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Farm Bill Expiration Looms as Congress Seeks Path to Conference, Vital Funding Hangs in the Balance

The U.S. House of Representatives and Senate are wrestling with how to rewrite the nation’s food and agriculture policy through a new Farm Bill.  After the previous bill expired last year, Congress provided a partial extension on January 1 that has kept most programs operating.  That stopgap measure will expire at the end of the fiscal year on September 30.  If no successor Farm Bill is agreed upon, it will jeopardize a host of programs, including vital funding for the beer and wine industries.

Seeking to avert another extension or an outright expiration, in June the Senate passed a complete Farm Bill (S. 954) that achieved $24 billion in savings and made significant reforms to a variety of programs.  But one week later, the House could not address concerns over the size of nutrition cuts and saw its version (H.R. 1947) go down to a rare defeat on the floor.  In July, House leaders returned to the floor with an abbreviated Farm Bill (H.R. 2642) that omitted the nutrition title and gained the necessary votes for passage.

Within the Farm Bill, the Market Access Program has been funded at $200 million annually since 2006 and has served to build and maintain overseas markets for America’s beer and wine industry.  This necessary and highly effective program seeks to counter foreign government promotion of their alcohol beverage sectors.  Should the Farm Bill expire, this funding would immediately cease.

Other programs in jeopardy include research, specialty crop block grants and vital pest and disease exclusion activities.  Under the current extension, the Specialty Crop Research Initiative (SCRI) – a dedicated program for the specialty crop industry that provides significant funding to the winegrape industry – was left entirely without funding.  Research funded via SCRI is slowly winding down due to those missing federal resources.

Congress has not yet established when and how to resolve differences between the two bills.  The Senate and House theoretically could move immediately to conference, despite the nutrition title’s absence from the House version.  But that would likely upset interests who thought the House’s original $20.5 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP) was too small.  That amount was five times larger than the Senate’s $4 billion in SNAP cuts.  At present, the Senate Democrats have announced their members for a conference committee, while the Senate Republicans and the House are yet to appoint theirs.

Regardless of the policy issues, the clock is ticking.  When Congress returns from their August recess, they will have less than ten legislative days before the end of the fiscal year to address the future of the Farm Bill and a host of essential programs it governs.




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TTB Proposal on Industrial Alcohol

On June 27, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a Notice of Proposed Rulemaking (NPRM) on specially denatured alcohol (SDA), completely denatured alcohol (CDA) and related amendments to federal regulations governing non-beverage “industrial” alcohol.  In the NPRM, the TTB makes a host of proposals to reduce regulatory burdens on the industrial alcohol industry and update regulations to align with current practice.

The NPRM contains a great many recommendations that you or someone on your staff should review with care.  Primary among the changes, however, are the following:

  1. Reclassifying two often-used SDA formulas, SDA # 12-A and SDA #35, as CDA formulas.  This change considerably reduces the regulatory burden associated with using these formulas.
  2. Issuing “general use” formulas for articles made with any of 15 SDA formulas.  Again, this change greatly reduces the regulatory burdens associated with using these SDA formulas.
  3. Issuing three new “general use” formulas for uses involving duplicating fluids, ink solvents and certain proprietary solvents.
  4. Authorizing the export of SDA by dealers, instead of only distilled spirits plants as currently authorized.
  5. Authorizing the export of articles that would not qualify for domestic distribution because they are not sufficiently denatured.  This change may substantially impact ethanol export operations, as some other countries’ standards for the denaturing of fuel alcohol are not as stringent as the TTB standard.
  6. Removing from the regulations SDA formulas no longer in use.

Taken together, the proposals represent a significant step towards simplifying TTB’s regulation of industrial alcohol production and distribution.  One can certainly envision a bolder liberalization, but in many instances Internal Revenue Code statutes prevent more radical changes to current regulations and policies.  Although not likely a high priority in today’s political environment, Congress would be wise to revisit those statutes, as many date back to Prohibition or just after repeal.

Current SDA and CDA producers and users should examine their current operations in light of the proposed regulations and should consider submitting comments to TTB, which are due on or before August 26, 2013.




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TTB Ruling on Voluntary Serving Fact Labeling

On May 28, 2013, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a new Industry Circular, Number 2013-2, that authorizes voluntary “serving facts” labeling on alcohol beverages regulated by TTB under the Federal Alcohol Administration Act (i.e., it does not apply to wine below 7 percent alcohol by volume (ABV) or beers made without malted barley or hops).

The most relevant points:

  1. Everything discussed in Industry Circular 2013-2 concerns voluntary labeling statements.  It mandates no new labeling disclosures.
  2. The serving facts statement mostly contains the same information contained in the “statement of average analysis” required for “light” and similar products.
  3. TTB gives producers and importers the option of adding a statement showing the amount of pure alcohol per serving or per container of a product (e.g., 0.6 fl. oz. of alcohol per serving), accompanied by alcohol content (ABV) information.
  4. The serving facts can be displayed in a panel (FDA style) or “linear” fashion.
  5. Producers and importers have the option of showing serving facts as a substitute for the statement of average analysis required on “light” and similar products.
  6. TTB recognizes a wider range of serving sizes for wine, malt beverages and distilled spirits, depending on the strength of the product.  For example, instead of a 12 oz. serving size for all malt beverages, serving facts statements for higher-strength beers should use smaller serving sizes for progressively higher-alcohol products.
  7. If a producer or importer follows the format authorized by TTB, it can add serving facts to existing labels without the need for a new COLA.



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