regarding label approvals are not required by statute to be conducted

on the record after an agency hearing; accordingly this is not a formal

adjudicatory proceeding. The regulations clarify that the conference is

an informal means of clarifying issues or discussing alternative

solutions, not an administrative hearing. The written submission of the

applicant or certificate holder and the written response of ATF will

form the official administrative record of such proceedings.

Comments Regarding Imported Products

The EC commented that "establishing a mandatory procedure

concerning certificates of label approval * * * would appear to be

disproportionate to the pursued objective" (of preventing consumer

deception). The EC said

[[Page 2128]]

further that they "would, therefore, deem this regulation as having

the effect of creating unnecessary obstacles to European exports unless

the U.S. authorities can show that this proposal is not more trade-

restrictive than necessary to fulfill the pursued objective and explain

the justification for this technical rule in terms of these Articles. *

* *" (Article 2.2 and Article 5.1.2 in connection with Article 2.5 of

the Agreement on Technical Barriers to Trade).

The final regulations do not create any unnecessary obstacles to

European exports to the United States; on the contrary, the regulations

will provide all applicants and certificate holders with more detailed

and specific information about the label approval process. The

regulations also set forth specific avenues of appeal for applicants

and certificate holders. Domestic and imported products are treated

with parity under both the proposed and final regulations . Accordingly,

ATF does not agree that the regulations create unnecessary obstacles to

imported products.

In its comments, FEVS asked that ATF ensure equal treatment of

domestic and foreign goods in the final rule, but did not identify any

specific changes to be made. As noted above, ATF is not aware of any

provision in the proposed rule or this final rule that treats domestic

and imported products differently.

NABI noted that importers of beer are subject to suspension or

revocation of their basic permits for FAA Act violations, including

labeling violations, while domestic brewers are not required to obtain

a basic permit under the FAA Act. However, this distinction flows

directly from the statute and is not subject to change through

regulations . Furthermore, brewers may be subject to other sanctions for

violations of the FAA Act. Thus, no changes were made to the final rule

as a result of these comments.

Unrelated Labeling Issues

Government Liaison Services, Inc. expressed concerns about ATF's

day-to-day handling of applications for certificates of label approval,

exemption from label approval, and distinctive liquor bottles. They

requested that ATF make changes in areas such as training, workflow,

recordkeeping, and communication of policy decisions. Similar concerns

were raised in the DISCUS and INAO comments.

These issues are beyond the scope of this rulemaking document.

Nonetheless, ATF is committed to improving the day-to-day

administration of its label approval system. ATF is addressing these

issues through partnership meetings with the regulated industry, and

through internal restructuring efforts.

Regulatory Flexibility Act

It is hereby certified that this regulation will not have a

significant economic impact on a substantial number of small entities.

The regulation will give ATF specific regulatory authority to issue,

deny or revoke certificates of label approval, exemptions from label

approval, and distinctive liquor bottle approvals. The regulation will

not increase recordkeeping or reporting requirements. Accordingly, a

regulatory flexibility analysis is not required because the final rule

is not expected (1) to have significant secondary or incidental effects

on a substantial number of small entitles; or (2) to impose, or

otherwise cause a significant increase in the reporting, recordkeeping,

or other compliance burdens on a substantial number of small entities.

Executive Order 12866

It has been determined that this final rule is not a significant

regulatory action as defined by Executive Order 12866. Accordingly,

this rule is not subject to the analysis required by this Executive

Order.

Paperwork Reduction Act

The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C.

3507(j), and its implementing regulations , 5 CFR part 1320, do not

apply to this document because no requirement to collect information is

imposed.

Drafting Information

The principal author of this document is Marjorie D. Ruhf,

Regulations Division, Bureau of Alcohol, Tobacco and Firearms. However,

other personnel of ATF participated in developing this document.

List of Subjects in

27 CFR Part 4

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Packaging and containers, Wine.

27 CFR Part 5

Advertising, Consumer protection, Customs duties and inspection,

Imports, Labeling, Liquors, Packaging and containers, Reporting and

recordkeeping requirements, Trade practices.

27 CFR Part 7

Advertising, Beer, Consumer protection, Customs duties and

inspection, Imports, Labeling.

27 CFR Part 13

Administrative practice and procedure, Alcohol and alcoholic

beverages, Appeals, Applications, Certificates of label approval,

Certificates of exemption from label approval, Denials, Distinctive

liquor bottle approvals, Informal conferences, Labeling, Revocations.

27 CFR Part 19

Administrative practice and procedure, Alcohol and alcoholic

beverages, Authority delegations, Claims, Chemicals, Customs duties and

inspection, Electronic fund transfers, Excise taxes, Exports, Gasohol,

Imports, Labeling, Liquors, Packaging and containers, Puerto Rico,

Reporting and recordkeeping requirements, Research, Security measures,

Spices and flavorings, Surety bonds, Transportation, Virgin Islands,

Warehouses, Wine.

Authority and Issuance

Chapter I of Title 27, Code of Federal Regulations , is amended as

follows:

PART 4--LABELING AND ADVERTISING OF WINE

Paragraph 1. The authority citation for part 4 continues to read as

follows:

Authority: 27 U.S.C. 205, unless otherwise noted.

Par. 2. Section 4.40 is amended to add paragraph (d) to read as

follows:

 

Sec. 4.40 Label approval and release.

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

Par. 3. Section 4.50 is amended to add paragraph (c) to read as

follows:

 

Sec. 4.50 Certificates of label approval.

* * * * *

(c) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval, and certificates of

exemption from label approval, as well as appeal procedures, see part

13 of this chapter.

PART 5--LABELING AND ADVERTISING OF DISTILLED SPIRITS

Par. 4. The authority citaiton for part 5 continues to read as

follows:

Authority: 26 U.S.C. 5301, 7805, 27 U.S.C. 205.

 

[[Page 2129]]

 

Par. 5. Section 5.46 is amended to revise paragraph (d) to read as

follows:

 

Sec. 5.46 Standard liquor bottles.

* * * * *

(d) Exceptions.--(1) Distinctive liquor bottles. The headspace and

design requirements in paragraphs (b) and (c) of this section do not

apply to liquor bottles that are specifically exempted by the Director,

pursuant to an application filed by the bottler or importer.

(2) Cross reference. For procedures regarding the issuance, denial

and revocation of distinctive liquor bottle approvals, as well as

appeal procedures, see part 13 of this chapter.

Par. 6. Section 5.51 is amended to add paragraph (e) to read as

follows:

 

Sec. 5.51 Label approval and release.

* * * * *

(e) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

Par. 7. Section 5.55 is amended to add paragraph (d) to read as

follows:

 

Sec. 5.55 Certificates of label approval.

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval and certificates of

exemption from label approval, as well as appeal procedures, see part

13 of this chapter.

PART 7--LABELING AND ADVERTISING OF MALT BEVERAGES

Par. 8. The authority citation for part 7 continues to read as

follows:

Authority: 27 U.S.C. 205.

Par. 9. Section 7.31 is amended to add paragraph (d) to read as

follows:

 

Sec. 7.31 Label approval and release

* * * * *

(d) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

Par. 10. Section 7.41 is revised to read as follows:

 

Sec. 7.41 Certificates of label approval.

(a) Requirement. No person shall bottle or pack malt beverages, or

remove malt beverages from the plant where bottled or packed unless

application is made to the Director, and an approved certificate of

label approval, ATF Form 5100.31, is issued by the Director.

(b) Cross reference. For procedures regarding the issuance, denial,

and revocation of certificates of label approval, as well as appeal

procedures, see part 13 of this chapter.

PART 13--LABELING PROCEEDINGS

Par. 11. Part 13 is added to read as follows:

Subpart A--Scope and Construction of Regulations

Sec.

13.1 Scope of part.

Subpart B--Definitions

13.11 Meaning of terms.

Subpart C--Applications

13.21 Application for certificate.

13.22 Withdrawal of applications.

13.23 Notice of denial.

13.25 Appeal of qualification or denial.

13.26 Decision after appeal of qualification or denial.

13.27 Second appeal of qualification or denial.

Subpart D--Revocations of Specific Certificates

13.41 Authority to revoke certificates.

13.42 Notice of proposed revocation.

13.43 Decision after notice of proposed revocation.

13.44 Appeal of revocation.

13.45 Final decision after appeal.

Subpart E--Revocation by Operation of Law or Regulation

13.51 Revocation by operation of law or regulation.

13.52 Notice of revocation.

13.53 Appeal of notice of revocation.

13.54 Decision after appeal.

Subpart F--Miscellaneous

13.61 Publicity of information.

13.62 Third-party comment on certificates.

13.71 Informal conferences.

13.72 Effective dates of revocations.

13.73 Effect of revocation.

13.74 Surrender of certificates.

13.75 Evidence of receipt by ATF.

13.76 Service on applicant or certificate holder.

13.81 Representation before ATF.

13.91 Computation of time.

13.92 Extensions.

Authority: 27 U.S.C. 205(e), 26 U.S.C. 5301 and 7805.

Subpart A--Scope and Construction of Regulations

 

Sec. 13.1 Scope of part.

The regulations in this part govern the procedure and practice in

connection with the issuance, denial, and revocation of certificates of

label approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals under 27 U.S.C. 205(e) and 26

U.S.C. 5301. The regulations in this part also provide for appeal

procedures when applications for label approval, exemptions from label

approval, or distinctive liquor bottle approvals are denied, when such

applications are approved with qualifications, or when these

applications are approved and then subsequently revoked.

Subpart B--Definitions

 

Sec. 13.11 Meaning of terms.

Where used in this part and in forms prescribed under this part,

where not otherwise distinctly expressed or manifestly incompatible

with the intent thereof, terms shall have the meaning ascribed in this

subpart. Words in the plural form shall include the singular, and vice

versa, and words importing the masculine gender shall include the

feminine. The terms "include" and "including" do not exclude
things

not enumerated that are in the same general class.

Act. The Federal Alcohol Administration Act.

Applicant. The permittee or brewer whose name, address, and basic

permit number, or plant registry number, appears on an unapproved ATF F

5100.31, application for a certificate of label approval, certificate

of exemption from label approval, or distinctive liquor bottle

approval.

Assistant Director, Alcohol and Tobacco. The ATF official

responsible for deciding an appeal of a revocation of a certificate of

label approval, a certificate of exemption from label approval, or a

distinctive liquor bottle approval, under this part.

ATF. The Bureau of Alcohol, Tobacco and Firearms, Department of the

Treasury, Washington, DC 20226.

Brewer. Any person who brews beer (except a person who produces

only beer exempt from tax under 26 U.S.C. 5053(e)) and any person who

produces beer for sale.

Certificate holder. The permittee or brewer whose name, address,

and basic permit number, or plant registry number, appears on an

approved ATF F 5100.31, certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval.

Certificate of exemption from label approval. A certificate issued

on ATF F 5100.31 which authorizes the bottling of wine or distilled

spirits, under the condition that the product will under no

circumstances be sold, offered for sale, shipped, delivered for

shipment, or otherwise introduced by the applicant, directly or

indirectly, into interstate or foreign commerce.

Certificate of label approval. A certificate issued on ATF F

5100.31 that authorizes the bottling or packing of wine, distilled

spirits, or malt beverages,

[[Page 2130]]

or the removal of bottled wine, distilled spirits, or malt beverages

from customs custody for introduction into commerce, as long as the

project bears labels identical to the labels affixed to the face of the

certificate, or labels with changes authorized by the certificate.

Chief, Alcohol and Tobacco Programs Division. The ATF official

responsible for issuing revocations of certificates of label approval,

certificates of exemption from label approval, and distinctive liquor

bottle approvals, under this part. This official is also responsible

for deciding certain appeals of denials of applications for

certificates of label approval, certificates of exemption from label

approval, and distinctive liquor bottle approvals, under this part.

Chief, Alcohol Labeling and Formulation Branch. The ATF official responsible
for

deciding first appeals of denials of applications for certificates of

label approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals, under this part. This official is

also responsible for proposing revocation of certificates of label

approval, certificates of exemption from label approval, and

distinctive liquor bottle approvals, under this part.

Director. The Director, Bureau of Alcohol, Tobacco and Firearms,

the Department of the Treasury, Washington, DC.

Distilled spirits. Ethyl alcohol, hydrated oxide of ethyl, spirits

of wine, whisky, rum, brandy, gin, and other distilled spirits,

including all dilutions and mixtures thereof for nonindustrial use. The

term "distilled spirits" does not include mixtures containing wine,

bottled at 48 degrees of proof or less, if the mixture contains more

than 50 percent wine on a proof gallon basis.

Distinctive liquor bottle. A liquor bottle of distinctive shape or

design.

Distinctive liquor bottle approval. Approval issued on ATF F

5100.31 that authorizes the bottling of distilled spirits, or the

removal of bottled distilled spirits from customs custody for

introduction into commerce, as long as the bottle is identical to the

photograph affixed to the face of the form.

Interstate or foreign commerce. Commerce between any State and any

place outside that State, or commerce within any Territory or the

District of Columbia, or between points within the same State but

through any place outside that State.

Liquor bottle: A bottle made of glass or earthenware, or of other

suitable material approved by the Food and Drug Administration, which

has been designed or is intended for use as a container for distilled

spirits for sale for beverage purposes, and which has been determined

by the Director to protect the revenue adequately.

Malt beverage. A beverage made by the alcoholic fermentation of an

infusion or decoction, or combination of both, in potable brewing

water, of malted barley with hops, or their parts, or their products,

and with or without other malted cereals, and with or without the

addition of unmalted or prepared cereals, other carbohydrates, or

products prepared therefrom, and with or without the addition of carbon

dioxide, and with or without other wholesome products suitable for

human food consumption.

Permittee. Any person holding a basic permit under the Federal

Alcohol Administration Act.

Person. Any individual, partnership, joint stock company, business

trust, association, corporation, or other form of business enterprise,

including a receiver, trustee, or liquidating agent and including an

officer or employee of any agency of a State or political subdivision

thereof.

Alcohol Labeling and Formulation Branch Specialist. An ATF official responsible

for reviewing initial applications for certificates of label approval,

certificates of exemption from label approval, and distinctive liquor

bottle approvals, under this part, with authority to issue approvals,

qualified approvals, or denials of such applications for certificates.

United States. The several States and Territories and the District

of Columbia; the term "State" includes a Territory and the District

of Columbia; and the term "Territory" means the Commonwealth of

Puerto Rico.

Use of other terms. Any other term defined in the Federal Alcohol

Administration Act and used in this part shall have the same meaning

assigned to it by the Act.

Wine. Wine as defined in section 610 and section 617 of the Revenue

Act of 1918 (26 U.S.C. 3036, 3044, 3045) and other alcoholic beverages

not so defined, but made in the manner of wine, including sparkling and

carbonated wine, wine made from condensed grape must, wine made from

other agricultural products than the juice of sound, ripe grapes,

imitation wine, compounds sold as wine, vermouth, cider, perry, and

sake; in each instance only if containing not less than 7 percent, and

not more than 24 percent of alcohol by volume, and if for nonindustrial

use.

Subpart C--Applications

 

Sec. 13.21 Application for certificate.

(a) Form of application. An applicant for a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, must send or deliver signed duplicate copies of

ATF Form 5100.31, "Application For And Certification/Exemption Of

Label/Bottle Approval" to the Alcohol Labeling and Formulation Branch,
Bureau of

Alcohol, Tobacco and Firearms, Washington, DC 20226. If the application

complies with applicable laws and regulations , a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval will be issued. If the approval is qualified in

any manner, such qualifications will be set forth in the appropriate

space on the form.

(b) Time period for action on application. Within 90 days of

receipt of an application, the Alcohol Labeling and Formulation Branch must
notify

the applicant whether the application has been approved or denied. The

Alcohol Labeling and Formulation Branch may extend this period of time once
by an

additional 90 days if it finds that unusual circumstances require

additional time to consider the issues presented by an application. If

the Alcohol Labeling and Formulation Branch extends the period, it must notify
the

applicant by letter, along with a brief explanation of the issues

presented by the label. If the applicant receives no decision from the

Alcohol Labeling and Formulation Branch within the time periods set forth in
this

paragraph, the applicant may file an appeal as provided in Sec. 13.25

of this part.

 

Sec. 13.22 Withdrawal of applications.

A person who has filed an application for a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, may withdraw such application at any time

before ATF takes action on the application.

 

Sec. 13.23 Notice of denial.

Whenever an application for a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval is denied, a Alcohol Labeling and Formulation Branch Specialist
must

issue to the applicant a notice of denial on ATF Form 5190.1, entitled

"ATF F 5100.31 Correction Sheet," briefly setting forth the reasons

why the label or bottle is not in compliance with the applicable laws

or regulations . The applicant may then submit a new application for

approval after making the necessary corrections.

[[Page 2131]]

Sec. 13.25 Appeal of qualification or denial.

(a) Form of appeal. If an applicant for a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval wishes to appeal the qualified approval or

denial of an application, the applicant may file a written appeal with

the Chief, Alcohol Labeling and Formulation Branch, within 45 days after the
date of

the notice of qualification or denial. The appeal should explain why

the applicant believes that the label or bottle is in compliance with

applicable laws and regulations . If no appeal is filed within 45 days

after the date of the notice of qualification or denial, the notice

will be the final decision of ATF.

(b) Informal resolution. Applicants may choose to pursue informal

resolution of disagreements regarding correction sheets or

qualifications by requesting an informal conference with the Specialist

or the Chief, Alcohol Labeling and Formulation Branch. However, formal administrative

appeals must comply with the provisions of paragraph (a) of this

section.

 

Sec. 13.26 Decision after appeal of qualification or denial.

(a) Decision. After considering any written arguments or evidence

presented by the applicant, the Chief, Alcohol Labeling and Formulation Branch,
must

issue a written decision to the applicant. If the decision is that the

qualified approval or denial should stand, a copy of the application,

marked "appeal denied," must be returned to the applicant with an

explanation of the decision and the specific laws or regulations relied

upon in qualifying or denying the application. If the decision is that

the certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle application should be approved

without qualification, the applicant should resubmit ATF Form 5100.31

and the certificate will be issued.

(b) Time limits for decision. Within 90 days of receipt of an

appeal, the Chief, Alcohol Labeling and Formulation Branch, must notify the
appellant

whether the appeal has been granted or denied. If an applicant requests

an informal conference as part of an appeal, as authorized in

Sec. 13.71, the 90-day period will begin 10 days after the date of the

conference to allow for consideration of any written arguments, facts

or evidence submitted after the conference. The Chief,

Labeling Branch, may extend this period of time once by an additional

90 days if he or she finds that unusual circumstances require

additional time to consider the issues presented by an appeal. If the

Chief, Alcohol Labeling and Formulation Branch, extends the period, he or she
must

notify the applicant by letter, briefly explaining the issues presented

by the label. If the appellant receives no decision from the Chief,

Alcohol Labeling and Formulation Branch, within the time periods set forth
in this

paragraph, the appellant may appeal as provided in Sec. 13.27.

(c) Judicial review. Prior to applying to the Federal courts for

review, an applicant must first exhaust his or her administrative

remedies, including the appeal rights set forth in this section and

Sec. 13.27.

 

Sec. 13.27 Second appeal of qualification or denial.

(a) Form of Appeal. The decision of the Chief, Alcohol Labeling and Formulation

Branch, may be appealed in writing to the Chief, Alcohol and Tobacco

Programs Division. If the decision is that the qualified approval or

denial was correct, a copy of the application, marked "appeal

denied," must be returned to the applicant, with an explanation of the

decision and the specific laws or regulations relied upon in qualifying

or denying the application. If the decision is that the certificate of

label approval, certificate of exemption from label approval, or

distinctive liquor bottle application should be approved without

qualification, the applicant may resubmit ATF Form 5100.31 and the

certificate will be issued.

(b) Time limits for decision. Within 90 days of receipt of an

appeal, the Chief, Alcohol and Tobacco Programs Division, must notify

the appellant whether the appeal has been granted or denied. If an

applicant requests an informal conference as part of an appeal, as

authorized in Sec. 13.71, the 90-day period will begin 10 days after

the date of the conference to allow for consideration of any written

arguments, facts or evidence submitted after the conference. The Chief,

Alcohol and Tobacco Programs Division, may extend this period of time

once by an additional 90 days if he or she finds that unusual

circumstances require additional time to consider the unique issues

presented by an appeal. If the Chief, Alcohol and Tobacco Programs

Division, extends the time period, he or she must notify the applicant

by letter, briefly explaining the issues presented by the label. The

decision of the Chief, Alcohol and Tobacco Programs Division, shall be

the final decision of ATF.

(c) Judicial review. An appeal to the Chief, Alcohol and Tobacco

Programs Division is required prior to application to the Federal

courts for review of any denial or qualification of an application.

Subpart D--Revocations of Specific Certificates

 

Sec. 13.41 Authority to revoke certificates.

Certificates of label approval, certificates of exemption from

label approval, and distinctive liquor bottle approvals, previously

approved on ATF Form 5100.31, may be revoked by the Chief, Alcohol and

Tobacco Programs Division, upon a finding that the label or bottle at

issue is not in compliance with the applicable laws or regulations .

 

Sec. 13.42 Notice of proposed revocation.

Except as provided in Sec. 13.51, when the Chief,

Labeling Branch, determines that a certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval has been issued for a label or bottle that is not in

compliance with the laws or regulations , he or she must issue to the

certificate holder a notice of proposed revocation. The notice must set

forth the basis for the proposed revocation and must provide the

certificate holder with 45 days from the date of receipt of the notice

to present written arguments or evidence why the revocation should not

occur.

 

Sec. 13.43 Decision after notice of proposed revocation.

(a) Decision. After considering any written arguments or evidence

presented by the certificate holder, the Chief, Alcohol and Tobacco

Programs Division, must issue a decision. If the decision is to revoke

the certificate, a letter must be sent to the holder explaining the

revocation of the certificate, and the specific laws or regulations

relied upon in determining that the label or bottle was not in

conformance with law or regulations . If the decision is to withdraw the

proposed revocation, a letter of explanation must be sent.

(b) Time limits for decision. Within 90 days of receipt of written

arguments or evidence from the certificate holder, the Chief, Alcohol

and Tobacco Programs Division, shall notify the appellant of his or her

decision. If a certificate holder requests an informal conference as

part of an appeal, as authorized in Sec. 13.71, the 90-day period will

begin 10 days after the date of the conference to allow for

consideration of any written arguments, facts or evidence submitted

after the conference. The Chief, Alcohol and Tobacco Programs Division,

may extend this period of time once by an additional 90 days if he or

she finds that unusual circumstances require additional time to

consider the issues presented by a proposed revocation. If the Chief,

Alcohol and Tobacco

[[Page 2132]]

Programs Division, extends the time period, he or she must notify the

applicant by letter, along with a brief explanation of the issues under

consideration.

 

Sec. 13.44 Appeal of revocation.

(a) Filing of appeal. A certificate holder who wishes to appeal the

decision of the Chief, Alcohol and Tobacco Programs Division, to revoke

a certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval, may file a written

appeal with the Assistant Director, Alcohol and Tobacco, setting forth

why the holder believes that the decision of the Chief, Alcohol and

Tobacco Programs Division, was erroneous. The appeal must be filed with

the Assistant Director, Alcohol and Tobacco within 45 days after the

date of receipt of the decision of the Chief, Alcohol and Tobacco

Programs Division.

(b) Judicial review. An appeal to the Assistant Director, Alcohol

and Tobacco, is required prior to application to the Federal courts for

review of any revocation of a certificate.

 

Sec. 13.45 Final decision after appeal.

(a) Issuance of decision. After considering any written arguments

or evidence presented by the certificate holder or the holder's

representative, the Assistant Director, Alcohol and Tobacco, must issue

a final decision. If the decision is to revoke the certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, a letter must be issued explaining the basis

for the revocation, and the specific laws or regulations relied upon in

determining that the label or bottle was not in conformance with law or

regulations . If the decision is to withdraw the proposed revocation, a

letter explaining the decision must be sent.

(b) Time limits for decision. Within 90 days of receipt of an

appeal, the Assistant Director, Alcohol and Tobacco, must notify the

holder whether the appeal has been granted or denied. If a certificate

holder requests an informal conference as part of an appeal, as

authorized in Sec. 13.71, the 90-day period will begin 10 days after

the date of the conference to allow for consideration of any written

arguments, facts or evidence submitted after the conference. The

Assistant Director, Alcohol and Tobacco, may extend this period of time

once by an additional 90 days if he or she finds that unusual

circumstances require additional time to consider the issues presented

by an appeal. If the Assistant Director, Alcohol and Tobacco, extends

the period, he or she must notify the holder by letter, briefly

explaining the issues presented by the label. The decision of the

Assistant Director, Alcohol and Tobacco, will be the final decision of

the Bureau.

Subpart E--Revocation by Operation of Law or Regulation

 

Sec. 13.51 Revocation by operation of law or regulation.

ATF will not individually notify all holders of certificates of

label approval, certificates of exemption from label approval, or

distinctive liquor bottle approvals, that their approvals have been

revoked if the revocation occurs by operation of law or regulation. If

changes in labeling or other requirements are made as a result of

amendments or revisions to the law or regulations , the certificate

holder must voluntarily surrender all certificates that are no longer

in compliance. The holder must submit applications for new certificates

in compliance with the new requirements, unless ATF determines that new

applications are not necessary. If a new application is unnecessary, it

is the responsibility of the certificate holder to ensure that labels

are in compliance with their requirements of the new regulations or

law.

 

Sec. 13.52 Notice of revocation.

If ATF determines that a certificate holder is still using a

certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval that is no longer in

compliance due to amendments or revisions in the law or regulations ,

the Chief, Alcohol Labeling and Formulation Branch, will notify the certificate

holder in writing that the subject certificate has been revoked by

operation of law or regulations , with a brief description of the

grounds for such revocation.

 

Sec. 13.53 Appeal of notice of revocation.

Within 45 days after the date of receipt of a notice of revocation

by operation of law or regulations , the certificate holder may file a

written appeal with the Chief, Alcohol and Tobacco Programs Division.

The appeal should set forth the reasons why the certificate holder

believes that the regulation or law at issue does not require the

revocation of the certificate.

 

Sec. 13.54 Decision after appeal.

(a) Issuance of decision. After considering all written arguments

and evidence submitted by the certificate holder, the Chief, Alcohol

and Tobacco Programs Division, must issue a final decision regarding

the revocation by operation of law or regulation of the certificate. If

the decision is that the law or regulation at issue requires the

revocation of the certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval, a

letter must be issued explaining the basis for the revocation, and

citing the specific laws or regulations which required the revocation

of the certificate. If the decision is that the law or regulation at

issue does not require the revocation of such certificate, a letter

explaining the decision must be sent to the certificate holder. The

decision of the Chief, Alcohol and Tobacco Programs Division, will be

the final decision of ATF.

(b) Time limits for decision. Within 90 days of receipt of an

appeal, the Chief, Alcohol and Tobacco Programs Division, must notify

the holder whether the appeal has been granted or denied. If a

certificate holder requests an informal conference as part of an

appeal, as authorized in Sec. 13.71, the 90-day period will begin 10

days after the date of the conference to allow for consideration of any

written arguments, facts or evidence submitted after the conference.

The Chief, Alcohol and Tobacco Programs Division, may extend this

period of time once by an additional 90 days if he or she finds that

unusual circumstances require additional time to consider the issues

presented by an appeal. If the Chief, Alcohol and Tobacco Programs

Division, extends the period, he or she must notify the holder by

letter, briefly explaining the issues presented by the label. The

decision of the Chief, Alcohol and Tobacco Programs Division, will be

the final decision of ATF.

Subpart F--Miscellaneous

 

Sec. 13.61 Publicity of information.

(a) Pending and denied applications. Pending and denied

applications for certificates of label approval, certificates of

exemption from label approval, or distinctive liquor bottle approvals

are treated as proprietary information, unless the applicant or

certificate holder provides written authorization to release such

information.

(b) Approved applications. The Chief, Alcohol Labeling and Formulation Branch,

shall cause to be maintained in the ATF Library for public inspection,

a copy of each approved application for certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval. These documents may be viewed during business hours at

[[Page 2133]]

650 Massachusetts Avenue, NW, Washington, DC 20226.

(c) Revoked certificates. If an approved certificate is

subsequently revoked, the record of the approved application will

remain on file for public inspection, but the index will be annotated

to show it was revoked.

(d) Further disclosure of information on denied or revoked

certificates. If an applicant whose application is pending or has been

denied, or a holder of a revoked certificate of label approval,

certificate of exemption from label approval, or distinctive liquor

bottle approval, issues public statements concerning ATF action in

connection with such application or certificate, then ATF may issue a

statement to clarify its position or correct any misstatements of fact,

including a disclosure of information contained on the application or

certificate of label approval, certificate of exemption from label

approval, or distinctive liquor bottle approval.

 

Sec. 13.62. Third-party comment on certificates.

When a third party (such as foreign government, another Federal

agency, a State agency, an industry association, a competitor of a

certificate holder, a consumer or consumer group, or any other

interested person) wishes to comment on an approved certificate of

label approval, certificate of exemption from label approval, or

distinctive liquor bottle approval, such comments should be submitted

in writing to the Chief, Alcohol Labeling and Formulation Branch. The Chief,
Alcohol

Labeling and Formulation Branch, will review the subject of the comment. If the

comment raises an issue that is outside the scope of ATF's statutory or

regulatory authority, or the Chief, Alcohol Labeling and Formulation Branch,

determines that the certificate is in compliance with applicable law

and regulations , the commenter will be informed that no further action

will be taken. If the Chief, Alcohol Labeling and Formulation Branch, determines
that

the commenter has raised a valid issue that ATF has authority to

address, then the Chief, Alcohol Labeling and Formulation Branch, will initiate

appropriate action. The Chief, Alcohol Labeling and Formulation Branch, may,
in his

or her discretion, notify the commenter as to the action being taken by

ATF with respect to the certificate.

 

Sec. 13.71 Informal conferences.

(a) General. As part of a timely filed written appeal of a notice

of denial, a notice of proposed revocation, or a decision of the Chief,

Alcohol and Tobacco Programs Division, to revoke a certificate, an

applicant or certificate holder may file a written request for an

informal conference with the ATF official deciding the appeal, or that

official's delegate.

(b) Informal conference procedures. The deciding official, or such

official's delegate, and the applicant or certificate holder will agree

upon a date for an informal conference. The informal conference is for

purposes of discussion only, and no transcript shall be made. If the

applicant or certificate holder wishes to rely upon arguments, facts,

or evidence presented at the informal conference, he or she has 10 days

after the date of the conference to incorporate such arguments, facts,

or evidence in a written submission to the deciding official.

 

Sec. 13.72 Effective dates of revocations.

(a) Effective dates.--(1) Revocation of specific certificates. A

written decision to revoke a certificate becomes effective 60 days

after the date of the decision.

(2) Revocation by operation of law or regulation. If a certificate

is revoked by operation of law or regulation, the revocation becomes

effective on the effective date of the change in law or regulation with

which the certificate does not comply, or if a separate label

compliance date is given, on that date.

(b) Use of certificate during period of appeal. If a certificate

holder files a timely appeal after receipt of a decision to revoke a

certificate from the Chief, Alcohol and Tobacco Programs Division,

pursuant to Sec. 13.45, the holder may continue to use the certificate

at issue until the effective date of a final decision issued by the

Assistant Director, Alcohol and Tobacco. However, the effective date of

a notice of revocation by operation of law or regulations , issued

pursuant to Sec. 13.52, is not stayed pending the appeal.

 

Sec. 13.73 Effect of revocation.

On and after the effective date of a revocation of a certificate of

label approval, certificate or exemption from label approval, or

distinctive liquor bottle approval, the label or distinctive liquor

bottle in question may not be used to bottle or pack distilled spirits,

wine or malt beverages, to remove such products from the place where

they were bottled or packed, or to remove such products from customs

custody for consumption.

 

Sec. 13.74 Surrender of certificates.

On the effective date of a final decision that has been issued by

the Chief, Alcohol and Tobacco Programs Division, or the Assistant

Director, Alcohol and Tobacco, to revoke a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval, the certificate holder must surrender the

original of the certificate to ATF for manual cancellation. Regardless

of whether the original certificate of label approval, certificate of

exemption from label approval, or distinctive liquor bottle approval

has been manually canceled or not, the certificate is null and void

after the effective date of the revocation. It is a violation of this

section for any certificate holder to present a certificate of label

approval, certificate of exemption from label approval, or distinctive

liquor bottle approval to an official of the United States Government

as a valid certificate after the effective date of the revocation of

the certificate if the certificate holder has been previously notified

that such certificate has been revoked by ATF.

 

Sec. 13.75 Evidence of receipt by ATF.

If there is a time limit on ATF action that runs from ATF's receipt

of a document, the date of receipt may be established by a certified

mail receipt or equivalent written acknowledgment secured by a

commercial delivery service or by a written acknowledgment of personal

delivery. In the absence of proof of receipt, the date the document is

logged in by ATF will be considered the date of receipt.

 

Sec. 13.76 Service on applicant or certificate holder.

(a) Method of service. ATF must serve notices of denial on an

applicant by first class mail, or by personal delivery. ATF must serve

notices of proposed revocation and notices of revocation on a

certificate holder by certified mail, return receipt requested, by a

commercial delivery service that will provide an equivalent written

acknowledgment from the recipient, or by personal delivery.

(b) Date of receipt. If there is a time limit on a certificate

holder's action that runs from the holder's receipt of a document, the

date of receipt may be established by a certified mail receipt, an

equivalent written acknowledgment secured by a commercial delivery

service, or by a written acknowledgment of personal delivery.

(c) Person to be served. When service is by mail or other

commercial delivery service, a copy of the document must be sent to the

applicant or certificate holder at the address stated in the

application or at the last known address. If authorized by the

applicant or certificate holder, the copy of the document may be mailed

to a designated representative. If service is by personal delivery, a

copy of the document must be delivered to the

[[Page 2134]]

certificate holder or to a designated representative. In the case of a

corporation, partnership, or association, personal delivery may be made

to an officer, manager, or general agent thereof, or to the attorney of

record.

 

Sec. 13.81 Representation before ATF.

An applicant or certificate holder may be represented by an

attorney, certified public accountant, or other person recognized to

practice before ATF as provided in 31 CFR part 8 (Practice Before the

Bureau of Alcohol, Tobacco and Firearms). The applicable requirements

of 26 CFR 601.521 through 601.527 (conference and practice requirements

for alcohol, tobacco, and firearms activities) shall apply.

 

Sec. 13.91 Computation of time.

In computing any period of time prescribed or allowed by this part,

the day of the act, event or default after which the designated period

of time is to run, is not counted. The last day of the period to be

computed is counted, unless it is a Saturday, Sunday, or legal holiday,

in which case the period runs until the next day that is not a

Saturday, Sunday, or legal holiday. Papers or documents that are

required or permitted to be filed under this part must be received at

the appropriate office within the filing time limits, if any.

 

Sec. 13.92 Extensions.

An applicant or certificate holder may apply to the Chief,

Labeling Branch, the Chief, Alcohol and Tobacco Programs Division, or

the Assistant Director, Alcohol and Tobacco for an extension of any

time limit prescribed in this part. The time limit may be extended if

ATF agrees the request is reasonable.

PART 19--DISTILLED SPIRITS PLANTS

Par. 12. The authority citation for part 19 continues to read as

follows:

Authority: 19 U.S.C. 81c, 1311; 26 U.S.C. 5001, 5002, 5004-5006,

5008, 5010, 5041, 5061, 5062, 5066, 5081, 5101, 5111-5113, 5142,

5143, 5146, 5171-5173, 5175, 5176, 5178-5181, 5201-5204, 5206, 5207,

5211-5215, 5221-5223, 5231, 5232, 5235, 5236, 5241-5243, 5271, 5273,

5301, 5311-5313, 5362, 5370, 5373, 5501-5505, 5551-5555, 5559, 5561,

5562, 5601, 5612, 5682, 6001, 6065, 6109, 6302, 6311, 6676, 6806,

7011, 7510, 7805; 31 U.S.C. 9301, 9303, 9306.

Par. 13. Section 19.633 is amended to add paragraph (c) to read as

follows:

 

Sec. 19.633 Distinctive liquor bottles.

* * * * *

(c) Cross reference. For procedures regarding issuance, denial and

revocation of distinctive liquor bottle approvals, as well as appeal

procedures, see part 13 of this chapter.

Par. 14. Section 19.641 is revised to read as follows:

 

Sec. 19.641 Certificate of label approval or exemption.

(a) Requirement. Proprietors are required by 27 CFR part 5 to

obtain approval of labels, or exemption from label approval, for any

label to be used on bottles of spirits for domestic use and shall

exhibit evidence of label approval, or of exemption from label

approval, on request of an ATF officer.

(b) Cross reference. For procedures regarding the issuance, denial

and revocation of certificates of label approval and certificates of

exemption from label approval, as well as appeal procedures, see Part

13 of this chapter.

"(Sec. 201, Pub. L. 85-859, 72 Stat. 1356, as amended (26 U.S.C.

5201))

Signed: August 6, 1998.

John W. Magaw,

Director.

Approved: December 11, 1998.

John P. Simpson,

Deputy Assistant Secretary (Regulatory, Tariff and Trade Enforcement).

[FR Doc. 99-624 Filed 1-12-99; 8:45 am]

BILLING CODE 4810-31-U

 

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This was last updated on January 14, 1999