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making but apparently receiving a higher priority now—would involve new FAA Act labeling and advertising regulations for distilled spirits, beer, and wine. While TTB’s public statements have not provided specifics on exactly what changes the agency will propose, it has consistently indicated that the result will be less, not more, regulatory burdens. As explained in the Unified Agenda, “TTB anticipates that these regulatory changes will assist industry in voluntary compliance, decrease industry burden, and result in the regulated industries being able to bring DISTILLERS products to market without MAY ENJOY undue delay.” SOME WELCOME Distillers, no RELIEF FROM doubt, will REGULATIONS THAT eagerly await the outcome of HAVE OUTLASTED this rulemaking THEIR ORIGINAL project. PURPOSES. A third rulemaking project would greatly reduce the reporting burdens on the smallest distillers. As proposed by TTB, taxpayers (distilleries, breweries, wineries, and importers) that qualify to pay their excise taxes quarterly or annually could also file their monthly reports quarterly or annually. By substantially reducing the number of reports received, TTB could ease its own paperwork burden and also ease the reporting burden on the companies that face the greatest challenges keeping up with the monthly filing requirements imposed by

TTB’s current regulations. And because such small taxpayers—while very large in number—pay a small fraction of the federal excise tax collected, the reduction in reporting frequency would not likely pose a significant threat to revenue collections. The Unified Agenda includes several other, less-prioritized, rulemaking projects of a deregulatory nature that would impact craft distillers. These would:

“Modernize and streamline” the application requirements for permits and/or registrations for all applicants, including distillers.

Combine distilled spirits plant reporting (currently monthly although, as indicated above, moving to quarterly and annual for the smallest distillers) from three forms (production, processing, and storage) to a single form.

Expand the definition of what constitutes an “oak container” for purposes of TTB’s standards of identity (i.e., class/type) and age statement rules.

Regardless of your political views generally or specifically towards the Trump Administration, distillers should welcome TTB’s recent turn to deregulation. Standards of fill are an anachronism whose time has come and gone. What other consumer product does the government require to come in only a certain limited number of container sizes? Similarly, while everyone likely agrees with the notion that TTB can and should keep false or misleading labels out of the market, even a

quick review of the FAA Act advertising regulations will uncover rules that make no sense. Indeed, many existing rules and policies (e.g., the ban on truthful age statements on a host of products, including vodkas, gins, and “specialty” spirits) actually keep consumers in the dark for no apparent public policy purpose. Hopefully TTB’s labeling and advertising regulatory reforms do away with these and similar restrictions on truthful, non-misleading commercial information. In sum, distillers may enjoy some welcome relief from regulations that have outlasted their original purposes. Of course, whether and how quickly TTB can follow through and complete its planned rulemaking projects remains to be seen.

Marc E. Sorini is a partner in the law firm of McDermott Will & Emery LLP, based in the Firm’s Washington D.C. office. He leads the Firm’s Alcohol Regulatory & Distribution Group, where he concentrates his practice on regulatory and litigation issues faced by suppliertier industry members. His practice for distillers includes distribution agreements, distribution counseling and litigation, labeling, promotional compliance, compliance strategy, and federal and state tax and trade practice enforcement defense.

LOGGERHEAD DECO, INC. 1640 LA DAWN DR. PORTAGE, WI 53901 630.206.3747 www.loggerheaddeco.com info@loggerheaddeco.com

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Artisan Spirit: Spring 2018  

The magazine for craft distillers and their fans.

Artisan Spirit: Spring 2018  

The magazine for craft distillers and their fans.