[Federal Register Volume 64, Number 8 (Wednesday, January 13, 1999)]
[Rules and Regulations]
[Pages 2122-2134]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-624]
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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., Product Compliance 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
[[Page 2123]]
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 Product Compliance 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, Product Compliance 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 Product Compliance Branch Specialist or
the Chief, Product Compliance 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, Product Compliance
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, Product Compliance 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, Product Compliance 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, Product Compliance
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, Product Compliance
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, Product Compliance 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.
Product Compliance 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 Product Compliance 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 Product Compliance Branch must notify
the applicant whether the application has been approved or denied. The
Product Compliance 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 Product Compliance 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
Product Compliance 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 Product Compliance 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, Product Compliance 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, Product Compliance 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, Product Compliance 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, Product Compliance 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, Product
Compliance 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, Product Compliance 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,
Product Compliance 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, Product Compliance
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, Product
Compliance 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, Product Compliance 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, Product Compliance 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, Product Compliance Branch. The Chief, Product
Compliance 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, Product Compliance 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, Product Compliance Branch, determines that
the commenter has raised a valid issue that ATF has authority to
address, then the Chief, Product Compliance Branch, will initiate
appropriate action. The Chief, Product Compliance 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, Product
Compliance 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
