EDITORIAL: Crisis brewing: Get federal government out of the beer business

The Senate is scheduled today to take up competing proposals addressing the government shutdown, but neither is likely to pass. The impasse has now hit 34 days.

One advantage of the shutdown is that it helps identify extraneous arms of a bulked-up administrative state. Take the current fate of the $76 billion-a-year craft beer industry, for example.

Various news reports reveal that small brewers have been particularly hard-hit because the federal Alcohol and Tobacco Tax and Trade Bureau has been idled during the standoff. The Treasury Department bureaucracy oversees most craft brewers “mainly in two ways: approving any new brewery equipment and approving labels on new lines of beer,” The New York Times reports.

As a result, some new breweries have been unable to open without a go-ahead from federal regulators. Meanwhile, various smaller established outfits have been forced to sit on new products because they have yet to receive labeling approval from the government.

For instance, The Associated Press reported this month that Milwaukee’s Lakefront Brewery has postponed the release of new beers because Washington regulators aren’t on the job to “approve labels for the bottles and cans.”

But why are federal bureaucrats in the business of approving labels for small craft brewers?

“From graphic design to alcohol warnings to listing the percentage of alcohol by volume,” the Times reports, “every new beer must have its label approved before it can be sold nationally. Some states do allow breweries to sell in-state before getting federal approval.”

Graphic design? Again, why are Beltway regulators charged with sanctioning the graphics on a beer can?

But it gets worse. The bureau must also approve the recipes that brewers use for “nontraditional” concoctions. Regulators have extensive lists of which ingredients will force an entrepreneur onto the federal treadmill and which won’t. There’s little rhyme or reason behind the distinctions, and never mind that empowering the government to bless beer bottle graphics raises obvious First Amendment issues.

The 21st Amendment gives states and the federal government vast authority to oversee the liquor industry. But is there truly a nexus between the graphic design decisions of craft breweries and consumer protection or tax compliance?

There’s no legitimate reason that brewers should be hamstrung because they lack label approval from federal regulators. Perhaps when the shutdown has been resolved, Congress should re-examine the authority of the Alcohol and Tobacco Tax and Trade Bureau.