DAR File No. 40923

Alcoholic Beverage Control, Administration

Rule R81-8

Manufacturer Licenses (Distillery, Winery, Brewery)

Notice of Proposed Rule

(Amendment)

DAR File No.: 40923
Filed: 10/31/2016 09:14:44 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule amendment is necessary to streamline provisions for Manufacturing Licenses and to implement H.B. 228, passed in the 2016 General Session.

Summary of the rule or change:

This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary.

Statutory or constitutional authorization for this rule:

• Section 32B-2-202
• Subsections 32B-11-210(7) and (12)
• Subsection 32B-11-208(9)

Anticipated cost or savings to:

the state budget:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. There are no anticipated cost or savings as the department's responsibilities to approve tasting areas and audit manufacturing licensees is an extension of duties already required.

local governments:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. This rule change effects the department and the licensees. There are no anticipated costs or savings to local government.

small businesses:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. The rule is broadly defined to meet the needs of each business type. Therefore, any additional costs or savings to small businesses would result from a business's decision related to what educational materials to use when conducting tastings.

persons other than small businesses, businesses, or local governmental entities:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. There are no anticipated costs or savings to persons other than small businesses, businesses, or local government entities.

Compliance costs for affected persons:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. The rule is broadly defined to meet the needs of each business type. Therefore, any compliance costs would result from a business�s decision related to what educational materials to use when conducting tastings.

Comments by the department head on the fiscal impact the rule may have on businesses:

None--This rule amendment streamlines provisions for manufacturing licenses, defines "Educational Information", and reserves a place to further define "Substantial Food", if necessary. The rule is broadly defined to meet the needs of each business type. Therefore, any additional costs or savings to businesses would result from a business�s decision related to what educational materials to use when conducting tastings.

Salvador D. Petilos, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Alcoholic Beverage Control
Administration
1625 S 900 W
SALT LAKE CITY, UT 84104-1630

Direct questions regarding this rule to:

• Nina McDermott at the above address, by phone at 801-977-6805, by FAX at 801-977-6888, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2016

This rule may become effective on:

12/22/2016

Authorized by:

Sal Petilos, Executive Director

R81. Alcoholic Beverage Control, Administration.

R81-8. Manufacturing [er ] and Related Licenses[ (Distillery, Winery, Brewery) ].

R81-8-1. Purpose.

Reserved.

 

R81-8-2. Authority.

(1) This rule is enacted pursuant to Subsections 32B-2-202, 32B-11-208(9), and 32B-11-210(7) and (12).

 

R81-8-3. Definitions.

(1) "Substantial Food." RESERVED.

(2) "Educational Information" means a presentation of information whose primary purpose is imparting knowledge related to the history, culture, significance, agriculture, manufacture, flavor profiles and/or the effects of alcohol.

 

R81-8-[1]4 . Application Guidelines.

(1) No license application will be included on the agenda of a monthly commission meeting for consideration for issuance of a manufactur ing[er (distillery, winery, brewery)] license until:

(a) A complete application including all documents and supplemental materials listed on the department's application checklist have been submitted to the department.[The applicant has first met all requirements of Sections 32B-1-304 and 32B-11-205 (qualifications to hold the license), and 32B-11-203, -205 and -207 (submission of a completed application, payment of application and licensing fees, written consent of local authority, a statement of the purpose for which the applicant is applying for the license, evidence that the person is authorized by the United States to manufacture an alcoholic product, a bond, and public liability insurance); and]

(b) the department has inspected the manufacturer premise[.]; and

(c) an investigation is conducted and a recommendation can be made as required by 32B-11-206.

(2)(a) All application requirements of Subsection (1)(a) must be filed with the department no later than the 10th day of the month in order for the application to be included on that month's commission meeting agenda unless the 10th day of the month is a Saturday, Sunday, or state or federal holiday, in which case all application requirements of Subsection (1)(a) must be filed on the next business day after the 10th day of the month.

(b) An incomplete application will be returned to the applicant.

(c) A completed application filed after the deadline in Subsection (2)(a) will not be considered by the commission that month, but will be included on the agenda of the commission meeting the following month.

 

R81-8- 5 [2]. Out of State Business.

(1) Purpose. Pursuant to 32B-11-201(4), brewers located outside the state must obtain a certificate of approval from the department before selling or delivering beer containing an alcohol content of less than 4% alcohol by volume to licensed beer wholesalers in this state, or if a small brewer, to licensed beer wholesalers or retailers in this state. These certificates must be renewed annually.

In addition to issuing certificates of approval to brewers who actually produce the beer, the department has also issued certificates to (1) importers that hold federal permits, and have the contractual rights to distribute and market beer for foreign breweries; and (2) marketing agents that distribute and market beer for domestic breweries. The department has also allowed brewers with a certificate of approval to market the products on behalf of other brewers under that certificate. However, this has resulted in a loss of direct regulatory authority over the breweries that actually produce the beer.

This rule ensures that each producer of beer obtain its own certificate of approval to allow its beer to be sold or delivered in this state.

(2) Application of Rule.

(a) A certificate of approval to sell or deliver beer in this state under 32B-11-201(4) may be issued only to the company that is ultimately responsible for producing the beer. The company holding the certificate may not allow another brewery to sell or deliver beer to this state under the certificate holder's certificate. A certificate of approval may not be issued to any third party such as an importer or marketing agent that does not actually manufacture or produce alcoholic beverages.

(b) This rule does not preclude the company that holds the certificate of approval from having its brand of beer produced by another brewery under contract under the brand name of the certificate holder's company. However, the certificate holder is responsible to ensure that any beer produced by the contract-brewery complies with the alcoholic beverage laws of this state. Any violations committed by the contract brewery will be the responsibility of the certificate holder.

(c) A distillery or winery that has beer produced for it by a brewery under contract under the distillery's or winery's brand name is deemed to be a "brewery" for purposes of 32B-11-201(4), and may be issued a certificate of approval. However, the distillery or winery is responsible to ensure that any beer produced by the contract-brewery complies with the alcoholic beverage laws of this state. Any violations committed by the contract brewery will be the responsibility of the distillery or winery that holds the certificate.

 

[ R81-8-3. Winery Tasting Facilities.

(1) Purpose. Pursuant to 32B-11-303, a licensed winery may allow the consumption of samples of wine on the premises of the winery as long as food is available. This rule establishes guidelines for tasting facilities on winery premises.

(2) Application of Rule. A winery licensee may operate on its manufacturing premises a tasting facility allowing the consumption of wine samples at a site approved by the department under the following conditions:

(a) The tasting area must be located on the winery premises.

(b) Food must be available in the tasting area.

(c) Records required by the department shall be kept current and available to the department for auditing purposes. This includes a daily record of all products and quantities tasted.

(d) The storage area floor plan for the tasting facility must be approved by the department and may not be relocated without department approval.

(e) Wine samples may not exceed two ounces per glass.

(f) Samples may not be removed from the winery premises.

(g) Sample tastings may not be conducted off of the winery premises.]

 

KEY: alcoholic beverages

Date of Enactment or Last Substantive Amendment: [May 22, 2012]2016

Notice of Continuation: May 2, 2016

Authorizing, and Implemented or Interpreted Law: [32A-1-107]32B-2-202; 32B-11-208(9); 32B-11-210(7) and (12)