TTB Expo 2009 - Keynote Address

I want to extend a personal welcome to each of you, and thank you for setting aside the time to attend TTB Expo 2009.

So much has changed since we last met in this venue. Our Nation is facing enormous economic challenges. We weathered the near meltdown of the financial markets, we are rebounding from the credit crisis, and we are waiting to see what we as a country will look like when we come out of this recession. In times such as these, it seems that there is only one thing we can count on - change.

Frequent and constant change poses challenges for the regulators as well as the regulated. The one constant for TTB is our commitment to service and outreach, which we believe lays the foundation for a compliant industry. This Expo exemplifies that commitment and our determination to build compliance through education, despite the uncertainty that surrounds us.

Like me, I'm sure that you are monitoring the major legislative proposals coming from Congress and grappling with what they might mean to your operations. Just in recent weeks, we have seen several bills and proposals that could spell drastic changes for the alcohol and tobacco industries.

• The President just signed two bills that would affect significantly the way we regulate tobacco products.
• There is talk on the Hill of tax increases for alcohol beverages and some discussion of enacting equalization of tax rates across the alcohol beverage commodities.
• And, the President's Budget proposes to fully fund TTB through annual licensing and registration fees for producers, wholesalers, and retailers.

We are still dealing with the effects of recently passed legislation - the Children's Health Insurance Program Reauthorization Act, or CHIPRA - which raised the tobacco tax rates by a significant amount, effectively doubling our collections for this commodity. The statute also imposed a floor stocks tax on tobacco products produced prior to the effective date.

There is also the long-standing issue of allergen and serving facts labeling, which is consistent with the Bureau's consumer protection authority. Since the passage of the Food Allergen Labeling and Consumer Protection Act of 2004, TTB has worked to draft the necessary implementing regulations that would require allergen statements on all alcohol beverage product labels. We are coming to the final rule stage, which will define the requirements for these mandatory allergen statements.

The regulatory landscape is undergoing a transition as well in response to changes within the industries. In May of 2008, TTB issued a notice of proposed rulemaking to update the distilled spirits regulations in Part 19 of the Code of Federal Regulations. The goal is to modernize the requirements for operating distilled spirits plants and make the regulations easier to understand by using plain language to improve clarity.

We are also drafting an advance notice of proposed rulemaking to seek comments on a revision of Part 25 to reflect current conditions in the brewing industry; the last update to the beer regulations was issued more than 20 years ago. This advance notice also will seek comment on a variety of beer production issues that might affect malt beverage labeling requirements, such as the statement of composition and use of what have been referred to as "traditional" ingredients.

From our perspective, these legislative mandates and regulatory projects challenge us to look for new ways to provide you with responsive and efficient Government. In all aspects of our operations, we attempt to be receptive to your questions and concerns and fair in our decision-making.

For example, because we know that designing and printing new labels has real cost implications for your business, our plan is to publish the allergen final rule with an effective date that coincides with the effective date for serving facts labeling.

Also, with the enactment of CHIPRA, our Tax Services branch at the National Revenue Center was flooded with calls related to the floor stocks tax. We were able to leverage our new Voice over IP phone system to respond to more than 27,000 calls received in a matter of three months - a feat that would have been close to impossible without the functionality and flexibility the new voicemail system provides.

We pride ourselves on being a lean and efficient operation, with a high return of $313 on every dollar invested in our Collect the Revenue program. This sort of return on investment is only possible because of our strategy to employ electronic solutions to meet our mission and reduce the burden of compliance on industry.

To cite an example, we have seen an explosive growth of small wineries, hundreds of which are operating in alternating proprietor settings. While this arrangement is beneficial to small start-up businesses, it can pose a risk to the revenue due to potential misuse of the small domestic producer wine tax credit. Our audits and investigations also show that alternating proprietorships raise other compliance issues such as separation of host and tenant and independence of operations.

The continued growth in the wine sector spurred action on our part. Because we have had to cut back on the number of seminars, we developed an online wine seminar that provides self-paced training from TTB.gov. We also offer tutorials on how to complete required forms on our Web site.

Further, our electronic systems and Web-based applications are critical to meeting our turnaround standards for the industry. We encourage all of you to file your label applications through our custom system, COLAs Online. Based on current data, we expect to see an e-filing rate well above 70 percent in this fiscal year - a remarkable usage rate for any e-Government application. We also encourage taxpayers to file reports and returns through Pay.gov. At the end of FY 2008, more than 3,600 taxpayers were registered to file and make tax payments through Pay.gov, or about 40 percent of all permittees who are potentially required to pay taxes.

Even with unknown budget conditions, we continue to pursue automation efforts in the area of permits to facilitate a faster approval process. This effort is essential to our success in meeting service standards, as the number of permit application submissions continues to rise. In just the past six years, original permit applications have increased more than 60 percent.

Despite these changes and increasing workloads, our resolve as a Bureau to educate you in the industry has not wavered. Almost one-third of the TTB workforce is here today because we believe that our duty as your regulator is to provide you with answers and support in meeting all compliance requirements. It is this kind of dedication, expertise, and common decency that have earned TTB a reputation as a fair, competent, and efficient Federal agency.

At every organizational level, we cultivate a service-minded organization, one that is committed to a set of values and core business principles. We strive to be open-minded, professional, innovative, and enthusiastic in fulfilling our mission responsibilities. In my view, we are well on our way, with an agency culture that ranked 7th out of 216 Federal agencies on the 2008 Federal Human Capital Survey.

The enthusiasm of our employees also is apparent when you look around at this event, which doubled in scope from last year to include more than 80 educational seminars, an e-Gov hall, one-on-one meeting rooms, and an entire exhibition hall with 30 booths. This is no small undertaking, and I want to take a moment to thank those who made it possible: Expo co-chairs Terri Baston, Teresa Kampsen, and Susan Stewart-Evans, as well as the Expo Coordination Team and the dozens of presenters and exhibitors who are here to teach you.

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