Well..at least thanks to the BATF we are safe from the attack of the vitamin ales.
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May 1994 issue of REASON Magazine, Pages 25 through 29
By Jacob Sullum
Even before Waco, people in the booze
business were afraid of the Bureau of
Alcohol, Tobacco, and Firearms.
A 12-ounce bottle of Grant's Scottish Ale contains 170 percent of the U.S. Recommended Daily Allowance for vitamin B-12. I can legally tell you this because I don't make beer for a living. But Bert Grant, creator of Grant's Scottish Ale, can't.
In January 1993, a few months after Grant and his wife, Sherry, started putting nutritional information on six-pack cartons of the beer, David Dunbar, an inspector with the Bureau of Alcohol, Tobacco, and Firearms, visited their Yakima, Washington, brewery. Dunbar told them that Yakima Brewing & Malting is not allowed to inform consumers about the vitamins and minerals in a bottle of beer. This surprised the Grants, because neither the Federal Alcohol Administration Act nor the regulations issued under it address nutritional information. The regulations do, however, forbid false or misleading claims about "curative or therapeutic effects," and the BATF cited a 1954 regulatory interpretation that says "any reference to vitamin content in the advertising of malt beverages would mislead a substantial number of persons to believe that consumption of the product would produce curative or therapeutic effects."
The Grants had to stop using the Scottish Ale six-pack cartons and drop plans to put nutritional information on the packaging of their other beers. But the rule seemed silly to them. So Sherry Grant wrote a press release about the BATF's order and sent it to some trade journals. "We felt it should be brought out, because we wanted the law changed," Bert explains. The story eventually attracted attention from the mainstream press, including Playboy and radio commentator Charles Osgood, as well as industry publications. The coverage was sympathetic to the Grants and critical of the BATF. An editorial in the Vancouver Columbian, for example, called the BATF policy "hypocritical on its face" and argued that "more information, not less, is the way to encourage better choices."
"Then the coincidences started," Bert recalls. Dunbar, the BATF agent, came back several times to look at the Grants' records and grill the couple and their employees, spending a total of three weeks at the brewery. She says Dunbar, who declines to comment on the case, had an intimidating, confrontational manner. "It scared me, because in the back of [my] mind, there was always this picture of Waco," she says. "And then I got really, really angry, because I thought, 'This is wrong. I should not have to be afraid of my own government."'
During 1993, Bert estimates, the Grants had to devote about a fifth of their time to dealing with one regulatory problem after another. Among other things, the BATF said they had to get the label for Grant's Celtic Ale reapproved because of a change in color. And the bureau decided that Grant's Spiced Ale, which the brewery had been producing since 1985, had a "frivolous" name that required a generic description - "A Fermented Ale with Added Spices and Honey" - in letters as big as the name.
Worst of all, the alchemists at the BATF transformed Grant's Cider, which the company had been producing since 1984, into a wine by bureaucratic edict. The financial consequences of that trick are serious. Under federal law, hard cider is exempt from excise taxes, but wine is taxed at $1.07 a gallon. The BATF claims that the Grants owe back taxes on the cider-cum-wine for nine years, plus the annual occupational tax for wineries, plus interest, plus penalties.
The bureau has not yet informed the Grants what all that will come to, but it could be hundreds of thousands of dollars. For a small business like Yakima Brewing & Malting, which produces about 9,000 barrels a year, that would be a significant hit. And the tax liability is in addition to some $100,000 in legal fees and lost sales that Bert estimates the hassles with the BATF have already cost the brewery.
The Grants feel they are being punished for criticizing the bureau's censorship. "It doesn't matter what you do for a living," Sherry says. "You still have a right to free speech. And I shouldn't have to worry about the government coming down on me for what I think or say."
The BATF denies any link between the Grant's recent troubles and the conflict over nutritional information. "There is no conspiracy," says Les Stanford, a BATF spokesman in Washington, D.C. "There is no connection between the two issues." Whether or not the BATF decided to retaliate against the Grants, their case illustrates the arbitrary power that the agency wields over brewers, vintners, and distillers. Entrepreneurs like the Grants operate in an environment of uncertainty created by vague regulations, inconsistent enforcement, unpredictable policy changes, and capricious decisions that apply retroactively. Long before the Waco fiasco made the BATF notorious, producers of alcoholic beverages had reason to fear the bureau.
"If you know how the average citizen feels about the IRS, the industry is in even greater fear of the ATF, because they have such awesome power over their very existence," says Jerry Mead, editor and publisher of The Wine Trader. "They can yank your license. You can appeal, but so what? You're out of business....If you piss them off, they can come in and audit your books. Even if they don't find anything wrong, they totally disrupt your [operation] for days, sometimes weeks, going through everything. And the ATF probably could find something wrong with just about anybody's operation, if they were really looking."
In the case of Yakima Brewing & Malting, practices the BATF had known about for years suddenly and inexplicably became violations. The bureau had never before complained, for example, that Grant's Spiced Ale, a name that seems straightforward and descriptive, was in fact "frivolous." Furthermore, as Sherry Grant notes, the BATF continues to allow the use of many fanciful beer names-including Pete's Wicked Ale, Labatt's Blue, and Blackened Voodoo-without demanding special explanations on the labels. "Tell me they're not picking on us," she says.
This combination of fuzzy rules and selective enforcement is an invitation to abuse. While ostensibly pursuing its regulatory mission, the BATF can punish businesses for criticizing the bureau or offending the wrong people. In 1992, for example, the BATF threatened to rescind its approval of labeling for Crazy Horse malt liquor after then Surgeon General Antonia Novello called the name "an insensitive and malicious marketing ploy" aimed at appealing to Native Americans. Since the bureau is not supposed to pass judgment on the propriety of target marketing, it cited a different concern: the use of three phrases on the label-"Fine Blend," "Lot No. 0690711," and "Registered at the Brewery" that it considered confusing or misleading. These phrases had apparently escaped the BATF's attention when it approved the label two months before.
A similar reversal involved PowerMaster, a malt liquor that the BATF approved in 1991. Like many other malt-liquor brands, PowerMaster was aimed mainly at inner-city blacks, but it attracted special attention because it had a higher alcohol content than its competitors. After Novello called the product "socially irresponsible" and anti-alcohol activists expressed their outrage, the bureau decided that the word Power was a veiled reference to alcoholic strength, which brewers are not allowed to advertise. It instructed G. Heileman Brewing Co. to remove the word from the product's name. The brewer, which had spent more than $2 million on research and marketing, decided to scuttle the venture.
