SCHUMER ANNOUNCES, FOLLOWING HIS PUSH, BLACK BUTTON DISTILLING IN ROCHESTER HAS RECEIVED FED APPROVALS NECESSARY TO EXPAND BUSINESS AND INCREASE PRODUCTION – SCHUMER PREVIOUSLY PUSHED FEDS TO EXPEDITE APPROVALS FOR LOCAL CRAFT DISTILLERY THAT HAD WAITED OVER 200 DAYS AS PERMIT APPLICATION LANGUISHED – SCHUMER VOWS TO CONTINUE PUSHING FOR MORE FED DISTILLERY INSPECTORS TO REDUCE THE KINDS OF BACKLOGS BLACK BUTTON HAD TO ENDURE
Schumer Says Delay in Necessary Federal Approvals Could Cause Losses to Producers – Like Black Button – Trying to Get Off The Ground or Expand, Which Had to Endure A Wait of 200 Days for Basic Approvals to Expand Business & Create Jobs; Following Schumer Push, Feds Approved Permits That Will Now Allow Rochester Distillery to Increase Production & Hire New Workers
Schumer Also Says Increasing The Amount Of Federal Alcohol Inspectors Should Be A Main Priority; While Distilleries & Craft Industry Have Grown Nationally By 50%, Fed Distillery Inspectors – Who Approve Requests – Have Been Cut By 10% – Schumer Vows to Continue Pushing For More Inspectors to Reduce Backlogs
Schumer: Now, Black Button Will No Longer Be Inhibited From Expanding Business & Hiring Residents for Good-Paying Local Jobs
U.S. Senator Charles E. Schumer today announced that the Alcohol and Tobacco Tax and Trade Bureau (TTB) has provided final sign-off on the necessary approvals that will allow Black Button Distilling to expand their production in Rochester and hire new employees. Schumer recently visited Black Button Distilling in Rochester, where he made the case for the federal agency to expedite approvals for this local business as well as launched his push to increase federal funding to the agency so that it can hire additional federal inspectors to review and approve delayed permit applications needed by distilleries, breweries, and wineries to open, expand, and sell their products. During his visit, Schumer explained 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 open and expand their operations. However, Schumer said the current shortage of federal inspectors means distilleries can wait for hundreds of days to have their requests approved. Schumer pointed to Black Button Distilling in Rochester as an example of a company that is being held back from expanding due to a lack of TTB inspectors. Schumer said Black Button waited for over 70 days for TTB to approve a $100,000 bond required to open a new warehouse to age their bourbon and free up space to install new production equipment.
Following Schumer’s push, the TTB granted Black Button Distilling the approvals it needed to finally begin its expansion in Rochester. Specifically, with these TTB approvals now in place, Black Button will be able to move into their new bourbon aging warehouse on University Avenue in Rochester on July 1. They had originally planned to move by February, but couldn’t due to the TTB red-tape that Schumer helped cut. Additionally, they can now install their new second still and four new fermenters at their existing production facility at 85 Railroad street to boost production. Once the new equipment is installed Black Button will go from a capacity of 1,800 bottles a week to 2,700 bottles a week to start, and once demand is in place it is expected the new equipment will make the distillery capable of producing 4,500 bottles a week. Finally, this expansion will enable Black Button to hire two new production employees and up to four new sales employees as they boost production and grow into this capacity over the next two years; currently they have six full-time employees and 13 part-time workers.
“Craft breweries and distilleries throughout Rochester 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 Black Button 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 said these necessary approvals will ultimately allow Black Button to grow, expand and create jobs in the Rochester area as it moves from 6,000 cases a year to 17,000 cases per year, nearly a 300% increase with this new storage facility and equipment. Before Schumer intervened, Black Button feared having their operations closed. While waiting for critical approvals on a $100,000 surety bond, the distillery received an automatic form letter from TTB advising that if the federal agency did not receive a new bond request within 90 days it would consider the distillery in violation of the law and may be forced to cease operations. Schumer said if TTB had enough inspectors they would see the company had filed for a new bond already. As a result, in addition to announcing this good news for Black Button, Schumer vowed to continue his push to secure the federal funding needed to hire more TTB inspectors and unclog the federal agency’s backups that could be costing local distilleries like Black Button.
Schumer explained that TTB 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.
During his visit, Schumer highlighted Black Button Distilling to show how these wait times are impacting real businesses. Previously, Black Button was waiting on the approval of two formulas for new products and the approval of three labels. The company needed all of these before they could sell their product. In addition, Black Button was waiting for approval on a $100,000 surety bond and a permit to open a new warehouse to age their bourbon. Schumer explained that, in July 2014, Black Button purchased a $50,000 surety bond and applied to TTB for approval of the bond. However, after nearly nine months passed without TTB approving the bond, the company was growing production at such a rate that, by March 2015, they actually needed a $100,000 bond. By March 2015, Black Button purchased a $100,000 bond from their insurance company and submitted both a revised application to TTB to approve the new $100,000 bond and an application to expand into a new warehouse to age their bourbon. This bond approval was a prerequisite to TTB approving Black Button’s other application to rent and open the new bourbon aging facility. However, TTB sent Black Button back a form letter in April 2015 stating that TTB’s files show the bond was set to expire in 90 days and, unless another request is submitted within that time period, Black Button would have been required to shut down.
In New York State alone, since 2012, the number of breweries has increased more than 100% to 207 breweries. The number of distilleries has grown to 87 and wineries to over 400. 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 and recipe applications companies need to get off the grown or expand. Schumer said if TTB had enough inspectors they would have been able to see Black Button had filed for a new bond already, and should not be at risk of having their operations closed. Schumer said this kind of red tape and bureaucracy could cause businesses like Black Button, which are looking to expand, play by the rules and create jobs, to lose a substantial amount of profits. 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. Today, Schumer is also sending a letter to TTB Administrator John Manfreda to expedite consideration and approval of Black Button's pending approvals in order to move forward with its expansion this summer.
A copy of Senator Schumer’s initial letter to federal appropriators and his letter to TTB Administrator Mangefrida on behalf of Black Button appears below:
Dear Chairman Boozman and Ranking Member Coons:
As you move forward with the Fiscal Year 2016 Financial Services and General Government Appropriations bill, we respectfully request that you provide funding of $106,439,000 for the Alcohol and Tobacco and Tax and Trade Bureau (TTB) for FY2016. This would be a $5 million increase above the Administration’s FY2016 request. The additional $5 million should be direct appropriations for enforcement activities under the Federal Alcohol Administration (FAA) Act.
TTB’s inadequate funding has resulted in a dramatic increase in the average processing time for permits, formulas and bonds. The timely approval of products and operations is needed for the many wineries, breweries and distilleries attempting to expand or begin production. TTB is responsible for efficiently reviewing over 100,000 labels and thousands of permits and formulas each year. However, 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. These delays cause real and opportunity-cost loss to producers in New York and across the country, many of which are small family owned businesses with limited financial resources, which support good-paying, local jobs.
TTB is also responsible for protecting U.S. producers from counterfeit beverages and advising the industry on a range of trade issues to promote U.S. exports. These important functions help support the job-creating
Increased funding is needed to ensure that TTB has the personnel to conduct its responsibilities as the primary regulator of the expanding licensed beverage industry. Rising costs in payroll, infrastructure, information technology and travel have left TTB with no alternative but to reduce its staff levels. At the same time, the industries that TTB advises, protects from predatory trade practices and approves for operation have grown significantly. Since 2007, TTB’s workforce has shrunk by 10%, while the number of wineries, breweries and distilleries in the U.S. has increased by 53.1%.
Increased funding would allow TTB to increase its staff to match the growth of our emerging licensed beverage industry. With just a small amount of additional funding, TTB would be able to both improve the processing time for permits, formulas, bonds and labels and better support the U.S. industry.
Again, I respectfully urge your support for $106,439,000 in TTB funding, with $5 million in funding tied to expanding enforcement-related activities under the Federal Alcohol Administration (FAA) Act. This funding would reflect the increased economic activity of the licensed beverage industry.
Charles E. Schumer
United States Senator
Dear TTB Administrator Manfreda,
I write to request your assistance to expedite consideration and approval of two submissions by Black Button Distilling in Rochester, New York that are vital for the businesses continued operation and expansion. Specifically Black Button is awaiting approval of a new larger $100,000 Surety Bond submitted to TTB in early March, 2015 and approval of its application to Add Non-Contiguous DSP Premises submitted on February 2, 2015.
Together the approvals are required in order for Black Button to rent a new warehouse to store barrels of their bonded bourbon as it ages. The company is at a critical juncture and does not have adequate space at its production facility to grow without the use of this additional warehouse. By moving the barrels now stored in the production facility to the new warehouse, Black Button will free up space to install new equipment including a new Still and 4 new Fermenters to increase their production and grow this family-owned business. The equipment has already been purchased but delays in gaining TTB approval is preventing the company from having the equipment shipped and installed.
Originally on July 25, 2014, Black Button purchased a then-larger $50,000 surety bond and applied to TTB for approval of the bond. However, after nearly nine months passed without TTB approving the bond, the company was growing production at such a rate that, by March 2015, they actually needed a $100,000 bond and the additional warehouse. So on February 20, 2015 Black Button submitted the Non-Contiguous DSP Premises application in order to occupy the new warehouse and by in March 2015, the company purchased a new larger superseding $100,000 bond from their insurance company and submitted a new application to TTB to approve the new $100,000 bond. Unfortunately, instead of receiving approval of the new $100,000 bond, Black Button received notice on April 2, 2015 that TTB finally approved the original application for the $50,000 bond submitted nine months earlier instead of the superseding $100,000 bond which is the one that should have been approved.
I appreciate your attention to this matter.
Charles E. Schumer
United States Senator
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