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Direct-Shipping Bills Die -- For Now -- As Congress Adjourns

Dana Nigro
Posted: November 22, 1999

Congress is adjourning for the year without passing any legislation restricting direct shipments of wine to consumers' homes. However, no one in the wine business expects the issue -- which wineries, retailers and wholesalers have been battling over all year -- to die.

In a rush to pass a giant budget package to keep the government running, the House and Senate dropped many other bills, including two that would have helped states enforce their regulations on direct shipments of alcoholic beverages.

In August, the House had passed the "21st Amendment Enforcement Act," allowing states to seek injunctions in federal court to crack down on interstate shipments that violate state laws. The bill (HR2031), sponsored by Rep. Joe Scarborough, R-Fla., was backed by alcoholic-beverage wholesalers, whose businesses may be threatened by phone, mail-order or Internet sales.

Wineries, who want to be able to sell directly to consumers in other states, opposed the Scarborough legislation until new wording was added. That language, known as the Cox-Goodlatte amendment, clarified that states may not discriminate against out-of-state businesses solely to protect in-state companies.

The Senate, however, never voted on its own version of the Scarborough bill. Instead, in May, members approved similar legislation (without the Cox-Goodlatte wording) as part of a juvenile-justice bill. The House passed another version of the juvenile-justice bill, without direct-shipping provisions, and a conference committee was not able to work out the differences -- which included controversial gun-control measures -- before the end of the session.

Sen. Orrin Hatch, R-Utah -- who had introduced the issue in the Senate early this year -- made a last-ditch attempt this month to attach a new direct-shipping amendment to one of the spending measures. However, he dropped the idea because key wine industry lobbying groups could not reach consensus on the language of the proposal.

All the parties involved predict that the issue will be resurrected in 2000, both in state legislatures and in Congress. "We expect that Hatch will float a stand-alone version that will be a match to the Scarborough bill," said Simon Siegl, president of the American Vintners Association, a Washington, D.C.-based winery trade group. "And there will be the same scramble to see what kind of amended language we can get on it."

In the meantime, the various winery groups are discussing possible strategies, such as introducing measures in favor of direct shipping. Siegl said, "The longer this plays out, the clearer the lines of the issue become, and that tends to help our side of the cause."

Overall, winery groups were pleased with how the year turned out, despite the lack of conclusive action at the federal level. "We started in defensive position at the beginning of the year, and we're starting to see that turn," said Seana Wagner, spokeswoman for Free the Grapes!, a group of wineries and consumers fighting for direct shipping. "Word has gotten out. The Internet is really affecting things with all the money that has been put into these e-commerce sites. The market is pushing for different avenues of access. Something is going to have to change."

For recent news on this subject:

  • Aug. 3, 1999
    House Overwhelmingly Passes Scarborough Bill

    For a complete explanation of the direct shipping issue, read our Special Features package The Wine Wars.

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