Congressional Bill Threatens Direct Shipping of Wine

| by CEI

By Angela Logomasini

This week, the National Beer Wholesalers Association members descend on Washington for their annual legislative conference and lobbying visits to Congress. High on their agenda is a bill (HR 5034) that would limit consumer freedom by allowing states to prevent direct-to-consumer shipping of alcohol–trumping the Supreme Court ruling, Granholm v. Heald. Under Granholm, states are not allowed to pass laws that discriminate between in-state and out-of-state wineries unless the state can show that there is no other way to meet state policy objectives associated with such things as tax collection and protection of minors, etc. The bill would shift the burden of proof, requiring that plaintiffs show that a state law does not serve the state’s policy goals in even the smallest way. It reads [emphasis added]:

(c) Presumption of Validity and Burden of Proof- The following shall apply in any legal action challenging, under the Commerce Clause or an Act of Congress, a State or territory law regarding the regulation of alcoholic beverages:

(1) The State or territorial law shall be accorded a strong presumption of validity.

(2) The party challenging the State or territorial law shall in all phases of any such legal action bear the burden of proving its invalidity by clear and convincing evidence.|

(3) Notwithstanding that the State or territorial law may burden interstate commerce or may be inconsistent with an Act of the Congress, the State law shall be upheld unless the party challenging the State or territorial law establishes by clear and convincing evidence that the law has no effect on the promotion of temperance, the establishment or maintenance of orderly alcoholic beverage markets, the collection of alcoholic beverage taxes, the structure of the state alcoholic beverage distribution system, or the restriction of access to alcoholic beverages by those under the legal drinking age.’.

The NBWA says that the bill will simply “clarify” Granholm requirements and promote an “orderly market.” In reality, rather than clarify, it overturns Granhom by allowing any protectionist law that might arguably in some tiny way serve any goals associated with: “temperance,” “orderly markets,” tax collection, regulation of distribution, or enforcement of the legal drinking age. And the law would stand even where other–likely much better–means of meeting such goals exist. This serve wholesalers, making sure that all wine passes through them before reaching consumers.

Congress can make these changes since the Commerce Clause of the U.S. Constitution allows it to grant states certain rights to regulate interstate commerce. But without congressional consent, the “dormant commerce clause” bars such protectionist state laws.

According to Wine America, which represents wineries: “NBWA’s legislation would, without any justification, allow states considering alcohol beverage measures to virtually ignore the Commerce Clause and federal law in all but the narrowest circumstances”. Tom Wark notes on Fermentation: “[t]his new law would provide a state with the ability to simply announce that the discriminatory law is meant to protect minors or assure tax collection…NOT THAT the discrimination is the only way of protecting minors or assuring tax collection. This is important. It gives states free reign to do what they like and renders the bill’s ‘may not facially discriminate’ language meaningless.”

It’s worth noting that these laws not only harm consumers, they impose serious burdens on small wineries–making it difficult for them to survive. Check out this video on the impact for wineries.