


H.R. 5034: The Lies, The Facts, The Fictions


With so much at stake for America's alcohol wholesalers and their protected
monopoly status that props up unearned profits, it's no surprise they would
swing for the fences with all their state-granted political power and
attempt to pass H.R.
5034 . This bill, currently in Congress, would give wholesaler
lobbyists the means to turn back the clock on consumer access to wine, lead
to the passage of laws that override federal regulations on alcohol, kill
jobs and business that focus on artisan production of wine, beer and
spirits, punish and dismantle small specialty wine retailers that serve the
consumers that wholesalers won't and override the critical Constitutional
principle of a single American economic union...all for the sake of
protecting wholesaler profits by giving them unprecedented control and
influence over the entire American alcohol industry.
But what is truly remarkable (and likely a result of the wholesalers' hubris
stemming from 75 years of being granted government welfare) is their
willingness to misrepresent facts, ignore the truth, and mislead in their
defense of H.R. 5034.
The recently launched www.hr5034.org
website is the creation of the National Beer Wholesalers Association and and
appears to be the repository all the misrepresentation, ignorance and
misleading ideas supporters of H.R. 5034 could possibly muster.
For the sake of context and setting the record straight, this post address
many of the misrepresentations and misleading claims made at the middlemen's
disingenuous new website.
On their homepage ( http://www.hr5034.org/ )

"Today’s system balances competition with public safety to
ensure that consumers can enjoy alcohol without suffering the negative
effects of an unregulated marketplace"


Is there really any competition when the state-based
regulatory system the wholesalers love so much require that producers of
alcohol use a wholesaler to bring their goods to market, meaning that
without use of a wholesaler a producer cannot enter a state's market? It
also means that wholesalers get to decide what consumers drink, not
consumers.


"Unfortunately the effective state-based regulatory system in
the U.S. is under attack. Over the past 10 years,more than 25 states
have faced challenges in federal courts to their authority to regulate
alcohol and their ability to maintain a licensed system of alcohol
controls."
The only challenges to the state-based alcohol regulatory
system are those that discriminate against interstate commerce for
protectionist reasons. Even in the wake of successful suits that
challenged the protectionist laws that wholesalers originally pushed,
the state retained extraordinarily broad authority to maintain a robust
system of alcohol controls.

ON THE "LEARN MORE" PAGE ( http://www.hr5034.org/learn-more ) "Litigation
against the states brought by those wishing to deregulate alcohol for
their own economic interests is of great concern to state alcohol
regulators, state attorneys general, public health advocates and many
others."When the economic interests of producers,
retailers and consumers are horsewhipped by states doing the bidding of
wholesales who receive more government protection and welfare from the
state than any other industry in america, you might expect them to fight
back. As for those that have "concern", let's recall that it's only a
tiny fraction of state alcohol regulators, that there is no formal
support from state attorneys general, only a mere handful of public
health advocates, a selection of recipients of campaign contributions
from wholesalers and wholesalers themselves that support H.R.
5034 .

"According to a recent national poll conducted by the Center
for Alcohol Policy, 79% of respondents support the right of individual
states to set their own laws and regulations surrounding the sale of
alcohol and 87% agree that state and local laws regarding alcohol
regulations should be decided by lawmakers and citizens, not by
judges."
I'm shocked, shocked i say, that the "center for alcohol
policy" is an arm of the national beer wholesalers association and that
it would conduct a poll that finds results supporting those that funded
the poll. Does it get any more illegitimate?

On the "Fact v. Fiction page ( http://www.hr5034.org/fact-vs-fiction ) "FACT: This
bill does not address direct shipping or any specific state alcohol law.
It does not preempt a state law that allows direct shipping. It does not
mandate a direct shipping law where there currently is not one. The bill
does PROTECT a state’s wine shipping law if someone were to challenge it
in court by providing the shipping law with the same presumption of
validity granted other state alcohol laws."Disingenuous in the extreme. And what's worse, the wholesalers knew
this when they wrote this. H.R. 5034 gives states the ability to pass
laws unchallengeable in court that would discriminate against
out-of-state wine shippers. And we know such laws would be introduced
into various states since wholesalers have seen to it that such laws
have been introduced into state legislatures for the past 20 years. In
fact, H.R. 5034 would allow states to pass laws that make consumers
receipt of a wine by in-state shippers legal while making receipt of a
wine by out-of-state shippers punishable to a greater degree than rape,
home invasion or selling cocaine to children. "Fact:
Protection of a state’s power to regulate alcohol is not an “industry
food fight.” "food fight" may be the wrong word.
Better to call the introduction of H.R. 5034 what it is: an attack on
the entire alcohol industry and consumers for the sake of protecting
wholesaler profits. It's no coincidence that brewers large and small,
wineries, spirit producers and importers, retailers, wine education
organizations, wine consumers and free trade organizations all oppose
H.R. 5034.


"This bill does not amend or alter the Federal Alcohol
Administration Act (FAA Act) which provides federal guidelines in many
of these areas"
No it doesn't "amend" the faa act. It overrides it entirely.
To quote from H.R. 5034:
"not withstanding that the state or territorial law
may burden interstate commerce or an act of congress, the state law
shall be upheld..."
This claim by the wholesalers that H.R. 5034 "does not
amend" federal regulations on alcohol is a straight up
misrepresentation. It's like saying "i didn't kick the dog, but rather
his ribs fell on to my boot".


"It is the intent of this language to make clear the
congressional support for the holding in Granholm-prohibiting state laws
that allow an in-state winery to do something a similarly situated
out-of-state winery cannot do. Language that bars facial discrimination
is included in the bill to codify this prohibition"
I have great faith in the wholesalers' ability to mislead.
But this goes beyond even my expectation. The intent of H.R. 5034 is
precisely to overturn the granholm v. Heald supreme court decision that
did away with protectionist state alcohol laws. More importantly, the
very language of H.R. 5034 gives states the explicit right to
discriminate against out-of-state wine shippers. All the state needs to
do is offer the feeblest of justifications. Read for yourself: "state or
territorial regulations may not facially discriminate, without
justification, against out-of-state producers of alcoholic beverages in
favor of in-state producers." one of those "justifications", the bill
states, is maintenance of the "structure of the state alcoholic beverage
distribution system." in other words, discrimination is ok as long as
the discrimination is written into the state's alcohol beverage
distribution laws. Furthermore, note that wine retailers are not even
covered by this duplicitous language on "justification". The state needs
no justification to discriminate against out-of-state retailers. 


"Over half the states have been sued challenging their
alcohol laws. The lawsuits have attacked items such as commonsense
safeguards that require a face-to-face transaction (needed for I.D.
checks) to buy alcohol"
In fact, face-to-face transactions are not needed for I.D
checks. We know this because states have written laws that have gone
unchallenged that require I.D. Checks to be made at the point of
delivery of the wine. 


"Unelected judges should not set alcohol policy; this
responsibility rightly rests with individual state legislatures, as
guaranteed under the 21st Amendment to the U.S. Constitution."
Judges never have set policy. State legislatures always
have. This is the big lie the wholesalers tell. Judges merely tell the
state when they have reached beyond what the 21st Amendment allows.
After that, the state legislatures, in every state where litigation has
affected badly crafted laws, went about legislating a fix. Surely the
wholesalers don't mean to say that state alcohol laws should in no way
be required to abide by the principles in the u.S. Constitution. What
next, will the wholesalers argue the 21st amendment give the states the
right to prohibit women from buying alcohol? Will they argue that state
laws banning African-Americans from being distributors is legal under
the 21st Amendment?


"State laws that raise concerns can and should be addressed
in the state legislature."
Lucky for Americans it wasn't this attitude that ruled the
day when jim crow laws were in place. The wholesalers would have argued
that the racist "separate but equal" philosophy had no business being
litigated and that we should wait for the legislatures that enacted the
racist laws to overturn them with new laws. We have courts precisely to
adjudicate concerns with the fairness and constitutionality of state
laws. But of course, wholesalers know this. They to have brought states
to court over alcohol distribution laws they didn't think were fair or
constitutional. It appears that wholesalers don't like the courts
involved when the decision don't go their way.

The hypocrisy, misleading notions and disinformation being featured at the
wholesalers website supporting H.R. 5034 is staggering. However, they do the
right thing when they invite readers to sign up for emails that will deliver
"the latest developments". I urge all readers to sign up for those emails .
In the mean time, please checkout the website that spurred the wholesalers to
launch their own: http://www.stophr5034.org. It is published by the
Specialty Wine Retailers Association and upon reading through it, you should
find yourself feeling much cleaner and less soiled than after wading through
the misrepresentations of the new wholesaler-sponsored website on H.R.
5034.

> Comments
 Scott said... Too bad there's not a way to shout louder
than all caps. Maybe try more exclamation points....  July 16,
2010 at 06:13 AM 
 Judd Wallenbrock said... Tom -- thanks so much for
keeping us all up to date and informed regarding this silly...but very
real threat...not only to our industry but to our basic rights as
consumers.  July 16, 2010 at 08:14 AM 
Tom Wark said... Scott: Thanks for the tips. Judd: my
pleasure!  July 16, 2010 at 09:42 AM 
Bill Sprow said... Get rid of thewe beer and wine
distributor associations, ie make them illegal, and you would really be
showing a free market work in progress. If I as a resident of Ohio want
to purchase a bottle of Californis wine on line and have it shipped to
me in Ohio without interference from anyone else.  July 16, 2010
at 10:41 AM 
Austin SEO said... Interesting!, Wholesalers
issue.Thanks for sharing your link. I enjoyed reading your post. 
July 17, 2010 at 12:35 PM 
JohnLopresti said... Thought I would post a link with a
cute title related to the post. NB: the article is in a trade journal
available by online subscription $ only.
http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202463630848&Alcohol_bill_means_happy_hour_for_lobbyists
 July 19, 2010 at 08:53 AM 
Steve said... Tom: Thanks for this passionate polemic, a
foreceful and sorely needed rebuttal to a bogus bill.  July 19,
2010 at 09:10 AM 
Tom said... Seems like some old geezers are filling
their pockets with some major greenbacks getting this bill passed
through. Its a blatant anti-competition bill that will crush the
uniqness of the alchohol/wine industry, kinda like Wal Mart moving into
a town and crushing the boutique shops. Since I live in Texas Ill have
to resort to buying O'Douls and Welchs grape juice after the Baptists
take control of the law in the State legislature. Dont even get me
started on the still enacted Blue Laws of this state (cant buy liqour on
Sundays)...  July 19, 2010 at 09:12 AM 
r said... Wow! I am speechless. I will not even waste my
time rebutting you point by point because you do not have a clue in many
instances what you are talking about. You do have a few valid points but
they too may be predicated on false premise, I do not claim to be the
all knowing expert. By using the same sensational BS Tactics you rail
against, instead of a balanced and fair assessment you render the
entirety of your rant incredible. In short the wine has to go from point
A to B in some way. Do you work for FedEx? It sounds like you would
prefer you government welfare to go there instead? Wholesalers compete
against each other... perhaps you forgot. They do not operate
monopolies. In Oregon for instance there are about 60 wholesalers
competing for partnerships on both the supply and the demand side,
hardly the ideal monopoly situation. In most cases where state laws
allow shipping you can get a bottle of wine shipped from the winery of
your choice. A very important point to remember: While large "commercial
wineries" (Factory wine producers) may have the ability to market their
own wine, smaller growers whom you seem to be so concerned about do not
have the proper infrastructure to allow wine sales on line in many
cases, let alone having their own transportation infrastructure. They
are experts at farming and producing wine, which is what they likely
prefer to do in most cases.  July 27, 2010 at 09:08 PM 
alean said... wine facts are really good
http://www.facts-about-wine.info/
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