On December 3, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a proposed rulemaking aimed at modernizing and streamlining permit application and reporting requirements for distilled spirits plants (DSPs), wineries, importers, wholesalers, alcohol beverage dealers, and other permittees. TTB’s proposed changes are good for the industry because they will reduce the regulatory burden imposed by the application process and certain reporting requirements associated with those permits. Below is a summary of the key proposed changes. Industry members are welcome to submit comments via the Regulations.gov website or via postal mail on or before February 1, 2022.

  1. Eliminate Certain Operational Information Required to Apply for a DSP Registration.
    • TTB proposes to eliminate the requirement that an applicant intending to operate as a distiller submit a statement as to whether spirits will be redistilled and reference formula requirements associated with such redistillation.
    • TTB proposes to eliminate the requirement that an applicant intending to operate as a warehouseman submit a narrative description of its storage system and a statement of the total amount of bulk wine gallons that can be stored.
    • TTB proposes to eliminate the requirement that an applicant intending to operate as a processor submit a narrative description of the storage system for spirits bottled and cased, or otherwise packaged and placed in approved containers for removal from the bonded premises.
    • TTB proposes to eliminate the requirement that a DSP applicant provide the serial number of each tank, still, and condenser to be used by the DSP.
  1. Relax or Eliminate Requirements to Submit Information About the Premises and Security.
    • TTB proposes to remove the requirement to provide a description of the tract of land and to further clarify the specific information to be submitted in a DSP application as follows: (1) overall dimensions of the building(s) housing the DSP; (2) the dimensions of the bonded premises and any general premises; (3) any internal walls establishing the boundaries of the bonded premises and general premises; (4) the external doors of the DSP premises; (5) any portions of the plant premises that are outdoors, including the location of any outdoor tanks; and (6) any adjacent retail premises that are to be operated by the applicant.
    • TTB proposes to no longer require the DSP proprietor to describe in detail “any material change in the construction or use of buildings or equipment,” but instead require the reporting of changes to the premises that would render inaccurate the description submitted with the registration, or submitted separately or previously by the proprietor with another amendment. The change described would be subsequently incorporated into the next submission of an application for amended registration where such amendment would not otherwise require submission of a premises description.
    • TTB proposes to eliminate detailed plant security statement requirements and to instead require that an application for registration as a DSP include a certification that the plant’s security will be compliant. TTB also proposes to replace current lock specification requirements with a requirement that the locks used to secure the plant be of a class and construction that is usual and customary in the industry to secure commercial property.
  1. Standardize and Clarify Ownership and Applicant Business Information.
    • TTB proposes amendments to statement of interest regulations affecting DSP registrations and operating permits, large alcohol fuel plant permits, specially denatured spirits dealer and user permits, and tax-free alcohol user permits. The proposed changes provide that (1) the requirement to disclose basic identifying information (e.g., names and addresses) of persons with an ownership interest, applies to persons with an ownership interest of 10% or more; and (2) where a “person” holding such an interest is a legal entity other than an individual, the applicant must provide the name, title, and place of residence (city and state) of a representative individual for that entity. The representative individual generally will be the individual designated by the entity to represent the entity’s interest in the applicant business or, in the absence of a designated individual, an owner, chief officer or manager, or person with similar authority within the entity.
    • TTB proposes other changes to incorporate the description of ownership interests described above into requirements for reporting changes in ownership interests and criteria for qualification or denial of permits.
  1. Extend the 30-Day Filing Requirements for Certain Business Changes.
    • TTB proposes to extend the deadline for reporting certain changes in a permitted business by DSPs, vinegar plants, alcohol fuel plants, dealers or users of denatured alcohol and rum, users of tax-free industrial alcohol, and alcohol beverage dealers, to 60 days. These changes include, among others, a change to a list of officers, directors, members, managers, or principal persons provided in the application for a permit, a change in control of the business, or discontinuance of a business.
      • Industry members who hold both a basic permit under the Federal Alcohol Administration Act (FAA Act) and a registration under the Internal Revenue Code (IRC) (e.g., DSPs producing nonindustrial spirits) should be aware that any proposed changes only apply to timeframes applicable to the registration issued under the IRC. Thus, DSPs may still be required to report changes within 30 days under the IRC.
    • TTB proposes to remove the requirement that a DSP proprietor notify TTB if any change is made to a plant security statement.
    • TTB proposes changes to clarify that when an IRC or FAA Act permit remains in effect pending final TTB action on a new application for such a permit necessitated by a business change, the approved notice of registration associated with that permit also remains valid during that time.
  1. Changes in Trade Names As a Notification, Rather Than an Amendment.
    • TTB proposes to allow FAA Act basic permittees, DSP operating permittees, specially denatured spirits user and dealer permittees, tax-free alcohol user permittees, and alcohol beverage dealers, to submit a notification for changes to trade names, rather than submit an amended permit or registration.
    • TTB proposes to remove the requirement that an applicant for an original DSP operating permit submit supporting documentation for the trade names identified in the application.
    • These changes would allow industry members to immediately begin operating under a new trade name, under federal law, after notifying TTB.
  1. Allow Retention of Records Off-Premises.
    • TTB proposes to amend 27 CFR parts 17, 20, 22, 26, 27, 28, and 31, to allow the storage of records at a location other than the permitted premises, and to allow applicants to notify TTB of their intention to store records at an off-premises location as part of the application process. The required records would still need to be made available at the permitted premises upon request, but copies (including electronic copies), would satisfy the requirement.
    • TTB proposes to also allow TTB-regulated manufacturers of nonbeverage products, specially denatured spirits dealers and users, tax-free alcohol users, importers, wholesalers, and alcohol beverage dealers, to keep records at the premises or at a central recordkeeping location maintained by the permittee, similar to what is already allowed for DSP proprietors.