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U.S. Congressman Introduces New Act Threatening Direct Shipping

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

Robert Taylor, Ben O'Donnell
Posted: March 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 Effectiveness 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 bipartisan 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.”

Steven Bialek
Los Angeles, CA —  March 18, 2011 7:14pm ET
Let's all worry about guns being shipped and not wine.
Kelly Carter
Colorado —  March 19, 2011 10:50am ET
I don't worry about guns or wine.

I worry about the incompetent members of Congress who incurred a $223 billion dollar deficit in February 2011 (with more to come), yet focus on a "problem" that is not within their pay grade.
Louis Robichaux
Highland Village, Texas —  March 19, 2011 11:39am ET
Last year, I scheduled an appointment and met personally with my congressman – Dr. Michael Burgess – to emphatically convey my opposition to HR 5034. I'm now writing an email to him following up on my opposition to HR 1161. As a wine lover, if value the ability to buy wine direct, you should actively do something to show your opposition. Lamenting on a blog about the inherent unfairness while not doing anything about will not change the outcome.
Dennis D Bishop
Shelby Twp., MI, USA —  March 20, 2011 7:16am ET
Prescription drugs, YES
Guns and knives, YES
Wine, NO

I don't get it.

Michael Cole
Ft. Lauderdale, Florida, USA —  March 20, 2011 6:19pm ET
I often wonder what our priorities are. What this bill would accomplish would only put a strain on small businesses particularly in California. This would not only hurt the wineries but could also reach out to the companies that support these businesses. The only industry who wins is the liquor distributors who are already so unreliable and have way too much control over the allocations, the consumers cannot get what they want. Way to help the economy and worse yet, California's economy. Just let them make their tax dollars on marijuana.
Joe Dekeyser
Waukesha, WI —  March 21, 2011 10:25am ET
With the real problems we face as a country - this is what our nincompoop congress chooses to pursue?
Erica Pilar
London, UK —  March 22, 2011 12:34am ET
Having dealt with the difficulties of shipping wine to customers throughout the States (when I previously worked in the New York wine trade), who knows soon enough it may be easier to ship nuclear waste than wine, . . .?
David Hornick
Solon Ohio —  March 22, 2011 11:32pm ET
It is interesting that Congress, and especially Republicans, decry government regulations, ESPECIALLY as they affect "free markets". Isn't it ironic that campaign money can so quickly make them change their tune, and support a bill that puts restrictions both on businesses and consumers--the very definition of what comprises a free market. There are no bigger hypocrites than those that sit in the US Congress, and it is truly pathetic!
Beth Eschenauer
Chicago, Illinois —  March 24, 2011 8:57am ET
I echo the sentiments everyone previously and wonder about the priorities of our 'representatives'. What is the value in this law? Of course, I live in Chicago where everything has a value, including Senate seats, and mayoral positions.
Yevhen Kostiuchenko
CA —  March 29, 2011 11:13am ET
"a Republican from Utah", look at the state he represents. That explains everything.
Joe Henslee
Napa, CA - USA —  March 30, 2011 3:10pm ET
Again the lobbyist for a highly profitable group of corporations try to convince the ignorant politicians that new restrictions will protect consumers. What is actually happening is creation of a monopoly by the wholesalers. Our freedoms are being sold down the river to line the pockets of the wholesalers.
Peter Roth
New Haven, VT, USA —  April 28, 2011 7:40am ET
The bill is nothing more than an attempt by distributors/wholesalers to strengthen their monopoly power. The passage of H.R. 1161 will raise the cost of purchasing wine , and in a small State like Vermont it will severely reduce the breadth of wine assortments consumers can choose from. The bill is a loser for consumers and a winner for special interests.
Michael Lynam
Indianapolis, IN USA —  May 2, 2011 6:39pm ET
The story references that the NBWA and WSWA have donated generously to those who support their causes through their political action committees. Can you please provide who received the donations and the amount for each? I plan on contacting my congressmen, and I'd like to know if they might have a personal financial interest influencing their position before I approach them. It could make for an interesting discussion about where they stand on the issue and why...
Ben Odonnell
New York, NY —  May 3, 2011 9:52am ET
Michael: For a more thorough breakdown of NBWA and WSWA contribution histories, please see our story about last year's iteration of the CARE Act: http://www.winespectator.com/webfeature/show/id/42823.

The complete contribution history for the NBWA's PAC can be found in the Federal Election Committee's campaign finance disclosure records here: http://query.nictusa.com/cgi-bin/com_supopp/C00144766/. Simply scroll down until you find your representative. (Negative figures indicate that the money had to be returned, as the contribution was in violation of campaign finance restrictions.)

For the WSWA, look here: http://query.nictusa.com/cgi-bin/com_supopp/C00147173/.

Finally, the list of HR 1161's co-sponsors so far is here: http://www.opencongress.org/bill/112-h1161/show. Click "View co-sponsors."

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