How To Fix The Anti-Consumer H.R. 5034 Wine Bill

Posted by Tom Wark on Jun 29, 2010

At a recent meeting of the National Conference of State Liquor Administrators (NCSLA) a lively debate over H.R. 5034, the bill that would allow states to pass any discriminatory or protectionist laws and regulations regarding alcohol sales and distribution without concern of court challenges. At that debate, wholesaler supporters complained that opponents of the bill have done nothing to suggest changes to the bill that would make it more passable:

"The people who oppose this legislation may have ideas to make it better, so let's hear them…..We have not seen cooperative efforts….It's incumbent upon us to try to fix [the litigation issue]."

As the Wine Institute's Steve Gross pointed out, it's not the job of opponents of the bill to make it better and passable. And he's right.

However, that's not to say there are not any ways to improve H.R. 5034 and get it closer to being a bill that may be more acceptable to producers and retailers. The Bill's supporters have consistently pushed back saying that H.R. 5034 is not meant to overturn the holdings of the Granholm v. Heald Supreme Court decision that dictated states are still required to write non-discriminatory legislation where interstate commerce is concerned. In fact, at the recent NCSLA conference, Wine & Spirit Wholesalers of America president Craig Wolf said H.R. 5034 is:

"designed to incorporate and enshrine Granholm…..but when it comes to cases that go beyond Granholm….we want to draw a line."

If this is really the case and if H.R. 5034 is designed to "enshrine" Granholm, let me suggest at least one change to the bill. Perhaps a passage ought to be added that states:

"NOT WITHSTANDING ANY OTHER PROVISION OF THIS BILL OR ANY OTHER ACT OF CONGRESS, NO STATE SHALL ENACT LAWS ALLOWING IN-STATE WINERIES AND/OR RETAILERS TO SHIP WINE DIRECTLY TO ITS CITIZENS WITHOUT PROVIDING OUT-OF-STATE PRODUCERS AND RETAILERS WITH THE SAME RIGHT ON THE SAME TERMS. NOR SHALL THE STATES ALLOW ITS IN-STATE PRODUCERS  TO SELL DIRECTLY TO IN-STATE RETAILERS AND RESTAURANTS WITHOUT PROVIDING THE SAME RIGHT TO OUT-OF-STATE PRODUCERS ON THE SAME TERMS.

While this amendment would not satisfy all those who oppose H.R. 5034, it would go quite some distance toward enshrining the holdings of the Granholm v. Heald Supreme Court decision (as the wholesalers say it is meant to), it would recognize the important and critical differences that exist in today wine marketplace and economy versus the economic paradigm that existed in the alcohol beverage industry when the three tier system was designed in the 1930s, and it would allow states to continue to prohibit all direct shipment of wine if its citizens really believe such shipments were dangerous.

Still, this simple amendment would not fix the bill. H.R. 5034 allows states to pass any legislation not withstanding any "act of Congress" without any fear that it could be overturned in court. Numerous interests have indicated that this kind of nearly unprecedented power would lead to severe confusion in terms of labeling regulations, tax policy and import provisions, to name a few, since states would no longer be required to abide by alcohol laws created at the federal level.

Still, if the wholesalers who support H.R. 5034 and who claim that it is meant to "enshrine" Granholm, they really ought to agree to the above amendment to the bill.