Stop H.R. 5034 — UPDATED

I’m just a bill.
Yes, I’m only a bill.
And I’m sitting here on Capitol Hill.

But I know I’ll be a law someday
At least I hope and pray that I will…

Well, I don’t want you to become a law, at least if you are H.R. 5034.

You shouldn’t want this bill to pass either. Entitled the Comprehensive Alcohol Regulatory Effectiveness Act (CARE), this bill is a classic example of most things that are wrong with federal lawmaking today. (This post updated with additional important awfulness. See the end.)
To be fair, there is a legitimate issue at the root of this bill, so let’s start there. Over time, states have passed a variety of regulations about the interstate sale of alcoholic beverages. Wine tends to be at the center of these controversies, but all alcoholic beverages come into play. Intentionally or not, these laws tend to restrict consumer choices, especially of smaller and start-up brands. Recently, the internet and modern culture have both expanded consumer desire for these more diverse choices, so more and more people want to engage in interstate mail order to purchase brands they cannot obtain locally. Wine and spirits and beer makers have to contend both with 50 different sets of rules of how to do business, and with a variety of markets whose governments don’t want them doing business there at all. States find it difficult and/or expensive to enforce their laws.

As usually happens in situations like this, lawyers ensue. (As an aside, I like virtually every attorney I’ve ever met. But if every lawyer in America simultaneously switched professions to bartending, I suspect we’d immediately have a more efficient and effective system of conflict resolution.) The federal courts have gotten involved in challenges to these laws, effectively making some law of their own. Not to harp on judicial activism, but the only people who generally make worse laws than legislators are judges, and these federal rulings have led to even more confusion and chaos from state to state.

H.R. 5034 intends purports to restore the ability of the states to regulate their own alcoholic beverage markets. On its face, I could not agree with it more. It strikes down often over-reaching and conflicting federal judicial decisions, and restores power to the states that does not belong to the Federal government. On its face, it is a Federalist wet-dream.

But here’s the problem: As with, well, most legislation, the effect will not be what is supposedly intended. In lots of ways.

As I said before, the net effect of much of the body of state law in question is to restrict or prevent interstate commerce. One of the most critical driving forces that led to the Constitution was the need to prevent states from restricting interstate commerce. I would contend that the federal rulings in question are less judicial overreach and 10th Amendment abuse, and more simple employment of Article I, Sections 8 and 10. So a law supposedly written for Federalist aims more likely undermines the Constitution. Note, of course, that with or without this law state are working hard to get around these restrictions.

As a simply practical matter, the bill is anti-consumer. The net effect will be to make it impossible for most Americans to legally obtain hundreds, if not thousands, of legitimate, mostly American-made, products that they desire. This is where my personal ox is being gored. If it means I can’t get Creme de Violette for my Aviations anymore, it’s on.

Finally, and most emblematic of what is happening to us these days, the bill is both a product of and enabler of further Crony Capitalism. Simply put, Crony Capitalism is the unholy marriage of big business and government regulation that results in competitive advantages for those with the right connections. The only “capital” in this kind of “capitalism” is the capital spent buying the rules-making process. Whether you are Conservative or Progressive, part of the Reality-Based Community or a Tea Partier, your first and foremost desire as a citizen should be to wish that it die in a fire. In fact, the only people who benefit from Crony Capitalism are a few public servants and the very largest owners of the largest corporations. The other 300 million of us get screwed.
In Crony Capitalism, regulations are written in response to damage wrought by large companies, but the regulations tend to disproportionately hamper small competitors, while not impacting (or even exempting) the firms who prompted the new restrictions. New nutritional information disclosure laws will destroy medium-sized restaurant chains, and prevent small chains from growing. Big chains win. Mattel imports toys containing lead, and new laws are passed that will devastate the used toy market and small, innovative toy makers, but Mattel itself gets exempted from enforcement!

Suffice it to say, H.R. 5034 was both largely written by lobbyists from, and is being forcefully supported by, the Wine and Spirits Wholesalers of America and the National Beer Wholesalers Association. The powerful members of these organizations are the most threatened by open consumer choice and interstate direct sales. But don’t worry, they are only thinking of the children! (I deleted three paragraphs here about this “argument” because I realized that anyone with the mental acuity of a Buick Roadmaster and three seconds to think will admit it’s horsehockey. “Child protectors” feel free to engage in the comments, if you dare.)

For more information on stopping these cronies from taking away your access to Beefeater 24, Bols Genever, or Smith & Cross, I direct you to StopHR5034.org, established by the Specialty Wine Retailers Association, whose ox is most directly being gored by this bill. Their Facebook page is here. There is information there on how you can get involved, and a lot of links to various news stories on the controversy from a variety of perspectives. If my own brilliant pontification has not settled the matter for you, the links they have will save you a Google search and the risk of accidental pr0n linkage. I don’t know how searching for this subject would lead to boobies, but I’m sure Google could think of something….

UPDATE: 5034 also has provisions that are incredibly poisonous to premium spirits distillers, large and small, as well. It would allow individual states to determine what legally defines a specific spirit. Lance Mayhew, at My Life on the Rocks, tipped me to this odious provision. Read his post to see why this is such a bad idea.

About the author

Doug

I am 48 years old, married with two young daughters. My interests are tennis, reading, computers, politics, and of course cocktails. I run a murder mystery party business that caters to both corporate and private events, Killing Time, murder consultants.

4 Comments

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  • The tension between state’s rights and federal prerogatives displays itself here as a matter of 10th Amendment presumptions versus the judicially constructed and frequently befuddling dormant commerce clause (http://en.wikipedia.org/wiki/Dormant_Commerce_Clause). It’s always an interesting ball game when these teams come out to play. Add to this frothing cauldron the deeply ingrained and historically rooted moralistic concerns associated with the regulation of alcohol (i.e. temperance) and an evolving threat to the market dominance of well-connected corporate trade groups (i.e. direct to consumer online sales), and things will really start to get ugly. As I read this proposed (lest we forget) legislation, the bulk of which concerns evidentiary standards in the adjudication of challenges to state laws, it initially appears that it would do little to disrupt the Supreme Court’s holding in Granholm v. Heald – that state laws may not facially discriminate between in-state and out-of-state wineries in their direct sales to consumers. In fact, CARE appears to codify Granholm in most respects. Where CARE starts to become truly disruptive (at least to small scale distilleries/wineries) is the section dealing with evidentiary burdens. By allowing state laws a strong presumption of validity and saddling plaintiffs with the heavy burden of showing that a piece of law has no effect on the broad justifications cited (temperance, regulation of alcohol market, collecting taxes, etc.), the route of judicial challenge is effectively foreclosed to smaller companies with few resources. As is their wont, many states will likely be emboldened to enact restrictive measures, at once supportive of corporate interests, but meagerly bolstered by Congressionally-sanctioned ad hoc justifications. Any time a judicial remedy is so constrained (see e.g. US PATRIOT Act, AEDPA, REAL ID), we should ask ourselves whose interests are being protected and to what end. It doesn’t take much digging to realize who would be helped and who would be harmed by this addition to federal law.

    Sorry for the lengthy rant. I dig your site very much. Cheers!

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  • Well, I was just going to say, “Amen, Brother!” but Mr. Constitutional Law up there makes me feel like an idiot, now.

    So, I will say, to you and to the idea of validity saddling, that I would support the ideal of opening as much interstate trade as possible (alcohol being the selfish incentive) and not restricting it, as this idea/law would ultimately do.

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  • Sam’s comment is a bit of a conversation stopper, isn’t it? Yet I do appreciate it, it brings some depth and a voice that is not my own “law as a foreign language” approach.
    The key to take from his words is the mechanics of how the Crony Capitalism works here: Set the battleground so that you can still win on the merits, but you need an army of lawyers or lobbyists to do so. It favors the large companies, and incidentally increases jobs for the most unproductive of society….

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