HUNTSVILLE, Ala. – Distillers across the nation, including right here in Huntsville, who changed their businesses to make hand sanitizer at the start of the pandemic are breathing a sigh of relief. The U.S. Department of Health and Human Services has directed the Federal Drug Administration to waive a $14,000 fee that was announced on December 29th without any advanced notice.
HHS officials said after many conversations with Legislators and the key agencies, they have withdrawn the Notice published in the Federal Register re OTC Monograph Drug Facility Fees and directed FDA to cease enforcement of these fees.
“Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid. Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so, said Brian Harrison, HHS Chief of Staff in a statement. “I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees. Happy New Year, distilleries, and cheers to you for helping keep us safe!”
Before the announcement of the fee waiver, we spoke with a local distillery owner who made hand sanitizer early in the pandemic. He voiced his concerns over the $14,000 fee.
“If it’s left untouched, it’s not going to be pleasant. A lot of people, especially the small guys, are going to exit the business,” said Jeff Irons, the owner of Huntsville-based Irons One Whisky Distillery.
The distilled spirits industry is only getting started in Alabama. There’s only about 20 or so in business.
This comes as small businesses across the country struggle to keep their doors open amid the pandemic. Thursday was also the deadline for businesses to go online and unselect their hand sanitizing ambitions or face more FDA fee’s in 2022.
For the most part, distilleries stopped or slowed hand sanitizer production down several months ago when national supply stabilized.
“I started getting all sorts of phone calls from people saying, hey do you need hand sanitizer? Because we have it by the train load. I was going, I think I’ll stop making it now,” said Irons.
National distillery groups were urging businesses to hold off on paying the $14,000 fee while they work with lawmakers and the FDA. The American Craft Spirits Association says the aforementioned task has been difficult because of the holidays.
The word difficult doesn’t cut it for distilleries who often rely on now-closed tasting rooms, let alone spirit taxes in states like Alabama.
“We pay a more reasonable federal tax now on whisky. State taxes are fairly high. We have the 4th highest state tax in the United States of America,” said Irons.
Months ago, Irons noticed distilleries were trying to sell their equipment. He feared the FDA fee issue would do the economy no favors.
“It’s a challenging environment for small businesses. Let’s make it a little bit more pro small business than we are right now,” said Irons.
Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.”