Department of Justice Strikes Major Blow to ASCAP and BMI

7.6.2016

by Tara Good

What does it mean for wineries?

WineAmerica is pleased to learn that the Department of Justice has denied performance licensing organizations (PROs) changes to the consent decree.

Yesterday, the Department of Justice (DoJ) announced that, after two years of reviews, they would not alter the existing consent decree regulating Broadcast Music, Inc. (BMI) and American Society of Composers, Authors and Publishers (ASCAP), as well as other elements of the music industry. The consent decree has regulated BMI and ASCAP since 1941 in response to anti-competitive behavior. Importantly, the DoJ struck down the PROs requests for “fractionalized licensing.”

This is an important decision for wineries who purchase “blanket licenses” from PROs in order to play music at their venue. A blanket license allows a venue to play a PROs entire repertory. Had the DoJ agreed to fractionalized licensing, a winery would have had to pay every PRO that represents a songwriter for a song with multiple writers: for example, if a song has four writers, each with a different PRO, then all four PRO could claim royalties for that single song.

WineAmerica is aware of PROs claims that a winery is required to pay each one. While, according to copyright law, a venue is required to pay to use copyrighted material, WineAmerica is working to bring transparency and market competition to the licensing process. We believe that small business should have the tools to make sound business decisions based on their unique needs. In our lobbying efforts, we argued that fractionalize licensing would have eliminated buyer’s choice in the marketplace, encourage anti-competitive behavior, and ultimately raise the cost of performing music.

Excerpt from WineAmerica’s comments to the DoJ on the consent decree, 11/20/2015:

Requiring the purchase of a license for joint ownership would further the anti-competitive behavior or BMI and ASCAP. It would eliminate buyer’s choice in the marketplace. By requiring multiple licenses for a single musical work, it would raise the cost of performing music. Venues are already canceling live music due to costly licenses. Requiring the purchase of multiple licenses would dramatically raise the number of wineries and vineyards no longer offering live music, hurting business, the music industry, and the consumer.

The consent decree does not regulate Society of European Stage Authors and Composers (SESAC) or Global Music Rights (GMR).

WineAmerica applauds the Department of Justice in its decision, meanwhile we will continue our lobbying efforts to alleviate undue burdens put upon wineries by PROs.

For more information, contact, Tara Good, Director of Operations at tgood@wineamerica.org, 202-223-5175.

Additional links:

Billboard:                     Department Of Justice To Deny Consent Decree Amendment

WineAmerica:              32% Of Wineries Surveyed Cancelled Live Music

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WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations.  As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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TTB Requests Comments on Wine Labeling Requirements

by Michael Kaiser

6.27.16

TTB has issued Notice 160 (read it here) Proposed Revisions to Wine Labeling and Record Keeping Requirements. The notice proposes to amend the labeling regulations to provide that any standard grape wine containing 7% or more alcohol by volume that is covered by a certificate of exemption from label approval may not be labeled with:

  • A varietal designation
  • A type designation of varietal significance
  • A vintage date
  • An appellation of origin, unless the wine is labeled is in compliance with the standards set forth in the regulations.

If a winery is choosing to file for an exemption from label approval, under this proposal they will only be allowed to use the descriptors on their labels if the wine in question meets the current labeling requirements. For American viticultural areas (AVA) the requirements are:

  • The AVA must be approved for use by the TTB
  • 85% of the wine must be made from grapes grown in the AVA
  • The wine must be fully finished in the state where the AVA is located

That is, a winery may use the AVA with a label filed as an exemption if they have purchased bulk wine that has been finished in the state where the AVA is located and bottled it elsewhere.

The TTB is taking this action in response to concerns raised by wine industry members and members of Congress regarding the accuracy of label information on certain wines covered by certificates of exemption from label approval. The are requesting public comments until August  22, 2016. Comments can be submitted the following ways:

  • Internet: www.regulations.gov (via the online comment form for this notice as posted within Docket No. TTB–2016–0005 at ‘‘Regulations.gov,’’ the Federal e-rulemaking portal)
  • U.S. Mail: Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005
  • Hand delivery/courier in lieu of mail: Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 400, Washington, DC 20005

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations.  As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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Hot Topic: The Food Safety Modernization Act

by Michael Kaiser

6.20.16

The Food Safety Modernization Act (FSMA) was passed by Congress in late 2010 and signed into law by President Obama on January 4, 2011. The intent of the FSMA is to allow FDA to “focus more on preventing food safety problems rather than relying primarily on reacting to problems after they occur.” The FSMA broadens the enforcement power of the Food and Drug Administration and creates higher rates of compliance with new prevention and risk based food safety standards. Additionally, it holds imported foods to the same standards and domestic foods and requires the FDA partner with local and state authorities on implementation.  The FSMA brings the wine industry under FDA jurisdiction more to than ever before.

The FSMA is a multi faceted piece of legislation that has taken nearly five years to fully implement. The last regulations authorized by the law were published on May 27. The preventative enforcement powers of the FDA have been expanded in the FSMA. The new powers are as follows and next week we will examine the regulations that have been written to enforce these new powers.

Prevention

  • Mandatory preventive controls for food facilities: Food facilities are required to implement a written preventive controls plan.  This involves: (1) evaluating the hazards that could affect food safety, (2) specifying what preventive steps, or controls, will be put in place to significantly minimize or prevent the hazards, (3) specifying how the facility will monitor these controls to ensure they are working, (4) maintaining routine records of the monitoring, and (5) specifying what actions the facility will take to correct problems that arise.  
  • Mandatory produce safety standards:  FDA must establish science-based, minimum standards for the safe production and harvesting of fruits and vegetables.  Those standards must consider naturally occurring hazards, as well as those that may be introduced either unintentionally or intentionally, and must address soil amendments (materials added to the soil such as compost), hygiene, packaging, temperature controls, animals in the growing area and water. )
  • Authority to prevent intentional contamination:FDA must issue regulations to protect against the intentional adulteration of food, including the establishment of science-based mitigation strategies to prepare and protect the food supply chain at specific vulnerable points.

Throughout the summer we will be examining the Food Safety Modernization Act and how it impacts the wine industry.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations.  As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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Pennsylvania Becomes 44th State to Allow Direct-to-Consumer Shipping

by Michael Kaiser

6.9.16

The Keystone State has become the 44th US state to allow some form of direct-to-consumer shipping of wine. Yesterday Governor Tom Wolf (D) signed House Bill 1690 into law, opening up state. Now, only six states prohibit direct-to-consumer shipping: Alabama, Delaware, Kentucky, Oklahoma, Mississippi and Utah. Pennsylvania is a “control state” and the Pennsylvania Liquor Control Board (PLCB) will remain in place.

Prior to HB 1690, Pennsylvania did have a DTC permit process.  The permit was extremely difficult to obtain as it required all sales to be fulfilled through the PLCB. The new DTC rules resemble the laws that WineAmerica, and our partners the Wine Institute and Free the Grapes! support. When HB 1690 is implemented, it will allow any wine producer licensed with the PLCB, another state, or another country to ship wine to a consumer. However, federal import rules would prohibit a foreign producer to ship. The new DTC license is only open to wine producers, not wine wholesalers or retailers.

To obtain the DTC license, a winery will need to send an application to the PLCB. The application must include a copy of the winery license and a $250 application fee. The applicant winery must also obtain a sales tax license (available here) and show proof of the license to the PLCB. The annual renewal fee for the DTC license is $250. The DTC sales limits are 36 standard cases to a consumer per calendar year per winery. There are no sales restrictions, so a wine that is sold by the PLCB can also be shipped directly to a consumer. The tax requirements are: 6% state sales tax, variable local county and city taxes–which could raise the total tax to 10%–and an excise tax of $2.50 per gallon collected from the purchaser and remitted to the state Department of Revenue.

Another key modernization development in HB 1690 is the ability of restaurants, hotels, and grocery stores with in-store restaurants to sell up to four bottles of wine for off-site consumption.

The bill also creates a commission to study the the possibility of privatizing the PLCB. The commission must provide a report to the Pennsylvania legislature in six months.

The new law goes into effect on August 8. WineAmerica will provide updates as needed.

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Questions? Contact Michael Kaiser, Director of Public Affairs, mkaiser@wineamerica.org.

WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations.  As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.

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