Wine Spectator – “U.S. Congressman Introduces New Act Threatening Direct Shipping”

Mar 18, 2011
In The News

House Resolution 1161 picks up where last year’s 5034 left off; can shipping opponents attract more votes this time?

Washington, D.C., Mar 18, 2011 -

The fate of direct shipping of wine from wineries and retailers to consumers is once again in the hands of the U.S. Congress. Rep. Jason Chaffetz, a Republican from Utah, introduced a reiteration of last year’s Comprehensive Alcohol Regulatory Act (the "CARE Act") yesterday. This year’s version is House Resolution 1161, the Community Alcohol Regulatory Effectiveness Act. The new CARE Act, if passed, could end direct shipping of wine and other forms of alcohol in the United States, or at least put major roadblocks in front of lawsuits by consumers and wineries trying to reduce restrictions on direct shipping.

The bill’s stated intention is to ensure state governments maintain their ability to regulate alcohol under the 21st Amendment, which ended Prohibition, and protect them from costly litigation challenging their laws governing direct-to-consumer wine shipping. Since the U.S. Supreme Court’s landmark Granholm decision in 2005, which struck down Michigan’s shipping policies allowing in-state wineries to ship wine directly to consumers’ homes but banned that practice by out-of-state wineries, a series of lawsuits across the country, most of them ultimately successful, have challenged restrictions on direct shipping. Today, 37 states allow the direct shipment of wine from producers to consumers. (A similar lawsuit that would have given the same protections to retailers was recently appealed to the Supreme Court, but the Justices declined to hear it.) The CARE Act would make it much harder to challenge such restrictions, allowing state governments to pass laws effectively banning direct shipping.

In addition to Chaffetz, who represents Utah’s 3rd district, eight other representatives are sponsoring 1161 thus far: Rep. Bruce Braley (D-Iowa), Rep. Howard Coble (R-N.C.), Rep. John Conyers (D.-Mich.), Rep. Ted Deutch (D-Fl.), Rep. Jim Jordan (R-Ohio), Rep. Gary Miller (R-Calif.), Rep. Dennis Ross (R-Fl.) and Rep. Debbie Wasserman Schultz (D-Fl.). Last year’s CARE Act was eventually sponsored by 153 representatives, with 94 Democrats signing on and 59 Republicans.

Congressman Mike Thompson (D-Calif.), who represents Napa, Mendocino and parts of Sonoma, is a proponent of winery direct shipping and issued a statement this afternoon strongly opposing H.R. 1161. “The federal government has no business picking winners and losers in the wine, beer and distilled spirits industry. Yet the Act would do just that by banning the direct shipment of wine and other forms of alcohol in the U.S. The impact of this bill would be devastating for brewers, vintners, distillers, importers and consumers across our country.”

Wine and Spirits Wholesalers of America president and CEO Craig Wolf, who fully supports the bill, doesn’t believe Republicans’ takeover of the house will hurt the bill’s chances. “This isn’t a partisan issue,” Wolf told Wine Spectator. Wolf’s organization and the National Beer Wholesaler’s Association drafted an early version of what would become 2010’s CARE Act, which H.R. 1161’s language closely mirrors. “This is about whether or not you as a member of Congress believe states should have the authority to make policy decisions on alcohol. If you think the courts should have the authority to interfere with state policy decisions, then you’re going to disagree with us; if you think that the states should be making that policy predominantly, then you’re probably going to agree with us.”

Despite the Republican majority, Wolf’s optimism may be justified. Several sources reported that former Speaker of the House Nancy Pelosi quietly opposed the measure last year, while a representative from Speaker John Boehner’s office told Wine Spectator that the new Speaker had not issued a statement of opinion on the new bill yet. Boehner was not a sponsor of last year’s bill, and potential restrictions on direct shipping could hurt small wineries—Boehner has repeatedly said he champions small businesses. But support of 5034 was bipartisan.

One possible reason for that bipartizan support: The NBWA and WSWA have donated generously to those who support their causes through their political action committees. Since 2005, the year of the Granholm decision, the nine sponsors of H.R. 1161 have accepted $185,000 from the NBWA and $73,073 from the WSWA. (Not all of the sponsors have been in office since 2005.) In 2010 alone, the NBWA gave these congresspersons $47,500 and the WSWA, $35,499, or $82,999 total. Chaffetz received $6,000 last year from the WSWA and $5,000 from the NBWA.

The larger question is not whether 1161 can win co-sponsors, but whether it can win votes. H.R. 5034 never received a full vote in committee, let alone on the House floor. And no similar bills were ever introduced in the Senate. Both sides are mobilizing their lobbying muscle. The new bill’s introduction makes it clear wholesalers are not willing to let the matter lie, but opponents are prepared to fight it.

“I will not allow this discriminatory bill to go unchallenged,” Thompson said in his statement. “Existing state and federal regulations have created a fair and competitive marketplace for wine and other alcoholic beverages. Nothing has changed. That’s why I am prepared to fight to protect our wineries, our businesses, our local economy and our consumers’ right to purchase these beverages.”