27 U.S.C. § 204 — Permits

Page 10 TITLE 27—INTOXICATING LIQUORS § 204 (c) It shall be unlawful, except pursuant to a basic permit issued under this subchapter by the Secretary of the Treasury— (1) to engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages; or (2) for any person so engaged to receive or to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, di- rectly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so purchased. This subsection shall take effect July 1, 1936. This section shall not apply to any agency of a State or political subdivision thereof or any officer or employee of any such agency, and no such agency or officer or employee shall be re- quired to obtain a basic permit under this sub- chapter. (Aug. 29, 1935, ch. 814, title I, § 103, formerly § 3, 49 Stat. 978; Feb. 29, 1936, ch. 105, § 1, 49 Stat. 1152; 1940 Reorg. Plan No. III, § 2, eff. June 30, 1940, 5 F.R. 2108, 54 Stat. 1232; renumbered title I, § 103, and amended Pub. L. 100–690, title VIII, § 8001(a)(1), (2), (b)(2), Nov. 18, 1988, 102 Stat. 4517, 4521.) Editorial Notes CODIFICATION In the original, subsections (a) and (b) of this section contained a final paragraph which provided as follows: ‘‘This subsection shall take effect sixty days after the date upon which the Administrator first appointed under this title takes office.’’ AMENDMENTS 1988—Pub. L. 100–690, § 8001(b)(2), substituted ‘‘sub- chapter’’ for ‘‘chapter’’ wherever appearing. 1936—Subsec. (c). Act Feb. 29, 1936, extended the effec- tive date from March 1, 1936, to July 1, 1936. Executive Documents TRANSFER OF FUNCTIONS ‘‘Secretary of the Treasury’’ was substituted in text for ‘‘Administrator’’, meaning the Administrator of the Federal Alcohol Administration, pursuant to Reorg. Plan No. III of 1940, see note set out under section 201 of this title. § 204. Permits (a) Who entitled thereto The following persons shall, on application therefor, be entitled to a basic permit: (1) Any person who, on May 25, 1935, held a basic permit as distiller, rectifier, wine pro- ducer, or importer issued by an agency of the Federal Government. (2) Any other person unless the Secretary of the Treasury finds (A) that such person (or in case of a corporation, any of its officers, direc- tors, or principal stockholders) has, within five years prior to the date of application, been convicted of a felony under Federal or State law or has, within three years prior to date of application, been convicted of a mis- demeanor under any Federal law relating to liquor, including the taxation thereof; or (B) that such person is, by reason of his business experience, financial standing, or trade con- nections, not likely to commence operations within a reasonable period or to maintain such operations in conformity with Federal law; or (C) that the operations proposed to be con- ducted by such person are in violation of the law of the State in which they are to be con- ducted. (b) Refusal of permit; hearing If upon examination of any application for a basic permit the Secretary of the Treasury has reason to believe that the applicant is not enti- tled to such permit, he shall notify the appli- cant thereof and, upon request by the applicant, afford him due notice and opportunity for hear- ing on the application. If the Secretary of the Treasury, after affording such notice and oppor- tunity for hearing, finds that the applicant is not entitled to a basic permit hereunder, he shall by order deny the application stating the findings which are the basis for his order. (c) Form of application The Secretary of the Treasury shall prescribe the manner and form of all applications for basic permits (including the facts to be set forth therein) and the form of all basic permits, and shall specify in any basic permit the authority conferred by the permit and the conditions thereof in accordance with the provisions of this subchapter. To the extent deemed necessary by the Secretary of the Treasury for the efficient administration of this subchapter, separate ap- plications and permits shall be required by the Secretary of the Treasury with respect to dis- tilled spirits, wine, and malt beverages, and the various classes thereof, and with respect to the various classes of persons entitled to permits hereunder. The issuance of a basic permit under this subchapter shall not operate to deprive the United States of its remedy for any violation of law. (d) Conditions A basic permit shall be conditioned upon com- pliance with the requirements of section 205 of this title (relating to unfair competition and un- lawful practices) and of section 206 of this title (relating to bulk sales and bottling), with the twenty-first amendment and laws relating to the enforcement thereof, and with all other Fed- eral laws relating to distilled spirits, wine, and malt beverages, including taxes with respect thereto. (e) Revocation, suspension, and annulment A basic permit shall by order of the Secretary of the Treasury, after due notice and oppor- tunity for hearing to the permittee, (1) be re- voked, or suspended for such period as the Sec- retary of the Treasury deems appropriate, if the Secretary finds that the permittee has wilfully violated any of the conditions thereof, provided that for a first violation of the conditions there- of the permit shall be subject to suspension only; or (2) be revoked if the Secretary finds that the permittee has not engaged in the oper- ations authorized by the permit for a period of more than two years; or (3) be annulled if the Secretary finds that the permit was procured through fraud, or misrepresentation, or conceal- ment of material fact. The order shall state the findings which are the basis for the order. Page 11 TITLE 27—INTOXICATING LIQUORS § 204 (f) Service of orders Orders of the Secretary with respect to any de- nial of application, suspension, revocation, an- nulment, or other proceedings, shall be served (1) in person by any officer or employee of the Secretary designated by him or any internal revenue or customs officer authorized by the Secretary for the purpose, or (2) by mailing the order by registered mail, addressed to the appli- cant or respondent at his last known address in the records of the Secretary. (g) Duration A basic permit shall continue in effect until suspended, revoked, or annulled as provided herein, or voluntarily surrendered; except that (1) if leased, sold, or otherwise voluntarily transferred, the permit shall be automatically terminated thereupon, and (2) if transferred by operation of law or if actual or legal control of the permittee is acquired, directly or indirectly, whether by stock-ownership or in any other manner, by any person, then such permit shall be automatically terminated at the expiration of thirty days thereafter: Provided, That if with- in such thirty-day period application for a new basic permit is made by the transferee or per- mittee, respectively, then the outstanding basic permit shall continue in effect until such appli- cation is finally acted on by the Secretary of the Treasury. (h) Appeal; procedure An appeal may be taken by the permittee or applicant for a permit from any order of the Secretary of the Treasury denying an applica- tion for, or suspending, revoking, or annulling, a basic permit. Such appeal shall be taken by fil- ing, in the court of appeals of the United States within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, within sixty days after the entry of such order, a written petition praying that the order of the Secretary be modified or set aside in whole or in part. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Secretary, or any officer designated by him for that purpose, and thereupon the Sec- retary shall file in the court the record upon which the order complained of was entered, as provided in section 2112 of title 28. Upon the fil- ing of such petition such court shall have exclu- sive jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Secretary shall be considered by the court unless such objection shall have been urged before the Secretary or unless there were reasonable grounds for failure so to do. The find- ing of the Secretary as to the facts, if supported by substantial evidence, shall be conclusive. If any party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such addi- tional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the proceeding before the Secretary, the court may order such additional evidence to be taken before the Secretary and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Secretary may modify his findings as to the facts by reason of the additional evi- dence so taken, and he shall file with the court such modified or new findings, which, if sup- ported by substantial evidence, shall be conclu- sive, and his recommendation, if any, for the modification or setting aside of the original order. The judgment and decree of the court af- firming, modifying, or setting aside, in whole or in part, any such order of the Secretary shall be final, subject to review by the Supreme Court of the United States upon certiorari or certifi- cation as provided in section 1254 of title 28. The commencement of proceedings under this sub- section shall, unless specifically ordered by the court to the contrary, operate as a stay of the Secretary’s order. (i) Limitation No proceeding for the suspension or revocation of a basic permit for violation of any condition thereof relating to compliance with Federal law shall be instituted by the Secretary more than eighteen months after conviction of the viola- tion of Federal law, or, if no conviction has been had, more than three years after the violation occurred; and no basic permit shall be suspended or revoked for a violation of any such condition thereof if the alleged violation of Federal law has been compromised by any officer of the Gov- ernment authorized to compromise such viola- tion. (Aug. 29, 1935, ch. 814, title I, § 104, formerly § 4, 49 Stat. 978; 1940 Reorg. Plan No. III, § 2, eff. June 30, 1940, 5 F.R. 2108, 54 Stat. 1232; June 25, 1948, ch. 646, § 32(a), 62 Stat. 991; May 24, 1949, ch. 139, § 127, 63 Stat. 107; Pub. L. 85–791, § 14, Aug. 28, 1958, 72 Stat. 946; renumbered title I, § 104, and amended Pub. L. 100–690, title VIII, § 8001(a)(1), (2), (b)(2), (3), Nov. 18, 1988, 102 Stat. 4517, 4521.) Editorial Notes CODIFICATION In subsec. (h) of this section, ‘‘section 1254 of title 28’’ was substituted for ‘‘sections 239 and 240 of the Judicial Code, as amended’’, on authority of act June 25, 1948, ch. 646, 62 Stat. 869, the first section of which enacted Title 28, Judiciary and Judicial Procedure. AMENDMENTS 1988—Subsec. (c). Pub. L. 100–690, § 8001(b)(2), sub- stituted ‘‘subchapter’’ for ‘‘chapter’’ wherever appear- ing. Subsec. (d). Pub. L. 100–690, § 8001(b)(3), made tech- nical amendment to references to sections 205 and 206 of this title to reflect renumbering of corresponding sections of original act. 1958—Subsec. (h). Pub. L. 85–791, in third sentence, substituted ‘‘transmitted by the clerk of the court to the Secretary, or’’ for ‘‘served upon, the Secretary, or upon any’’, substituted ‘‘file in the court’’ for ‘‘certify and file in the court a transcript of’’, and inserted ‘‘as provided in section 2112 of title 28’’, and in fourth sen- tence, substituted ‘‘petition’’ for ‘‘transcript’’. Statutory Notes and Related Subsidiaries CHANGE OF NAME ‘‘Court of appeals’’ was substituted for ‘‘circuit court of appeals’’ pursuant to act June 25, 1948, as amended by act May 24, 1949. APPLICABILITY OF ADMINISTRATIVE PROCEDURE ACT Pub. L. 85–791, § 35, Aug. 28, 1958, 72 Stat. 951, provided that: ‘‘This Act shall not be construed to repeal or Page 12 TITLE 27—INTOXICATING LIQUORS § 205 modify any provision of the Administrative Procedure Act [see Short Title note preceding section 551 of Title 5, Government Organization and Employees].’’ Executive Documents TRANSFER OF FUNCTIONS ‘‘Secretary of the Treasury’’ and ‘‘Secretary’’ were substituted in subsecs. (a) to (c) and (e) to (i) for ‘‘Ad- ministrator’’, meaning the Administrator of the Fed- eral Alcohol Administration, pursuant to Reorg. Plan No. III of 1940, see note set out under section 201 of this title. § 205. Unfair competition and unlawful practices It shall be unlawful for any person engaged in business as a distiller, brewer, rectifier, blender, or other producer, or as an importer or whole- saler, of distilled spirits, wine, or malt bev- erages, or as a bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate: (a) Exclusive outlet To require, by agreement or otherwise, that any retailer engaged in the sale of distilled spir- its, wine, or malt beverages, purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such requirement is made in the course of inter- state or foreign commerce, or if such person en- gages in such practice to such an extent as sub- stantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such require- ment is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce; or (b) ‘‘Tied house’’ To induce through any of the following means, any retailer, engaged in the sale of distilled spir- its, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of inter- state or foreign commerce, or if such person en- gages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to pre- vent, deter, hinder, or restrict other persons from selling or offering for sale any such prod- ucts to such retailer in interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in real or personal property owned, occupied, or used by the retailer in the conduct of his busi- ness; or (3) by furnishing, giving, renting, lend- ing, or selling to the retailer, any equipment, fixtures, signs, supplies, money, services, or other thing of value, subject to such exceptions as the Secretary of the Treasury shall by regula- tion prescribe, having due regard for public health, the quantity and value of articles in- volved, established trade customs not contrary to the public interest and the purposes of this subsection; or (4) by paying or crediting the re- tailer for any advertising, display, or distribu- tion service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer cred- it for a period in excess of the credit period usual and customary to the industry for the par- ticular class of transactions, as ascertained by the Secretary of the Treasury and prescribed by regulations by him; or (7) by requiring the re- tailer to take and dispose of a certain quota of any of such products; or (c) Commercial bribery To induce through any of the following means, any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of inter- state or foreign commerce, or if such person en- gages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the direct effect of such inducement is to pre- vent, deter, hinder, or restrict other persons from selling or offering for sale any such prod- ucts to such trade buyer in interstate or foreign commerce: (1) By commercial bribery; or (2) by offering or giving any bonus, premium, or com- pensation to any officer, or employee, or rep- resentative of the trade buyer; or (d) Consignment sales To sell, offer for sale, or contract to sell to any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, or for any such trade buyer to purchase, offer to purchase, or contract to purchase, any such products on con- signment or under conditional sale or with the privilege of return or on any basis otherwise than a bona fide sale, or where any part of such transaction involves, directly or indirectly, the acquisition by such person from the trade buyer or his agreement to acquire from the trade buyer other distilled spirits, wine, or malt bev- erages—if such sale, purchase, offer, or contract is made in the course of interstate or foreign commerce, or if such person or trade buyer en- gages in such practice to such an extent as sub- stantially to restrain or prevent transactions in interstate or foreign commerce in any such products or if the direct effect of such sale, pur- chase, offer, or contract is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce: Pro- vided, That this subsection shall not apply to transactions involving solely the bona fide re- turn of merchandise for ordinary and usual com- mercial reasons arising after the merchandise has been sold; or (e) Labeling To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign