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House Committee Approves Wholesaler-Backed Scarborough Bill

Dana Nigro
Posted: July 21, 1999

A bill that would make it tougher for wineries to send their products directly to consumers in other states is moving through Congress, with a full House vote possible as early as next week.

On Tuesday afternoon, without hearing testimony on the bill, the House Judiciary Committee voted 22 to 9 to approve a revised version of the "21st Amendment Enforcement Act," first introduced by Rep. Joe Scarborough, R-Fla., in June. The bill, HR2031, would put the power of the federal government behind state regulations on shipping alcoholic beverages, allowing state attorneys general to seek injunctions in federal court to stop out-of-state companies that violate those laws.

Since mid-June, when the House Rules Committee decided not to include Scarborough's bill in a controversial package of juvenile-justice legislation, winery trade organizations have been lobbying to limit the bill's impact. Meanwhile, wine, beer and spirits wholesalers, who support restrictions on direct shipments that could threaten their business, have been trying to rush the bill through the House.

During the committee's Tuesday markup-session (which differs from a formal hearing in that testimony is not heard), Rep. Zoe Lofgren, D-Calif., and Rep. Elton Gallegly, R-Calif., proposed a winery-supported amendment that would limit the scope of the bill only to illegal shipments to minors, but the committee voted it down.

"Although the prevention of underage access was a key concern of the bill, it was not the only concern," said Juanita Duggan, CEO of the Wine and Spirits Wholesalers of America. "Taxation, regulation and licensing are also high priorities for state authorities."

However, the groups did win a few key changes that would make obtaining an injunction more difficult. Among the new provisions: Attorneys generals would be required to provide clear evidence of a violation and prove irreparable harm, defendants would be given a hearing before an injunction may be issued, and actions could only be brought against companies for violations that occur at least 90 days after the law takes effect.

"We agreed to incorporate much of the Democratic substitute -- as much as we could without affecting the intent of the underlying bill," said Scarborough spokesman Dave Stafford. "We made a good-faith effort to reach out to opponents of the bill to alleviate their concerns."

Simon Siegl, president of the American Vintners Association, a Washington, D.C.-based winery trade organization, acknowledged, "While we are not pleased with the outcome, we are a lot more satisfied that these aspects are incorporated into what is going forward."

"In our view, it's still a bad bill," added Robert Koch, senior vice president of the Wine Institute, a winery trade group. "It's overly broad. It cedes authority to state attorneys general -- authority that they haven't even requested as a group." However, he pointed out, "For state attorneys general who want to gain access to the federal court system to seek injunctive relief, the bar has been raised significantly -- to the point where I'm not certain a state attorney general would be terribly interested in going this route."

A date has not yet been set for a full hearing by the House, but the bill is expected to be put on the suspension calendar (a method of bypassing the full committee process for a quicker vote) as early as next Monday. In that case, a two-thirds vote would be required for its passage.

While Scarborough anticipates opposition from California representatives, Stafford said, "Given the strong support of the committee and that the Senate has already passed similar provisions, we feel pretty confident that we'll have the votes to pass it through the full House." If the House approves Scarborough's bill, it could pave the way for Senate approval of a similar bill -- such as S577, introduced by Sen. Orrin Hatch, R-Utah, earlier this year -- or for inclusion in the final juvenile-justice legislation, which contains similar provisions in its Senate version.

For past news reports and a complete overview of the direct shipping battle, read our feature package Wine Wars.

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