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dhdunbar last won the day on February 20

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About dhdunbar

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    Eclectic - from square dancing to Miles Davis; browsing the library for books of interest - Tony Hillerman crime novels to popular books on quantum physics. Simply sitting. Cooking dinner when someone else will wash the dishes. Walking the dog. Poetry and epistemology. Writing.

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  1. Yea. When I teach about the regulations, I have a mantra, "It is because they say it is." I preach it is best not to ask why, even in the face of incredulous requests. Nike style - just do it. I don't argue with them unless it is necessary - I know how to argue, but I want to win wars, not lose them because I was able to win a battle. In the case of applications, winning is getting an approval ASAP. I'm pragmatic. I have never been asked, how many square feet. That is, in fact, a nonsensical question. I think the specialists work from check sheets. In their defense, it is a way to try to keep your head above water when you are drowning. But someone should check the check sheets to check to see if the checks for which they ask make sense. Square feet doesn't.
  2. Here's the thing - despite what TTB says, and I am one who says, you should ask them, you can use any area of the bonded premises to store bulk spirits. There is, in fact, no such thing as a designated storage area within the bonded premises. Some specialists insist there is, and when I submit an application, and they come back and ask, I take a deep breath, don't argue, and write "bulk storage' in some hole in the diagram. It is not a fight worth fighting. But here is what TTB says, in its explanation of the changes it made to the regulations in 2011. The document, by the way, was signed by the administor: Recordkeeping accounts. All operations at a DSP are accounted for within four recordkeeping accounts— production, storage, denaturation, and processing. Since the facilities (tanks and rooms) of a DSP may be used for multiple purposes, the accountability for spirits must be maintained of necessity by appropriate records within the four accounts instead of by physical separation. Here is the citation on that - Federal Register / Vol. 76, No. 32 / Wednesday, February 16, 2011 / Rules and Regulations, page 9081. Again, the document is signed by the administrator and expresses TTB official position on the matter. So, even though I counsel asking TTB, they do not always give the straight answer. NRC specialists get this wrong. This means, if TTB is looking for is how many barrels, etc, you can stuff into the area where you can have barrels, that's the whole damned bonded area. The answer you got sounds good, but it is crazy. Now, why does the application ask for this info? It asks because, if you have a facility for storage only, if it will not have a capacity of at least 250,000 wine gallons, you have to make an application to make an application. See 19.56. That is the only thing that makes the number of wine gallons relevant. If, on the application, you designate an area in one corner of the bonded premises for bulk storage, and then proceed to store bulk spirits in another corner of the DSP, so you can put a gin still smack in the middle of the barrel storage area, TTB has no grounds for objecting. It's a battle we can win using TTB's own words, but winning the battle would postpone getting the permit issued. So we give them what they ask for and then do what we must to make good use of the space, secure in the knowledge that we are doing nothing wrong. Mr. Manfreda himself tells us so. Give them a reasonable number. I do and can defend doing that.
  3. You may sell spirits in bulk to a person who is authorized to receive them. That includes manufacturers of non-beverage products. Vanilla is a non-beverage product made according to FDA standards of identity. You pay the tax on your next return. You pass the tax on in your price. The manufacturer of non-beverage products files formulas, keeps records, etc, etc, and then submits a claim for drawback of the taxes for which he bore the burden due to your passing the tax on to him in your price. If approved, they get back all by $1.00 per proof gallon. As you note, special provisions apply if the same company owns the distillery and makes the non-beverage products, but they cannot make non-beverage products on your DSP premises. If you sell spirits that will be used to make non-beverage products, the rules that apply to your operations and transactions are the part 19 sections that apply to industrial alcohol. Persons who produce and deal in industrial alcohol must make application for and obtain an operating permit under the part 19. The basic permit, issued under part 1, is good only for beverage alcohol. Industrial alcohol has its own labeling requirements. The rules that apply to the non-beverage manufacture are found in part 17. Note that the exemption from bonding that just came into play do not apply to industrial alcohol. No matter how little tax you pay, if deal in industrial alcohol, you must have an operating bond and must also have a withdrawal bond if you want to defer the taxes. I recall that the new regulations also require that you identify industrial alcohol at the time you make the production gauge and keep it segregated from beverage alcohol at all times after that. Check that out. I normally provide the citations to back up what I say, but I'm too busy to do that now. The key term you want to enter into your search engine to mine part 19 on these issues is "industrial alcohol."
  4. My last word on this, I promise. Bottom line . American style is governed by US regulations. That said, "American style" is the same in Tasmania as Tulsa. If you want to know if someone is making American style whiskey anywhere "outside of the US," you have to know what American style is.
  5. Since you know what the standards are, then you know the questions to ask. So, rather than asking, "Is there anyone who makes American style whiskey?" ask, "Is there anyone, outside of the United States, who makes a whiskey with a mash bill of grain only, with 51% or more of a single grain, that is distilled to 160 proof or less, aged in new charred oak at not more than 125 degrees proof, and bottled at not less than 40% abv?" That is not ambiguous. "American type" is ambiguous because a lot of people are going to try to answer your question who don't know what you already do, what American type means. It is also ambiguous, because as the term is used in US regulations, "American type" also includes "a mixture of neutral spirits and not less than 5 percent on a proof gallon basis of whisky, or straight whisky, or straight whisky and whisky, if the straight whisky component is less than 20 percent on a proof gallon basis." The answer to your question would be "yes" if there is someone, somewhere making that sort of NSG diluted product. However, I think that is not what you want to know.
  6. This is a complicated question. Here is how I understand it. Because the FDA was drowning in requests for GRAS determinations, it took refuge in a policy that allows a food manufacturer to self-certify that an ingredient is GRAS. However, to do so, the food manufacturer must possess evidence that would have convinced the FDA to issue a GRAS certification if the FDA had examined the evidence itself. Under those circumstances, it seems to me that self-certification is not something that most of the people engaged in craft businesses can pull off. The FDA struggled with the rules for more than 10 years, then issued guidelines. TTB reported on this in its newsletter. Here is what TTB said: . TTB NEWSLETTER | Weekly News August 19, 2016 FDA ISSUES FINAL RULE ON FOOD INGREDIENTS THAT MAY BE "GENERALLY RECOGNIZED AS SAFE" Each producer and importer of alcohol beverages is responsible for ensuring that the ingredients in its products comply with the laws and regulations that FDA administers, including rules regarding criteria for concluding that a substance is “generally recognized as safe” (GRAS). Industry members are reminded that TTB's approval of a COLA or formula does not imply or otherwise constitute a determination that the product complies with the Federal Food, Drug, and Cosmetic Act. Source: FDA Constituent Update dated August 12, 2016 In a step to strengthen its oversight of food ingredients, the U.S. Food and Drug Administration today issued a final rule detailing the criteria for concluding that the use of a substance in human or animal food is “generally recognized as safe” (GRAS). Unlike food additives, GRAS substances are not subject to FDA pre-market approval; however, they must meet the same safety standards as approved food additives. The rule addresses the types of scientific evidence that can be used to demonstrate safety as well as the role of publications in evaluating whether the scientific evidence of safety is “generally available and accepted.” The GRAS criteria require that the safe use of ingredients in human and animal food be widely recognized by the appropriate qualified experts. The final rule also formalizes the voluntary GRAS notification procedure, which was originally established under an interim policy and pilot program for human food in 1997 and animal food in 2010. The FDA strongly encourages companies to inform the agency of GRAS conclusions through the notification procedure finalized with today’s rule. While the FDA can question the basis for an independent GRAS conclusion, whether notified or not, and take action as appropriate, the notification procedure yields important information that aids the agency’s food safety monitoring efforts. The GRAS final rule is the most recent step we are taking to strengthen the FDA’s oversight of substances added to human and animal food. Next steps include issuing additional guidances related to the GRAS regulations. As part of the Foods and Veterinary Medicine Program’s Strategic Plan, the FDA will develop and implement innovative regulatory and compliance strategies to improve premarket oversight and safety evaluation of human and animal food additives and GRAS substances. Now, TTB requires that you submit a formula when you add harmless coloring, flavoring, or blending materials to a spirits product that comes under TTB's labeling jurisdiction. However, in all instances, the FDA is the arbiter of what is and is not safe. TTB bows to the FDA's determinations. The question, then, is what TTB would do it you asserted, in a formula, that you cannot give a GRAS number because you have self-certified, to the FDA, the safety or "kukiboja" root (my invention) as a flavoring ingredient in your specialty item. I suspect it would not be well received. The burden is going to fall on you to show the sense of the community of experts applies in the case of spirits, and not just kukiboja jelly or chewing gum. Thomas Merton wrote in his journal, "Isn't life absurd enough already without our adding to it our own fantastic frustrations and stupidities?" I have a feeling attempts to use kukoboja extract might be piling frustrations onto the absurdities. I will add that the possibility that said extract could destroy kidney function is not an absurdity to be ignored. The requirement for proof that it is safe should not be decomposed along with the rest of the administrative state. I prefer to live free of concerns that food producers are poisoning me, even if it means that the food producer is not free to add any damned thing it wants. Tweedle-dee and Tweedle-dum; freedom to and freedom from. Sometimes it is necessary for government to put a thumb on the scale to balance to and from on a reasonable way
  7. Can someone tell me how many people out of one hundred could tell if you made the NSG from sugar, wine, or grain? I suspect it is very few, but I do not know that. Next, would any subtle difference in the sugar, wine, grain neutral spirits carry over into a gin after you get the required primarily juniper character? Finally, wouldn't it always be better, as a gin maker, if I started with the cleanest spirits available, that is, with the stuff that comes off industrial stills? I don't intend these as rhetorical questions. I am honestly curious.
  8. "American Whiskey" comes under the rubric (l) Class 12; products without geographical designations but distinctive of a particular place. That section provides, (1) The whiskies of the types specified in paragraphs (b) (1), (4), (5), and (6) of this section are distinctive products of the United States and if produced in a foreign country shall be designated by the applicable designation prescribed in such paragraphs, together with the words “American type” or the words “produced (distilled, blended) in __”, the blank to be filled in with the name of the foreign country: Provided, That the word “bourbon” shall not be used to describe any whisky or whisky-based distilled spirits not produced in the United States. If whisky of any of these types is composed in part of whisky or whiskies produced in a foreign country there shall be stated, on the brand label, the percentage of such whisky and the country of origin thereof. That is the law in the United States. It is not the law in Tuva because the US senate can't make laws that apply in Tuva. Search the TTB COLAs online public database for examples of class 12 products and you will find out if anyone has label approvals for American type whiskey produced in another country for export to the US. However, you will not find out if someone is making it in Laos. I think that for your purposes, the important whiskey type listed in Class 12 is whiskey of the type specified in (b)(1). The rest are, respectively, "blended whiskey," which is not what you might think it is; a blend of straight whiskeys; and spirit whiskey; all of which, I think, were meant to allow you to call just about anything that is derived only from grain a whiskey of some sort or the other. They are all, including (b)(1), in my opinion, special interest legislation marching under the banner of consumer protection. That few of you can tell me the standard for blended whiskey demonstrates the proof of that. But I suspect that when you use the term "American type," you are using in loosely, which is okay, as long as we understand that you probably mean only those products that comport to the (b)(1) standard, which is: (1)(i) “Bourbon whisky”, “rye whisky”, “wheat whisky”, “malt whisky”, or “rye malt whisky” is whisky produced at not exceeding 160° proof from a fermented mash of not less than 51 percent corn, rye, wheat, malted barley, or malted rye grain, respectively, and stored at not more than 125° proof in charred new oak containers; and also includes mixtures of such whiskies of the same type. I will omit the provisions related to corn and straight whiskey that follow. Add to that the requirement that it be bottled at not less than 80 proof, which is true of all types of the class whiskey, and you have described American type whiskey as we here in the US understand it. So your question is really whether anyone elsewhere is making whiskey in the manner in which products that would allow them to import them into the US if they are labeled, for example, as "American Type Rye." This is not easily answered, because, unless some in Mozambique wants to export their product to the US, the person has no reason to label the stuff as "American." Frankly who outside of the US gives a hoot? Who in Johannesburg cares that the whiskey down the street is made in an American style? I wouldn't and don't. And given the propensity to play with aging rule so that nanoseconds suffice, I think that a lot of US producers don't really care either.
  9. Everyone who says pay a trademark attorney is correct. Period. And, if the attorney says it is okay, make sure that the attorney files the paperwork to obtain the name for you ASAP. Here today, gone tomorrow rules. Then don't ignore first use issues. Then ... no, no more "thens" allowed - loop this back to my first comment. Get a trademark attorney.
  10. Okay - go to the part 19 table of contents. You know that fusel oil is a byproduct of the distillation processes. Distillation is done in the production account. Look for the production account in the table of contents. You find: Rules for Chemical Byproducts 19.308 Spirits content of chemicals produced. 19.309 Disposition of chemicals. 19.310 Wash water. Follow those leads - you find: Sec. 19.308 Spirits content of chemicals produced. All chemicals and chemical byproducts produced must be substantially free of spirits before being removed from bonded premises. The spirits content of chemicals to be removed from bonded premises must not exceed 10 percent by volume unless the appropriate TTB officer approves higher limits. A proprietor must test chemicals for spirits content and maintain a record of such tests as required by Sec. 19.584. Sec. 19.309 Disposition of chemicals. - Chemicals that meet the requirements in Sec. 19.308 may be removed from bonded premises by pipeline or in containers marked to show the contents. The proprietor must determine the quantities of chemicals removed from bonded premises and keep records of removals as required by Sec. 19.586. A TTB officer may take samples of chemicals. Remember the 10% limit. Follow the leads to 19.584 and 19.586. You'll find that 584 applies and 586 does not (it addresses the production of spirits as a byproduct of a manufacturing process for another product. Sec. 19.584(f) Materials for the production of distilled spirits. - A proprietor must maintain daily records of materials produced or received for, or used in, the production of distilled spirits. This includes records covering ... the quantity of fusel oils or other chemicals removed from the production system, including the disposition thereof, with the name of he consignee, if any, together with the results of alcohol content tests performed on those fusel oils or chemicals ... Sec. 19.586 Byproduct spirits production records. Each proprietor who manufactures substances other than spirits in a process that produces spirits as a byproduct must maintain daily production records of: (a) The kind and quantity of materials received and used in production; (b) The kind and quantity of spirits produced and disposed of; and (c) The kind and quantity of other substances produced. I cannot explain how 19.586 sneaks into the requirement, but if you keep the records required by 19.584, TTB will be delighted. I offer this in the hope that I can encourage people to find answers in the regulations. I did not know the specific answer before I began, but I knew there was something about it and that I probably could find it through the table of contents. I've gone into detail to show you how you can do what I did. It is not hard.
  11. The TTB advice above is somewhat dated, even if they did give it only a year ago. If you filed online originally, then you amend the permit on line as well. You do not use, and TTB will not accept, paper forms. You will also need a diagram, which is not listed in the TTB info. The bond situation is changing, of course, and if you have a bond, you will have to get consent of surety, but it you can get permission to terminate your bond prior to the move, then you would not need the consent of surety - the reason is simple, there would be no surety to give consent. As a rough guideline, if you pay taxes on 2,000 cases of 80 proof 12/750 bottles, you need a bond; if you pay on less you do not, unless you have some industrial alcohol or, strangely, you pay no taxes at all. Yup, if you don not pay taxes you need a bond to cover the taxes you do not pay (the withdrawal portion of the unit bond) , plus the potential liability on any bulk spirits you have (the operating portion of the unit bond). This is not TTB's doing; it is the way that congress wrote the law. The issue of moving the cased goods remains because you can't move bottled spirits from one DSP to another, bond or no bond. So the letter is actually a request for a variance from that requirement, which TTB will grant on a one time basis. How long? Who knows how long TTB will take with anything these days. Allow five months. That is a long time to pay two rents. But do not bank on someone else's experience. Last year's experience is not this year's experience and someone else's experience this year may not be yours. I just wrote a client who asked the how long question, giving the same answer and an apology that I cannot give a better one.
  12. You are correct. Quickly, because I'm drowning in paper today, if you change class or type, you do not do that in storage. Adding flavoring, which changes class and type, takes place, as you summize, in the processing account. So you would transfer the whiskey as whiskey out of the storage account and into the processing account, where you would add the flavorings, according to an approved formula, of course. If the flavorings have an alcohol content, then you need to record the number of proof gallons dumped into the product (line 4). Ditto if the flavoring is wine. You do not report any additions of flavoring that has no alcohol content (it does not change proof gallons, but you do need records of what you added to show that the product is properly labeled.). Note that you do not account for products on the front of processing report by class and type. That is done on the reverse, part IV, where, in your example, you would enter whiskey into the account (column b of the appropriate row) and bottle it as a flavored product, which I would include at line 66, since they do not give a space for that. No, I do not know why. Note that the bottling entry is in wine gallons. Again, why is because they say it is. That's all. That is the general answer. For more specific info on specific products, write me and I'll get back to you to discuss how I can help.
  13. Well, I'm over 60 and had to climb a damned fence to catch my dog, a Shih Tzu, who are notorious wanders and so, like TTB, required a fence. The issue with TTB is not keeping people from scaling. It is establishing a demarcation between an area where a resident has a reasonable expectation of privacy and an area where the resident does not. If an area is within the domain where the resident has a reasonable expectation of privacy, then warrantless entry could be restricted under the 4th Amendment's prohibition against unreasonable search. TTB does not want to have to get warrants to enter, and although the IRC gives them unfettered right of entry at any time of the day or night [see Section 19.11 and 26 USC 5203(b)], they do not want to cloud that authority with constitutional issues. Or, at least, that is my reading of the situation, absent any statement from TTB on the matter. I doubt the TTB specialist will, or maybe even can, articulate that position, and I can't justify it by reference to the legislative history of Section 5178, since the law dates back to the mid 1800's, but it makes complete sense within the regulatory scheme. That, of course, doesn't make my reading right!
  14. There is something in the regulations and there is also something in the law. Sec. 19.52 Restrictions on location of plants. A person who intends to establish a distilled spirits plant may not locate it in any of the following places: (a) In any residence, shed, yard, or enclosure connected to a residence ... 26 USC 5178 (b) - No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under subsection (b)). There are some not so subtle differences between the regulation and law, but TTB gets to interpret the law - it's their job to do that - and its interpretation is the regulation. Once upon a time, TTB visited the premises before approval, but no longer, and could see with human eyes the residence sitting next to the DSP. They no longer do and there is no question in the application that requires you to disclose the fact that the DSP you propose is located in yard that contains a residence. That is a flaw in TTB's regulatory scheme. So I suspect that some DSP's get approved without consideration of the location because TTB does not know. Others get approved after full disclosure. Those rest on safe grounds. The "connected to" phrase is the key to approval. At one time TTB preached that locating on the same tract of land created the connection, per se, case closed. As recently as a year ago there was a specialist at the NRC who proclaimed that approval was not allowed. I had fought that battle already and gotten approvals, so he's wrong. I don't know if others did too, but TTB will now approve DSP premises on the same tract of land, provided you establish that it is not connected to the residence within the meaning of Section 5178. TTB does not have rules, at least any that they make public. They say they will determine this on a case by case basis and as much as I hate case by case, that seems proper here. They state distance is one consideration, but it is only one. If you build a DSP on the same tract of land, you roll the dice, unless you get TTB's approval first. I think the odds in the dice roll are becoming more and more in your favor as we push the envelope on what it means to be "connected to a residence," but there are limits. Attachment is at one end of the scale and location five miles away is at the other. Somewhere between them is an undefined line, which is a lot closer to attached than to five miles, but nevertheless will exist in the case by case world, but where that line falls will vary by the habitual use and other considerations. If you want to approach TTB about this, embrace the term "curtilage." It is the passage from no to yes. "Yard" is the wand we wave. "Yard" has legal meaning. A fence can, but need not, provide a division that sets the "yard" off from the rest of the property. Establishing a clear division between the portion of the property that is within the curtilage of the residence, which includes, but may not be limited to the "yard," and the portion that is not within the curtilage, then establishing that the proposed DSP is located on the right side of that line, is the hurdle you must clear. Beyond these general comments, everything becomes cases specific.
  15. A second bond article in the recent ADI newsletter is in need of comment. It was written by an attorney, and who am I to challenge that - well, I did serve as a hearing office who listened to attorneys squabble and had to decide which, if either, made sense, but here are my comments. You can read the article for yourself. It's entitled "Dropping your bond: thrifty or risky. I'll not quote it here. Here is how I responded to the article after I first read it in Artisans Spirits Magazine: All applications for bonds with which I am familiar carry indemnification clauses. At least two persons must individually indemnify the surety against loss, if there is more than one person who is a principal, as must the entity in whose name the bond is issued, before the surety will issue the bond. I can assure you that the sureties do not see themselves as the deep pockets that will ultimately get stuck with the bill if you can’t pay. Their attorneys will protect them against that. Default on tax payments and if you have any assets, you will likely find yourself in front of a judge in a civil asset discovery hearing. Further, before TTB will go against the surety, it is likely that it will provide the proprietor of the DSP with an opportunity to submit an offer in compromise to compromise all or portion of the tax liability in the proprietor is for some reason unable to pay what is owed. You can see examples of such offers on TTB’s website. I think TTB seldom pursues payment from a surety, but I have no data to substantiate that claim. The advice given in the article is given by an attorney. I am not an attorney and my advice is not legal advice, but neither is his in this context. If you are concerned about risk-reward calculations, consult your personal attorney. Reply ↓