The Federal Government Shutdown and TTB

By Jeffrey Giametta

Approximately 483 federal employees that work for the Alcohol and Tobacco Tax and Trade Bureau (TTB) have dutifully reported to work today “for the orderly shutdown of TTB.” We have all heard how that the inability of Congress to pass a spending bill is creating a shutdown of the federal government, but what does that really mean for us in the alcohol beverage industry?

 Well, during the shutdown you won’t be able to file any COLAs, permits or formulas online. Also, if you have any of those types of applications pending with TTB they will be placed on hold and will not be processed any further during the shutdown. 

But don’t worry – if you want to file your tax return and you owe excise taxes, TTB will accommodate you during the shutdown. They will remain staffed to process such returns. 

TTB’s website posted a special notification today that says they will suspend all “non-excepted operations.” No personnel will be available to respond to any inquiries, and there will be no accessto TTB’s eGovernment applications, such as Permits Online, Formulas Online, and COLAs online.
 
The shutdown will encompass all of TTB’s core mission business with the exception of those activities required to ensure that all tax collection remittances are processed, government property is secured and preserved, and criminal enforcement activities continue. At the time of this shutdown only 35 of those 483 employees work in positions that perform those “excepted activities.”  
 
All of TTBs operations will fully resume when appropriations are reenacted – TTB promises “once funding has been restored, and the government shutdown is over, we will work to restore regular service as soon as possible.” To get an idea of when that might happen, we’ll all have to keep an eye on the news coming out of D.C. 
 
The entire TTB Shutdown Plan can be read here.

I-1183 and the Alcohol Distribution Chain

Even as the various litigation questions get asked and answered to attract headlines, we are continuing to support many clients in each tier of the alcohol supply chain to deal with the changes brought by I-1183 and its implementation. The WSLCB and suppliers, distributors, and retailers are full-steam ahead on spirits privatization -- including ongoing evaluations and bidding on the privatizing state liquor store locations -- even as new rules and processes adopted or proposed by WSLCB are evolving. The logjam of spirits-related license applications is causing problems for the WSLCB, and now even causing problems for the federal TTB too concerning Washington retail applicants who are being told they must have certain federal permits at each of their locations. We are assisting clients to evaluate their business opportunities, pursue licenses and permits (or resist those that ought not to be required), and to comment on new rules and facilitate expedited approvals. Stay tuned...

Will Four Loko's FTC Settlement lead to more disclosures of Alcohol Content?

The maker of the controversial Four Loko flavored malt beverages has agreed to label its products with disclosures stating how much alcohol they contain compared to "regular" beer.

Craft beer manufacturers and producers in other categories should watch related regulatory efforts with some caution. TTB has previously proposed that all alcoholic beverages contain a mandatory "Serving Facts" panel, though due in part to the efforts of various industry organizations, including those representing craft brewers, those proposals have been shelved -- for now, at least. The Four Loko case demonstrates that the FTC (which works closely with TTB in these issues) believes that relative alcohol disclosures are meaningful.

Among craft brewers' concerns may be whether their often popular "high hops, high alcohol" ales (some approaching or exceeding 10% ABV) might one day have to caution that they contain twice the alcohol of "regular" beers, or whether they might be required to disclose that the 22-oz. bottles so common to the craft beer category contain more than one serving. Small producers have also complained that requiring them to analyze content, print labels, and get label approval based on Serving Facts of each of their small lots of production will add costs, discourage product development, and favor large manufacturers.

FDA, TTB and Caffeine...

The Food and Drug Administration (FDA) is joining the regulatory movement against products marketed as "energy" alcohol drinks. "Espresso stouts" and other craft beers and spirits are not the intended target of these sorts of things...but this is a movement even those producers should keep an eye on. The U.S. Government's food regulators—FDA (and USDA, too)—often like to take a heavy-handed approach to their role in alcoholic beverage products (when asked by TTB or pushed by state attorney generals or interest groups), because unlike every other food/beverage category, alcohol is the one segment where they can have an up-front role in preventing products from getting to market—the TTB's Certificate of Label Approval process.