BEFORE THE DEPARTMENT OF REVENUE
OF THE STATE OF MONTANA
In the matter of the adoption of New Rule I and amendment of ARM 42.13.201, 42.13.203, and 42.13.401 relating to product approval for beer, wine, and hard cider products
TO: All Concerned Persons
1. On November 15, 2012, at 3 p.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 adoption and amendment 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 p.m., November 5, 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 firstname.lastname@example.org.
3. The department is proposing to adopt a new rule and amend current rules in order to protect the public's health and safety by creating a product approval process for beer, wine, and hard cider products. Alcoholic beverages are a mature product category and therefore should be marketed in an appropriate and responsible manner. In order to protect the public health and safety, it is necessary to have clear, concise rules to prevent unwarranted products from entering the market.
The proposed new rule is specific to wineries and wine importers who desire to introduce a new wine product into the state of Montana. This new rule will enhance wineries and wine importers knowledge of the label approval process and clarify when label and packaging information is required.
The labeling and packaging requirements in ARM 42.13.201 are proposed to protect the public's health and safety. For generations, alcoholic beverages were distinct and recognizably different from nonalcoholic beverages; however, new innovative products are being introduced that blur this distinction. New flavors, packaging types, and advertising methods are making it more difficult for an individual to differentiate an alcoholic product from a nonalcoholic product. The amendments in ARM 42.13.201 will help ensure that these products are not introduced into the state of Montana.
The proposed amendments to ARM 42.13.203 mirror the requirements in New Rule I but are specific to brewers and beer importers. The proposed rule also addresses the requirements for beer over 8.75 percent alcohol by volume. The proposed amendments are made to enhance the industry's knowledge of the beer approval process and to enhance the readability of the rule.
The department is proposing to amend ARM 42.13.401 to ensure wineries and wine importers are aware of the product approval process.
4. The proposed new rule does not replace or modify any section currently found in the Administrative Rules of Montana. The proposed new rule provides as follows:
NEW RULE I WINE LABEL APPROVALS (1) Each product a winery or wine importer desires to sell in the state of Montana must conform to the provisions of ARM 42.13.201.
(2) The department must receive picture copies of the label and packaging, from the winery or wine importer, in order to consider the product for approval.
(a) Changes to the label or packaging that requires TTB approval must be approved by the department prior to making the product available for sale in the state of Montana.
(b) A winery or wine importer that desires to sell wine that is subject to the labeling requirements administered by the U.S. Food and Drug Administration (FDA) must also supply copies of that label and packaging for approval to the department. Such products are wine beverages containing less than 7 percent alcohol by volume, including hard cider.
(3) The department will process the request and provide approval or denial to the winery or wine importer in writing within 30 days of receipt of all required information.
AUTH: 16-1-303, MCA
IMP: 16-1-101, 16-1-102, 16-1-106, 16-1-303, 16-4-107, MCA
REASONABLE NECESSITY: The department is proposing New Rule I to enhance wineries' and wine importers' knowledge of the labeling and packaging requirements in ARM 42.13.201. It further coordinates the department's approval process with the requirements for products regulated by the FDA. This language will reduce confusion and increase the understanding of the approval process for the industry.
5. The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:
42.13.201 LABELING AND PACKAGING REQUIREMENTS (1)
No As a condition of holding a retail license, no retail licensee shall sell, offer for sale, or deliver provide any liquor (distilled spirits beer, wine, or malt beverages) hard cider unless the containers thereof label and packaging are marked, branded, or labeled in conformity with this rule and ARM 42.13.221.
Alcohol content by volume must be noted on the labels of all packaged malt beverages sold or manufactured in Montana, with an alcohol content of more than 8.75% alcohol by volume. Alcoholic beverage products are a mature product category, restricted by law to only consumers age 21 and older and who are not intoxicated, and therefore should be marketed in a responsible and appropriate manner. The department, in its discretion and on a case-by-case basis, will not approve a beer, wine, or hard cider label or package that:
(a) blurs the distinction between an alcoholic and nonalcoholic product by utilizing labeling, packaging, and/or containers that emphasize features that are most commonly associated with nonalcoholic consumable products including, but not limited to:
(i) aerosol cans;
(ii) gelatin cups;
(iii) hollow candies; or
(iv) mason jars that contain fruit;
(b) uses flavors that are most commonly associated with underage persons, such as:
(i) cotton candy; or
(ii) bubble gum; or
(c) contains graphics or elements that:
(i) are most commonly associated with underage persons;
(ii) minimizes, fails to identify, or disguises the product's alcohol content; or
(iii) alludes to or suggests irresponsible, excessive, or underage consumption.
(3) The department will notify the winery, wine importer, brewer, or beer importer of any products that do not conform to the requirements in (2). The winery, wine importer, brewer, or beer importer must remove the product from the Montana market within 60 days of being notified by the department.
AUTH: 16-1-303, MCA
IMP: 16-1-101, 16-1-102, 16-1-106, 16-1-303, MCA
REASONABLE NECCESITY: The department is proposing to amend ARM 42.13.201 to protect the public health, welfare, and safety of the people of Montana from beer, wine, and hard cider products that emphasize features normally associated with nonalcoholic products, minimize the alcohol content, appeal to underage consumers, or allude to irresponsible consumption.
The department is proposing to amend the title to add the words "and packaging," because more information is needed than the label in approving products from a health and safety perspective. Containers and advertising methods are evolving beyond what was used in the past to attract new customers, and some labels and packaging can cause a product to be particularly attractive to persons who are specifically prohibited by law from acquiring or consuming the product. These features also make it more difficult for individuals to determine an alcoholic product from a nonalcoholic product.
The stricken language in (2) is being transferred to ARM 42.13.203, as that rule specifically mentions the requirement for beer containing more than 8.75 percent alcohol by volume. The new language in (2), including (2)(a) through (2)(c) is being proposed to protect the public health, welfare, and safety of Montana citizens. Alcoholic beverages are unique products that require high standards in the way they are marketed. The provisions set forth in this rule are several of the same philosophies found in both the Wine Institute's Code of Advertising Standards and the Beer Institute's Advertising and Marketing Code. In addition, the proposed amendments in (2) are similar to rules that already exist for liquor products as specified in ARM 42.11.402.
The new language in (3) is proposed to enhance the industry's knowledge of the process by which the department will undertake for products found in the market place that do not meet the proposed requirements.
42.13.203 BEER LABEL APPROVALS (1) Each product a brewer or beer importer desires to sell in the state of Montana must conform to the provisions of ARM 42.13.201.
(2) Except as provided in (a),
a brewer or beer importer who wishes to sell beer in the state must provide labels for each brand to the department for approval prior to selling or distributing beer within the state the department must receive picture copies of the label and packaging, from the brewer or beer importer, in order to consider the product for approval. All label changes must be preapproved for both in-state and out-of-state brewers or importers.
(a) A brewer
or beer importer of malted beverages who is not subject to the labeling provisions in the regulations of the Tobacco Tax and Trade Bureau (TTB), United States Department of the Treasury as set forth in 27 CFR, as revised on April 1, 2009, has an annual nationwide production of less than 10,000 barrels is not required to provide the department with labels copies of the label and packaging.
(b) Changes to the label or packaging that require Tobacco Tax and Trade Bureau (TTB) approval must be approved by the department prior to making the product available for sale in the state of Montana.
(c) A brewer or beer importer that desires to sell beer that is subject to the labeling requirements administered by the U.S. Food and Drug Administration (FDA) must also supply copies of that label and packaging to the department for approval. Such products are a fermented beverage that qualifies as a beer under the Internal Revenue Code (other than sake or similar products) but that is made without both malted barley and hops.
(2)(3) Beer containing more than 8.75 % percent but not more than 14 percent alcohol by volume must:
(a) be approved by the department prior to being sold or distributed within the state
.; Beer containing more than 8.75% alcohol by volume must
(b) be made by the alcoholic fermentation of an infusion or decoction, or a combination of both, in potable brewing water, of malted cereal grain, in which the sugars used for fermentation of the alcoholic beverage are at least 75
% percent derived from malted cereal grain measured as a percentage of the total dry weight of the fermentable ingredients; and
(c) note the alcohol content by volume on the label.
(3)(4) To obtain approval from the department for all beer or formula changes that meet the criteria in (2)(3), the following documents are required:
(a) The brewer or beer importer must file a form,
BeerSS, a sworn statement supplied by the department, attesting that the formula meets the requirements in (2)(3).
(b) If the brewer or beer importer is required by federal law or regulations to file its formula with TTB, the brewer or beer importer is also required to send a copy of the formula filed with the TTB to the department.
(c) At the department's request and sole discretion, brewers or beer importers must file a formula for verification of its compliance with Montana statutes.
(d) All formulas filed with the department are protected by the privacy act and will not be released by the department unless otherwise required by law or by court order.
(4) A cover letter requesting approval of the labels and formulations shall be sent to the Liquor Control Division, P.O. 1712, Helena, MT 59624.
(5) The department will process the request and provide approval or denial in writing within 30 days of receipt of all required information.
AUTH: 16-1-303, MCA
IMP: 16-1-302, 16-4-105, MCA
REASONABLE NECCESITY: The department is proposing to amend ARM 42.13.203 to enhance brewers' and beer importers' knowledge of the labeling and packaging requirements in ARM 42.13.201.
Section (2) is being amended to indicate that copies of labels and packaging are needed as it is a component of the approval process. This coincides with the requirements in ARM 42.13.201 and creates continuity between the rules. The amendment to (2)(a) provides an exemption to the labeling requirements for small brewers with production of less than 10,000 barrels.
The language in (3) is being amended by reorganizing the language to enhance the readability of the rule. In addition, the language in (3)(c) was transferred from ARM 42.13.201 as it applies to beer with an alcohol content of more than 8.75 percent alcohol by volume.
The language in (4)(a) is being amended to remove the specific name of the form. This amendment will reduce any confusion, if the form happens to change names in the future.
The current language in (4) is being stricken as a cover letter is not needed during the approval process. In addition, the form supplied by the department includes a mailing address where the applicable information is to be sent.
The language in (5) is being amended to enhance the industry's knowledge that a decision will not be made until all required information is submitted to, and approved by, the department.
42.13.401 IMPORTATION OF WINE (1) Each winery or importer desiring to ship table wines to licensed distributors within the state must submit an application for registration to the department as specified in 16-4-107, MCA. Each application must be accompanied by
a the applicable registration fee applicable shown in (2) and a copy of each product label the winery or importer intends to ship into the state. Approval will be granted by the department annually on or before October 1. The department must be notified in writing of any changes, additions, or deletions in product line prior to distribution in Montana. Each product the winery or importer desires to ship must conform to the provisions of ARM 42.13.201.
(2) The registration fee shall be as follows:
(a) 0-60 cases no charge;
(b) 61-500 cases = $25;
(c) 501-1000 cases = $50;
(d) 1001-1500 cases = $100;
(e) 1501-2000 cases = $200; or
(f) 2001 + cases = $400.
(3) remains the same.
AUTH: 16-1-303, MCA
IMP: 16-4-107, MCA
REASONABLE NECCESITY: The department is proposing to amend ARM 42.13.401 to enhance wineries' and wine importers' knowledge of the product approval requirements in ARM 42.13.201. The stricken language in (1) pertains to the product approval process which is part of New Rule I.
The proposed amendments in (2) are for format purposes only.
6. 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@example.com and must be received no later than November 26, 2012.
7. Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.
8. An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov. Select the "Legal Resources" link in the left hand column, and click on the "Rules" link within to view the options under the "Current Rule Actions – Published Notices" 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. While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable due to system maintenance or technical problems.
9. 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 notice 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 6 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.
10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.
/s/ Cleo Anderson /s/ Dan R. Bucks
CLEO ANDERSON DAN R. BUCKS
Rule Reviewer Director of Revenue
Certified to Secretary of State October 15, 2012