FDA FINES Struggling Distillers Who Pivoted To Make Hand-Sanitizer


(UPDATE 1-4-21: Thanks, in part, to Reason's Jacob Grier reporting on this, late last week, a firestorm of public outrage appears to have inspired the Department of Health and Human Services to reverse the EPA course. In a new Reason piece, Grier notes that the HHS Office of General Counsel engaged in a last-minute review of the EPA fine and determined that the penalty "has the force and effect of a legislative rule" -- an interesting term, especially coming from an extra-legislative, constitutionally dubious body like the HHS itself) and that only the HHS Secretary can issue such "rules". So the fines are off the table -- for now.)

In the early months of the bizarre COVID19 lockdowns, many U.S. distillers who saw demand for their products slammed by those lockdowns of bars diligently worked to change production from spirits to hand-sanitizer. Without doing so, many of the business owners would have shut down.

And this week, the Food and Drug Administration (FDA) began fining those distillers for their creative efforts.

Jacob Grier reports for Reason:

The agency delivered notice to distilleries that had produced hand sanitizer in the early days of the pandemic that they now owe an unexpected fee to the government of more than $14,000.

How sweet of them. 

Grier points out that more than 800 spirit-makers changed their production to bottle ethanol-based hand-sanitizer, and, though they didn’t make immense profits, for many of those businesses, the change was the only thing that allowed them to stay in operation, keeping thousands of employees from being out of work. On top of that, many distilleries that produced sanitizer handed over their first batches to first responders and front-line medical workers at reduced prices - or, in many cases, completely free of charge, stepping up to meet a massive emergency need.

But not only did the FDA make it harder for them to make the changes at the outset, now, they’re reflecting the eternal truth of the adage, “No good deed goes unpunished.”

At issue is a provision of the CARES Act that reformed regulation of non-prescription drugs. Under the revised law, distilleries that produced sanitizer have been classified as ‘over-the-counter drug monograph facilities.’ The CARES Act also enacted user fees on these facilities to fund the FDA's regulatory activities. For small distillers, that means ending the year with a surprise bill for $14,060 due on February 11.

Needless to say, this is hitting the distillers like a wrecking ball.

’I compare it to surprise medical billing,’ says Becky Harris, president of the American Craft Spirits Association (ACSA) and of Catoctin Creek Distilling in Purcellville, Virginia.

And the timing of the fines is such that the craft spirit makers will have a very hard time fighting them. Writes Grier:

Potentially compounding the impact of the fee is that it is determined by registration as an OTC (over-the-counter) monograph drug production facility in the previous calendar year. That means that distilleries not only have to contend with this year's fee; if they fail to update their status with the FDA by tomorrow, they may be liable for an additional fee in 2022 as well.

Talk about insulting and painful.

The American Revolutionaries spilled tea for a lot less.

In fact, as one feels the ever-hotter blood percolating in his or her brain when reading about these immediate attacks on innocent business people and their teams, that historical note reminds us that this offers a powerfully memorable lesson about the US government.

Simply put, the FDA is not sanctioned by the US Constitution. There is no enumerated so-called “power” allowing the feds to “regulate” the makers of spirits or hand-sanitizer or any other product. The Washington-based thugs have, for many decades, used as their justification a misreading of the Interstate Commerce Clause (Article One, Section Eight), which was written, as James Madison explained (after he TOOK NOTES at the Constitutional Convention in 1787), to resolve State versus State trade conflicts such as tariffs imposed by one state government on the products of other states. It was not intended to be a clause allowing “regulation” of any product just because it goes over state borders.

But that's what many politicians have done. Since leftist “progressives” passed the first meat inspection statute in 1891, the sweep of unconstitutional federal “controls” over food and drugs and virtually all commerce traveling from one state to another has grown and grown, creating a nation in which hardly ANY entrepreneur can engage in a “white market” (above-board) business endeavor without getting permission from the feds and conforming to federal, state, and local commands.

In legal terminology, these are political acts of prior-restraint, and in philosophical terminology, they are immoral and unethical crimes.

It takes little imagination to consider a world where such “prior restraints” are laid down by government in order for residents to engage in all kinds of other peaceful activities.

When it came to racial harmony, at least many American politicians were forced to give up their prior restraint statutes that blocked inter-racial dating and marriage.

Such activities were, of course, voluntary and peaceful, mutually-agreed-to acts. There were no victims at all.

So why can’t the feds, and many Americans, see that selling a product, and buying a product, are peaceful, voluntary acts? Why can’t they recognize that to pass prior restraints against them -- or to require the participants to conform to political commands before they can peacefully interact -- are immoral acts of government aggression?

This story of FDA recklessness is worth noting not only because of the immediate, tragic, and angering effects it is having on earnest and honest business people, but also because it reminds us of the underlying problem: the existence of the FDA and federal prior restraints.

If the government imposes preconditions on you before it allows you to engage in peaceful activity with willing participants, you are not free.

Perhaps this is a lesson more Americans can learn in 2021. We’ve seen the problems that ignorance of this principle has wrought in 2020.


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