Reclassification of Specially Denatured Spirits and Completely Denatured Alcohol Formulas and Related Amendments, 38628-38645 [2013-15262]

Download as PDF TKELLEY on DSK3SPTVN1PROD with PROPOSALS 38628 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules to the southwest corner of section 12, T16N/R13W; then (7) Proceed west-southwesterly in a straight line approximately 0.8 mile, crossing onto the Orrs Springs map, to the 1,883-foot elevation point in section 14, T16N/R13W; then (8) Proceed west-southwesterly in a series of three straight lines (totaling approximately 3.15 miles in distance), first to the 1,836-foot elevation point in section 15, T16N/R13W; then to the 1,805-foot elevation point in section 16, T16N/R13W; and then to the 2,251-foot elevation point in section 20, T16W/ R13W; then (9) Proceed south-southwesterly in a straight line approximately 0.8 mile to the 2,562-foot elevation point, section 20, T16N/R13W; then (10) Proceed north-northwesterly in a straight line approximately 0.8 mile to the 2,218-foot elevation point, section 19, T16N/R13W; then (11) Proceed northeasterly in a straight line approximately 0.35 mile to the 2,112-foot elevation point in the southeast corner of section 18, T16N/ R13W; then (12) Proceed north-northeasterly in a straight line approximately 0.9 mile to the 2,344-foot elevation point, section 17, T16N/R13W; then (13) Proceed northwesterly in a straight line approximately 1.8 miles, crossing onto the Laughlin Range map, to the intersection of the R13W/R14W common boundary line and an unnamed, unimproved road east of Leonard Lake, section 1, T16N/R14W; then (14) Proceed west-northwesterly along the unnamed, unimproved road to the road’s intersection with the 2,000 foot contour line between Leonard Lake and Mud Lake, section 1, T16N/R13W; then (15) Proceed north-northwesterly in a straight line approximately 1.6 miles, crossing onto the Greenough Ridge map, to the 2,246-foot elevation point, section 26, T17N/R14W; then (16) Proceed northerly in a straight line approximately 0.9 mile to the 2,214-foot elevation point, section 23, T17N/R14W; then (17) Proceed northeasterly in a straight line approximately 1 mile, crossing onto the Laughlin Range map, to the peak of Impassable Rocks, section 24, T17N/R14W; then (18) Proceed northwesterly in a straight line approximately 0.95 mile, crossing onto the Greenough Ridge map, to the 2,617-foot elevation point, section 14, T17N/R14W, and continue northwesterly in a straight line approximately 0.8 mile to the 2,836-foot elevation point of Irene Peak, section 11, T17N/R14W; then VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 (19) Proceed northerly in a straight line approximately 1 mile to the intersection of 3 unnamed unimproved roads approximately 0.3 mile west of the headwaters of Walker Creek (locally known as the intersection of Blackhawk Drive, Walker Lake Road, and Williams Ranch Road) section 2, T17N/R14W; then (20) Proceed easterly along the unnamed improved road, locally known as Blackhawk Drive, approximately 1.35 miles, crossing onto the Laughlin range map, to the road’s intersection with the section 2 eastern boundary line, T17N/ R14W; then (21) Proceed east-northeasterly in a straight line approximately 0.75 mile, returning to the 2,213 elevation point near the northeast corner of section 1, T17N/R14W; then (22) Proceed southeasterly in a straight line approximately 3.55 miles to BM 1893 (0.2 mile south of Ridge) in section 16, T17N/R13W, and then continue southeasterly in a straight line approximately 0.85 mile to a radio facility located at approximately 2,840 feet in elevation in the Laughlin Range, section 15, T17N/R13W; then (23) Proceed easterly in a straight line approximately 0.85 mile to another radio facility located at approximately 3,320 feet in elevation in the Laughlin Range, section 14, T17N/R13W; then (24) Proceed southerly in a straight line approximately 1.5 miles to the 2,452-foot elevation point in section 26, T17N/R13W; then (25) Proceed southeasterly in a straight line approximately 0.4 mile to the intersection of the 1,800-foot contour line with Bakers Creek within McGee Canyon, section 26, T17N/ R13W; then (26) Proceed southeasterly (downstream) approximately 0.2 mile along Bakers Creek, returning to the beginning point. Dated: June 18, 2013. John J. Manfreda, Administrator. [FR Doc. 2013–15247 Filed 6–26–13; 8:45 am] BILLING CODE 4810–31–P PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Parts 19, 20, 21, 27, and 28 [Docket No. TTB–2013–0005; Notice No. 136] RIN 1513–AB03 Reclassification of Specially Denatured Spirits and Completely Denatured Alcohol Formulas and Related Amendments Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Notice of proposed rulemaking; solicitation of comments. AGENCY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes to amend its regulations concerning denatured alcohol and products made with industrial alcohol. The proposed amendments would eliminate outdated specially denatured spirits formulas from the regulations, reclassify some specially denatured spirits formulas as completely denatured alcohol formulas, and issue some new general-use formulas for manufacturing products with specially denatured spirits. The proposed amendments would remove unnecessary regulatory burdens on the industrial alcohol industry as well as TTB, and would align the regulations with current industry practice. The proposed amendments would also make other needed improvements and clarifications, as well as a number of minor technical changes and corrections to the regulations. TTB invites comments on these proposed amendments to the regulations. DATES: TTB must receive your written comments on or before August 26, 2013. ADDRESSES: You may send comments on this document to one of the following addresses: • https://www.regulations.gov: To submit comments via the Internet, use the comment form for this document as posted within Docket No. TTB–2013– 0005 at ‘‘Regulations.gov,’’ the Federal e-rulemaking portal; • Mail: Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005. • 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 document for specific instructions and requirements for submitting comments, and for information on how to request a public hearing. SUMMARY: E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules You may view copies of this document, selected supporting materials, and any comments TTB receives about this proposal within Docket No. TTB–2013–0005 at https:// www.regulations.gov. A link to this Regulations.gov docket is posted on the TTB Web site at https://www.ttb.gov/ regulations_laws/all_rulemaking.shtml under Notice No. 136. You also may view copies of this document, all supporting materials, and any comments TTB receives about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. Please call 202–453–2270 to make an appointment. FOR FURTHER INFORMATION CONTACT: Karen Welch of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, at 202–453– 1039, extension 046, or IndustrialAlcoholRegs@ttb.gov. SUPPLEMENTARY INFORMATION: Authority and Background TKELLEY on DSK3SPTVN1PROD with PROPOSALS Internal Revenue Code Chapter 51 of the Internal Revenue Code of 1986 (IRC), 26 U.S.C. chapter 51, contains excise tax and related provisions concerning distilled spirits used for both beverage and nonbeverage purposes. The IRC imposes an excise tax rate of $13.50 per proof gallon on distilled spirits (26 U.S.C. 5001). Under section 5006(a) of the IRC (26 U.S.C. 5006(a)) the excise tax on distilled spirits is generally determined at the time the distilled spirits are withdrawn from the bonded premises of a distilled spirits plant. However, section 5214(a) of the IRC authorizes, subject to regulations prescribed by the Secretary of the Treasury, the following two types of spirits to be withdrawn free of tax: • Spirits that have been ‘‘denatured’’ by the addition of materials that make the spirits unfit for beverage consumption; and • Undenatured spirits for certain governmental, educational, medical, or research purposes. Section 5214(a)(1) of the IRC permits the withdrawal of denatured spirits free of tax for: • Exportation; • Use in the manufacture of a definite chemical substance, where such distilled spirits are changed into some other chemical substance and do not appear in the finished product; or • Any other use in the arts or industry, or for fuel, light, or power, except that, under 26 U.S.C. 5273(b), denatured spirits may not be used in the VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 manufacture of medicines or flavors for internal human use where any of the spirits remain in the finished product, and, under section 5273(d), denatured spirits may not be withdrawn or sold for beverage purposes. The IRC authorizes the Secretary of the Treasury to prescribe regulations regarding the production, warehousing, denaturing, distribution, sale, export, and use of industrial alcohol in order to protect the revenue (26 U.S.C. 5201), and to regulate materials that are suitable to denature distilled spirits (26 U.S.C. 5241 and 5242). Section 5242 states that denaturing materials shall be such as to render the spirits with which they are admixed unfit for beverage or internal medicinal use and that the character and quantity of denaturing materials used shall be as prescribed by the Secretary by regulations. Furthermore, section 5273(a) of the IRC requires that any person using specially denatured spirits (which is defined in the following section of this document) to manufacture products: * * * shall file such formulas and statements of process, submit such samples, and comply with such other requirements, as the Secretary shall by regulations prescribe, and no person shall use specially denatured distilled spirits in the manufacture or production of any article until approval of the article, formula, and process has been obtained from the Secretary.1 Regulation of Denatured Spirits The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers Chapter 51 of the IRC pursuant to section 111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120–01 (Revised), dated January 21, 2003, to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law. Regulations pertaining specifically to denatured spirits are found in 27 CFR part 20 (Distribution and use of denatured alcohol and rum) and part 21 (Formulas for denatured alcohol and rum). Certain provisions in TTB’s regulations in 27 CFR part 19 (Distilled spirits plants), part 27 (Importation of distilled spirits, wines, and beer), and 1 Other sections of the IRC relating to denatured spirits set forth requirements pertaining to the taxation and manufacture of distilled spirits, the withdrawal of distilled spirits free of tax or without payment of tax, the importation and exportation of distilled spirits, the issuance of permits for industrial alcohol users and dealers, the sale and use of industrial alcohol, and the recovery of potable alcohol from industrial alcohol (see 26 U.S.C. 5002 through 5008, 5061, 5062, 5101, 5111, 5112, 5131, 5132, 5181, 5204, 5214, 5232, 5235, 5271, 5273, and 5313). PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 38629 part 28 (Exportation of alcohol) also concern denatured spirits. Denatured spirits are spirits to which denaturants—which are materials that make alcoholic mixtures unfit for beverage or internal human medicinal use—have been added in accordance with 27 CFR part 21. TTB approves denaturants if the denaturants: (1) Make the spirits unfit for beverage or internal human medicinal use (26 U.S.C. 5242 and 27 CFR 21.11), (2) are adequate to protect the Federal excise tax revenue (27 CFR 21.91), and (3) are suitable for the intended use of the denatured spirits (26 U.S.C. 5242).2 There are two types of denatured spirits: completely denatured alcohol (C.D.A.) and specially denatured spirits (referred to as ‘‘S.D.S.’’ for purposes of this preamble). C.D.A. jeopardizes the revenue less than S.D.S. does—first, C.D.A. is more offensive to the taste than S.D.S. and thus C.D.A. is less likely to be used for beverage purposes, and second, it is more difficult to separate potable alcohol from C.D.A. than it is from S.D.S. For these reasons, the withdrawal and use of C.D.A. are subject to less stringent regulatory oversight than are the withdrawal and use of S.D.S. Title 27 CFR 20.41 provides that permits are required to withdraw, deal in, or use S.D.S. The regulations also require that dealers and users of S.D.S. maintain specified records and retain invoices (see 27 CFR 20.262 through 20.268). Under § 20.264(b), users of S.D.S. are required to submit an annual report to TTB, and, under § 20.262(d), a dealer, as defined in 27 CFR 20.11, when requested by TTB, must submit a required accounting of each formulation of new and recovered S.D.S. In contrast, under 27 CFR 20.141, no permits are required to use or distribute C.D.A. (with the exception of recovery for reuse). A person that receives, packages, stores, disposes of, or uses C.D.A. is required to maintain records only when specifically requested by TTB (see 27 CFR 20.261). The regulations do not provide any reporting requirements for persons that use or deal in C.D.A. The regulations prescribe formulas for C.D.A. and for S.D.S. C.D.A. generally may be sold and used for any purpose (§ 20.141), with the exception that C.D.A. denatured in accordance with Formula No. 20 is restricted to fuel use (27 CFR 21.24). In contrast, S.D.S., 2 In most cases, spirits used for industrial purposes are ‘‘alcohol,’’ which in this context means a type of spirits distilled at more than 160 degrees of proof and substantially neutral in character, lacking the taste, aroma, and other characteristics generally attributed to whisky, brandy, rum, or gin. (27 CFR 19.487(a)(1).) E:\FR\FM\27JNP1.SGM 27JNP1 38630 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules TKELLEY on DSK3SPTVN1PROD with PROPOSALS which is generally used as a raw material or ingredient in the manufacture of other products (termed ‘‘articles’’), may not be used for any purpose not specifically authorized in the regulations. The authorized purposes are categorized within ‘‘use codes,’’ which are published in the regulations in 27 CFR part 21. Manufacture of Articles With Denatured Spirits Both C.D.A. and S.D.S. may be used to manufacture articles, which are defined in section 5002(a)(14) of the IRC (26 U.S.C. 5002(a)(14)) as ‘‘any substance in the manufacture of which denatured distilled spirits are used.’’ The manufacture of articles with C.D.A. is generally unregulated. By contrast, the manufacture of articles with S.D.S. is strictly regulated under 27 CFR part 20, in accordance with sections 5271 through 5275 of the IRC (26 U.S.C. 5271–5275). A significant aspect of this regulation is the requirement for prior TTB approval of all articles made with S.D.S. Such approval is mandated by law in section 5273(a) of the IRC (26 U.S.C. 5273(a)), which states, ‘‘. . . no person shall use specially denatured distilled spirits in the manufacture or production of any article until approval of the article, formula, and process has been obtained from the Secretary.’’ TTB approval of articles takes two forms. First, TTB approves specific, proprietary formulas and processes for articles, submitted by manufacturers on TTB Form 5150.19. Second, ‘‘generaluse formulas,’’ which TTB generally approves by publishing them in the regulations in 27 CFR part 20, are approved formulas for articles. Generaluse formulas may be used by any manufacturer that has a TTB permit to use S.D.S. in the manufacture of articles. Each general-use formula authorizes the production of only a specific type of article. Under § 20.111, manufacturers of articles produced pursuant to generaluse formulas are not required to obtain specific formula approval from TTB on TTB Form 5150.19. Thus, the regulatory burden is lighter on manufacturers producing articles pursuant to generaluse formulas than on manufacturers producing articles pursuant to other formulas that prescribe S.D.S. (In fiscal year 2011, TTB received 1,593 formula applications on TTB Form 5150.19.) Updating of Industrial Alcohol Regulations In this document, TTB proposes changes to the industrial alcohol regulations found in 27 CFR parts 19, 20, 21, 27, and 28. The proposed changes would reduce regulatory VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 burdens on the industrial alcohol industry as well as TTB, update the regulations to align them with current industry practice, and clarify other regulatory provisions. Terminology TTB is providing the following definitions to assist in comprehension of this proposed rulemaking: • Rum is any spirit produced from sugar cane products and distilled at less than 190 proof in such manner that the spirit possesses the taste, aroma, and characteristics generally attributed to rum. • A formula is an instruction for manufacturing a product, and is analogous to a recipe that a cook follows. This document refers to two broad types of formulas: Denatured alcohol formulas and article formulas. Denatured alcohol formulas specify the instructions for producing either S.D.S (as specified in 27 CFR part 21 subpart D) or C.D.A. (as specified in 27 CFR part 21 subpart C). Article formulas include both formulas approved individually by TTB on TTB Form 5150.19 and generaluse formulas (as specified in 27 CFR 20.112 through 20.119). • A formulation is a physical product manufactured in accordance with a formula, and is analogous to a cooked meal that has been prepared, using a recipe. The word ‘‘formulation’’ can refer to S.D.S., C.D.A., or an article. • Specially Denatured Spirits (S.D.S.) are specially denatured alcohol (S.D.A.) and/or specially denatured rum (S.D.R.). Only a registered distilled spirits plant may produce S.D.S. TTB and industry generally refer to formulations of S.D.S. by the formula number. For example, a formulation produced in accordance with S.D.A. Formula No. 40–B is simply referred to as ‘‘S.D.A. 40–B.’’ To reflect the common parlance, this same shorthand is used throughout this document. • Specially Denatured Alcohol (S.D.A) is alcohol that has been denatured following a formula specified in subpart D of 27 CFR part 21. A formulation of S.D.A. may be used only for the uses specified for the corresponding formula in 27 CFR part 21. • Specially Denatured Rum (S.D.R.) is rum that has been denatured following the formula specified in subpart D of 27 CFR part 21. S.D.R. may be used only for the uses specified for that formula in 27 CFR part 21. (There is currently only one formula for S.D.R.) • Completely Denatured Alcohol (C.D.A.) is alcohol that has been denatured under a formula specified in subpart C of 27 CFR part 21. Only a PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 registered distilled spirits plant may produce C.D.A. TTB and industry generally refer to formulations of C.D.A. by the formula number. For example, a formulation produced in accordance with C.D.A. Formula No. 20 is simply referred to as ‘‘C.D.A. 20.’’ To reflect the common parlance, this same shorthand is used throughout this document. • An article is any substance or preparation manufactured using denatured spirits. • A general-use formula is a formula for making a certain type of article that is prescribed by 27 CFR 20.112 through 20.119, approved by TTB as an alternate method, or published as a TTB ruling. Specific formula approval by TTB on Form 5150.19 is not required for an article made pursuant to a general-use formula. Business Process Reengineering Study As part of TTB’s effort to reduce regulatory burdens, TTB commissioned a Business Process Reengineering (BPR) study to streamline the approval process for articles made with S.D.S. The BPR study involved a review of the S.D.S. formulas in 27 CFR part 21 with the goal of achieving significantly less regulatory burden without threat to the revenue. The BPR study also examined whether any S.D.S. formulas are no longer in use, and thus can be deleted. TTB proposes to adopt the following BPR recommendations: • To remove from the regulations 16 S.D.A. formulas that are no longer in use; • To reclassify two S.D.A. formulas as C.D.A. formulas; • To issue a general-use formula for any appropriate articles made with any of 15 S.D.A. formulations—14 S.D.A. formulations identified in the BPR study and S.D.A. No. 35–A, which was identified by TTB as being appropriate for the general-use formula; and • To issue three general-use formulas subject to specified conditions. These proposed changes to the regulations are discussed below. Review of Other Regulations Relating to the Manufacture, Use, and Distribution of S.D.A., C.D.A., and Articles In addition to commissioning the BPR study, TTB reviewed past formula approvals and industry member requests to determine if it would be appropriate to create any other new general-use formulas or revise any existing general-use formulas. As a result of this review, TTB determined that it would be appropriate to create an additional new general-use formula for duplicating fluids and ink solvents, and to authorize one additional denaturant E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules for the existing general-use formula for proprietary solvents. These changes are discussed in detail below. TTB also reviewed the denaturants authorized in part 21 to ascertain whether their use is consistent with other Federal regulations. As a result of this review, TTB decided to remove one denaturant, benzene, from the regulations in part 21. Its removal is discussed in detail below. TTB also reviewed the related regulations in 27 CFR parts 19, 20, 27, and 28 and found references to a number of out-dated processes. Consequently, TTB is proposing to change the regulations in 27 CFR parts 19, 20, 27, and 28 relating to the following subjects: • Destruction of S.D.S. or recovered alcohol; • Adoption of formulas by parent or subsidiary corporations; • Bay rum, alcoholado, or alcoholadotype toilet waters for export; Section No. S.D.A. formula No. 21.34 .................................... 2–C .................................... .................................... .................................... .................................... .................................... .................................... 3–B 6–B 17 20 22 23–F 21.52 21.53 21.54 21.60 21.66 21.69 .................................... .................................... .................................... .................................... .................................... .................................... 27 27–A 27–B 33 38–C 39 21.70 .................................... 39–A 21.78 .................................... 42 21.81 .................................... TKELLEY on DSK3SPTVN1PROD with PROPOSALS 21.36 21.39 21.42 21.45 21.46 21.48 46 Some of the formulas that TTB is proposing to remove from the regulations prescribe denaturants that are not mentioned in other formulas; therefore, TTB is proposing to remove the following denaturants from the table in 27 CFR 21.151, which sets forth a list of denaturants authorized for use in denatured spirits: • Bone oil (Dipple’s oil); • Chloroform; • Cinchonidine; • Cinchonidine sulfate, N.F. IX; • Gentian violet; • Gentian violet, U.S.P.; • Mercuric iodide, red, N.F. XI.; • Pine tar, U.S.P.; • Phenyl mercuric benzoate; • Phenyl mercuric chloride, N.F. IX.; VerDate Mar<15>2010 16:41 Jun 26, 2013 • Reagent alcohol for manufacturing; • Labeling of articles; • Exportation of S.D.S. by dealers; and • Articles for export. In addition to the above changes, TTB is proposing to make clarifying and technical changes to the regulations relating to: • Records of article manufacture; • Part 20 definitions; • Developmental samples of articles; • General-use formulas; • General-use formulas for tobacco flavors and inks; • Use of the word ‘‘formulation’’ instead of the word ‘‘formula;’’ • Low alcohol general-use formula; • Articles for internal human use; • Registration of persons trafficking in articles; • Shipment for the account of another dealer; Jkt 229001 38631 • Incomplete shipments of S.D.S.— use of the term ‘‘proprietor;’’ • Permittee’s Records and Reports; • Authorization of substitute denaturants in part 21; • Incorporation of authorized substitute denaturants; • Industry Circular 75–6, Importation of Ethyl Alcohol for Industrial Purposes; and • Certain miscellaneous nonsubstantive technical or editorial matters. Proposed Substantive Changes Removal of Certain S.D.A. Formulas TTB is proposing to remove the 16 S.D.A. formulas in part 21 that do not appear to be in use. Those 16 formulas and the denaturants prescribed for each formula are identified in the table below: Denaturant(s) per 100 gallons of alcohol of not less than 185 proof 33 pounds or more of metallic sodium and either 1⁄2 gallon of benzene, 1⁄2 gallon of toluene, or 1⁄2 gallon of rubber hydrocarbon solvent. 1 gallon of pine tar, U.S.P. 1⁄2 gallon of pyridine bases. 0.05 gallon (6.4 fl. oz.) of bone oil (Dipple’s oil). 5 gallons of chloroform. 10 gallons of formaldehyde solution, U.S.P. 3 pounds of salicylic acid, U.S.P., 1 pound of resorcinol (resorcin), U.S.P., and 1 gallon of bergamot oil, N.F. XI, or bay oil (myrcia oil), N.F. XI. 1 gallon of rosemary oil, N.F. XII, and 30 pounds of camphor, U.S.P. 35 pounds of camphor, U.S.P., and 1 gallon of clove oil, N.F. 1 gallon of lavender oil, N.F., and 100 pounds of green soap, U.S.P. 30 pounds of gentian violet or gentian violet, U.S.P. 10 pounds of menthol, U.S.P., and 1.25 gallons of formaldehyde solution, U.S.P. 9 pounds of sodium salicylate, U.S.P., or salicylic acid, U.S.P.; 1.25 gallons of fluid extract of quassia, N.F. VII; and 1⁄8 gallon of tert-butyl alcohol. 60 avoirdupois ounces of any one of the following alkaloids or salts together with 1⁄8 gallon of tert-butyl alcohol: quinine, N.F. X.; quinine bisulfate, N.F. XI.; quinine dihydrochloride, N.F. XI.; cinchonidine; cinchonidine sulfate, N.F. IX. (1) 80 grams of potassium iodide, U.S.P., and 109 grams of red mercuric iodide, N.F. XI; or (2) 95 grams of thimerosal, U.S.P.; or (3) 76 grams of any of the following: phenyl mercuric nitrate, N.F.; phenyl mercuric chloride, N.F. IX; or phenyl mercuric benzoate. 25 fluid ounces of phenol, U.S.P., and 4 fluid ounces of methyl salicylate, N.F. • Phenyl mercuric nitrate, N.F.; • Pyridine bases; • Quassia, fluid extract, N.F. VII; • Quinine, N.F. X; • Quinine dihydrochloride, N.F. XI; • Resorcinol (Resorcin), U.S.P.; • Salicylic acid, U.S.P.; • Sodium (metallic); and • Thimerosal, U.S.P. TTB also proposes to remove the following regulations that provide specifications for some of these denaturants, because the specifications would no longer be needed. Those regulations are 27 CFR 21.98 (Bone oil (Dipple’s oil)), 21.103 (Chloroform), 21.104 (Cinchonidine), 21.111 (Gentian violet), 21.121 (Phenyl mercuric PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 benzoate), 21.122 (Pyridine bases), and 21.128 (Sodium (metallic)). In addition, TTB proposes to remove the references to each of the 16 S.D.A. formulas from the chart in 27 CFR 21.141, which lists products and processes for which specially denatured alcohol and rum are specified. TTB also proposes to remove the reference to ‘‘Antiseptic, bathing solution (restricted)’’ from the chart in § 21.141, because the only S.D.A. formula specified for that product is Formula No. 46, which is being removed from the regulations. Finally, in 27 CFR 21.161, TTB proposes to remove the entry for each of the 16 S.D.A. formulas from the chart, E:\FR\FM\27JNP1.SGM 27JNP1 38632 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules which lists the weights and specific gravities of specially denatured alcohol. Reclassification of Certain S.D.A. Formulas as C.D.A. Formulas As noted above, TTB has identified two S.D.A. formulas that TTB could reclassify as C.D.A. formulas, because it would be very difficult to separate the denaturant from the alcohol in the resulting formulation. S.D.A. Formula No. 12–A, found in 27 CFR 21.40, currently specifies 5 gallons of benzene or toluene per 100 gallons of alcohol of not less than 185 proof. S.D.A. Formula No. 35, found in § 21.61, specifies 29.75 gallons of ethyl acetate having an ester content of 100 percent by weight or the equivalent thereof not to exceed 35 gallons of ethyl acetate with an ester content of not less than 85 percent by weight per 100 gallons of alcohol of not less than 185 proof. These two formulas prescribe denaturants that form azeotropes—liquid mixtures that have constant minimum or maximum boiling points that are lower or higher than that of any of their components, and that distill without a change in composition—with ethanol in the resulting formulations. Thus, it would be more difficult to separate the ethanol from the denaturants by distillation and simple manipulation compared to other S.D.S. formulations. Therefore, TTB proposes to reclassify these two S.D.A. formulas as C.D.A. formulas by removing §§ 21.40 and 21.61 and by adding new 27 CFR 21.21a and 21.25 respectively. In addition, TTB proposes to remove the references to these two S.D.A. formulas from the charts in §§ 21.141 and 21.161. General-Use Formula for Articles Made With Certain S.D.A. Formulations As was explained earlier in this document, general-use formulas are provided in 27 CFR Part 20 for the production of certain types of articles. Manufacturers of articles produced in accordance with general-use formulas are not required to obtain specific formula approval from TTB on Form 5150.19. As stated above, TTB has determined that it would be appropriate to issue a new general-use formula for any appropriate articles made with one or more of 15 S.D.A. formulations—the 14 S.D.A. formulations identified in the BPR study and S.D.A. 35–A, which TTB identified as being appropriate for the general-use formula. It would be difficult to separate the alcohol from the articles produced using one or more of those 15 S.D.A. formulations, and, thus, revenue would not be jeopardized. The 15 S.D.A. formula numbers and their denaturant specifications are as follows: S.D.A. formula No. Denaturant(s) per 100 gallons of alcohol of not less than 185 proof 1 ............................................................... 4 gallons of methyl alcohol and either 1⁄8 avoirdupois ounces of denatonium benzoate; 1 gallon of methyl isobutyl ketone; 1 gallon of mixed isomers of nitropropane, or 1 gallon of methyl n-butyl ketone. 5 gallons of methyl alcohol. 10 gallons of ethyl ether. 100 gallons of ethyl ether. 8 gallons of acetone, U.S.P. 8 gallons of acetone, U.S.P., and 1.5 gallon of methyl isobutyl ketone. 10 gallons of methyl alcohol. 5 gallons of ethyl ether. 4.25 gallons of ethyl acetate having an ester content of 100% by weight or the equivalent thereof not to exceed 5 gallons of ethyl acetate with an ester content of not less than 85% by weight. 3 gallons of ammonia, aqueous, 27 to 30% by weight; 3 gallons of strong ammonium solution, N.F.; 17.5 pounds of caustic soda, liquid grade, containing 50% by weight sodium hydroxide; or 12 pounds of caustic soda, containing 73% by weight sodium hydroxide. 45 fluid ounces of eucalyptol, N.F. XII, 30 avoirdupois ounces of thymol, N.F., and 20 avoirdupois ounces of menthol, U.S.P. 2.5 pounds of menthol, U.S.P., and 2.5 gallons of formaldehyde solution, U.S.P. 1⁄8 gallon of tert-butyl alcohol and 1.5 avoirdupois ounces of either (1) brucine alkaloid, (2) brucine sulfate, N.F. IX, (3) quassin, or (4) any combination of 2 of the 3. 1 lb of sucrose octaacetate and 1⁄8 gallon of tert-butyl alcohol. 1⁄16 avoirdupois ounces of denatonium benzoate, N.F., and 1⁄8 gallon of tert-butyl alcohol. 3–A .......................................................... 13–A ........................................................ 19 ............................................................. 23–A ........................................................ 23–H ........................................................ 30 ............................................................. 32 ............................................................. 35–A ........................................................ 36 ............................................................. 37 ............................................................. 38–D ........................................................ 40 ............................................................. TKELLEY on DSK3SPTVN1PROD with PROPOSALS 40–A ........................................................ 40–B ........................................................ TTB is proposing to add a new 27 CFR 20.120 setting forth a general-use formula covering articles made with any of those 15 S.D.A. formulations. This general-use formula will cover any article made with any of the S.D.A. formulations specified in the new § 20.120, provided that the article conforms to one of the use codes authorized for the S.D.A. formulation being used. (Articles produced under this general-use formula made with more than one S.D.A. formulation must conform to a use code that is authorized for all S.D.A. formulations being used.) Use codes are identified in section (b) of each section of subpart D of part 21. Use Code 900 (‘‘Specialized uses (unclassified)’’) is not allowed under VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 this general-use formula because it is a ‘‘catch-all’’ for all uses not otherwise specified. TTB will still consider for approval on TTB Form 5150.19 formulas for articles that are intended to be used for specialized unclassified uses under Use Code 900. The proposed § 20.120 also requires that the finished article made following this general-use formula contain sufficient additional ingredients to definitely change the composition and character of the original S.D.A. used to make the article. The additional ingredients change the character of the S.D.A., so that when the article is sold on the retail level, it is substantially different from S.D.A. This requirement is necessary to comply with the law, PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 because an article that is essentially similar to S.D.S. should not be sold to the general public; 26 U.S.C. 5271(a) requires a permit for anyone procuring S.D.S. This requirement would be similar to the current requirement for special industrial solvents found in 27 CFR 20.112(b), and is necessary to ensure that the resulting articles are unfit for beverage or internal human use and are not capable of being reclaimed or diverted to beverage or internal human use. General-Use Formulas, With Conditions, for Certain Articles Made With S.D.A. Formulas As discussed above, TTB has identified three S.D.A. formulations that E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules may be used as ingredients, subject to certain conditions, in certain generaluse formulas. Accordingly, in new 27 CFR 20.121, TTB proposes to allow the use of S.D.A. 18 (specified in 27 CFR 21.43) in a vinegar general-use formula. In addition, in new 27 CFR 20.122, TTB proposes to allow the use of S.D.A. 39– Proposed new section S.D.A. formula No. C (specified in 27 CFR 21.72) in a general-use formula. Finally, in new 27 CFR 20.123, TTB proposes to provide for the use of S.D.A. 40–C (specified in 27 CFR 21.77) in a pressurized container general-use formula. Only the uses that are currently approved for the corresponding S.D.A. formula in part 21 Condition Must be used in a process to make vinegar whereby either all the ethyl alcohol loses its identity or only residual ethyl alcohol within the limit specified in § 20.104 remains. Each gallon of finished product must contain not less than 2 fl. oz. of perfume material (essential oils as defined in § 21.11, isolates, aromatic chemicals, etc.). This formula may only be used in the manufacture of products which will be packaged in pressurized containers in which the liquid contents are in intimate contact with the propellant and from which the contents are not easily removable in liquid form. 18 100 gallons of vinegar not less than 90-grain strength or 150 gallons of vinegar of not less than 60-grain strength. 20.122 ...................... 39–C 1 gallon of diethyl phthalate .................................... 20.123 ...................... 40–C 3 gallons of tert-butyl alcohol .................................. The condition that articles made with S.D.A. 39–C contain in each gallon of finished product at least two fluid ounces of perfume material (including essential oils, isolates, and aromatic chemicals) currently appears in the regulations at 27 CFR 20.103. Because this condition will appear in the general-use formula specified in the new § 20.122, and because the new general-use formula covers all articles made with S.D.A. 39–C, the condition is no longer needed in § 20.103. Accordingly, TTB proposes to remove § 20.103 from the regulations. TKELLEY on DSK3SPTVN1PROD with PROPOSALS General-Use Formula for Duplicating Fluids and Ink Solvents TTB has approved approximately 570 article formulas specifically for duplicating fluids and ink solvents, most of which specify S.D.A. 3–C, but some of which specify S.D.A. 1 and S.D.A. 3–A. Duplicating fluids and ink solvents are articles made of denatured alcohol combined with other ingredients, and are intended only for use in the printing industry. To eliminate the need for specific article formula approval from TTB, TTB proposes to create a general-use formula for duplicating fluids and ink solvents specifying S.D.A. 1, 3–A, and 3–C in new 27 CFR 20.124. Specification of S.D.A. 3–C in the Proprietary Solvents General-Use Formula TTB has approved numerous requests from industry members to use S.D.A. 3– C formulations to make proprietary solvents under the general-use formula 16:41 Jun 26, 2013 would be allowed under each of these three new general-use formulas. The chart below states, with respect to each new general-use formula: Its proposed new section number, the number of the S.D.A. formula prescribed for it, the denaturants contained in that S.D.A., and the proposed condition. Denaturant(s) per 100 gallons of alcohol of not less than 185 proof 20.121 ...................... VerDate Mar<15>2010 38633 Jkt 229001 in § 20.113(a). Section 20.113(a) currently allows the use of S.D.A. 1 or 3–A in the proprietary solvents generaluse formula. TTB is proposing to amend § 20.113(a) to also allow for the use of S.D.A. 3–C in making proprietary solvents. Removal of Benzene From the Regulations Upon review, TTB determined that benzene should be removed from the S.D.A. and C.D.A. formulas. Benzene is currently prescribed by S.D.A. Formula Nos. 2–B, 2–C, and 12–A. The U.S. Environmental Protection Agency (EPA) in its regulations has designated benzene as a hazardous air pollutant under the Clean Air Act (40 CFR 61.01(a)), and EPA regulations limit the amount of benzene that may be used in gasoline (40 CFR part 80). As was discussed above, TTB is already proposing to remove S.D.A. Formula No. 2–C from the regulations, and to reclassify S.D.A. Formula No. 12–A as a C.D.A. formula. Accordingly, TTB is proposing to remove benzene as a denaturant prescribed in S.D.A. Formula No. 2–B by amending 27 CFR 21.33, and to exclude benzene from the denaturants prescribed by the new C.D.A. Formula No. 12–A in proposed § 21.21a. TTB notes that other authorized denaturants may contain small quantities of benzene. For example, benzene is allowed, up to a maximum of 1.1 percent by volume, in two newly authorized denaturants: high octane denaturant blend and straight run gasoline (see discussion on Incorporation of Authorized Substitute PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 Denaturants, below). Under EPA regulations, importers and refiners of gasoline must ensure that their gasoline complies with certain benzene limits. (See 40 CFR 80.1230(a) and (b).) To the extent that TTB-permitted manufacturers of denatured alcohol or fuel alcohol made with these authorized denaturants are subject to these EPA regulations, they must comply with them. TTB is also proposing to remove benzene from the list of authorized denaturants in § 21.151. Destruction of S.D.S. or Recovered Alcohol Under 27 CFR part 20, when a permittee destroys S.D.S. or recovered alcohol, the permittee’s liability for payment of the Federal excise tax on the alcohol is terminated (27 CFR 20.221), but the permittee must prepare a record of the destruction (27 CFR 20.222). If recovered material meets the specifications of an article formula approved by TTB on TTB Form 5150.19, the recovered material may be transferred for destruction to nonpermittees. If recovered material is not sufficiently denatured to be treated as an article, the material is treated as S.D.S., which by law (26 U.S.C. 5271(a)(2)) may only be procured by a permittee. To destroy the material without transferring it to a permittee, the manufacturer could add denaturants or similar chemicals to the recovered S.D.S. to make the material into an article meeting the specifications of an article formula approved by TTB on E:\FR\FM\27JNP1.SGM 27JNP1 38634 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules TTB Form 5150.19 that could then be transferred to a nonpermittee. To clarify the regulations relating to these matters, TTB proposes to add a new paragraph to 20.222, titled ‘‘Destruction by nonpermittees.’’ The new paragraph will state that destruction of recovered material that is not sufficiently denatured to meet the formula specifications of an article must be done by the original manufacturer, a distilled spirits plant, or a facility that possesses an S.D.S. dealer’s permit. Adoption of Formulas by Parent or Subsidiary Corporations Currently, TTB’s regulations allow a permittee to adopt only its predecessor’s formulas. In order to increase operating flexibility for domestic manufacturers, TTB proposes to amend 27 CFR 20.63 to allow any permittee to adopt, for use at any of its plants, any formula previously approved for use at another of its plants, or any formula previously approved for its parent or wholly-owned subsidiary. TTB also proposes to remove the requirements that the certificate of adoption must contain a TTB Laboratory sample number (unnecessary in this context) and the TTB Form 5150.19 serial number (which is no longer used). TKELLEY on DSK3SPTVN1PROD with PROPOSALS Bay Rum, Alcoholado, or AlcoholadoType Toilet Waters for Export Currently, under 27 CFR 20.102, bay rum, alcoholado, and alcoholado-type toilet waters must contain the materials specified in that section. However, TTB has approved alternate methods and procedures under § 20.22 to allow industry members to make these products without adding the materials specified in § 20.102 if the products were intended only for export. Accordingly, TTB is proposing to amend § 20.102 to except bay rum, alcoholado, and alcoholado-type toilet waters produced under an approved formula and endorsed ‘‘For Export Only’’ from the requirement that they be produced from the materials specified in that section. TTB is also proposing to change the unit of measurement in § 20.102 from ‘‘grains,’’ which is outdated, to metric units. Finally, the change also replaces the reference to ‘‘Bitrex (THS 839),’’ which is a registered trade name, with the generic term ‘‘denatonium benzoate.’’ Reagent Alcohol for Manufacturing ‘‘Reagent alcohol’’ is an approved article only if distributed for scientific use at a laboratory (27 CFR 20.117(d)). Therefore, reagent alcohol not so distributed is not an approved article but remains in the category of S.D.A., which by law may not be used in the VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 manufacture or production of an article prior to the issuance of both a permit (26 U.S.C. 5271) and a formula approval (26 U.S.C. 5273(a)). TTB believes that the current regulations on reagent alcohol should be less restrictive. Consequently, TTB proposes to add to § 20.117 a new paragraph (e) that would allow permittees who have a legitimate use for reagent alcohol in manufacturing to receive it for that purpose, but only from distilled spirits plants and S.D.S. user or dealer permittees. To ensure that such use is appropriate, TTB will still require an approved formula for a permittee to receive and use reagent alcohol in manufacturing even if the product being manufactured conforms to a general-use formula. Further, when used in this manner, reagent alcohol must be treated as S.D.A., not as an article. TTB also proposes to amend § 20.117(a) to provide for treatment of reagent alcohol as S.D.A. when distributed for use in manufacturing. Finally, TTB proposes some additional non-substantive organizational and wording changes in § 20.117 to improve its clarity and readability. for Exportation, to incorporate this change. The proposed regulatory text excludes S.D.S. 3–C, 29, and 38–B because these formulations are more susceptible to being rendered fit for beverage use. TTB is also proposing to add a new 27 CFR 28.157 in TTB’s regulations on exports, which will provide a cross-reference to the new provision in part 20. Labeling of Articles TTB is proposing to amend 27 CFR 20.134 to allow containers of articles to either (1) bear a label or (2) have the required information etched or printed directly on the containers, since the technology now exists to etch or print information directly on containers. TTB is proposing this change to allow for greater flexibility in labeling articles. Clarifying and Technical Changes Exportation of S.D.S. by Dealers The IRC at 26 U.S.C. 5214(a)(1) allows for the withdrawal of S.D.S. free of tax for exportation and does not prohibit such exportation of S.D.S. by dealers. However, the current regulations do not provide for the exportation of S.D.S. by dealers, but they do allow for the exportation of S.D.S. by distilled spirits plants. TTB believes that the exportation of S.D.S. by dealers who hold a TTB permit generally will not represent a significant threat to the revenue. Accordingly, TTB proposes to amend the regulations by adding a new 27 CFR 20.183 which would allow for the exportation of S.D.S. by dealers provided that the S.D.S. conforms to a formula specified in part 21 of the TTB regulations, that the exportation is to a country the laws of which allow the importation of such spirits, and that the dealer notifies TTB of the exportation. TTB will appropriately modify TTB Form 5100.11, Withdrawal of Spirits, Specially Denatured Spirits, or Wines PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 Articles for Export TTB, and previously ATF, have approved alternate methods or procedures for industry members to produce articles for export where the article could not be approved for domestic distribution because it is not sufficiently denatured to preclude any recovery of potable alcohol. TTB’s regulations allow for the export of S.D.S., so TTB is proposing to add new § 20.193 (27 CFR 20.193) to also allow for the export of articles that would not be approved for domestic distribution. This new provision is not expected to create any significant jeopardy to the revenue, and will allow businesses to export such products to foreign countries. Records of Article Manufacture Distilled spirits plant proprietors who manufacture articles are required by 27 CFR 19.607 to keep certain records. The records required to be kept pursuant to § 19.607 generally parallel those required to be kept by 27 CFR part 20, but do not include records of ingredients used. A record of ingredients used is essential to verify compliance with approved formulas. Therefore, TTB proposes to amend § 19.607 by cross referencing in it the requirements of 27 CFR part 20. Part 20 Definitions Currently, § 20.11 does not include definitions for ‘‘TTB,’’ ‘‘Fit for beverage use, or fit for beverage purposes,’’ ‘‘Internal human use,’’ or ‘‘Unfit for beverage use, or unfit for beverage purposes.’’ TTB is proposing to add definitions of these terms to this section. TTB is also proposing to amend 27 CFR 20.111(c), 20.114(a), 20.115(a), 20.133(b) and 20.189(d), to use the defined terms ‘‘fit for beverage use,’’ ‘‘fit for beverage purposes,’’ ‘‘unfit for beverage use,’’ or ‘‘unfit for beverage purposes’’ to help clarify those regulatory sections. Developmental Samples of Articles For clarity, TTB is proposing to revise 27 CFR 20.95 (Developmental samples of articles). The revised text provides that the user may only use the limited quantity of S.D.S. that is necessary to E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules produce the samples. The current regulation provides that ‘‘limited quantities’’ may be used. The text further clarifies that only one sample of each formulation of the article under development may be sent to each prospective customer and that these samples may be produced without prior formula approval. General-Use Formulas TTB is proposing to revise § 20.111 to reflect the issuance of new general-use formulas as proposed in this document, update the information on how to locate TTB publications, and clarify when a statement of process is required. Additionally, the changes would clarify that articles made under a general-use formula must meet the same standards as other articles; that is, the articles must be unfit for beverage use and incapable of being reclaimed or diverted to beverage use or internal human use. General-Use Formulas for Tobacco Flavors and Inks TTB is proposing to amend §§ 20.114 and 20.115 to clarify that articles produced under the tobacco flavor general-use formula and the ink generaluse formula must contain ingredients that are sufficient to ensure that the articles are unfit for beverage use. Use of the Word ‘‘Formulation’’ Instead of the Word ‘‘Formula’’ TTB is proposing to amend 20.119, 20.136, 20.141, 20.170, 20.189, 20.262, 20.263, and 20.264 to correct several inconsistent uses of the word ‘‘formula.’’ The word ‘‘formula’’ is to be used to refer to a prescription of the ingredients (‘‘recipe’’) to be used to produce S.D.S., C.D.A., or an article. The word ‘‘formulation’’ is to be used to refer to the physical S.D.S., C.D.A., or article produced in accordance with a formula. TKELLEY on DSK3SPTVN1PROD with PROPOSALS Low Alcohol General-Use Formula TTB is proposing to clarify in § 20.116 that articles made under the low alcohol general-use formula must be covered by a statement of process as provided in 27 CFR 20.94 even if the articles do not contain alcohol or the articles’ manufacture includes the recovery of C.D.A. or S.D.S. (Examples of lowalcohol articles are hair mousses and some household detergents.) Additionally, TTB is proposing to clarify in § 20.116 that the alcohol content of the finished article can be measured by either weight or by volume, because when the alcohol content is as low as 5 percent, there is no significant difference between the VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 two types of measurements for TTB’s purposes. Articles for Internal Human Use The regulations in part 20 require that, if denatured spirits are used in the production of a medicinal preparation or flavoring extract which is for internal human use, none of the spirits may remain in the finished product (27 CFR 20.132(a)). TTB proposes to add a definition for ‘‘Internal human use’’ to § 20.11 to clarify that this term does not apply to use only in the mouth, when the product is not intended to be swallowed. Thus, the prohibition on the use of S.D.S. in articles made for internal human use would not apply to mouthwashes, toothpastes, breath sprays, and other articles that are used in the mouth but that are not intended to be swallowed. Registration of Persons Trafficking in Articles TTB is proposing to clarify in § 20.133, which allows TTB to require the registration of persons trafficking in articles, that finished articles must not be reclaimed or diverted to beverage use or internal human use. This requirement is also imposed on S.D.S. users and manufacturers of articles in § 20.189(d). Shipment for the Account of Another Dealer In 27 CFR 20.175(c), TTB is proposing to clarify that persons shipping S.D.S. are not liable for the tax on the spirits, except as provided in 26 U.S.C. 5001(a)(4) and (5). The proposed change makes § 20.175(c) consistent with the law. Incomplete Shipments of S.D.S.—Use of the Term ‘‘Proprietor’’ TTB is proposing to clarify in 27 CFR 20.204(c) that the ‘‘dealer or proprietor’’ refers to the ‘‘shipper,’’ which is either a dealer or distilled spirits plant proprietor. Permittee’s Records and Reports TTB is proposing to add new paragraph (a)(4) to § 20.264, which cross-references the recordkeeping requirement of § 20.193(b)(4), to make it easier for an individual reading the regulations to know what is required. Authorization of Use of Substitute Denaturants in Part 21 Under 27 CFR 21.91, TTB may authorize the use of substitute denaturants if valid reasons exist and if such use will not jeopardize the revenue. TTB has authorized the use of several such substitute denaturants in TTB Rulings that are publicly available. PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 38635 TTB is proposing to add language to § 21.91 to clarify that TTB may authorize the use of a substitute denaturant in a TTB Ruling. Incorporation of Authorized Substitute Denaturants TTB and its predecessor agency, ATF, have approved, under § 21.91, the use of substitute denaturants for use in making S.D.A. 2–B, 3–A, 12–A, 36, 38–B, and 38–F and C.D.A. 20. TTB has also approved, under § 19.746, the use of new materials that can be used to render alcohol unfit for beverage use for the purposes of making fuel alcohol. In addition, TTB recently approved, under § 20.111, the use of a new prescribed ingredient in the special industrial solvent general-use formula set forth in § 20.112. TTB and its predecessor agency, ATF, published the approvals as ATF Rulings 74–1, 85–15, and 86–3, and as TTB Rulings 2008–2, 2010–1, 2010–5, and 2010–6. (Some, but not all of the materials authorized in TTB Ruling 2010–6 were added to § 19.746 in the recent rulemaking on part 19; see T.D. TTB–92, 76 FR 9080, February 16, 2011.) These rulings are effective and are available on TTB’s Web site at https://www.ttb.gov. Rulemaking is not required for the approvals to be effective. However, for completeness, TTB is adding those denaturants and materials to the regulatory sections that prescribe the materials for fuel alcohol, or the denaturants for S.D.A. Formula Nos. 2–B, 3–A, 12–A, 36, 38–B, and 38– F, and C.D.A. Formula No. 20. Accordingly, TTB is: (1) Revising 27 CFR 19.746, 20.112, 21.24, 21.33, 21.35, 21.63, 21.65, and 21.68 to add the recently approved denaturants to the formulas (TTB is removing and reserving § 21.40 for Formula No. 12–A, but see new § 21.21a for C.D.A. Formula No. 12–A with approved denaturants); (2) adding new sections 27 CFR 21.94a, 21.105a, 21.105b, 21.106a, 21.108a, 21.112a, 21.112b, 21.112c, 21.115a, 21.115b, 21.118a, 21.118b, 21.118c, 21.121a, 21.124a, and 21.130a, and revising 27 CFR 21.121, to add the specifications for those approved denaturants; and (3) revising the chart listing authorized denaturants in § 21.151 to incorporate the new denaturants. In addition, TTB is revising the specification for toluene in 27 CFR 21.132 so that it is consistent with the updated toluene specification that was included in TTB Ruling 2010–6. Industry Circular 75–6, Importation of Ethyl Alcohol for Industrial Purposes The mere addition of denaturants to alcohol does not cause the product to E:\FR\FM\27JNP1.SGM 27JNP1 38636 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules TKELLEY on DSK3SPTVN1PROD with PROPOSALS lose its character as a distilled spirit. There is no provision in law for the withdrawal of distilled spirits from customs custody free of tax, other than for the use of the United States in accordance with 27 CFR part 27, subpart M. Therefore, imported denatured spirits and imported products that are essentially similar to denatured spirits are subject to the internal revenue tax and associated provisions of the IRC. It should be noted, however, that the internal revenue tax does not apply to imported products that contain alcohol but are unfit for beverage use and have lost their character as distilled spirits. TTB’s predecessor, ATF, published Industry Circular 75–6 on March 28, 1975 to advise that denatured alcohol is subject to tax upon importation, although payment of the tax may be avoided by transferring the denatured alcohol from customs custody to the bonded premises of a distilled spirits plant, as provided in 26 U.S.C. 5232. As stated in the circular, ‘‘[T]he addition of denaturants to ethyl alcohol prior to importation does not free the resultant mixture from the application of the internal revenue tax imposed by 26 U.S.C. 5001(a) or from the provisions of 26 U.S.C. 5232 in regard to receipt, storage, and disposition of distilled spirits when such material is released from customs custody.’’ Current regulations do not clearly state the rules regarding the importation of denatured spirits. To remedy this situation, TTB proposes to add a new § 27.222 (27 CFR 27.222) to incorporate the statement in Industry Circular 75–6 that imported denatured spirits or fuel alcohol may be transferred in bond to a distilled spirits plant without payment of tax and later withdrawn from the distilled spirits plant free of tax in accordance with 27 CFR part 19. In addition, TTB proposes to add new § 19.412 (27 CFR 19.412) to provide a cross-reference in part 19 to § 27.222 to alert industry members to that section. Section 19.742 (27 CFR 19.742) already provides for the importation of fuel alcohol by an alcohol fuel plant proprietor. Miscellaneous Technical Changes • Control numbers for information collection requests issued by the Office and Management and Budget have been updated in §§ 20.11, 20.63, 20.95, 20.111, 20.117, 20.133, 20.134, 20.222, and 20.264 to reflect the change from ATF to TTB. • In 27 CFR 20.41, paragraph (d) is clarified to show that distilled spirits plants are exempt from qualification under part 20 for manufacturing activities as well as dealer activities. VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 • In the last sentence in the introductory text of § 20.112(a), the word ‘‘alcohol’’ is replaced by ‘‘S.D.A.’’ to clarify that the ingredients listed in § 20.112 are added to S.D.A. rather than to alcohol. Comments Received in Response to Notice No. 83 In recent years, TTB has undertaken the revision of several parts of its regulations to update and modernize them. As part of this project, TTB published a notice of proposed rulemaking, Notice No. 83 (73 FR 26200; May 8, 2008), to solicit comments on proposed revisions to the distilled spirits plant regulations in 27 CFR part 19. Three of the comments received in response to Notice No. 83 related to regulations contained in 27 CFR parts 20 and 21. One industry member proposed that, in S.D.S. and C.D.A. formulas, TTB specify a minimum amount of denaturant, rather than an exact amount of denaturant per a certain quantity of spirits. TTB believes that specifying a minimum amount of denaturant rather than an exact amount of denaturant per a certain quantity of spirits would cause problems in verifying compliance. Furthermore, the IRC in section 5242 requires that denaturants be ‘‘suitable to the use for which the denatured distilled spirits are intended to be withdrawn.’’ To ensure that denatured spirits are suitable for their authorized uses (as indicated by the use codes prescribed for each S.D.S. formula), precise formulas must be followed. Each S.D.S. formula describes specific products that have been found to be suitable for the formula’s indicated uses. A product with a higher concentration of denaturants might not be suitable for the same uses. Therefore, TTB will continue to specify exact amounts of denaturants per a certain quantity of spirits in S.D.S. and C.D.A. formulas. With respect to C.D.A., it should be noted that the denaturer is free to produce an article by addition of greater quantities of denaturants, subject to the requirement of 27 CFR 20.148 that the product may no longer be called C.D.A. if its composition and character have been materially changed. Further, the TTB regulations contain authority for TTB to allow variations from the specific requirements; under § 21.91, denaturers may obtain TTB permission to use greater amounts of denaturants. Another industry member proposed that TTB create specific regulations for each category of article (e.g., cosmetics, topical over-the-counter drug products, cleaners, and laboratory products) because category-specific regulations PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 may reduce recordkeeping burdens on manufacturers. This would require a reanalysis of and significant revisions to the regulations, which would not be appropriate for this document because TTB has not sought the views of those who are likely to be affected by such a significant revision of the regulations. This kind of change is outside the scope of TTB’s recent review, so TTB is not planning to make such changes at this time. A third industry member suggested that TTB harmonize the regulations for fuel alcohol produced by an alcohol fuel plant and C.D.A. 20 produced by a distilled spirits plant. TTB is considering this proposal for inclusion in a separate rulemaking with some other proposed changes to the regulations governing alcohol fuel plants, found in 27 CFR part 19, subpart X. TTB has also considered harmonizing the denaturants specified in § 21.24 for use in C.D.A. 20 and the materials authorized in § 19.746 for rendering alcohol unfit for beverage use for the production of fuel alcohol. TTB will consider making these changes in a future rulemaking. Public Participation Comments Sought TTB invites comments on this proposed rulemaking from all interested parties. TTB is particularly interested in comments regarding the proposed revisions to the various definitions sections; TTB wants to define terms in a way that is clearly understandable and consistent with the relevant statutes. Please submit your comments by the closing date shown above in this document. All comments must reference Notice No. 136 and must 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. TTB does not acknowledge receipt of comments, and considers all comments as originals. Submitting Comments You may submit comments on this document by using one of the following three methods: • Federal e-Rulemaking Portal: You may send comments via the online comment form associated with this document in Docket No. TTB–2013– 0005 on ‘‘Regulations.gov,’’ the Federal e-rulemaking portal, at https:// www.regulations.gov. A link to this Regulations.gov docket is available under Notice No. 136 on the TTB Web site at https://www.ttb.gov/ regulations_laws/all_rulemaking.shtml. E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules 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 tab. • U.S. Mail: You may send comments via postal mail to the Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005. • 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. In your comment, please clearly state if you are commenting on your own behalf or on behalf of an association, business, or other entity. If you are commenting on behalf of an 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. TKELLEY on DSK3SPTVN1PROD with PROPOSALS Confidentiality All submitted comments and attachments are part of the public record and are 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, TTB will post, and the public may view, copies of this document, selected supporting materials, and any electronic or mailed comments TTB receives about this proposal. You may view the Regulations.gov docket containing this document 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 email addresses. TTB may omit voluminous attachments or material that TTB considers unsuitable for posting. You and other members of the public may view copies of this document, any VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 supporting materials, and any electronic or mailed comments TTB receives about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact TTB’s 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. Regulatory Analysis and Notices Executive Order 12866 This proposed rule is not a significant regulatory action as defined in Executive Order 12866. Therefore, it requires no regulatory assessment. Regulatory Flexibility Act Pursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. Chapter 6) TTB certifies that this notice of proposed rulemaking will not have a significant economic impact on a substantial number of small entities. The proposed rule will update the regulations to align them with current industry practice, clarify other regulatory provisions, and reduce the regulatory burden on the alcohol industry as well as TTB, resulting in an estimated 80 percent reduction in the number of article formulas submitted to TTB. Thus, the regulatory changes being proposed do not create any additional requirements or burdens on small businesses, and are expected to decrease the regulatory burden on industry members, including small entities. Accordingly, a regulatory flexibility analysis is not required. Pursuant to 26 U.S.C. 7805(f), TTB will submit the proposed regulations to the Chief Counsel for Advocacy of the Small Business Administration for comment on the impact of the proposed regulations on small businesses. Paperwork Reduction Act The collections of information in the regulations contained in this notice have been previously reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3504(h)) and assigned control numbers 1513–0011, 1513–0028, 1513– 0037, 1513–0061, and 1513–0062. Specific regulatory sections in this proposed rule that contain collections of information are 27 CFR 19.607, 20.63, 20.95, 20.111, 20.117, 20.133, 20.134, 20.183, 20.193, 20.222, 20.262, 20.263, and 20.264. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 38637 information unless it displays a valid control number assigned by OMB. Several amendments proposed in this document would reduce information collection burdens. Specifically, certain proposed amendments would alter circumstances under which article manufacturers must obtain formula approval using TTB Form 5150.19. Information collections associated with Form 5150.19 are currently approved under OMB control number 1513–0011. These amendments will reduce required submissions of Form 5150.19, and thus will reduce the total burden hours currently estimated for control number 1513–0011 by an estimated 955 burden hours, and an 80 percent reduction in the number of these forms submitted to TTB. TTB proposes four categories of amendments that would reduce required submissions of Form 5150.19. First, TTB proposes to add new sections 27 CFR 20.120 through 20.124 setting forth five new general-use formulas covering articles made with 19 different S.D.A. formulations. Second, TTB proposes to amend regulations in part 21 to reclassify S.D.A. Formula Nos. 12–A and 35 as C.D.A. formulas. Third, TTB proposes to amend 27 CFR 20.113(a) to permit the use of S.D.A. Formula No. 3–C in the proprietary solvents general-use formula. Fourth, TTB proposes to amend 27 CFR 20.63 to allow a permittee to adopt, for use at a plant where such use is not specifically approved, one of the permittee’s own article formulas previously approved for use at another of the permittee’s plants, or to adopt a formula previously approved for a parent or wholly-owned subsidiary. TTB estimates that, as a result of the amendments, the new annual burden hours will be as follows: • Estimated total annual reporting and/or record keeping burden: 239 hours. • Estimated average annual burden hours per respondent: 0.84 hours. • Estimated number of respondents: 285. • Estimated annual frequency of responses: 1 (one). One proposed amendment involves an alteration to the information collection currently approved under, OMB control number 1513–0061. The amendment to 27 CFR 20.63 would allow a permittee to adopt, for use at a plant where such use is not specifically approved, one of the permittee’s own article formulas previously approved for use at another of the permittee’s plants, or to adopt a formula previously approved for a parent or wholly-owned subsidiary. Permittees may currently E:\FR\FM\27JNP1.SGM 27JNP1 TKELLEY on DSK3SPTVN1PROD with PROPOSALS 38638 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules adopt formulas under more limited circumstances by submitting a certificate of adoption to TTB, which is an information collection currently approved under control number 1513– 0061. Although TTB estimates that the proposed amendment will increase the number of certificates of adoption submitted to TTB under § 20.63, it will also proportionally decrease the number of submissions of Form 5150.19 that would have been required absent the amendment. Since the estimated average annual burden per respondent relating to certificates of adoption approved under control number 1513– 0061 is smaller than the average annual burden for Form 5150.19 under control number 1513–0011, the amendment will in actuality reduce the overall burden on permittees. TTB estimates that, as a result of this amendment, the new annual burden under control number 1513–0061 will be as follows: • Estimated total annual reporting and/or record keeping burden: 1,897 hours. • Estimated average annual burden hours per respondent: 0.5 hours. • Estimated number of respondents: 3,794. • Estimated annual frequency of responses: 1 (one). Other amendments to regulatory sections that involve collections of information will not impact the burden hours associated with those collections. Proposed amendments to 27 CFR 19.607, 20.95, 20.111, 20.117, 20.133, 20.134, 20.193, 20.222, 20.262, 20.263, and 20.264 will not increase or decrease information collections because the amendments clarify preexisting regulatory requirements and do not otherwise impose new requirements increasing information collection burdens. Proposed new 27 CFR 20.183 would allow S.D.S. dealers to export S.D.S. and would require such dealers to complete TTB Form 5100.11. TTB estimates that the proposed amendment will not increase submissions of Form 5100.11 because, although the amendment will allow an additional category of persons to export, the amendment is not expected to increase demand for exported S.D.S. Thus, the exporters may be different, but the number of exportations is not expected to change. Since TTB is only proposing to include an additional category of persons entitled to export S.D.S., and not proposing to increase information collection burdens associated with exporting S.D.S., the proposed amendment would not impact currently estimated information collection burdens. Information collections associated with the amendments VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 described in this paragraph are currently approved under OMB control numbers 1513–0028, 1513–0037, and 1513–0062. TTB estimates the new annual burden hours under these control numbers would be as follows: OMB Control Number 1513–0028: • Estimated total annual reporting and/or record keeping burden: 419 hours. • Estimated average annual burden hours per respondent: 0.76 hour. • Estimated number of respondents: 550. • Estimated annual frequency of responses: 1 (one). OMB Control Number 1513–0037: • Estimated total annual reporting and/or record keeping burden: 6,000 hours. • Estimated average annual burden hours per respondent: 20 hours. • Estimated number of respondents: 300. • Estimated annual frequency of responses: 20. OMB Control Number 1513–0062: • Estimated total annual reporting and/or record keeping burden: 1 hour. • Estimated number of respondents: 3,430. • Estimated annual frequency of responses: 1 (one). Revisions of the currently approved collections have been submitted to the OMB for review. Comments on OMB control numbers 1513–0011, 1513–0028, 1513–0037, 1513–0061, and 1513–0062 should be sent to OMB at Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503 or email to OIRA_submission@omb.eop.gov. A copy should also be sent to TTB by any of the methods previously described. Comments on the information collection should be submitted not later than August 26, 2013. Comments are specifically requested concerning: • Whether the collections of information approved under OMB control numbers 1513–0011, 1513–0028, 1513–0037, 1513–0061, and 1513–0062 are necessary for the proper performance of the functions of TTB, including whether the information will have practical utility; • The accuracy of the estimated burdens associated with the collections of information (see below); • How to enhance the quality, utility, and clarity of the information to be collected; • How to minimize the burden of complying with the collections of PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 information, including the application of automated collection techniques or other forms of information technology; and • Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Drafting Information Steven C. Simon and Karen E. Welch of the Regulations and Rulings Division, TTB, drafted this document. Other employees of TTB contributed to the development of this document. List of Subjects 27 CFR Part 19 Caribbean Basin Initiative, Claims, Electronic funds transfer, Excise taxes, Exports, Gasohol, Imports, Labeling, Liquors, Packaging and containers, Puerto Rico, Reporting and recordkeeping requirements, Research, Security measures, Surety bonds, Vinegar, Virgin Islands, Warehouses. 27 CFR Part 20 Alcohol and alcoholic beverages, Claims, Cosmetics, Excise taxes, Labeling, Packages and containers, Penalties, Reporting and recordkeeping requirements, Surety bonds. 27 CFR Part 21 Alcohol and alcoholic beverages. 27 CFR Part 27 Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties and inspection, Electronic fund transfers, Excise taxes, Imports, Labeling, Liquors, Packaging and containers, Reporting and recordkeeping requirements, Wine. 27 CFR Part 28 Aircraft, Alcohol and alcoholic beverages, Armed forces, Beer, Claims, Excise taxes, Exports, Foreign trade zones, Labeling, Liquors, Packaging and containers, Reporting and recordkeeping requirements, Surety bonds, Vessels, Warehouses, and Wine. Proposed Amendments to the Regulations For the reasons explained in the preamble, TTB proposes to amend 27 CFR parts 19, 20, 21, 27, and 28 as set forth below: PART 19—DISTILLED SPIRITS PLANTS 1. 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, 5111–5114, E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules 5121–5124, 5142, 5143, 5146, 5148, 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, 9304, 9306. 2. Section 19.412 is added under the undesignated center heading ‘‘Receipt of Spirits from Customs Custody’’ to read as follows: ■ § 19.412 Importation of denatured spirits. For provisions relating to the importation of denatured spirits, see § 27.222 of this chapter. ■ 3. Section 19.607 is revised to read as follows: § 19.607 Article manufacture records. Each processor qualified to manufacture articles must maintain daily manufacturing and disposition records, arranged by the name and authorized Use Code of the article, in the manner provided in part 20 of this chapter. ■ 4. Section 19.746 is amended by revising paragraphs (b)(1)(xi) and (xii), adding paragraphs (b)(1)(xiii) through (xvi), and revising paragraph (c) to read as follows: § 19.746 Authorized materials. * * * * * (b) * * * (1) * * * (xi) Naphtha; (xii) Straight run gasoline; (xiii) Alkylate; (xiv) High octane denaturant blend; (xv) Methyl tertiary butyl ether; or (xvi) Any combination of the materials listed in paragraphs (b)(1)(i) through (xv) of this section; * * * * * (c) Specifications. Specifications for the materials listed in paragraph (b) are found in part 21, subpart E, of this chapter. * * * * * c. Revising the Office of Management and Budget control number referenced at the end of the section. The revisions and additions read as follows: ■ § 20.11 Meaning of terms. * * * * * Fit for beverage use, or fit for beverage purposes. Suitable for consumption as an alcoholic beverage by a normal person, or susceptible of being made suitable for such consumption merely by dilution with water to an alcoholic strength of 15 percent by volume. The determination is based solely on the composition of the product and without regard to extraneous factors such as price, labeling, or advertising. * * * * * Internal human use. Use inside the human body, but not including use only in the mouth where the substance being used is not intended to be swallowed. * * * * * Specially Denatured Spirits or S.D.S. Specially denatured alcohol and/or specially denatured rum. * * * * * TTB. The Alcohol and Tobacco Tax and Trade Bureau, U.S. Department of the Treasury. * * * * * Unfit for beverage use, or unfit for beverage purposes. Not conforming to the definition of ‘‘Fit for beverage use, or fit for beverage purposes’’ in this section. * * * * * (Approved by the Office of Management and Budget under control number 1513–0061) 7. In § 20.41, paragraph (d)(1) is revised to read as follows: ■ § 20.41 Application for industrial alcohol user permit. 5. The authority citation for part 20 continues to read as follows: * * * * (d) Exceptions. (1) The proprietor of a distilled spirits plant qualified under part 19 of this chapter is not required to qualify under this part for activities conducted at that plant’s bonded premises. * * * * * ■ 8. Section 20.63 is revised to read as follows: Authority: 26 U.S.C. 5001, 5206, 5214, 5271–5275, 5311, 5552, 5555, 5607, 6065, 7805. § 20.63 Adoption of formulas and statements of process. 6. Section 20.11 is amended by: a. Revising the definition of ‘‘Specially denatured spirits’’; ■ b. Adding, in alphabetical order, definitions for ‘‘Fit for beverage use, or fit for beverage purposes,’’ ‘‘Internal human use,’’ ‘‘TTB,’’ and ‘‘Unfit for beverage use, or unfit for beverage purposes’’; and (a) Adoption of formulas and statements of process is permitted: (1) When a successor (proprietorship or fiduciary) adopts a predecessor’s formulas and statements of process as provided in §§ 20.57(c) and 20.58; and (2) When a permittee adopts for use at one plant, the formulas previously approved by TTB for use at another PART 20—DISTRIBUTION AND USE OF DENATURED ALCOHOL AND RUM TKELLEY on DSK3SPTVN1PROD with PROPOSALS ■ ■ ■ VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 * PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 38639 plant, or when a permittee adopts a formula previously approved by TTB for a parent or subsidiary, provided that in the case of a parent-subsidiary relationship the subsidiary is whollyowned by the parent. (b) The adoption will be accomplished by the submission of a certificate of adoption. The certificate of adoption shall be submitted to the appropriate TTB officer and shall contain: (1) A list of all approved formulas or statements of process in which S.D.S. is used or recovered; (2) The formulas of S.D.S. used or recovered; (3) The dates of approval of the relevant Forms 1479–A or TTB Forms 5150.19: (4) The applicable code number(s) for the article or process; (5) The name of the permittee adopting the formulas, followed by the phrase, for each formula, ‘‘Formula of llllll (Name and permit number of permittee who received formula approval) is hereby adopted;’’ and (6) In the case of a permittee adopting the formulas of another entity, evidence of its relationship to that entity. (Approved by the Office of Management and Budget under control number 1513–0061) 9. Section 20.95 is revised to read as follows: ■ § 20.95 Developmental samples of articles. (a) Samples for submission to TTB. Prior to receiving formula approval on TTB Form 5150.19, a user may use S.D.S. in the manufacture of samples of articles for submission in accordance with § 20.92. However, the user may only use the limited quantity of S.D.S. that is necessary to produce the samples. (b) Samples for shipment to prospective customers. Prior to submitting a formula and statement of process on TTB Form 5150.19, a user may use S.D.S. to prepare developmental samples of articles for shipment to prospective customers. Only one sample of each formulation of the article under development may be sent to each customer. Each sample shall be no larger than necessary for the customer to determine whether the product meets its requirements. The user shall maintain records showing: (1) The types of product samples prepared; (2) The size and number of samples sent, on a one-time basis, to each prospective customer; and (3) The names and addresses of the prospective customers. (c) Formula requirement. Before the user begins to make a quantity greater E:\FR\FM\27JNP1.SGM 27JNP1 38640 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules (Approved by the Office of Management and Budget under control number 1513–0062) after the words ‘‘nitropropane (mixed isomers),’’. ■ 14. In § 20.113, the last sentence of the paragraph (a) introductory text is revised to read as follows: 10. Section 20.102 is revised to read as follows: § 20.113 Proprietary solvents general-use formula. than specified in this section, formula approval on TTB Form 5150.19 is required. ■ § 20.102 Bay rum, alcoholado, or alcoholado-type toilet waters. Unless manufactured exclusively for export under a formula approved by TTB and endorsed ‘‘For Export Only,’’ bay rum, alcoholado, or alcoholado-type toilet waters made with S.D.S. shall contain in each gallon of finished product: (a) 71 milligrams of denatonium benzoate (also known as benzyldiethyl (2:6-xylylcarbamoyl methyl) ammonium benzoate) in addition to any of this material used as a denaturant in the specially denatured alcohol; (b) 2 grams of tartar emetic; or (c) 0.5 avoirdupois ounce of sucrose octaacetate. § 20.103 [Removed and Reserved] 11. Section 20.103 is removed and reserved. ■ 12. Section 20.111 is amended by revising paragraph (a), adding paragraph (c), and revising the Office of Management and Budget control number referenced at the end of the section to read as follows: ■ § 20.111 General. (a) Formula approval obtained on TTB Form 5150.19 is not required for an article made in accordance with any approved general-use formula that is specified in §§ 20.112 through 20.124, that is approved by the appropriate TTB officer as an alternate method, or that is published as a TTB Ruling on the TTB Web site at https://www.ttb.gov. However, a statement of process on TTB Form 5150.19 is still required in any of the circumstances described in § 20.94. * * * * * (c) The manufacturer shall ensure that each finished article made pursuant to a general-use formula is unfit for beverage use and is incapable of being reclaimed or diverted to beverage use or internal human use. TKELLEY on DSK3SPTVN1PROD with PROPOSALS (Approved by the Office of Management and Budget under control number 1513–0061) § 20.112 [Amended] 13. In § 20.112, the last sentence of paragraph (a) introductory text is amended by removing the word ‘‘alcohol’’ and adding, in its place, the letters ‘‘S.D.A.’’, and paragraph (a)(1) is amended by adding the words ‘‘propylene glycol monomethyl ether,’’ ■ VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 (a) * * * A proprietary solvent made pursuant to this formula shall be made with alcohol denatured in accordance with S.D.A. Formula No. 1, 3–A, or 3– C and shall contain, for every 100 parts (by volume) of S.D.A.: * * * * * ■ 15. In § 20.114, the introductory text and paragraph (a) are revised to read as follows: § 20.114 Tobacco flavor general-use formula. This tobacco flavor general-use formula authorizes the production of any finished article made with alcohol denatured in accordance with S.D.A. Formula No. 4 or S.D.R. Formula No. 4 which— (a) Contains flavors sufficient to ensure that the article is unfit for beverage or internal human use, * * * * * ■ 16. In § 20.115, the introductory text and paragraph (a) are revised to read as follows: § 20.115 Ink general-use formula. This ink general-use formula authorizes the production of any finished article made with alcohol denatured in accordance with S.D.A. Formula No 1, 3–A, 3–C, 13–A, 23–A, 30, or 32, or which— (a) Contains pigments, dyes, or dyestuffs sufficient to ensure that the article is unfit for beverage use, * * * * * ■ 17. Section 20.116 is revised to read as follows: § 20.116 Low alcohol general-use formula. This low alcohol general-use formula authorizes the production of any finished article containing not more than 5 percent alcohol by weight or volume. Articles containing no alcohol, or whose manufacture involves the recovery of S.D.S., shall be covered by a statement of process on TTB Form 5150.19 submitted under § 20.94. ■ 18. Section 20.117 is revised to read as follows: § 20.117 Reagent alcohol general-use formula. (a) General. Reagent alcohol must be made in accordance with paragraph (b) of this section and labeled in accordance with paragraph (c) of this section. Reagent alcohol is— PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 (1) Treated as an article if distributed and used in accordance with paragraph (d) of this section; or (2) Treated as S.D.A. if distributed and used in accordance with paragraph (e) of this section. (b) Formula. Reagent alcohol shall be made with 95 parts (by volume) of S.D.A. 3–A, and 5 parts (by volume) of isopropyl alcohol. Water may be added at the time of manufacture. Reagent alcohol shall not contain any ingredient other than those specified in this paragraph. (c) Labeling. (1) Each container of reagent alcohol, regardless of size, shall have affixed to it a label containing the following words that are as conspicuous as any other words on the container labels: ‘‘Reagent Alcohol: Specially Denatured Alcohol Formula 3–A, 95 parts by vol.; and Isopropyl Alcohol, 5 parts by vol.’’ If water is added at the time of manufacture, the label shall specify the composition of the product as diluted. (2) Because undiluted reagent alcohol contains 4 percent by weight or more of methyl alcohol, the container shall have a label bearing a skull and crossbones symbol and the following words: ‘‘Danger,’’ ‘‘Poison,’’ ‘‘Vapor harmful,’’ ‘‘May be fatal or cause blindness if swallowed,’’ and ‘‘Cannot be made nonpoisonous.’’ However, if the addition of water reduces the methyl alcohol concentration to less than 4 percent by weight, the requirements of this paragraph do not apply. (3) A back label shall be attached showing the word ‘‘ANTIDOTE,’’ followed by suitable directions for an antidote. (d) Distribution and use of reagent alcohol as an article. Reagent alcohol is treated as an article if distributed exclusively for the purpose of scientific use. Only the following distributions of reagent alcohol are permitted under this paragraph: (1) For scientific use—(i) In smaller containers. The manufacturer or repackager of the reagent alcohol, or an S.D.S. dealer, may distribute reagent alcohol in containers not exceeding four liters to laboratories or other persons who require reagent alcohol for scientific use. (ii) In bulk containers. The manufacturer of the reagent alcohol, or an S.D.S. dealer, may distribute reagent alcohol in containers larger than four liters to a laboratory or other person requiring reagent alcohol for scientific use if that laboratory or person is qualified to receive bulk shipments of reagent alcohol on [EFFECTIVE DATE OF FINAL RULE] or has received, from the appropriate TTB officer, approval of E:\FR\FM\27JNP1.SGM 27JNP1 TKELLEY on DSK3SPTVN1PROD with PROPOSALS Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules a letterhead application containing the following information: (A) The applicant’s name, address, and permit number, if any; (B) An explanation of the applicant’s need for bulk quantities of reagent alcohol; (C) A description of the security measures that will be taken to segregate reagent alcohol from denatured spirits or other alcohol that may be on the same premises; and (D) A statement that the applicant will allow any appropriate TTB officer to inspect the applicant’s premises. (2) For repackaging. The manufacturer of the reagent alcohol, or an S.D.S. dealer, may distribute reagent alcohol in containers larger than 4 liters to the persons specified in this paragraph. Those persons must repackage the reagent alcohol in containers not exceeding 4 liters, label the smaller packages in accordance with paragraph (c) of this section, and redistribute them in accordance with paragraph (d)(1)(i) of this section. The persons to whom reagent alcohol may be distributed in bulk for repackaging under this paragraph are: (i) A proprietor of a bona fide laboratory supply house; and (ii) Any other person who was qualified to receive bulk shipments of reagent alcohol on [EFFECTIVE DATE OF FINAL RULE], or who has received, from the appropriate TTB officer, approval of a letterhead application containing all of the information required by paragraph (d)(1)(ii)(A) through (D), in addition to the following: (A) A statement that the applicant will comply with the labeling, packaging, and distribution requirements of paragraphs (c) and (d)(1) of this section; and (B) A statement that the applicant will comply with the requirements of § 20.133. (3) For redistribution. The manufacturer of the reagent alcohol, or an S.D.S. dealer, may distribute reagent alcohol in containers of any size to an S.D.S. dealer for redistribution in accordance with this section. An S.D.S. dealer distributing or redistributing reagent alcohol may repackage it in containers of any size permitted under this section that is necessary for the conduct of business. (e) Distribution and use of reagent alcohol in manufacturing. Reagent alcohol is treated as S.D.A. if distributed for the purpose of manufacturing. The following requirements apply to reagent alcohol treated as S.D.A.: (1) The manufacturer of the reagent alcohol, or an S.D.S. dealer, may VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 distribute reagent alcohol in containers of any size to the persons specified in this paragraph for use in manufacturing. (2) A person may receive reagent alcohol for use in manufacturing if the person: (i) Holds a permit as an S.D.A. user; (ii) Has received formula approval on TTB Form 5150.19 to use reagent alcohol in manufacturing; and (iii) Treats the reagent alcohol as S.D.A., not an article. (Approved by the Office of Management and Budget under control number 1513–0061) § 20.119 [Amended] 19. In § 20.119, the introductory text is amended by: ■ a. Removing the words ‘‘shall consist of’’ and adding, in their place, the word ‘‘describes’’; and ■ b. Removing the word ‘‘formula’’ the second time it appears and adding, in its place, the word ‘‘formulation’’. ■ 20. In subpart F, §§ 20.120 through 20.124 are added to read as follows: ■ § 20.120 General-use formula for articles made with S.D.A. 1, 3–A, 13–A, 19, 23–A, 23–H, 30, 32, 35–A, 36, 37, 38–D, 40, 40–A, or 40–B. This general-use formula authorizes the manufacture of any article that: (a) Is made with alcohol denatured in accordance with S.D.A. Formula No. 1, 3–A, 13–A, 19, 23–A, 23–H, 30, 32, 35– A, 36, 37, 38–D, 40, 40–A, and/or 40– B, but no other specially denatured spirits formula; (b) Conforms to one of the Use Codes specified in part 21 of this chapter authorized for the S.D.A. formulation(s) being used to make the article, other than Use Code 900, as described in part 21 of this chapter; and (c) Contains sufficient additional ingredients, other than the denaturants prescribed for the applicable S.D.A. formula(s)— (i) To definitely change the composition and character of the S.D.A. used to make the article, and (ii) To ensure that the finished article is unfit for beverage or internal human use, and, unless approved ‘‘for export only’’ under § 20.193(b), is incapable of being reclaimed or diverted to beverage use or internal human use. § 20.121 Vinegar general-use formula. The vinegar general-use formula is a formula for making vinegar with alcohol denatured in accordance with S.D.A. Formula No. 18 in a process whereby all of the ethyl alcohol, except residual alcohol within the limit specified in § 20.104, loses its identity by being converted to vinegar. PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 § 20.122 38641 S.D.A. 39–C general-use formula. S.D.A. 39–C general-use formula is a formula for articles made with alcohol denatured in accordance with S.D.A. Formula No. 39–C. Articles made pursuant to this general-use formula shall contain, in each gallon of finished product, not less than 2 fl. oz. of perfume material (essential oils as defined in § 21.11, isolates, aromatic chemicals, etc.). Unless approved with the endorsement ‘‘for export only,’’ all articles made with alcohol denatured in accordance with S.D.A. Formula No. 39–C must be made in accordance with this formula. § 20.123 Pressurized container generaluse formula. This general-use formula describes an article, made with alcohol denatured in accordance with S.D.A. Formula No. 40–C, that will be packaged in pressurized containers in which the liquid contents are in intimate contact with the propellant and from which the contents are not easily removable in liquid form. § 20.124 Duplicating fluid and ink solvent general-use formula. (a) Duplicating fluids and ink solvents under this general-use formula shall be made with alcohol denatured in accordance with S.D.A. Formula No. 1, 3–A, or 3–C and (1) Shall contain, for every 100 parts (by volume) of denatured alcohol: (i) No less than 1 part (by volume) of n-propyl acetate, and no less than 10 parts (by volume) of one or any combination of isopropyl alcohol or methyl alcohol; or (ii) No less than 5 parts (by volume) of n-propyl acetate; and (2) May contain additional ingredients. (b) Duplicating fluids and ink solvents are intended for use in the printing industry, shall not be sold for general solvent use, and shall not be distributed through retail channels for sale as consumer commodities for personal or household use. (c) If this article contains 4 percent or more by weight of methyl alcohol, the label shall have a skull and crossed bones symbol and the following words: ‘‘Danger,’’ ‘‘Poison,’’ ‘‘Vapor harmful,’’ ‘‘May be fatal or cause blindness if swallowed,’’ and ‘‘Cannot be made nonpoisonous.’’ ■ 21. In § 20.133, paragraph (b) is revised, paragraph (c) is added, and the Office of Management and Budget control number referenced at the end of the section is revised to read as follows: E:\FR\FM\27JNP1.SGM 27JNP1 38642 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules § 20.133 Registration of persons trafficking in articles. * * * * * (b) A person who reprocesses articles shall ensure that each article containing 0.5 percent or more alcohol by weight or volume is unfit for beverage or internal human use and is incapable of being reclaimed or diverted to beverage use or internal human use. (c) The appropriate TTB officer will prohibit any of the activities described in paragraph (a) of this section if the activity jeopardizes the revenue or increases the burden of administering this part. (Approved by the Office of Management and Budget under control number 1513–0061) 22. In § 20.134, paragraph (a) and the Office of Management and Budget control number referenced at the end of the section are revised to read as follows: ■ § 20.134 Labeling. (a) General. Except as otherwise provided in paragraph (b) or (c) of this section, the immediate container of each article shall, before removal from the manufacturer’s premises, bear the following information either directly on the container or on a label securely attached to it: (1) The name, trade name or brand name of the article; and (2) The name and address (city and State) of the manufacturer or distributor of the article. * * * * * (Approved by the Office of Management and Budget under control number 1513–0061) § 20.136 [Amended] 23. In § 20.136, the third sentence of paragraph (b) is amended by removing the words ‘‘Formula Nos.’’ and adding, in their place, the words ‘‘formulations’’. ■ § 20.141 [Amended] 24. In § 20.141, paragraph (a) is amended by removing the word ‘‘formula’’ the first time it appears, and adding, in its place, the word ‘‘formulation’’, and by adding the words ‘‘formulations of’’ after the words ‘‘For example,’’. ■ § 20.170 [Amended] 25. Section 20.170 is amended by removing the word ‘‘formula’’ and adding, in its place, the word ‘‘formulation’’. TKELLEY on DSK3SPTVN1PROD with PROPOSALS ■ § 20.175 [Amended] 26. In § 20.175, paragraph (c) is amended by adding to the end of the sentence the words, ‘‘except as provided in 26 U.S.C. 5001(a)(4) and (5)’’. ■ VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 27. Section 20.183 is added under the undesignated center heading ‘‘Operations By Dealers’’ to read as follows: ■ § 20.183 Exportation of S.D.S. (a) General. Except as otherwise provided in paragraph (b) of this section, a dealer may export S.D.S. that conform to a formula specified in part 21 of this chapter to any country that allows the importation of such spirits. The exporting dealer shall: (1) For each export shipment, prepare TTB Form 5100.11 in accordance with its instructions as a notice and submit it to the appropriate TTB officer; (2) Mark each shipping container and case with the words ‘‘For Export’’; (3) Export the S.D.S. directly; and (4) Retain appropriate documentation, such as invoices and bills of lading, as evidence that the denatured spirits were, in fact, exported. (b) Exception. A dealer may not export under paragraph (a) of this section any spirits that conform to Formula No. 3–C, 29, or 38–B. ■ 28. Section 20.189 is amended by revising paragraphs (c) and (d) to read as follows: § 20.189 Use of S.D.S. * * * * * (c) Unless otherwise authorized by the appropriate TTB officer, each formulation of S.D.S. may be used only for the purposes authorized for that formulation under part 21 of this chapter. (d) By the use of essential oils and/or chemicals in the manufacture of each article containing 0.5 percent or more alcohol by weight or volume, the manufacturer shall ensure that: (1) Each finished article is unfit for beverage use; and (2) Unless approved ‘‘for export only’’ under § 20.193(b), each finished article is incapable of being reclaimed or diverted to beverage use or internal human use. * * * * * ■ 29. Section 20.193 is added to subpart I to read as follows: § 20.193 Articles for export. (a) Articles approved without qualification, including articles made in accordance with one of the general-use formulas in §§ 20.111 through 20.124, may be exported without restriction. (b) For each article for which the approved formula is endorsed ‘‘For Export Only’’ the manufacturer shall: (1) Label the immediate container to clearly show that the article is for export (for example, with the words ‘‘For export only’’, ‘‘Not for sale in the United PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 States’’, or ‘‘Manufactured for sale in _______________’’); (2) Mark the shipping containers and cases with the words ‘‘For Export’’; (3) Export the article directly; and (4) Retain appropriate documentation, such as invoices and bills of lading, as evidence that the article was, in fact, exported. (c) All articles for export shall comply with the applicable requirements of the countries to which they are sent. ■ 30. In § 20.204, paragraph (c) is revised to read as follows: § 20.204 Incomplete shipments. * * * * * (c) Subject to the limitations for loss prescribed in § 20.202, the shipper (dealer or distilled spirits plant proprietor) shall file a claim for allowance of the entire quantity lost, in the manner provided in that section. The claim shall include the applicable data required by § 20.205. ■ 31. Section 20.222 is revised to read as follows: § 20.222 Destruction. (a) Record of destruction. A permittee who destroys specially denatured spirits or recovered alcohol, or who transfers such material to another entity for destruction, shall prepare a record of destruction, which shall be maintained by the permittee with the records required by subpart P of this part. The record shall identify— (1) The reason for destruction, (2) The date, time, location and manner of destruction, (3) The quantity involved and, if applicable, identification of containers, and (4) The name of the individual who accomplished or supervised the destruction. (b) Destruction by nonpermittees. In general, the destruction of specially denatured spirits and recovered alcohol shall be performed by a permittee or a distilled spirits plant. However, a nonpermittee may destroy recovered alcoholic material if the material has been determined by the appropriate TTB officer to be equivalent to an article. If the material is not so determined, destruction may only occur on the premises of the manufacturer who recovered the material, a distilled spirits plant, or a dealer permittee. (Approved by the Office of Management and Budget under control number 1513–0062) § 20.262 [Amended] 32. Section 20.262 is amended in paragraphs (a) introductory text, (b), and (c) by removing the word ‘‘formula’’ and adding, in its place, the word ‘‘formulation’’. ■ E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules § 20.263 [Amended] 33. Section 20.263 is amended in paragraphs (a) introductory text, (b), and (c) by removing the word ‘‘formula’’ and adding in its place, the word ‘‘formulation’’. ■ 34. In § 20.264, paragraphs (a)(1) and (2) are revised, paragraph (a)(4) is added, and the Office of Management and Budget control number referenced at the end of the section is revised to read as follows: ■ § 20.264 User’s records and report of products and processes. (a) Records. (1) Each user shall maintain separate accountings of— (i) The number of gallons of each formulation of new S.D.S. used for each product or process, recorded by the code number prescribed by § 21.141 of this chapter; and (ii) The number of gallons of each formulation of recovered S.D.S. used for each product or process, recorded by the code number prescribed by § 21.141 of this chapter. (2) Each user who recovers specially denatured spirits shall maintain separate accountings of the number of gallons of each formulation of specially denatured spirits recovered from each product or process, recorded by the code number prescribed by § 21.141 of this chapter. * * * * * (4) Each user who manufactures articles for export subject to § 20.193(b) shall retain the documentation required by § 20.193(b)(4). * * * * * alkylate, ethyl tertiary butyl ether, high octane denaturant blend, methyl tertiary butyl ether, naphtha, natural gasoline, raffinate, or any combination of these; or A total of 5.0 gallons of toluene. * * * * * ■ 38. In subpart C, § 21.25 is added to read as follows: § 21.25 Formula No. 35. Formula. To every 100 gallons of alcohol of not less than 185 proof add: 29.75 gallons of ethyl acetate having an ester content of 100 percent by weight or the equivalent thereof not to exceed 35 gallons of ethyl acetate with an ester content of not less than 85 percent by weight. ■ 39. In § 21.33, paragraph (a) is revised to read as follows: § 21.33 Formula No. 2–B. (a) Formula. To every 100 gallons of alcohol add: One-half gallon of rubber hydrocarbon solvent, 1⁄2 gallon of toluene, 1⁄2 gallon of heptane, 1⁄2 gallon of hexane (mixed isomers), or 1⁄2 gallon of n-hexane. * * * * * §§ 21.34, 21.36, 21.39, 21.40, 21.42, 21.45, 21.46, 21.48, 21.52 through 21.54, 21.60, 21.61, 21.66, 21.69, 21.70, 21.78, and 21.81 [Removed and Reserved] 40. Sections 21.34, 21.36, 21.39, 21.40, 21.42, 21.45, 21.46, 21.48, 21.52 through 21.54, 21.60, 21.61, 21.66, 21.69, 21.70, 21.78, and 21.81 are removed and reserved. ■ 38643 (2) A total of at least 3 pounds of any two or more denaturing materials listed under Formula No. 38–B, plus sufficient boric acid, N.F., Polysorbate 80, N.F., or Poloxamer 407, N.F. to total 10 pounds of denaturant; or * * * * * ■ 45. Section 21.91 is amended by adding a sentence at the end of the section to read as follows: § 21.91 General * * * The authorization of a substitute denaturant may be published in a TTB Ruling. ■ 46. Section 21.94a is added to read as follows: § 21.94a Alkylate. (a) API gravity at 60 °F. 70.4. (b) Reid vapor pressure (PSI). 5.60 maximum. (c) Distillation (°F): (1) I.B.P. 109.0. (2) 10 percent. 186.6. (3) 50 percent. 221.1. (4) 90 percent. 271.8. (5) End point distillation. 375.7. §§ 21.98, 21.103, 21.104, 21.111, 21.121, 21.122, and 21.128 [Removed and Reserved] 47. Sections 21.98, 21.103, 21.104, 21.111, 21.122, and 21.128 are removed and reserved. ■ 48. Section 21.105a is added to read as follows: ■ § 21.105a Cornmint oil (Mentha arvensis and Mentha canadensis). Authority: 5 U.S.C. 552(a), 26 U.S.C. 5242, 7805. 42. In § 21.63, paragraph (a) is amended by adding the words ‘‘8.75 pounds of potassium hydroxide, on an anhydrous basis;’’ before the words ‘‘or 12.0 pounds of caustic soda,’’. 36. Section 21.21a is added to read as follows: (a) Specific gravity at 25 °C. 0.895 to 0.905. (b) Refractive index at 20 °C. 1.4580 to 1.4590. (c) Optical rotation at 20 °C. ¥18° to ¥36°. (d) Alcohol content (as menthol). 65 percent minimum. (e) Ketone content (as menthone). 5 percent minimum. ■ 49. Section 21.105b is added to read as follows: § 21.65 § 21.105b § 21.35 [Amended] (Approved by the Office of Management and Budget under control number 1513–0062) PART 21—FORMULAS FOR DENATURED ALCOHOL AND RUM 41. In § 21.35, paragraph (a) is amended by adding the words ‘‘cyclohexane or’’ before the words ‘‘methyl alcohol.’’ § 21.63 ■ [Amended] ■ 35. The authority citation of part 21 continues to read as follows: ■ ■ [Amended] Formula. To every 100 gallons of alcohol of not less than 185 proof add: Five gallons of toluene or 5 gallons of heptane. ■ 37. In § 21.24, paragraph (a) is revised to read as follows: 43. In § 21.65, the list in paragraph (a) is amended by adding entries reading ‘‘Cornmint oil.’’, ‘‘Distilled lime oil.’’, ‘‘L(–)–Carvone.’’, ‘‘Lemon oil.’’, and ‘‘Peppermint oil, Terpeneless.’’, in appropriate alphabetical order. ■ 44. In § 21.68, paragraphs (a)(1) and (2) are revised to read as follows: § 21.24 § 21.68 ■ TKELLEY on DSK3SPTVN1PROD with PROPOSALS § 21.21a Formula No. 12–A. Formula No. 20. (a) Formula. To every 100 gallons of ethyl alcohol of not less than 195 proof add: A total of 2.0 gallons of either unleaded gasoline, rubber hydrocarbon solvent, kerosene, deodorized kerosene, VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 Formula No. 38–F. (a) * * * (1) Six pounds of either boric acid, N.F., Polysorbate 80, N.F., or Poloxamer 407, N.F.; 11/3 pounds of thymol, N.F.; 11/3 pounds of chlorothymol, N.F. XII; and 11/3 pounds of menthol, U.S.P.; or PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 Cyclohexane. (a) Specific gravity at 20 °C. 0.75 to 0.80. (b) Odor. Characteristic odor. ■ 50. Section 21.106a is added to read as follows: § 21.106a Distilled lime oil (Citrus aurantifolia). (a) Specific gravity at 25 °C. 0.850 to 0.870. (b) Refractive index at 20 °C. 1.4740 to 1.4780. (c) Optical rotation at 20 °C. +30° to +50°. (d) Aldehyde content (as citral). 0.5 to 3.0 percent. E:\FR\FM\27JNP1.SGM 27JNP1 38644 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules (e) Terpene content (as limonene). 45 percent minimum. ■ 51. Section 21.108a is added to read as follows: § 21.108a Ethyl tertiary butyl ether. (a) Purity. ≥95.0 percent. (b) Color. Colorless to light yellow. (c) Odor. Terpene-like. (d) Specific gravity at 20 °C. 0.70 to 0.80. (e) Boiling point (°C). 73. ■ 52. Section 21.112a is added to read as follows: § 21.112a Hexane (mixed isomers). n-Hexane. (a) General. Minimum 97 percent purity. (b) Distillation range. No distillate should come over below 150 °F and none above 160° F. (c) Odor. Characteristic odor. ■ 54. Section 21.112c is added to read as follows: § 21.112c High octane denaturant blend. (a) API Gravity at 60 °F. 40 to 65. (b) Reid Vapor Pressure (PSI). 6 to 15. (c) Isopropyl alcohol. 24 to 40 percent volume. (d) Methyl alcohol. 1.6 to 9.6 percent volume. (e) Diisopropyl ether (DIPE). 4 to 12 percent volume. (f) tert-Butyl alcohol. 4 to 12 percent volume. (g) Iso-pentane. 4 to 9 percent volume. (h) Pentane. 4 to 9 percent volume. (i) Pentene. 0 to 2.4 percent volume. (j) Hexane. 2 to 6 percent volume. (k) Heptane. 1 to 3 percent volume. (l) Sulfur (ppm). 0 to 120. (m) Benzene (% vol.). 0 to 1.1. (n) Distillation (°F): (1) 10 percent. 80 to 168. (2) 50 percent. 250. (3) End point distillation. 437. ■ 55. Section 21.115a is added to read as follows: TKELLEY on DSK3SPTVN1PROD with PROPOSALS § 21.115a Lemon oil (Citrus limonium). (a) Specific gravity at 25 °C. 0.850 to 0.860. (b) Refractive index at 20 °C. 1.4570 to 1.4580. (c) Optical rotation at 20 °C. +55° to +65°. (d) Terpene content (as limonene). 65 percent minimum. ■ 56. Section 21.115b is added to read as follows: VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 L(–)–Carvone. (a) Specific gravity at 25 °C. 0.955 to 0.965. (b) Refractive index at 20 °C. 1.495 to 1.500. (c) Angular rotation. ¥57° to ¥62°. (d) Assay. Not less than 97.0 percent. ■ 57. Section 21.118a is added to read as follows: § 21.118a (a) General. Minimum 55 percent nhexane. (b) Distillation range. No distillate should come over below 150 °F and none above 160 °F. (c) Odor. Characteristic odor. ■ 53. Section 21.112b is added to read as follows: § 21.112b § 21.115b Methyl tertiary butyl ether. (a) Purity. ≥97.0 percent. (b) Color. Clear, colorless. (c) Odor. Turpentine-like. (d) Specific Gravity at 20 °C. 0.70 to 0.80. (e) Boiling Point (°C). 55. ■ 58. Section 21.118b is added to read as follows: § 21.118b Naphtha. (a) API Gravity at 60 °F. 30 to 85. (b) Reid Vapor Pressure (PSI). 8 maximum. (c) Specific Gravity at 20 °C. 0.70 to 0.80. (d) Distillation (°F): (1) I.B.P. 85 maximum. (2) 10 percent. 130 maximum. (3) 50 percent. 250 maximum. (4) 90 percent. 340 maximum. (e) End point distillation. 380 maximum. (f) Copper corrosion. One (1). (g) Sabolt color. 28 minimum. ■ 59. Section 21.118c is added to read as follows: § 21.118c Natural gasoline. Natural gasoline is a mixture of various alkanes including butane, pentane, and hexane hydrocarbons extracted from natural gas. It has a distillation range wherein no more than 10 percent by volume of the sample may distill below 97 °F; at least 50 percent by volume shall distill at or below 156 °F; and at least 90 percent by volume shall distill at or below 209 °F. ■ 60. Section 21.121 is revised to read as follows: § 21.121 Peppermint oil, Terpeneless. (a) Specific gravity at 25 °C. 0.890 to 0.910. (b) Refractive index at 20 °C. 1.455 to 1.465. (c) Esters as menthyl acetate. 5 percent minimum. (d) Menthol (free and esters). 5 percent minimum. ■ 61. Section 21.121a is added to read as follows: § 21.121a Potassium Hydroxide. (a) Color. White or yellow. (b) Specific gravity at 20 °C. 1.95 to 2.10. (c) Melting point. 360 °C. (d) Boiling point. 1320 °C. PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 (e) pH (0.1M solution). 13.5. 62. Section 21.124a is added to read as follows: ■ § 21.124a Raffinate. (a) API Gravity at 60 °F. 30 to 85. (b) Reid Vapor Pressure (PSI). 5 to 11. (c) Octane (R+M/2). 66 to 70. (d) Distillation (°F): (1) 10 percent. 120 to 150. (2) 50 percent. 144 to 180. (3) 90 percent. 168 to 200. (4) End point distillation. 216 to 285. ■ 63. Section 21.130a is added to read as follows: § 21.130a Straight run gasoline. (a) General. Straight run gasoline is a mixture consisting predominantly (greater than 60 percent by volume) of C4, C5, C6, C7 and/or C8 hydrocarbons, and is either: (1) A petroleum distillate coming straight from an atmospheric distillation unit without being cracked or reformed, or (2) A condensate coming directly from an oil/gas recovery operation. (b) API gravity. 72° minimum, 85° maximum. (c) Reid vapor pressure (PSI). 15 maximum. (d) Sulfur. 120 ppm maximum. (e) Benzene. 1.1 percent by volume maximum. (f) Distillation (°F): (1) 10 percent. 97 minimum, 158 maximum. (2) 50 percent. 250 maximum. (3) Final boiling point. 437 maximum. ■ 64. Section 21.132 is revised to read as follows: § 21.132 Toluene. (a) Specific Gravity at 15.56°/15.56°C. 0.80 to 0.90. (b) Boiling point (°C). 110.6. (c) Distillation range (°C). Not more than 1 percent by volume should distill below 109, and not less than 99 percent by volume below 112. (d) Odor. Characteristic odor. § 21.141 [Amended] 65. In § 21.141, the table is amended by: ■ a. Removing the entry for ‘‘Antiseptic, bathing solution (restricted).’’, and ■ b. Removing each reference to ‘‘2–C’’, ‘‘3–B’’, ‘‘6–B’’, ‘‘12–A’’, ‘‘17’’, ‘‘20’’, ‘‘22’’, ‘‘23–F’’, ‘‘27’’, ‘‘27–A’’, ‘‘27–B’’, ‘‘33’’, ‘‘35’’, ‘‘38–C’’, ‘‘39’’, ‘‘39–A’’, ‘‘42’’, and ‘‘46’’ in the column headed ‘‘Formulas authorized.’’ ■ § 21.151 [Amended] 66. In § 21.151, the table is amended by: ■ a. Removing the entries for ‘‘Benzene’’; ‘‘Bone oil (Dipple’s oil)’’; ■ E:\FR\FM\27JNP1.SGM 27JNP1 Federal Register / Vol. 78, No. 124 / Thursday, June 27, 2013 / Proposed Rules ‘‘Chloroform’’; ‘‘Cinchonidine’’; ‘‘Cinchonidine sulfate, N.F. IX’’; ‘‘Gentian violet’’; ‘‘Gentian violet, U.S.P’’; ‘‘Mercuric iodide, red N.F. XI’’; ‘‘Phenyl mercuric benzoate’’; ‘‘Phenyl mercuric chloride, N.F. IX’’; ‘‘Phenyl mercuric nitrate, N.F’’; ‘‘Pine tar, U.S.P’’; ‘‘Pyridine bases’’; ‘‘Quassia, fluid extract, N.F. VII’’; ‘‘Quinine, N.F. X’’; ‘‘Quinine dihydrochloride, N.F. XI’’; ‘‘Resorcinol (Resorcin), U.S.P’’; ‘‘Salicylic acid, U.S.P’’; ‘‘Sodium, metallic’’; and ‘‘Thimerosal, U.S.P’’; ■ b. Removing each remaining reference to ‘‘2–C’’, ‘‘22’’, ‘‘23–F’’, ‘‘27’’, ‘‘27–A’’, ‘‘27–B’’, ‘‘38–C’’, ‘‘39’’, ‘‘39–A’’, ‘‘42’’, and ‘‘46’’; and ■ c. Revising the entries for ‘‘Ethyl acetate’’, and ‘‘Toluene’’, and adding entries for ‘‘Alkylate’’, ‘‘Cornmint oil’’, ‘‘Cyclohexane’’, ‘‘Distilled lime oil’’, ‘‘Ethyl tertiary butyl ether’’, ‘‘Hexane’’, ‘‘n-Hexane’’, ‘‘High octane denaturant blend’’, ‘‘L(–)–Carvone’’, ‘‘Lemon oil’’, ‘‘Methyl tertiary butyl ether’’, ‘‘Naphtha’’, ‘‘Natural gasoline’’, ‘‘Peppermint oil, terpeneless.’’, ‘‘Poloxamer 407 N.F.’’, ‘‘Potassium hydroxide’’, ‘‘Raffinate’’, and ‘‘Straight run gasoline’’. The revisions and additions read as follows: DENATURANTS AUTHORIZED FOR COMPLETELY DENATURED ALCOHOL (C.D.A), SPECIALLY DENATURED ALCOHOL (S.D.A.), AND SPECIALLY DENATURED RUM (S.D.R.)—Continued * * * L(–)–Carvone ........................ * * S.D.A. 38–B. * * * Lemon oil .............................. * * S.D.A. 38–B. * * * Methyl tertiary butyl ether .. * * C.D.A. 20. * * * Naphtha ................................ Natural gasoline ................... * * C.D.A. 20. C.D.A. 20. * * * Peppermint oil, terpeneless * * S.D.A. 38–B. * * * Poloxamer 407, N.F. ............. * * S.D.A. 38–F. * * * Potassium hydroxide ........... * * S.D.A. 36. * * * Raffinate ................................ * * C.D.A. 20. * * * Straight run gasoline ............ * * C.D.A. 20. * * * Toluene ................................. * * C.D.A. 12–A; S.D.A. 2–B. § 21.151 List of denaturants authorized for denatured spirits. * * * * * * * § 21.161 * * * [Amended] 67. In § 21.161, the table is amended by removing the entries for ‘‘2–C’’, ‘‘3– DENATURANTS AUTHORIZED FOR COM- B’’, ‘‘6–B’’, ‘‘12–A’’, ‘‘17’’, ‘‘20’’, ‘‘22’’, PLETELY DENATURED ALCOHOL ‘‘23–F’’, ‘‘27’’, ‘‘27–A’’, ‘‘27–B’’, ‘‘33’’, (C.D.A), SPECIALLY DENATURED AL- ‘‘35 3’’, ‘‘35 4’’, ‘‘38–C’’, ‘‘39’’, ‘‘39–A’’, COHOL (S.D.A.), AND SPECIALLY DE- ‘‘42’’, and ‘‘46’’. * * * NATURED * * ■ RUM (S.D.R.) PART 27—IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER * * * Alkylate ................................. * * C.D.A. 20. * * * Cornmint oil ......................... Cyclohexane ......................... * * S.D.A. 38–B. S.D.A. 3–A. * * * Distilled lime oil .................. * * S.D.A. 38–B. * * * Ethyl acetate ......................... * * C.D.A. 35; S.D.A. 29, 35–A. ■ * * * Ethyl tertiary butyl ether ..... * * C.D.A. 20. * * * Hexane .................................. n-Hexane ............................... * * S.D.A. 2–B. S.D.A. 2–B. * * * High octane denaturant blend. * * C.D.A. 20. Denatured spirits and fuel alcohol are treated as spirits for purposes of this part and are subject to tax pursuant to § 27.40(a). The tax must be paid upon importation, with only two exceptions: Spirits may be withdrawn from customs custody free of tax for the use of the United States under subpart M of this part; and spirits may be withdrawn from customs custody and transferred to a 68. The authority citation for part 27 is revised to read as follows: TKELLEY on DSK3SPTVN1PROD with PROPOSALS ■ VerDate Mar<15>2010 16:41 Jun 26, 2013 Jkt 229001 Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121–5124, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805. 69. Section 27.222 is added to read as follows: § 27.222 Importation of denatured spirits and fuel alcohol. PO 00000 Frm 00038 Fmt 4702 Sfmt 9990 38645 distilled spirits plant, including a bonded alcohol fuel plant, without payment of tax under subpart L of this part. After transfer pursuant to subpart L, denatured spirits or fuel alcohol may be withdrawn free of tax in accordance with part 19 of this chapter if they meet the standards to conform either to a denatured spirits formula specified in part 21 of this chapter (for withdrawal from a regular distilled spirits plant) or a formula specified in § 19.746 of this chapter (for withdrawal from an alcohol fuel plant). Such withdrawal is permitted, even though the denaturation or rendering unfit for beverage use may have occurred, in whole or in part, in a foreign country. For purposes of this chapter, the denaturation or rendering unfit is deemed to have occurred at the distilled spirits plant (including the alcohol fuel plant), the proprietor of which is responsible for compliance with part 21 or § 19.746, as the case may be. Imported fuel alcohol shall also conform to the requirements of 27 CFR 19.742. PART 28—EXPORTATION OF ALCOHOL 70. The authority citation for part 28 continues to read as follows: ■ Authority: 5 U.S.C. 552(a); 19 U.S.C. 81c, 1202; 26 U.S.C. 5001, 5007, 5008, 5041, 5051, 5054, 5061, 5121, 5122, 5201, 5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805; 27 U.S.C. 203, 205, 44 U.S.C. 3504(h). 71. Section 28.157 is added to read as follows: ■ § 28.157 Exportation by dealer in specially denatured spirits. A dealer in specially denatured spirits who holds a permit under part 20 of this chapter may export specially denatured spirits in accordance with § 20.183 of this chapter. Signed: December 12, 2012. John J. Manfreda, Administrator. Approved: April 14, 2013. Timothy E. Skud, Deputy Assistant Secretary (Tax, Trade and Tariff Policy). [FR Doc. 2013–15262 Filed 6–26–13; 8:45 am] BILLING CODE 4810–31–P E:\FR\FM\27JNP1.SGM 27JNP1

Agencies

[Federal Register Volume 78, Number 124 (Thursday, June 27, 2013)]
[Proposed Rules]
[Pages 38628-38645]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15262]

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DEPARTMENT OF THE TREASURY

Alcohol and Tobacco Tax and Trade Bureau

27 CFR Parts 19, 20, 21, 27, and 28

[Docket No. TTB-2013-0005; Notice No. 136]
RIN 1513-AB03

Reclassification of Specially Denatured Spirits and Completely
Denatured Alcohol Formulas and Related Amendments

AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury.

ACTION: Notice of proposed rulemaking; solicitation of comments.

-----------------------------------------------------------------------

SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes to
amend its regulations concerning denatured alcohol and products made
with industrial alcohol. The proposed amendments would eliminate
outdated specially denatured spirits formulas from the regulations,
reclassify some specially denatured spirits formulas as completely
denatured alcohol formulas, and issue some new general-use formulas for
manufacturing products with specially denatured spirits. The proposed
amendments would remove unnecessary regulatory burdens on the
industrial alcohol industry as well as TTB, and would align the
regulations with current industry practice. The proposed amendments
would also make other needed improvements and clarifications, as well
as a number of minor technical changes and corrections to the
regulations. TTB invites comments on these proposed amendments to the
regulations.

DATES: TTB must receive your written comments on or before August 26,
2013.

ADDRESSES: You may send comments on this document to one of the
following addresses:
https://www.regulations.gov: To submit comments via the
Internet, use the comment form for this document as posted within
Docket No. TTB-2013-0005 at ``Regulations.gov,'' the Federal e-
rulemaking portal;
Mail: Director, Regulations and Rulings Division, Alcohol
and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12,
Washington, DC 20005.
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 document for specific
instructions and requirements for submitting comments, and for
information on how to request a public hearing.

[[Page 38629]]

You may view copies of this document, selected supporting
materials, and any comments TTB receives about this proposal within
Docket No. TTB-2013-0005 at https://www.regulations.gov. A link to this
Regulations.gov docket is posted on the TTB Web site at https://www.ttb.gov/regulations_laws/all_rulemaking.shtml under Notice No.
136. You also may view copies of this document, all supporting
materials, and any comments TTB receives about this proposal by
appointment at the TTB Information Resource Center, 1310 G Street NW.,
Washington, DC 20005. Please call 202-453-2270 to make an appointment.

FOR FURTHER INFORMATION CONTACT: Karen Welch of the Regulations and
Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, at 202-453-
1039, extension 046, or IndustrialAlcoholRegs@ttb.gov.

SUPPLEMENTARY INFORMATION:

Authority and Background

Internal Revenue Code

Chapter 51 of the Internal Revenue Code of 1986 (IRC), 26 U.S.C.
chapter 51, contains excise tax and related provisions concerning
distilled spirits used for both beverage and nonbeverage purposes. The
IRC imposes an excise tax rate of $13.50 per proof gallon on distilled
spirits (26 U.S.C. 5001). Under section 5006(a) of the IRC (26 U.S.C.
5006(a)) the excise tax on distilled spirits is generally determined at
the time the distilled spirits are withdrawn from the bonded premises
of a distilled spirits plant.
However, section 5214(a) of the IRC authorizes, subject to
regulations prescribed by the Secretary of the Treasury, the following
two types of spirits to be withdrawn free of tax:
Spirits that have been ``denatured'' by the addition of
materials that make the spirits unfit for beverage consumption; and
Undenatured spirits for certain governmental, educational,
medical, or research purposes.
Section 5214(a)(1) of the IRC permits the withdrawal of denatured
spirits free of tax for:
Exportation;
Use in the manufacture of a definite chemical substance,
where such distilled spirits are changed into some other chemical
substance and do not appear in the finished product; or
Any other use in the arts or industry, or for fuel, light,
or power, except that, under 26 U.S.C. 5273(b), denatured spirits may
not be used in the manufacture of medicines or flavors for internal
human use where any of the spirits remain in the finished product, and,
under section 5273(d), denatured spirits may not be withdrawn or sold
for beverage purposes.
The IRC authorizes the Secretary of the Treasury to prescribe
regulations regarding the production, warehousing, denaturing,
distribution, sale, export, and use of industrial alcohol in order to
protect the revenue (26 U.S.C. 5201), and to regulate materials that
are suitable to denature distilled spirits (26 U.S.C. 5241 and 5242).
Section 5242 states that denaturing materials shall be such as to
render the spirits with which they are admixed unfit for beverage or
internal medicinal use and that the character and quantity of
denaturing materials used shall be as prescribed by the Secretary by
regulations. Furthermore, section 5273(a) of the IRC requires that any
person using specially denatured spirits (which is defined in the
following section of this document) to manufacture products:

* * * shall file such formulas and statements of process, submit
such samples, and comply with such other requirements, as the
Secretary shall by regulations prescribe, and no person shall use
specially denatured distilled spirits in the manufacture or
production of any article until approval of the article, formula,
and process has been obtained from the Secretary.\1\
---------------------------------------------------------------------------

\1\ Other sections of the IRC relating to denatured spirits set
forth requirements pertaining to the taxation and manufacture of
distilled spirits, the withdrawal of distilled spirits free of tax
or without payment of tax, the importation and exportation of
distilled spirits, the issuance of permits for industrial alcohol
users and dealers, the sale and use of industrial alcohol, and the
recovery of potable alcohol from industrial alcohol (see 26 U.S.C.
5002 through 5008, 5061, 5062, 5101, 5111, 5112, 5131, 5132, 5181,
5204, 5214, 5232, 5235, 5271, 5273, and 5313).
---------------------------------------------------------------------------

Regulation of Denatured Spirits

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers
Chapter 51 of the IRC pursuant to section 111(d) of the Homeland
Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has
delegated various authorities through Treasury Department Order 120-01
(Revised), dated January 21, 2003, to the TTB Administrator to perform
the functions and duties in the administration and enforcement of this
law.
Regulations pertaining specifically to denatured spirits are found
in 27 CFR part 20 (Distribution and use of denatured alcohol and rum)
and part 21 (Formulas for denatured alcohol and rum). Certain
provisions in TTB's regulations in 27 CFR part 19 (Distilled spirits
plants), part 27 (Importation of distilled spirits, wines, and beer),
and part 28 (Exportation of alcohol) also concern denatured spirits.
Denatured spirits are spirits to which denaturants--which are materials
that make alcoholic mixtures unfit for beverage or internal human
medicinal use--have been added in accordance with 27 CFR part 21. TTB
approves denaturants if the denaturants: (1) Make the spirits unfit for
beverage or internal human medicinal use (26 U.S.C. 5242 and 27 CFR
21.11), (2) are adequate to protect the Federal excise tax revenue (27
CFR 21.91), and (3) are suitable for the intended use of the denatured
spirits (26 U.S.C. 5242).\2\
---------------------------------------------------------------------------

\2\ In most cases, spirits used for industrial purposes are
``alcohol,'' which in this context means a type of spirits distilled
at more than 160 degrees of proof and substantially neutral in
character, lacking the taste, aroma, and other characteristics
generally attributed to whisky, brandy, rum, or gin. (27 CFR
19.487(a)(1).)
---------------------------------------------------------------------------

There are two types of denatured spirits: completely denatured
alcohol (C.D.A.) and specially denatured spirits (referred to as
``S.D.S.'' for purposes of this preamble). C.D.A. jeopardizes the
revenue less than S.D.S. does--first, C.D.A. is more offensive to the
taste than S.D.S. and thus C.D.A. is less likely to be used for
beverage purposes, and second, it is more difficult to separate potable
alcohol from C.D.A. than it is from S.D.S. For these reasons, the
withdrawal and use of C.D.A. are subject to less stringent regulatory
oversight than are the withdrawal and use of S.D.S.
Title 27 CFR 20.41 provides that permits are required to withdraw,
deal in, or use S.D.S. The regulations also require that dealers and
users of S.D.S. maintain specified records and retain invoices (see 27
CFR 20.262 through 20.268). Under Sec. 20.264(b), users of S.D.S. are
required to submit an annual report to TTB, and, under Sec. 20.262(d),
a dealer, as defined in 27 CFR 20.11, when requested by TTB, must
submit a required accounting of each formulation of new and recovered
S.D.S. In contrast, under 27 CFR 20.141, no permits are required to use
or distribute C.D.A. (with the exception of recovery for reuse). A
person that receives, packages, stores, disposes of, or uses C.D.A. is
required to maintain records only when specifically requested by TTB
(see 27 CFR 20.261). The regulations do not provide any reporting
requirements for persons that use or deal in C.D.A.
The regulations prescribe formulas for C.D.A. and for S.D.S. C.D.A.
generally may be sold and used for any purpose (Sec. 20.141), with the
exception that C.D.A. denatured in accordance with Formula No. 20 is
restricted to fuel use (27 CFR 21.24). In contrast, S.D.S.,

[[Page 38630]]

which is generally used as a raw material or ingredient in the
manufacture of other products (termed ``articles''), may not be used
for any purpose not specifically authorized in the regulations. The
authorized purposes are categorized within ``use codes,'' which are
published in the regulations in 27 CFR part 21.

Manufacture of Articles With Denatured Spirits

Both C.D.A. and S.D.S. may be used to manufacture articles, which
are defined in section 5002(a)(14) of the IRC (26 U.S.C. 5002(a)(14))
as ``any substance in the manufacture of which denatured distilled
spirits are used.'' The manufacture of articles with C.D.A. is
generally unregulated. By contrast, the manufacture of articles with
S.D.S. is strictly regulated under 27 CFR part 20, in accordance with
sections 5271 through 5275 of the IRC (26 U.S.C. 5271-5275). A
significant aspect of this regulation is the requirement for prior TTB
approval of all articles made with S.D.S. Such approval is mandated by
law in section 5273(a) of the IRC (26 U.S.C. 5273(a)), which states,
``. . . no person shall use specially denatured distilled spirits in
the manufacture or production of any article until approval of the
article, formula, and process has been obtained from the Secretary.''
TTB approval of articles takes two forms. First, TTB approves
specific, proprietary formulas and processes for articles, submitted by
manufacturers on TTB Form 5150.19. Second, ``general-use formulas,''
which TTB generally approves by publishing them in the regulations in
27 CFR part 20, are approved formulas for articles. General-use
formulas may be used by any manufacturer that has a TTB permit to use
S.D.S. in the manufacture of articles. Each general-use formula
authorizes the production of only a specific type of article. Under
Sec. 20.111, manufacturers of articles produced pursuant to general-
use formulas are not required to obtain specific formula approval from
TTB on TTB Form 5150.19. Thus, the regulatory burden is lighter on
manufacturers producing articles pursuant to general-use formulas than
on manufacturers producing articles pursuant to other formulas that
prescribe S.D.S. (In fiscal year 2011, TTB received 1,593 formula
applications on TTB Form 5150.19.)

Updating of Industrial Alcohol Regulations

In this document, TTB proposes changes to the industrial alcohol
regulations found in 27 CFR parts 19, 20, 21, 27, and 28. The proposed
changes would reduce regulatory burdens on the industrial alcohol
industry as well as TTB, update the regulations to align them with
current industry practice, and clarify other regulatory provisions.

Terminology

TTB is providing the following definitions to assist in
comprehension of this proposed rulemaking:
Rum is any spirit produced from sugar cane products and
distilled at less than 190 proof in such manner that the spirit
possesses the taste, aroma, and characteristics generally attributed to
rum.
A formula is an instruction for manufacturing a product,
and is analogous to a recipe that a cook follows. This document refers
to two broad types of formulas: Denatured alcohol formulas and article
formulas. Denatured alcohol formulas specify the instructions for
producing either S.D.S (as specified in 27 CFR part 21 subpart D) or
C.D.A. (as specified in 27 CFR part 21 subpart C). Article formulas
include both formulas approved individually by TTB on TTB Form 5150.19
and general-use formulas (as specified in 27 CFR 20.112 through
20.119).
A formulation is a physical product manufactured in
accordance with a formula, and is analogous to a cooked meal that has
been prepared, using a recipe. The word ``formulation'' can refer to
S.D.S., C.D.A., or an article.
Specially Denatured Spirits (S.D.S.) are specially
denatured alcohol (S.D.A.) and/or specially denatured rum (S.D.R.).
Only a registered distilled spirits plant may produce S.D.S. TTB and
industry generally refer to formulations of S.D.S. by the formula
number. For example, a formulation produced in accordance with S.D.A.
Formula No. 40-B is simply referred to as ``S.D.A. 40-B.'' To reflect
the common parlance, this same shorthand is used throughout this
document.
Specially Denatured Alcohol (S.D.A) is alcohol that has
been denatured following a formula specified in subpart D of 27 CFR
part 21. A formulation of S.D.A. may be used only for the uses
specified for the corresponding formula in 27 CFR part 21.
Specially Denatured Rum (S.D.R.) is rum that has been
denatured following the formula specified in subpart D of 27 CFR part
21. S.D.R. may be used only for the uses specified for that formula in
27 CFR part 21. (There is currently only one formula for S.D.R.)
Completely Denatured Alcohol (C.D.A.) is alcohol that has
been denatured under a formula specified in subpart C of 27 CFR part
21. Only a registered distilled spirits plant may produce C.D.A. TTB
and industry generally refer to formulations of C.D.A. by the formula
number. For example, a formulation produced in accordance with C.D.A.
Formula No. 20 is simply referred to as ``C.D.A. 20.'' To reflect the
common parlance, this same shorthand is used throughout this document.
An article is any substance or preparation manufactured
using denatured spirits.
A general-use formula is a formula for making a certain
type of article that is prescribed by 27 CFR 20.112 through 20.119,
approved by TTB as an alternate method, or published as a TTB ruling.
Specific formula approval by TTB on Form 5150.19 is not required for an
article made pursuant to a general-use formula.

Business Process Reengineering Study

As part of TTB's effort to reduce regulatory burdens, TTB
commissioned a Business Process Reengineering (BPR) study to streamline
the approval process for articles made with S.D.S. The BPR study
involved a review of the S.D.S. formulas in 27 CFR part 21 with the
goal of achieving significantly less regulatory burden without threat
to the revenue. The BPR study also examined whether any S.D.S. formulas
are no longer in use, and thus can be deleted.
TTB proposes to adopt the following BPR recommendations:
To remove from the regulations 16 S.D.A. formulas that are
no longer in use;
To reclassify two S.D.A. formulas as C.D.A. formulas;
To issue a general-use formula for any appropriate
articles made with any of 15 S.D.A. formulations--14 S.D.A.
formulations identified in the BPR study and S.D.A. No. 35-A, which was
identified by TTB as being appropriate for the general-use formula; and
To issue three general-use formulas subject to specified
conditions.
These proposed changes to the regulations are discussed below.

Review of Other Regulations Relating to the Manufacture, Use, and
Distribution of S.D.A., C.D.A., and Articles

In addition to commissioning the BPR study, TTB reviewed past
formula approvals and industry member requests to determine if it would
be appropriate to create any other new general-use formulas or revise
any existing general-use formulas. As a result of this review, TTB
determined that it would be appropriate to create an additional new
general-use formula for duplicating fluids and ink solvents, and to
authorize one additional denaturant

[[Page 38631]]

for the existing general-use formula for proprietary solvents. These
changes are discussed in detail below. TTB also reviewed the
denaturants authorized in part 21 to ascertain whether their use is
consistent with other Federal regulations. As a result of this review,
TTB decided to remove one denaturant, benzene, from the regulations in
part 21. Its removal is discussed in detail below.
TTB also reviewed the related regulations in 27 CFR parts 19, 20,
27, and 28 and found references to a number of out-dated processes.
Consequently, TTB is proposing to change the regulations in 27 CFR
parts 19, 20, 27, and 28 relating to the following subjects:
Destruction of S.D.S. or recovered alcohol;
Adoption of formulas by parent or subsidiary corporations;
Bay rum, alcoholado, or alcoholado-type toilet waters for
export;
Reagent alcohol for manufacturing;
Labeling of articles;
Exportation of S.D.S. by dealers; and
Articles for export.
In addition to the above changes, TTB is proposing to make
clarifying and technical changes to the regulations relating to:
Records of article manufacture;
Part 20 definitions;
Developmental samples of articles;
General-use formulas;
General-use formulas for tobacco flavors and inks;
Use of the word ``formulation'' instead of the word
``formula;''
Low alcohol general-use formula;
Articles for internal human use;
Registration of persons trafficking in articles;
Shipment for the account of another dealer;
Incomplete shipments of S.D.S.--use of the term
``proprietor;''
Permittee's Records and Reports;
Authorization of substitute denaturants in part 21;
Incorporation of authorized substitute denaturants;
Industry Circular 75-6, Importation of Ethyl Alcohol for
Industrial Purposes; and
Certain miscellaneous non-substantive technical or
editorial matters.

Proposed Substantive Changes

Removal of Certain S.D.A. Formulas

TTB is proposing to remove the 16 S.D.A. formulas in part 21 that
do not appear to be in use. Those 16 formulas and the denaturants
prescribed for each formula are identified in the table below:

------------------------------------------------------------------------
Denaturant(s) per 100
Section No. S.D.A. gallons of alcohol of
formula No. not less than 185 proof
------------------------------------------------------------------------
21.34.......................... 2-C 33 pounds or more of
metallic sodium and
either \1/2\ gallon of
benzene, \1/2\ gallon
of toluene, or \1/2\
gallon of rubber
hydrocarbon solvent.
21.36.......................... 3-B 1 gallon of pine tar,
U.S.P.
21.39.......................... 6-B \1/2\ gallon of
pyridine bases.
21.42.......................... 17 0.05 gallon (6.4 fl.
oz.) of bone oil
(Dipple's oil).
21.45.......................... 20 5 gallons of
chloroform.
21.46.......................... 22 10 gallons of
formaldehyde solution,
U.S.P.
21.48.......................... 23-F 3 pounds of salicylic
acid, U.S.P., 1 pound
of resorcinol
(resorcin), U.S.P.,
and 1 gallon of
bergamot oil, N.F. XI,
or bay oil (myrcia
oil), N.F. XI.
21.52.......................... 27 1 gallon of rosemary
oil, N.F. XII, and 30
pounds of camphor,
U.S.P.
21.53.......................... 27-A 35 pounds of camphor,
U.S.P., and 1 gallon
of clove oil, N.F.
21.54.......................... 27-B 1 gallon of lavender
oil, N.F., and 100
pounds of green soap,
U.S.P.
21.60.......................... 33 30 pounds of gentian
violet or gentian
violet, U.S.P.
21.66.......................... 38-C 10 pounds of menthol,
U.S.P., and 1.25
gallons of
formaldehyde solution,
U.S.P.
21.69.......................... 39 9 pounds of sodium
salicylate, U.S.P., or
salicylic acid,
U.S.P.; 1.25 gallons
of fluid extract of
quassia, N.F. VII; and
\1/8\ gallon of tert-
butyl alcohol.
21.70.......................... 39-A 60 avoirdupois ounces
of any one of the
following alkaloids or
salts together with \1/
8\ gallon of tert-
butyl alcohol:
quinine, N.F. X.;
quinine bisulfate,
N.F. XI.; quinine
dihydrochloride, N.F.
XI.; cinchonidine;
cinchonidine sulfate,
N.F. IX.
21.78.......................... 42 (1) 80 grams of
potassium iodide,
U.S.P., and 109 grams
of red mercuric
iodide, N.F. XI; or
(2) 95 grams of
thimerosal, U.S.P.; or
(3) 76 grams of any of
the following: phenyl
mercuric nitrate,
N.F.; phenyl mercuric
chloride, N.F. IX; or
phenyl mercuric
benzoate.
21.81.......................... 46 25 fluid ounces of
phenol, U.S.P., and 4
fluid ounces of methyl
salicylate, N.F.
------------------------------------------------------------------------

Some of the formulas that TTB is proposing to remove from the
regulations prescribe denaturants that are not mentioned in other
formulas; therefore, TTB is proposing to remove the following
denaturants from the table in 27 CFR 21.151, which sets forth a list of
denaturants authorized for use in denatured spirits:
Bone oil (Dipple's oil);
Chloroform;
Cinchonidine;
Cinchonidine sulfate, N.F. IX;
Gentian violet;
Gentian violet, U.S.P.;
Mercuric iodide, red, N.F. XI.;
Pine tar, U.S.P.;
Phenyl mercuric benzoate;
Phenyl mercuric chloride, N.F. IX.;
Phenyl mercuric nitrate, N.F.;
Pyridine bases;
Quassia, fluid extract, N.F. VII;
Quinine, N.F. X;
Quinine dihydrochloride, N.F. XI;
Resorcinol (Resorcin), U.S.P.;
Salicylic acid, U.S.P.;
Sodium (metallic); and
Thimerosal, U.S.P.
TTB also proposes to remove the following regulations that provide
specifications for some of these denaturants, because the
specifications would no longer be needed. Those regulations are 27 CFR
21.98 (Bone oil (Dipple's oil)), 21.103 (Chloroform), 21.104
(Cinchonidine), 21.111 (Gentian violet), 21.121 (Phenyl mercuric
benzoate), 21.122 (Pyridine bases), and 21.128 (Sodium (metallic)).
In addition, TTB proposes to remove the references to each of the
16 S.D.A. formulas from the chart in 27 CFR 21.141, which lists
products and processes for which specially denatured alcohol and rum
are specified. TTB also proposes to remove the reference to
``Antiseptic, bathing solution (restricted)'' from the chart in Sec.
21.141, because the only S.D.A. formula specified for that product is
Formula No. 46, which is being removed from the regulations.
Finally, in 27 CFR 21.161, TTB proposes to remove the entry for
each of the 16 S.D.A. formulas from the chart,

[[Page 38632]]

which lists the weights and specific gravities of specially denatured
alcohol.

Reclassification of Certain S.D.A. Formulas as C.D.A. Formulas

As noted above, TTB has identified two S.D.A. formulas that TTB
could reclassify as C.D.A. formulas, because it would be very difficult
to separate the denaturant from the alcohol in the resulting
formulation. S.D.A. Formula No. 12-A, found in 27 CFR 21.40, currently
specifies 5 gallons of benzene or toluene per 100 gallons of alcohol of
not less than 185 proof. S.D.A. Formula No. 35, found in Sec. 21.61,
specifies 29.75 gallons of ethyl acetate having an ester content of 100
percent by weight or the equivalent thereof not to exceed 35 gallons of
ethyl acetate with an ester content of not less than 85 percent by
weight per 100 gallons of alcohol of not less than 185 proof. These two
formulas prescribe denaturants that form azeotropes--liquid mixtures
that have constant minimum or maximum boiling points that are lower or
higher than that of any of their components, and that distill without a
change in composition--with ethanol in the resulting formulations.
Thus, it would be more difficult to separate the ethanol from the
denaturants by distillation and simple manipulation compared to other
S.D.S. formulations. Therefore, TTB proposes to reclassify these two
S.D.A. formulas as C.D.A. formulas by removing Sec. Sec. 21.40 and
21.61 and by adding new 27 CFR 21.21a and 21.25 respectively. In
addition, TTB proposes to remove the references to these two S.D.A.
formulas from the charts in Sec. Sec. 21.141 and 21.161.

General-Use Formula for Articles Made With Certain S.D.A. Formulations

As was explained earlier in this document, general-use formulas are
provided in 27 CFR Part 20 for the production of certain types of
articles. Manufacturers of articles produced in accordance with
general-use formulas are not required to obtain specific formula
approval from TTB on Form 5150.19.
As stated above, TTB has determined that it would be appropriate to
issue a new general-use formula for any appropriate articles made with
one or more of 15 S.D.A. formulations--the 14 S.D.A. formulations
identified in the BPR study and S.D.A. 35-A, which TTB identified as
being appropriate for the general-use formula. It would be difficult to
separate the alcohol from the articles produced using one or more of
those 15 S.D.A. formulations, and, thus, revenue would not be
jeopardized. The 15 S.D.A. formula numbers and their denaturant
specifications are as follows:

------------------------------------------------------------------------
Denaturant(s) per 100 gallons of
S.D.A. formula No. alcohol of not less than 185
proof
------------------------------------------------------------------------
1.................................... 4 gallons of methyl alcohol and
either \1/8\ avoirdupois ounces
of denatonium benzoate; 1 gallon
of methyl isobutyl ketone; 1
gallon of mixed isomers of
nitropropane, or 1 gallon of
methyl n-butyl ketone.
3-A.................................. 5 gallons of methyl alcohol.
13-A................................. 10 gallons of ethyl ether.
19................................... 100 gallons of ethyl ether.
23-A................................. 8 gallons of acetone, U.S.P.
23-H................................. 8 gallons of acetone, U.S.P., and
1.5 gallon of methyl isobutyl
ketone.
30................................... 10 gallons of methyl alcohol.
32................................... 5 gallons of ethyl ether.
35-A................................. 4.25 gallons of ethyl acetate
having an ester content of 100%
by weight or the equivalent
thereof not to exceed 5 gallons
of ethyl acetate with an ester
content of not less than 85% by
weight.
36................................... 3 gallons of ammonia, aqueous, 27
to 30% by weight; 3 gallons of
strong ammonium solution, N.F.;
17.5 pounds of caustic soda,
liquid grade, containing 50% by
weight sodium hydroxide; or 12
pounds of caustic soda,
containing 73% by weight sodium
hydroxide.
37................................... 45 fluid ounces of eucalyptol,
N.F. XII, 30 avoirdupois ounces
of thymol, N.F., and 20
avoirdupois ounces of menthol,
U.S.P.
38-D................................. 2.5 pounds of menthol, U.S.P.,
and 2.5 gallons of formaldehyde
solution, U.S.P.
40................................... \1/8\ gallon of tert-butyl
alcohol and 1.5 avoirdupois
ounces of either (1) brucine
alkaloid, (2) brucine sulfate,
N.F. IX, (3) quassin, or (4) any
combination of 2 of the 3.
40-A................................. 1 lb of sucrose octaacetate and
\1/8\ gallon of tert-butyl
alcohol.
40-B................................. \1/16\ avoirdupois ounces of
denatonium benzoate, N.F., and
\1/8\ gallon of tert-butyl
alcohol.
------------------------------------------------------------------------

TTB is proposing to add a new 27 CFR 20.120 setting forth a
general-use formula covering articles made with any of those 15 S.D.A.
formulations. This general-use formula will cover any article made with
any of the S.D.A. formulations specified in the new Sec. 20.120,
provided that the article conforms to one of the use codes authorized
for the S.D.A. formulation being used. (Articles produced under this
general-use formula made with more than one S.D.A. formulation must
conform to a use code that is authorized for all S.D.A. formulations
being used.) Use codes are identified in section (b) of each section of
subpart D of part 21. Use Code 900 (``Specialized uses
(unclassified)'') is not allowed under this general-use formula because
it is a ``catch-all'' for all uses not otherwise specified. TTB will
still consider for approval on TTB Form 5150.19 formulas for articles
that are intended to be used for specialized unclassified uses under
Use Code 900.
The proposed Sec. 20.120 also requires that the finished article
made following this general-use formula contain sufficient additional
ingredients to definitely change the composition and character of the
original S.D.A. used to make the article. The additional ingredients
change the character of the S.D.A., so that when the article is sold on
the retail level, it is substantially different from S.D.A. This
requirement is necessary to comply with the law, because an article
that is essentially similar to S.D.S. should not be sold to the general
public; 26 U.S.C. 5271(a) requires a permit for anyone procuring S.D.S.
This requirement would be similar to the current requirement for
special industrial solvents found in 27 CFR 20.112(b), and is necessary
to ensure that the resulting articles are unfit for beverage or
internal human use and are not capable of being reclaimed or diverted
to beverage or internal human use.

General-Use Formulas, With Conditions, for Certain Articles Made With
S.D.A. Formulas

As discussed above, TTB has identified three S.D.A. formulations
that

[[Page 38633]]

may be used as ingredients, subject to certain conditions, in certain
general-use formulas. Accordingly, in new 27 CFR 20.121, TTB proposes
to allow the use of S.D.A. 18 (specified in 27 CFR 21.43) in a vinegar
general-use formula. In addition, in new 27 CFR 20.122, TTB proposes to
allow the use of S.D.A. 39-C (specified in 27 CFR 21.72) in a general-
use formula. Finally, in new 27 CFR 20.123, TTB proposes to provide for
the use of S.D.A. 40-C (specified in 27 CFR 21.77) in a pressurized
container general-use formula. Only the uses that are currently
approved for the corresponding S.D.A. formula in part 21 would be
allowed under each of these three new general-use formulas. The chart
below states, with respect to each new general-use formula: Its
proposed new section number, the number of the S.D.A. formula
prescribed for it, the denaturants contained in that S.D.A., and the
proposed condition.

----------------------------------------------------------------------------------------------------------------
Denaturant(s) per 100
Proposed new section S.D.A. formula gallons of alcohol of not Condition
No. less than 185 proof
----------------------------------------------------------------------------------------------------------------
20.121.............................. 18 100 gallons of vinegar not Must be used in a process to
less than 90-grain strength make vinegar whereby either
or 150 gallons of vinegar all the ethyl alcohol loses
of not less than 60-grain its identity or only
strength. residual ethyl alcohol
within the limit specified
in Sec. 20.104 remains.
20.122.............................. 39-C 1 gallon of diethyl Each gallon of finished
phthalate. product must contain not
less than 2 fl. oz. of
perfume material (essential
oils as defined in Sec.
21.11, isolates, aromatic
chemicals, etc.).
20.123.............................. 40-C 3 gallons of tert-butyl This formula may only be
alcohol. used in the manufacture of
products which will be
packaged in pressurized
containers in which the
liquid contents are in
intimate contact with the
propellant and from which
the contents are not easily
removable in liquid form.
----------------------------------------------------------------------------------------------------------------

The condition that articles made with S.D.A. 39-C contain in each
gallon of finished product at least two fluid ounces of perfume
material (including essential oils, isolates, and aromatic chemicals)
currently appears in the regulations at 27 CFR 20.103. Because this
condition will appear in the general-use formula specified in the new
Sec. 20.122, and because the new general-use formula covers all
articles made with S.D.A. 39-C, the condition is no longer needed in
Sec. 20.103. Accordingly, TTB proposes to remove Sec. 20.103 from the
regulations.

General-Use Formula for Duplicating Fluids and Ink Solvents

TTB has approved approximately 570 article formulas specifically
for duplicating fluids and ink solvents, most of which specify S.D.A.
3-C, but some of which specify S.D.A. 1 and S.D.A. 3-A. Duplicating
fluids and ink solvents are articles made of denatured alcohol combined
with other ingredients, and are intended only for use in the printing
industry. To eliminate the need for specific article formula approval
from TTB, TTB proposes to create a general-use formula for duplicating
fluids and ink solvents specifying S.D.A. 1, 3-A, and 3-C in new 27 CFR
20.124.

Specification of S.D.A. 3-C in the Proprietary Solvents General-Use
Formula

TTB has approved numerous requests from industry members to use
S.D.A. 3-C formulations to make proprietary solvents under the general-
use formula in Sec. 20.113(a). Section 20.113(a) currently allows the
use of S.D.A. 1 or 3-A in the proprietary solvents general-use formula.
TTB is proposing to amend Sec. 20.113(a) to also allow for the use of
S.D.A. 3-C in making proprietary solvents.

Removal of Benzene From the Regulations

Upon review, TTB determined that benzene should be removed from the
S.D.A. and C.D.A. formulas. Benzene is currently prescribed by S.D.A.
Formula Nos. 2-B, 2-C, and 12-A. The U.S. Environmental Protection
Agency (EPA) in its regulations has designated benzene as a hazardous
air pollutant under the Clean Air Act (40 CFR 61.01(a)), and EPA
regulations limit the amount of benzene that may be used in gasoline
(40 CFR part 80). As was discussed above, TTB is already proposing to
remove S.D.A. Formula No. 2-C from the regulations, and to reclassify
S.D.A. Formula No. 12-A as a C.D.A. formula. Accordingly, TTB is
proposing to remove benzene as a denaturant prescribed in S.D.A.
Formula No. 2-B by amending 27 CFR 21.33, and to exclude benzene from
the denaturants prescribed by the new C.D.A. Formula No. 12-A in
proposed Sec. 21.21a. TTB notes that other authorized denaturants may
contain small quantities of benzene. For example, benzene is allowed,
up to a maximum of 1.1 percent by volume, in two newly authorized
denaturants: high octane denaturant blend and straight run gasoline
(see discussion on Incorporation of Authorized Substitute Denaturants,
below). Under EPA regulations, importers and refiners of gasoline must
ensure that their gasoline complies with certain benzene limits. (See
40 CFR 80.1230(a) and (b).) To the extent that TTB-permitted
manufacturers of denatured alcohol or fuel alcohol made with these
authorized denaturants are subject to these EPA regulations, they must
comply with them.
TTB is also proposing to remove benzene from the list of authorized
denaturants in Sec. 21.151.

Destruction of S.D.S. or Recovered Alcohol

Under 27 CFR part 20, when a permittee destroys S.D.S. or recovered
alcohol, the permittee's liability for payment of the Federal excise
tax on the alcohol is terminated (27 CFR 20.221), but the permittee
must prepare a record of the destruction (27 CFR 20.222).
If recovered material meets the specifications of an article
formula approved by TTB on TTB Form 5150.19, the recovered material may
be transferred for destruction to nonpermittees. If recovered material
is not sufficiently denatured to be treated as an article, the material
is treated as S.D.S., which by law (26 U.S.C. 5271(a)(2)) may only be
procured by a permittee. To destroy the material without transferring
it to a permittee, the manufacturer could add denaturants or similar
chemicals to the recovered S.D.S. to make the material into an article
meeting the specifications of an article formula approved by TTB on

[[Page 38634]]

TTB Form 5150.19 that could then be transferred to a nonpermittee.
To clarify the regulations relating to these matters, TTB proposes
to add a new paragraph to 20.222, titled ``Destruction by
nonpermittees.'' The new paragraph will state that destruction of
recovered material that is not sufficiently denatured to meet the
formula specifications of an article must be done by the original
manufacturer, a distilled spirits plant, or a facility that possesses
an S.D.S. dealer's permit.

Adoption of Formulas by Parent or Subsidiary Corporations

Currently, TTB's regulations allow a permittee to adopt only its
predecessor's formulas. In order to increase operating flexibility for
domestic manufacturers, TTB proposes to amend 27 CFR 20.63 to allow any
permittee to adopt, for use at any of its plants, any formula
previously approved for use at another of its plants, or any formula
previously approved for its parent or wholly-owned subsidiary. TTB also
proposes to remove the requirements that the certificate of adoption
must contain a TTB Laboratory sample number (unnecessary in this
context) and the TTB Form 5150.19 serial number (which is no longer
used).

Bay Rum, Alcoholado, or Alcoholado-Type Toilet Waters for Export

Currently, under 27 CFR 20.102, bay rum, alcoholado, and
alcoholado-type toilet waters must contain the materials specified in
that section. However, TTB has approved alternate methods and
procedures under Sec. 20.22 to allow industry members to make these
products without adding the materials specified in Sec. 20.102 if the
products were intended only for export. Accordingly, TTB is proposing
to amend Sec. 20.102 to except bay rum, alcoholado, and alcoholado-
type toilet waters produced under an approved formula and endorsed
``For Export Only'' from the requirement that they be produced from the
materials specified in that section. TTB is also proposing to change
the unit of measurement in Sec. 20.102 from ``grains,'' which is
outdated, to metric units. Finally, the change also replaces the
reference to ``Bitrex (THS 839),'' which is a registered trade name,
with the generic term ``denatonium benzoate.''

Reagent Alcohol for Manufacturing

``Reagent alcohol'' is an approved article only if distributed for
scientific use at a laboratory (27 CFR 20.117(d)). Therefore, reagent
alcohol not so distributed is not an approved article but remains in
the category of S.D.A., which by law may not be used in the manufacture
or production of an article prior to the issuance of both a permit (26
U.S.C. 5271) and a formula approval (26 U.S.C. 5273(a)).
TTB believes that the current regulations on reagent alcohol should
be less restrictive. Consequently, TTB proposes to add to Sec. 20.117
a new paragraph (e) that would allow permittees who have a legitimate
use for reagent alcohol in manufacturing to receive it for that
purpose, but only from distilled spirits plants and S.D.S. user or
dealer permittees. To ensure that such use is appropriate, TTB will
still require an approved formula for a permittee to receive and use
reagent alcohol in manufacturing even if the product being manufactured
conforms to a general-use formula. Further, when used in this manner,
reagent alcohol must be treated as S.D.A., not as an article. TTB also
proposes to amend Sec. 20.117(a) to provide for treatment of reagent
alcohol as S.D.A. when distributed for use in manufacturing. Finally,
TTB proposes some additional non-substantive organizational and wording
changes in Sec. 20.117 to improve its clarity and readability.

Labeling of Articles

TTB is proposing to amend 27 CFR 20.134 to allow containers of
articles to either (1) bear a label or (2) have the required
information etched or printed directly on the containers, since the
technology now exists to etch or print information directly on
containers. TTB is proposing this change to allow for greater
flexibility in labeling articles.

Exportation of S.D.S. by Dealers

The IRC at 26 U.S.C. 5214(a)(1) allows for the withdrawal of S.D.S.
free of tax for exportation and does not prohibit such exportation of
S.D.S. by dealers. However, the current regulations do not provide for
the exportation of S.D.S. by dealers, but they do allow for the
exportation of S.D.S. by distilled spirits plants.
TTB believes that the exportation of S.D.S. by dealers who hold a
TTB permit generally will not represent a significant threat to the
revenue. Accordingly, TTB proposes to amend the regulations by adding a
new 27 CFR 20.183 which would allow for the exportation of S.D.S. by
dealers provided that the S.D.S. conforms to a formula specified in
part 21 of the TTB regulations, that the exportation is to a country
the laws of which allow the importation of such spirits, and that the
dealer notifies TTB of the exportation. TTB will appropriately modify
TTB Form 5100.11, Withdrawal of Spirits, Specially Denatured Spirits,
or Wines for Exportation, to incorporate this change. The proposed
regulatory text excludes S.D.S. 3-C, 29, and 38-B because these
formulations are more susceptible to being rendered fit for beverage
use. TTB is also proposing to add a new 27 CFR 28.157 in TTB's
regulations on exports, which will provide a cross-reference to the new
provision in part 20.

Articles for Export

TTB, and previously ATF, have approved alternate methods or
procedures for industry members to produce articles for export where
the article could not be approved for domestic distribution because it
is not sufficiently denatured to preclude any recovery of potable
alcohol. TTB's regulations allow for the export of S.D.S., so TTB is
proposing to add new Sec. 20.193 (27 CFR 20.193) to also allow for the
export of articles that would not be approved for domestic
distribution. This new provision is not expected to create any
significant jeopardy to the revenue, and will allow businesses to
export such products to foreign countries.

Clarifying and Technical Changes

Records of Article Manufacture

Distilled spirits plant proprietors who manufacture articles are
required by 27 CFR 19.607 to keep certain records. The records required
to be kept pursuant to Sec. 19.607 generally parallel those required
to be kept by 27 CFR part 20, but do not include records of ingredients
used. A record of ingredients used is essential to verify compliance
with approved formulas. Therefore, TTB proposes to amend Sec. 19.607
by cross referencing in it the requirements of 27 CFR part 20.

Part 20 Definitions

Currently, Sec. 20.11 does not include definitions for ``TTB,''
``Fit for beverage use, or fit for beverage purposes,'' ``Internal
human use,'' or ``Unfit for beverage use, or unfit for beverage
purposes.'' TTB is proposing to add definitions of these terms to this
section. TTB is also proposing to amend 27 CFR 20.111(c), 20.114(a),
20.115(a), 20.133(b) and 20.189(d), to use the defined terms ``fit for
beverage use,'' ``fit for beverage purposes,'' ``unfit for beverage
use,'' or ``unfit for beverage purposes'' to help clarify those
regulatory sections.

Developmental Samples of Articles

For clarity, TTB is proposing to revise 27 CFR 20.95 (Developmental
samples of articles). The revised text provides that the user may only
use the limited quantity of S.D.S. that is necessary to

[[Page 38635]]

produce the samples. The current regulation provides that ``limited
quantities'' may be used. The text further clarifies that only one
sample of each formulation of the article under development may be sent
to each prospective customer and that these samples may be produced
without prior formula approval.

General-Use Formulas

TTB is proposing to revise Sec. 20.111 to reflect the issuance of
new general-use formulas as proposed in this document, update the
information on how to locate TTB publications, and clarify when a
statement of process is required. Additionally, the changes would
clarify that articles made under a general-use formula must meet the
same standards as other articles; that is, the articles must be unfit
for beverage use and incapable of being reclaimed or diverted to
beverage use or internal human use.

General-Use Formulas for Tobacco Flavors and Inks

TTB is proposing to amend Sec. Sec. 20.114 and 20.115 to clarify
that articles produced under the tobacco flavor general-use formula and
the ink general-use formula must contain ingredients that are
sufficient to ensure that the articles are unfit for beverage use.

Use of the Word ``Formulation'' Instead of the Word ``Formula''

TTB is proposing to amend 20.119, 20.136, 20.141, 20.170, 20.189,
20.262, 20.263, and 20.264 to correct several inconsistent uses of the
word ``formula.'' The word ``formula'' is to be used to refer to a
prescription of the ingredients (``recipe'') to be used to produce
S.D.S., C.D.A., or an article. The word ``formulation'' is to be used
to refer to the physical S.D.S., C.D.A., or article produced in
accordance with a formula.

Low Alcohol General-Use Formula

TTB is proposing to clarify in Sec. 20.116 that articles made
under the low alcohol general-use formula must be covered by a
statement of process as provided in 27 CFR 20.94 even if the articles
do not contain alcohol or the articles' manufacture includes the
recovery of C.D.A. or S.D.S. (Examples of low-alcohol articles are hair
mousses and some household detergents.) Additionally, TTB is proposing
to clarify in Sec. 20.116 that the alcohol content of the finished
article can be measured by either weight or by volume, because when the
alcohol content is as low as 5 percent, there is no significant
difference between the two types of measurements for TTB's purposes.

Articles for Internal Human Use

The regulations in part 20 require that, if denatured spirits are
used in the production of a medicinal preparation or flavoring extract
which is for internal human use, none of the spirits may remain in the
finished product (27 CFR 20.132(a)). TTB proposes to add a definition
for ``Internal human use'' to Sec. 20.11 to clarify that this term
does not apply to use only in the mouth, when the product is not
intended to be swallowed. Thus, the prohibition on the use of S.D.S. in
articles made for internal human use would not apply to mouthwashes,
toothpastes, breath sprays, and other articles that are used in the
mouth but that are not intended to be swallowed.

Registration of Persons Trafficking in Articles

TTB is proposing to clarify in Sec. 20.133, which allows TTB to
require the registration of persons trafficking in articles, that
finished articles must not be reclaimed or diverted to beverage use or
internal human use. This requirement is also imposed on S.D.S. users
and manufacturers of articles in Sec. 20.189(d).

Shipment for the Account of Another Dealer

In 27 CFR 20.175(c), TTB is proposing to clarify that persons
shipping S.D.S. are not liable for the tax on the spirits, except as
provided in 26 U.S.C. 5001(a)(4) and (5). The proposed change makes
Sec. 20.175(c) consistent with the law.

Incomplete Shipments of S.D.S.--Use of the Term ``Proprietor''

TTB is proposing to clarify in 27 CFR 20.204(c) that the ``dealer
or proprietor'' refers to the ``shipper,'' which is either a dealer or
distilled spirits plant proprietor.

Permittee's Records and Reports

TTB is proposing to add new paragraph (a)(4) to Sec. 20.264, which
cross-references the recordkeeping requirement of Sec. 20.193(b)(4),
to make it easier for an individual reading the regulations to know
what is required.

Authorization of Use of Substitute Denaturants in Part 21

Under 27 CFR 21.91, TTB may authorize the use of substitute
denaturants if valid reasons exist and if such use will not jeopardize
the revenue. TTB has authorized the use of several such substitute
denaturants in TTB Rulings that are publicly available. TTB is
proposing to add language to Sec. 21.91 to clarify that TTB may
authorize the use of a substitute denaturant in a TTB Ruling.

Incorporation of Authorized Substitute Denaturants

TTB and its predecessor agency, ATF, have approved, under Sec.
21.91, the use of substitute denaturants for use in making S.D.A. 2-B,
3-A, 12-A, 36, 38-B, and 38-F and C.D.A. 20. TTB has also approved,
under Sec. 19.746, the use of new materials that can be used to render
alcohol unfit for beverage use for the purposes of making fuel alcohol.
In addition, TTB recently approved, under Sec. 20.111, the use of a
new prescribed ingredient in the special industrial solvent general-use
formula set forth in Sec. 20.112.
TTB and its predecessor agency, ATF, published the approvals as ATF
Rulings 74-1, 85-15, and 86-3, and as TTB Rulings 2008-2, 2010-1, 2010-
5, and 2010-6. (Some, but not all of the materials authorized in TTB
Ruling 2010-6 were added to Sec. 19.746 in the recent rulemaking on
part 19; see T.D. TTB-92, 76 FR 9080, February 16, 2011.) These rulings
are effective and are available on TTB's Web site at https://www.ttb.gov. Rulemaking is not required for the approvals to be
effective. However, for completeness, TTB is adding those denaturants
and materials to the regulatory sections that prescribe the materials
for fuel alcohol, or the denaturants for S.D.A. Formula Nos. 2-B, 3-A,
12-A, 36, 38-B, and 38-F, and C.D.A. Formula No. 20.
Accordingly, TTB is: (1) Revising 27 CFR 19.746, 20.112, 21.24,
21.33, 21.35, 21.63, 21.65, and 21.68 to add the recently approved
denaturants to the formulas (TTB is removing and reserving Sec. 21.40
for Formula No. 12-A, but see new Sec. 21.21a for C.D.A. Formula No.
12-A with approved denaturants); (2) adding new sections 27 CFR 21.94a,
21.105a, 21.105b, 21.106a, 21.108a, 21.112a, 21.112b, 21.112c, 21.115a,
21.115b, 21.118a, 21.118b, 21.118c, 21.121a, 21.124a, and 21.130a, and
revising 27 CFR 21.121, to add the specifications for those approved
denaturants; and (3) revising the chart listing authorized denaturants
in Sec. 21.151 to incorporate the new denaturants. In addition, TTB is
revising the specification for toluene in 27 CFR 21.132 so that it is
consistent with the updated toluene specification that was included in
TTB Ruling 2010-6.

Industry Circular 75-6, Importation of Ethyl Alcohol for Industrial
Purposes

The mere addition of denaturants to alcohol does not cause the
product to

[[Page 38636]]

lose its character as a distilled spirit. There is no provision in law
for the withdrawal of distilled spirits from customs custody free of
tax, other than for the use of the United States in accordance with 27
CFR part 27, subpart M. Therefore, imported denatured spirits and
imported products that are essentially similar to denatured spirits are
subject to the internal revenue tax and associated provisions of the
IRC. It should be noted, however, that the internal revenue tax does
not apply to imported products that contain alcohol but are unfit for
beverage use and have lost their character as distilled spirits.
TTB's predecessor, ATF, published Industry Circular 75-6 on March
28, 1975 to advise that denatured alcohol is subject to tax upon
importation, although payment of the tax may be avoided by transferring
the denatured alcohol from customs custody to the bonded premises of a
distilled spirits plant, as provided in 26 U.S.C. 5232. As stated in
the circular, ``[T]he addition of denaturants to ethyl alcohol prior to
importation does not free the resultant mixture from the application of
the internal revenue tax imposed by 26 U.S.C. 5001(a) or from the
provisions of 26 U.S.C. 5232 in regard to receipt, storage, and
disposition of distilled spirits when such material is released from
customs custody.''
Current regulations do not clearly state the rules regarding the
importation of denatured spirits. To remedy this situation, TTB
proposes to add a new Sec. 27.222 (27 CFR 27.222) to incorporate the
statement in Industry Circular 75-6 that imported denatured spirits or
fuel alcohol may be transferred in bond to a distilled spirits plant
without payment of tax and later withdrawn from the distilled spirits
plant free of tax in accordance with 27 CFR part 19. In addition, TTB
proposes to add new Sec. 19.412 (27 CFR 19.412) to provide a cross-
reference in part 19 to Sec. 27.222 to alert industry members to that
section. Section 19.742 (27 CFR 19.742) already provides for the
importation of fuel alcohol by an alcohol fuel plant proprietor.

Miscellaneous Technical Changes

Control numbers for information collection requests issued
by the Office and Management and Budget have been updated in Sec. Sec.
20.11, 20.63, 20.95, 20.111, 20.117, 20.133, 20.134, 20.222, and 20.264
to reflect the change from ATF to TTB.
In 27 CFR 20.41, paragraph (d) is clarified to show that
distilled spirits plants are exempt from qualification under part 20
for manufacturing activities as well as dealer activities.
In the last sentence in the introductory text of Sec.
20.112(a), the word ``alcohol'' is replaced by ``S.D.A.'' to clarify
that the ingredients listed in Sec. 20.112 are added to S.D.A. rather
than to alcohol.

Comments Received in Response to Notice No. 83

In recent years, TTB has undertaken the revision of several parts
of its regulations to update and modernize them. As part of this
project, TTB published a notice of proposed rulemaking, Notice No. 83
(73 FR 26200; May 8, 2008), to solicit comments on proposed revisions
to the distilled spirits plant regulations in 27 CFR part 19. Three of
the comments received in response to Notice No. 83 related to
regulations contained in 27 CFR parts 20 and 21.
One industry member proposed that, in S.D.S. and C.D.A. formulas,
TTB specify a minimum amount of denaturant, rather than an exact amount
of denaturant per a certain quantity of spirits. TTB believes that
specifying a minimum amount of denaturant rather than an exact amount
of denaturant per a certain quantity of spirits would cause problems in
verifying compliance. Furthermore, the IRC in section 5242 requires
that denaturants be ``suitable to the use for which the denatured
distilled spirits are intended to be withdrawn.'' To ensure that
denatured spirits are suitable for their authorized uses (as indicated
by the use codes prescribed for each S.D.S. formula), precise formulas
must be followed. Each S.D.S. formula describes specific products that
have been found to be suitable for the formula's indicated uses. A
product with a higher concentration of denaturants might not be
suitable for the same uses. Therefore, TTB will continue to specify
exact amounts of denaturants per a certain quantity of spirits in
S.D.S. and C.D.A. formulas. With respect to C.D.A., it should be noted
that the denaturer is free to produce an article by addition of greater
quantities of denaturants, subject to the requirement of 27 CFR 20.148
that the product may no longer be called C.D.A. if its composition and
character have been materially changed. Further, the TTB regulations
contain authority for TTB to allow variations from the specific
requirements; under Sec. 21.91, denaturers may obtain TTB permission
to use greater amounts of denaturants.
Another industry member proposed that TTB create specific
regulations for each category of article (e.g., cosmetics, topical
over-the-counter drug products, cleaners, and laboratory products)
because category-specific regulations may reduce recordkeeping burdens
on manufacturers. This would require a reanalysis of and significant
revisions to the regulations, which would not be appropriate for this
document because TTB has not sought the views of those who are likely
to be affected by such a significant revision of the regulations. This
kind of change is outside the scope of TTB's recent review, so TTB is
not planning to make such changes at this time.
A third industry member suggested that TTB harmonize the
regulations for fuel alcohol produced by an alcohol fuel plant and
C.D.A. 20 produced by a distilled spirits plant. TTB is considering
this proposal for inclusion in a separate rulemaking with some other
proposed changes to the regulations governing alcohol fuel plants,
found in 27 CFR part 19, subpart X. TTB has also considered harmonizing
the denaturants specified in Sec. 21.24 for use in C.D.A. 20 and the
materials authorized in Sec. 19.746 for rendering alcohol unfit for
beverage use for the production of fuel alcohol. TTB will consider
making these changes in a future rulemaking.

Public Participation

Comments Sought

TTB invites comments on this proposed rulemaking from all
interested parties. TTB is particularly interested in comments
regarding the proposed revisions to the various definitions sections;
TTB wants to define terms in a way that is clearly understandable and
consistent with the relevant statutes. Please submit your comments by
the closing date shown above in this document. All comments must
reference Notice No. 136 and must 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. TTB does not
acknowledge receipt of comments, and considers all comments as
originals.

Submitting Comments

You may submit comments on this document by using one of the
following three methods:
Federal e-Rulemaking Portal: You may send comments via the
online comment form associated with this document in Docket No. TTB-
2013-0005 on ``Regulations.gov,'' the Federal e-rulemaking portal, at
https://www.regulations.gov. A link to this Regulations.gov docket is
available under Notice No. 136 on the TTB Web site at https://www.ttb.gov/regulations_laws/all_rulemaking.shtml.

[[Page 38637]]

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 tab.
U.S. Mail: You may send comments via postal mail to the
Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and
Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005.
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.
In your comment, please clearly state if you are commenting on your
own behalf or on behalf of an association, business, or other entity.
If you are commenting on behalf of an 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 are 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, TTB will post,
and the public may view, copies of this document, selected supporting
materials, and any electronic or mailed comments TTB receives about
this proposal. You may view the Regulations.gov docket containing this
document 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 email addresses. TTB may omit voluminous
attachments or material that TTB considers unsuitable for posting.
You and other members of the public may view copies of this
document, any supporting materials, and any electronic or mailed
comments TTB receives about this proposal by appointment at the TTB
Information Resource Center, 1310 G Street NW., Washington, DC 20005.
You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact
TTB's 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.

Regulatory Analysis and Notices

Executive Order 12866

This proposed rule is not a significant regulatory action as
defined in Executive Order 12866. Therefore, it requires no regulatory
assessment.

Regulatory Flexibility Act

Pursuant to the requirements of the Regulatory Flexibility Act (5
U.S.C. Chapter 6) TTB certifies that this notice of proposed rulemaking
will not have a significant economic impact on a substantial number of
small entities. The proposed rule will update the regulations to align
them with current industry practice, clarify other regulatory
provisions, and reduce the regulatory burden on the alcohol industry as
well as TTB, resulting in an estimated 80 percent reduction in the
number of article formulas submitted to TTB. Thus, the regulatory
changes being proposed do not create any additional requirements or
burdens on small businesses, and are expected to decrease the
regulatory burden on industry members, including small entities.
Accordingly, a regulatory flexibility analysis is not required.
Pursuant to 26 U.S.C. 7805(f), TTB will submit the proposed regulations
to the Chief Counsel for Advocacy of the Small Business Administration
for comment on the impact of the proposed regulations on small
businesses.

Paperwork Reduction Act

The collections of information in the regulations contained in this
notice have been previously reviewed and approved by the Office of
Management and Budget (OMB) in accordance with the Paperwork Reduction
Act of 1995 (44 U.S.C. 3504(h)) and assigned control numbers 1513-0011,
1513-0028, 1513-0037, 1513-0061, and 1513-0062. Specific regulatory
sections in this proposed rule that contain collections of information
are 27 CFR 19.607, 20.63, 20.95, 20.111, 20.117, 20.133, 20.134,
20.183, 20.193, 20.222, 20.262, 20.263, and 20.264. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information unless it displays a valid control number
assigned by OMB.
Several amendments proposed in this document would reduce
information collection burdens. Specifically, certain proposed
amendments would alter circumstances under which article manufacturers
must obtain formula approval using TTB Form 5150.19. Information
collections associated with Form 5150.19 are currently approved under
OMB control number 1513-0011. These amendments will reduce required
submissions of Form 5150.19, and thus will reduce the total burden
hours currently estimated for control number 1513-0011 by an estimated
955 burden hours, and an 80 percent reduction in the number of these
forms submitted to TTB.
TTB proposes four categories of amendments that would reduce
required submissions of Form 5150.19. First, TTB proposes to add new
sections 27 CFR 20.120 through 20.124 setting forth five new general-
use formulas covering articles made with 19 different S.D.A.
formulations. Second, TTB proposes to amend regulations in part 21 to
reclassify S.D.A. Formula Nos. 12-A and 35 as C.D.A. formulas. Third,
TTB proposes to amend 27 CFR 20.113(a) to permit the use of S.D.A.
Formula No. 3-C in the proprietary solvents general-use formula.
Fourth, TTB proposes to amend 27 CFR 20.63 to allow a permittee to
adopt, for use at a plant where such use is not specifically approved,
one of the permittee's own article formulas previously approved for use
at another of the permittee's plants, or to adopt a formula previously
approved for a parent or wholly-owned subsidiary.
TTB estimates that, as a result of the amendments, the new annual
burden hours will be as follows:
Estimated total annual reporting and/or record keeping
burden: 239 hours.
Estimated average annual burden hours per respondent: 0.84
hours.
Estimated number of respondents: 285.
Estimated annual frequency of responses: 1 (one).
One proposed amendment involves an alteration to the information
collection currently approved under, OMB control number 1513-0061. The
amendment to 27 CFR 20.63 would allow a permittee to adopt, for use at
a plant where such use is not specifically approved, one of the
permittee's own article formulas previously approved for use at another
of the permittee's plants, or to adopt a formula previously approved
for a parent or wholly-owned subsidiary. Permittees may currently

[[Page 38638]]

adopt formulas under more limited circumstances by submitting a
certificate of adoption to TTB, which is an information collection
currently approved under control number 1513-0061. Although TTB
estimates that the proposed amendment will increase the number of
certificates of adoption submitted to TTB under Sec. 20.63, it will
also proportionally decrease the number of submissions of Form 5150.19
that would have been required absent the amendment. Since the estimated
average annual burden per respondent relating to certificates of
adoption approved under control number 1513-0061 is smaller than the
average annual burden for Form 5150.19 under control number 1513-0011,
the amendment will in actuality reduce the overall burden on
permittees. TTB estimates that, as a result of this amendment, the new
annual burden under control number 1513-0061 will be as follows:
Estimated total annual reporting and/or record keeping
burden: 1,897 hours.
Estimated average annual burden hours per respondent: 0.5
hours.
Estimated number of respondents: 3,794.
Estimated annual frequency of responses: 1 (one).
Other amendments to regulatory sections that involve collections of
information will not impact the burden hours associated with those
collections. Proposed amendments to 27 CFR 19.607, 20.95, 20.111,
20.117, 20.133, 20.134, 20.193, 20.222, 20.262, 20.263, and 20.264 will
not increase or decrease information collections because the amendments
clarify preexisting regulatory requirements and do not otherwise impose
new requirements increasing information collection burdens. Proposed
new 27 CFR 20.183 would allow S.D.S. dealers to export S.D.S. and would
require such dealers to complete TTB Form 5100.11. TTB estimates that
the proposed amendment will not increase submissions of Form 5100.11
because, although the amendment will allow an additional category of
persons to export, the amendment is not expected to increase demand for
exported S.D.S. Thus, the exporters may be different, but the number of
exportations is not expected to change. Since TTB is only proposing to
include an additional category of persons entitled to export S.D.S.,
and not proposing to increase information collection burdens associated
with exporting S.D.S., the proposed amendment would not impact
currently estimated information collection burdens. Information
collections associated with the amendments described in this paragraph
are currently approved under OMB control numbers 1513-0028, 1513-0037,
and 1513-0062. TTB estimates the new annual burden hours under these
control numbers would be as follows:

OMB Control Number 1513-0028:
Estimated total annual reporting and/or record keeping
burden: 419 hours.
Estimated average annual burden hours per respondent: 0.76
hour.
Estimated number of respondents: 550.
Estimated annual frequency of responses: 1 (one).

OMB Control Number 1513-0037:
Estimated total annual reporting and/or record keeping
burden: 6,000 hours.
Estimated average annual burden hours per respondent: 20
hours.
Estimated number of respondents: 300.
Estimated annual frequency of responses: 20.

OMB Control Number 1513-0062:
Estimated total annual reporting and/or record keeping
burden: 1 hour.
Estimated number of respondents: 3,430.
Estimated annual frequency of responses: 1 (one).

Revisions of the currently approved collections have been submitted
to the OMB for review. Comments on OMB control numbers 1513-0011, 1513-
0028, 1513-0037, 1513-0061, and 1513-0062 should be sent to OMB at
Office of Management and Budget, Attention: Desk Officer for the
Department of the Treasury, Office of Information and Regulatory
Affairs, Washington, DC 20503 or email to OIRA_submission@omb.eop.gov.
A copy should also be sent to TTB by any of the methods previously
described. Comments on the information collection should be submitted
not later than August 26, 2013.
Comments are specifically requested concerning:
Whether the collections of information approved under OMB
control numbers 1513-0011, 1513-0028, 1513-0037, 1513-0061, and 1513-
0062 are necessary for the proper performance of the functions of TTB,
including whether the information will have practical utility;
The accuracy of the estimated burdens associated with the
collections of information (see below);
How to enhance the quality, utility, and clarity of the
information to be collected;
How to minimize the burden of complying with the
collections of information, including the application of automated
collection techniques or other forms of information technology; and
Estimates of capital or start-up costs and costs of
operation, maintenance, and purchase of services to provide
information.

Drafting Information

Steven C. Simon and Karen E. Welch of the Regulations and Rulings
Division, TTB, drafted this document. Other employees of TTB
contributed to the development of this document.

List of Subjects

27 CFR Part 19

Caribbean Basin Initiative, Claims, Electronic funds transfer,
Excise taxes, Exports, Gasohol, Imports, Labeling, Liquors, Packaging
and containers, Puerto Rico, Reporting and recordkeeping requirements,
Research, Security measures, Surety bonds, Vinegar, Virgin Islands,
Warehouses.

27 CFR Part 20

Alcohol and alcoholic beverages, Claims, Cosmetics, Excise taxes,
Labeling, Packages and containers, Penalties, Reporting and
recordkeeping requirements, Surety bonds.

27 CFR Part 21

Alcohol and alcoholic beverages.

27 CFR Part 27

Alcohol and alcoholic beverages, Beer, Cosmetics, Customs duties
and inspection, Electronic fund transfers, Excise taxes, Imports,
Labeling, Liquors, Packaging and containers, Reporting and
recordkeeping requirements, Wine.

27 CFR Part 28

Aircraft, Alcohol and alcoholic beverages, Armed forces, Beer,
Claims, Excise taxes, Exports, Foreign trade zones, Labeling, Liquors,
Packaging and containers, Reporting and recordkeeping requirements,
Surety bonds, Vessels, Warehouses, and Wine.

Proposed Amendments to the Regulations

For the reasons explained in the preamble, TTB proposes to amend 27
CFR parts 19, 20, 21, 27, and 28 as set forth below:

PART 19--DISTILLED SPIRITS PLANTS

0
1. 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, 5111-5114,

[[Page 38639]]

5121-5124, 5142, 5143, 5146, 5148, 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,
9304, 9306.

0
2. Section 19.412 is added under the undesignated center heading
``Receipt of Spirits from Customs Custody'' to read as follows:

Sec. 19.412 Importation of denatured spirits.

For provisions relating to the importation of denatured spirits,
see Sec. 27.222 of this chapter.
0
3. Section 19.607 is revised to read as follows:

Sec. 19.607 Article manufacture records.

Each processor qualified to manufacture articles must maintain
daily manufacturing and disposition records, arranged by the name and
authorized Use Code of the article, in the manner provided in part 20
of this chapter.
0
4. Section 19.746 is amended by revising paragraphs (b)(1)(xi) and
(xii), adding paragraphs (b)(1)(xiii) through (xvi), and revising
paragraph (c) to read as follows:

Sec. 19.746 Authorized materials.

* * * * *
(b) * * *
(1) * * *
(xi) Naphtha;
(xii) Straight run gasoline;
(xiii) Alkylate;
(xiv) High octane denaturant blend;
(xv) Methyl tertiary butyl ether; or
(xvi) Any combination of the materials listed in paragraphs
(b)(1)(i) through (xv) of this section;
* * * * *
(c) Specifications. Specifications for the materials listed in
paragraph (b) are found in part 21, subpart E, of this chapter.
* * * * *

PART 20--DISTRIBUTION AND USE OF DENATURED ALCOHOL AND RUM

0
5. The authority citation for part 20 continues to read as follows:

Authority: 26 U.S.C. 5001, 5206, 5214, 5271-5275, 5311, 5552,
5555, 5607, 6065, 7805.

0
6. Section 20.11 is amended by:
0
a. Revising the definition of ``Specially denatured spirits'';
0
b. Adding, in alphabetical order, definitions for ``Fit for beverage
use, or fit for beverage purposes,'' ``Internal human use,'' ``TTB,''
and ``Unfit for beverage use, or unfit for beverage purposes''; and
0
c. Revising the Office of Management and Budget control number
referenced at the end of the section.
The revisions and additions read as follows:

Sec. 20.11 Meaning of terms.

* * * * *
Fit for beverage use, or fit for beverage purposes. Suitable for
consumption as an alcoholic beverage by a normal person, or susceptible
of being made suitable for such consumption merely by dilution with
water to an alcoholic strength of 15 percent by volume. The
determination is based solely on the composition of the product and
without regard to extraneous factors such as price, labeling, or
advertising.
* * * * *
Internal human use. Use inside the human body, but not including
use only in the mouth where the substance being used is not intended to
be swallowed.
* * * * *
Specially Denatured Spirits or S.D.S. Specially denatured alcohol
and/or specially denatured rum.
* * * * *
TTB. The Alcohol and Tobacco Tax and Trade Bureau, U.S. Department
of the Treasury.
* * * * *
Unfit for beverage use, or unfit for beverage purposes. Not
conforming to the definition of ``Fit for beverage use, or fit for
beverage purposes'' in this section.
* * * * *
(Approved by the Office of Management and Budget under control
number 1513-0061)

0
7. In Sec. 20.41, paragraph (d)(1) is revised to read as follows:

Sec. 20.41 Application for industrial alcohol user permit.

* * * * *
(d) Exceptions. (1) The proprietor of a distilled spirits plant
qualified under part 19 of this chapter is not required to qualify
under this part for activities conducted at that plant's bonded
premises.
* * * * *
0
8. Section 20.63 is revised to read as follows:

Sec. 20.63 Adoption of formulas and statements of process.

(a) Adoption of formulas and statements of process is permitted:
(1) When a successor (proprietorship or fiduciary) adopts a
predecessor's formulas and statements of process as provided in
Sec. Sec. 20.57(c) and 20.58; and
(2) When a permittee adopts for use at one plant, the formulas
previously approved by TTB for use at another plant, or when a
permittee adopts a formula previously approved by TTB for a parent or
subsidiary, provided that in the case of a parent-subsidiary
relationship the subsidiary is wholly-owned by the parent.
(b) The adoption will be accomplished by the submission of a
certificate of adoption. The certificate of adoption shall be submitted
to the appropriate TTB officer and shall contain:
(1) A list of all approved formulas or statements of process in
which S.D.S. is used or recovered;
(2) The formulas of S.D.S. used or recovered;
(3) The dates of approval of the relevant Forms 1479-A or TTB Forms
5150.19:
(4) The applicable code number(s) for the article or process;
(5) The name of the permittee adopting the formulas, followed by
the phrase, for each formula, ``Formula of ------------ (Name and
permit number of permittee who received formula approval) is hereby
adopted;'' and
(6) In the case of a permittee adopting the formulas of another
entity, evidence of its relationship to that entity.

(Approved by the Office of Management and Budget under control
number 1513-0061)

0
9. Section 20.95 is revised to read as follows:

Sec. 20.95 Developmental samples of articles.

(a) Samples for submission to TTB. Prior to receiving formula
approval on TTB Form 5150.19, a user may use S.D.S. in the manufacture
of samples of articles for submission in accordance with Sec. 20.92.
However, the user may only use the limited quantity of S.D.S. that is
necessary to produce the samples.
(b) Samples for shipment to prospective customers. Prior to
submitting a formula and statement of process on TTB Form 5150.19, a
user may use S.D.S. to prepare developmental samples of articles for
shipment to prospective customers. Only one sample of each formulation
of the article under development may be sent to each customer. Each
sample shall be no larger than necessary for the customer to determine
whether the product meets its requirements. The user shall maintain
records showing:
(1) The types of product samples prepared;
(2) The size and number of samples sent, on a one-time basis, to
each prospective customer; and
(3) The names and addresses of the prospective customers.
(c) Formula requirement. Before the user begins to make a quantity
greater

[[Page 38640]]

than specified in this section, formula approval on TTB Form 5150.19 is
required.

(Approved by the Office of Management and Budget under control
number 1513-0062)

0
10. Section 20.102 is revised to read as follows:

Sec. 20.102 Bay rum, alcoholado, or alcoholado-type toilet waters.

Unless manufactured exclusively for export under a formula approved
by TTB and endorsed ``For Export Only,'' bay rum, alcoholado, or
alcoholado-type toilet waters made with S.D.S. shall contain in each
gallon of finished product:
(a) 71 milligrams of denatonium benzoate (also known as
benzyldiethyl (2:6-xylylcarbamoyl methyl) ammonium benzoate) in
addition to any of this material used as a denaturant in the specially
denatured alcohol;
(b) 2 grams of tartar emetic; or
(c) 0.5 avoirdupois ounce of sucrose octaacetate.

Sec. 20.103 [Removed and Reserved]

0
11. Section 20.103 is removed and reserved.
0
12. Section 20.111 is amended by revising paragraph (a), adding
paragraph (c), and revising the Office of Management and Budget control
number referenced at the end of the section to read as follows:

Sec. 20.111 General.

(a) Formula approval obtained on TTB Form 5150.19 is not required
for an article made in accordance with any approved general-use formula
that is specified in Sec. Sec. 20.112 through 20.124, that is approved
by the appropriate TTB officer as an alternate method, or that is
published as a TTB Ruling on the TTB Web site at https://www.ttb.gov.
However, a statement of process on TTB Form 5150.19 is still required
in any of the circumstances described in Sec. 20.94.
* * * * *
(c) The manufacturer shall ensure that each finished article made
pursuant to a general-use formula is unfit for beverage use and is
incapable of being reclaimed or diverted to beverage use or internal
human use.

(Approved by the Office of Management and Budget under control
number 1513-0061)

Sec. 20.112 [Amended]

0
13. In Sec. 20.112, the last sentence of paragraph (a) introductory
text is amended by removing the word ``alcohol'' and adding, in its
place, the letters ``S.D.A.'', and paragraph (a)(1) is amended by
adding the words ``propylene glycol monomethyl ether,'' after the words
``nitropropane (mixed isomers),''.
0
14. In Sec. 20.113, the last sentence of the paragraph (a)
introductory text is revised to read as follows:

Sec. 20.113 Proprietary solvents general-use formula.

(a) * * * A proprietary solvent made pursuant to this formula shall
be made with alcohol denatured in accordance with S.D.A. Formula No. 1,
3-A, or 3-C and shall contain, for every 100 parts (by volume) of
S.D.A.:
* * * * *
0
15. In Sec. 20.114, the introductory text and paragraph (a) are
revised to read as follows:

Sec. 20.114 Tobacco flavor general-use formula.

This tobacco flavor general-use formula authorizes the production
of any finished article made with alcohol denatured in accordance with
S.D.A. Formula No. 4 or S.D.R. Formula No. 4 which--
(a) Contains flavors sufficient to ensure that the article is unfit
for beverage or internal human use,
* * * * *
0
16. In Sec. 20.115, the introductory text and paragraph (a) are
revised to read as follows:

Sec. 20.115 Ink general-use formula.

This ink general-use formula authorizes the production of any
finished article made with alcohol denatured in accordance with S.D.A.
Formula No 1, 3-A, 3-C, 13-A, 23-A, 30, or 32, or which--
(a) Contains pigments, dyes, or dyestuffs sufficient to ensure that
the article is unfit for beverage use,
* * * * *
0
17. Section 20.116 is revised to read as follows:

Sec. 20.116 Low alcohol general-use formula.

This low alcohol general-use formula authorizes the production of
any finished article containing not more than 5 percent alcohol by
weight or volume. Articles containing no alcohol, or whose manufacture
involves the recovery of S.D.S., shall be covered by a statement of
process on TTB Form 5150.19 submitted under Sec. 20.94.
0
18. Section 20.117 is revised to read as follows:

Sec. 20.117 Reagent alcohol general-use formula.

(a) General. Reagent alcohol must be made in accordance with
paragraph (b) of this section and labeled in accordance with paragraph
(c) of this section. Reagent alcohol is--
(1) Treated as an article if distributed and used in accordance
with paragraph (d) of this section; or
(2) Treated as S.D.A. if distributed and used in accordance with
paragraph (e) of this section.
(b) Formula. Reagent alcohol shall be made with 95 parts (by
volume) of S.D.A. 3-A, and 5 parts (by volume) of isopropyl alcohol.
Water may be added at the time of manufacture. Reagent alcohol shall
not contain any ingredient other than those specified in this
paragraph.
(c) Labeling. (1) Each container of reagent alcohol, regardless of
size, shall have affixed to it a label containing the following words
that are as conspicuous as any other words on the container labels:
``Reagent Alcohol: Specially Denatured Alcohol Formula 3-A, 95 parts by
vol.; and Isopropyl Alcohol, 5 parts by vol.'' If water is added at the
time of manufacture, the label shall specify the composition of the
product as diluted.
(2) Because undiluted reagent alcohol contains 4 percent by weight
or more of methyl alcohol, the container shall have a label bearing a
skull and crossbones symbol and the following words: ``Danger,''
``Poison,'' ``Vapor harmful,'' ``May be fatal or cause blindness if
swallowed,'' and ``Cannot be made nonpoisonous.'' However, if the
addition of water reduces the methyl alcohol concentration to less than
4 percent by weight, the requirements of this paragraph do not apply.
(3) A back label shall be attached showing the word ``ANTIDOTE,''
followed by suitable directions for an antidote.
(d) Distribution and use of reagent alcohol as an article. Reagent
alcohol is treated as an article if distributed exclusively for the
purpose of scientific use. Only the following distributions of reagent
alcohol are permitted under this paragraph:
(1) For scientific use--(i) In smaller containers. The manufacturer
or repackager of the reagent alcohol, or an S.D.S. dealer, may
distribute reagent alcohol in containers not exceeding four liters to
laboratories or other persons who require reagent alcohol for
scientific use.
(ii) In bulk containers. The manufacturer of the reagent alcohol,
or an S.D.S. dealer, may distribute reagent alcohol in containers
larger than four liters to a laboratory or other person requiring
reagent alcohol for scientific use if that laboratory or person is
qualified to receive bulk shipments of reagent alcohol on [EFFECTIVE
DATE OF FINAL RULE] or has received, from the appropriate TTB officer,
approval of

[[Page 38641]]

a letterhead application containing the following information:
(A) The applicant's name, address, and permit number, if any;
(B) An explanation of the applicant's need for bulk quantities of
reagent alcohol;
(C) A description of the security measures that will be taken to
segregate reagent alcohol from denatured spirits or other alcohol that
may be on the same premises; and
(D) A statement that the applicant will allow any appropriate TTB
officer to inspect the applicant's premises.
(2) For repackaging. The manufacturer of the reagent alcohol, or an
S.D.S. dealer, may distribute reagent alcohol in containers larger than
4 liters to the persons specified in this paragraph. Those persons must
repackage the reagent alcohol in containers not exceeding 4 liters,
label the smaller packages in accordance with paragraph (c) of this
section, and redistribute them in accordance with paragraph (d)(1)(i)
of this section. The persons to whom reagent alcohol may be distributed
in bulk for repackaging under this paragraph are:
(i) A proprietor of a bona fide laboratory supply house; and
(ii) Any other person who was qualified to receive bulk shipments
of reagent alcohol on [EFFECTIVE DATE OF FINAL RULE], or who has
received, from the appropriate TTB officer, approval of a letterhead
application containing all of the information required by paragraph
(d)(1)(ii)(A) through (D), in addition to the following:
(A) A statement that the applicant will comply with the labeling,
packaging, and distribution requirements of paragraphs (c) and (d)(1)
of this section; and
(B) A statement that the applicant will comply with the
requirements of Sec. 20.133.
(3) For redistribution. The manufacturer of the reagent alcohol, or
an S.D.S. dealer, may distribute reagent alcohol in containers of any
size to an S.D.S. dealer for redistribution in accordance with this
section. An S.D.S. dealer distributing or redistributing reagent
alcohol may repackage it in containers of any size permitted under this
section that is necessary for the conduct of business.
(e) Distribution and use of reagent alcohol in manufacturing.
Reagent alcohol is treated as S.D.A. if distributed for the purpose of
manufacturing. The following requirements apply to reagent alcohol
treated as S.D.A.:
(1) The manufacturer of the reagent alcohol, or an S.D.S. dealer,
may distribute reagent alcohol in containers of any size to the persons
specified in this paragraph for use in manufacturing.
(2) A person may receive reagent alcohol for use in manufacturing
if the person:
(i) Holds a permit as an S.D.A. user;
(ii) Has received formula approval on TTB Form 5150.19 to use
reagent alcohol in manufacturing; and
(iii) Treats the reagent alcohol as S.D.A., not an article.

(Approved by the Office of Management and Budget under control
number 1513-0061)

Sec. 20.119 [Amended]

0
19. In Sec. 20.119, the introductory text is amended by:
0
a. Removing the words ``shall consist of'' and adding, in their place,
the word ``describes''; and
0
b. Removing the word ``formula'' the second time it appears and adding,
in its place, the word ``formulation''.
0
20. In subpart F, Sec. Sec. 20.120 through 20.124 are added to read as
follows:

Sec. 20.120 General-use formula for articles made with S.D.A. 1, 3-A,
13-A, 19, 23-A, 23-H, 30, 32, 35-A, 36, 37, 38-D, 40, 40-A, or 40-B.

This general-use formula authorizes the manufacture of any article
that:
(a) Is made with alcohol denatured in accordance with S.D.A.
Formula No. 1, 3-A, 13-A, 19, 23-A, 23-H, 30, 32, 35-A, 36, 37, 38-D,
40, 40-A, and/or 40-B, but no other specially denatured spirits
formula;
(b) Conforms to one of the Use Codes specified in part 21 of this
chapter authorized for the S.D.A. formulation(s) being used to make the
article, other than Use Code 900, as described in part 21 of this
chapter; and
(c) Contains sufficient additional ingredients, other than the
denaturants prescribed for the applicable S.D.A. formula(s)--
(i) To definitely change the composition and character of the
S.D.A. used to make the article, and
(ii) To ensure that the finished article is unfit for beverage or
internal human use, and, unless approved ``for export only'' under
Sec. 20.193(b), is incapable of being reclaimed or diverted to
beverage use or internal human use.

Sec. 20.121 Vinegar general-use formula.

The vinegar general-use formula is a formula for making vinegar
with alcohol denatured in accordance with S.D.A. Formula No. 18 in a
process whereby all of the ethyl alcohol, except residual alcohol
within the limit specified in Sec. 20.104, loses its identity by being
converted to vinegar.

Sec. 20.122 S.D.A. 39-C general-use formula.

S.D.A. 39-C general-use formula is a formula for articles made with
alcohol denatured in accordance with S.D.A. Formula No. 39-C. Articles
made pursuant to this general-use formula shall contain, in each gallon
of finished product, not less than 2 fl. oz. of perfume material
(essential oils as defined in Sec. 21.11, isolates, aromatic
chemicals, etc.). Unless approved with the endorsement ``for export
only,'' all articles made with alcohol denatured in accordance with
S.D.A. Formula No. 39-C must be made in accordance with this formula.

Sec. 20.123 Pressurized container general-use formula.

This general-use formula describes an article, made with alcohol
denatured in accordance with S.D.A. Formula No. 40-C, that will be
packaged in pressurized containers in which the liquid contents are in
intimate contact with the propellant and from which the contents are
not easily removable in liquid form.

Sec. 20.124 Duplicating fluid and ink solvent general-use formula.

(a) Duplicating fluids and ink solvents under this general-use
formula shall be made with alcohol denatured in accordance with S.D.A.
Formula No. 1, 3-A, or 3-C and
(1) Shall contain, for every 100 parts (by volume) of denatured
alcohol:
(i) No less than 1 part (by volume) of n-propyl acetate, and no
less than 10 parts (by volume) of one or any combination of isopropyl
alcohol or methyl alcohol; or
(ii) No less than 5 parts (by volume) of n-propyl acetate; and
(2) May contain additional ingredients.
(b) Duplicating fluids and ink solvents are intended for use in the
printing industry, shall not be sold for general solvent use, and shall
not be distributed through retail channels for sale as consumer
commodities for personal or household use.
(c) If this article contains 4 percent or more by weight of methyl
alcohol, the label shall have a skull and crossed bones symbol and the
following words: ``Danger,'' ``Poison,'' ``Vapor harmful,'' ``May be
fatal or cause blindness if swallowed,'' and ``Cannot be made
nonpoisonous.''
0
21. In Sec. 20.133, paragraph (b) is revised, paragraph (c) is added,
and the Office of Management and Budget control number referenced at
the end of the section is revised to read as follows:

[[Page 38642]]

Sec. 20.133 Registration of persons trafficking in articles.

* * * * *
(b) A person who reprocesses articles shall ensure that each
article containing 0.5 percent or more alcohol by weight or volume is
unfit for beverage or internal human use and is incapable of being
reclaimed or diverted to beverage use or internal human use.
(c) The appropriate TTB officer will prohibit any of the activities
described in paragraph (a) of this section if the activity jeopardizes
the revenue or increases the burden of administering this part.

(Approved by the Office of Management and Budget under control
number 1513-0061)
0
22. In Sec. 20.134, paragraph (a) and the Office of Management and
Budget control number referenced at the end of the section are revised
to read as follows:

Sec. 20.134 Labeling.

(a) General. Except as otherwise provided in paragraph (b) or (c)
of this section, the immediate container of each article shall, before
removal from the manufacturer's premises, bear the following
information either directly on the container or on a label securely
attached to it:
(1) The name, trade name or brand name of the article; and
(2) The name and address (city and State) of the manufacturer or
distributor of the article.
* * * * *
(Approved by the Office of Management and Budget under control
number 1513-0061)

Sec. 20.136 [Amended]

0
23. In Sec. 20.136, the third sentence of paragraph (b) is amended by
removing the words ``Formula Nos.'' and adding, in their place, the
words ``formulations''.

Sec. 20.141 [Amended]

0
24. In Sec. 20.141, paragraph (a) is amended by removing the word
``formula'' the first time it appears, and adding, in its place, the
word ``formulation'', and by adding the words ``formulations of'' after
the words ``For example,''.

Sec. 20.170 [Amended]

0
25. Section 20.170 is amended by removing the word ``formula'' and
adding, in its place, the word ``formulation''.

Sec. 20.175 [Amended]

0
26. In Sec. 20.175, paragraph (c) is amended by adding to the end of
the sentence the words, ``except as provided in 26 U.S.C. 5001(a)(4)
and (5)''.
0
27. Section 20.183 is added under the undesignated center heading
``Operations By Dealers'' to read as follows:

Sec. 20.183 Exportation of S.D.S.

(a) General. Except as otherwise provided in paragraph (b) of this
section, a dealer may export S.D.S. that conform to a formula specified
in part 21 of this chapter to any country that allows the importation
of such spirits. The exporting dealer shall:
(1) For each export shipment, prepare TTB Form 5100.11 in
accordance with its instructions as a notice and submit it to the
appropriate TTB officer;
(2) Mark each shipping container and case with the words ``For
Export'';
(3) Export the S.D.S. directly; and
(4) Retain appropriate documentation, such as invoices and bills of
lading, as evidence that the denatured spirits were, in fact, exported.
(b) Exception. A dealer may not export under paragraph (a) of this
section any spirits that conform to Formula No. 3-C, 29, or 38-B.
0
28. Section 20.189 is amended by revising paragraphs (c) and (d) to
read as follows:

Sec. 20.189 Use of S.D.S.

* * * * *
(c) Unless otherwise authorized by the appropriate TTB officer,
each formulation of S.D.S. may be used only for the purposes authorized
for that formulation under part 21 of this chapter.
(d) By the use of essential oils and/or chemicals in the
manufacture of each article containing 0.5 percent or more alcohol by
weight or volume, the manufacturer shall ensure that:
(1) Each finished article is unfit for beverage use; and
(2) Unless approved ``for export only'' under Sec. 20.193(b), each
finished article is incapable of being reclaimed or diverted to
beverage use or internal human use.
* * * * *
0
29. Section 20.193 is added to subpart I to read as follows:

Sec. 20.193 Articles for export.

(a) Articles approved without qualification, including articles
made in accordance with one of the general-use formulas in Sec. Sec.
20.111 through 20.124, may be exported without restriction.
(b) For each article for which the approved formula is endorsed
``For Export Only'' the manufacturer shall:
(1) Label the immediate container to clearly show that the article
is for export (for example, with the words ``For export only'', ``Not
for sale in the United States'', or ``Manufactured for sale in --------
----------------------'');
(2) Mark the shipping containers and cases with the words ``For
Export'';
(3) Export the article directly; and
(4) Retain appropriate documentation, such as invoices and bills of
lading, as evidence that the article was, in fact, exported.
(c) All articles for export shall comply with the applicable
requirements of the countries to which they are sent.
0
30. In Sec. 20.204, paragraph (c) is revised to read as follows:

Sec. 20.204 Incomplete shipments.

* * * * *
(c) Subject to the limitations for loss prescribed in Sec. 20.202,
the shipper (dealer or distilled spirits plant proprietor) shall file a
claim for allowance of the entire quantity lost, in the manner provided
in that section. The claim shall include the applicable data required
by Sec. 20.205.
0
31. Section 20.222 is revised to read as follows:

Sec. 20.222 Destruction.

(a) Record of destruction. A permittee who destroys specially
denatured spirits or recovered alcohol, or who transfers such material
to another entity for destruction, shall prepare a record of
destruction, which shall be maintained by the permittee with the
records required by subpart P of this part. The record shall identify--
(1) The reason for destruction,
(2) The date, time, location and manner of destruction,
(3) The quantity involved and, if applicable, identification of
containers, and
(4) The name of the individual who accomplished or supervised the
destruction.
(b) Destruction by nonpermittees. In general, the destruction of
specially denatured spirits and recovered alcohol shall be performed by
a permittee or a distilled spirits plant. However, a nonpermittee may
destroy recovered alcoholic material if the material has been
determined by the appropriate TTB officer to be equivalent to an
article. If the material is not so determined, destruction may only
occur on the premises of the manufacturer who recovered the material, a
distilled spirits plant, or a dealer permittee.

(Approved by the Office of Management and Budget under control
number 1513-0062)

Sec. 20.262 [Amended]

0
32. Section 20.262 is amended in paragraphs (a) introductory text, (b),
and (c) by removing the word ``formula'' and adding, in its place, the
word ``formulation''.

[[Page 38643]]

Sec. 20.263 [Amended]

0
33. Section 20.263 is amended in paragraphs (a) introductory text, (b),
and (c) by removing the word ``formula'' and adding in its place, the
word ``formulation''.
0
34. In Sec. 20.264, paragraphs (a)(1) and (2) are revised, paragraph
(a)(4) is added, and the Office of Management and Budget control number
referenced at the end of the section is revised to read as follows:

Sec. 20.264 User's records and report of products and processes.

(a) Records. (1) Each user shall maintain separate accountings of--
(i) The number of gallons of each formulation of new S.D.S. used
for each product or process, recorded by the code number prescribed by
Sec. 21.141 of this chapter; and
(ii) The number of gallons of each formulation of recovered S.D.S.
used for each product or process, recorded by the code number
prescribed by Sec. 21.141 of this chapter.
(2) Each user who recovers specially denatured spirits shall
maintain separate accountings of the number of gallons of each
formulation of specially denatured spirits recovered from each product
or process, recorded by the code number prescribed by Sec. 21.141 of
this chapter.
* * * * *
(4) Each user who manufactures articles for export subject to Sec.
20.193(b) shall retain the documentation required by Sec.
20.193(b)(4).
* * * * *
(Approved by the Office of Management and Budget under control
number 1513-0062)

PART 21--FORMULAS FOR DENATURED ALCOHOL AND RUM

0
35. The authority citation of part 21 continues to read as follows:

Authority: 5 U.S.C. 552(a), 26 U.S.C. 5242, 7805.

0
36. Section 21.21a is added to read as follows:

Sec. 21.21a Formula No. 12-A.

Formula. To every 100 gallons of alcohol of not less than 185 proof
add: Five gallons of toluene or 5 gallons of heptane.
0
37. In Sec. 21.24, paragraph (a) is revised to read as follows:

Sec. 21.24 Formula No. 20.

(a) Formula. To every 100 gallons of ethyl alcohol of not less than
195 proof add:
A total of 2.0 gallons of either unleaded gasoline, rubber
hydrocarbon solvent, kerosene, deodorized kerosene, alkylate, ethyl
tertiary butyl ether, high octane denaturant blend, methyl tertiary
butyl ether, naphtha, natural gasoline, raffinate, or any combination
of these; or
A total of 5.0 gallons of toluene.
* * * * *
0
38. In subpart C, Sec. 21.25 is added to read as follows:

Sec. 21.25 Formula No. 35.

Formula. To every 100 gallons of alcohol of not less than 185 proof
add:
29.75 gallons of ethyl acetate having an ester content of 100
percent by weight or the equivalent thereof not to exceed 35 gallons of
ethyl acetate with an ester content of not less than 85 percent by
weight.
0
39. In Sec. 21.33, paragraph (a) is revised to read as follows:

Sec. 21.33 Formula No. 2-B.

(a) Formula. To every 100 gallons of alcohol add:
One-half gallon of rubber hydrocarbon solvent, \1/2\ gallon of
toluene, \1/2\ gallon of heptane, \1/2\ gallon of hexane (mixed
isomers), or \1/2\ gallon of n-hexane.
* * * * *

Sec. Sec. 21.34, 21.36, 21.39, 21.40, 21.42, 21.45, 21.46, 21.48,
21.52 through 21.54, 21.60, 21.61, 21.66, 21.69, 21.70, 21.78, and
21.81 [Removed and Reserved]

0
40. Sections 21.34, 21.36, 21.39, 21.40, 21.42, 21.45, 21.46, 21.48,
21.52 through 21.54, 21.60, 21.61, 21.66, 21.69, 21.70, 21.78, and
21.81 are removed and reserved.

Sec. 21.35 [Amended]

0
41. In Sec. 21.35, paragraph (a) is amended by adding the words
``cyclohexane or'' before the words ``methyl alcohol.''

Sec. 21.63 [Amended]

0
42. In Sec. 21.63, paragraph (a) is amended by adding the words ``8.75
pounds of potassium hydroxide, on an anhydrous basis;'' before the
words ``or 12.0 pounds of caustic soda,''.

Sec. 21.65 [Amended]

0
43. In Sec. 21.65, the list in paragraph (a) is amended by adding
entries reading ``Cornmint oil.'', ``Distilled lime oil.'', ``L(-)-
Carvone.'', ``Lemon oil.'', and ``Peppermint oil, Terpeneless.'', in
appropriate alphabetical order.
0
44. In Sec. 21.68, paragraphs (a)(1) and (2) are revised to read as
follows:

Sec. 21.68 Formula No. 38-F.

(a) * * *
(1) Six pounds of either boric acid, N.F., Polysorbate 80, N.F., or
Poloxamer 407, N.F.; 1\1\/3 pounds of thymol, N.F.; 1\1\/
3 pounds of chlorothymol, N.F. XII; and 1\1\/3
pounds of menthol, U.S.P.; or
(2) A total of at least 3 pounds of any two or more denaturing
materials listed under Formula No. 38-B, plus sufficient boric acid,
N.F., Polysorbate 80, N.F., or Poloxamer 407, N.F. to total 10 pounds
of denaturant; or
* * * * *
0
45. Section 21.91 is amended by adding a sentence at the end of the
section to read as follows:

Sec. 21.91 General

* * * The authorization of a substitute denaturant may be published
in a TTB Ruling.
0
46. Section 21.94a is added to read as follows:

Sec. 21.94a Alkylate.

(a) API gravity at 60[emsp14][deg]F. 70.4.
(b) Reid vapor pressure (PSI). 5.60 maximum.
(c) Distillation ([deg]F):
(1) I.B.P. 109.0.
(2) 10 percent. 186.6.
(3) 50 percent. 221.1.
(4) 90 percent. 271.8.
(5) End point distillation. 375.7.

Sec. Sec. 21.98, 21.103, 21.104, 21.111, 21.121, 21.122, and
21.128 [Removed and Reserved]

0
47. Sections 21.98, 21.103, 21.104, 21.111, 21.122, and 21.128 are
removed and reserved.
0
48. Section 21.105a is added to read as follows:

Sec. 21.105a Cornmint oil (Mentha arvensis and Mentha canadensis).

(a) Specific gravity at 25 [deg]C. 0.895 to 0.905.
(b) Refractive index at 20 [deg]C. 1.4580 to 1.4590.
(c) Optical rotation at 20 [deg]C. -18[deg] to -36[deg].
(d) Alcohol content (as menthol). 65 percent minimum.
(e) Ketone content (as menthone). 5 percent minimum.
0
49. Section 21.105b is added to read as follows:

Sec. 21.105b Cyclohexane.

(a) Specific gravity at 20 [deg]C. 0.75 to 0.80.
(b) Odor. Characteristic odor.
0
50. Section 21.106a is added to read as follows:

Sec. 21.106a Distilled lime oil (Citrus aurantifolia).

(a) Specific gravity at 25 [deg]C. 0.850 to 0.870.
(b) Refractive index at 20 [deg]C. 1.4740 to 1.4780.
(c) Optical rotation at 20 [deg]C. +30[deg] to +50[deg].
(d) Aldehyde content (as citral). 0.5 to 3.0 percent.

[[Page 38644]]

(e) Terpene content (as limonene). 45 percent minimum.
0
51. Section 21.108a is added to read as follows:

Sec. 21.108a Ethyl tertiary butyl ether.

(a) Purity. >=95.0 percent.
(b) Color. Colorless to light yellow.
(c) Odor. Terpene-like.
(d) Specific gravity at 20 [deg]C. 0.70 to 0.80.
(e) Boiling point ([deg]C). 73.
0
52. Section 21.112a is added to read as follows:

Sec. 21.112a Hexane (mixed isomers).

(a) General. Minimum 55 percent n-hexane.
(b) Distillation range. No distillate should come over below
150[emsp14][deg]F and none above 160 [deg]F.
(c) Odor. Characteristic odor.
0
53. Section 21.112b is added to read as follows:

Sec. 21.112b n-Hexane.

(a) General. Minimum 97 percent purity.
(b) Distillation range. No distillate should come over below
150[emsp14][deg]F and none above 160[deg] F.
(c) Odor. Characteristic odor.
0
54. Section 21.112c is added to read as follows:

Sec. 21.112c High octane denaturant blend.

(a) API Gravity at 60 [deg]F. 40 to 65.
(b) Reid Vapor Pressure (PSI). 6 to 15.
(c) Isopropyl alcohol. 24 to 40 percent volume.
(d) Methyl alcohol. 1.6 to 9.6 percent volume.
(e) Diisopropyl ether (DIPE). 4 to 12 percent volume.
(f) tert-Butyl alcohol. 4 to 12 percent volume.
(g) Iso-pentane. 4 to 9 percent volume.
(h) Pentane. 4 to 9 percent volume.
(i) Pentene. 0 to 2.4 percent volume.
(j) Hexane. 2 to 6 percent volume.
(k) Heptane. 1 to 3 percent volume.
(l) Sulfur (ppm). 0 to 120.
(m) Benzene (% vol.). 0 to 1.1.
(n) Distillation ([deg]F):
(1) 10 percent. 80 to 168.
(2) 50 percent. 250.
(3) End point distillation. 437.
0
55. Section 21.115a is added to read as follows:

Sec. 21.115a Lemon oil (Citrus limonium).

(a) Specific gravity at 25 [deg]C. 0.850 to 0.860.
(b) Refractive index at 20 [deg]C. 1.4570 to 1.4580.
(c) Optical rotation at 20 [deg]C. +55[deg] to +65[deg].
(d) Terpene content (as limonene). 65 percent minimum.
0
56. Section 21.115b is added to read as follows:

Sec. 21.115b L(-)-Carvone.

(a) Specific gravity at 25 [deg]C. 0.955 to 0.965.
(b) Refractive index at 20 [deg]C. 1.495 to 1.500.
(c) Angular rotation. -57[deg] to -62[deg].
(d) Assay. Not less than 97.0 percent.
0
57. Section 21.118a is added to read as follows:

Sec. 21.118a Methyl tertiary butyl ether.

(a) Purity. >=97.0 percent.
(b) Color. Clear, colorless.
(c) Odor. Turpentine-like.
(d) Specific Gravity at 20 [deg]C. 0.70 to 0.80.
(e) Boiling Point ([deg]C). 55.
0
58. Section 21.118b is added to read as follows:

Sec. 21.118b Naphtha.

(a) API Gravity at 60 [deg]F. 30 to 85.
(b) Reid Vapor Pressure (PSI). 8 maximum.
(c) Specific Gravity at 20 [deg]C. 0.70 to 0.80.
(d) Distillation ([deg]F):
(1) I.B.P. 85 maximum.
(2) 10 percent. 130 maximum.
(3) 50 percent. 250 maximum.
(4) 90 percent. 340 maximum.
(e) End point distillation. 380 maximum.
(f) Copper corrosion. One (1).
(g) Sabolt color. 28 minimum.
0
59. Section 21.118c is added to read as follows:

Sec. 21.118c Natural gasoline.

Natural gasoline is a mixture of various alkanes including butane,
pentane, and hexane hydrocarbons extracted from natural gas. It has a
distillation range wherein no more than 10 percent by volume of the
sample may distill below 97 [deg]F; at least 50 percent by volume shall
distill at or below 156 [deg]F; and at least 90 percent by volume shall
distill at or below 209 [deg]F.
0
60. Section 21.121 is revised to read as follows:

Sec. 21.121 Peppermint oil, Terpeneless.

(a) Specific gravity at 25 [deg]C. 0.890 to 0.910.
(b) Refractive index at 20 [deg]C. 1.455 to 1.465.
(c) Esters as menthyl acetate. 5 percent minimum.
(d) Menthol (free and esters). 5 percent minimum.
0
61. Section 21.121a is added to read as follows:

Sec. 21.121a Potassium Hydroxide.

(a) Color. White or yellow.
(b) Specific gravity at 20 [deg]C. 1.95 to 2.10.
(c) Melting point. 360 [deg]C.
(d) Boiling point. 1320 [deg]C.
(e) pH (0.1M solution). 13.5.
0
62. Section 21.124a is added to read as follows:

Sec. 21.124a Raffinate.

(a) API Gravity at 60[emsp14][deg]F. 30 to 85.
(b) Reid Vapor Pressure (PSI). 5 to 11.
(c) Octane (R+M/2). 66 to 70.
(d) Distillation ([deg]F):
(1) 10 percent. 120 to 150.
(2) 50 percent. 144 to 180.
(3) 90 percent. 168 to 200.
(4) End point distillation. 216 to 285.
0
63. Section 21.130a is added to read as follows:

Sec. 21.130a Straight run gasoline.

(a) General. Straight run gasoline is a mixture consisting
predominantly (greater than 60 percent by volume) of C4,
C5, C6, C7 and/or C8
hydrocarbons, and is either:
(1) A petroleum distillate coming straight from an atmospheric
distillation unit without being cracked or reformed, or
(2) A condensate coming directly from an oil/gas recovery
operation.
(b) API gravity. 72[deg] minimum, 85[deg] maximum.
(c) Reid vapor pressure (PSI). 15 maximum.
(d) Sulfur. 120 ppm maximum.
(e) Benzene. 1.1 percent by volume maximum.
(f) Distillation ([deg]F):
(1) 10 percent. 97 minimum, 158 maximum.
(2) 50 percent. 250 maximum.
(3) Final boiling point. 437 maximum.
0
64. Section 21.132 is revised to read as follows:

Sec. 21.132 Toluene.

(a) Specific Gravity at 15.56[deg]/15.56[deg]C. 0.80 to 0.90.
(b) Boiling point ([deg]C). 110.6.
(c) Distillation range ([deg]C). Not more than 1 percent by volume
should distill below 109, and not less than 99 percent by volume below
112.
(d) Odor. Characteristic odor.

Sec. 21.141 [Amended]

0
65. In Sec. 21.141, the table is amended by:
0
a. Removing the entry for ``Antiseptic, bathing solution
(restricted).'', and
0
b. Removing each reference to ``2-C'', ``3-B'', ``6-B'', ``12-A'',
``17'', ``20'', ``22'', ``23-F'', ``27'', ``27-A'', ``27-B'', ``33'',
``35'', ``38-C'', ``39'', ``39-A'', ``42'', and ``46'' in the column
headed ``Formulas authorized.''

Sec. 21.151 [Amended]

0
66. In Sec. 21.151, the table is amended by:
0
a. Removing the entries for ``Benzene''; ``Bone oil (Dipple's oil)'';

[[Page 38645]]

``Chloroform''; ``Cinchonidine''; ``Cinchonidine sulfate, N.F. IX'';
``Gentian violet''; ``Gentian violet, U.S.P''; ``Mercuric iodide, red
N.F. XI''; ``Phenyl mercuric benzoate''; ``Phenyl mercuric chloride,
N.F. IX''; ``Phenyl mercuric nitrate, N.F''; ``Pine tar, U.S.P'';
``Pyridine bases''; ``Quassia, fluid extract, N.F. VII''; ``Quinine,
N.F. X''; ``Quinine dihydrochloride, N.F. XI''; ``Resorcinol
(Resorcin), U.S.P''; ``Salicylic acid, U.S.P''; ``Sodium, metallic'';
and ``Thimerosal, U.S.P'';
0
b. Removing each remaining reference to ``2-C'', ``22'', ``23-F'',
``27'', ``27-A'', ``27-B'', ``38-C'', ``39'', ``39-A'', ``42'', and
``46''; and
0
c. Revising the entries for ``Ethyl acetate'', and ``Toluene'', and
adding entries for ``Alkylate'', ``Cornmint oil'', ``Cyclohexane'',
``Distilled lime oil'', ``Ethyl tertiary butyl ether'', ``Hexane'',
``n-Hexane'', ``High octane denaturant blend'', ``L(-)-Carvone'',
``Lemon oil'', ``Methyl tertiary butyl ether'', ``Naphtha'', ``Natural
gasoline'', ``Peppermint oil, terpeneless.'', ``Poloxamer 407 N.F.'',
``Potassium hydroxide'', ``Raffinate'', and ``Straight run gasoline''.
The revisions and additions read as follows:

Sec. 21.151 List of denaturants authorized for denatured spirits.

* * * * *
* * * * *

Denaturants Authorized for Completely Denatured Alcohol (C.D.A),
Specially Denatured Alcohol (S.D.A.), and Specially Denatured Rum
(S.D.R.)

* * * * *
Alkylate................................. C.D.A. 20.

* * * * *
Cornmint oil............................. S.D.A. 38-B.
Cyclohexane.............................. S.D.A. 3-A.

* * * * *
Distilled lime oil....................... S.D.A. 38-B.

* * * * *
Ethyl acetate............................ C.D.A. 35; S.D.A. 29, 35-A.

* * * * *
Ethyl tertiary butyl ether............... C.D.A. 20.

* * * * *
Hexane................................... S.D.A. 2-B.
n-Hexane................................. S.D.A. 2-B.

* * * * *
High octane denaturant blend............. C.D.A. 20.

* * * * *
L(-)-Carvone............................. S.D.A. 38-B.

* * * * *
Lemon oil................................ S.D.A. 38-B.

* * * * *
Methyl tertiary butyl ether.............. C.D.A. 20.

* * * * *
Naphtha.................................. C.D.A. 20.
Natural gasoline......................... C.D.A. 20.

* * * * *
Peppermint oil, terpeneless.............. S.D.A. 38-B.

* * * * *
Poloxamer 407, N.F....................... S.D.A. 38-F.

* * * * *
Potassium hydroxide...................... S.D.A. 36.

* * * * *
Raffinate................................ C.D.A. 20.

* * * * *
Straight run gasoline.................... C.D.A. 20.

* * * * *
Toluene.................................. C.D.A. 12-A; S.D.A. 2-B.

* * * * *

Sec. 21.161 [Amended]

0
67. In Sec. 21.161, the table is amended by removing the entries for
``2-C'', ``3-B'', ``6-B'', ``12-A'', ``17'', ``20'', ``22'', ``23-F'',
``27'', ``27-A'', ``27-B'', ``33'', ``35 \3\'', ``35 \4\'', ``38-C'',
``39'', ``39-A'', ``42'', and ``46''.

PART 27--IMPORTATION OF DISTILLED SPIRITS, WINES, AND BEER

0
68. The authority citation for part 27 is revised to read as follows:

Authority: 5 U.S.C. 552(a), 19 U.S.C. 81c, 1202; 26 U.S.C.
5001, 5007, 5008, 5010, 5041, 5051, 5054, 5061, 5121-5124, 5201,
5205, 5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805.

0
69. Section 27.222 is added to read as follows:

Sec. 27.222 Importation of denatured spirits and fuel alcohol.

Denatured spirits and fuel alcohol are treated as spirits for
purposes of this part and are subject to tax pursuant to Sec.
27.40(a). The tax must be paid upon importation, with only two
exceptions: Spirits may be withdrawn from customs custody free of tax
for the use of the United States under subpart M of this part; and
spirits may be withdrawn from customs custody and transferred to a
distilled spirits plant, including a bonded alcohol fuel plant, without
payment of tax under subpart L of this part. After transfer pursuant to
subpart L, denatured spirits or fuel alcohol may be withdrawn free of
tax in accordance with part 19 of this chapter if they meet the
standards to conform either to a denatured spirits formula specified in
part 21 of this chapter (for withdrawal from a regular distilled
spirits plant) or a formula specified in Sec. 19.746 of this chapter
(for withdrawal from an alcohol fuel plant). Such withdrawal is
permitted, even though the denaturation or rendering unfit for beverage
use may have occurred, in whole or in part, in a foreign country. For
purposes of this chapter, the denaturation or rendering unfit is deemed
to have occurred at the distilled spirits plant (including the alcohol
fuel plant), the proprietor of which is responsible for compliance with
part 21 or Sec. 19.746, as the case may be. Imported fuel alcohol
shall also conform to the requirements of 27 CFR 19.742.

PART 28--EXPORTATION OF ALCOHOL

0
70. The authority citation for part 28 continues to read as follows:

Authority: 5 U.S.C. 552(a); 19 U.S.C. 81c, 1202; 26 U.S.C.
5001, 5007, 5008, 5041, 5051, 5054, 5061, 5121, 5122, 5201, 5205,
5207, 5232, 5273, 5301, 5313, 5555, 6302, 7805; 27 U.S.C. 203, 205,
44 U.S.C. 3504(h).

0
71. Section 28.157 is added to read as follows:

Sec. 28.157 Exportation by dealer in specially denatured spirits.

A dealer in specially denatured spirits who holds a permit under
part 20 of this chapter may export specially denatured spirits in
accordance with Sec. 20.183 of this chapter.

Signed: December 12, 2012.
John J. Manfreda,
Administrator.
Approved: April 14, 2013.
Timothy E. Skud,
Deputy Assistant Secretary (Tax, Trade and Tariff Policy).
[FR Doc. 2013-15262 Filed 6-26-13; 8:45 am]
BILLING CODE 4810-31-P

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