Brewers Association Legal Brief May 2014: EOT Beer News

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The Brewers Association’s regular legal brief release summarizes all of the current legislative and legal issues facing the brewing industry in the US. It is an extremely informative and valuable resource. The Association offers their brief as a press release.

The following is a press release from the Brewers Association.

May 2014

A. FEDERAL / NATIONAL / INTERNATIONAL

Small Brewer Federal Excise Tax Legislation

Small brewer excise tax recalibration legislation, The Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act) continues to gain support in both chambers of the 113th U.S. Congress.  H.R. 494 was introduced on February 5 by Representatives Jim Gerlach (R-PA) and Richard E. Neal (D-MA).  Joining as original co-sponsors of the bill were Representatives Peter De Fazio (D-OR), Erik Paulsen (R-MN), Earl Blumenauer (D-OR) and Patrick McHenry (R-NC).  The bill now has a total of 163 sponsors.

On May 9, Senators Ben Cardin (D-MD) and Susan Collins (R-ME) introduced S. 917 in the U.S. Senate.  The bill now has the support of 44 Senate sponsors.

The Small BREW Act seeks to reduce the small brewer rate on the first 60,000 barrels by 50 percent (from $7.00 to $3.50/barrel) and institute a new rate $16.00 per barrel on beer production above 60,000 barrels up to 2 million barrels.  Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.  Legislation introduced last session, H.R. 1236, gained a total of 174 total sponsors.  In the Senate, companion legislation S.534 realized 44 total sponsors.

FDA Seeks to Clarify Issues Concerning Potential Spent Grain Regulation

In response to the many questions arising from the spent grain provisions in the proposed rule for Preventive Controls for Animal Food contained in the Food Safety Modernization Act (FSMA), the U.S. Food and Drug Administration has posted Questions and Answers for Brewers/Distillers on its web site in an attempt to address some of those concerns.

In response to a proposed rule from the federal Food and Drug Administration (FDA) regulating the use of spent grain for animal feed as part of the Food Safety and Modernization Act (FSMA), the Brewers Association (BA) released a statement outlining concerns with how the potential regulation would adversely impact brewers and the local farmers utilizing their spent grain.  Under the proposal, brewers would be faced with either implementing extensive and costly handling and recordkeeping requirements if they chose to continue providing spent grain for feed or simply ending the practice and landfilling a valuable resource (which would also come with a monetary cost).  Given the lack of evidence that spent grain is a potential human or animal hazard, the BA requested FDA conduct a risk assessment prior to imposing any new regulation.

The BA also submitted formal comments to the FDA on the issue, making these points as well as arguing that breweries should not be subject to the animal food provisions based on the already existing general exemption in the FSMA for beverage alcohol producers.  The FDA expects to open a further comment period following the issuance of a re-proposed animal feed rule this summer which will reflect revisions to the originally proposed rule.

Spent Grain Legislation Introduced in U.S. Congress

H.R.4430, the Protecting the Sustainable Use of Spent Grains Act of 2014, seeks to amend the Food Safety Modernization Act to ensure that certain facilities continue to be treated as alcohol-related facilities, notwithstanding the distribution of spent grains resulting from the production of alcoholic beverages.

B. THE STATES

Sales, Distribution and Franchise

 

Colorado
House Bill 1346
authorizes a malt liquor importer or a person who holds a nonresident manufacturer’s license for malt liquor and who also manufactures hard cider to import and sell hard cider of its own manufacture, for which it has obtained a federal bonded winery basic permit, to persons licensed as liquor wholesalers; maintain stocks of hard cider and operate warehouses in which it has a financial interest by procuring a wholesaler’s license; and solicit orders from retail licensees and fill the orders through the licensed wholesalers.

Florida
Dying in committee, House Bill 1329 sought to define growlers to be containers between 32 ounces and 128 ounces and sets growler packaging requirements. Additionally, it sought to allow a number of three-tier exceptions, essentially requiring businesses to choose to operate primarily as a vendor or a manufacturer rather than under the current law that effectively permits businesses to operate in both tiers.

Dying in the House after passing the Senate, Senate Bill 1714 sought to define the term “growler” to mean a clean container made of glass, ceramic, metal, or similar leak-proof material having a capacity of 32 ounces, 64 ounces, or 128 ounces that is filled with a malt beverage and sealed on the premises at or immediately before or after the time of sale in response to an order in a face-to-face transaction. The bill would have also permitted vendor-licensed brewers to: sell growlers to consumers for off-premises consumption with malt beverages that are brewed on the licensed premises by the vendor-licensed brewer; sell malt beverages that it manufactures at another location or that are manufactured by another brewer as authorized by its vendor’s license, however, the malt beverages that are manufactured at another location and that are sold for consumption off the premises must be obtained from a licensed distributor and sold to the consumer in their original sealed containers.  The bill prohibited brew pubs from filling growlers, shipping malt beverages between licensed premises owned by the licensee, and selling or distributing malt beverages outside the licensed premises.

Hawaii
Before the Governor for action, S.B. 3042 removes the requirement that a class 14 brewpub licensee manufacture not more than thirty thousand barrels of malt beverages and creates a new license (class 18) for a small craft producer pub (for beer defined as one producing not more than 60,000 barrels annually) and among other abilities, allow for the sale of growlers for off-premises consumption.

Maryland
Approved by the Governor, House Bill 464 authorizes the holder of a Class 7 micro-brewery (on- and off-sale) license to sell at retail beer brewed under the license to customers for consumption off the licensed premises as prepackaged beer in non-refillable containers.

Eligible for the Governor’s consideration, House Bill 208 seeks to standardize the requirements for alcoholic beverage refillable containers used in the sale of draft beer or wine for off premises consumption. The bill also authorizes the Comptroller to establish standards for alcoholic beverages refillable containers, including containers originating from outside the State. The holder of a refillable container permit may sell, fill, or refill any container that meets the standards. The bill applies to refillable container license holders in specified jurisdictions as well as Class 5 manufacturer’s license holders who sell refillable containers.

Missouri
Passing both chambers of the legislature, Senate Bill 689 expands the types of packages in which malt liquor may be sold to include single bottles, cans and pouches of beer.

New Hampshire
Approved by both legislative chambers, Senate Bill 257 establishes a commission to study the sale of beer in refillable containers.  The previously included authorization for off-premises and on-premises licensees to sell beer in sealed refillable containers is deleted.

Favorably considered in the House and Senate, House Bill 1217 amends the definition of “wholesale distributor” to allow purchases of beverages from nano brewery licensees.

Wisconsin
Failing to advance out of committee, companions Senate Bill 658 and Assembly Bill 855 sought to authorize a brewer, at the request of a customer, to package and sell at retail, on brewery premises or at the brewer’s off-site retail outlet, the brewer’s own beer and other Wisconsin-made beer in refillable containers exceeding 24 ounces in volume.

Taxation

Virginia
Approved by the Governor, Senate Bill 596 establishes the state and local license tax for breweries that manufacture no more than 500 barrels of beer during the licensing year. For such breweries, the state license tax is $350 per licensing year and the local license tax is $250. The bill also establishes the local license tax at a rate not exceed $1,000 for breweries that manufacture more than 500 barrels of beer during the year.

Trade Practice & Other

Arizona
Signed into law, Senate Bill 1397, among many provisions, permits beer to be dispensed in a refillable container composed of a material approved by a national sanitation organization, rather than only a glass container.

California
Passing the Assembly, A.B. 1928 seeks to prohibit a beer manufacturer or a beer and wine wholesaler from offering, funding, producing, sponsoring, promoting, furnishing, or redeeming any type of coupon and a licensee authorized to sell alcoholic beverages at retail from accepting, redeeming, possessing, or utilizing any type of coupon that is funded, produced, sponsored, promoted, or furnished by a beer manufacturer or beer and wine wholesaler.

Passing committee, Assembly Bill 2609 would permit the removal and use of home brewed beer or homemade wine in connection with a bona fide competition or judging or a bona fide exhibition or tasting. This The bill would also allow nonprofit organizations that either promote home brewing or home winemaking, or that are primarily composed of home brewers or home winemakers, to sell beer or wine to serve beer at fundraising events subject to specified conditions, including requiring an educational component to the event and limiting the nonprofit organization to 2 of these types of events that sell wine or serve beer pursuant to this authorization per year.

Passing the Assembly, A.B. 2004 requires the Department of Alcoholic Beverage Control (ABC) to include in its annual report to the Legislature the number of active field agents employed by it and the number and type of enforcement activities conducted by it and by local law enforcement agencies in conjunction with ABC by license type and by region or county.

Under Senate consideration following passage by the Assembly, A.B. 2203 prohibits the obliteration, mutilation, or marking out of a manufacturer’s name on metal beer kegs.

Connecticut
Passing the House and Senate, H.B. 5099 seeks to allow holders of caterer liquor permits to also be holders of manufacturer permits for brew pubs and manufacturer permits for beer and brew pubs.

Idaho
House Bill 524
codifies the independence between the manufacturing tier and the distribution tier by declaring that a brewery/manufacturer, with limited exceptions, cannot have a financial interest in a distributor and that a distributor cannot have a financial interest in a brewery.  The bill has been signed into law.

Kansas
Signed into law by the Governor, H.B. 2223 raises the allowable number of barrels of domestic beer, from 15,000 to 30,000, that may be produced in a calendar year by a Kansas microbrewery licensee.  Further, the bill allows a homemade fermented beverage to be provided to guests and judges at a contest or competition so long as no compensation is provided to the maker either for producing the beverage or allowing its consumption.

Maine
Becoming law without the Governor’s signature, House Bill 1265  provides that a licensee may display the alcohol content of malt liquor, wine or spirits when it is expressed as a percentage of alcohol by volume. Current law prohibits a licensee from posting any advertisement that includes the alcohol content of malt liquor, expressed in any manner.

Signed into law by the Governor, Senate Bill 628 provides for taste-testing event licenses to be issued to manufacturers and wholesalers.

Maryland
Signed into law, Senate Bill 226 allows Maryland brewers to sample and sell their beer at farmers markets, County Agricultural Fairs, and a variety of other special events.

Michigan
Approved by the Governor, House Bill 4593 regulates the purchase and sale of scrap metal.

Missouri
Passed by the Senate and under House consideration, S.B. 786 specifies that the admission fee for any organized event at which home-brewed beer is available without a separate charge is not to be considered a sale of the beer so long as the home brewer does not receive proceeds from the fee and the beer consumption occurs off licensed premises or on certain types of licensed premises.

New Hampshire
Deemed inexpedient to legislate after receiving favorable Senate consideration, S.B. 329 sought to eliminate the prohibition on advertising alcoholic beverages on billboards and establishes restrictions on the content and placement of billboards and exterior signs advertising alcoholic beverages.

New York
Governor Cuomo hosted the Second New York State Wine, Beer, Spirits and Cider Summit during which proposed legislation, the Craft New York Act, was announced.  The proposal features significant reforms to the state’s alcohol laws to consolidate and simplify manufacturing licenses, raise production limits and lower licensing fees for craft manufacturers, expand marketing opportunities, modernize shipping laws, and increase retail outlets where small craft manufacturers can sell, serve, and offer samples of their products.  Shortly following the Summit, the State Liquor Authority approved a number of advisories to help support the continued growth and development of New York’s farm-based beverage producers.

Ohio
Signed into law, S.B. 173 expands the ability to offer consumer sampling of beer, wine and mixed beverages.

Rhode Island
Held for further study, House Bill 7718 provides the parameters for the issuance of a farmer-brewer license.

Held for further study, H.B. 7919 seeks to allow a farmer-brewery and a farmer-winery, under certain conditions, the ability to sell beer or wine for off-premises consumption at a farmers’ market, similar to what is now permitted in Massachusetts.

South Carolina
Companions S.B. 1230 and H.B. 5153 seek to raise the maximum annual barrelage production of brewpubs from 2,000 to 500,000 barrels.  Additionally, the legislation would grant brewpubs the ability to sell to distributors.

Vermont
Currently in House-Senate conference committee, S.B. 299 seeks to allow wholesale dealers to offer tastings of malt or vinous beverages to the management and staff of businesses who have applied for first- or second-class licenses but have yet to receive the license from the Department of Liquor Control, provided that the local control commission has approved the liquor license. The intent of the legislation is to enable the management of new businesses to taste and choose malt or vinous beverages and to print their menus and otherwise make the start-up of their businesses easier.

Virginia
Signed into law by the Governor, Senate Bill 430 creates a new limited brewery license for breweries that manufacture no more than 15,000 barrels of beer per calendar year, are located on a farm in the Commonwealth, and use agricultural products that are grown on the farm in the manufacture of their beer. The bill limits local regulation of limited brewery licensees and specifically prohibits the imposition of minimum parking, road access, or road upgrade requirements on any licensed limited brewery.

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Tags: Beer Beer News Brewers Association Brewers Association Legal Brief May 2014 FanSided Food Ergo Love Legal Legislative Matt Miller

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