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House Resolution 5034 is a contemptible piece of special interest legislation that would harm small, family wineries, harm specialty wine stores, kill jobs and prevent consumers from legally accessing wines they can’t find locally by leading to bans on the legal, well regulated direct shipment of wine. Learn about the legislation, who supports it, who opposes it, and how it’s being covered in the media. GET EDUCATED and Help STOP HR 5034
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NEW-August 23, 2010: Reason Magazine explains why H.R. 5034 provides another reason to have an anti-acronym bias in another update on the bill from Katherine Mangu-Ward.
August 18, 2010: At the Washington Examiner writer Jacob Grier delivers a sterling, concise explanation as to why H.R. 5034 will only benefit alcohol wholesalers as well as giving the same concise treatment to the legal and Constitutional background to H.R. 5034. A MUST READ.
August 16, 2010: In an editorial in Virginia’s Richmond Times-Dispatch, Ann Heidig, president of the Virginia Wineries makes a compelling case against H.R. 5034. In her editorial she notes, “The bill would make it virtually impossible for consumers, producers, and retailers to challenge discriminatory laws, such as those prohibiting direct-to-consumer shipments from out-of-state wineries and retailers while allowing in-state shipping. This would turn back the clock on the Supreme Court decision of 2005. If passed, H.R. 5034 — billed as “The Comprehensive Alcohol Regulatory Effectiveness (CARE) Act” — would eliminate jobs, harm local and state economies, and hurt wineries and consumers in Virginia and other states. This bill is neither “effective” nor “caring,” except to the nation’s alcohol wholesalers.”
August 12, 2010: John Engler, President of the National Association of Manufacturers, has written a letter to Rep. John Conyers (D-MI), Chairman of the House Judiciary Committee, and Lamar Smith (R-TX), Ranking Member of the House Judiciary Committee asking them to oppose H.R. 5034, which awaits a hearing in their committee. In the letter from the influential trade association, Engler writes, “Passage of the CARE ACT would allow discrimination against out-of-state producers of alcoholic beverages and balkanize the marketplace. States already have significant authority to regulate alcohol sales under their police powers. This legislation is unnecessary to protect a state’s citizens or preserve a state’s ownership of retail distribution. Its only purpose is to protect the economic interests of certain parts of the distribution network to the detriment of others.”
August 12, 2010: California Joint Resolution 34, unanimously approved by the California Senate and Assembly has been sent off to the President, Vice President, Senate President Pro Tempore, the Speaker of the House and all Senators and Representatives from California. The Joint Resolution calls on Congress to oppose H.R. 5034 and warns, “Unfortunately, H.R. 5034 threatens to erect new barriers that would, in all likelihood, restrict consumer choice and negatively impact wine producers in California and other states.”
August 12, 2010: Anti-Trust Today reports on the mounting opposition to H.R. 5034 coming in the form of a unanimous declaration by the California legislature asking the President and Congress to oppose the legislation. Writing about the bill, Anti-Trust Today said, “The bill would allow states greater leeway to impose protectionist regulations and to block alcohol e-commerce while protecting traditional distributors.”
August 10, 2010: A story over the weekend in the North County Times (covering the region near the Wine Country region of Temecula, CA) reports that local congresswoman Mary Bono Mack supports H.R. 5034, despite the fact that California’s entire legislature condemned the bill, and the California Wine Institute as well as Family Winemakers of California oppose the bill. But the part of the story that is of interest is the comment by Representative Bono Mack’s Chief of Staff Frank Cullen. In the story Cullen claims “the legislation won’t change shipping rules and won’t prevent local vintners from selling across state lines, as they fear. On the contrary, the bill specifically forbids states from treating their own winemakers differently than those outside.” What’s remarkable about this statement is how wrong it is. There is no question that H.R. 5034 will lead to California vintners, including those in the Temecula region represented by Bono Mack, Cullen’s boss, being discriminated against by other states who, upon passage of H.R. 5034, will enact laws put forth by local wholesalers in those states banning wine shipments by out-of-state wineries and wine merchants. It’s no surprise that Cullen’s comments on the bill are nearly identical to the wholesalers that support H.R. 5034 and who have given Bono Mack more than $30,000 over the past few years. If Rep. Bono Mack truly wants to represent the interests of her constituents, she and her staff should sit down with local vintner representatives, get an education on H.R. 5034 and remove her name as a sponsor of this legislation.
August 20, 2010: The editorial board of the St. Louis Post Dispatch reports on the battle over H.R. 5034 (including the not so coincidental campaign contributions that have been given by beer distributors to supporters of the the bill) and concludes: “Effective liquor control laws are important. Fostering competition in an increasingly concentrated industry is important. This issue should be decided on the merits, not the money.”
August 6, 2010: In a recent article in the Los Angeles Times that looked at H.R. 5034 and its impact, the head of the Wine & Spirits Wholesalers of America, Craig Wolf, stated bluntly that distributors, “would not seek any state legislation that blatantly discriminates against out-of-state producers.” On the one hand this is hard to believe since state wholesalers have been behind every effort to thwart direct sales and shipping of wine to consumers from both out-of-state wineries as well as out-of-state retailers. In a number of cases, they’ve actively lobbied to revoke the right of wineries to even ship wine within the state. California Representative Mike Thompson doesn’t believe Mr. Craig either. Rep. Thompson responded, “I don’t believe them at all. There’s no guarantee that they won’t.” Mr. Thompson is right. Of course Craig’s national wholesaler association won’t actually seek any state-based regulations themselves. They don’t do that. They leave that up to local wholesalers and their state associations. However, they will continue, as they have in the past, to write “Friend of the Court” briefs in cases where they argue that Direct-To-Consumer shipping should be banned and that states ought to have the right to blatantly discriminate against out-of-state wineries and retailers that merely seek to safely and in a well-regulated environment ship wine to consumers that wholesalers have failed to serve by not bringing in wines to the states that the consumers want.
August 3, 2010: Yesterday the California assembly passed California Senate Joint Resolution 34, which urges “Congress to defeat House Resolution 5034. HR 5034 would restrict legal challenges to state laws governing the interstate shipment of wine, severely limit consumer choice of California wine throughout the nation and restrict market access for California wineries that cannot secure wholesale distribution.” Authored by Senator Alex Padilla (D-Pacoima), Vice-Chair of the Senate Select Committee on California’s Wine Industry and Senator Patricia Wiggins (D-Santa Rosa), Committee Chair, was unanimously approved by the Assembly. The resolution has already been approved by the Senate. SJR 34 will now be sent to the President, Vice President, United States Senate President Pro Tempore, Speaker of the House of Representatives, and Senators and Representatives from California. This resolution puts the entire U.S. Congress on notice that the State of California opposes H.R. 5034 and speaks powerfully to the idea that well-regulated commerce in alcohol should not be hampered by those seeking special interest protection from competition.
August 3, 2010: The Washington Post published a story outlining how the National Beer Wholesalers Association have relied on campaign contributions to get their agenda (H.R. 5034) advanced on Capital Hill. Written by Dave Eggan, the article looks at how donations have been doled out by NBWA and concludes: “The donations provide a particularly stark illustration of the tactics used by interest groups to push forward their agenda on Capitol Hill, where legislation is commonly propelled by amassing sponsorships and by doling out campaign contributions to sympathetic lawmakers.”
July 29, 2010: An impressive line up of 42 different public policy groups, led by the Competitive Enterprise Institute have signed a Coalition Letter opposing H.R. 5034. The letter was sent to all members of the House of Representatives where the bill now resides in the Judiciary Committee. In part, the letter reads: ““Yet H.R. 5034 could impede these positive trends. It would allow states to reverse course and pass protectionist laws for just about any alleged reason at all. And it makes it nearly impossible for anyone to challenge those laws in court. This bill would harm consumers while serving only one special interest: wholesalers who support protectionist laws to protect their role as middlemen.”
July 26, 2010: Wayne T. Brough, Vice President for Research and Chief Economist at Freedomworks, has composed a comprehensive argument against H.R. 5034 and devastating attack on the “economic protectionism designed to shore up the monopoly profits of beer, wine, and spirits wholesalers” that is H.R. 5034. Freedomworks is a national grassroots organization stressing individual liberty and the freedom to compete. Mr. Brough’s broadside, entitled “No Wine Shall Be Served Before Its Time—At Least Not Without Wholesalers Taking a Cut” Cuts to the core of the disingenuous sales effort behind H.R. 5034 and exposed the detrimental effect the bill would have on competition and consumer access to wine were it to pass.
July 26, 2010: The California Wine Institute’s General Counsel Wendell Lee was interviewed by Wine & Spirits Daily on the issue of H.R. 5034. In the interview, Lee dispels the myth that proponents of H.R. 5034 spread that somehow state alcohol regulators have lost their ability to oversee alcohol sales and distribution and that H.R. 5034 is necessary or states to retail rights that they have not lost. The interview is highly recommended.
July 21. 2010: Over at Law.com Carrie Levine examines the various lobbying activities that are happening behind the scenes over H.R. 5034: “Right now we’re all consumed by this,” said Mark Gorman, senior vice president for government relations for the Distilled Spirits Council of the United States. “It’s sort of the first time in the 10 years I’ve been here that we have a very strong beer, wine and spirits supplier coalition working hand-in-hand, consulting with each other every day.”
July 18, 2010: Alder Yarrow at Vinography, one of the leading and best read wine blogs in the world, has again come out in opposition to H.R. 5034, urging his readers to appreciate and learn how the campaign to promote the legislation is both misleading and full of lies and distortions.
July 18, 2010: Marc Sorini, a beverage alcohol legal expert and attorney at McDermott, Will & Emery has released a letter he sent to House Judiciary Committee Chairman Rep. John Conyers demonstrating the misleading nature of a letter penned by a few civil rights activists claiming that H.R. 5034 would have positive effects on keeping allowing states to regulate alcohol. Sorini’s letter strikes at the heart of claims made by the promoters of H.R. 5034 (wholesalers) and coincidentally the activist groups that support the bill, that state alcohol regulators are somehow hampered from doing their jobs as a result of lawsuits. The letter explains to Rep. Conyers that none of the lawsuits that have been aimed at overturning discriminatory laws have had any effect on regulators doing their job.
July 14, 2010: A new article at FERMENTATION: The Daily Wine Blog explains in detail the misinformation, lies and misleading statements found at the new website supporting H.R. 5034 produced by the National Beer Wholesalers Association.
NEW-July 14, 2010: In a devastatingly precise and cutting articl, Timothy Carney of the Washington Examiner’s Lobbying desk undresses the alcohol wholesalers’ profit-based motivation for supporting H.R. 5034.
July 13, 2010: In “an interview with M.Shanken Communication’s “Impactnewsletter, Wine & Spirit Wholesalers Association president Craig Wolf claims that his organization’s support for H.R, 5034 is meant to “reaffirm the rights of state legislatures in determining alcohol policy within their own borders, not to subvert direct-shipping laws, unfairly benefit any one tier of the alcohol industry, or expand state authority into areas currently under federal jurisdiction.” Wolf goes on to state that “There’s a perception out there being forwarded by the other side that there’s some sort of equilibrium between state and federal power that this bill would throw out of whack. The fact is, there’s been no such equilibrium.” While there may not be any “equilibrium” there is a “Constitution” that is the law of the land and there is no indication that the framers of the 21st amendment sought to allow states complete immunity form all principles embedded in the Constitution as H.R. 5034 would do. It is also notable that in trying to dampen the criticism of H.R. 5034 over its impact on direct shipping laws, Wolf does not admit that under the H.R. 5034 states could pass strictly protectionist and discriminatory laws against out-of-state shippers, something currently prohibited by the Dormant Commerce Clause of the Constitution.
July 12, 2010: The California Wine Institute has issued a press release re-emphasizing its opposition to H.R. 5034 and noting that winery to consumer shipments, which are threatened by the bill, amount to $1 billion in sales annually. Among the concerns noted in the release by the Wine Institute are that the bill will allow wholesalers to pass discriminatory state laws eliminating legal, regulated direct-to-consumer wine shipments and that H.R. 5034 will give wholesalers unfettered monopoly distribution.
July 12, 2010: Winepolicy.com has” put up a post that reports that a postponement of hearings on H.R. 5034 scheduled for July 14 may have canceled due to concerns that the bill has unconstitutional elements within it.
July 12, 2010: Katherine Mangu-Ward at Reason.com” also has something to say about reports that are surfacing that the tentatively scheduled hearing on H.R. 5034 may have been canceled due to Constitutional concerns. In addition, she comments on reports that the federal agency that governs alcohol sales, the TTB, may be set to issue a letter opposing the bill.
July 12, 2010: Practical Winery and Vineyard, a long standing wine industry trade publication, has published and long and comprehensive story on the H.R. 5034 written by Charles F. Reidelbach, Jr. and Rohan A. Shrikhande of Higgs, Fletcher & Mack LLP. The new article puts H.R 5034 in a context of how the American wine distribution system works.
July 8, 2010: The expected hearings on H.R. 5034 on July 14 have been canceled. According to House Judiciary staff, a scheduling conflict is the reason. So far no new date has been set for new hearings.
July 8, 2010: Reason Magazine has launched a new salvo at H.R. 5034 at Reason.com asking “Wine Snobs and Suds Swillers to Unite” in opposition of H.R. 5034. The article by Kathrine Mangu-Ward outlines the various ways consumers will be hurt by the legislation and how the powers behind the bill have disingenuously positioned the pending legislation as the “CARE” bill.
July 2, 2010: The most recent email update from the StopHR5034 movement went out today. If you are not on the mailing list to receive these updates CLICK HERE to sign up.
July 2, 2010: America’s oldest and longest running wine trade publication, Wines & Vines, has come out against H.R. 5034 with an editorial in its July issue. In dismissing the bill as a “jaw dropping power grab” by American alcohol wholesalers, Wines & Vines noted “HR 5034…could limit wineries’ access to customers, reduce their profit margins, create huge new legal bills for them and their associations, and potentially launch a host of other negative consequences. We think it’s a bad idea and urge everyone in the wine-producing and retailing tiers to speak out against it.” The editorial went on to identify H.R. 5034 as a bill that is “very far-reaching” and ultimately “give the states (and their powerful wholesaler lobbies) the equivalent of bulletproof vests to protect them from any further changes desired by alcohol producers.” The editorial is a powerful statement form an authoritative source that has, over the past decades, seen it all. We recommend the editorial be read closely and forwarded to all friends of wine.
June 28, 2010: Word from a variety of sources suggest that there will be a hearing in the House Judiciary committee on H.R. 5034 on July 14th. The committee is currently working to develop a witness list which will hopefully include numerous members from the producer tier, retail tier as well as consumers representatives.
June 28, 2010: In an interview on iWineradio, Cheryl Murphy Durzy of Clos LaChance Winery in California explains how passage of H.R. 5034 would severely impact her family’s winery that relies both on direct to consumer sales and sales via distributors.
June 23, 2010: Today a coalition representing nearly every producer of beer, wine and spirits in America including The Wine Institute, The Beer Institute, WineAmerica, The Distilled Spirits Council of America and the Brewers Association issued a letter to Congress asking that no Congressional representatives support H.R. 5034. In bold and plain language, America’s producers of alcohol beverages told Congress: “With H.R. 5034, NBWA [Beer Wholesalers] and WSWA [Wine Wholesalers] want to put brewers, wineries, distillers and retailers at a competitive disadvantage; allow states to unfairly and arbitrarily enact protectionist laws against out-of-state beer, wine and spirit producers; and preempt federal oversight of alcohol. Specifically, H.R. 5034 would allow states to pass laws that violate the dormant Commerce Clause, federal anti-trust laws and any other act of Congress.”
The letter is the clearest message yet that H.R. 5034 is opposed by the vast majority of the alcohol beverage industry. CLICK HERE or a list of other organizations that have officially opposed H.R. 5034
June 23, 2010: A new post at FERMENTATION: The Daily Wine Blog explains how alcohol regulators have subverted democracy by supporting H.R. 5034 and are poised to do it again.
June 20, 2010: An article in the Fort Wayne Journal Gazette explains the hazards of H.R. 5034 and concludes, “It is small, family wineries and people who love their wines that would suffer, while the only ones to gain would be big distributors that would see what is already a legal monopoly and make it an unassailable, unchallengeable monopoly.”
June 17, 2010: The California Senate today passed Senate Joint Resolution 34 by a vote of 26-0. The Joint Resolution, which now moves on to the Assembly, calls on Congress to oppose H.R. 5034. California State Senators Padilla and Wiggens were Co-Sponsors. Industry groups The California Wine Institute, Family Winemakers of California, The California Association of Winegrape Growers, Napa Valley Vintners and The Specialty Wine Retailers Association sponsored SJ$ 34.
June 16, 2010: In a news item at Fox8 North Carolina on the impact HR 5034 will have on NC vintners, supporters of the bill continue to claim that H.R. 5034 will protect current legislation that allows direct to consumer shipment when in fact, it will make NC vintners highly vulnerable to seeing their shipping rights taken away in a number of states.
June 16, 2010: Dave McIntyre of the Washington Post explains why Direct To Consumer sales are so important to wineries and retailers in a world where state wholesalers are incapable of representing all the brands in the American marketplace and all the wines that consumers desire. Yet, if H.R. 5034 passes, wineries and retailers are likely to lose access to numerous states, hurting their sales and livelihood as well as leaving consumers with access to only those wines wholesalers think the market needs.
June 15, 2010: In a move that demonstrates, once again, that alcohol regulators who were never elected believe themselves to be legislators, the National Alcohol Beverage Control Association has issued a statement in support of H.R. 5034. The Association consists of a minority of states where alcohol is in one way or another marketed and sold by the state. Members primarily consist of appointed regulators. According to NABCA board member Nida Samona (who is also chairwoman of the Michigan Liquor Control Commission): “This action was not taken to side with any segment or tier of the beverage alcohol industry but rather to strengthen the states’ ability to regulate the sale and distribution of beverage alcohol in our respective jurisdictions.” Chairwoman Samona is the same person who worked very closely with wholesalers in Michigan to introduce a bill banning Michiganers from having wine shipped to them from both in-state and out-of-state wine retailers after the system of regulation she defended was, for the second time in her tenure, struck down as unconstitutional. Ms Samona, like the recent NABCA decision to support H.R. 5034 is an example appointed regulators taking legislative action into their own hands when they have no business doing so. It should also be noted that in nearly every case regulators like Samona almost always take sides with the wholesalers’ interests to the detriment of free trade and consumers interests. Appointed regulators have no business setting policy, such as determining that the states’ ability to regulate the sale and distribution of alcohol needs to be strengthened. That’s a legislative decision. Ms. Samona’s charge in Michigan is bureaucratic, not legislative. Apparently she still doesn’t understand that.
June 14, 2010: In language the Wine & Spirit Wholesalers are asking their members’ employees to send to Congressional representatives, they are claiming that H.R. 5034 is a job saving bill. The language reads: “As an American family-owned beverage alcohol distributorship we support states’ authority to regulate alcohol and I urge Congress to reaffirm that authority by supporting the CARE Act. Since communities’ views on alcohol differ greatly across the country, alcohol regulations should be made by elected state legislatures rather than the courts.My job and the jobs of my co-workers are wholly dependent on strong state-based regulation of alcohol.”
June 11, 2010: In a news segment on KNTV out of San Jose that covered the controversy surrounding H.R. 5034, Wine & Spirit Wholesalers of America president Craig Wolf called litigation that led to the Granholm v. Heald Supreme Court decision “frivolous litigation”.
June 10, 2010-An article in the Pittsburgh Post Gazette explains that if H.R. 5034 passes, it would make any challenges to discriminatory alcohol laws virtually impossible to go forward leaving the door open for laws that only allow consumers to have wine shipped to them from their in-state wineries and in-state retailers and banning the shipment of wine from out-of-state sources.
June 10, 2010-A disturbing number of constituent letters from Congressional Representatives have been surfacing that claim H.R. 5034 will have no effect on direct shipping laws currently in place and that the bill would have no effect on the holdings of the Granholm v. Heald Supreme Court case from 2005 that paved the way for consumers to access wines beyond those provided by wholesalers to retailers. The language in these letters sound very much like that of the wholesalers in their defense of the bill and is incorrect. H.R. 5034 would completely overturn the Granholm ruling and the principles of non-discrimination that it outlined. The result would be that states would be be able to pass wholesaler bills that ban out of state shipping from producers and retailers while producers and consumers would have no option to challenge the laws in court using the Commerce Clause. Our hope is that this incorrect and deceptive information can be corrected.
June 8, 2010: Jeff Caroll of Free the grapes offers an in depth analysis of the consequences of H.R. 5034 in Wines & Vines. Carrol properly speculates on where H.R. would have its initial impact (Florida).
June 8, 2010-“Free the Grapes issues a release”:http://www.businesswire.com/news/home/20100607006848/en/Free-Grapes%21-HR-5034-Presents-Tangible-Threat detailing how various organizations confirm that H.R. 5034 will be a tangible threat to wine consumers as well as the alcohol beverage industry as a whole, all the while demonstrating how wholesalers are attempting to dupe Congress by cynically claiming that if passed H.R. 5034 will have no effect on current laws.
June 7, 2010: In a long article on H.R. 5034 in the Reno Journal Gazette, wholesalers now claim Nevada is losing tax revenue due to direct shipping. However, representatives from the Nevada Department of Taxation say H.R. 5034 won’t help anyone collect any tax revenue.
June 4, 2010: In a straight forward analysis of the language of H.R. 5034, two lawyers from Farella, Braun + Martel explain that the text of H.R. 5034 makes it clear that were it to pass, “the CARE Act would render Granholm, and future dormant commerce clause challenges to state laws regulating alcohol, moot.” The article concludes that “this means that decisions like Granholm would be very unlikely and that States will have fewer barriers to enact laws that discriminate against out of state producers alcohol.”
June 4, 2010: How is H.R. 5034 being sold to the public, the media and to congressional representatives? Fermentation: The Daily Wine Blogs offers a compilation of public statements by the bill’s supporters and demonstrates those statements don’t always hit the truth target with precision.
June 4, 2010: Alcohol Industry Rallies Together to Oppose HR 5034.
June 3, 2010: The Brewers Association, an organization of over 1000 brewers,” has issued a statement opposing H.R. 5034”:http://www.brewersassociation.org/pages/government-affairs/ba-position-statements. In its statement the BA notes that “H.R. 5034 invites states to enact inconsistent laws that needlessly raise costs and impede small brewers’ efforts to expand into new markets.” The BA goes on to insist that “Congress should not provide states with a free hand to enact new and inequitable protection for wholesalers. Similarly, any serious discussion of an equitable distribution system must assure access to market for small brewers, allowing them to distribute beer in order to build a market for small brands.”
June 3, 2010: New York Cork Report issues update on H.R. 5034 from the perspective of New Yorkers and New York wineries.