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dhdunbar last won the day on April 25

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About dhdunbar

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    Retired from ATF and began consulting for DSP's in 2012. When I'm not working, I like to head outdoors. That can mean simply sitting on the deck reading. Regulation bores me. Helping others deal with it does not.

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  1. Good. Because that means you are not doing what I hoped you were not doing. It sounded as if you might not be bottling on the DSP premises - "We are at that point where we want to slowly begin bottling." .The "taproom" reference was "concerning" because of, well, the tap. But I see that you make reference to " filled into standard size bottles that we pour out of. " So I take it that you are filling the bottles on the DSP premises, then bringing them to the tasting room, then pouring them from the hand filled bottles into glasses for on premises consumption. A couple of points - precision hydrometers and thermometers are the only instruments that you may use to determine proof, unless you want to spend a lot of money on a desktop densitometer - see https://www.ttb.gov/images/pdfs/2014-7-21-device-approval-guidlines.pdf for a discussion of approved units. This has been discussed on other threads before. It is just as important to have an accurate thermometer as it is to have an accurate hydrometer. Make your cuts by weight and ease into them. With a little practice, you should not have a problem with getting accurate proof readings. I'm a klutz and I was able to do it.
  2. If taproom, etc, as you describe, means what I think you mean by it, I hate to wade into this. There no provisions for growler type operations in distilled spirits. This is a classic case of the difference between "can" and "may." You "can" fill growers out of a tap in your tasting room because there is no one there to stop you. For the same reason, you also "can" make beer on your DSP premises. But you "may" not do either. Because TTB is short handed, they might never find out about the growler type operation. But if they do, they will have a few more words than this to say about it.
  3. Here we go again. from TTB's newsletter today:: EXTENSION OF HAND SANITIZER GUIDANCE On March 26, 2020, TTB issued guidance providing certain exemptions and waivers to distilled spirits permittees to facilitate the production of alcohol-based hand sanitizers, see TTB G 2020-1A, Production of Hand Sanitizer to Address the COVID 19 Pandemic. On March 27, 2020, the CARES Act was signed into law, providing for additional flexibility with regard to removals of distilled spirits free of tax for use in or contained in hand sanitizer that is produced and distributed in a manner consistent with Food and Drug Administration guidance related to COVID-19. We are therefore working to update our original guidance and also provide guidance on the additional flexibilities of the CARES Act. In the interim, we are extending any exemptions, waivers, or other authorizations currently provided in TTB G 2020-1A, through December 31, 2020. _______________________
  4. TTB's specialists have adopted a mantra, "Floor to ceiling." If you submit an application showing a retail area that is adjacent to the DSP premises, they are likely to send a "correction request" - which is what they call any request for additional information, as well as changes - asking, "Please confirm that the separation is floor to ceiling." So, in practice, they are requiring floor to ceiling separation between a DSP and any place you make sales of the product at retail. I don't care how many exceptions you may have seen to this "rule," TTB now asks about it with regularly. The legal basis is a prohibition, in the law, against establishing a DSP anywhere where liquors are sold at retail (§5178(a)(1)(B)). §19.52 is the section of regulation that implements that prohibition. II find no section of the regulation that addresses suitable separation. That is why I call it policy. I think that policy would not necessarily require a floor to ceiling separation. TTB could interpret the law to allow any separation that it deems adequate to establish that that, for purposes of §5178, the DSP premises is separate from the retailer premises. That is how we work around the residence issue, which also follows from §5178 prohibitions. There are some provisions of part 19 that point toward a floor to ceiling requirement for the purpose of physical security of the revenue. §19.192(b) provides , "The buildings, rooms, and partitions must be constructed of substantial materials. Doors, windows, or any other openings to the building must be secured or fastened during times when distilled spirits plant operations are not being conducted. "Other openings" could be construed to mean any space that might exist between a partition and the the ceiling, but that reading is certainly not required and TTB has not required it, for example, in case of separation between a DSP and an adjacent brewery, although a specialist might do so tomorrow. Further, while the authority for the security requirements is also §5178, they are, I think, authorized under a different paragraph, (a)(1)(A,) than is the need for the separation of DSP and retail premises. Where does that leave you? You must either plan on floor to ceiling partition, which for TTB purposes could be a chain link fence, or be prepared to go to battle over why what you propose to do is both (1) necessary and (2) permissible. In general, unless you have a compelling reason to argue otherwise, I advise accepting the rule, "It must be floor to ceiling because they say it must be floor to ceiling." That's my general rule, "It is because they say it is." I advise picking your fight carefully,.
  5. This issue is a mess because both the FDA and the TTB guidelines are for hand sanitizers and only hand sanitizers. They did not address other sanitizers. Specifically, they do not address sanitzers used for cleaning surfaces, which is a common use when you sell sanitizer in spray bottles. Because I do not know squat about the issue, and because there is an emergency need, and because ... well, just because it is easier to be quiet sometimes and let things play out, I decided to shut up. I summarize the current situation as follows: Someone yelled "pandemic" (belatedly) in a crowded room and since it was, hey, a real pandemic, everyone bolted for the doors without much regard to regulatory decorum. Consequently, persons with access to alcohol for use in sanitizers have gone off in all directions to fill emergency needs in just about any way imaginable. Collectively, you've delivered all sort of products to hospitals, doctors offices, fire departments, police, ambulance services, prisons, individuals, and, well, just about anyone who feels they have a need for a santizer for any use for which they feel that they might have that need. Lines between uses are blurred - it's a hand sanitize, it's not a hand sanitizer, - if not complexity ignored - who cares if its a hand sanitizer - and the general refrain, in practice, is "Rules. Rules? We don't need no stinkin' rules." That is the nature of an emergency. The general who was in charge of federal Katrina aid, when the government decided they had to get serious after it turned out that Brownie had done a hell of a job messing things up, said officials should not make rules they cannot enforce. I'll say this, TTB tried, but in my opinion, the FDA was just plain officious. But the dust from the bolting will settle. This thread asks, "What then?" EPA and FDA This question sent me, via a Google search, to a CDA web site - https://www.cdc.gov/infectioncontrol/guidelines/disinfection/disinfection-methods/regulatory-framework.html. The document is headed, "The Regulatory Framework for Disinfectants and Sterilants - Guideline for Disinfection and Sterilization in Healthcare Facilities (2008). Note that it is specifically for health care facilities. It discusses the role of the CDC, EPA, and FDA. I will not pretend to have any expertise on these matters. Some excerpts from that site: In the United States, chemical germicides formulated as sanitizers, disinfectants, or sterilants are regulated in interstate commerce by the Antimicrobials Division, Office of Pesticides Program, EPA. Any substance or mixture of substances intended to prevent, destroy, repel, or mitigate any pest (including microorganisms but excluding those in or on living humans or animals) must be registered before sale or distribution. To obtain a registration, a manufacturer must submit specific data about the safety and effectiveness of each product. For example, EPA requires manufacturers of sanitizers, disinfectants, or chemical sterilants to test formulations by using accepted methods for microbiocidal activity, stability, and toxicity to animals and humans. The manufacturers submit these data to EPA along with proposed labeling. If EPA concludes the product can be used without causing “unreasonable adverse effects,” then the product and its labeling are registered, and the manufacturer can sell and distribute the product in the United States. FIFRA also requires users of products to follow explicitly the labeling directions on each product. The following standard statement appears on all labels under the “Directions for Use” heading: “It is a violation of federal law to use this product in a manner inconsistent with its labeling.” Failure to follow the specified use-dilution, contact time, method of application, or any other condition of use is considered a misuse of the product and potentially subject to enforcement action under FIFRA. In general, EPA regulates disinfectants and sterilants used on environmental surfaces, and not those used on critical or semicritical medical devices; the latter are regulated by FDA. In June 1993, FDA and EPA issued a “Memorandum of Understanding” that divided responsibility for review and surveillance of chemical germicides between the two agencies. Under the agreement, FDA regulates liquid chemical sterilants used on critical and semicritical devices, and EPA regulates disinfectants used on noncritical surfaces and gaseous sterilants 793. EPA continues to register nonmedical chemical sterilants. In January 2000, FDA published its final guidance document on product submissions and labeling. Antiseptics are considered antimicrobial drugs used on living tissue and thus are regulated by FDA under the Food, Drug and Cosmetic Act. FDA regulates liquid chemical sterilants and high-level disinfectants intended to process critical and semicritical devices. FDA has published recommendations on the types of test methods that manufacturers should submit to FDA for 510[k] clearance for such agents. I suspect that uses of sanitizers outside of the health services is not regulated at all by the FDA, since it is for neither internal or external human use, but I do not know what I am talking about, so any further comment would be inappropriate. But the path to a continuing market for sanitizer is a mind field of testing requirements, etc. Are they enforced? I don't know. It's not my bailiwick. TTB As to TTB, sanitizes made with alcohol are "articles" under its regulations. You find the rules for articles in n part 20, which requires that the articles be made with denatured alcohol. There is no provision for using undenatured alcohol as an ingredient in sanitizers,hand or otherwise, so, you start with denatured alcohol and then add further sanitizing ingredients. The formulas for denatured alcohol are in part 21. Not all formulas are approved for use in sanitzers. Any alcohol used to make denatured alcohol must be produced at a plant that is authorized to conduct operations in "industrial alcohol" That requires a permit issued under part 19 - this is different than the basic permit that beverage plants must have - and a registration, as an industrial alcohol plant, under the same part . Any DSP conducting operations in industrial alcohol must have a bond. There is no exemption based on the excise taxes paid, as there is for beverage spirits. You can be both a beverage plant and an industrial plant, but unless you declare the acohol to be beverage at the itme of the production gauge, you mustd have a bond sufficient to cover the liability for the taxes on the alcohol. Only a DSP can denature alcohol. When a DSP denatures alcohol according to a formula in part 21, the tax is not due upon removal of the denatured spirits from the DSP. Because the hand sanitizer is made with denatured alcohol, if it is made in accordance with the guidance formula, there is no tax due. That is true whether you sell it or give it away. If it is made with undenatured alcohol, then there is tax due. That is true whether you sell or give it away., A DSP may make articles on the DSP premises. Persons who are not DSPs and want to make articles must get a users permit under part 2o and buy a bond. DSPs are exempt from that, but must follow the other rules for making articles in part 20. The rules require an approved formula for all articles made. The hand sanitizer guidance provided a temporary exemption from the the requirements that DSPs have an operating permit, register as an industrial plant, and post bond. It also removed the formula requirement for hand sanitizers made according to the formulas provided in the guidance document. TTB initially provided that you could make hand sanitizers - specifically hand sanitizers - using undenatured alcohol, but after the FDA demanded for no good reason that the hand sanitizer be made with denatured alcohol, TTB changed its requirement. Under the ruiles, if youy make any sanitizer other than hand sanitizer produced according to the guidance document, taxes are due. Period. Whether TTB will ever attempt to collect those taxes is a real question. I doubt it. With all the sanitizer that has been sold, it would require that they devote most of their resources to collecting that tax, which is going to be a very small portion of the taxes that it collects each year. However, after the emergency ends, all of the requirements come to apply. You need an operating permit, you need to register as an industrial alcohol plant, you need to make the articles with SDA that is designated for use in sanitizers, you need to have a and you need to have an approved formula. What about alcohol delivered to hospitals, state agencies, etc. That is a different subject. For it to be withdrawn free of tax, the entity receiving it must have a permit. I do not want to go there now. Nor do I want to provide a citation for everything I just said. One final statement. Certificates of label approval are for beverage alcohol only. You must label industrial alcohol, denatured alcohol and articles according the rules for such products, but you do not get a label approval because they are not beverage products. I am now going to shut up again.
  6. I recommend that everyone read the Notice in full, to understand what changes to the regulations TTB made and how TTB decided to make those changes (or not make them). It is one of the best ways to gain an understanding of how the pieces fit together, especially when the final rule is for a major revision like this one. For part 19, can look to TD TTB–92 for an equally informative explanation of the regulations that govern DSP operations. You can access all TD's through TTB's websit at https://www.ttb.gov/rrd/treasury-decisions. This is the shortest and probably best advice I've every posted on this forum. Between the two TD's you have a very good introductory course, DSP 101, to what TTB requires and how it came to require it. To make it just a bit longer, if in the future you seek to get a section amended, understanding what TTB considered when it made the rule is important. It gives you a foundation on which to base your arguments.
  7. The guidance in the document is precisely worded. The excerpt you quote has three separate sentences, each describing a different set of circumstances. The three sentences are clear, but you have to carefully parse them. First Sentence - Part 19, 20, and 223 requirements Any existing DSP Can immediately commence production of; Hand sanitizer or Distilled spirits (ethanol) for use in hand sanitizer, As described below, Without having to first obtain authorization. What does that allow and prohibit? The sentence is relatively free of embedded clauses. Nothing in that provision prohibits manufacturing , for sale, hand sanitizer or distilled spirits for use in hand sanitizer. This is a blanket authorization. Nothing in that sentence addresses whether you must pay taxes on the distilled spirits that are in the hand sanitize that you produce or on the distilled spirits that you produce for use in hand sanitizer. This sentence waives the requirements of part 19 that a DSP be qualified as an industrial plant and have a bond to engage in such transactions. Part 19 allows you to make "articles," a class of products to which hand sanitizers belong, on DSP premises, without an additional SDA users permit, as long as you make the articles in conformity with the requirements of part 20. Part 20 requires formulas for articles produced. If the formula is not a general use formula, then you must file a formula and obtain TTB's approval of it before making it. However, the "as described below" provision of the first sentence has the effect of making the formula in the guidance a general use formula for the duration of the emergency. Thus, you do not have to have additional authorization, i.e. the formula, to make a hand santizer if you do so in accordance with the formula in the guidance. You will not need to pay taxes if you produce the sanitizer according to the current TTB guidance, since the current guidance requires that you produce hand sanitizer with specially denature alcohol (SDA). You make SDA according to a formula ion part 21. If you follow the formula, , tax is no longer attached to alcohol used to make the SDA. Therefore, the hand sanitizer made with SDA is not subject to excise tax. You remove it without paying tax. Second Sentence - Part 19 and 22 requirements re: governments The second sentence describes a different set of circumstances. It is independent of the first sentance. It addresses the removal, from a DSP, of alcohol. for use by a restricted class of persons, only a state or local government, for use by such persons, to make hand sanitizer. Any existing DSP Also may remove Undenatured or denatured ethanol From bonded premises free of tax For use by any state or local government to produce hand sanitizer. What does that allow and prohibit? The provisions of this sentence apply only to removals made to state or local governments. The government would be the person using the product. In this case, the removal is free of tax, but only if they have an industrial use permit issued under part 22. Again, the guidance waives the requirement that the DSP be qualified as an industrial alcohol plant and the requirement for a bond. It does not waive the requirement that the government have a permit under part 22. Third Sentence - Part 19 and 22 requirements re: hospitals, pharmacies, etc. The third sentence describes a third set of circumstances. It is independent of either of the two preceding sentences. It addresses the removal, without payment of tax, of undenatured or denatured alcohol, to specific types of entities. Any existing DSP may remove undenatured or denatured ethanol from bonded premises free of tax for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer, and not for resale or use in the manufacture of any product for sale. What does it prohibit and allow: The provisions of this sentence apply only to removals made to the enumerated parties, hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions The enumerated parties will be the persons using the product (they do so under the second set of FDA guidelines, which differ from the set that applies to DSPs that are manufacturing hand sanitizers, which has been a cause of some confusion here). In this case, the removal is free of tax, but only if they have an industrial use permit issued under part 22. Again, the guidance waives the requirement that the DSP be qualified as an industrial alcohol plant and the requirement for a bond. It does not waive the requirement that the government have a permit under part 22. Resale Provisions Importantly, the phrase "not for resale" does not apply to sales of sanitizer made with denatured alcohol under the provisions of the first sentence. The not for resale provision apply only in the circumstances described by the third sentence, i.e., where a DSP sells spirits "free of tax" to one of the enumerated entities. The liability for the tax passes from you to the entity upon removal of the spirits from your DSP. That is why the entity must have an industrial use permit and why you must verify that it has such a permit prior to selling the alcohol free of tax to the entity. If the entity then produces a hand sanitizer for which it makes a charge, the entity owes the excise tax. The regulations assume that the government entities to whom you may remove spirits free of tax for their use will not manufacture articles for sale.. This is my reading of the requirements. I am not an attorney and this should not be construed as legal advice. I offer it for general guidance as a result of my experinece with these matters, If you think that I am wrong, or may be wrong, contact TTB to determine if what I am saying comports to the intent of the regulations in question.
  8. I have avoided getting further involved in this because it is a rats nest. The FDA guidance documents say that it contains nonbinding recommendations. WTF does that mean? The whole thing centers on FDA's concern about it GRAS ruies. Whai Would call the FD's overly cautious approach to covid 19 testing poked a stick into the spokes of an essential program. It put us way behind the wave. It's caution on hand sanitzers is having the same effect. In 1996 and 2009 and nine the FDA was prepared to recognize undenatured alcohol as GRAS in hand sanitizers, but in 2016 it reversed that, calling for further testing. Why? Out of a concern that kids might drink it and poison themselves. Let';s put those two concerns on the scales by which we measure this emergency. To me, the FDA's position is indefensible. The are running much too scared. And as a lot of you know, the result has been a "wild west" scene around the country. What has the FDA's conservatism accomplished? So I stay out of it. Once burned. But I will insert a bit more here. TTB's guidance document addresses TWO different matters. One is the production of an article, in the parlance of part 20 of its regulatons. The article is the hand sanitizer. TTB says that you can forget the rules in part 20 for the production of articles if you make the hand sanitizer according to the guidance document. I'll leave that there. The second matter is the sale of undenatured alcohol, plain alcohol, not containing any other substance other than water, to persons who are eligible to receive it under the provisions of the Internal Revenue Code. Normally, you would need to be an industrial alcohol plant to do that. Normally you would need a bond. TTB's guidance document waives those two requirements. It does not waive the other requirements that part 20 p[laces on such sales. If you look at the TTB guidance document carefully, you will see that every reference to "not for sale" applies to the removal of the undenatured alcohol, not hand sanitizer. Here is every reference to "not for sale" that you will find in TTB's guidance document: Alcohol, whether or not denatured, may be delivered tax-free to state and local governments for non-beverage purposes. The same is true for hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions, if not for resale or use in the manufacture of any product for sale. Any existing DSP also may remove undenatured or denatured ethanol from bonded premises free of tax for use by any state or local government to produce hand sanitizer. In addition, any existing DSP may remove undenatured or denatured ethanol from bonded premises free of tax for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer, and not for resale or use in the manufacture of any product for sale. See 26 U.S.C. 5214(a)(3). These measures are generally authorized under authorities that apply in disaster situations, and as a result, are initially approved through June 30, 2020, with the possibility for extension as necessary. Guidance for hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions. Hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions may obtain alcohol free of tax for their own nonbeverage purpose use and not for resale or use in the manufacture of any product for sale, as described in 26 U.S.C. 5214(a)(3). Manufacturing hand sanitizer is one such nonbeverage use. As with state and local governments, such alcohol must be obtained from a distilled spirits plant and may only be obtained by those holding an alcohol user permit from TTB. See 26 U.S.C. 5271(a); 27 CFR part 22. TTB will offer these organizations the same streamlined application, as authorized under 27 CFR 22.42 and 22.43(a)(2). Again, please note that recent FDA guidance specifies using denaturants when making hand sanitizer. The requirement that the person obtaining the alcohol have a permit cannot be waived because it would waive a tax provision. Only congress can do that. The rules are different for the removal. for industrial purposes, of tax determined bulk alcohol The TTB guidance document does not waive those rules. But there is no issue that I can find with selling hand sanitizer made in accordance with the provisions of the guidance document.
  9. As I said somewhere a long time ago in this now too long thread, DISCUS and its likes are better able to deal with this by playing above the rim than a pipsqueak like me is. I'm copying, below, two documents from the Distilled Spirits Council's website. https://www.distilledspirits.org/news/discus-statement-on-u-s-reps-yarmuth-barr-letter-to-fda-commissioner-urging-flexibility-for-distilleries-producing-hand-sanitizer/ One is a letter members of congress have sent to the FDA on this issue. The other is the councils statement on the letter.. It's time to let the big boys play. I'll have one more post on the matter of things other than hand sanitizers and then I'm retiring. I never want to hear the word hand sanitizer again :-). I wash my hands of it, so to say. DISCUS Statement on U.S. Reps. Yarmuth, Barr letter to FDA Commissioner Urging Flexibility for Distilleries Producing Hand Sanitizer March 29, 2020 1:05 pm Statement by Distilled Spirits Council of the United States President & CEO Chris Swonger on a letter sent by Co-chairs of the Congressional Bourbon Caucus Chairman John Yarmuth and Congressman Andy Barr and 85 members of the House of Representatives to U.S. Food and Drug Administration Commissioner Stephen Hahn urging the agency to update its guidance to recognize the use of undenatured alcohol in the production of hand sanitizer during the COVID-19 health crisis: “Distillers across the country are jumping in to produce hand sanitizer for first responders, hospitals and those in need in their communities. The recently-passed CARES Act includes an important provision to guard distillers from having to pay federal excise taxes on the alcohol used. Unfortunately, FDA must first update their guidance to permit distillers to use undenatured alcohol, which is recommended by WHO and is the type of alcohol distillers readily have on hand. We appreciate the support of Chairman Yarmuth, Congressman Barr and the 85 House members in calling on the FDA to be more flexible during this crisis so we can get hand sanitizer to those who need it most. The Distilled Spirits Council of the United States is committed to working with the FDA to explore appropriate ways to address any safety concerns.” BACKGROUND: For weeks DISCUS has been urging FDA to update its Guidance to permit distillers to use undenatured alcohol in its hand sanitizer formula as directed by the WHO Guidance. Most beverage alcohol companies exclusively make products with undenatured alcohol and may not be able to access the required denaturing materials. Denatured spirits are those that are treated with bittering agents to make them unsuitable for human beverage consumption. DISCUS has raised concerns with FDA regarding potential shortages of denaturing ingredients as well as the effect the denaturing materials may have on distilling equipment. Due to the highly concentrated nature and toxicity of the bittering agents, these components are very persistent and distillers may have to develop a special cleaning method to remove them before beverage grade product can be reintroduced. Requiring denaturing could also significantly increase the amount of time it takes to produce this product and get it to those who need it now. The WHO Formula is a very high proof alcohol with hydrogen peroxide, which is less palatable than other denatured products currently on the market. Thus, further bittering should not be needed, particularly in light of the present need. ### ____________________ Friday, March 27, 2020 The Honorable Stephen Hahn Commissioner U.S. Food and Drug Administration 10903 New Hampshire Avenue Silver Spring, MD 20993 Dear Commissioner Hahn: We write regarding the U.S. Food and Drug Administration’s (FDA) guidance to manufacturers who are producing hand sanitizer as part of the COVID-19 crisis. As you know, hundreds of distilled spirits producers across the country have immediately responded to the current health crisis by halting their regular operations and quickly turning to the production of hand sanitizer. These distillers are fulfilling a critical need in their communities and providing the hand sanitizer to health care professionals, first responders, and local and state governments. They have diligently followed the guidance released by their regulator, the Alcohol, Tobacco Tax and Trade Bureau (TTB), and are producing hand sanitizer according to the World Health Organization’s (WHO) formula. Unfortunately, the FDA’s “Temporary Policy for Manufacture of Alcohol for Incorporation Into Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19): Guidance for Industry” does not acknowledge the reality that these distillers have stepped up in a time of crisis to produce hand sanitizer using the alcohol they have readily available, which is undenatured. Undenatured alcohol is food grade alcohol that is compliant with the WHO’s hand sanitizer formula and has the same effectiveness as denatured alcohol. The United States largely differentiates between the two types of alcohol for tax purposes – with undenatured alcohol incurring the distilled spirits Federal Excise Tax (FET) and paid to the federal government. A provision was included in the recently-passed COVID-relief package that would temporarily remove the Federal Excise Tax on hand sanitizer production as long as the distiller has followed FDA guidance. Through the current guidance, the FDA is standing in the way of hundreds of thousands of gallons of hand sanitizer from being produced and given to those on the front lines battling this pandemic. We have a responsibility to provide more resources to help flatten the curve and alleviating this burden would allow distilleries the opportunity to step up and help their communities. We strongly urge the agency to update its guidance to recognize the use of undenatured alcohol in the production of hand sanitizer during the COVID-19 health crisis and work with industry on reasonable safeguards to keep hand sanitizer out of the hands of children. This will ensure distillers do not face a tax bill for filling a vital need in their communities. Sincerely, _________________________ _________________________ John Yarmuth Andy Barr Member of Congress Member of Congress
  10. Since my last post here, I have had a private conversation with someone who was once much higher in the TTB pantheon than I and whose opinion I respect. I'll not name the person, because it was a private conversation. I will share the opinion. The person wrote me: "I do think it gives FDA the leeway to set whatever guidance it wants to adopt including that the spirits be denatured. Attached is the Senate final explanation of the bill. Look at page 13 and the description of section 2308. Congress intentionally relied on FDA here. Under rules of statutory construction (as you note) Congress is assumed to know what FDA had in place and could have used different language to directed FDA to allow the use of undenatured spirits. Moreover, the spirits lobbyists who got this added minute to the bill knew what the FDA conditions were and could have find a way to get around it by the legislation. I am not sure why they did not do so." So I take back my claim about the CARE Act provisions being an unambiguous expression of congressional intent. I'll rephrase my conclusion this way, "the language of the CARE Act amendment clearly establishes that congress does not object to making hand sanitizer with of alcohol that has not been denatured if the FDA choses to allow that." The curious thing is that the FDA guidance document contains what the FDA calls, on the heading to each page, "Non bonding recommendations," then states, in the text, "In general, FDA’s guidance documents do not establish legally enforceable responsibilities. Instead, guidances describe the Agency’s current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited. The use of the word should in Agency guidances means that something is suggested or recommended, but not required." They offer no further explanation of what they mean by that, but invite discussion of an "alternative approach." Now I will do as I said I would and write to both FDA and TTB requesting that for matters of public safety they allow you to make hand sanitizer using undenatured alcohol. That's the job I've given myself for the morning. Hang in there; be safe.
  11. blustar: wrote: Correct, the newest law does NOT override the FDA, although I understand why @dhdunbar might have suspected so, and in fact I would not be surprised if the legislators intent might have been along those lines, but it is the language of the bill that matters. No, I think I am right. I think the provisions unambiguous express congregational intent that persons who manufacture hand sanitizer may do so using alcohol that has not been denatured according to part 21. The language of the bill gives the FDA the authority to provide guidance on how a person may use undenatured alcohol in hand sanitizer, not on whether it may be used. Otherwise the provision makes no sense. So, it also gives FDA authority to regulate how the undenatured alcohol is used. That is what I address above. In that regard, it is very interesting (:"very" is a word I do not use very often 🙂) that each page of the FDA guidance document is headed "Contains Nonbinding Recommendations; " has this prominent heading: and states, within the text. "In general, FDA’s guidance documents do not establish legally enforceable responsibilities. Instead, guidances describe the Agency’s current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited [emphasis added]. The use of the word should in Agency guidance means that something is suggested or recommended, but not required." I find no citation to any section other than in the footnotes which state the sections that the FDA will not enforce under the stated conditions. Why this coy approach? I do not know. Ask an attorney familiar with FDA practices. I sure don't know. TTB then made mandatory, under TTB's authority in part 20 ( not part 21) to require formulas for articles, the FDA's guidance recommendations, which may be nonbinding under FDA FDA's authoritativeness at the time. Whether the CARE Act provisions somehow extend FDA authorities is another matter for attorneys who are familiar with the FDA statutes and regulations. One might use Bill Gates' observation about not being able to "ignore the pile of bodies in the corner" as a bludgeon to get FDA to take a reasonable position on necessary emergency measures. it's easy for me to argue what you might have to argue in court, because it does not endanger my business. I just as the disclaimer that I'm not an attorney, that what I write here should not be considered legal advice, and you should consult an attorney before taking any action,. It would be different if it were my DSP. I know that.
  12. Yes Thatch. And I had found it. Here are my comments.on that: I want to remind everyone that this whole brouhaha is over the use of alcohol in a specific product, alcohol based hand sanitizer. It is not about alcohol based disinfectants in general. I managed to find a searchable copy of the CARE Act. §2308 applies. It amends §5214(a) to add a new paragraph, paragraph 14. That section now provides: (a) Purposes Distilled spirits on which the internal revenue tax has not been paid or determined may, subject to such regulations as the Secretary shall prescribe, be withdrawn from the bonded premises of any distilled spirits plant in approved container – (14) with respect to distilled spirits removed after December 31, 2019, and before January 1, 2021, free of tax for use in or contained in hand sanitizer produced and distributed in a manner consistent with any guidance issued by the Food and Drug Administration that is related to the outbreak of virus SARS–CoV–2 or coronavirus disease 2019 (COVID–19). Paragraph 14 clearly gives FDA the power issue guidance on the distribution of alcohol removed free of tax, but I cannot read the language to allow the FDA to prohibit all such removals. That clearly would be contrary to congressional intent. So, it is likely that FDA would still be able to require that alcohol used in hand sanitizers be USP grade. I am out of my depths here, but the standard appears to be: - Methanol – Not more than 0.5 corresponding to 200 uL/L - Acetaldehyde and acetal - Not more than 10 uL/L expressed as Acetaldehyde - Benzene – NMT 2 uL/KL - Sum of all other impurities - Not more than 300 uL/L I have no idea what that means in practice. Check it out at https://www.usp.org/sites/default/files/usp/document/harmonization/excipients/alcohol-m1238.pdf. Further, it appears to define ethyl alcohol as having not less than 94.9% and not more than 96.0% abv. That is 189.8 and 192 proof, respectively, which is a very narrow range. Finally, they conceivably can impose all sorts of standards that would prevent most small distillers from making product in compliance with the agency's guidance. For example, there are "sterile environment provisions." In anticipation of such stick in the spoke requirements that deny consumers, health care professionals, first responders and anyone else who is endangered by the shortage of f hand sanitizers, you need to be prepared to either practice "civili disaobedience,"and suffer the potential consequences, as some obviously are doing, or find a stick big enough to knock some sense into some very dense heads.
  13. No, I think it is not the same waiver that has been talked about on this thread. That is why I asked this question. I think it is far more reaching. Here is how my argument goes: There is a general presumption in law that congress acts purposefully. Under the Internal Revenue Code there already was no excise tax due on any alcohol used to produce a denatured alcohol, in accordance with part 21. Because those provisions already existed, there was no need for congress to purposefully act to waive a tax on denatured alcohol used in sanitizers. Therefore, congress must have meant something more. I would conclude that congress meant what it plainly said it meant; it waived the tax on undenatured spirits used to make hand sanitizers. If congress waived the tax on undenatured alcohol used to make hand sanitizers, then congress must have intended to permit the use of undenatured alcohol in the production of hand sanitizers. The wavier was an unambiguous expression of congressional intent that undenatured alcohol may be used, as long as the bill is in effect, to make hand sanitizer. Therefore, while TTB and FDA may make rules that govern the use of undenatured alcohol in hand sanitizers, they may not prohibit such use. Thus, both agencies should issue new guidance, consistent with the statutory language, on the rules for the use of undenatured alcohol in the production of hand sanitizers. Because the provisions are emergency provisions, they should issue the rules immediately. That is why I want to see the language of the bill itself. I want to see what rules would seem to be consistent with congressional intent. But without seeing the statutory language, I think it is likely it is the nail in the coffin of the FDA's ridiculous position in this matter. If I am correct,then the silliness will end. I assume that if I have figured it out correctly, DISCUS, ACSA, and attorneys for the large producers, who lobbied for this change, will figure it out too. But I intend to add my voice to those calling on TTB and the FDA to provide guidance documents that comport to congresses intent that taxes be waived to expedite the use of beverage grade alcohol in the production of hand sanitizers. Large distillers have argued, "“If we could get the FDA to say yes you can use the beverage grade and for the duration of this emergency at least for some point in time here for the next two weeks you can waive the denaturant we would literally have millions of gallons of hand sanitizer available within a matter of days,” said Monte Shaw, CEO of Iowa Renewable Fuels Association, an ethanol trade group. “Every one of our plants has gotten contacted by people who want this stuff and we can’t send it to them.” https://time.com/5811201/ethanol-producers-hand-sanitizer/. But, as small distillers, I think you are a more effective distribution channel, at least initially, for sanitizes than the large producers are. You can deliver to the hospital down the street without having to establish and fill a distribution channel that brings the spirits from the large producer to the far away warehouses for subsequent delivery to those who need them to protect the lives of health workers, etc. Such delays cannot be justified. So now we ask that TTB let you do that. I will post my analysis of why the ban on undenatured alcohol should end even if the FDA takes issue with my arguments here about congressional intent. I've been silent here while I worked on a "shame on you, FDA" argument. But, if I am right, about the import of congress' recent action, there is no need for such an argument none. Congress already made it.
  14. Does anyone know anything more about the tax relief mentioned by DISCUS in this news release? News Statement by Distilled Spirits Council of the United States President Chris Swonger on House Passage of COVID-19 Relief Package Which Includes Critical Tax Waiver for Distillers’ Production of Hand Sanitizer: March 27, 2020 1:36 pm “We are grateful that Congress recognizes the significant contributions of the nation’s distillers in producing hand sanitizer to help fight COVID-19, and for waiving the federal excise tax on these much-needed products so that these distillers are not subjected to a tax bill for their goodwill. We urge the FDA to update its guidance for distillers to ensure this tax provision can be implemented. The hospitality industry is one of the hardest hit by COVID-19, and many craft distilleries are facing the very real possibility that they may not be able to open their doors again when this crisis is over. There is more to be done, and we look forward to working with Congress and the administration to ensure future success for distilleries across the United States.”
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