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| Montana Administrative Register Notice 42-2-872 | No. 23 12/08/2011 | |
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BEFORE THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA
TO: All Concerned Persons 1. On January 9, 2012, at 10:00 a.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, at Helena, Montana, to consider the adoptions of the above-stated rules. Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana. 2. The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Revenue no later than 5:00 p.m., January 3, 2012, to advise us of the nature of the accommodation that you need. Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected]. 3. The department is proposing to adopt these new rules to implement Senate Bill 389 enacted by the 2011 Legislature in order to be compliant with the administration of the alcohol beverage code. It is the policy of the state of Montana through the Montana Alcoholic Beverage Code to ensure the entire control of the manufacture, sale, importation, and distribution of alcohol beverages within the state for the protection of public health and safety. These new rules seek to increase the beer and distilled spirits manufacturers' understanding of the process to acquire, use, and account for alcohol or ingredients containing alcohol from an external source for the use in the manufacturing process to reduce confusion, increase consistency, and to protect public health and safety. 4. The proposed new rules do not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rules provide as follows: NEW RULE I DEFINITIONS The following definition applies to a term used in this subchapter: (1) "Flavors and nonbeverage ingredients containing alcohol" means any intermediate product containing alcohol that is used in the production of beer. AUTH: 16-1-303, MCA IMP: 16-1-401, 16-1-404, 16-3-214, MCA REASONABLE NECESSITY: The department is proposing to adopt New Rule I to define the term "flavors and nonbeverage ingredients containing alcohol" as it is used in the rules contained in this subchapter. The department is including the definition to make it clear and easy for the brewer to understand the term's meaning and to emphasize that all intermediate products containing alcohol are included within this definition. NEW RULE II USE OF FLAVORS AND NONBEVERAGE INGREDIENTS CONTAINING ALCOHOL IN THE MANAFACTURING OF BEER (1) A brewery licensed by the department and located in Montana that uses flavors and other nonbeverage ingredients containing alcohol in their blending and manufacturing processes is required to request such products through the department on a form supplied by the department. (2) The department will process the request and notify the supplier, specified by the brewery, of the quantities and sizes of the various flavors and nonbeverage ingredients containing alcohol to be delivered to the brewery. (3) For beer with alcohol content of 6 percent or less alcohol by volume, flavors and other nonbeverage ingredients containing alcohol may contribute no more than 49 percent of the overall alcohol content of the finished product. (4) For beer with an alcohol content of more than 6 percent alcohol by volume, no more than 1.5 percent of the volume of the finished product may consist of alcohol derived from added flavors and other nonbeverage ingredients containing alcohol. (5) All brewery beer formulas, for beer containing flavors and other nonbeverage ingredients containing alcohol, must be approved by the Alcohol and Tobacco Tax and Trade Bureau (TTB), prior to state approval. Brewers requesting label approval by the state, for beer containing flavors and other nonbeverage ingredients containing alcohol, must include a copy of their TTB formula approval letter. (6) The brewery must keep all flavors and nonbeverage ingredients containing alcohol on its licensed premises. (7) Flavors and nonbeverage ingredients containing alcohol can only be used for blending and manufacturing purposes and may not be resold, transferred, or given away. A brewery must receive approval from the department to destroy or dispose of any flavors or nonbeverage ingredients containing alcohol. (8) A brewery must document and maintain records at their place of business of all flavors and nonbeverage ingredients containing alcohol used for blending and manufacturing purposes. The department may make an examination of any brewery's records and otherwise check the accuracy of the alcohol content of any malt beverage manufactured by the brewery.
AUTH: 16-1-303, MCA REASONABLE NECESSITY: The department is proposing to adopt New Rule II to provide guidance to the breweries on the proper use of flavors and nonbeverage ingredients containing alcohol for manufacturing purposes. These rules ensure the entire control of the importation, storage, and use of these ingredients protect the health and safety of Montana citizens. The department finds that it is in the best interest of the state to regulate these alcoholic ingredients consistent with the Montana Alcoholic Beverage Code, due to the high alcohol content and potential harm these alcoholic ingredients could cause if not properly used and accounted for. Section (1) is proposed to ensure these types of ingredients are controlled in a manner that is consistent with alcoholic beverages to protect public health and safety. Section (2) is proposed to reduce confusion and increase consistency by establishing a uniform process for all breweries to request flavors and nonbeverage ingredients containing alcohol. Sections (3) and (4) are proposed to increase the brewer's understanding of the federal requirements by mirroring the Code of Federal Regulations (27 CFR 25.15 Materials for the Production of Beer). Section (5) is proposed to ensure the product is properly classified and has been approved by the Alcohol and Tobacco Tax and Trade Bureau. Sections (6), (7), and (8) are proposed to protect public health and safety by ensuring that all flavors and nonbeverage ingredients containing alcohol, imported for blending and manufacturing purposes, are properly accounted for.
NEW RULE III USE OF OUTSOURCED ALCOHOL IN THE MANUFACTURING OF DISTILLED SPIRITS (1) A distillery or microdistillery licensed by the department and located in Montana that uses alcohol from another distilled spirits plant in order to distill, rectify, blend, or manufacture its own alcoholic beverages is required to request such products through the department on a form supplied by the department. (2) A distillery or microdistillery may only obtain alcohol from sources authorized by the federal government, such as an entity that holds a basic permit or industrial permit. (3) The department will process the request and notify the distilled spirits plant, specified by the distillery or microdistillery, of the quantities, proof, and sizes of alcohol to be delivered to the distillery or microdistillery. (4) The distillery or microdistillery may not bottle and sell alcohol acquired from the distilled spirits plant without using it in their own distilling, rectifying, blending, or manufacturing process first. (5) The distillery or microdistillery must keep all alcohol acquired from a distilled spirits plant on the licensed premises and may not resell, transfer, or give away the alcohol. A distillery or microdistillery must receive approval from the department to destroy or dispose of any alcohol the distillery or microdistillery acquired from another distilled spirits plant. (6) A distillery or microdistillery must document and maintain records at their place of business of all alcohol acquired from a distilled spirits plant. The department may make an examination of any distillery or microdistillery's records as it pertains to this section.
AUTH: 16-1-303, MCA IMP: 16-1-401, 16-1-404, 16-3-214, MCA REASONABLE NECESSITY: The department is proposing to adopt New Rule III to provide guidance to the distilleries and microdistilleries concerning the use of outsourced alcohol for manufacturing purposes. These rules ensure the entire control of the importation, storage, and use of alcohol to protect the welfare, health, and safety of the citizens of Montana. Section (1) is proposed to protect public health and safety by eliminating unregulated alcohol from entering the state of Montana. Section (2) is proposed to ensure the outsourced alcohol has been properly manufactured and acknowledged by the federal government. Section (3) is proposed to reduce confusion and increase consistency by establishing a uniform process for distilleries and microdistilleries to request alcohol from an external source. Section (4) is proposed to ensure distilleries and microdistilleries are in compliance with the Montana Alcoholic Beverage Code. Sections (5) and (6) are proposed to ensure public health and safety by requiring all alcohol imported for distilling, rectifying, blending, and manufacturing purposes is properly accounted for. 5. Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail [email protected] and must be received no later than January 13, 2012. 6. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing. 7. An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov. Locate "Legal Resources" in the left hand column, select the "Rules" link and view the options under the "Notice of Proposed Rulemaking" heading. The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems. 8. The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding particular subject matter or matters. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the person in 5 above or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue. 9. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill, SB 389, sponsor, Senator Kendall Van Dyk was notified on June 13, 2011, by regular mail, and subsequently notified on November 16, 2011, by regular mail, and again on November 23, 2011, by electronic mail. /s/ Cleo Anderson /s/ Dan R. Bucks CLEO ANDERSON DAN R. BUCKS Rule Reviewer Director of Revenue Certified to Secretary of State November 28, 2011
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