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Paul Tomaszewski

Residences in conjunction with Distilleries

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Alright ladies and gents, I know I'm possibly resurrecting a sleeping giant with this one. However, after talking to Ralph for a while and dealing with this for several months now, I would like to see if I can come to a conclusion on my situation in the near future. Bottom line, if you have a residence next to and/or on the same piece of property as your dsp, could you please e-mail me @ paul@mbrdistillery.com and (if you're willing), I would like to call you and discuss things for a brief few minutes. I've been getting passed around by the feds and both myself and Ralph believe that my individual situation is perfectly legit for having a dwelling house next to (but not in connection with) the dsp/bonded buildings. If I can provide some references of some other examples to the feds when I submit my proposal to them, it may save me much money, time and heartache. For anyone willing to share their experiences on this matter it will be greatly appreciated and I'll put a gold star next to your name on my rolodex, plus you'll be saving me a whole bunch of money each month as some day I would like to pay myself something.

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Paul, here is the exact regulation from the CFR:

Subpart F - Location and Use (of distilleries)

§ 19.131 Restrictions as to locations.

Distilled spirits plants shall not be located in any dwelling

house, or in any shed, yard, or enclosure connected with

any dwelling house, or on board any vessel or boat, or

on premises where beer or wine is produced, or liquors

of any description are retailed, or (except as provided in

§19.133) on premises where any other business is

conducted.

The wording is clear. There are existing precedents like TUTHILLTOWN which property also includes the house I live in. There is no prohibition in the regulations other than what is stated clearly above. Many distilleries of all sizes have residences on the property for workers or the manager. There should be no issue with this at the Federal level and if you are running into resistance contact your local Federal Legislator and get their staff on it. You're going to create jobs and economic development, they should be hot to get you into operation and start collecting taxes.

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In regards to location of a DSP, could a DSP be located, say, in the ground floor of a building where there were apartments on upper floors of the same building? This might be a stupid question but there seem to be plenty of exceptions to the various laws. It seems obvious that the apartments are "dwelling units" and i suppose if they are in the same building it appears that they are "connected" to the DSP but i just want to be sure. Im also curious as to whether it only applies to the dwelling house of the DSP propietor, himself, or anyone who might be living in the building. Thank you in advance.

Alright ladies and gents, I know I'm possibly resurrecting a sleeping giant with this one. However, after talking to Ralph for a while and dealing with this for several months now, I would like to see if I can come to a conclusion on my situation in the near future. Bottom line, if you have a residence next to and/or on the same piece of property as your dsp, could you please e-mail me @ paul@mbrdistillery.com and (if you're willing), I would like to call you and discuss things for a brief few minutes. I've been getting passed around by the feds and both myself and Ralph believe that my individual situation is perfectly legit for having a dwelling house next to (but not in connection with) the dsp/bonded buildings. If I can provide some references of some other examples to the feds when I submit my proposal to them, it may save me much money, time and heartache. For anyone willing to share their experiences on this matter it will be greatly appreciated and I'll put a gold star next to your name on my rolodex, plus you'll be saving me a whole bunch of money each month as some day I would like to pay myself something.

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StevenD,

It seems to me that the regs say "No" to your question.

I think I remember this exact question coming up in the past; but I didn't search prior to my response.

Best,

John

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StevenD,

It seems to me that the regs say "No" to your question.

I think I remember this exact question coming up in the past; but I didn't search prior to my response.

Best,

John

About having apts in the same building, I asked that exact question of a TTB officer while on the phone with him. He said that there cannot be anyone living in the same building as the distillery. As far as locating it near your house on property you also own, subdividing the land will work. I think that's what the guy in NE that owns Most Wanted (Fox?) Did. Greg

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Just to repeat what has been said many times before, there is nothing whatsoever in the federal rules that would require subdividing the property. I can't speak for local laws, but the federal rule is clear. The distillery cannot be in a residence nor in a separate building attached to a residence. Period. That's the sum total of the rule. There is absolutely nothing saying it cannot be on the same piece of property as a residence.

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Just to repeat what has been said many times before, there is nothing whatsoever in the federal rules that would require subdividing the property. I can't speak for local laws, but the federal rule is clear. The distillery cannot be in a residence nor in a separate building attached to a residence. Period. That's the sum total of the rule. There is absolutely nothing saying it cannot be on the same piece of property as a residence.

27CFR 19.131 Restrictions as to locations.

Distilled spirits plants shall not be located in any dwelling house, or in any shed, yard, or enclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is produced, or liquors of any description are retailed, or (except as provided in §19.133) on premises where any other business is conducted.

"...connected with..." is not the same as 'connected to' or 'attached' but that key term is just vague enough to cause you problems. I asked, in person, a TTB agent the direct question of having a non-attached building at the other end of 10 acres, not physically connected in any way. His direct response was, you can't do it. It would have to be retitled to a seperate titled piece of property. And notice the word 'yard' in the TTB entry. All yards are 'connected with' a dwelling. So if the distillery were in a building, or shed, in the yard but not connected to the dwelling would it be allowed? Now you get complicated, and unless your agent gives it in writing I wouldn't bet an investment on it. And if you run a home based business, how does that effect it, since it says "...any other business is conducted."

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Sorry to disagree, and regardless what your inspector said, but this is simply an overcomplicated reading of a simple statement in the Fed Regs. There are a number of licensed DSP premises with homes on the same lot. TUTHILLTOWN SPIRITS is one example, and we had an inspector visit the property twice during our application process. There is simply NO prohibition against having a dwelling on the same parcel as the DSP premises. Period. Finito. And until some distiller is actually denied a permit and tests this in court, I suggest the topic be dropped, lest it invite challenge and create problems where there are none.

And not to put too fine a point on it, Porter is, on my own reading of this section, putting the emphasis on the wrong syl-LAB-le. The way I would interpret this (and I'm no lawyer) to read (adding my own emphasis)

"Distilled spirits plants shall not be located in any dwelling house, or in any shed, yard, or enclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is produced, or liquors of any description are retailed, or (except as provided in §19.133) on premises where any other business is conducted."

Meaning, any shed, yard (defined portion of a property connected with a dwelling), or enclosure; any of which connected physically with a dwelling. This being to prevent someone setting up a still in their backyard, or front yard for that matter. The reading described in Porter's post would extend the "yard" to include all land on the same parcel upon which is a dwelling which would exclude all Farm Distilleries. It simply is not so.

R

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In my observations of this industry I have seen many examples of TTB being unable or unwilling to enforce its own rules consistently, on this and other matters. Based on reported experiences, it would seem that most TTB decision-makers interpret the rule as I do. If the dwelling and the distillery are separate structures and not linked by any connecting structure, the rule is satisfied. But the rule as written is ambigious enough to allow other interpretations. I would say that the best way to deal with a TTB person who takes the 'wrong' position is to explain the situation without attributing error. It is fair to say that the more restrictive interpretation is in the minority and would seem to serve no practical purpose. One assumes that the purpose of the rule is safety and re-titling a piece of property would have no impact on safety.

I disagree with Ralph about burying the topic. It will be in everyone's best interest if TTB recognizes that there is some conflict in the way this rule is being interpreted and provides clarification.

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On a related note, the reg says that a distillery can't be on 'premises where beer or wine is produced.' I've seen a few where the distillery is in the same building as a winery. Is there some exception for micro-distilleries? Is anyone on the forum here doing this now?

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On a related note, the reg says that a distillery can't be on 'premises where beer or wine is produced.' I've seen a few where the distillery is in the same building as a winery. Is there some exception for micro-distilleries? Is anyone on the forum here doing this now?

Premises, not building. Hence, the use of "secured" fences or walls to delineate the bar and/or brewery and/or winery premises from the distillery premises. The TTB will have to evaluate your method of separation of premises in a common building to determine if it meets the requirement. You show you have both physical barriers and administrative rules that maintain this separation. They can inspect you at any time to determine if you continue to meet the requirement. An example of administrative rules would be how you handle tax issues as product moves from the premises of the distillery to the premises of the brewery.

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Premises, not building. Hence, the use of "secured" fences or walls to delineate the bar and/or brewery and/or winery premises from the distillery premises. The TTB will have to evaluate your method of separation of premises in a common building to determine if it meets the requirement. You show you have both physical barriers and administrative rules that maintain this separation. They can inspect you at any time to determine if you continue to meet the requirement. An example of administrative rules would be how you handle tax issues as product moves from the premises of the distillery to the premises of the brewery.

Thanks for the insight!

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Guest mdepew

I just communicated with the TTB this morning and this is what was said about this:

"Hello, I live in New Mexico and considering starting a craft distillery

with production of no more than 1200 gallons per year. I live outside

city limits with no zoning restrictions. I have a 20'X20' building in

close proximity to our residence but is not connected and has no

adjoining entryways. I am considering using it for this purpose if it is

acceptable for the TTB. I await your reply and if you need any further

information I will be more than happy to comply."

The reply from the TTB:

"Michael, unfortunately the distillery laws and regulations prohibit you

from locating a distillery on the same property where there is a residence.

Consequently, you will need commercial space in which to locate your plant.

Refer to section 19.52 of the distilled spirits plant regulations at the

link: http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=f8818be2291a86f8810885f9cc9a1809&rgn=div5&view=text&node=27:1.0.1.1.15&idno=27"

I would love to be able to have my distillery close to home, but this is not very encouraging.

Comments?

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You need to write them right back and in the nicest possible way cite to Subpart F, Section 19.131 and ask where, in the code, subpart and section, they are finding a 'separate, commercial parcel' requirement. The law is your friend. Use it. They don't get to make shit up. Just say you've read the law, cite specifically § 19.131, and you can't find anything about 'a separate, commercial parcel' being required, and could they please tell you where in the code that requirement is to be found.

The link you provided still says exactly what Ralph posted in this thread back in November.

Subpart F - Location and Use (of distilleries)

§ 19.131 Restrictions as to locations.

Distilled spirits plants shall not be located in any dwelling house, or in any shed, yard, or enclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is produced, or liquors of any description are retailed, or (except as provided in §19.133) on premises where any other business is conducted.

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My first distillery location, and still current until my change of address goes through, is in my barn adjacent (but not connected to) my house. Same property, not subdivided. Someone at the TTB is wrong in their interpretation.

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Guest mdepew

I wrote to the TTB again, and this is what was communicated:

"Hello,

I just read the law, specifically Title 27 Alcohol, Tobacco, and

Firearms / Part 19 Distilled Spirits Plants / Subpart F Location and

use / 19.131 Restrictions as to locations, states "Distilled spirits

plants shall not be located in any dwelling house, or in any shed, yard,

or enclosure connected with any dwelling house, or on board any vessel

or boat, or on premises where beer or wine is produced, or liquors of

any description are retailed, or (except in 19.133) on premises where

any other business is conducted." I don't see anything, anywhere in

there where it says 'a separate, commercial piece' of property is

required. Can you please tell me where in the code that requirement is

to be found?

Thank You,

Michael L. Depew "

And the reply was:

"We were addressing the fact that you cannot locate a distillery on the same property as your residence.

With that in mind you'll need either commercial space or other plot where there is no residence.

Wherever you set up it should be not be in violation of local zoning and fire code."

Just an observation, but this sort of back and forth communication between the TTB and myself probably won't resolve anything

as long as the regulations can be apparently interpreted in whatever way they feel at that particular time. I'm only a beginner

just getting into this industry, but I can see from other replies to this thread that there are DSP's with residences that are

in close proximity to their DSP and on the same property. To set up a DSP is no small investment and should not be dependent upon

the whims of the way a person may feel about how the regulations should be interpreted. The law should apply to everyone in exactly

the same way.

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If you're writing them then I expect they are writing as little as possible to be able to do as little as possible to satisfy the hundreds of emails they are probably getting a day.

I would suggest calling them, find you who deals with the issue you're talking about and start communicating with a SINGLE person and then ask your question. If they give the same response, then tell them you're a member of ADI and say that members on your board are already doing what you want.

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Just an observation, but this sort of back and forth communication between the TTB and myself probably won't resolve anything

as long as the regulations can be apparently interpreted in whatever way they feel at that particular time. I'm only a beginner

just getting into this industry, but I can see from other replies to this thread that there are DSP's with residences that are

in close proximity to their DSP and on the same property. To set up a DSP is no small investment and should not be dependent upon

the whims of the way a person may feel about how the regulations should be interpreted. The law should apply to everyone in exactly

the same way.

In fact, "this sort of back and forth communication between the TTB and myself" is the only thing that will resolve it. You just have to stay extremely nice and polite, but insistent that there is no requirement in the code for "commercial space or other plot where there is no residence," and you would like to know the basis under which the office is claiming that such a requirement exists.

If ADI were an actual trade association it would intercede at the highest levels of TTB to get this resolved for everyone's benefit but, sadly, it isn't.

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Have you been dealing with the same agent there? I understand your predicament. I likely would have been unable to start my business if I could not use my own property. You should also have an answer from your local zoning, since your property will be mixed use/home business. That can stop the process too. If they're OK with it, then you also have that on your side. If it comes down to it you could contact John Manfredda at the TTB and explain what's going on. Another option is to submit your paperwork with your address as it is. My map I submitted showed my house on it. Since they have this 'round robin' review process, it's unlikely you're app. will be this same agent who's telling you you cannot do it. You have precedent on your side, there are plenty of small DSP's on property with a residence.

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The reply from the TTB:

"Michael, unfortunately the distillery laws and regulations prohibit you

from locating a distillery on the same property where there is a residence.

Consequently, you will need commercial space in which to locate your plant.

Refer to section 19.52 of the distilled spirits plant regulations at the

link: http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=f8818be2291a86f8810885f9cc9a1809&rgn=div5&view=text&node=27:1.0.1.1.15&idno=27"

Its a sad state of affairs when more than two years later, I just got the same response word for word -- and its a site that doesn't even have a residence on the property (just nearby residences on other properties).

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I have experience here. TTB will decide, on a case by case basis, whether to approve establishing a DSP in any "yard" connected with a residence. They will also decide, on a case by case basis, on whether to allow you to establish a DSP in a mixed use condominium. I have experience there as well.

Remember:

(1) TTB is not dealing with the language of the regulation alone. It is also dealing with the language of the law, which you can find at 26 USC 5178. It is darn close to the language you find in the regulation. Congressional intent is lost to history. The law stems from 1880's provisions for which we lack legislative history. At least, I have been unable to find any.

(2) TTB may not approve anything that is contrary to law.

Therefore, you are going to have to deal with the issue of whether the premises you propose is sufficiently connected to the residence to trigger the prohibition set forth in Section 5178. Neither ADI or any other association will be able to intercede in a way that will have TTB draw lines in the sand that define a particular set of circumstances that will allow it to say, if A and B, but not C or D, then it is (or is not) connected. It is going to be based on the entire set of circumstances.

What TTB should do is enunciate how one should go about asking for an interpretation. When you write the TTB answer desk with minimal facts and ask "mother-may-I" questions, you get safe answers. The safe answer is "No, you may not." But the real answer is often, "Yes, you may." The burden is on you to frame the issues in a convincing way.

I'm going to show up as a "newbie" on these posts. But I've been around a while. I just decided to start commenting here because I see so many answers that are not based on experience or want to argue why something should be other than what TTB says it is, or enter into speculation. In that regard, I really doubt the prohibition has anything to do with safety. For any attorneys lurking in the wings, the issue is probably tied to the common law notion of curtilage; at what point does the resident lose the reasonable expectation of privacy associated with the residence so that TTB's authority to enter the DSP premises at any time and use whatever force is necessary if entry is refused comes to trump 4th amendment rights? But I'm not an attorney either.

By the way, if you actually sit down and prepare a detailed request and send it to the "Appropriate TTB officer," as you should, be prepared to wait for an answer. TTB is short staffed. If you don't understand the notion of "appropriate TTB officer," visit the definitions section of Part 19. That's section 19.1.

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Thanks Chuck. I retract my last comment suggesting this be put to rest, obviously the interpretations being received from Investigators at TTB are not in conformance with practice. I agree that the ongoing polite but not necessarily deferential dialogue with the respondent at TTB is important. It will form the basis for your appeal if you must file one. But also, the previous suggestion that you pick up the phone and call the TTB directly is a good one, and take notes on the conversations. I stand with Chuck on this, the law and precedent agree: there is no prohibition against having a DSP premises on the same parcel as a residence, a domicile, a house. There are numerous examples of licensed DSPs with residences on the same lot, not connected to the distillery building or rickhouse or other of the "licensed premises". And this is exactly the kind of matter the AMERICAN CRAFT DISTILLERS ASSOCIATION is organized to address.

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Ralph at Tuthilltown - Correct - a this time the issue is not the parcel. It is the degree of connection. But don't waste time discussing this on the telephone with someone who cannot set policy. Any comments they make are not binding on the agency - indeed, any oral comments are not binding, even if made by the Administrator. By all means take notes of telephone conversations,but don't think you will be able to claim, "Well, so and so said." If you want answers on which you can reasonably rely, you must write down the particular circumstances and submit those circumstances for a ruling. I'll repeat, TTB makes case by case decisions. It is akin to Justice Potter's position that he could not define "pornography," but that he knew it when he saw it. Replace "pornography" with "connected to" and you will have TTB's current position, at least as they have expressed it to me, on the residence issue. So, don't expect that you are going to get an answer in the form of an algorithm that you can apply to any situation and say yes or no. If you insist on that, TTB may well say, citing 26 USC 5178, "Fine, here is what the law says, 'No distilled spirits plant for the production of distilled spirits shall be located in ... any ... yard ...connected with any dwelling house.' Since you insist on the one size fits all answer, We interpret 'yard' to mean parcel. We therefore will not approve an application." Do not ignore the fact that TTB wants to work with you on this. Prior approvals are evidence of that. But don't insist on boxing them in. That's my advice. It has worked for my clients.

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It is true that phone comments are not to be taken as THE resolution. But they can bring contradicting opinions to the front, especially when the caller can identify the source of the misinformation as they work their way up the ladder of responsibility. The TTB is addressing this issue at an upcoming meeting with their Cincinnati office in DC shortly. The ambiguity is deliberate apparently, so that they can determine the extent of "connection" and determine on a case by case basis, this is true. I believe there is a "one size fits all" solution to the text problem. We'll stay close to this and see what comes out of the upcoming TTB meeting. The TTB representative in Regulatory office agrees the language is ambiguous, they are addressing this.

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