Stop H.R. 5034—The Anti-Consumer Wine Bill

Posted by Tom Wark on Apr 17, 2010

House Resolution 5034 is by far the most audacious attempt ever by America's beer, wine and spirit wholesalers to takeover complete and total control of the country's alcohol beverage market and, in the process, create circumstances in all fifty states that assure consumers only have access to the slim number of wines to which wholesalers decide consumers ought to have access. But perhaps most sinister is the fact that if H.R. 5034 passes, it will put out of business an entire swath of America's artisan wineries.

First, let's be clear how this will happen. Buried deep in this newly introduced legislation is this language:

"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.’’

This language means that any state may pass a law that discriminates against out-of-state wine shippers and that the law cannot be challenged in court and therefore invalidated—just as the 2005 Granholm v. Heald Supreme Court decision invalidated laws in New York and Michigan that discriminated.

The Granholm Court reasoned that because the states' goals of temperance, an orderly market and tax collection could have been achieved without burdening interstate commerce and discriminating against out-of-state interests, those discriminatory wine shipping laws were unconstitutional violations of the Constitution's Commerce Clause.

The language in H.R. 5034 would mean that states would not have to show that there is no other non-discriminatory means of achieving the goals of temperance, an orderly market or tax collection. Rather, in order for a law that discriminates against out of state commerce to be upheld if challenged, the State would only have to show that the law, in some small way, achieves these goals—whether the goals can be achieved by non-discriminatory means or not.

But even more deadly for any court challenge of a discriminatory wine shipping law is the language in H.R. 5034 that says the challenged law must be shown to have no effect on upholding the "state alcoholic beverage distribution system" or have no effect in restricting "access to alcoholic beverages by those under the legal drinking age."

Simply by virtue of passing a law that prohibits out of state wineries or retailers from shipping wine into a state, the state can easily claim they are both protecting their alcoholic beverage distribution system and attempting to keep wine out of the hands of minors.

Ball game over.

After passage of H.R. 5034, there can be no successful challenge on Commerce Clause grounds (the same grounds used to successfully litigate Granholm v. Heald) to a state law that allows its in-state wineries and retailers to ship wine to the state's residents but prohibits out-of-state wineries and retailers from doing so.

So, let me tell you what will happen immediately after passage of H.R. 5034.

The states of Michigan, Texas, Illinois, Massachusetts and likely Maryland will see laws introduced that prohibit the shipment of wine into those states by out-of-state wineries and retailers. These states are those most completely controlled, from the legislature to the regulators, by wholesalers who don't want direct shipping. And you can bet that once these states successfully shut out the sale and shipment of wine by out-of-staters, wholesalers in other states will follow suit with their own discriminatory bills.

The Wine & Spirit Wholesalers of America say they won't get behind this kind of effort:

"Our goal is not to overturn existing state laws. We simply
believe the proper forum for resolving legitimate differences over
these issues is in the state legislatures – not the courts.”

They are lying. And they will be lying to congress if they respond in this manner to any question concerning existing state laws that come up during congressional hearings on this bill.

If the wholesalers have the courage of their convictions, then they will most certainly be attempting to roll back the direct shipping laws they say they oppose. And if H.R. 5034 means anything, it is that the wholesalers most definitely possess the courage to pursue their convictions that direct shipment of wine is bad.

There is no question that the wholesalers are swinging for the fences by trying to pass the most onerous consumer wine law since the passage of the 18th Amendment and the onset of Prohibition. Many wineries and retailers will say, "this will never pass". And it may not.

But keep something in mind. This kind of bill is unlikely to find much significant opposition or support from the citizens of the United States. It's not a sexy bill that affects the majority of Americans. H.R. 5034 is the kind of bill that gets pushed and opposed by insiders and lobbyists without much attention from citizens and the media. Anyone in the wine industry, be they retailers or wineries, who believes that they can sit back and just let the process protect their interests without getting involved is sorely mistaken. Any consumer who relies on direct shipment of wine for their wine club wines or to purchase the huge number of wines they can't find locally and who thinks this bill won't pass simply because it's so retrograde is sorely mistaken.

What's needed to stop this bill are a variety of steps.

1. There needs to be a joint and concerted effort by the likes of Family Winemakers of California, Free The Grapes, The Specialty Wine Retailers Association, The California Wine Institute and every other regional winery organization in America to oppose this bill. There should be a single organizing committee representing these organizations that works to lobby against the bill.

2. There must be a well coordinated effort to educate the media about the effects of this bill if it passes and to see story after story run that simply and precisely calls this bill exactly what it is: A WHOLESALER BAILOUT THAT IS BEING PURSUED BY SPECIAL INTERESTS THAT HAVE PURCHASED CONGRESSIONAL MEMBERS AND THAT, IF SUCCESSFUL, WILL SPELL FAILURE AND BANKRUPTCY FOR NUMEROUS WINERIES ACROSS THE COUNTRY AS WELL AS COMPLETELY STOP CONSUMERS IN NUMEROUS STATES FROM HAVING ACCESS TO THE WINES THEY WANT.

3. There must be the creation of a national wine consumer organization/union that will organize consumer opposition to this bill and create the foundation for the consumer involvement in the process of alcohol regulation across the country.

The only way many wineries can survive or thrive inside today's ineffective alcohol distribution system is through direct shipment of wine to consumers. The only way consumers can access most of the wines that have resulted from the explosion of artisan wineries across the country is via direct shipment of wine. If H.R. 5034 passes, it will mean the end of the direct shipment of wine in numerous states.

And anyone who doesn't believe that should ask themselves this question: Is there any evidence that alcohol wholesalers will use their political muscle to stop the direct shipment of wine?