Compliance with regulatory requirements is expensive. But the costs of noncompliance can be even more.
In rulemaking this week, the TTB published its annual adjustment to the maximum penalty potentially imposed under the Alcoholic Beverage Labeling Act. The adjustment (which is required by application of the Inflation Adjustment Act and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015) reflects the indexing for inflation of the original penalty of $10,000 for violations of the ABLA.
Starting January 10, 2017, each violation of the ABLA will result in a maximum civil penalty of $20,111. A meaningful penalty, to be sure, but what are the chances that it will influence behavior? As with most regulations, the devil is in the details. And the details here include a single seven-word sentence tucked into the middle.
“Each day shall constitute a separate offense.”
What does that mean? It means that if you are found to have violated the ABLA, you could owe $20,111 for each day that you sold the particular product (or products) that violated the Act. At $20k per day, your tab can mount pretty quickly.
So what violates the ABLA? Failing to include that ubiquitous government health warning on your hooch – you know, the one we all ignore. The one that reads:
GOVERNMENT WARNING: (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. (2) Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems.
Does anyone actually make the mistake of not including the warning? Well, you won’t get your COLA without it, but apparently mistakes in the warning do occur – and with alarming frequency. As I reported here last April, the TTB’s most recent Alcohol Beverage Sampling Program found errors in the government warning in 14 of 154 sampled distilled spirits products. For those of you keeping score, that’s an almost 10% failure rate – and make no mistake the law doesn’t really differentiate between including an erroneous version of the warning and simply leaving the warning off the label entirely.
That’s right – even if you quibble with the fact that the language of the warning is poorly drafted (it impairs your ability to drive a car or operate machinery? – isn’t your car a machine? more to the point, doesn’t it impair your ability to do both?) you don’t get to correct it. Just put it on your label and be done with it.