Beer lobby struggles with shutdown

Beer lobby struggles with shutdown
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Lobbyists for alcohol and tobacco companies are trying to make the best of a bad situation during the government shutdown.

Businesses in those industries, who need to get labels for their products approved by the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB), hit a significant roadblock when the agency closed on Dec. 22, along with about 25 percent of the federal government.

That's left companies unable to sell seasonal beers and other products as they wait for President TrumpDonald John TrumpTrump cites tax cuts over judges as having biggest impact of his presidency Trump cites tax cuts over judges as having biggest impact of his presidency Ocasio-Cortez claps back at Trump after he cites her in tweet rejecting impeachment MORE and Congress to end the longest shutdown in U.S. history. Trump has said he would deliver a "major announcement" on Saturday, raising speculation that he will declare a national emergency to end the shutdown.

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Over the last month, though, the shutdown has left industry lobbyists scrambling to explore temporary workarounds for their clients in hopes of quickly making up for lost ground when the government eventually reopens.

“Lobbyists are texting Treasury staff on behalf of their clients as well as the companies,” Michael Drobac, the senior advisor of federal public affairs at McGuireWoods Consulting, told The Hill.

“People who had contacts and ongoing relationships with the administration are remaining in contact. While these people are not formally working, they are still responding that these are priority items they are working through and when they’re back, they will jump right on it.”

The agency’s website notes the because of the shutdown it will not be updated. It adds that while businesses may make submissions, agency employees will “not be able to respond to questions or comments submitted via the website until appropriations are enacted.”

For Tyler Cole, legislative director at Issue One, a nonpartisan government reform group, lobbyists reaching out to furloughed federal workers "raises concerns."

"In a situation where two friends are simply talking about life, that’s fine,” said Cole, or “if all the employee is doing is quite literally pointing out that they are on furlough and cannot be taking action but will conduct business when the government reopens.”

“But in general, lobbyists contacting furloughed employees about government business shows they have more power in this town than the average American,” he added.

The Office of Government Ethics is currently closed due to the shutdown.

Drobac noted that the shutdown was a frustrating situation for both lobbyists, whose clients could lose money if they fail to move products quickly, and furloughed employees.

“They’re asking earnestly to try and help industries but they know there is only so much they can do with having to go through the bureaucratic process,” he said of federal workers.

For now, the Beer Institute and Brewers Association, as well as other alcohol-related associations, have had ongoing conversations to figure out how to get the agency back up and running, sources familiar with the talks told The Hill.

“The partial government shutdown is hindering our ability to advocate for our members with parts of the executive branch, particularly TTB,” Jim McGreevy, president and CEO of the Beer Institute, told The Hill.

The Beer Institute and Brewers Association informed their members as soon as the government partially shut down about how it could impact them. Still, the length of the shutdown has left companies in a tough spot.

Cape May Brewing Co. in New Jersey, like other breweries across the country, is at a standstill and their 2019 product release calendar is on hold.

"We have several brands sitting at the TTB in a queue waiting for approval that we got into the bureau before the shutdown," Alicia Grasso, marketing communications manager for Cape May Brewing, told The Hill.

The brewery usually plans for TTB approvals for new labels to be granted within 12 to 15 days, with the process sometimes taking as little as 7 days. If the bureau requests changes to a label, and the brewery submits the modifications quickly, that usually only adds about two days to the process. Some of the labels waiting on the TTB were already at the resubmission step so approvals were expected right when the shutdown started.

One brewery is even taking the issue to court.

Washington, D.C. company Atlas Brew Works filed a lawsuit against the acting attorney general on Tuesday claiming its First Amendment rights were violated by the government's failure to approve their labels, DCist reported. Justin Cox, the CEO of Atlas, told DCist that the company sees their labels "as a form of speech."

Atlas has a tank of beer that can’t sell because the agency didn’t approve its label before the shutdown began. 

The shutdown issues with TTB go beyond beer to other alcoholic drinks.

“Yes, the shutdown has had an impact on producers of Distilled Spirits. We rely on TTB for formula and label approvals for getting our products to market,” Frank Coleman, senior vice president of the Distilled Spirits Council, told The Hill.

“TTB’s approvals of beverage alcohol formulas, labels and permits are critical to generating both federal and state revenue (taxes). Distillers are in the midst of planning their seasonal offerings which is completely impossible without the prompt label and formula approvals.”

Lobbyists say they are doing as much as they can for their clients, even with their hands tied by the shutdown.

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“A lot of people are telling their clients, ‘hey, we’ve been in contact but they’re simply not working,' ” Drobac said. “[Treasury aides] are saying, ‘we’re at home and we’re not working but we’re thinking through our strategies.’ There’s clearly a willingness with members of the administration to want to work.”

Others are turning their attention on Congress to address other issues for their clients.

“We have, however, been able to continue our work with the legislative branch, meeting with members of Congress, including the new freshmen class,” McGreevy said.

For now, industry group leaders are hoping Washington will end the shutdown soon.

“It is our sincere hope that the shutdown can be resolved so products can get to the marketplace in a timely manner and FET [the federal excise tax] can be collected,” Coleman said.

“We hope members of Congress and the President negotiate a swift end to this government shutdown so the TTB and other agencies that impact the beer industry get back up and running so Americans can continue to enjoy innovations in their favorite alcohol beverage – beer,” McGreevy said.