[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.

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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outdated specially denatured spirits formulas from the regulations, 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:
     http://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 http://www.regulations.gov. A link to this 
Regulations.gov docket is posted on the TTB Web site at http://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\
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    \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).
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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\
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    \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).)
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    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 http://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 
http://www.regulations.gov. A link to this Regulations.gov docket is 
available under Notice No. 136 on the TTB Web site at http://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 http://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 http://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