Mr. HILL. Yes. The gist of this regulation, which was issued July 19, 1923, was the regulation of the manufacture of cider and nonintoxicating fruit juices under section 29 of the Volstead Act. Mr. HERSEY. Who were the parties? Mr. HILL. The parties were D. H. Blair, Commissioner of Internal Revenue this is a regulation of the department, you understandand this was approved by S. P. Gilbert, jr., Acting Secretary of the Treasury. It is a Treasury decision. It is one of the regulations to which I object; it is one of these regulations which not even the man who framed it knows what it means, and I propose to prove that by a letter from him. Mr. HERSEY. Now, it is proposed to adopt a new law. Would the same argument apply to one as to the other? You are not changing your regulations at all. Mr. HILL. I am not objecting to any specific regulation as a regulation. I will say to the gentleman from Maine that I am objecting to giving to any bureau of the Government power to decline existing law by the passage of regulations which have the force of law. Mr. HERSEY. You are against all regulations then, by departmental officers? Mr. HILL. No; I am simply against such regulations as are in effect new laws. I submit this is the condition. The present Volstead Act contains several sections. The first section is obsolete, that died with the end of war-time prohibition. But here is a proposal to confer the power of a new Government agency on somebody, to wit, the Commissioner of Prohibition, which I submit is creating a new law, and I am protesting against the transfer of existing law which has been found not to be successful or beneficial, to a new officer. Now, in reference to T. D. 3498, if I had time I should like to comment on that to the committee. I think the committee would find it quite interesting, because it contains in itself, as is so apt to be in regulations of this kind, very patent self-contradiction, and although this is an extraordinarily able and intelligent committee, I do not believe this committee could decide what this T. D. 3498 means. Mr. HERSEY. Is it necessary for us to make a decision on this bill? Mr. HILL. It is, yes; because I am protesting against giving the power of making regulations to a bureau chief. I say that regulations of the importance contained in T. D. 3498 are matters of substantive law and not of changing department regulations. Now, in reference to this, and I will then conclude, I desire to place before the committee correspondence between myself, Federal Prohibition Commissioner, the Attorney General, and Secretary of the Treasury in reference to the meaning of section 29 of the Volstead Act, which correspondence resulted in the publication by the Treasury Department of T. D. 3498, and I ask permission to put that in, if I may, for the information of the committee. Gentlemen of the committee, I put in these last matters as a protest against the continuance by a new law-because an amendment to an existing law is a new law, a reaffirmation of a certain theory of government; I desire to protest against the creation of a commissioner of prohibition who may have the power of regulation which he can change from time to time at his will. In summing up I desire to say that my objection to the bill offered by the gentleman from Michigan [Mr. Cramton] is that it creates, first, unnecessary expense, raises the present Prohibition Commissioner to $10,000 a year, creates a new solicitor of prohibition, while at present he is merely an appointive officer not having to be confirmed by the Senate, merely a departmental officer; and, in the second place, it proceeds on the theory of the creation of a new, officer who has charge of police activities, on the one side, which are criminal, and of medicinal properties, on the other hand, which are totally unrelated and should not be confused either in the public mind or in the administration. In the third place, because this bill is against the theory that should be followed and should exist at the present time for proper and adequate national reorganization; and, fourth, because it attempts to confer on the new officer, the Commissioner of Prohibition, the power to issue regulations on very important matters which should not be the subject of regulation. I thank the committee. [T. D. 3498. Prohibition-Manufacture of cider and vinegar. Article V, Regulations 60, amended] TREASURY DEPARTMENT, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, To Federal prohibition directors and others concerned: Article V of Regulations 60 is hereby amended to read as follows: SEC. 34. Definitions: As used in this article: (a) The word "cider" shall mean the expressed juice of whole, fresh, sound, ripe apples, exclusive of any extraneous or foreign matter, and without regard to the fermentation or alcoholic content thereof, unless otherwise indicated by the context. (b) "Sweet cider" is the fresh juice obtained by the first pressing of whole, fresh, sound, ripe apples. (c) "Preserved sweet cider" is sweet cider as defined above in which alcoholic fermentation is prevented or materially retarded (1) by the addition, immediately upon pressing, of U. S. P. benzoate of soda in the proportion of not less than 4 to 4 (this increase in the minimum requirement of benzoate of soda is intended to provide for variations in temperature, shipping conditions, destination, period of time in which cider is to be kept, etc.) avoirdupois ounces to each barrel of not exceeding 50 wine gallons capacity, or (2) by pasteurizaton or sterilization and immediately placing same in small impervious, sterile, sealed containers, such as bottles or jugs. (d) The presence of 4 per cent of acetic acid will be considered as constituting the article vinegar" and the presence of as much as 1 per cent of acetic acid will be considered "vinegar stock." Other acetic solutions of similar strength made from malt, etc., shall also be considered to be vinegar or vinegar stock. SEC. 35 (a). Home manufacture of nonintoxicating cider and fruit juices: Under section 29 of the act the penalties against the manufacture of liquor without a permit do not apply to any person for manufacturing nonintoxicating cider and fruit juices exclusively for use in his home, but such cider and fruit juices shall not be sold or delivered except to persons having permits to manufacture vinegar." Any person, therefore, for use exclusively in his home, may manufacture cider and fruit juices of other kinds which are nonintoxicating, without obtaining permit or giving bond. Such manufacture need not be done at the home of the producer but such person may take his apples or other fruits to a custom or commercial mill and have the juice expressed, and the juice removed to his home, but such removal must be accomplished immediately after the juice is expressed. Fruit juice may not be lawfully used for beverage purposes after becoming intoxicating. (b) If the nonintoxicating cider or fruit juice so manufactured is intended for beverage use it must, if intended for other than immediate consumption, be so preserved and put up as to prevent further alcoholic fermentation. The processes by which fruits and vegetables are ordinarily prepared in cans or jars for winter use are familiar to most housewives, and it is expected that the same care will be exercised in sterilizing and bottling eider, grape juice, etc., as is done in the case of the other preserving operations mentioned so that such cider and fruit juices will not, when consumed for beverage purposes be found to have "worked" or fermented so as to become intoxicating. (c) If intended for immediate beverage use, or if intended for home use only, as vinegar, such cider and fruit juices need not be sterilized and sealed or otherwise preserved, but after becoming intoxicating such cider or fruit juices should not be used for beverage purposes. (d) A person who makes nonintoxicating fruit juice for bona fide home use exclusively may, if he afterwards finds it desirable, sell a part thereof to a person holding a permit as a manufacturer of vinegar. If such sale is made before the juice has so fermented as to become intoxicating no permit authorizing the specific transaction is required, but if such juice at the time of sale is intoxicating the provisions of section 40 (d) must be complied with. If the juice has fermented through to vinegar stock or vinegar, such sale to a vinegar manufacturer may be made without presentation of a permit to purchase, but the vinegar manufacturer is required to keep the records required in section 41. A person who makes fruit juices containing one-half of 1 per cent or more of alcohol by volume with the intent of selling same to a vinegar manufacturer must procure permit as provided in sections 39 (a) and 39 (e). (e) Sweet cider direct from the press may lawfully be sold by the glass or in other small containers without permit, provided it is not combined with any other ingredient so as to produce an intoxicating liquor, and is sold for consumption at the place of sale or in such proximity thereto and in such quantities that it will reasonably be expected to be consumed before becoming intoxicating. One selling unpreserved sweet cider, even though it is not intoxicating at the time of sale, to be consumed after such alcoholic content has developed is guilty of violating section 18 of the act making it unlawful to sell any "substance designed or intended for use in the unlawful manufacture of intoxi cating liquor.' (f) Dried fruits, dandelions, rhubarb, etc., may not lawfully be used in the production of the "nonintoxicating cider and fruit juices" mentioned herein. SEC. 36 (a). A head of a family intending to produce in any year not to exceed 200 gallons of such fruit juice, other than cider, any part of which may ferment so as to contain as much as one-half of 1 per cent of alcohol by volume, must, in order to legalize such production under the internal revenue laws as well as to obtain tax exemption, in lieu of the notice provided in T. D. 2765, at least five days before commencing operations for any vintage season, file Form 1541, set out in section 37. The notice will be made in triplicate on Form 1541; one copy will be retained by the producer, one copy will be filed with the collector of internal revenue, and one filed with the director. Form 698 will be used by persons intending to produce wine. The nonintoxicating fruit juices thus manufactured tax free may not be commercialized or sold. The notice will be effective for one year from the date thereof. Production hereunder shall not take place on bonded winery premises. (b) The tax exemption mentioned in section 36(a) does not apply to such fruit juices (a) made by one person for the use of another, whether consumed on the premises or removed therefrom for the family use of the owner; (b) produced by a single person, unless he is the head of a family; (c) produced by a married man living apart from his family, and not for the use of that family, as in such case the fruit juices are not made for family use; (d) made by a partnership, (e) furnished ranch hands or boarders. SEC. 37. The notice mentioned in section 36(a) should be in form substantially as follows: NOTICE OF INTENTION TO PRODUCE NOT IN EXCESS OF 200 GALLONS OF NONINTOXICATING FRUIT JUICES EXCLUSIVELY FOR USE IN THE HOME OF THE PRODUCER TO COLLECTOR OF INTERNAL REVENUE, SIR: I, (name), (Form 1541) District of (city, county, State), hereby give notice that on or about 192, I intend to commence producing nonintoxicating fruit juices exclusively for use in my home, and not to be otherwise removed, consumed, sold, or delivered, and that I do not intend to produce more than 200 gallons of such fruit juices during the year for which this notice is given and is in effect. I further state that if I produce or have on hand at any one time more than 200 gallons of fruit juices, containing as much as one-half of 1 per cent of alcohol by volume, I will give timely notice thereof on Form 698 and execute bond as required by T. D. 2765, and will further comply with the provisions of the internal revenue and prohibition laws and regulations of the United States. Dated at 192-. (Signature.) SEC. 38. For the operation of a custom cider mill no permit is required if the cider is promptly removed to the home of the owner while sweet, as defined in section 34(b); cider taken as toll may be promptly sold by the mill operator under the same circumstances. SEC. 39(a). Commercial production: A person desiring to manufacture preserved sweet cider under section 4 of Title II of the act, or cider or other liquid or liquor specified in this article for conversion into vinegar, or to use such cider, liquid, or liquor in the manufacture of vinegar, or to sell same to a vinegar manufacturer, should file application on form 1404 as prescribed in article 3, as amended by T. D. 3398 and 3410, setting forth in such application the acts for which authorization is desired. If such application is approved, a permit will be issued authorizing the acts stipulated in the permit. (b) Preserved sweet cider may be manufactured under permit issued as provided above, and when manufactured and prepared for the market may be sold without further permit. The process of preservation shall be adequately described in the application. A method of preserving by pasteurization and bottling in closed sterile containers is generally recognized as efficient. Pasteurized cider may not be sold or delivered in bulk containers, such as kegs, barrels, etc. (except to a vinegar maker, pursuant to section 40(d). The manufacturer of preserved sweet cider is responsible for preparing it in such manner as will insure such cider remaining nonintoxicating; and where such cider is found upon the market containing excessive alcohol the burden of proof shall be upon the manufacturer to show that it was so prepared and that it was not intoxicating at the time it was withdrawn from the place where manufactured. The placing of such responsibility upon the manufacturer shall not, however, be construed to relieve from the penalties provided in the act such manufacturer or any other person so treating or manipulating such cider as to increase the alcoholic content. (c) By section 602 (b) of the revenue act of 1921 a sales tax of 2 cents per gallon is placed "upon all unfermented fruit juices," sweetened or not and intended for consumption as beverages; by section 602 (c) pure apple cider, preserved as herein provided, is specifically exempted from such tax. (d) Intoxicating cider is subject to forfeiture unless manufactured under permit and intended for sale to a vinegar manufacturer and except as provided in section 35 (a). If nonintoxicating cider is lawfully acquired and held and such cider later develops sufficient alcohol to render it intoxicating, the person so possessing such cider in good faith may apply for a permit to dispose of it to a vinegar manufacturer. (e) Cider manufactured by a person holding a permit therefor may, under proper permit, be used in the manufacture of vinegar or may be sold or furnished to other persons holding permits to use cider in the manufacture of vinegar, pursuant to and upon receipt of permits to purchase, Form 1410A, and may not be otherwise disposed of, except as provided in subsection (f) of this section. Such cider may be sold in bulk containers such as barrels and without payment of tax thereon. (f) Cider manufactured under permit may, pursuant to and upon receipt of permit to purchase, Form 1410A, be sold by the manufacturer to a manufacturer of food products, such as apple butter, as provided in T. D. 3045. (g) In the manufacturer of cider, sugar or other fermentable substance should under no circumstances be added to the apple juice for the purpose of increasing the alcoholic content, inasmuch as such practice is held to constitute the production of a mash fit for distillation within the prohibition of R. S. 3282. Preserved sweet cider may, however, be charged with carbonic acid gas. SEC. 40(a). Vinegar: Pursuant to appropriate permits, liquors may be manufactured for conversion into vinegar, and vinegar may be manufactured from such liquors. (b) Vinegar may be made by the vaporization process pursuant to the provisions of R. S. 3282, as amended, and regulations 7, pages 225 and 229. (c) Malt vinegar may be made by the direct oxidation of malt liquor without the use of generators or the vaporization process. Malt liquor for conversion into vinegar may be produced by a person holding permit to produce vinegar under this section. (d) A person holding permit for such purposes may manufacture vinegar from eider produced by him, or he may procure, for use in the manufacture of vinegar, cider from other persons authorized to manufacture it or tax-paid wine from bonded wineries. To procure either cider or wine containing as much as onehalf of 1 per cent of alcohol by volume, a permit to purchase, Form.1410A, is required. If such cider is to be procured from a person who has produced it without permit pursuant to the provisions of section 35(a), the permit to purchase and the application therefor should be modified by using the words "home production" in place of the permit number of the vendor in the space for such number. If the cider procured from a person who has manufactured it exclusively for use in his own home contains less than one-half of 1 per cent of alcohol by volume, it may be sold and transported to the plant of the vinegar manufacturer without permit, or a permit to purchase may be issued on the application of the vinegar manufacturer. Vinegar and vinegar stock as defined in section 34(d) may be sold and transported without obtaining a permit to purchase. (e) Vinegar may be produced from alcohol lawfully denatured by the oxidation of such denatured alcohol in oxidizing or generating plants, without the necessity of obtaining permits under this article, upon compliance with the provisions of regulations 61. (f) Persons operating bonded wineries may convert wines into vinegar upon such premises without obtaining permit for such purpose, provided that upon removal from such premises the product contains 1 per cent or more of acetic acid and is treated as vinegar stock and not sold or used as wine. Before removing such product from the bonded premises application should be made to the collector on Form 1415 for permission to make such removal, accompanied by a signed copy of the chemical analysis of the material, showing the percentage of acetic acid contained therein. Such vinegar may be removed from the winery free of tax and proper credit taken on the records kept at the winery. SEC. 41. Persons manufacturing intoxicating liquors under permit must keep a record of the amount manufactured as well as the date of manufacture and must show upon such record the disposition of all liquor manufactured by them. SEC. 42. Containers of all intoxicating liquor manufactured for sale as such under this article must immediately upon manufacture be labeled in accordance with Article XVIII to show the following: 1. Name of manufacturer. 2. Date of manufacture. 3. Serial number of permit authorizing manufacture. 4. Kind and quantity of contents. Approved: July 19, 1923. S. P. GILBERT, Jr., Acting Secretary of the Treasury. D. H. BLAIR, Commissioner of Internal Revenue. (Correspondence of Representative Hill of Maryland with the Federal Prohibition Commissioner, the Secretary of the Treasury, and the Attorney General concerning regulations of the Treasury Department, relating to section 29 of the national prohibition enforcement (Volstead) act.) HOUSE OF REPRESENTATIVES, COMMITTEE ON MILITARY AFFAIRS, Maj. R. A. HAYNES, Prohibition Commissioner, Bureau of Internal Revenue, Washington, D. C. DEAR SIR: Inclosed herewith copy of H. R. 11410, providing for the creation of Federal local option districts coordinate with existing congressional districts, and a vote next November in each of such districts on the question of the liberalization of the national prohibition act as to 2.75 per cent beer and 2.75 per cent cider (including dandelion wine and other such fruit and vegetable beverages). It was recently stated on the floor of the Maryland House of Representatives that the rules of your office permitted the possession and consumption in the home of cider with an alcoholic content of from 6 to 8 per cent. This statement was denied, and other conflicting statements in reference to this matter were made. |