A brewing Capitol Hill fight pits California winemakers against beer wholesalers and others who are hoping to outflank a landmark Supreme Court decision.
One hundred and seven lawmakers, nearly one-fourth of the House of Representatives, support legislation that would make it easier for states to hinder direct shipments of alcohol. The bill effectively takes the fizz out of a 2005 Supreme Court decision that said some bans on direct shipments violated the Constitution. The bill's supporters say they want to bolster state alcohol enforcement powers.
"With (the bill), Congress is taking an important step toward ending the erosion of the states' ability to regulate alcohol," the president of the National Beer Wholesalers Association, Craig Purser, declared when the bill was introduced earlier this year.
The bill's opponents say it would benefit booze distributors at the expense of wineries and consumers. "It really threatens the progress that's been made on direct shipping of wine," U.S. Rep. George Radanovich, R-Calif., said Friday. "It puts into jeopardy all of the work we've done." Himself a former winemaker, Radanovich co-chairs the 250-member Congressional Wine Caucus. The caucus supports direct shipping and will play a big role in what happens next.
Realistically, the legislation to complicate direct shipments has little to no chance in the remaining months of this Congress. Its chief author, Rep. Bill Delahunt, D-Mass., is a lame duck. Its opponents include key lieutenants of House Speaker Nancy Pelosi, D-Calif., who often champions her home state's wine industry. Two months after Delahunt quietly introduced his bill, a Senate version is nowhere in sight.
Politically, though, the bill signals a resurgence in the long-running struggle that pits different elements of the alcohol business against one another. "We have to be diligent anytime a bill like this takes shape," Radanovich said. "We have to be sure we can block it." Direct shipments cut out the distributors and middlemen, allowing wineries to sell straight to customers who may have visited in person or browsed via the Internet. Modest-sized wineries, in particular, have considered direct shipping a retail boon.
"It's definitely helped; there's no question about it," Patrick Campbell, the owner of Laurel Glen Winery in California's Sonoma County, said Friday. "The fact that you can ship direct to some markets creates an opening, and that scares the hell out of the distributors."
Urged on by the politically muscular liquor distributors, many states enacted laws that either prohibited direct shipping or severely restricted it. After a protracted legal campaign, the Supreme Court in the case called Granholm v. Heald struck down laws that banned out-of-state direct shipments while permitting those from in-state wineries. The court concluded that the state laws violated the Constitution's Commerce Clause, which prohibits states from erecting barriers against one another. Driven in part by subsequent legal or legislative action, 38 states now permit some form of direct shipping.
Enter the Comprehensive Alcohol Regulatory Effectiveness Act. As introduced April 15, the legislation significantly raises the legal hurdles for a successful challenge to a state's direct wine-shipment restriction. The bill declares that a state's alcohol control law "shall be upheld" unless the challengers can prove, essentially, that the law serves no purpose.
The challengers, for instance, would have to show that the alcohol control law has "no effect" on stopping underage drinking or the establishment of an "orderly" alcohol market. The state laws would have the "strong presumption of validity" under the bill.
"This legislation is urgently needed to help states defend against lawsuits that are motivated by economic gain ... and are not in the best interest of the health, safety and welfare of the public," Nida Samona, the chairwoman of the Michigan Liquor Control Commission, told a House panel recently.