TTB Funding Still in FY 2013 Budget

By Cary Greene
In December, we sent out an ezine to the membership regarding a memo written by the Office of Management & Budget (“OMB”)—the federal agency that makes recommendations concerning government regulation and which oversees the drafting of the President’s budget—that asked whether the Alcohol & Tobacco Tax & Trade Bureau (“TTB”) should be dismantled. OMB proposed a transfer of TTB’s tax collection duties to the Internal Revenue Service (“IRS”), and TTB’s regulatory and public safety functions to the Food & Drug Administration (“FDA.”)
WineAmerica took a serious, but low key approach, in coalition with other producer groups, mindful that such a dramatic regulatory change would have a substantial impact on wineries. We hoped that OMB and the President’s administration generally could be convinced not to include an overhaul of TTB in the President’s budget. Apparently, these efforts were successful. See http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/tre.pdf (TTB’s budget begins on page 1092).
While we are pleased to find no significant regulatory change for wineries in the President’s budget, historically, OMB has a habit of retreading its ideas in subsequent budgets. TTB “user fees”—essentially charging wineries to be regulated—and significant excise tax increases have both been proposed repeatedly by OMB, though not this year. Most likely, we now need to add the dismantling of TTB to our annual watch list.
The membership put us in a great position to get our grassroots engaged should it have been necessary, reaching out continuously since December regarding this issue. While we may ask that more funding be dedicated to the label approval process as 2013 expenditures move through Congress, we are happy to focus on improving industry regulation rather than battle to keep regulation from becoming a larger stumbling block to industry development.

TTB Industry Circular: Tie-In Sales–An Unlawful Trade Practice

To: Distilled Spirits Plants, Breweries, Wineries, Taxpaid Wine Bottling Houses, Wholesale Liquor Dealers, Importers, Retailers, and Others Concerned.
What is the purpose of this circular?

Our purpose in publishing this circular is to remind alcohol industry members and others that tie-in sales of alcohol beverage “products,” as defined in 27 CFR 6.11, and hereafter referred to as “products,” are prohibited inducements under the “Tied-House” provisions of the Federal Alcohol Administration Act (FAA Act).

This Industry Circular supersedes Industry Circular 2003–3.

What is a Tie-in Sale?

A tie-in sale occurs when an industry member requires a retailer to purchase a product that the retailer did not want to purchase, in order to obtain the product the retailer wants. Tie-in sales are a form of unlawful quota sales covered by the FAA Act in 27 U.S.C. 205(b)(7). Tie-in sales are also one of the unlawful means to induce covered under the “Tied-House” regulations promulgated under the FAA Act, which are contained in 27 CFR part 6, “Tied-House.” In particular, 27 CFR 6.72 defines a tie-in sale:

The act by an industry member of requiring that a retailer purchase one product (as defined in § 6.11) in order to obtain another constitutes a means to induce within the meaning of the Act. This includes the requirement to take a minimum quantity of a product in standard packaging in order to obtain the same product in some type of premium package, i.e., a distinctive decanter, or wooden or tin box. This also includes combination sales if one or more products may be purchased only in combination with other products and not individually. However, an industry member is not precluded from selling two or more kinds or brands of products to a retailer at a special combination price, provided the retailer has the option of purchasing either product at the usual price, and the retailer is not required to purchase any product it does not want. * * *

A tie-in sale results in a violation of the FAA Act “Tied-House” provisions (27 U.S.C. 205(b)(7)) and TTB’s part 6 regulations (27 CFR 6.21(g)) when the prerequisite elements of means to induce, exclusion, interstate or foreign commerce, and similar State law (in the case of malt beverages) are established.
TTB deems tie-in sales to be a serious unlawful trade practice that inherently puts retailer independence at risk in the context of exclusion. 27 CFR 6.152(d).

What are some examples of tie-in sales?

Tie-in sales occur when:

  • A retailer must purchase a certain amount of regular distilled spirits, whether bottled or cased, in order to be allowed to purchase distilled spirits in a special holiday container or packaging.

  • A retailer must purchase ten cases of Winery X’s Merlot from a wholesaler in order to purchase ten cases of Winery X’s Chardonnay.
  • A retailer must purchase an industry member’s pre-mixed alcohol beverage specialty product (for example, strawberry daiquiri) in order to purchase a certain amount of their regular distilled spirits case goods. In other words, the regular distilled spirits products are not sold separately but only in combination with the specialty product. See § 6.93 of the TTB regulations (27 CFR 6.93) for rules concerning packaging of products with non-alcoholic items.
  • A retailer is required to purchase a two-bottle package containing one each of a winery’s Merlot and Chardonnay in order to get the Merlot. The Merlot is not available for purchase separately.
  • A retailer must purchase a slow moving wine in order to purchase a distilled spirit that is in heavy demand. The distilled spirit is not available for purchase separately.

The above examples are considered tie-in sales because the retailer is compelled or required to purchase one product in order to obtain the product the retailer wants. A tie-in sale occurs regardless of whether the two products are the same brand or different brands of products. A tie-in sale also occurs if another category of alcohol beverage is involved.

Whom may I contact concerning the information in this circular?
If you have any questions about tie-in sales, you may contact the Trade Investigations Division at:

Trade Investigations Division
Alcohol and Tobacco Tax and Trade Bureau
1310 G Street, NW. Box 12
Washington, DC 20005
(202) 453-2272

WineAmerica Joins Call for Farm Bill Passage This Year

WineAmerica, as part of the Specialty Crop Farm Bill Alliance, joined numerous other agriculture organizations in sending a letter to leaders of the Senate and House Agriculture Committees urging passage of the new Farm Bill this year. A continuation of current law with an extension of the 2008 bill into next year, as others have called for, would push the 2012 bill’s passage into a worse budget climate and make the future of several wine / grape program priorities more uncertain. Therefore, we fully support passage this year of the 2012 Farm Bill and will continue to push Congress to take action now rather than later. The letter follows:

February 10, 2012
The Honorable Debbie Stabenow, Chairwoman
The Honorable Pat Roberts, Ranking Member
Committee on Agriculture, Nutrition & Forestry Committee on Agriculture, Nutrition & Forestry
United States Senate
Washington, DC 20510

The Honorable Frank Lucas, Chairman
The Honorable Collin Peterson, Ranking Member
Committee on Agriculture Committee on Agriculture
United States House of Representatives
Washington, DC 20515

Dear Senators Stabenow and Roberts and Representatives Lucas and Peterson:

The 2012 farm bill is among the most important pieces of legislation the U.S. Congress will
consider this year. We the undersigned have heard calls for an extension of current law. We ask
you to reject these calls for delay and aggressively act to ensure that a new, comprehensive farm
bill is passed this year.

Farmers need a safety net that works more effectively, and they need access to tools that help
them be good stewards of our natural resources. The farm bill also provides essential resources
to prevent hunger, which is especially critical during these tough economic times. The bill also
addresses short and long-term job creation through streamlined and targeted rural economic
development policies and investments in agricultural research.

A temporary extension of current policy creates tremendous uncertainty while serving to further
none of these needs. We, therefore, stand ready to help you in an effort to pass a full,
comprehensive reauthorization of the farm bill this year, without needless delay or disruption.
Sincerely,
American Farm Bureau Federation
American Farmland Trust
American Society of Agronomy
American Soybean Association
American Sugar Alliance
Aquatic Plant Management Society
Association of Farm Managers & Rural Appraisers
Association of Fish and Wildlife Agencies
Board on Agriculture Assembly of the Association of Public and Land-Grant Universities
Center for Rural Affairs
Community Food Security Coalition
Council for Agricultural Science & Technology (CAST)
2
CropLife America
Crop Life & Reinsurance Bureau
Crop Science Society of America
Ducks Unlimited
Environmental Defense Fund
Evangelical Lutheran Church in America
Experiment Station Committee on Organization and Policy
Fair Food Network
Green for All
Housing Assistance Council
Institute of Food Technologists
Izaak Walton League of America
Kentucky Waterways Alliance
Land Trust Alliance
League of Rural Voters
Midwest Dairy Coalition
Missouri Coalition for the Environment
National Agricultural Biotechnology Council (NABC)
National Association of Conservation Districts
National Association of Counties
National Association of Development Organizations
National Association of Resource Conservation & Development Councils
National Association of Towns and Townships
National Association of Wheat Growers
National Audubon Society
National Barley Growers Association
National Bobwhite Conservation Initiative (NCBI)
National Catholic Rural Life Conference
National Coalition for Food & Agricultural Research
National Corn Growers Association
National Farmers Union
National Milk Producers Federation
National Organic Coalition
National Rural Health Association
National Sorghum Producers
National Sunflower Association
National Sustainable Agriculture Coalition
National Telecommunications Cooperative Association
National Trust for Historic Preservation
National Wildlife Federation
North Central Weed Science Society
Organic Farming Research Foundation
Organic Trade Association
Partners for Rural America
Pheasants Forever
Pollinator Partnership
3
Quail Forever
Rain and Hail
Rural Community Assistance Corporation
Rural Community Assistance Partnership
Rural Community Insurance Services
Slow Food USA
Soil and Water Conservation Society
Soil Science Society of America
Southern Weed Science Society
Specialty Crop Farm Bill Alliance
The Nature Conservancy
The Wildlife Society
The Xerces Society for Invertebrate Conservation
Theodore Roosevelt Conservation Partnership
Union of Concerned Scientists
United States Conference of Catholic Bishops
USA Dry Bean & Lentil Council
US Canola Association
US Composting Council
US Rice Producers Association
Weed Science Society of America
Western Peanut Growers Association
Western Society of Weed Science
World Wildlife Fund
cc: The Honorable John Boehner
The Honorable Nancy Pelosi
The Honorable Harry Reid
The Honorable Mitch McConnell
Members of House and Senate Agriculture Committees

Registration is Open for the 2012 Wine and Grape Policy Conference

2012 Wine and Grape Policy Conference
WineAmerica and Winegrape Growers of America
Washington, DC
Please mark your calendars for the 2012 annual meeting
March 11-14, 2012
Washington Court Hotel
Washington, DC
Registration is now open for the annual Wine and Grape Policy Conference in Washington, D.C. The conference is an important opportunity for members of both organizations to discuss and evaluate Federal policy issues of interest to our industry, and to communicate our stances directly to Congressional Staff and the Administration. These meetings play an important role in the critical process of relationship building which is central to our mission of favorably influencing policy outcomes. It is also a great opportunity for wine industry leaders from across the country to network with each other in formal and informal settings. We hope that you will join us in March for this very important meeting.
It must be stressed that Congress will not be in session the week of our meeting. Due to the changing nature of the Congressional Calendar and hotel availability we could not change the dates or venue of our 2012 conference. We believe that we can still have a successful conference. Senior Congressional staff will still be available for meetings.
To register for the meeting please follow this link: http://www.wineamerica.org/membership/springmeeting.cfm
Call the hotel toll free at 800-321-3010 and reference the Wine and Grape Policy Conference
The rates are $299
Rooms fill up quickly in Washington, so please make your reservations as soon as possible. The room block cut off date is February 14.
Please contact Michael Kaiser at mkaiser@wineamerica.org or at 202-223-5172 with any questions regarding the 2012 Wine and Grape Policy Conference.
Preliminary Agenda
Sunday, March 11
12:00 PM – 5:00 PM
WineAmerica Executive Committee Meeting
4:00 PM- 6:00 PM
Welcome WGA Registrants Hospitality Suite
Monday, March 12
7:30 AM
Registration

8:00 AM
Breakfast

8:30 AM – 11:30 AM
Concurrent WGA and WineAmerica Board Sessions

12:00 PM – 1:30 PM
Welcome Luncheon with Speaker

1:30 PM – 5:00 PM
WineAmerica SAC Meeting

1:45 PM- 5:00 PM
WGA Meeting

5:30 PM – 7:00 PM
Wine Reception at hotel

7:00 PM
No Host Dinner

Tuesday, March 13
8:00 AM
Breakfast
8:30 AM – 12:00 PM
Policy Discussion
12:00 PM -1:00 PM
Luncheon and Hill Visit Preview
1:30 PM – 4:30 PM
Hill Visits
6:00 PM – 8:00 PM
Taste the Wines of America Reception
Wednesday, March 14
9:00 AM- 12:30 PM
Hill Visits cont.
12:30 PM
Legislative Wrap-Up Session

WineAmerica Staff Travel

One of the most important and essential functions of the WineAmerica staff is getting our message out to members and non-members across the country. Wineries and State Winery Associations need to know what we are doing to protect their interests in Washington, DC. To get our message out, the WineAmerica staff has been and will be traveling to various parts of the country to speak at various meetings and conferences as well as visiting our member wineries. Additionally, we are always looking to recruit new members. Here is a breakdown of our travel this winter and early spring:

January


Cary Greene spoke at the Oregon Wine Board meeting in Portland, Oregon.

Jennifer Montgomery was a featured speaker at VinCo 2012, the joint meeting of the Colorado Wine Industry Development Board and the Colorado Association of Viticulture and Enology held in Grand Junction, Colorado.

Michael Kaiser was at the 2012 Unified Wine and Grape Symposium in Sacramento, California representing WineAmerica.

February


Jennifer Montgomery will be a featured speaker at the 2012 Midwest Wine and Grape Conference held in St. Charles, Missouri.

March


Michael Kaiser will be attending the inaugural Eastern Winery Exposition in Lancaster, Pennsylvania.

Michael Kaiser and Jennifer Montgomery will be attending Wineries Unlimited 2012 in Richmond Virginia.

April


Michael Kaiser will be a featured speaker at License to Steal: The National Wine Marketing Conference held in Geneva-on-the-Lake, Ohio

Michael Kaiser will be attending the fourth annual DrinkLocalWine Conference in Denver, Colorado. The conference will be focused on Colorado wine this year.