1513-0051Law and Regs.

1513-0051

26 U.S.C.

Sec. 5181. Distilled spirits for fuel use

(a) In general

(1) Purposes for which plant may be established

On such application and bond and in such manner as the Secretary

may prescribe by regulation, a person may establish a distilled

spirits plant solely for the purpose of--

(A) producing, processing, and storing, and

(B) using or distributing,

distilled spirits to be used exclusively for fuel use.

(2) Regulations

In prescribing regulations under paragraph (1) and in carrying

out the provisions of this section, the Secretary shall, to the

greatest extent possible, take steps to--

(A) expedite all applications;

(B) establish a minimum bond; and

(C) generally encourage and promote (through regulation or

otherwise) the production of alcohol for fuel purposes.

(b) Authority to exempt

The Secretary may by regulation provide for the waiver of any

provision of this chapter (other than this section or any provision

requiring the payment of tax) for any distilled spirits plant described

in subsection (a) if the Secretary finds it necessary to carry out the

provisions of this section.

(c) Special rules for small plant production

(1) Applications

(A) In general

An application for an operating permit for an eligible

distilled spirits plant shall be in such a form and manner, and

contain such information, as the Secretary may by regulations

prescribe; except that the Secretary shall, to the greatest

extent possible, take steps to simplify the application so as to expedite the issuance of such permits.

(B) Receipt of application

Within 15 days of receipt of an application under

subparagraph (A), the Secretary shall send a written notice of

receipt to the applicant, together with a statement as to

whether the application meets the requirements of subparagraph

(A). If such a notice is not sent and the applicant has a

receipt indicating that the Secretary has received an

application, paragraph (2) shall apply as if a written notice

required by the preceding sentence, together with a statement

that the application meets the requirements of subparagraph (A),

had been sent on the 15th day after the date the Secretary

received the application.

(C) Multiple applications

If more than one application is submitted with respect to

any eligible distilled spirits plant in any calendar quarter,

the provisions of this section shall apply only to the first

application submitted with respect to such plant during such

quarter. For purposes of the preceding sentence, if a corrected

or amended first application is filed, such application shall

not be considered as a separate application, and the 15-day

period referred to in subparagraph (A) shall commence with

receipt of the corrected or amended application.

(2) Determination

(A) In general

In any case in which the Secretary under paragraph (1)(B)

has notified an applicant of receipt of an application which

meets the requirements of paragraph (1)(A), the Secretary shall

make a determination as to whether such operating permit is to

be issued, and shall notify the applicant of such determination,

within 45 days of the date on which notice was sent under

paragraph (1)(B).

(B) Failure to make determination

If the Secretary has not notified an applicant within the

time prescribed under subparagraph (A), the application shall

be treated as approved.

(C) Rejection of application

If the Secretary determines under subparagraph (A) that a

permit should not be issued--

(i) the Secretary shall include in the notice to the

applicant of such determination under subparagraph (A)

detailed reasons for such determination, and

(ii) such determination shall not prejudice any further

application for such operating permit.

(3) Bond

No bond shall be required for an eligible distilled spirits

plant. For purposes of section 5212 and subsection (e)(2) of this

section, the premises of an eligible distilled spirits plant shall

be treated as bonded premises.

(4) Eligible distilled spirits plant

The term ``eligible distilled spirits plant'' means a plant

which is used to produce distilled spirits exclusively for fuel use

and the production from which does not exceed 10,000 proof gallons

per year.

(d) Withdrawal free of tax

Distilled spirits produced under this section may be withdrawn free

of tax from the bonded premises (and any premises which are not bonded

by reason of subsection (c)(3)) of a distilled spirits plant exclusively for fuel use as provided in section 5214(a)(12).

(e) Prohibited withdrawal, use, sale, or disposition

(1) In general

Distilled spirits produced under this section shall not be

withdrawn, used, sold, or disposed of for other than fuel use.

(2) Rendering unfit for use

For protection of the revenue and under such regulations as the

Secretary may prescribe, distilled spirits produced under this

section shall, before withdrawal from the bonded premises of a

distilled spirits plant, be rendered unfit for beverage use by the

addition of substances which will not impair the quality of the

spirits for fuel use.

(f) Definition of distilled spirits

For purposes of this section, the term ``distilled spirits'' does

not include distilled spirits produced from petroleum, natural gas, or

coal.

(Added Pub. L. 96-223, title II, Sec. 232(e)(1), Apr. 2, 1980, 94 Stat.

278.)

27 CFR

Sec. 19.910 Application for permit required.

Any person wishing to establish an alcohol fuel plant shall first

make application for and obtain an alcohol fuel producer's permit. The

application for a permit will be on Form 5110.74. The application, in

duplicate, will be submitted to the appropriate TTB officer. The

description of stills on the approved application constitutes

registration of stills as required by 27 CFR 196.45. Alcohol fuel

producers' permits are continuing unless automatically terminated under

Sec. 19.920, suspended or revoked as provided in Sec. 19.950, or

voluntarily surrendered.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1355, as amended (26 U.S.C. 5179);

sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.912 Small plants.

Persons wishing to establish a small plant shall apply for a permit

as provided in this section. Except as provided in paragraph (c) of

Sec. 19.913, operations may not be commenced until the permit has been

issued.

(a) Application for permit. The application (Form 5110.74) shall be

submitted to the appropriate TTB officer and shall set forth the

following information:

(1) Name and mailing address of the applicant, and the location of

the alcohol fuel plant if not apparent from the mailing address;

(2) A diagram of the plant premises and a statement as to the

ownership of the premises (if the premises are not owned by the

proprietor, the owner's consent to access by appropriate TTB officers

must be furnished);

(3) A description of all stills and a statement of their maximum

capacity;

(4) The materials from which spirits will be produced; and

(5) A description of the security measures to be used to protect

premises, buildings and equipment where spirits are produced, processed,

and stored.

(b) Bond. No bond is required for small plants.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.914 Medium plants.

Any person wishing to establish a medium plant shall make

application for and obtain in alcohol fuel producer's permit. Operations may not be commenced until the application has been approved and the permit issued.

(a) Application for permit. The application (Form 5110.74) shall be

submitted to the appropriate TTB officer and shall set forth the

following information:

(1) The information required by Sec. 19.912 (a);

(2) Statement of maximum total proof gallons of spirits that will be produced and received during a calendar year:

(3) Information identifying the principal persons involved in the

business and a statement as to whether the applicant or any such person

has ever been convicted of a felony or misdemeanor under Federal or

State law; and,

(4) Statement of the amount of funds invested in the business and

the source of those funds.

(b) Bond. A bond of sufficient penal sum, as prescribed in Sec.

19.957, is required. The bond must be submitted on Form 5110.56 and

approved before a permit may be issued.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.915 Large plants.

Any person wishing to establish a large plant shall make application for and obtain an alcohol fuel producer's permit. Operations may not be commenced until the application has been approved and the permit issued.

(a) Application for permit. The application (Form 5110.74) shall be

submitted to the appropriate TTB officer and shall set forth the

following information:

(1) The information required by Sec. 19.912(a);

(2) Statement of the maximum proof gallons of spirits that will be

produced and received during a calendar year;

(3) Information identifying the principal persons involved in the

business and a statement as to whether the applicant or any such person

has ever been convicted of a felony or misdemeanor under Federal or

State law;

(4) Statement of the amount of funds invested in the business and

the source of those funds;

(5) Statement of the type of business organization and of the

persons interested in the business, supported by the items of

information listed in Sec. 19.916; and,

(6) List of the offices, the incumbents of which are authorized by

the articles of incorporation or the board of directors to act on behalf of the proprietor or to sign the proprietor's name.

(b) Bond. A bond of sufficient penal sum, as prescribed in Sec.

19.957, is required. The bond must be submitted on Form 5110.56 and

approved before a permit may be issued.

(Sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.916 Organizational documents.

The supporting information required by paragraph (a)(5) of Sec.

19.915, includes, as applicable, copies of--

(a) Corporate documents. (1) Corporate charter or certificate of

corporate existence or incorporation.

(2) List of officers and directors, showing their names and

addresses. However, do not list officers and directors who have no

responsibilities in connection with the operation of the alcohol fuel

plant.

(3) Certified extracts or digests of minutes of meetings of board of directors, authorizing certain individuals to sign for the corporation.

(4) Statement showing the number of shares of each class of stock or other evidence of ownership, authorized and outstanding, and the voting rights of the respective owners or holders.

(b) Statement of interest. (1) Names and addresses of the 10 persons having the largest ownership or other interest in each of the classes of stock in the corporation, or other legal entity, and the nature and amount of the stockholding or other interest of each,

whether the interest appears in the name of the interested party or in

the name of another for him. If a corporation is wholly owned or

controlled by another corporation, those persons of the parent

corporation who meet the above standards are considered to be the

persons interested in the business of the subsidiary, and the names

thereof need be furnished only upon request of the appropriate TTB

officer.

(2) In the case of an individual owner or partnership, the name and

address of each person interested in the plant, whether the interest

appears in the name of the interested party or in the name of another

for that person.

(c) Availability of additional documents. The originals of documents required to be submitted under this section and additional items required under Sec. 19.918 such as the articles of incorporation, bylaws, State certificate authorizing operations, or articles of partnership or association (in the case of a partnership where required by State law) shall be made available to any appropriate TTB officer upon request.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended (26 U.S.C. 5271);

sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.919 Changes affecting applications and permits.

When there is a change relating to any of the information contained

in, or considered a part of, the application on Form 5110.74, the

proprietor shall within 30 days file with the appropriate TTB officer, a written notice, in duplicate, of such change. Where the change affects the terms and conditions of the permit the proprietor shall within 30 days (except as otherwise provided in this subpart), file with the appropriate TTB officer, in duplicate, an amended application on Form 5110.74.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1370, as amended

(26 U.S.C. 5172, 5271); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26

U.S.C. 5181))

Sec. 19.920 Automatic termination of permits.

(a) Permits not transferable. Permits issued under this subpart

shall not be transferred. In the event of the lease, sale, or other

transfer of such a permit, or of the authorized operations, the permit

automatically terminates.

(b) Corporations. In the case of a corporation holding a permit

under this subpart, if actual or legal control of the permittee

corporation changes, directly or indirectly, whether by reason of change in stock ownership or control (in the permittee corporation or in any other corporation), by operation of law, or in any other manner, the permit may remain in effect until the expiration of 30 days after the change, whereupon the permit will automatically terminate. However, if operations are to be continued after the change in control, and an

application for a new permit is filed within 30 days of the change, then the outstanding permit may remain in effect until final action is taken on the new application. When final action is taken on the application, the outstanding permit automatically terminates.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended (26 U.S.C. 5271))

Sec. 19.921 Change in type of alcohol fuel plant.

(a) Small plants. If the proprietor of a small plant wishes to

increase production (including receipts) to a level in excess of 10,000

proof gallons of spirits per calendar year, the proprietor shall first

furnish a bond and obtain an amended permit by filing application under

Sec. 19.914 or Sec. 19.915, as applicable. Information filed with the

original application for permit need not be resubmitted, but may be

incorporated by reference in the new application.

(b) Medium plants. Where the proprietor of a medium plant intends to increase production (including receipts) above 500,000 proof gallons of spirits per calendar year, the proprietor shall first obtain an amended permit by filing an application under Sec. 19.915. A new or

strengthening bond may be required (see Sec. 19.956). Information

already on file may be incorporated by reference in the new application.

(c) Curtailment of activities. Proprietors of large or medium plants who have curtailed operations to a level where they are eligible to be requalified as medium or small plants may, on approval of a letter of application by the appropriate TTB officer, be relieved from the additional requirements incident to their original qualification. In the case of a change to small plant status, termination of the bond and relief of the surety from further liability shall be as provided in

subpart H of this part.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1370, as amended (26 U.S.C. 5271);

sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.922 Change in name of proprietor.

Where there is to be a change in the individual, firm, or corporate

name, the proprietor shall, within 30 days of the change, file an

application to amend the permit; a new bond or consent of surety is not

required.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1370, as amended

(26 U.S.C. 5172, 5271); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26

U.S.C. 5181))

Sec. 19.924 Change in proprietorship.

(a) General. If there is a change in the proprietorship of a plant

qualified under this part, the outgoing proprietor shall comply with the

requirements of Sec. 19.945 and the successor shall, before commencing

operations, apply for and obtain a permit and file the required bond (if any) in the same manner as a person qualifying as the proprietor of a new plant.

(b) Fiduciary. A successor to the proprietorship of a plant who is

an administrator, executor, receiver, trustee, assignee or other

fiduciary, shall comply with the applicable provisions of Sec.

19.186(b).

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended (26 U.S.C. 5172))

Sec. 19.925 Continuing partnerships.

If under the laws of the particular State, the partnership is not

immediately terminated on death or insolvency of a partner, but

continues until the winding up of the partnership affairs is completed,

and the surviving partner has the exclusive right to the control and

possession of the partnership assets for the purpose of liquidation and

settlement, the surviving partner may continue to operate the plant

under the prior qualification of the partnership. However, in the case

of a large or a medium plant, a consent of surety must be filed, wherein the surety and the surviving partner agree to remain liable on the bond. If the surviving partner acquires the business on completion of the settlement of the partnership, he shall qualify in his own name from the date of acquisition, as provided in Sec. 19.924(a). The rule set forth in this section will also apply where there is more than one surviving partner.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended (26 U.S.C. 5172);

sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.926 Change in location.

Where there is a change in the location of the plant or of the area

included within the plant premises, the proprietor shall file an

application to amend the permit and, if a bond is required, either a new bond or a consent of surety on Form 1533 (5000.18). Operation of the plant may not be commenced at the new location prior to issuance of the amended permit.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1370, as amended

(26 U.S.C. 5172, 5271); sec. 805(c), Pub. L. 96-39, 93 Stat. 276 (26

U.S.C. 5173); sec. 232, Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))

Sec. 19.930 Alternating proprietorship.

(a) General. (1) An alcohol fuel plant, or a part thereof, may be

operated alternately by proprietors if--

(i) The alcohol fuel plant and the proprietors are otherwise

qualified under the provisions of this subpart, and

(ii) The necessary operations bonds (if any) and applications

covering such operations have been filed with and approved by the

appropriate TTB officer.

(2) Where alternating proprietorship is to be limited to a part of a plant, that part must be suitable for qualification as a separate plant.

(b) Qualifying Documents. Each person desiring to operate an alcohol fuel plant as an alternating proprietor shall file with the appropriate TTB officer:

(1) An application on Form 5110.74 to cover the proposed alternation of premises.

(2) Diagram of premises, in duplicate, showing the arrangement under which the premises will be operated. Diagrams will be prepared in

accordance with paragraph (c) of this section.

(3) Evidence of existing operations bond (if any), consent of

surety, or a new operations bond to cover the proposed alternation of

premises.

(4) When required by the appropriate TTB officer, additional

information as may be necessary to determine whether the application

should be approved.

(c) Diagram of premises. Each person filing an application for

operation of a plant as an alternating proprietor shall submit a diagram of the premises. Where operations by alternating proprietors are limited to parts of a plant, a diagram which designates the parts of the plant that are to be alternated will be submitted. A diagram will be submitted for each arrangement under which the premises will be operated. The diagram will be in sufficient detail to establish the boundaries of the plant or any part thereof which is to be alternated.

(d) Alternation Journal. Once the applications have been approved

and initial operations conducted thereunder, the plant, or parts

thereof, may be alternated. The outgoing and incoming proprietor shall

enter into an alternation journal the following information:

(1) Name or trade name;

(2) Alcohol fuel plant permit number;

(3) Date and time of alternation; and

(4) Quantity of spirits transferred in proof gallons.

The alternation journal will remain in the possession of the incoming

proprietor until the premises are again alternated whereupon it will be

transferred to the new incoming proprietor.

(e) Commencement of operations. Except for spirits transferred to

the incoming proprietor, the outgoing proprietor shall remove all

spirits from areas, rooms, or buildings to be alternated, prior to the

effective date and time shown in the alternation journal. Fuel alcohol

may be either transferred to the incoming proprietor or may be retained

by the outgoing proprietor in areas, rooms, or buildings to be

alternated when the areas, rooms, or buildings are secured with locks,

the keys to which are in the custody of the outgoing proprietor.

Whenever operation of the areas, rooms, or buildings is to be resumed by a proprietor following suspension of operations by an alternating proprietor, the outgoing proprietor (except proprietors of small plants) must furnish a consent of surety on Form 1533 (5000.18) to

continue in effect the operations bond covering his operations. This is

to be done prior to alternating the premises.

(f) Records. Each proprietor shall maintain separate records and

submit separate reports. All transfers of spirits will be reflected in

the records of each proprietor. The quantity of spirits and fuel alcohol transferred will be shown in the production and disposition records of the outgoing proprietor. The quantity of spirits transferred will be shown in the receipt record of the incoming proprietor. Each outgoing and incoming proprietor shall include spirits transferred in

determinations of plant size and bond amounts. The provisions of Sec.

19.921 regarding change in type of plant are applicable to each

proprietor. Entries into these records will be in the manner prescribed

in Sec. Sec. 19.982, 19.984, and 19.986.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1349, as amended, 1370, as amended

(26 U.S.C. 5172, 5271; sec. 805(a), Pub. 96-39, 93 Stat. 275 (26 U.S.C.

5171); sec. 232 Pub. L. 96-223, 94 Stat. 278 (26 U.S.C. 5181))