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Montana Administrative Register Notice 42-2-887 No. 22   11/23/2012    
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BEFORE THE DEPARTMENT OF REVENUE

OF THE STATE OF MONTANA

 

 

In the matter of the amendment of ARM 42.11.105, 42.11.211, 42.11.245, 42.11.402, 42.11.409, and 42.13.804 relating to liquor stores, vendors, licensees, and distilleries

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

1.  On December 17, 2012, at 3:30 p.m., a public hearing will be held in the Third Floor Reception Area Conference Room of the Sam W. Mitchell Building, in Helena, Montana, to consider the amendment of the above-stated rules.

Individuals planning to attend the hearing shall enter the building through the east doors of the Sam W. Mitchell Building, 125 North Roberts, Helena, Montana.

 

2.  The Department of Revenue will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the Department of Revenue no later than 5 p.m., December 3, 2012, to advise us of the nature of the accommodation that you need.  Please contact Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail canderson@mt.gov.

 

3.  As part of the biennial review of all its administrative rules, the department proposes to amend current rules to increase the public's and liquor industry's understanding of liquor laws.  The goal of the proposed amendments is to reduce confusion, enhance the readability, and add clarity to the rules.

The proposed amendments seek to improve the definition of product to ensure a consistent use of the term throughout Chapter 11.  The proposed amendments clarify the requirements for the registration of representatives and enhance the readability of approved advertising specialties by removing cumbersome language.

The proposed amendments seek to add clarity to the inventory policy governing distilled spirits.  Distilled spirits are a mature product category and therefore should be marketed in an appropriate and responsible manner.  In order to protect the public health, welfare, and safety of the people of Montana, it is necessary to have clear, concise rules to prevent unwarranted products from entering the market.

The department also seeks to add consistency within the rules by aligning ARM 42.11.409 and 42.11.421 with regard to overstocked inventory.  Finally, the proposed amendments seek to clarify reporting periods for domestic distilleries.

 

4.  The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

42.11.105  DEFINITIONS  As used in this subchapters 1, 2, and 4, the following definitions apply:

(1) through (13) remain the same.

(14)  "Product" means a brand of liquor item, identified by a unique identification number or stock-keeping unit.

(15) through (22) remain the same.

 

AUTH:  16-1-103, 16-1-104, 16-1-303, MCA

IMP:  16-1-103, 16-1-104, 16-1-302, 16-1-401, 16-1-404, 16-1-411, 16-2-101, 16-2-201, 16-2-301, 16-3-107, MCA

 

REASONABLE NECESSITY:  In accordance with 2-4-314, MCA, the department conducted a biennial review of all its administrative rules.  As a result of that review, the department is proposing to amend ARM 42.11.105, to expand the word "subchapter" to include two other subchapters in this chapter because the terms defined in the rule also apply to terms used in those other subchapters.

The department further proposes to amend (14) to better define and ensure a consistent use of the term "product" throughout Chapter 11.  Amending the definition is intended to enhance the liquor industry's understanding of the term and eliminate any potential confusion as it is referenced throughout the chapter.

 

42.11.211  REGISTRATION OF REPRESENTATIVES  (1) and (2) remain the same.

(3)  In considering an application for registration of a representative, the department shall consider all matters pertaining to the residency, qualifications, experience, and character (including criminal record, if any) of the representative to be registered.  Individuals seeking registration as a representative must submit a properly completed application to the department and supply proof of residency, as per 16-3-107, MCA.  The completed application, proof of residency, and the requirements in (2) will be reviewed by the department for the purpose of approving a registration of representative.

(4) remains the same.

(5)  Individuals seeking registration as a representative must submit a properly completed application to the department.

(6)  Registration of a representative is effective upon approval by the department.

(7)(6)  In addition to the definition of "resident" found in ARM Title 42, chapter 2, evidence of residency includes:

(a)  qualification to vote in a Montana election;

(b)  filing a Montana income tax return; or

(c)  having a current Montana drivers driver's license. 

 

AUTH:  16-1-103, 16-1-303, MCA

IMP:  16-3-103, 16-3-107, MCA

 

REASONABLE NECESSITY:  In accordance with 2-4-314, MCA, the department conducted a biennial review of all its administrative rules.  As a result of that review, the department is proposing to amend ARM 42.11.211 to enhance potential liquor representatives' understanding of the requirements necessary to have their registration application approved, to add 16-3-103, MCA, as an implementing statute, and correct punctuation.

 

42.11.245  ADVERTISING SPECIALTIES  (1)  Registered representatives are allowed to distribute point of sale advertising materials and consumer advertising specialties to a retailer as set forth in Title 27 of the Code of Federal Regulations, regulation number 6.84 of the Tobacco Tax and Trade Bureau (TTB), United States Department of the Treasury as set forth in 27 CFR as revised on April 1, 2006, which is incorporated by reference as fully set forth as the regulations for consumer advertising specialties and retailer advertising specialties.  Copies may be obtained at the United States Treasury web site located at www.ttb.gov/Regulations www.ttb.gov.

(2) remains the same.

 

AUTH:  16-1-103, 16-1-303, MCA

IMP:  2-4-307, 16-3-103, MCA

 

REASONABLE NECESSITY:  In accordance with 2-4-314, MCA, the department conducted a biennial review of all its administrative rules.  As a result of that review, the department is proposing to amend to amend ARM 42.11.245 to remove the date reference of the Code of Federal Regulations (CFR).  Continuing to reference the year of the CFR revision in the rule is unnecessary because the CFR is updated each calendar year.  Striking the revision date will also eliminate the administrative burden of amending the rule annually in the future.  The department further proposes to revise cumbersome phrasing to enhance the readability of the rule and to update a web site address.

 

42.11.402  INVENTORY POLICY  (1) and (2) remain the same.

(3)  Products will not be made available in the state of Montana through the state liquor warehouse if the container, flavor, label, or advertising emphasizes the features that are normally associated with nonalcoholic products and minimizes the products' alcohol content Liquor products are a mature product category, restricted by law to only consumers age 21 or older and who are not intoxicated, and therefore should be marketed in a responsible and appropriate manner.  These include, but are not limited to, products The department, in its discretion and on a case-by-case basis, will not approve a liquor product that:

(a)  appear to appeal to underage consumers blurs the distinction between an alcoholic and nonalcoholic product by utilizing labeling, packaging and/or containers that emphasize features that are most commonly associated with nonalcoholic consumable products including, but not limited to:

(i)  aerosol cans;

(ii)  gelatin cups;

(iii)  hollow candies; or

(iv)  mason jars that contain fruit;

(b)  blur the distinction between an alcoholic and nonalcoholic product;

(c)  reference Santa Claus, cartoon type characters, or other child like figures;

(d)  use uses flavors that are most commonly targeted toward children such as, for example, associated with underage persons, such as:

(i)  bubble gum; or

(ii)  cotton candy;

(e)(c)  are candies filled with liquor in liquid form; or contains graphics or elements that:

(i)  are most commonly associated with underage persons;

(ii)  minimizes, fails to identify, or disguises the product's alcohol content; or

(iii)  alludes to or suggests irresponsible, excessive, or underage consumption;

(f)(d)  require requires specialized handling requirements such as frozen or refrigerated products.

(4) remains the same.

 

AUTH:  16-1-103, 16-1-303, MCA

IMP:  16-1-103, 16-1-104, 16-1-302, MCA

 

REASONABLE NECESSITY:  In accordance with 2-4-314, MCA, the department conducted a biennial review of all its administrative rules.  As a result of that review, the department is proposing to amend ARM 42.11.402 to add clarity to the product approval process for liquor.  Liquor is a unique product that requires high standards in the way it is marketed in order to protect the public health, welfare, and safety of the people of Montana.

The department proposes to add language into the rule which will provide the public and industry with examples of specific types of containers, labels, and/or packaging that will not be approved for sale in the state of Montana.

The department is further proposing to amend the rule to make consistent reference to individuals under the legal drinking age as "underage persons" rather than as "children."

 

42.11.409  REVISED LISTING, CLOSEOUT, AND OVERSTOCK  (1) and (2) remain the same.

(3)  Inventory in excess of the projected 12 months of sales a historical 12-week case demand for a product will be treated as overstock in accordance with ARM 42.11.104.

(4) through (6) remain the same.

 

AUTH:  16-1-103, 16-1-303, MCA

IMP:  16-1-103, 16-1-104, 16-1-302, MCA

 

REASONABLE NECESSITY:  As part of the biennial review of all its administrative rules, the department is proposing to amend ARM 42.11.409 to correct an error in (3).  As per ARM 42.11.421, the maximum level of inventory to be maintained in the bailed warehouse is a historical twelve-week case demand of the product.  Any inventory over this maximum would be considered excess.  Amending this rule will create continuity with ARM 42.11.421 and eliminate potential confusion.

 

42.13.804  DOMESTIC DISTILLERY - MONTHLY REPORTS  (1)  Each distillery shall file with the department a monthly tax report, as required by 16-1-424, MCA, showing the following information:

(a)  the total number of proof gallons manufactured, distilled, rectified, bottled, or processed and sold nationwide during the current calendar year;

(b)  the total amount of liquor provided to consumers for on-premise consumption with or without charge at the distillery; and

(c)  the total number of bottles sold to consumers at retail for off-premise consumption.

(2) remains the same.

 

AUTH:  16-1-303, 16-1-424, MCA

IMP:  16-1-404, 16-4-311, 16-4-312, 16-4-501, MCA

 

REASONABLE NECESSITY:  As part of the biennial review of all its administrative rules, the department is proposing to amend ARM 42.13.804 to enhance distillers' knowledge by specifying the period of time for which they are required to report their monthly sales information.  The proposed amendment is intended to eliminate any potential confusion and to ensure that distillers will understand the importance of consistently and timely reporting their sales information.

 

5.  Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing.  Written data, views, or arguments may also be submitted to: Cleo Anderson, Department of Revenue, Director's Office, P.O. Box 7701, Helena, Montana 59604-7701; telephone (406) 444-5828; fax (406) 444-4375; or e-mail canderson@mt.gov and must be received no later than January 4, 2013.

 

6.  Cleo Anderson, Department of Revenue, Director's Office, has been designated to preside over and conduct the hearing.

 

7.  An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov.  Select the "Laws and Rules" link in the left hand column, and click on the "Rules" link within to view the options under the "Current Rule Actions – Published Notices" heading.  The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable due to system maintenance or technical problems.

 

8.  The Department of Revenue maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices and specifies that the person wishes to receive notice regarding particular subject matter or matters.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  A written request may be mailed or delivered to the person in number 5 above, or faxed to the office at (406) 444-4375, or may be made by completing a request form at any rules hearing held by the Department of Revenue.

 

9.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

 

 

/s/ Cleo Anderson                            /s/ Dan R. Bucks     

CLEO ANDERSON                         DAN R. BUCKS

Rule Reviewer                                   Director of Revenue

 

Certified to Secretary of State November 13, 2012

 

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