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America Needs Better Whisky Regulations — Dramming

America Needs Better Whisky Regulations

by Oliver Klimek on September 18, 2014

I am following a large number of American whisky people, bloggers as well as normal whisky lovers. Hardly a day passes without someone mentioning the ongoing debate about non-distiller producers (NDP) and the attempts of some to hide the fact that they are not distilling their own whisky but rather buy it in bulk from elsewhere, which usually is MGP in Indiana. Lately the debate has mostly focussed on the lack of enforcement of a labelling rule that requires the state of distillation stated on the label if the whisky was not distilled in the same state as the company is located.

The discussion gained even more steam recently when Templeton Rye, long regarded as one of the most notorious obfuscators, came clean and admitted that they were only selling sourced whisky. But this was not everything. In the aftermath of this confession yet another can of worms was opened. In a recent Whiskycast interview with Mark Gillespie Templeton also admitted that they were using flavouring in their rye whisky in accordance with Section 5.23(a)(2) of the US whisky regulations.

This revelation came as a shock to many. Rye whisky with undeclared flavourings was thought to be impossible to be legal. Apparently the rule in question was overlooked by just about anyone out there or at least not brought into connection with whisky because it affects all spirits. Even Chuck Cowdery who can safely be described as one of the most knowledgeable authorities on American whisky had to admit that he had been unaware of the fact that American whisky may indeed contain flavourings unless it is labelled as “straight”. And judging from his writings he knows the US whisky regulations better than almost everyone else.

This incident highlights a fundamental problem of the American whisky regulations. If even experts have trouble to understand the implications of the rules, there must be something seriously wrong. Part of the problem certainly is that the whisky regulations are not treated in a separate document. The regulations are covering all types of spirits, and rules for whisky only are mixed with rules for all spirits or subsets thereof.

Furthermore the regulations are written in a language that needs serious dedication to understand. The infamous section 5.23(a)(2) for example is a single sentence with 122 words, if I counted right. They also appear to be a hodge-podge of amendments as can be seen from the fact that in section 5.23(a)(3) the “whiskey” spelling is used contrary to the “whisky” that is used elsewhere in the regulations. In short the regulations are a jungle that has grown beyond control, and it needs someone with a regulatory machete to cut a new path through the thicket.

And while we’re at it, why not change a few things for the better? I am only a small whisky blogger, but here are a few proposals:

  1. Make separate sections for separate spirits, even if this involves repetitions. Whisky people can look under “whisky”, vodka people can look under “vodka” and find what they are looking for.
  2. Introduce a minimum age for whisky of 2 years. Unaged spirit may be called White Dog, Moonshine or whatever. Spirit aged less than two years may not be called whisky.
  3. Make the “straight” requirements the gold standard for whisky and designate clear categories for all whiskies not meeting the standard, particularly with repsect to the use of used barrels or additives of any kind. For example whisky containing any kind of flavouring should be required to be named “flavoured whisky”.
  4. Find a way to codify single malt whisky as whisky containing 100% malted grain (“single malt” for barley, “single rye malt” etc.)
  5. Use the already existing “sprit whisky” category for all whisky with added grain neutral spirit and reserve the “blend” category for blends of properly aged whiskies only.
  6. Get rid of the label approvement process, maybe by introducing a legal path to challenge potentially noncompliant labels.

{ 7 comments… read them below or add one }

Josh Feldman September 18, 2014 at 2:06 pm

Amen. All good suggestions.

Reply

Michael Norris September 18, 2014 at 6:13 pm

“This incident highlights a fundamental problem of the American whisky regulations. If even experts have trouble to understand the implications of the rules, there must be something seriously wrong.”

While you elaborate the presence of a problem, you do not directly specify it. I infer from your focus on altering regulations that you identify the regulations themselves as the problem. May I suggest that an equally “fundamental” problem is the questionable reading comprehension of myriad administrative personnel constituting the craft spirits industry? Restricting the problem to the miscomprehension of readers seems warranted given the extent of detail your account affords it: “This revelation came as a shock to many. Rye whisky with undeclared flavourings was thought to be impossible to be legal. Apparently the rule in question was overlooked by just about anyone out there or at least not brought into connection with whisky because it affects all spirits.” How, I’m left wondering, is others’ ignorance of the regulatory details an example of Templeton’s obfuscation in this instance? While they certainly bear responsibility and consequence for being deceptive in regards to failing to identity the non-Iowa origin of “their” rye whiskey on their bottles, with respect to additives they are (as you indicate) operating “in accordance with Section 5.23(a)(2) of the US whisky regulations.” It is, I’d argue, incumbent upon all of us in the business of distilling spirits to read and understand the federal and state ordinances regulating our industry. Honestly, considering the high percentage of lawyers populating the rosters of craft spirits companies, I am shocked that such a comprehensive lack of regulatory awareness has obtained for so long.

Reply

Oliver Klimek September 18, 2014 at 6:35 pm

In my opinion the regulations are too complicated which ultimately results in the “comprehensive lack of regulatory awareness” you are complaining about. Templeton has used a loophole that allowed them to use undeclared additives and nobody has noticed so far. If regulations were easier to understand, the “ignorance of the regulatory details” would be far less prominent. The very fact that there is this discussion at the moment shows that people have problems to understand them. At the minimum there should be a comprehensive list stating all requirements for a given type of whisky. At the moment you have to pick this information from various sections spread across the document. The proposals for regulatory changes are of course just my personal suggestions based on countless discussions I have witnessed.

Reply

Michael Norris September 18, 2014 at 8:37 pm

I’d like to think I’m less “complaining” and more “responding” to your argument, and specifically to the idea that in this instance characterizing federal regulations as “too complicated” is one, but not the only and perhaps not the most useful, explanation for the shock and awe attending the discovery that Templeton is dosing its rye with additives. I guess I feel it less constructive to point the finger at the dead letter of regulations when a number of intelligent adults in positions of high responsibility could simply spend a little more time, energy, and effort attending to the regulating code they willingly submitted to when they created their distilleries. Advocate to change the code if you want, certainly, but we should also do the work of making ourselves code literate in the here-and-now, as ignorance of it has consequences.

Reply

Shane Helmick September 18, 2014 at 11:01 pm

Technically, the rule states any “harmless” additions have to be traditionally used in whisky. I wrote an article about hops in whisky a while back that mentioned that rule. Going back to a time before regulation, there were Americans flavoring their spirit and calling it whisky; we called them rectifiers and they ironically created the need for label regulations. It shouldn’t really be a surprise that the precedent makes room for lots of questionable ingredients.

Reply

bear toe September 21, 2014 at 5:36 am

Long time reader, first time blabberer…

“Get rid of the label approvement process, maybe by introducing a legal path to challenge potentially noncompliant labels.”

My partner and I (both US lawyers, but neither practicing in any area remotely close to this, so please please please don’t take anything I say as legal advice; I’m just an anonymous guy commenting on a blog post) had a spirited (in both senses of that word) discussion of this point last night. I have a kneejerk response whenever I hear about proposals to allow people to sue each other over something new in this country, as it’s mostly just an exercise in giving people like me more money.

That said, there may already be a way to challenge non-compliant labels, just not how you’re thinking. While I don’t know of (and doubt the existence of) a private right of action under the relevant federal regulations, it is quite possible that an enterprising plaintiffs’ attorney could make a claim under state fraud law. For example, a couple of years ago the California Supreme Court held that mis-labeling hardware as “Made in the USA” could be the basis of a valid claim under the state’s unfair competition law if the purchasers could prove that they bought the item at least in part because of that statement. Given the fury in the whiskey world over Potemkin distilleries, it may not be a stretch to say that some consumers paid more for LDI/MGP whiskey than they otherwise would have because they were deceived into believing it was a (small/local/craft/whatever) product.

I agree that the best solution would be to have very clear and very strict rules that are actually enforced by people who know what they’re doing, but I’m not going to hold my breath. Remember that the vast majority of US legislators are also attorneys, and they’re very good at protecting our monopoly.

Reply

Raj Sabharwal September 21, 2014 at 2:03 pm

Good thoughts, the US regulations should come into sync with world regulations. Especially to include a category for Single Malts.

Reply

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