Standards for Pipe Tobacco and Roll-Your-Own Tobacco; Request for Public Comment, 42659-42662 [2010-17957]
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Federal Register / Vol. 75, No. 140 / Thursday, July 22, 2010 / Proposed Rules
posted vertical clearance; minimum
cross-sectional width; lane width(s);
shoulder width(s); and pavement type.
(3) Interior tunnel structural features.
Tunnel shape (e.g., circular, rectangular,
horseshoe, oval); ground conditions
(e.g., soft ground, soft rock, hard rock,
mixed face); ceiling type (e.g., structural
lining, integral box, suspended panel);
finish lining type (e.g., tiles, metal
panels, precast panels, masonry block,
shotcrete or gunite, coating or paint);
and primary tunnel support lining.
(4) Portal structural features. Portal
types (e.g., cast-in place or precast
concrete, stone masonry, bare rock); and
portal shapes (e.g., circular, rectangular,
horseshoe, oval).
(b) Preliminary assessment of tunnel
condition. (1) Using data from the most
recent inspection, each State or Federal
agency must rate the structural and
functional systems in its tunnels, where
applicable, from 0 to 9 in accordance
with the chart on page 4–12 of the
Highway and Rail Transit Tunnel
Inspection Manual and submit the data
to FHWA within 90 days of the effective
date of this rule.
(2) A system rated 3 or below is
considered a critical finding. The State
or Federal agency must file a follow-up
plan with the FHWA within 30 days of
identification of a critical finding and
the actions taken to address all critical
findings.
(c) Updates to preliminary findings.
Upon performing an initial inspection of
a tunnel under § 650.511(a), each State
or Federal agency shall notify the
FHWA of any updates to the
information provided under subsections
(a) and (b) of this section.
(d) Tunnel inventory. Each State or
Federal agency must prepare, maintain,
and make available to the FHWA upon
request, an inventory of all tunnels
subject to the NTIS reflecting the
findings of the tunnel inspections.
(e) Data entry for inspections. For all
inspections, enter the tunnel data into
the State or Federal agency inventory
within 90 days of the date of inspection.
(f) Data entry for tunnel modifications
and new tunnels. For modifications to
existing tunnels that alter previously
recorded data and for new tunnels, enter
the data into the State or Federal agency
inventory within 90 days after the
completion of the work.
(g) Data entry for tunnel load
restriction and closure changes. For
changes in traffic load restriction or
closure status, enter the data into the
State or Federal agency inventory
within 90 days after the change in status
of the tunnel.
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§ 650.517
Reference Manual.
‘‘The Federal Highway Administration
and Federal Transit Administration
Highway and Rail Transit Tunnel
Inspection Manual,’’ 2005 edition,
available in electronic format at https://
www.fhwa.dot.gov/bridge/tunnel/
management/, is incorporated by
reference herein.
[FR Doc. 2010–17787 Filed 7–21–10; 8:45 am]
BILLING CODE 4910–22–P
DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade
Bureau
27 CFR Parts 40, 41, 44, 45, and 46
[Docket No. TTB–2010–0004; Notice No.
106]
RIN 1513–AB78
Standards for Pipe Tobacco and RollYour-Own Tobacco; Request for Public
Comment
Alcohol and Tobacco Tax and
Trade Bureau, Treasury.
ACTION: Advance notice of proposed
rulemaking; solicitation of comments.
AGENCY:
The Alcohol and Tobacco Tax
and Trade Bureau requests public
comments on standards that have been
proposed to distinguish between pipe
tobacco and roll-your-own tobacco for
Federal excise tax purposes based upon
certain physical characteristics of the
two products. We also request
comments on any other physical
characteristics that may be used for such
purposes.
DATES: We must receive written
comments on or before September 20,
2010.
SUMMARY:
You may send comments on
this advance notice to one of the
following addresses:
• https://www.regulations.gov (via the
online comment form for this advance
notice as posted within Docket No.
TTB–TTB–2010–0004 at
‘‘Regulations.gov,’’ the Federal
e-rulemaking portal);
• Mail: Director, Regulations and
Rulings Division, Alcohol and Tobacco
Tax and Trade Bureau, P.O. Box 14412,
Washington, DC 20044–4412; or
• Hand Delivery/Courier in Lieu of
Mail: Alcohol and Tobacco Tax and
Trade Bureau, 1310 G Street, NW., Suite
200–E, Washington, DC 20005.
See the Public Participation section of
this advance notice for specific
instructions and requirements for
submitting comments, and for
ADDRESSES:
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information on how to request a public
hearing.
You may view copies of this advance
notice, selected supporting materials,
and any comments we receive about this
proposal at https://www.regulations.gov
within Docket No. TTB–2010–0004. A
direct link to this docket is posted on
the TTB Web site at https://www.ttb.gov/
tobacco/tobacco-rulemaking.shtml
under Notice No. 106. You also may
view copies of this advance notice, any
supporting materials, and any
comments we receive about this
proposal by appointment at the TTB
Information Resource Center, 1310 G
Street, NW., Washington, DC 20220.
Please call 202–453–2270 to make an
appointment.
FOR FURTHER INFORMATION CONTACT:
Amy R. Greenberg, Regulations and
Rulings Division, Alcohol and Tobacco
Tax and Trade Bureau (202–453–2099).
SUPPLEMENTARY INFORMATION:
Background
TTB Authority
Chapter 52 of the Internal Revenue
Code of 1986 (IRC) sets forth the Federal
excise tax and related provisions that
apply to tobacco products and
processed tobacco manufactured in, or
imported into, the United States.
Section 5702(c) of the IRC (26 U.S.C.
5702(c)) defines the term ‘‘tobacco
products’’ as ‘‘cigars, cigarettes,
smokeless tobacco, pipe tobacco, and
roll-your-own tobacco.’’ Each of these
terms is also separately defined in
section 5702.
Regulations implementing the
provisions of chapter 52 of the IRC are
contained in 27 CFR parts 40
(Manufacture of tobacco products,
cigarette papers and tubes, and
processed tobacco), 41 (Importation of
tobacco products, cigarette papers and
tubes, and processed tobacco), 44
(Exportation of tobacco products and
cigarette papers and tubes, without
payment of tax, or with drawback of
tax), 45 (Removal of tobacco products
and cigarette papers and tubes, without
payment of tax, for use of the United
States), and 46 (Miscellaneous
regulations relating to tobacco products
and cigarette papers and tubes). These
regulations are administered by the
Alcohol and Tobacco Tax and Trade
Bureau (TTB).
Children’s Health Insurance Program
Reauthorization Act of 2009
On February 4, 2009, the President
signed into law the Children’s Health
Insurance Program Reauthorization Act
of 2009, Public Law 111–3, 123 Stat. 8
(‘‘the Act’’).
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Section 701 of the Act amended the
IRC to increase the Federal excise tax
rates on tobacco products and cigarette
papers and tubes, effective as of April 1,
2009. The tax rates on pipe tobacco and
roll-your-own tobacco, which had both
previously been $1.0969 per pound,
were raised to $2.8311 per pound for
pipe tobacco and $24.78 per pound for
roll-your-own tobacco. See 26 U.S.C.
5701(f) and (g), respectively. On March
31, 2009, TTB published in the Federal
Register (T.D. TTB–75, 74 FR 14479) a
temporary rule to amend the TTB
regulations to reflect the section 701
changes. In the same issue of the
Federal Register, TTB also published a
notice of proposed rulemaking (Notice
No. 93, 74 FR 14506) inviting comments
on the temporary regulations.
On June 22, 2009, TTB published a
temporary rule in the Federal Register
(T.D. TTB–78, 74 FR 29401) to
implement certain additional changes
made to the IRC by section 702 of the
Act. In the same issue of the Federal
Register, TTB also published a notice of
proposed rulemaking (Notice No. 95, 74
FR 29433) inviting comments on the
temporary regulations.
In an additional temporary rule,
published in the Federal Register on
September 24, 2009 (T.D. TTB–81, 74
FR 48650), TTB amended certain
temporary provisions set forth in T.D.
TTB–78 by extending the length of time
packages of roll-your-own tobacco and
pipe tobacco that did not comply with
new regulatory requirements could still
be used. This temporary rule also was
published concurrent with a notice of
proposed rulemaking in the same issue
of the Federal Register (Notice No. 99,
74 FR 48687) soliciting comments on
the revision.
emcdonald on DSK2BSOYB1PROD with PROPOSALS
Distinguishing Between Pipe Tobacco
and Roll-Your-Own Tobacco in T.D.
TTB–78
Temporary rule T.D. TTB–78
included new provisions regarding the
expansion of the statutory definition of
roll-your-own tobacco generally to
include cigar wrapper and filler, and
regarding the packaging and labeling of
pipe tobacco and roll-your-own tobacco
to better differentiate, on the basis of the
packaging and labeling, between these
two types of taxable products. In T.D.
TTB–78, TTB noted that the tax rate
increases adopted in section 701 of the
Act resulted in a significant difference
between the rate of tax imposed on rollyour-own tobacco ($24.78 per pound)
and the rate of tax imposed on pipe
tobacco ($2.8311 per pound). Prior to
the amendments made by the Act, the
two tax rates were the same.
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The Bureau further noted that the
existing TTB regulations contained no
standards to differentiate between rollyour-own tobacco and pipe tobacco
beyond a repeat of the statutory
definitions. In T.D. TTB–78, we
amended these definitions to
incorporate the definitional changes
contained in the Act. These definitional
changes did not include any language
which provides objective standards to
readily distinguish between roll-yourown tobacco and pipe tobacco. Section
5702(o) of the IRC, as amended by the
Act, defines the term ‘‘roll-your-own
tobacco’’ as ‘‘any tobacco, which,
because of its appearance, type,
packaging, or labeling, is suitable for use
and likely to be offered to, or purchased
by, consumers as tobacco for making
cigarettes or cigars, or for use as
wrappers thereof.’’ The term ‘‘pipe
tobacco’’ is defined at 26 U.S.C. 5702(n)
as ‘‘any tobacco which, because of its
appearance, type, packaging, or labeling,
is suitable for use and likely to be
offered to, or purchased by, consumers
as tobacco to be smoked in a pipe.’’
TTB recognizes that the similarity of
roll-your-own tobacco and pipe tobacco
and the much lower rate on pipe
tobacco resulting from the tax rate
changes made by the Act created an
incentive for persons who roll their own
cigarettes to use pipe tobacco. In T.D.
TTB–78, the agency noted that there is
now a heightened need for more
regulatory detail to clarify the difference
between the two products. Because both
the definition of roll-your-own tobacco
and the definition of pipe tobacco
require consideration of the packaging
and labeling of the product in order to
determine the appropriate tax
classification and because additional
regulatory standards regarding the
packaging and labeling were available,
TTB amended the regulations to more
clearly distinguish between the two
products on those bases. With regard to
the products’ other defining
characteristics, TTB stated that it was
evaluating analytical methods and other
standards that may lead to future
rulemaking proposals.
Comments Received
As a result of our rulemaking actions,
TTB received six written submissions
from four industry members and one
consumer organization suggesting
specific standards that could be used to
distinguish between roll-your-own
tobacco and pipe tobacco. According to
some of these commenters, such
standards are urgently needed because,
they allege, the new packaging and
labeling regulations are not sufficient to
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prevent the misrepresentation of rollyour-own tobacco as pipe tobacco.
A representative for Altadis USA,
Inc., a manufacturer and importer of
pipe tobacco, submitted the most
detailed proposal regarding physical
standards in comments to Notice No. 95,
which were repeated in a separate letter
to TTB’s Administrator. Stating that it
believes the new packaging
requirements outlined in Notice No. 95
are only marginally helpful in dealing
with the ‘‘misclassification problem,’’
Altadis USA, Inc. proposes that TTB
establish standards of physical
characteristics for pipe tobacco. It
asserts that examination of physical
characteristics is necessary to determine
whether the product, by virtue of its
‘‘appearance’’ and ‘‘type,’’ is ‘‘suitable for
use’’ as tobacco to be smoked in a pipe,
as described in the statutory definition
of pipe tobacco at 26 U.S.C. 5702(n), or
as tobacco for making cigarettes or
cigars, as described in the statutory
definition of roll-your-own tobacco at 26
U.S.C. 5702(o). This commenter
therefore proposes that processed
tobacco in its finished form be classified
as pipe tobacco only if it meets at least
one of the following:
• At least 18% of its weight consists
of reducing sugars;
• Moisture content exceeds 22% of its
weight;
• Its cut tobacco exceeds 1⁄8 inch in
width;
• At least 10% of its weight consists
of Latakia, Perique, or Black Tobacco
(USDA Type 37) or a combination
thereof; or
• At least 20% of its weight consists
of flavoring, casing, or other nontobacco content.
According to the commenter, any
processed tobacco product that does not
meet any of these criteria cannot be
legitimately classified as pipe tobacco
and must be classified as roll-your-own
tobacco.
TTB notes that this commenter also
proposes that TTB take into
consideration pre-existing or established
brands for pipe tobacco and roll-yourown tobacco. The commenter states that
prior to the introduction of the relevant
tobacco tax legislation in Congress in
January 2009, there were no ‘‘crossover
brands’’, that is, ‘‘brands associated with
both pipe tobacco and roll-your-own
tobacco.’’ The commenter therefore
urged TTB to deem any processed
tobacco regularly sold under a preexisting brand name, trade name, or
trademark predominantly associated
with roll-your-own tobacco, prior to
January 1, 2009, as roll-your-own
tobacco. Similarly, any processed
tobacco regularly sold under a pre-
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existing brand name, trade name, or
trademark predominantly associated
with pipe tobacco prior to January 1,
2009, should be deemed pipe tobacco.
A representative of Top Tobacco L.P.,
a manufacturer of roll-your-owntobacco, specifically addresses the
above commenter’s proposed standards
for pipe tobacco in a letter to TTB’s
Administrator. Although the company
states that it agrees with the general
statement of facts in the submission, it
disagrees with the proposed criterion
regarding the width of the cut of the
tobacco. This commenter states that it
does not believe that the width factor
can be a reliable indicator of whether or
not a product is intended for
consumption as roll-your-own tobacco
or pipe tobacco because, according to
the commenter, tobacco cut at 1⁄8 of an
inch can be rolled into cigarettes and,
further, consumers can use basic
kitchen or hardware appliances to grind
wider cut tobacco into a size suitable for
use as roll-your-own tobacco. The
commenter goes on to assert that width
standards proposed in Germany were
not successful.
In response to Notice No. 95, the Pipe
Tobacco Council, Inc. (PTC) submitted a
comment proposing that pipe tobacco
products sold as such prior to January
1, 2009, be exempt from the proposed
labeling and packaging regulations. The
PTC proposes that manufacturers with
such products certify that the products
were on the market prior to January 1,
2009, and that TTB create and maintain
a database of such certifications.
Manufacturers wishing to market any
products as pipe tobacco that would be
sold to consumers for the first time on
or after January 1, 2009, would be
required to submit a sample of the
finished product to TTB along with a
‘‘valid reason why the product should be
considered pipe tobacco.’’ Such reasons
could include the product’s cut size,
casing and flavoring rates, tobacco
grades used, cut style, and moisture.
Finally, PTC proposes that any brand
name or trademark that was ever sold as
either a roll-your-own tobacco product
or cigarette brand produced and sold
after January 1, 2009, should not be
classified as pipe tobacco.
A representative of the National
Tobacco Company LP (NTC), a
manufacturer of both pipe tobacco and
roll-your-own tobacco, in a comment to
Notice No. 95, states that the constituent
tobacco materials used in various
tobacco products often overlap in terms
of their type and appearance. Therefore,
NTC believes that the type of tobacco
and the appearance of the tobacco
product are not always reliable guides to
the product’s suitable and intended use.
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Nonetheless, the commenter does
suggest a number of characteristics that
could be used to identify pipe tobacco,
such as the inclusion of substantial
amounts of Cavendish, Latakia, or
Perique tobacco, the appearance of a
broad-leaf cut tobacco blend, high
moisture content, dense packing, burn
inhibitors, and block or flake cut. NTC
states that the presence of menthol
flavoring and the use of blending
components such as expanded stem,
expanded leaf tobacco, or reconstituted
sheet tobacco could indicate that a
tobacco product is intended for use as
roll-your own tobacco.
In a comment to Notice No. 99 (74 FR
48687), Extension of Package Use-Up
Rule for Roll-Your-Own Tobacco and
Pipe Tobacco, the consumer
organization Campaign for Tobacco-Free
Kids states that the proposed packaging
regulations do not do enough to prevent
the mislabeling of roll-your-own tobacco
as pipe tobacco. It urges TTB to
establish clear criteria to distinguish
between those types of tobacco that may
be labeled as pipe tobacco and those
that may not. The group suggests that
one possibility is to require that any
loose tobacco consisting primarily of
flue-cured or burley tobacco be labeled
and taxed as roll-your-own tobacco.
TTB Response
We are aware that additional
regulatory standards to distinguish
between roll-your-own tobacco and pipe
tobacco, based on physical
characteristics, would be beneficial. It is
our primary concern that any regulatory
distinction drawn between these
products be objective and enforceable.
To that end, TTB continues to conduct
research on the physical characteristics
of the products that may be used to
effectively distinguish between the two
products for tax purposes. We also
believe that soliciting comments from
the public may assist us in developing
objective, enforceable, and not easily
subverted distinctions. Accordingly, in
this document we are requesting
comments on the proposals set forth
above, and any additional comments, on
the distinguishing physical
characteristics of the two products.
Public Participation
Comments Invited
We invite comments from interested
members of the public on whether the
physical standards discussed above
under the heading ‘‘Comments
Received’’ are appropriate and sufficient
for distinguishing between pipe tobacco
and roll-your-own tobacco. We also
request comments on any additional
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physical characteristics that could also
be used to distinguish between these
two tobacco products for tax
classification purposes. Furthermore,
we invite comments on any particular
combination(s) of physical
characteristics which would distinguish
between pipe tobacco and roll-your-own
tobacco. If a commenter can identify a
specific list of differentiating physical
characteristics, we invite the commenter
to opine on what number of the physical
characteristics should be present in
order for the product to be classified as
‘‘pipe tobacco’’ (e.g., 2 of 5, 3 of 6). In
addition, we request comments
providing objective methods for
analyzing whether or not a tobacco
product meets the physical
characteristics discussed in this notice
or any additional physical
characteristics suggested by the
commenter. In particular, we invite
commenters to provide objective
methods for determining the percentage
of Cavendish, Latakia, Perique, or Black
Tobacco in a tobacco product, and for
determining the percentage of casings
and flavorings on a tobacco product.
Submitting Comments
You may submit comments on this
advance notice by using one of the
following three methods:
• Federal e-Rulemaking Portal: You
may send comments via the online
comment form linked to this advance
notice in Docket No. TTB–2010–0004 on
‘‘Regulations.gov,’’ the Federal
e-rulemaking portal, at https://
www.regulations.gov. A link to the
docket is available under Notice No. 106
on the TTB Web site at https://
www.ttb.gov/tobacco/tobaccorulemaking.shtml. Supplemental files
may be attached to comments submitted
via Regulations.gov. For information on
how to use Regulations.gov, click on the
site’s Help or FAQ tabs.
• U.S. Mail: You may send comments
via postal mail to the Director,
Regulations and Rulings Division,
Alcohol and Tobacco Tax and Trade
Bureau, P.O. Box 14412, Washington,
DC 20044–4412.
• Hand Delivery/Courier: You may
hand-carry your comments or have them
hand-carried to the Alcohol and
Tobacco Tax and Trade Bureau, 1310 G
Street, NW., Suite 200–E, Washington,
DC 20005.
Please submit your comments by the
closing date shown above in this notice.
Your comments must reference Notice
No. 106 and include your name and
mailing address. Your comments also
must be made in English, be legible, and
be written in language acceptable for
public disclosure. We do not
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Federal Register / Vol. 75, No. 140 / Thursday, July 22, 2010 / Proposed Rules
acknowledge receipt of comments, and
we consider all comments as originals.
If you are commenting on behalf of an
association, business, or other entity,
your comment must include the entity’s
name as well as your name and position
title. If you comment via
Regulations.gov, please include the
entity’s name in the ‘‘Organization’’
blank of the comment form. If you
comment via postal mail, please submit
your entity’s comment on letterhead.
You may also write to the
Administrator before the comment
closing date to ask for a public hearing.
The Administrator reserves the right to
determine whether to hold a public
hearing.
Confidentiality
All submitted comments and
attachments are part of the public record
and subject to disclosure. Do not
enclose any material in your comments
that you consider to be confidential or
that is inappropriate for public
disclosure.
emcdonald on DSK2BSOYB1PROD with PROPOSALS
Public Disclosure
On the Federal e-rulemaking portal,
Regulations.gov, we will post, and the
public may view, copies of this advance
notice, selected supporting materials,
and any electronic or mailed comments
we receive about this proposal. A direct
link to the Regulations.gov docket
containing this advance notice and the
posted comments received on it is
available on the TTB Web site at
https://www.ttb.gov/tobacco/tobaccorulemaking.shtml under Notice No. 106.
You may also reach the docket
containing this advance notice and the
posted comments received on it through
the Regulations.gov search page at
https://www.regulations.gov.
All posted comments will display the
commenter’s name, organization (if
any), city, and State, and, in the case of
mailed comments, all address
information, including e-mail addresses.
We may omit voluminous attachments
or material that we consider unsuitable
for posting.
You and other members of the public
may view copies of this advance notice,
any related supporting materials, and
any electronic or mailed comments we
receive about this proposal by
appointment at the TTB Information
Resource Center, 1310 G Street, NW.,
Washington, DC 20220. You may also
obtain copies at 20 cents per 8.5 x 11
inch page. Contact our information
specialist at the above address or by
telephone at 202–453–2270 to schedule
an appointment or to request copies of
comments or other materials.
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Drafting Information
Jennifer Berry of the Regulations and
Rulings Division drafted this advance
notice.
Signed: April 28, 2010.
John J. Manfreda,
Administrator.
Approved: May 26, 2010.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and
Tariff Policy) .
[FR Doc. 2010–17957 Filed 7–21–10; 8:45 am]
BILLING CODE 4810–31–P
PENSION BENEFIT GUARANTY
CORPORATION
29 CFR Parts 4003 and 4903
Debt Collection
Pension Benefit Guaranty
Corporation.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
revise the Pension Benefit Guaranty
Corporation’s regulation on debt
collection to conform to the Debt
Collection Improvement Act of 1996,
the Federal Claims Collection Standards
and other legal requirements applicable
to the collection of non-tax debts owed
to PBGC. This proposed rule would add
salary offset and administrative wage
garnishment to the collection methods
allowed under the current regulation
and make other changes to strengthen
PBGC’s debt collection program.
DATES: Comments must be received by
September 20, 2010.
ADDRESSES: Comments may be
submitted by any of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the Web
site instructions for submitting
comments.
• E-mail: reg.comments@pbgc.gov.
• Fax: 202–326–4224.
• Mail or Hand Delivery: Legislative
and Regulatory Department, Pension
Benefit Guaranty Corporation, 1200 K
Street, NW., Washington, DC 20005–
4026.
Comments received, including
personal information provided, will be
posted to https://www.pbgc.gov. Copies
of comments may also be obtained by
writing to Disclosure Division, Office of
General Counsel, Pension Benefit
Guaranty Corporation, 1200 K Street,
NW., Washington, DC 20005–4026, or
calling 202–326–4040 during normal
business hours. (TTY and TDD users
may call the Federal relay service tollSUMMARY:
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free at 1–800–877–8339 and ask to be
connected to 202–326–4040.)
FOR FURTHER INFORMATION CONTACT:
Margaret E. Drake, Attorney, Office of
the General Counsel, Pension Benefit
Guaranty Corporation, 1200 K Street,
NW., Washington, DC 20005–4026; 202–
326–4400 (extension 3228). (For TTY/
TDD users, call the Federal relay service
toll-free at 1–800–877–8339 and ask to
be connected to 202–326–4400
(extension 3228)).
SUPPLEMENTARY INFORMATION: This
proposed rule will revise and replace
the PBGC’s debt collection regulations
found at 29 CFR part 4903 to conform
to the Debt Collection Improvement Act
of 1996 (DCIA), Public Law 104–134,
110 Stat. 1321, 1358 (April 26, 1996),
the revised Federal Claims Collection
Standards, 31 CFR chapter IX (parts 900
through 904), and other laws applicable
to the collection of non-tax debt owed
to the Government.
Background
In 1994, PBGC adopted a regulation
on debt collection to provide procedures
to implement administrative offset, as
authorized by the Federal Claims
Collection Act of 1966, as amended by
the Debt Collection Act of 1982 (31
U.S.C. 3701, et seq.), and in accordance
with regulations issued by the
Department of Justice and the General
Accountability Office. In 1995, PBGC
adopted a regulation on debt collection
to provide procedures to implement tax
refund offset, as required for
participation in the Federal tax refund
offset program authorized by 31 U.S.C.
3720A and in accordance with
regulations issued by the Treasury
Department. Together, these regulations
comprise PBGC’s current debt collection
regulation (29 CFR part 4903) providing
procedures for debt collection through
administrative offset and tax refund
offset. Administrative offset allows
PBGC to request that debts owed to
PBGC by a debtor (e.g., in connection
with government contractual
obligations) be offset by amounts
another Federal agency may owe to the
debtor. Likewise, other Federal agencies
may request the collection of debts
owed to them be offset by amounts
PBGC may owe the debtor. Tax refund
offset allows PBGC to request that debts
owed to PBGC by a debtor be offset by
amounts the Government may owe to
the debtor. The Debt Collection
Improvement Act of 1996 (DCIA)
fundamentally changed the manner in
which the Federal Government is
required to manage the collection of its
delinquent debts. Under DCIA, Congress
directed that the management of
E:\FR\FM\22JYP1.SGM
22JYP1
]]>Agencies
[Federal Register Volume 75, Number 140 (Thursday, July 22, 2010)]
[Proposed Rules]
[Pages 42659-42662]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-17957]
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DEPARTMENT OF THE TREASURY
Alcohol and Tobacco Tax and Trade Bureau
27 CFR Parts 40, 41, 44, 45, and 46
[Docket No. TTB-2010-0004; Notice No. 106]
RIN 1513-AB78
Standards for Pipe Tobacco and Roll-Your-Own Tobacco; Request for
Public Comment
AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.
ACTION: Advance notice of proposed rulemaking; solicitation of
comments.
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SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau requests public
comments on standards that have been proposed to distinguish between
pipe tobacco and roll-your-own tobacco for Federal excise tax purposes
based upon certain physical characteristics of the two products. We
also request comments on any other physical characteristics that may be
used for such purposes.
DATES: We must receive written comments on or before September 20,
2010.
ADDRESSES: You may send comments on this advance notice to one of the
following addresses:
https://www.regulations.gov (via the online comment form
for this advance notice as posted within Docket No. TTB-TTB-2010-0004
at ``Regulations.gov,'' the Federal e-rulemaking portal);
Mail: Director, Regulations and Rulings Division, Alcohol
and Tobacco Tax and Trade Bureau, P.O. Box 14412, Washington, DC 20044-
4412; or
Hand Delivery/Courier in Lieu of Mail: Alcohol and Tobacco
Tax and Trade Bureau, 1310 G Street, NW., Suite 200-E, Washington, DC
20005.
See the Public Participation section of this advance notice for
specific instructions and requirements for submitting comments, and for
information on how to request a public hearing.
You may view copies of this advance notice, selected supporting
materials, and any comments we receive about this proposal at https://www.regulations.gov within Docket No. TTB-2010-0004. A direct link to
this docket is posted on the TTB Web site at https://www.ttb.gov/tobacco/tobacco-rulemaking.shtml under Notice No. 106. You also may
view copies of this advance notice, any supporting materials, and any
comments we receive about this proposal by appointment at the TTB
Information Resource Center, 1310 G Street, NW., Washington, DC 20220.
Please call 202-453-2270 to make an appointment.
FOR FURTHER INFORMATION CONTACT: Amy R. Greenberg, Regulations and
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau (202-453-
2099).
SUPPLEMENTARY INFORMATION:
Background
TTB Authority
Chapter 52 of the Internal Revenue Code of 1986 (IRC) sets forth
the Federal excise tax and related provisions that apply to tobacco
products and processed tobacco manufactured in, or imported into, the
United States. Section 5702(c) of the IRC (26 U.S.C. 5702(c)) defines
the term ``tobacco products'' as ``cigars, cigarettes, smokeless
tobacco, pipe tobacco, and roll-your-own tobacco.'' Each of these terms
is also separately defined in section 5702.
Regulations implementing the provisions of chapter 52 of the IRC
are contained in 27 CFR parts 40 (Manufacture of tobacco products,
cigarette papers and tubes, and processed tobacco), 41 (Importation of
tobacco products, cigarette papers and tubes, and processed tobacco),
44 (Exportation of tobacco products and cigarette papers and tubes,
without payment of tax, or with drawback of tax), 45 (Removal of
tobacco products and cigarette papers and tubes, without payment of
tax, for use of the United States), and 46 (Miscellaneous regulations
relating to tobacco products and cigarette papers and tubes). These
regulations are administered by the Alcohol and Tobacco Tax and Trade
Bureau (TTB).
Children's Health Insurance Program Reauthorization Act of 2009
On February 4, 2009, the President signed into law the Children's
Health Insurance Program Reauthorization Act of 2009, Public Law 111-3,
123 Stat. 8 (``the Act'').
[[Page 42660]]
Section 701 of the Act amended the IRC to increase the Federal
excise tax rates on tobacco products and cigarette papers and tubes,
effective as of April 1, 2009. The tax rates on pipe tobacco and roll-
your-own tobacco, which had both previously been $1.0969 per pound,
were raised to $2.8311 per pound for pipe tobacco and $24.78 per pound
for roll-your-own tobacco. See 26 U.S.C. 5701(f) and (g), respectively.
On March 31, 2009, TTB published in the Federal Register (T.D. TTB-75,
74 FR 14479) a temporary rule to amend the TTB regulations to reflect
the section 701 changes. In the same issue of the Federal Register, TTB
also published a notice of proposed rulemaking (Notice No. 93, 74 FR
14506) inviting comments on the temporary regulations.
On June 22, 2009, TTB published a temporary rule in the Federal
Register (T.D. TTB-78, 74 FR 29401) to implement certain additional
changes made to the IRC by section 702 of the Act. In the same issue of
the Federal Register, TTB also published a notice of proposed
rulemaking (Notice No. 95, 74 FR 29433) inviting comments on the
temporary regulations.
In an additional temporary rule, published in the Federal Register
on September 24, 2009 (T.D. TTB-81, 74 FR 48650), TTB amended certain
temporary provisions set forth in T.D. TTB-78 by extending the length
of time packages of roll-your-own tobacco and pipe tobacco that did not
comply with new regulatory requirements could still be used. This
temporary rule also was published concurrent with a notice of proposed
rulemaking in the same issue of the Federal Register (Notice No. 99, 74
FR 48687) soliciting comments on the revision.
Distinguishing Between Pipe Tobacco and Roll-Your-Own Tobacco in T.D.
TTB-78
Temporary rule T.D. TTB-78 included new provisions regarding the
expansion of the statutory definition of roll-your-own tobacco
generally to include cigar wrapper and filler, and regarding the
packaging and labeling of pipe tobacco and roll-your-own tobacco to
better differentiate, on the basis of the packaging and labeling,
between these two types of taxable products. In T.D. TTB-78, TTB noted
that the tax rate increases adopted in section 701 of the Act resulted
in a significant difference between the rate of tax imposed on roll-
your-own tobacco ($24.78 per pound) and the rate of tax imposed on pipe
tobacco ($2.8311 per pound). Prior to the amendments made by the Act,
the two tax rates were the same.
The Bureau further noted that the existing TTB regulations
contained no standards to differentiate between roll-your-own tobacco
and pipe tobacco beyond a repeat of the statutory definitions. In T.D.
TTB-78, we amended these definitions to incorporate the definitional
changes contained in the Act. These definitional changes did not
include any language which provides objective standards to readily
distinguish between roll-your-own tobacco and pipe tobacco. Section
5702(o) of the IRC, as amended by the Act, defines the term ``roll-
your-own tobacco'' as ``any tobacco, which, because of its appearance,
type, packaging, or labeling, is suitable for use and likely to be
offered to, or purchased by, consumers as tobacco for making cigarettes
or cigars, or for use as wrappers thereof.'' The term ``pipe tobacco''
is defined at 26 U.S.C. 5702(n) as ``any tobacco which, because of its
appearance, type, packaging, or labeling, is suitable for use and
likely to be offered to, or purchased by, consumers as tobacco to be
smoked in a pipe.''
TTB recognizes that the similarity of roll-your-own tobacco and
pipe tobacco and the much lower rate on pipe tobacco resulting from the
tax rate changes made by the Act created an incentive for persons who
roll their own cigarettes to use pipe tobacco. In T.D. TTB-78, the
agency noted that there is now a heightened need for more regulatory
detail to clarify the difference between the two products. Because both
the definition of roll-your-own tobacco and the definition of pipe
tobacco require consideration of the packaging and labeling of the
product in order to determine the appropriate tax classification and
because additional regulatory standards regarding the packaging and
labeling were available, TTB amended the regulations to more clearly
distinguish between the two products on those bases. With regard to the
products' other defining characteristics, TTB stated that it was
evaluating analytical methods and other standards that may lead to
future rulemaking proposals.
Comments Received
As a result of our rulemaking actions, TTB received six written
submissions from four industry members and one consumer organization
suggesting specific standards that could be used to distinguish between
roll-your-own tobacco and pipe tobacco. According to some of these
commenters, such standards are urgently needed because, they allege,
the new packaging and labeling regulations are not sufficient to
prevent the misrepresentation of roll-your-own tobacco as pipe tobacco.
A representative for Altadis USA, Inc., a manufacturer and importer
of pipe tobacco, submitted the most detailed proposal regarding
physical standards in comments to Notice No. 95, which were repeated in
a separate letter to TTB's Administrator. Stating that it believes the
new packaging requirements outlined in Notice No. 95 are only
marginally helpful in dealing with the ``misclassification problem,''
Altadis USA, Inc. proposes that TTB establish standards of physical
characteristics for pipe tobacco. It asserts that examination of
physical characteristics is necessary to determine whether the product,
by virtue of its ``appearance'' and ``type,'' is ``suitable for use''
as tobacco to be smoked in a pipe, as described in the statutory
definition of pipe tobacco at 26 U.S.C. 5702(n), or as tobacco for
making cigarettes or cigars, as described in the statutory definition
of roll-your-own tobacco at 26 U.S.C. 5702(o). This commenter therefore
proposes that processed tobacco in its finished form be classified as
pipe tobacco only if it meets at least one of the following:
At least 18% of its weight consists of reducing sugars;
Moisture content exceeds 22% of its weight;
Its cut tobacco exceeds \1/8\ inch in width;
At least 10% of its weight consists of Latakia, Perique,
or Black Tobacco (USDA Type 37) or a combination thereof; or
At least 20% of its weight consists of flavoring, casing,
or other non-tobacco content.
According to the commenter, any processed tobacco product that does
not meet any of these criteria cannot be legitimately classified as
pipe tobacco and must be classified as roll-your-own tobacco.
TTB notes that this commenter also proposes that TTB take into
consideration pre-existing or established brands for pipe tobacco and
roll-your-own tobacco. The commenter states that prior to the
introduction of the relevant tobacco tax legislation in Congress in
January 2009, there were no ``crossover brands'', that is, ``brands
associated with both pipe tobacco and roll-your-own tobacco.'' The
commenter therefore urged TTB to deem any processed tobacco regularly
sold under a pre-existing brand name, trade name, or trademark
predominantly associated with roll-your-own tobacco, prior to January
1, 2009, as roll-your-own tobacco. Similarly, any processed tobacco
regularly sold under a pre-
[[Page 42661]]
existing brand name, trade name, or trademark predominantly associated
with pipe tobacco prior to January 1, 2009, should be deemed pipe
tobacco.
A representative of Top Tobacco L.P., a manufacturer of roll-your-
own-tobacco, specifically addresses the above commenter's proposed
standards for pipe tobacco in a letter to TTB's Administrator. Although
the company states that it agrees with the general statement of facts
in the submission, it disagrees with the proposed criterion regarding
the width of the cut of the tobacco. This commenter states that it does
not believe that the width factor can be a reliable indicator of
whether or not a product is intended for consumption as roll-your-own
tobacco or pipe tobacco because, according to the commenter, tobacco
cut at \1/8\ of an inch can be rolled into cigarettes and, further,
consumers can use basic kitchen or hardware appliances to grind wider
cut tobacco into a size suitable for use as roll-your-own tobacco. The
commenter goes on to assert that width standards proposed in Germany
were not successful.
In response to Notice No. 95, the Pipe Tobacco Council, Inc. (PTC)
submitted a comment proposing that pipe tobacco products sold as such
prior to January 1, 2009, be exempt from the proposed labeling and
packaging regulations. The PTC proposes that manufacturers with such
products certify that the products were on the market prior to January
1, 2009, and that TTB create and maintain a database of such
certifications. Manufacturers wishing to market any products as pipe
tobacco that would be sold to consumers for the first time on or after
January 1, 2009, would be required to submit a sample of the finished
product to TTB along with a ``valid reason why the product should be
considered pipe tobacco.'' Such reasons could include the product's cut
size, casing and flavoring rates, tobacco grades used, cut style, and
moisture. Finally, PTC proposes that any brand name or trademark that
was ever sold as either a roll-your-own tobacco product or cigarette
brand produced and sold after January 1, 2009, should not be classified
as pipe tobacco.
A representative of the National Tobacco Company LP (NTC), a
manufacturer of both pipe tobacco and roll-your-own tobacco, in a
comment to Notice No. 95, states that the constituent tobacco materials
used in various tobacco products often overlap in terms of their type
and appearance. Therefore, NTC believes that the type of tobacco and
the appearance of the tobacco product are not always reliable guides to
the product's suitable and intended use. Nonetheless, the commenter
does suggest a number of characteristics that could be used to identify
pipe tobacco, such as the inclusion of substantial amounts of
Cavendish, Latakia, or Perique tobacco, the appearance of a broad-leaf
cut tobacco blend, high moisture content, dense packing, burn
inhibitors, and block or flake cut. NTC states that the presence of
menthol flavoring and the use of blending components such as expanded
stem, expanded leaf tobacco, or reconstituted sheet tobacco could
indicate that a tobacco product is intended for use as roll-your own
tobacco.
In a comment to Notice No. 99 (74 FR 48687), Extension of Package
Use-Up Rule for Roll-Your-Own Tobacco and Pipe Tobacco, the consumer
organization Campaign for Tobacco-Free Kids states that the proposed
packaging regulations do not do enough to prevent the mislabeling of
roll-your-own tobacco as pipe tobacco. It urges TTB to establish clear
criteria to distinguish between those types of tobacco that may be
labeled as pipe tobacco and those that may not. The group suggests that
one possibility is to require that any loose tobacco consisting
primarily of flue-cured or burley tobacco be labeled and taxed as roll-
your-own tobacco.
TTB Response
We are aware that additional regulatory standards to distinguish
between roll-your-own tobacco and pipe tobacco, based on physical
characteristics, would be beneficial. It is our primary concern that
any regulatory distinction drawn between these products be objective
and enforceable. To that end, TTB continues to conduct research on the
physical characteristics of the products that may be used to
effectively distinguish between the two products for tax purposes. We
also believe that soliciting comments from the public may assist us in
developing objective, enforceable, and not easily subverted
distinctions. Accordingly, in this document we are requesting comments
on the proposals set forth above, and any additional comments, on the
distinguishing physical characteristics of the two products.
Public Participation
Comments Invited
We invite comments from interested members of the public on whether
the physical standards discussed above under the heading ``Comments
Received'' are appropriate and sufficient for distinguishing between
pipe tobacco and roll-your-own tobacco. We also request comments on any
additional physical characteristics that could also be used to
distinguish between these two tobacco products for tax classification
purposes. Furthermore, we invite comments on any particular
combination(s) of physical characteristics which would distinguish
between pipe tobacco and roll-your-own tobacco. If a commenter can
identify a specific list of differentiating physical characteristics,
we invite the commenter to opine on what number of the physical
characteristics should be present in order for the product to be
classified as ``pipe tobacco'' (e.g., 2 of 5, 3 of 6). In addition, we
request comments providing objective methods for analyzing whether or
not a tobacco product meets the physical characteristics discussed in
this notice or any additional physical characteristics suggested by the
commenter. In particular, we invite commenters to provide objective
methods for determining the percentage of Cavendish, Latakia, Perique,
or Black Tobacco in a tobacco product, and for determining the
percentage of casings and flavorings on a tobacco product.
Submitting Comments
You may submit comments on this advance notice by using one of the
following three methods:
Federal e-Rulemaking Portal: You may send comments via the
online comment form linked to this advance notice in Docket No. TTB-
2010-0004 on ``Regulations.gov,'' the Federal e-rulemaking portal, at
https://www.regulations.gov. A link to the docket is available under
Notice No. 106 on the TTB Web site at https://www.ttb.gov/tobacco/tobacco-rulemaking.shtml. Supplemental files may be attached to
comments submitted via Regulations.gov. For information on how to use
Regulations.gov, click on the site's Help or FAQ tabs.
U.S. Mail: You may send comments via postal mail to the
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and
Trade Bureau, P.O. Box 14412, Washington, DC 20044-4412.
Hand Delivery/Courier: You may hand-carry your comments or
have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau,
1310 G Street, NW., Suite 200-E, Washington, DC 20005.
Please submit your comments by the closing date shown above in this
notice. Your comments must reference Notice No. 106 and include your
name and mailing address. Your comments also must be made in English,
be legible, and be written in language acceptable for public
disclosure. We do not
[[Page 42662]]
acknowledge receipt of comments, and we consider all comments as
originals.
If you are commenting on behalf of an association, business, or
other entity, your comment must include the entity's name as well as
your name and position title. If you comment via Regulations.gov,
please include the entity's name in the ``Organization'' blank of the
comment form. If you comment via postal mail, please submit your
entity's comment on letterhead.
You may also write to the Administrator before the comment closing
date to ask for a public hearing. The Administrator reserves the right
to determine whether to hold a public hearing.
Confidentiality
All submitted comments and attachments are part of the public
record and subject to disclosure. Do not enclose any material in your
comments that you consider to be confidential or that is inappropriate
for public disclosure.
Public Disclosure
On the Federal e-rulemaking portal, Regulations.gov, we will post,
and the public may view, copies of this advance notice, selected
supporting materials, and any electronic or mailed comments we receive
about this proposal. A direct link to the Regulations.gov docket
containing this advance notice and the posted comments received on it
is available on the TTB Web site at https://www.ttb.gov/tobacco/tobacco-rulemaking.shtml under Notice No. 106. You may also reach the
docket containing this advance notice and the posted comments received
on it through the Regulations.gov search page at https://www.regulations.gov.
All posted comments will display the commenter's name, organization
(if any), city, and State, and, in the case of mailed comments, all
address information, including e-mail addresses. We may omit voluminous
attachments or material that we consider unsuitable for posting.
You and other members of the public may view copies of this advance
notice, any related supporting materials, and any electronic or mailed
comments we receive about this proposal by appointment at the TTB
Information Resource Center, 1310 G Street, NW., Washington, DC 20220.
You may also obtain copies at 20 cents per 8.5 x 11 inch page. Contact
our information specialist at the above address or by telephone at 202-
453-2270 to schedule an appointment or to request copies of comments or
other materials.
Drafting Information
Jennifer Berry of the Regulations and Rulings Division drafted this
advance notice.
Signed: April 28, 2010.
John J. Manfreda,
Administrator.
Approved: May 26, 2010.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade, and Tariff Policy) .
[FR Doc. 2010-17957 Filed 7-21-10; 8:45 am]
BILLING CODE 4810-31-P
