With Government Reopened, TTB Begins Processing Backlog of Beer Labels

Hundreds of Alcohol and Tobacco Tax and Trade Bureau (TTB) employees returned to work on Monday, following a 35-day government shutdown the brought beer label approvals and other important alcohol beverage enforcement activities to a standstill.

Last Friday, President Donald Trump signed a continuing resolution that ended the longest government shutdown in U.S. history and temporarily funded the federal government through February 15.

Now, with the threat of another shutdown looming, TTB workers are tasked with processing a backlog of nearly 10,000 alcohol beverage label approval requests that have already been submitted this year.

That figure doesn’t include certificate of label approvals (COLAs) applications that were submitted prior to the shutdown, or during the last nine days of 2018.

The TTB currently lists the “average label processing time” for malt beverage COLAs at 48 days, and it is working on applications submitted on December 13, 2018.

Reached by email on Monday, TTB spokesman Tom Hogue told Brewbound that the COLA application backlog had “roughly doubled” as a result of the shutdown, and the agency was still “assessing the workload.”

“We are going to do the best we can, as quickly as we can, to get back to the level of service that our stakeholders have come to expect,” he wrote.

During the shutdown, 54 TTB employees remained on the job and performed a variety of functions, including the processing of tax returns, as well as criminal law enforcement and undercover operations, among other activities.

The TTB employs more than 470 people, and some of those workers are tasked with approving labels and issuing new brewer’s notices.

While the shutdown was still ongoing, industry trade group the Brewers Association (BA) worked with Peter DeFazio (D-OR), the chairman of the House of Representatives Small Brewers Caucus, as well as Patrick McHenry (R-NC) and Mike Kelly (R-PA), on a January 24 letter to TTB Administrator John Manfreda urging him to “exercise temporary enforcement discretion on certain TTB actions.”

The letter called for the TTB to “announce that the lack of an approved COLA will not lead to agency enforcement action if the industry member had filed for COLA approval and nothing suggests that the business knew or should have known its label was in violation of the law.”

The TTB approved 192,000 alcohol beverage labels — including approximately 34,000 beer labels — in 2018, according to the Washington Post.

During the 35-day shutdown, a number of small craft brewery owners were stuck waiting for beer label approvals that couldn’t be processed, delaying new beer releases and causing financial setbacks.

Most notably, Washington, D.C.-based Atlas Brew Works was sitting on about 40 barrels of an apricot IPA called “The Precious One” that it couldn’t distribute in cans or kegs outside of its taproom.

“The beer is sitting in our tank, and there is a big opportunity cost,” founder Justin Cox told Brewbound earlier this month. “It’s causing further production delays.”

Atlas Brew Works had planned to distribute the seasonal offering throughout Maryland, Virginia and Tennessee, but the government shutdown delayed those plans.

In response, Cox filed a lawsuit against the federal government, arguing that his company’s First Amendment rights were violated because it could not sell beer with TTB-approved labels.

“The way that we speak to our customers and distributors are through our labels,” he told Brewbound. “We are unable to speak because of the government shutdown, and that is not the way the Constitution or Bill of Rights works.”

Cox estimated that he spent more than $5,000, including labor and raw material costs, to produce the first 40 barrels of The Precious One. But the company had planned to brew an additional 60 barrels, and Cox said he would lose out on potential sales if the brewery decided not to produce another batch.

Meanwhile, in Oregon, Deschutes Brewery president Michael LaLonde told the Bend Bulletin that 8 percent of the company’s business was at risk as it awaited approval for six beer labels and a cider permit.

“It’s having a huge impact on the business and potentially the economy of Oregon itself,” he told the outlet.

Small brewers from around the country had similar stories, including the owners of Vector Brewing, a brewery-in-planning located in Dallas, Texas.

According to the Dallas Observer, the shutdown jeopardized the state of the company’s $1 million Small Business Administration loan.

During the shutdown, the SBA, a federal agency, stopped issuing new loan approvals, leaving Vector Brewing in limbo.

“It’s taken six months to negotiate this SBA loan,” co-founder Veronica Bradley told the outlet. “We thought we were done with fundraising. It’s like we were at the finish line, and then the finish line moved.”

Meanwhile, Dallas-based Deep Ellum Brewing said it would give away beer at its soon-to-open Fort Worth location if the shutdown delayed its ability to sell beer legally.

“While I’d love to just pull the blinds and do some good old fashioned bootlegging, we’ve decided to just give the beer away until the shutdown ends,” the brewery wrote on Facebook.

The brewery had planned to open the new location on March 1, but the 35-day-long shutdown will likely delay the processing of its new Brewer’s Notice request.

“We’ve decided to open our doors regardless of the Tax & Trade Bureau’s approval,” the company wrote.

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