March 21st, 2011
If you have been following the debate over the CARE (Community Alcohol Regulatory Effectiveness) Act for the last nine months, it should be no surprise that the bill was re-introduced in the US House of Representatives last week. Proponents of the bill, including the National Beer Wholesalers Association (NBWA) and the Wine & Spirits Wholesalers of America (WSWA) had hinted for months that it would be re-introduced in the 112th Congress after the previous version was heard, but did not move out of the House Judiciary Committee in the 111th. As expected, HR 1161 was introduced just before the NBWA Annual Legislative Conference, which will take place March 27th-30th in Washington, D.C.
When comparing the text (see our redline version) of the current bill to that of the revised version of the original bill (HR 5034) from September, you’ll notice that not much changed in terms of substance. Aside from the assignment of a new bill number (HR 1161), the re-introduced bill was renamed to be the “Community” Alcohol Regulatory Effectiveness Act of 2011 from the “Comprehensive” Alcohol Regulatory Effectiveness Act of 2010. The Purpose (Sec. 2) and Declaration of Policy (Sec. 3a) were also rewritten and are now slightly more concise. However, the meat of the Act lies within the Construction of Congressional Silence (Sec. 3b) and the Amendment to Wilson Act (Sec. 4), both of which were untouched. For additional background on the CARE Act and its potential effects, see our previous post, which was published just before the House Judiciary Committee hearing on September 29th, 2010.
Because HR 5034’s lead sponsor, Bill Delahunt, retired from congress last year, HR 1161 has a new lead sponsor in Rep. Jason Chaffetz of Utah. Rep. Chaffetz was one of the original co-sponsors of HR 5034, which was shelved with 152 total co-sponsors. HR 1161 was introduced with only eight co-sponsors last week, but that number will certainly grow as the lobbying efforts begin to ramp up. The bill has yet to be introduced in the Senate.
And so the battle continues. NBWA and WSWA both applauded the introduction of HR 1161 as necessary to enable “states to defend their alcohol laws from litigation designed to eviscerate state control over alcohol policy decisions.” A coalition of supplier groups, including the Brewers Association, Beer Institute, Distilled Spirits Council of the United States, Wine Institute, National Association of Beverage Importers, and WineAmerica, remain opposed and immediately responded by referencing their preemptive February joint producer letter to Congress urging them to refrain from spending “valuable time wading into an intra-industry squabble and unraveling a successful regulatory structure to the detriment of consumers, the industry, and the federal interest in a fair, competitive, and orderly marketplace for alcohol beverages.”
“Ultimately, this legislation is about who should make decisions regarding alcohol regulation, not what those decisions should be,” said NBWA President Craig Purser in a statement. “Alcohol is different than other consumer products and that’s why the 21st Amendment to the U.S. Constitution created a state-based system of alcohol regulation that effectively balances local community control, tough consumer protections as well as choice and variety. The majority of Americans believe that laws regarding the regulation of alcohol should be made at the state and local level – and so do we.”
Paul Kronenburg, President of Family Winemakers of California, summarized the supplier opposition to HR 1611. “Family Winemakers of California (FWC) remains opposed to efforts at the national level to undermine the Commerce Clause and embolden states to pass discriminatory alcohol laws. Rarely are states reluctant to regulate and they don’t need H.R. 1161 to remind them of their authority. Florida is a prime example where wholesalers recently introduced a production cap bill despite last year’s Massachusetts decision finding caps unconstitutional. FWC will work with others to preserve our national economic union and consumer choice by opposing H.R. 1161.”
"We see HR 1161 as a radical departure from the principles of a single economic union laid down in the Constitution," said Tom Wark, executive director of the Specialty Wine Retailers Association. "This bill would revoke all Commerce Clause protections against discriminatory state laws that wine retailers currently enjoy and would undoubtedly lead to protectionist laws that hurt retailers and consumer access to wine, beer and spirits."
In a previous post, we discussed how the CARE Act would not change anything overnight, despite hyperbole to the contrary. Effectively, it would allow states the ability to pass new laws that include non-facial forms of discrimination such as capacity caps, in-person purchase requirements, and limits on production capacity. One certainty is that the hyperbole and rhetoric on both sides will escalate as the industry associations dig in and make their case for (and against) federal legislation. Wholesaler groups are going out of their way to say that this is not an “intra-industry” squabble, but the battle lines are currently drawn with wholesalers united on one side, and suppliers united on the other.
HR 5034 Bill Summary and Status
HR 1161 Bill Summary and Status
NBWA Press Release
WSWA Press Release
Beer, Wine and Spirits Producers Press Release
Viewpoint: Back to the Future with HR 5034 (June 2010)
H.R. 5034 Update: Revision Reignites Debate, Important Hearing Set for Wednesday (September 2010)