Imagining No TTB

March 2012
by W. Blake Gray

In many industries, the term “government regulation” is almost a swear word. But the wine industry got a chance recently to imagine life without the TTB, and many found it dark and uncomfortable.

Last year, the White House Office of Management and Budget proposed eliminating the TTB in a memo to the Treasury Department. In the proposal, the TTB’s responsibilities would have been divided between the IRS, which would collect taxes, and the FDA, which would have been in charge of everything else.

But when the White House released its budget proposal in mid-February, that major restructuring was not included. The budget does propose giving the IRS authority to initiate criminal investigations and prosecutions of excise wine tax violations—a move seemingly designed to crack down on gray market wine imports. The Wine Institute responded immediately with a letter signed by seven U.S. senators opposing even this minor change.

While the TTB will survive this year (albeit with a slightly smaller proposed budget, which won’t hasten label approvals), it would be a mistake to think the idea of eliminating it is gone for good. Reducing the size of the federal government remains a popular idea in Washington.

Moving wine under the FDA umbrella would psychologically be a huge step: Less than a decade after being lumped in with weapons, wine might finally be considered food.

What else might elimination of the TTB mean? The biggest change would be in regulatory style. Unlike the TTB, the FDA is reactionary; food producers don’t ask for permission before going to market with new products, but are subject to penalties if they are later found out of compliance with the law. The FDA might require wineries to do two things it demands of other food producers: list ingredients and use a standard nutritional analysis label.

Wine industry representatives strongly oppose eliminating the TTB. The Wine Institute’s statement opposing even the minor change says, “We will continue to advocate that TTB’s responsibilities and reporting structure remain intact and unchanged within Treasury.”

Of the original proposal, Michael Kaiser, director of communications for Wine America, said, “The TTB knows the issue better than the FDA does. The way the FDA works, we think there would be more onerous regulations on the wine industry.”

Adam Lee, owner of Siduri Wines in Santa Rosa, Calif., pointed out that while all wineries large and small—now numbering 7,396 in the U.S., according to WinesVinesDATA—are regulated by the TTB, fruit juice, which is regulated by the FDA, has fewer than 50 producers. “I think that moving from the TTB to the FDA would be at best a pain in the ass, and at worst something that would drive many wineries out of business, leaving just a few big players as is true in the juice business,” Lee said.

Lee and Larry Brooks, winemaker at Tolosa in San Luis Obispo, Calif., probably speak for most producers in strongly opposing ingredient labeling. “What would it say?” Brooks asked. “Contains grapes? How about yeast? By the time it’s bottled the yeast is gone, but it wouldn’t be wine without it. All scientific studies show wine to be one of the purest of food products. There’s virtually zero pesticide residues, and most of the common additives such as fining agents leave no residue.”

Longtime organic advocate and former Wine Institute chair Paul Dolan of Mendocino County, Calif., took a different position. Dolan prefers to keep the TTB in some form, because he said eliminating its rules on issues such as defining appellations would lead to chaos. But he suggested that moving the infrastructure of the TTB under the rubric of the IRS, if that saves the government money, would be OK. And as for ingredient labeling, Dolan said, “As an industry we have been opposed because it opens up a lot of confusion for the consumer. That said, personally I am a believer in transparency. I believe it is the future, and we as consumers need to know what’s in our food choices. In wine it would be accurate alcohol (percentage), fining material, sulfites, etc.”

I’m not a producer, I’m a consumer. I like the way Dolan thinks, and the many wineries that have been conscientiously working low-impact for years should consider whether they really want to stand together with wineries dependent on chemical fixes or have official labeling that gives them a deserved marketing advantage.

That said, fermentation and filtering complicate the idea of wine ingredient labeling. Brooks said, “The grapes are 70% to 75% water, and the wine is more like 80% to 85% water. Do we say, ‘Contains water?’ I’m a proponent of saying ‘contains flavor and happiness.’”

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