Schumer: Because Of Federal Red Tape, Distilleries Like Cooperstown Distillery In Otsego County Are Forced To Wait Over 200 Days To Get Basic Approvals To Expand; Distilleries & Craft Industry Have Expanded By Over 50%, Yet Federal Distillery Inspectors - Who Approve Requests - Have Been Cut By 10%; Senator Calls For More inspectors To Reduce Backlog That Is Costing Distillery Industry Millions

Press Release

Today, at Cooperstown Distillery, U.S. Senator Charles E. Schumer pushed for funding needed by the Alcohol and Tobacco Tax and Trade Bureau (TTB) to hire the additional federal inspectors to review and approve expansion, and other permit requests from distilleries. Schumer said that TTB inspectors are in charge of auditing and reviewing requests such as bond approvals, production licenses, recipe formulas, product labels, and more that are critical for New York distilleries, breweries, and wineries to expand their operations. Schumer said the shortage of federal inspectors means distilleries can wait for hundreds of days to have their requests approved. According to industry data, the licensed beverage industry has grown by 53% since 2007. Schumer said the growth in the industry TTB regulates has stretched the federal agency to its limits and has led to huge backlogs in bond, permit, recipe and labeling applications companies need to get off the grown or expand.

Schumer pointed to Cooperstown Distillery in Otsego County as an example of a company that is being held back from growing its business due to a lack of TTB inspectors. Specifically, Schumer said the distillery has had to wait months for transfer in bond and label approvals, which are often needed quickly to bring products to market. Schumer said if TTB had enough inspectors they would be able to more efficiently approve there kinds of proposals and applications that would allow businesses like the Cooperstown Distillery to increase production, expand, and even create jobs.

"Craft breweries and distilleries throughout Cooperstown and Upstate New York pour local products and jobs into our economy, which is why we must make sure their exciting growth is not choked off by bureaucratic red tape and delays caused by their federal regulators. In order for these local craft distillers like Cooperstown Distillery to expand and create more good-paying local jobs, we need the federal Alcohol and Tobacco Tax and Trade Bureau to be more efficient with providing the necessary approvals on recipes, labels and licenses producers need to get products out of the barrel and onto the shelf. But right now that is nearly impossible because the number of TTB inspectors has been cut while the number of craft distilleries has increased. The excruciating wait times that result are not only delaying business expansion but even putting some start-ups in jeopardy," said Schumer. "That is why I am calling on federal appropriators to provide $5 million in additional funding to hire these inspectors and clear the backlog of requests. It is high-time we make it easier on our distillers and brewers to get these critical approvals so they can really begin to tap into their full potential."

Schumer explained that TTB has lost 10 percent of its staff since 2007, and currently has about 500 employees, while the number of number of wineries, breweries and distilleries in the country has grown by 53 percent. Schumer said this discrepancy means that while there are increasing requests for the bond approvals, production licenses, recipe formulas, and product labels associated with new these breweries and distilleries, there is less staff to review and audit the requests. TTB is responsible for reviewing over 100,000 labels and thousands of formulas each year. This shortage of TTB inspectors -- which are needed to review and approve each request -- is resulting in excruciating wait periods for these businesses, many of which are small family-owned businesses, looking to expand and create good-paying, local jobs. Schumer said TTB's inadequate funding has limited the agency's ability to complete these reviews in a timely manner and has resulted in a dramatic increase in the average processing time for permits and labels. As of March 2015, the average processing time for a brewery's permit to operate was 115 days and similar backlogs exist throughout the agency. Schumer said this is far too long for the many businesses that rely on securing these permits in order to expand and produce new recipes, and could even threaten the overall operation of some businesses. For comparison, the New York State liquor authority's processing time for operating permits is only 38 days.

These delays cause real and opportunity-cost loss to producers in New York and across the country. As a result, Schumer said increased funding is needed to ensure that TTB has the personnel needed to conduct its responsibilities as the primary regulator of the expanding licensed beverage industry. Increased funding would allow TTB to increase staff in order to match the growth of this emerging license beverage industry as well as upgrade technology and web-based systems to boost efficiencies and reduce delays and backlog. That is why Schumer is pushing for an additional $5 million in the appropriations bill for TTB enforcement activities, which would include hiring additional inspectors. This funding increase is a top priority of the twelve leading industry associations that represent the nation's craft distilleries, breweries and wineries. Schumer said that with this additional funding TTB would be able to both improve the processing time for labels and permits and better support the industry. In addition to approving the requests it receives every day, TTB is tasked with protecting U.S. producers from counterfeit beverages and advising the U.S. industry on a range of trade issues to promote U.S. exports. Schumer said the current lack of TTB staff has diminished the agency's ability to protect the industry from any bad actors.

Schumer highlighted a local Otsego County company, Cooperstown Distilling, to show how these wait times are impacting real businesses. Specifically, Schumer said the distillery has had to wait months for transfer in bond approvals -- which are often needed quickly to bring products to market. According to Cooperstown Brewery, they had to wait several weeks for a Transfer in Bond application approval, which is needed by distillers to purchase and transport bulk spirits from other alcohol producing plants. Even after the extensive and arduous process of filling out the application with technical information not normally on hand for the average distiller -- like "bond coverage limits" -- the Cooperstown Brewery owner explained the application then goes to a TTB officer for a personal review. However, this can take several weeks. Additionally, the distillery had to wait to purchase and transport certain bulk materials, which delayed production another three weeks, because it is illegal to ship certain materials to a distiller without TTB approvals in place.

In addition, Schumer said the Cooperstown Distillery has struggled, like many brewers and distillers, to have labels approved in a timely manner. The arduous process of filling out the applications with technical information, which is not normally on hand for the average distiller, can take a great deal of time. Even if a distillery submits their forms with all the correct information they will an average of 30-day wait for the review process to take place. Forms can also be flagged for a secondary review process, which can take another two weeks or longer. The entire process to have a label approved can take 4-6 weeks or longer, even in the reportedly rare event that all of the details make it past the initial hurdle the first time.

Schumer said these kinds of bureaucratic hurdles could cause businesses like Cooperstown Distillery, which are looking to expand, play by the rules and create jobs, to lose a substantial amount of profits. In fact, Cooperstown is looking at a major expansion in the next year to 18 months, and they will be looking to double or triple their production. The distillery, however, has said such an expansion would be very difficult, and potentially even waylaid, under the current TTB climate and red tape. Therefore, Schumer said he will be pushing to ensure this Cooperstown expansion is made possible through approvals and gets out the gate. Schumer said this lack of federal inspectors could therefore thwart business growth across New York in this burgeoning industry and can be solved with more federal funding directed at hiring inspectors for approvals and auditing as well as enforcement activities.

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