Is the FDA Trying to Kill Craft Beer?

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No one in their right mind goes into brewing for the money. The start-up cost is too high, and the profit margin too thin for craft breweries to make a fast buck (yes, we know Ballast Point sold for $1 billion dollars; that was 23 years in). Which is why new laws, regulations, or shoddy oversight can make or break the smallest breweries — of which there are 2,300 in the U.S. — while offering little to no benefit to the consumer. That’s the argument lawyer Baylen J. Linnekin names in his new book Biting the Hands That Feed Us, a detailed, fascinating, and at times stodgy account of the unforeseen consequences of FDA rules and regulations that, he argues, can put unnecessary pressure on artisanal food producers and encourage waste in the system that gets food from the farm to you. In this excerpt, Linnekin details a proposed rule stemming from the Food Safety Modernization Act (FSMA) for how brewers handle the byproducts of making beer that just about everyone in the industry found absurd and business-killing costly. —Ellie Kincaid

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In 2013, I attended the Craft Brewers Conference, an annual event in Washington, D.C., that brings together craft beer fans, experts, and brewers from around the country. I went to sample the beer, sure, but also to learn about the sorts of regulatory challenges that smaller brewers were facing at the time. During the question-and-answer session that followed an excellent lecture on beer regulations by a top beverage industry lawyer, several brewers complained they’d been visited by “clueless” FDA inspectors who “should know what they’re talking about” but appeared not to. One of the complaints aired by the brewers, which I wrote about at the time, was that an FDA inspector had suggested that they refrigerate grain before using it to brew beer. Because refrigerated grains can become musty and pick up odors that can be passed on to — and, hence, ruin — beer, brewers never, ever refrigerate fresh grains. This has always been the case. All the brewers knew this. Bill Butcher, founder of Port City Brewing Company, which won small brewery of the year at 2015’s Great American Beer Fest, confirmed this during a tour he gave me and my George Mason University Law School students that same year. Yet this fact had struck the FDA inspector both as entirely new information and a potential food-safety violation.

The lawyer delivering the lecture that day, Art DeCelle, who had served previously as general counsel for the Beer Institute, which represents several of the country’s largest brewers, cautioned those in the room that FSMA would only increase the FDA’s role in regulating breweries of all sizes. Given their recent experiences with FDA inspectors, this wasn’t something the brewers wanted to hear. But DeCelle’s warning turned out to be prophetic.

Later that same year, the FDA proposed an outrageous rule for dealing not with fresh grains but with those grains that had already been used to brew beer. So-called “spent grains,” literally “spent” because they’ve been used as part of the process of brewing beer, have been used by farmers to feed livestock from prehistoric times through the present day. “The ‘grains,’ or exhausted mash, is sold to dairymen to feed cows,” reads one American text from 1878. Nowadays, in addition to selling them, many breweries donate their spent grains to farmers free of charge. This wonderful, synergistic relationship has helped reduce landfill costs for brewers and feed costs for farmers. It’s also helped prevent literally tons of “food waste,” a term that refers to the roughly 40 percent of our food that is not eaten or otherwise put to use and which ends up in landfills, often needlessly. But my focus with spent grains here is not on food waste but with how the FDA’s overzealous and inane attempt to make the food supply safer by imposing meaningless new rules for farmers and brewers almost cost them — and us — dearly.

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The FDA’s proposed rules for spent grains, which were part of the agency’s larger FSMA rules, likely would have required breweries of all sizes to dry and package their wet spent grains, to register with the agency as pet-food manufacturers, and to meet agency regulations for the manufacture of pet food. Brewers of all sizes — from tiny nanobreweries to the country’s largest brewers — were dumbfounded by the proposed rule. The Beer Institute told the FDA the proposed rule was “based on the flawed and erroneous assumption” that breweries’ intended customers are named Bessie, Spot, and Fido. “The goal of brewing is not to manufacture beer and animal feed simultaneously,” the group wrote, in tersely worded comments that conveyed many brewers’ thinly veiled disdain for the rule. “The goal of brewing is to manufacture beer.”

What exactly were the food-safety issues the FDA claimed spent grains posed? Much to the chagrin of those who were to be governed by the rule, the FDA never identified any. This was something brewers and farmers alike were quick to point out. “To our knowledge, there has never been a case of animals or humans becoming ill or harmed from consuming spent brewing grains or eating products from the animals who consume them,” said Natalie Cilurzo of Russian River Brewing Company, in comments to the Huffington Post. “These proposed FDA rules appear to be a solution looking for a problem.”

The Brewers Association, a membership organization that represents America’s craft brewers, and the Beer Institute, which represents the country’s largest beer makers, both voiced spirited objections to the proposed spent-grains rules. The Brewers Association told the FDA there was an “absence of reports of illness or death among humans or animals associated with the handling and use of spent grains” and accused the agency of “attempting to provide a solution to something that isn’t a problem and hasn’t been for the thousands of years brewers have been feeding spent grain to animals.” The FDA admitted the regulations weren’t a response to any problem. “We don’t know of any problems,” said Daniel McChesney, director of surveillance and compliance with the FDA’s Center for Veterinary Medicine, which — as the center’s very name suggests — should never have anything at all to do with regulating breweries. “But we’re trying to get to a preventative mode.”

Although the proposed rule likely couldn’t prevent food-safety problems from arising in places where no such issues have ever existed, it most certainly could create a host of unwanted new problems for farmers and brewers. It is these problems the rules weren’t intended to create but which would arise just the same — “unintended consequences,” as they’re known — that show the proposed rule’s dramatic potential negative impact. The spent-grains rule, in addition to creating mountains of food waste, would have taken money out of the hands of brewers and farmers of all sizes and, ultimately, would have raised the price every American pays for beer and food.

Estimates of the costs associated with the proposed spent-grain rules across the food chain were staggering. The average brewer would be forced to spend nearly $14 million per year, the Associated Press reported, to comply with the rules. Brewers would be forced to pass the extra costs on to farmers, who — you guessed it — would in turn be forced to charge consumers more for foods such as milk that come from dairy cows fed the spent grains. Many farmers estimated that — without access to brewers’ spent grains — their feed costs could rise by hundreds of dollars per day. Brewmaster Christian Ettinger, of Hopworks, a zero-waste brewery in Portland, Oregon, that is a model of sustainability and has sent more than 750 tons of spent grains to a local organic dairy farmer, said the spent-grains rule would result in “higher prices for dairy, for meat and definitely higher prices for beer.”

The fact that a small urban brewery such as Hopworks is sending hundreds of tons of spent grains to farmers shows how large and vital the trade in spent grains is in this country. Sure enough, the amount of spent grains produced in this country is staggering. The Beer Institute says that U.S. brewers of all sizes produce nearly 3 million tons of spent grains a year. Nearly all of it changes hands from brewers to farmers and ranchers each year. That’s a remarkable partnership for promoting sustainability.

Large breweries produce — and sell or donate to farmers — much of those spent grains. They’re also leaders in sustainability efforts. Miller-Coors, for example, sells or donates nearly 100 percent of its spent grains. Both it and Budweiser have been active in providing farmers with spent grains since the 1800s. It’s largely thanks to these big breweries that nearly 8 percent of the nation’s dairy cattle feed comes from spent grains, according to Beer Institute data. But smaller brewers are also key contributors and, perhaps more importantly, are probably more reliant on these relationships with local farmers. New Glarus Brewing in Wisconsin, for example, donates about 2,000 tons of spent grains per year to a local dairy farmer. Oregon Natural Meats (ONM), located just outside Eugene, appeals to supporters of sustainability and local food by partnering with local craft brewer Ninkasi Brewing Company. ONM’s cattle eat more than 11 million pounds of Ninkasi spent grains each year. The ONM website features a constantly updating ticker that shows the number of pounds of spent grains the company has “upcycled” since 2009. That number stood at nearly 70 million total pounds at last check.

Brewers and farmers have relied on each other for millennia. Each has benefited from the relationship, as have meat eaters, beer drinkers, livestock, and the environment. The FDA rules would have upset this beneficial, delicate, and tasty balance. As the Brewers Association argued, the proposed rules would harm “brewers looking to create local sustainable ties and close loops within their communities.”

One company that’s undoubtedly helping close that loop is Achadinha Cheese Company in Petaluma, California. The small dairy farm, run by the husband-and-wife team of Jim and Donna Pacheco, raises a variety of animals, including goats, cows, and chickens, and is known for its goat cheese. Jim’s family has been making cheese for three generations. Achadinha obtains several tons of spent grains each week from Bear Republic Brewing Company in nearby Healdsburg and Russian River Brewing Company in Santa Rosa. The goats feast on a steady diet of alfalfa, spent grains, and (when drought strikes, as it has) hay. “The brewers grain is slightly fermented,” Donna Pacheco told me, “which means that it is much easier to digest for the girls.”

The fact that Achadinha pastures its goats and buys spent grains from a brewery is just the beginning of the sustainability loop. In addition to selling cheese at about sixty farmers markets within a two-hour drive of their farm, the Pachecos also sell their cheese to a variety of local restaurants. One of those restaurants is Bear Republic’s brewpub, which uses Achadinha goat cheese in its artisanal cheese and charcuterie sampler. So the spent grains from Bear Republic’s beermaking process feed the Achadinha goats that make the cheese that’s served with the beer back at the brewery. That’s lovely, delicious, and a great example of a sustainability loop. But could the loop survive? Donna Pacheco said the FDA’s proposed spent-grain rules, coupled with California’s ongoing drought, could be a death knell. “The FDA requirements are going to make it more and more difficult for small companies to stay in business,” Pacheco told me. “We are a small family farm struggling to provide a future in agriculture for our children. The grain is a healthy way for us to keep going.”

Faced with this onslaught of opposition, the FDA dramatically reversed course in September 2014. The agency announced it would not treat spent grains like industrial waste and require breweries to be regulated as pet-food makers. FDA deputy commissioner Michael Taylor said in a statement that “redundant animal feed standards that would impose costs without adding value for food or feed safety . . . would not make common sense, and we’re not going to do it.” At the same time, Taylor cynically claimed the agency would never have done the very things it had proposed to do, things that caused brewers, farmers, cheesemakers, consumers, and others such consternation and that required countless hours and dollars to respond to in written comments (which were often drafted by costly attorneys). Taylor chalked the spent grains issue up as nothing more than a big misunderstanding — or “misperception” — and said, of imposing restrictions on spent grains, “it was never our intent to do so.”

Intent or not — and, absent any evidence to the contrary, I believe the former to be true — it’s difficult to overestimate the negative impact such a rule would have. “Every brewer in Seattle that I know of has a relationship with a farmer to dispose of spent grain,” Sara Nelson, co-owner of Seattle’s Fremont Brewing Company, told me. Nelson also applauded the Brewers Association for its lobbying efforts, and said they helped avoid “millions more tons of organic ‘waste’ clogging up land-fills, inflating brewers’ utility bills, and eliminating a no-cost source of animal food for local farmers.” Thankfully, the proposed spent-grain rule appears dead. But Nelson said she and her fellow brewers remain vigilant. They have good reason. The FDA’s pronouncement was not final. The agency is still pondering how it will treat spent grains.

From Biting the Hands that Feed Us by Baylen J. Linnekin; citations from original omitted. Copyright © 2016 by the author. Reproduced by permission of Island Press, Washington, D.C. 

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