HR 5034 -- Congress mulls your right to buy wine

Update, March 21, 2011: Congress mulls your right to buy wine, again.

You might guess Congress would have other things to micromanage, and alas, they do. But for the moment, we wine geeks are talking about the making of yet another law, this one regarding alcohol (read wine) purchases. Across state lines. From small wineries or retailers, perhaps even via the Internet. Purchases directly shipped to you, the buyer, without your using a wholesale distributor for the transaction. Which means the wholesale distributor hasn't made any money from your choice.

That's bad. The wholesaler wants you to be impelled to shop local retail stores for wine, so that you buy whatever he has already placed (and made money from) there. If he's a big distributor, he especially doesn't want you fumfering around trying little boutique wines from Oblivion, Texas, which aren't worth his while to represent, the discovery of which keeps you happily shopping the web and away from your local stores.

Now bless his heart, of course the nice wholesale liquor distributor wants to make a living. So does your nice local merchant. Together, they offer you a nice, big selection of good, affordable wines, replenished all the time. But if you learn from your experiences browsing and buying there, and happily venture out to other wines from other sources, the wholesaler rather quickly notices and says No: you will stay with me, and you'll please to buy what I bring to you. In fact, let's make this permanent.

How so? Via House Resolution 5034, the Comprehensive Alcohol Regulatory Effectiveness act of 2010 ("the CARE act") sponsored by the National Beer Wholesalers Association. If passed, this will make it federal law that anyone suing any state over any state law regarding liquor shipments -- i.e., someone in Wisconsin suing for the right to buy wine from Oblivion, Texas -- will have to prove that whatever existing state law he is suing about, far from being onerous, is "ineffective" regarding liquor distribution. That it doesn't do much at all.

Now that's confusing, isn't it? Why would wholesalers, bent on keeping you shopping locally, craft some crazy national law outlining what argument your state-level liquor distribution lawsuit must make? Why assume people will sue to buy wine? Ah, but they do. We had better get some background, before it all becomes still more confusing.

After the repeal of Prohibition, the federal government essentially took its hands off liquor, leaving the regulation of alcohol sales and consumption to the states and to counties and communities. The resulting, overlapping 70-year-old webs of booze laws were meant to ensure the orderly movement of "intoxicating liquors" from those who made and sold them to those who wanted them, all in keeping with local standards, the need to prevent teens' finding Demon Rum, and the need to collect taxes. It's that 70-year- old web of laws which rises up and clings to you in silly and hysterical ways, whenever you want to do something involving Demon Rum, for instance host a wine tasting in a public building in a town where, it turns out, you can't bring alcohol into a public building. Not that I'm bitter, but who knew?

The other major aftereffect of Prohibition's repeal, partner to the fact of state and local control becoming everything, was the establishment of just that three-tiered, producer-to-wholesaler-to-retailer alcohol distribution system. Apparently spending the 1920s watching the Mob source hootch, from bathtub to point of sale, convinced the freshly all-powerful states that it would be best to make sure separate entities manufactured, distributed, and sold liquor, so that nobody had a violent, price-gouging monopoly of the whole process. All fine; but the trouble is that by now the middle tier of the system, wholesale distributors, consider that all these bootleg-era laws and aftereffects amount to legal guarantees that their industry shall exist. Nay prosper -- even if bright souls like you increasingly see ways to get interesting, boutique hootch without it. And note one big change in those seven decades. All fifty states now have wineries. These wineries would like to exist, too, nay prosper, and the best way to do that is to reach as many consumers as possible, as freely as possible. Kevin Zraly writes in his American Wine Guide that, for seventy years, from Repeal until 2005, "distribution has been the main obstacle to growth, especially for smaller wineries."

And what is significant about the year 2005? In its concentration on the niceties of lawsuits and liquor, the smart people say HR 5034 is a painstakingly thought-out reaction to, and a deconstruction of, a Supreme Court case of that year, which wine geeks know about but not many other people do. Kevin Zraly refers to it as Wine Wholesalers Association v Heald, but it has come to be called Granholm v. Heald, because the case involved mostly Michigan issues (the governor of Michigan is Jennifer Granholm.) In 2005, the Supreme Court ruled that Michigan's liquor distribution laws, which had banned direct wine shipments to consumers from out-of-state wineries, could not stand because they violated the Constitution's guarantee that all the 50 states are a free market (the Commerce Clause). Liquor wholesalers trying to confine Michigan consumers to the (Michigan only) wineries they represented argued "we are obeying state laws mandating the maintenance of orderly markets and of tax revenue collection, and are helping keep liquor from being directly shipped to teens." The Court essentially responded, "you can still obey all those laws even if you are not making money when adult citizens order wine from outside Michigan." And of course, being a Supreme Court decision, this ruling applies to all the states. No state may discriminate between in-state or out-of-state wineries "in matters of direct-to-consumer shipping" (Wine Spectator, April 16, 2010).

Granholm opened a flood of other lawsuits of the same sort, and as a result, challenged states have changed their laws such that consumers in 37 of them may now buy wine from out of state wineries. Out of state retail purchases are another matter; Illinois' wholesalers, for example, plugged that gap as of June 1, 2008, with the result that I can't buy wine, say, from San Francisco's famed K & L Merchants. Neither can you, if you live in any one of 32 other states whose liquor distribution laws command you to shop local. A pity; their inventory seems so interesting.

Hence, HR 5034's intent to go as national as Granholm did, and to control what you might call the narrative of any further lawsuits. If you plan to sue, the bill says, be prepared not to argue a blessed thing about commerce or your right to buy wine. Prep, instead, to argue that your state's liquor distribution laws are "ineffective." (It would be as if a group of doctors wrote a law to say that someone suing a doctor for malpractice had to prove instead that a state's malpractice laws were ineffective. Hardly the point.) One more thing: the bill also exudes a kind of protective coating over itself and over the situation that wholesalers find themselves in right now. It says that current state liquor distribution laws and networks need never be bothered again about whether or not they "burden commerce" or stand "inconsistent with any Act of the Congress," past, present, or future, apparently. So here, the U.S. Congress freezes an entire economic and legal scenario for one industry, decrees that it shall decree this one last item regarding it, and then recuses itself from the subject. Would that they might decree their own abandonment of a topic more often.

If HR 5034 passes, excising as it does Congress and the courts from the arena where people fight over the right to buy wine, the only authority figures left there will be the state legislatures. That serves the wholesalers just fine. It only takes a few lawmakers, bought and paid for and typically representing districts obviously not filled with a wine loving demographic, to sponsor little-noticed legislation erecting firewalls between wine consumers, wineries, and retailers across the country. That's an unpleasant thing to say, but it would be naive to imagine that wholesalers' campaign contributions to the right state lawmakers have no effect on the lawmakers' votes. Two years ago, Illinois wholesalers only needed two sponsoring legislators, Rep. Edward Acevedo and Sen. James. F. Clayborne Jr., plus Governor Blagojevich, to plug that retail sales gap with a nice shiny new law forbidding me to shop through K & L.

Wine geeks throughout the blogosphere are agog at this, and rightly so. But I must admit. A brilliant mind or minds came up with this bill. It seems to me perfect in its logic and its foresight. I wonder if it resulted from five years of heated committee meetings and legal study in dusty libraries, or if it was the product of a single genius. I suspect the latter, only because it seems more romantic -- and because it lets me indulge the fancy that whoever it was also plays very good chess. And, memo to the good guys in the wine industry: find whoever it was and hire him.

Salutes aside, the question is, do enough Americans care about buying wine as they wish, to contact their Congressmen and say, "please oppose HR 5034"? Or are wine geeks too marginal a group to be heard? Some people say this bill will never make it to a vote. Some say it's the end of your wine club, so enjoy your shipments from Cakebread while you can. Who is your representative?

The four sponsors of the "CARE act" are Bill Delahunt (D, Massachusetts), Mike Quigley (D, Illinois), Howard Coble (R, North Carolina) and Jason Chaffetz (R, Utah).