How Bureaucrats May Jack Up Alcohol Costs

By Chuck Muth | October 9, 2019 | 6:33am EDT
(Photo by David Silverman/Getty Images)

People can argue whether the best wine is made in California or New York. We can argue about whether the best whiskey is made in Kentucky or Tennessee. But one thing is for sure: nothing worthwhile is added when bottles are dragged through a swamp.

Unfortunately, some swamp creatures have taken it upon themselves to interfere in the country’s alcohol markets, and they are driving up prices by slapping on regulations imposed in Washington.

This is exactly the opposite of what President Trump wants. His administration is supposed to be working to make American spirits and wine more price-competitive with the rest of the world.

For example, it recently announced that, at the end of October, it will impose $7.5 billion in new tariffs, including on Scotch whiskey and French wine, to make American-made distilled spirits more competitive and pressure other countries to drop their duties. However, unelected bureaucrats are working to undercut the gains he is bringing to the marketplace by imposing new regulations that violate the president’s deregulatory desires and will drive U.S. prices up, not down.

The cause of trouble is an obscure agency named the “Alcohol and Tobacco Tax and Trade Bureau,” also known as TTB.

Late last year, TBB issued Notice No. 176, the “Modernization of the Labeling and Advertising Regulations for Wine, Distilled Spirits and Malt Beverages.” That sounds innocent enough. But the end result would be a massive increase in costs.

For example, the rule would force companies to resubmit all their alcohol labels for reapproval. “Upon request by the appropriate TTB officer, bottlers and importers must provide evidence of label approval for a label that is used on an alcohol beverage container and that is subject to the certification of label approval (COLA) requirements of the applicable part,” the rule says. “Where labels on containers reflect revisions to the approved label that have been made in compliance with allowable revisions authorized to be made on the COLA form or otherwise authorized by TTB, the bottler or importer must be able to identify the COLA covering the product, upon request by the appropriate TTB officer.”

That’s all as clear as swamp mud. Meanwhile, TBB threatens to fine any company that won’t comply with its confusing rule.

All by itself, Notice 176 would more than double the number of regulations that currently afflict the industry. President Trump, of course, wants executive agencies to go the other way, and lift more regulations than they impose. That’s why one of his first acts as president was to sign Executive Order 13771 on February 3, 2017. It directs all agencies to eliminate two regulations for each new one they propose.

Further, “Given that Notice No. 176 has also been said to create hundreds of millions in new business costs, it also seemingly violates Executive Order 12866, which states that the OMB’s Office of Information and Regulatory Affairs must review any new significant regulatory action before it is formally proposed,” a coalition of conservative groups pointed out in opposition to the proposed rule. These groups are encouraging President Trump to work with the Treasury Department to remove Notice No. 176 and replace it with a regulation better aligned with the president’s government reforms put consumers first.

Lawmakers agree that Notice 176 should go. “The Committee is deeply concerned about a number of the provisions in the TTB proposed rule,” the Senate Appropriations Subcommittee on Financial Services and General Government wrote in its report on the fiscal year 2020 spending bill. “The Committee urges TTB to withdraw its proposal and instead work to craft a commonsense alternative that protects consumers without imposing onerous regulatory burdens.” That’s the correct approach.

President Trump is successfully rolling back regulations. As the non-partisan American Action Forum recently reported, the regulatory burden on Americans actually declined by $6 billion in 2018, after soaring by $890 billion during the Obama administration. This is making it more affordable to do business in the United States, and driving an economic boom.

We can’t have bureaucrats imposing massive costs for little gain. The president should ensure that Notice No. 176 is removed, before it dents his economy.

(Chuck Muth is the president of Citizen Outreach.)



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