Federal Register / Vol. 73, No. 139 / Friday, July 18, 2008 / Rules and Regulations 41259

accordance with Executive Order 13132, DEPARTMENT OF THE TREASURY § 1.881–5T [Removed] it is determined that this amendment I Par. 2. Section 1.881–5T is removed. does not have sufficient federalism Internal Revenue Service implications to require consultations or LaNita Van Dyke, warrant the preparation of a federalism 26 CFR Part 1 Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief summary impact statement. Executive [TD 9391] Order 12372, regarding Counsel, (Procedure and Administration). intergovernmental consultation on RIN 1545–BF85 [FR Doc. E8–16305 Filed 7–17–08; 8:45 am] Federal programs and activities, does BILLING CODE 4830–01–P Source Rules Involving U.S. not apply to this amendment. Executive Order 12866: This Possessions and Other Conforming amendment is exempt from the review Changes; Correction DEPARTMENT OF THE TREASURY under Executive Order 12866, but has AGENCY: Internal Revenue Service (IRS), Alcohol and Tobacco Tax and Trade been reviewed internally by the Treasury. Department of State to ensure Bureau ACTION: Correcting amendment. consistency with the purposes thereof. Executive Order 12988: The SUMMARY: This document contains a 27 CFR Parts 7, 16, and 25 Department of State has reviewed the correction to final regulations (TD 9391) [TTB Ruling 2008–3] proposed regulations in light of sections that were published in the Federal 3(a) and 3(b)(2) of Executive Order Register on Wednesday, April 9, 2008 Classification of Brewed Products as 12988 to eliminate ambiguity, minimize (73 FR 19350) providing rules under ‘‘Beer’’ Under the Internal Revenue litigation, establish clear legal section 937(b) of the Internal Revenue Code of 1986 and as ‘‘Malt Beverages’’ standards, and reduce burden. Code for determining whether income is Under the Federal Alcohol Paperwork Reduction Act: This rule derived from sources within a U.S. Administration Act does not impose any new reporting or possession or territory specified in recordkeeping requirements subject to AGENCY: Alcohol and Tobacco Tax and section 937(a)(1) (generally referred to Trade Bureau, Treasury. the Paperwork Reduction Act, 44 U.S.C. in this preamble as a ‘‘territory’’) and ACTION: Chapter 35. whether income is effectively connected Ruling on the classification of brewed products. List of Subjects in 22 CFR Part 122 with the conduct of a trade or business within a territory. Arms and munitions, Exports, SUMMARY: This document reproduces a Reporting and recordkeeping DATES: This correction is effective July ruling issued by the Alcohol and requirements. 18, 2008, and is applicable on April 9, Tobacco Tax and Trade Bureau on July 2008. I Accordingly, for the reasons set forth 7, 2008, to clarify that that certain above, Title 22, Chapter I, Subchapter FOR FURTHER INFORMATION CONTACT: J. brewed products classified as ‘‘beer’’ M, Part 122 is amended as follows: David Varley, (202) 622–7790 (not a toll- under the Internal Revenue Code of free number). 1986 do not meet the definition of a PART 122—REGISTRATION OF SUPPLEMENTARY INFORMATION: ‘‘malt beverage’’ under the Federal MANUFACTURERS AND EXPORTERS Alcohol Administration Act. Background DATES: The ruling was effective on July I 1. The authority citation for Part 122 The final regulations and removal of 7, 2008. continues to read as follows: temporary regulations that are the FOR FURTHER INFORMATION CONTACT: Authority: Secs. 2 and 38, Public Law subjects of this document are under Ramona Hupp, Regulations and Rulings 90–629, 90 Stat. 744 (22 U.S.C. 2752, 2778); sections 1, 170A, 861, 871, 876, 881, Division, Alcohol and Tobacco Tax and E.O. 11958, 42 FR 4311, 1977 Comp. p. 79, 884, 901, 931, 932, 933, 934, 935, 937, Trade Bureau, 1310 G Street, NW., 22 U.S.C. 2651a. 957, 1402, 6012, 6038, 6046, 6688, and Room 200–East, Washington, DC 20220; I 2. Section 122.3 is amended by 7701 of the Internal Revenue Code. telephone (202) 927–2166. revising paragraphs (a) and (b) to read Need for Correction SUPPLEMENTARY INFORMATION: On July 7, as follows: 2008, the Alcohol and Tobacco Tax and As published, final regulations (TD § 122.3 Registration fees. Trade Bureau (TTB) issued TTB Ruling 9391) contain an error that may prove to 2008–3 to clarify that certain brewed (a) A person who is required to be misleading and is in need of products classified as ‘‘beer’’ under the register may do so for a period of 1 year clarification. Internal Revenue Code of 1986 do not upon submission of a completed Form List of Subject in 26 CFR Part 1 meet the definition of a ‘‘malt beverage’’ DS–2032, transmittal letter and payment under the Federal Alcohol of $1,750. Income taxes, Reporting and Administration Act. We made this (b) Expiration of registration. A recordkeeping requirements. ruling available through the TTB Web registrant must submit its request for Correction of Publication site on July 8, 2008. This ruling is registration renewal at least 30 days but reproduced below: no earlier than 60 days prior to the I Accordingly, 26 CFR part 1 is expiration date. corrected by making the following TTB Ruling 2008–3 * * * * * correcting amendment: Classification of Brewed Products as Dated: July 3, 2008. PART 1—INCOME TAXES ‘‘Beer’’ Under the Internal Revenue John C. Rood, Code of 1986 and as ‘‘Malt Beverages’’ Acting Under Secretary for Arms Control and I Paragraph 1. The authority citation Under the Federal Alcohol International Security, Department of State. for part 1 continues to read, in part, as Administration Act [FR Doc. E8–16537 Filed 7–17–08; 8:45 am] follows: In recent months, the Alcohol and BILLING CODE 4701–25–P Authority: 26 U.S.C. 7805 * * * Tobacco Tax and Trade Bureau (TTB)

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has received inquiries from brewers Chapter 51 of the IRC, section 5051 (26 It should be noted that sake´ and regarding the labeling standards that U.S.C. 5051) imposes a tax on all beer similar products are included within the apply to beers produced from brewed or produced, and removed for definition of ‘‘beer’’ under the IRC. See substitutes for malted barley, such as consumption or sale, within the United 26 U.S.C. 5052(a). However, sake´ is also rice or corn. We also have fielded States, or imported into the United included within the definition of a wine questions from brewers and importers States. Section 5412 of the IRC (26 under the FAA Act, which, among other regarding the appropriate labeling of U.S.C. 5412) provides that beer may be things, covers only wines with an beers that are made without hops. This removed from the brewery for alcohol content of at least seven percent ruling explains the statutory criteria for consumption or sale only in hogsheads, alcohol by volume. See 27 U.S.C. classification of products as ‘‘beer’’ and packages, and similar containers, 211(a)(6). Thus, sake´ and similar ‘‘malt beverages’’ under the applicable marked, branded, or labeled in such products with an alcohol content of at laws and regulations. manner as the Secretary of the Treasury least seven percent alcohol by volume may by regulation require. Regulations are subject to the labeling and other Laws and Regulations that implement the Chapter 51 requirements of the FAA Act. Federal Alcohol Administration Act provisions pertaining to beer are set TTB Jurisdiction Over These Products Sections 105(e) and (f) of the Federal forth in part 25 of the TTB regulations (27 CFR part 25) and include, in Beers (other than sake´ and similar Alcohol Administration Act (FAA Act), products) that do not conform to the 27 U.S.C. 205(e) and (f), vest broad § 25.142 (27 CFR 25.142), label requirements for beer in bottles. definition of a ‘‘malt beverage’’ in the authority in the Secretary of the FAA Act are outside the scope of the Section 5052(a) of the IRC (26 U.S.C. Treasury to prescribe regulations with FAA Act and, therefore, are not subject 5052(a)) defines the term ‘‘beer,’’ for respect to the labeling and advertising of to the labeling, advertising, and other purposes of Chapter 51, as ‘‘beer, ale, wine, distilled spirits, and malt provisions of the TTB regulations porter, stout, and other similar beverages that are introduced into promulgated under the FAA Act. This fermented beverages (including sake´ or interstate or foreign commerce or means, among other things, that brewers similar products) of any name or imported into the United States. Section and importers of such products are not description containing one-half of 1 105(e) also provides that no person may required to obtain a certificate of label percent or more of alcohol by volume, bottle, or remove from customs custody approval for these beers. in bottles, distilled spirits, wine, or malt brewed or produced from malt, wholly Brewery products that are not malt beverages unless he has obtained a or in part, or from any substitute beverages under the FAA Act but that certificate of label approval issued in therefor.’’ The same definition appears conform to the IRC definition of ‘‘beer’’ accordance with regulations prescribed in the TTB regulations at 27 CFR 25.11. are still subject to all applicable by the Secretary. Regulations that In addition, with reference to what may requirements of the IRC and part 25 of implement the provisions of §§ 105(e) be a substitute for malt, § 25.15(a) of the the TTB regulations, including the and (f), as they relate to malt beverages, TTB regulations (27 CFR 25.15(a)) states labeling of bottles (§ 25.142) and the are set forth in part 7 of the TTB that ‘‘[o]nly rice, grain of any kind, bran, approval of formulas (27 CFR 25.55). regulations (27 CFR part 7), Labeling glucose, sugar, and molasses are Furthermore, all alcohol beverages and Advertising of Malt Beverages. In substitutes for malt.’’ containing not less than one-half of one the case of malt beverages, the labeling ‘‘Beer’’ versus ‘‘Malt Beverage’’ percent alcohol by volume and intended provisions of the FAA Act apply only if for human consumption are subject to the laws of the State into which the malt As indicated above, the definition of the Government health warning beverages are shipped impose similar a ‘‘beer’’ under the IRC differs from the statement requirements of the Alcoholic requirements. definition of a ‘‘malt beverage’’ under Beverage Labeling Act of 1988 (the Section 117(a)(7) of the FAA Act (27 the FAA Act in several significant ABLA, codified at 27 U.S.C. 213 through U.S.C. 211(a)(7)) defines the term ‘‘malt respects. First, the IRC does not require 219 and 219a) and the ABLA beverage’’ as ‘‘a beverage made by the beer to be fermented from malted barley; implementing regulations in part 16 of alcoholic fermentation of an infusion or instead, a beer may be brewed or the TTB regulations (27 CFR part 16). decoction, or combination of both, in produced from malt or ‘‘from any In cases where a brewery product potable brewing water, of malted barley substitute therefor.’’ Second, the IRC (other than sake´ and similar products) with hops, or their parts, or their does not require the use of hops in the fails to meet the definition of a ‘‘malt products, and with or without other production of beer. Third, the definition beverage’’ under the FAA Act, the malted cereals, and with or without the of ‘‘beer’’ in the IRC provides that the product will be subject to ingredient addition of unmalted or prepared product must contain one-half of one and other labeling requirements cereals, other carbohydrates or products percent or more of alcohol by volume, administered by the U.S. Food and Drug prepared therefrom, and with or without whereas there is no minimum alcohol Administration (FDA). As reflected in the addition of carbon dioxide, and with content for a ‘‘malt beverage’’ under the the 1987 Memorandum of or without other wholesome products FAA Act. Understanding between FDA and TTB’s suitable for human food consumption.’’ Accordingly, a fermented beverage predecessor agency, the Bureau of The same definition appears in the TTB that is brewed from a substitute for malt Alcohol, Tobacco and Firearms (ATF), regulations at 27 CFR 7.10. (such as rice or corn) but without any TTB is responsible for the promulgation malted barley may constitute a ‘‘beer’’ and enforcement of regulations with Internal Revenue Code of 1986 under the IRC but does not fall within respect to the labeling of distilled Chapter 51 of the Internal Revenue the definition of a ‘‘ malt beverage’’ spirits, wines, and malt beverages Code of 1986 (IRC) sets forth excise tax under the FAA Act. Similarly, a pursuant to the FAA Act. Importantly, collection and related provisions fermented beverage that is not brewed however, in cases where an alcohol pertaining to distilled spirits, wines, with hops may fall within the IRC beverage is not covered by the labeling and beer; these provisions and the definition of ‘‘beer’’ but also falls provisions of the FAA Act, the product regulations promulgated thereunder are outside of the definition of a ‘‘malt is subject to ingredient and other also administered by TTB. Within beverage’’ under the FAA Act. labeling requirements under the Federal

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Food, Drug, and Cosmetic Act, and the Dated: July 7, 2008. SUPPLEMENTARY INFORMATION: implementing regulations that are John J. Manfreda, Regulatory Information administered by FDA. Administrator. On April 25, 2008, we published a Required Quantities of Malted Barley Dated: July 14, 2008. notice of proposed rulemaking (NPRM) and Hops to Qualify as a Malt Beverage John J. Manfreda, entitled Regattas and Marine Parades; Under the FAA Act Administrator. Great Lakes Annual Marine Events, in TTB and its predecessor agency have [FR Doc. E8–16413 Filed 7–17–08; 8:45 am] the Federal Register (73 FR 22303). We previously provided guidance on the BILLING CODE 4810–31–P received 0 letters commenting on the minimum quantities of malted barley proposed rule. No public meeting was and hops required to be used in the requested, and none was held. production of malt beverages. In 1994, DEPARTMENT OF HOMELAND Under 5 U.S.C. 553(d)(3), the Coast the Bureau of Alcohol, Tobacco and SECURITY Guard finds that good cause exists for Firearms (ATF) issued ATF Compliance making this rule effective less than 30 Matters 94–1, which provided that beers Coast Guard days after publication in the Federal fermented from at least 25 percent Register. Delaying this rule would be malted barley (calculated as the 33 CFR Part 100 contrary to the public interest of percentage of malt, by weight, compared [USCG–2008–0220] ensuring the safety and security of the to the total dry weight of all ingredients spectators and participants during this contributing fermentable extract to the RIN 1625–AA00 event and immediate action is necessary base product) and made with at least to prevent possible loss of life or 1 Regattas and Marine Parades; Great 7 ⁄2 pounds of hops (or the equivalent property. thereof in hop extracts or hop oils) per Lakes Annual Marine Events Background and Purpose 100 barrels were ‘‘malt beverages’’ AGENCY: Coast Guard, DHS. under the FAA Act. Because neither the ACTION: Final rule. This rule will remove the specific FAA Act nor the implementing entries from table 1 found in 33 CFR regulations in 27 CFR part 7 prescribe SUMMARY: The Coast Guard is amending 100.901, Great Lakes annual marine minimum standards for the amount of special local regulations for annual events that apply to regattas and marine malted barley used in the production of regattas and marine parades in the parades in the Captain of the Port a malt beverage, we are now Captain of the Port Detroit zone. This Detroit zone and list each regatta or reconsidering this guidance. rule is intended to ensure safety of life marine parade as a subpart. This rule Pending a decision on whether to on the navigable waters immediately will also add several regattas and engage in rulemaking on this issue, TTB prior to, during, and immediately after marine parades not previously listed in will continue to address inquiries from regattas or marine parades. This rule 33 CFR Part 100 and remove several brewers regarding the classification of will establish restrictions upon, and events that no longer occur annually or fermented beverages that contain hops control movement of, vessels in a are not regattas or marine parades. and malted barley, but are made from specified area immediately prior to, Discussion of Comments and Changes less than 25 percent malted barley or during, and immediately after regattas less than 71⁄2 pounds of hops per 100 or marine parades. No comments were received and no barrels. For example, we recently DATES: This rule is effective July 18, changes were made to this rule. determined that a neutral malt beer base 2008. Regulatory Analyses containing a much lower amount of malted barley (one percent of the total ADDRESSES: Comments and material We developed this rule after dry weight of all ingredients received from the public, as well as considering numerous statutes and contributing fermentable extract to the documents mentioned in this preamble executive orders related to rulemaking. product) conformed to the definition of as being available in the docket, are part Below we summarize our analyses a ‘‘malt beverage.’’ of docket USCG–2008–0220 and are based on 13 of these statutes or Brewers and importers should contact available online at www.regulations.gov. executive orders. the Assistant Director, Advertising, This material is also available for Regulatory Planning and Review Labeling and Formulation Division, if inspection or copying at two locations: they have a question as to whether a The Docket Management Facility (M– This rule is not a ‘‘significant particular product falls within the 30), U.S. Department of Transportation, regulatory action’’ under section 3(f) of definition of a ‘‘malt beverage’’ and West Building Ground Floor, Room Executive Order 12866, Regulatory therefore is subject to the certificate of W12–140, 1200 New Jersey Avenue, SE., Planning and Review, and does not label approval and other requirements Washington, DC 20590, between 9 a.m. require an assessment of potential costs under the FAA Act. and 5 p.m., Monday through Friday, and benefits under section 6(a)(3) of that except Federal holidays and the U.S. Order. The Office of Management and TTB Holding Coast Guard, Sector Detroit, 110 Mt. Budget has not reviewed it under that Held, in order for a brewery product Elliot Ave., Detroit, MI 48207 between Order. to fall within the definition of a ‘‘malt 8 a.m. and 4 p.m., Monday through The Coast Guard’s use of these special beverage’’ under the FAA Act, it must Friday, except Federal holidays. local regulations will be periodic in be a fermented beverage made from both FOR FURTHER INFORMATION CONTACT: If nature, of short duration, and designed malted barley and hops, or their parts, you have questions on this rule, call to minimize the impact on navigable or their products. A fermented beverage CDR Joseph Snowden, Prevention, U.S. waters. These special local regulations that qualifies as a ‘‘beer’’ under the IRC Coast Guard Sector Detroit at (313) 568– will only be enforced immediately (other than sake´ or similar products) but 9580. If you have questions on viewing before and during the time the marine that is made without both malted barley the docket, call Renee V. Wright, events are occurring. Furthermore, these and hops is not subject to the Program Manager, Docket Operations, special local regulations have been requirements of the FAA Act. telephone (202) 366–9826. designed to allow vessels to transit

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