DC CONSIDERING PREJUDICIAL LAW CHANGE

[Ralph at Tuthilltown]

Just learned that DC is considering an amendment to their alcohol laws which is prejudicial against American producers and favors Irish and Scotch producers of whiskey. The critical section being considered is as follows:

§ 25-751. Limitations on container size.

© No person shall sell or deliver in the District alcoholic beverages in containers of a capacity of 1/10 gallon, except the following:

(1) Scotch whiskey, Irish whiskey, brandy, and rum;

(2) Cordials and liqueurs, cocktails, highballs, gin fizzes, bitters, and similar specialties; or

(3) Domestic and imported still wines and sparking wines.

The question to ask your DC legislators: Why do Scotch and Irish whiskey makers get this right and not American producers?

This is one more example of the bias toward just Scotch and Irish whiskey producers to the exclusion of producers of whiskey in the rest of the world. And especially important since it is American law which does not help, but excludes American tax paying producers.

R

[BWFiggins]

Hi Ralph,

This is clearly prejudicial, but really, who is permitted to bottle in 1/10 gallon volumes, anyway? My take on this would be that every 375 ml bottle in every class and type will still be permitted in the District of Columbia, because federal rulemaking did away with the half-gallon, fifth-gallon and tenth-gallon such a long time ago. If DC is serious about excluding this bottle size, they had better make it metric in their legislative language, because for spirits and wine, the metric system rules the day.

Is it still true that DC is one of the only places in the country where producers can sell direct without the use of a broker or distributor?

Have a great week,

Rusty

[Ralph at Tuthilltown]

The change would prevent "nips" by American producers in DC. I'm told this is not a popular change and may be set aside. But the real issue is: "Why do the Scotch and Irish and Canadian whiskey producers get exemptions no other producing country gets? That exemption flies in the face of the relatively new EU regulation requiring whiskey to be in oak for minimum three years, while still recognizing Bourbon and Rye Whiskeys as "American spirits", the EU law contradicts itself when it refuses to accept the American definition of an acknowledged American national spirit.

For instance, how is it Canadian Rye gets a pass on its production method, using GNS to blend into the rye whiskey, but it still gets to be called "Rye Whiskey" in the US, though American producers may not blend it similarly? It is, simply recognition that Canadian rye whiskey falls under Canadian rules. This is the same for Scotch and Irish whiskeys, they do not meet the American technical definition of "Rye Whiskey" but are permitted to be sold in the US as "Rye Whiskey" because the rules are different in the country of origin. The EU wants the world to match their definition of Scotch and Irish whiskeys but is denying the same to everyone else.

To to be clear, it is less a matter that we NEED to permit ALL producers the same rights to fill small bottles, than it is that we should not be discriminating in favor of Canada, Ireland and Scotland and against American producers. And we should be lobbying through our Federal officials to, either get the same exemption under EU law which is afforded the Scotch, Irish and Canadian producers in US law (recognition of country of origin regulations for legal whiskey); or we should eliminate the exclusive exemptions and include all countries; or we should eliminate the exemptions altogether and make everyone follow our laws the way the EU is insisting.

[cowdery]

There is no GNS in Canadian whiskey. I used to make this mistake myself until I was corrected by my Canadian friends.

The blending whiskey used in Canada is similar to the blending whiskey used in Scotland and Ireland. It is distilled below neutrality -- just barely, but still below it, making it whiskey -- and to further meet the definition of whiskey, it is aged in oak barrels. If the bottle carries an age statement, all of the whiskey in that bottle is at least that old, including the nearly-neutral blending whiskey. Again, just like the Scottish and Irish practice.

In all three cases, it is fair to call the blending spirit 'nearly neutral,' but it is not neutral and, therefore, not GNS.

The United States is absolutely unique in all the world in allowing a product that can contain up to 80% GNS (i.e., vodka) to be labeled as 'whiskey.'

This is not something of which we should be proud.

[Ralph at Tuthilltown]

Thanks for the correction Chuck.

If you have a thought about the ongoing exclusive exemptions allowed Scotch and Irish and Canadian whiskey makers written into American alcohol law, I know I'd be eager to learn it.

R

[cowdery]

I don't know a lot about it. What you've written on the subject makes sense to me.

[Ralph at Tuthilltown]

Thanks Chuck. For anyone not familiar with the topic, it relates to leveling the playing field. In a nutshell:

American law requires some "types" of whiskey to be aged in "charred new oak" barrels, and no minimum time in oak. This applies to "Bourbon Whiskey", "Oat Whiskey", "Malt Whiskey", etc. So in order to sell a product as "Malt Whiskey" it must be aged in fresh, new, unused charred oak. EXCEPT if the producer produces Scotch, Irish Whiskey or Canadian Whiskey, all three countries are "exempt" from the requirement. Their exemption is exclusive, if you make "Single Malt Whiskey" in Wales or Switzerland (both of which are happening) you can not call your product "Single Malt" or "Malt" Whisky and sell it that way in the States.

EU law was changed during the first (Daddy) Bush administration and a three (3) year in oak minimum was added to the EU definition of whisky/whiskey sold in the EU. No requirement for a "new" oak container. And though the EU specifically defines both Bourbon and Rye Whiskeys as "American spirits" and "products of America" those American products are not considered "whiskey/whisky" in the EU unless they are in oak for a minimum of three years. They are recognized as American but the EU redefines those legal American spirits, barring young American distilleries from the EU for at least three years after their goods go into oak, which ends up being four to five years all things considered.

There's an attempt to challenge this being mounted by the US INTERNATIONAL TRADE OFFICE on behalf of American small distillers. It is considered an unfair trade barrier.

The other issue is the exclusive exemptions for Scotch, Irish and Canadian whiskey makers in US law; not so much because they are exempt from the "new oak" rule (after all they are a great after market for used oak produced by American whiskey makers), but mainly because they are somehow made special by those exemptions which are not extended to producers in any other countries but Scotland, Ireland and Canada. In my opinion the exemption should be for all countries that have a recognized "national product" made according to the regulations of the country of origin, or it should be eliminated entirely and every producer be required to meet the US Standards of Identity.

For more detailed info check out the Forum topic about Selling Spirits in Europe on this site.

It is because of these improper international rules in the EU that the issue of the exemptions given to Scotch and Irish whiskeys under this AMERICAN law in DC is an issue. Considering the existing exemptions which are given exclusively to Scotch and Irish whisky producers at the National level without justification, and the barrier erected by the EU against young legal American whiskeys it is a puzzlement why the Capital city of the US would keep a law on the books which further extends the unexplained bias in both EU and US laws toward Scotch and Irish Whisky definitions of whiskey/whisky. It may seem to be a small matter, but it is indicative of a larger perception. And it's just plain wrong.

[Ralph at Tuthilltown]

I have been enlightened by an attorney friend specializing in whiskey who pointed out that the law, as it is written on the books in DC is specific to the size it cites: 1/10th a gallon, and is not an approved fill volume in the US. So the law is a moot point after all. A big who-ha over nothing after all. I sure hope the DC elected officials who passed this law into effect didn't spend too much time on it.

But it is another example why it's important for us all to keep current on which alcohol related legislation is bubbling around out there, including items from local zoning up to Federal law.

[nick jones]

...in order to sell a product as "Malt Whiskey" it must be aged in fresh, new, unused charred oak. EXCEPT if the producer produces Scotch, Irish Whiskey or Canadian Whiskey...

Ralph,

I've never seen this exception that you mention in the CFR or anywhere else. Do you know where I could find it?

My understanding has always been that "Scotch Whiskey", "Irish Whiskey", and "Canadian Whiskey" were themselves all recognized and defined "types" of whiskey. The sole purpose of this recognition, as is clear from the way that these types are defined in 27 CFR 5.22, is to protect these products from counterfitting, unlike the delicious glass of counterfit Burgundy that I enjoyed last night (a boxed "Burgundy" that was produced in California). Here is the CFR's definition of Scotch Whiskey:

“Scotch whisky” is whisky which is a distinctive product of Scotland, manufactured in Scotland in compliance with the laws of the United Kingdom regulating the manufacture of Scotch whisky for consumption in the United Kingdom: Provided, That if such product is a mixture of whiskies, such mixture is “blended Scotch whisky” (Scotch whisky—a blend).

I see no mention of, "Scotch Whiskey producers may age their whiskey in used cooperage and still market it as malt whiskey" or any other such wording. Is this exception that you speak of located elsewhere in the CFR?

The way I understand the law, "Scotch Whiskey" is not "Malt Whiskey", and "Malt Whiskey" is not "Scotch Whiskey". They are two separate "types" recognized by the CFR. As far as I can tell, it would not be any more legal for a Scotch whiskey producer to age whiskey in a used barrel and then market it as "Malt Whiskey" in the USA than it would be for him to do the same with a corn-based whiskey and market it as "Bourbon Whiskey" in the USA.

Am I missing something?

Nick

[Ralph at Tuthilltown]

It is confusing, I know. The CFR definition includes "malt whiskey", there is no definition of "single malt whiskey". All the non-exempt countries' producers of whiskey that is a malt whiskey, as "Scotch Single Malt Whisky" is, may not call their spirits "whiskey" or "whisky" in the US. Only the countries listed: Canada, Scotland and Ireland are exempt from the "new oak" rule and therefore can call their goods "malt whisky" in the US. All others must call their goods "whisky"/"whiskey", or "aged grain spirit". An American producer may not call his goods "Scotch Single Malt Whisky" because it is not made in Scotland and not made under Scottish regulations. The Scotch Whisky Association regulation was adopted by the EU and requires 3 year minimum age in oak for the designation "whisky". A Scotch producer may indeed use a used bourbon barrel (and age, according to EU law, minimum three years in oak, new or used, charred or not) and sell their goods in the US as "Malt Whisky" or "Single Malt Whisky". And yes a Scottish producer may not under any circumstances no matter what the substrate, call his whisky "Bourbon Whiskey" because it is not made in the US.

And it is the opinion of many in the industry, the insertion of the "three years in oak" rule into EU law was the attempt of the Scotch Whisky Association to narrow the definition of whisky and erect the European (the Scottish) method as "the standard" worldwide for "real" whisky production.

The EU and the Scots can do as they please of course. And the US recognizes that right. My point is that the EU is not allowing US producers the same right to make American whiskey according to American rules and have it recognized as a legitimate whiskey product. It's reciprocity I'm talking about. And the question remains: Why do only the Scots, the Irish and the Canadians enjoy the exemptions, why not the Swiss, the Swedes, the Welsh, all of whom are making single malt whisky in the same fashion as Scotch is made, aged the same way. Why are producers of whisky from every other country in the world prohibited from selling their "whisky"/"whiskey" in the US as "whiskey"/"whiskey"?

My point is that the exemptions have no basis in fact or logic and should either be extended to all countries or eliminated altogether. And the EU law should equally recognize American Whiskey and honor the regulations under which it is made and marketed by American producers.

[cowdery]

I guess I have some thoughts on the subject after all.

Generally, laws are not written to cover circumstances that do not exist. When the Standards of Identity were drafted, there were no single malt whiskeys from Tasmania sold in the United States, nor 'whiskeys' made from sugar cane from India. So the law can get behind. Because TTB decisions have the force of law, that's where we can see the rules evolving.

The objective of the Standards is to prevent consumer confusion and consumer deception. Scotch and Irish Whiskey, being well established in the U.S. when the rules were drafted, got very deferential treatment. Presumably, it was assumed that the Scots would police scotch sufficiently to protect U.S. consumers, ditto the Irish.

So scotch whiskey is defined pretty simply, as Nick quotes it above. Made in Scotland under Scottish law (ditto Ireland). Incorporated is the right to use 'malt whiskey' under those terms, not under U.S. terms. The law is less deferential to Canada, which is required to call its product 'blended whiskey' in the U.S., even though Canadian law makes no such requirement in Canada. Producers in any other country are apparently bound by the same standards that bind American producers. Scotland and Ireland already defined 'blended whiskey' so it wasn't an issue with them.

It's gotten hard to handicap TTB these last few years -- they approved 'potato whiskey,' after all -- but that's how I read the rules.

I haven't said anything different from what Ralph said, I've just said it in a different way.

[nick jones]

I haven't said anything different from what Ralph said, I've just said it in a different way.

You are mistaken, Cowdery. Ralph correctly grouped Canadian whiskey with Scotch and Irish whiskey.

Scotch and Irish Whiskey, being well established in the U.S. when the rules were drafted, got very deferential treatment.... The law is less deferential to Canada, which is required to call its product 'blended whiskey' in the U.S., even though Canadian law makes no such requirement in Canada.

The CFR is freely available for anyone to read before making posts on this forum here.

But for those of you who would prefer for me to quote it, here ya go:

Immediately following 27 CFR 5.22((7) (quoted above in post #9) come 27 CFR 5.22((8) and 27 CFR 5.22((9):

“Irish whisky” is whisky which is a distinctive product of Ireland, manufactured either in the Republic of Ireland or in Northern Ireland, in compliance with their laws regulating the manufacture of Irish whisky for home consumption: Provided, That if such product is a mixture of whiskies, such mixture is “blended Irish whisky” (Irish whisky—a blend).

“Canadian whisky” is whisky which is a distinctive product of Canada, manufactured in Canada in compliance with the laws of Canada regulating the manufacture of Canadian whisky for consumption in Canada: Provided, That if such product is a mixture of whiskies, such mixture is “blended Canadian whisky” (Canadian whisky—a blend).

As you can see, Canadian whiskey is granted every protection granted to Scotch and Irish whiskey, and they are all required to call their products "blended" if their products are a "mixture of whiskies" (whatever the hell that means).

Let me reiterate that I am 100% behind Ralph's effort to make the EU recognize Bourbon Whiskey legally produced in the US under US law to be a true whiskey, namely Bourbon Whiskey.

But I think that focusing on this supposed preferential treatment of the Scots and the Irish (and our brothers to the north) is not going to get us anywhere. In my opinion, we'd be better off bartering some appellation that the US doesn't recognize (like port) with the EU in order to get them to recognize Bourbon Whiskey. But then again, I'm no politician, so take my opinion as you will.

Nick

[nick jones]

Immediately following 27 CFR 5.22( (7) (quoted above in post #9) come 27 CFR 5.22( (8) and 27 CFR 5.22( (9):

OMG, LOL!!!

that is 27 CFR 5.22 (b as in bravo)

FYI

Nick

[Ralph at Tuthilltown]

The typical response to the proposal is that the most practical resolution would be a FULL recognition in EU law of American Whiskeys made under American law as legitimate whiskey on a par with the recognition the US Standards of Identity allows Scotch, Irish and Canadian whiskeys, but that response is typically followed by the comment: "Good luck with that." We are regularly reminded that the EU will not change their law, that the SWA will keep that from happening and from US International Trade offices the EU regulators will not even address the topic with the US.

The suggestion that the issue of the lack of quid pro quo between the EU and American law and a proposal that the exemptions allowed Scotch, Irish and Canadian whisky producers be eliminated are about the only lever available to the US in the ongoing attempt to get a fair hearing and equal consideration under EU law. It is as you say unlikely and perhaps just pissing upwind to attempt to eliminate such a long standing policy (the exemptions in US law), but perhaps the threat will be enough to get the EU to recognize American whiskeys as legitimate products.

And I can say with some confidence that the issue of unfair trade barriers to export of American products is high on the list of priorities of the Fed. Once the nature of this particular barrier is explained to a Legislator, it has been my experience they all react the same way, "What the.....?" The bias and unfairness of the EU position is clear as can be and the Fed and (at least) the State of New York are now aware of this and beginning to pay attention, especially given the increase in the volume of spirits being produced by new distillers in the US and the "small business" nature of those distillery operations.

R

[cowdery]

The only way that's a lever is that if it ever had a chance of happening, because that would be an extremely bitter pill for the multinationals that dominate the international distilled spirits industry, and they would be more hospitable to making non-U.S. markets more receptive to merely giving American products the exact same deference our rules give scotch, Irish and Canadian whiskey. But where is the leverage? TTB isn't going to change the Standards of Identity to give U.S. producers leverage over foreign regulators. That's not their job.

Isn't it a stronger argument with American lawmakers to say the Office of the U.S. Trade Representative isn't doing its job of zealously working to open foreign markets to U.S. products?

[Ralph at Tuthilltown]

Chuck, yes it's a bitter pill prospect. And yes it would have to be actually possible. And again yes the more effective course would be to get the EU lawmakers to the table to discuss the problem. Unfortunately there is an arrogance factor that prevents the EU (SWA) from even entering into a discussion that addresses the definition of whiskey/whisky; given the accepted "truth" among the SWA members and apparently the EU lawmakers that the only true experts on making whiskey, the only ones qualified to define whiskey are the Scotch makers. It is time for the US International Trade officials to bring some pressure to bear on the EU just to get them to the table.

And it's not the first time I've been advised that such seemingly impossible undertakings will never be fruitful. The team working on this issue now includes US Legislators, the US International Trade Office and the New York State International Trade office. I guess we'll see what happens. These things take time. But worth doing, considering the enormous market opportunity in the EU and especially for the new breed of distillers producing more and more interesting whiskeys, I think it worth pursuing at whatever speed is possible. Takes a long long time to change State law, forever to change Federal law and Forever and a day to change EU law.

And it doesn't mean that any domestic Law changes should be abandoned in favor of the effort. There's still lots to do at home here in the US on leveling the playing field.

R