Temperature's Risin' in New Orleans; Another Hearing on CARE Coming

Uncomfortably high temps very common in the Big Easy, but rarely has indoor session at conference of state liq admins reached heat of session on CARE Act yesterday. Supporters and foes of bill made familiar arguments, but aired them with passionate give-and-take not previously public. First the news: there will be a full Judiciary Committee hearing. Right now likely date is Jul 14 (pushed back from Jul 1) but date could change. Debate occurred against unstated backdrop: CARE losing some steam in terms of gathering cosponsors. At 121 overall, but only 18 so far in Jun. "There's a lot of punching going on behind-the-scenes," said a source.

Heated differences flew in first, extended debate that included principal architects/defenders of bill (NBWA's Paul Pisano/WSWA's Craig Wolf), primary opponents (Wine Inst's Steve Gross/ atty Marc Sorini) and regulator (VA ABC's Curtis Coleburn). Debate managed ably by 2 well-known ex-regulators who now work for industry clients, Lynn Walding (IA) and Lou Bright (TX). Lotsa lively exchange among audience too from distrib advocates, supplier reps and other regulators. Craig and Paul got oppy to defend bill as necessary reaction to erosion of states' rights to regulate alcohol by fed court decisions. State regs have been "beaten to the ground" in recent yrs, Craig Wolf insisted. But Marc calls it a "myth" that states "under siege." No court has struck down state laws on licensing, background checks, restrictions on time/place of sale or other "fundamentals of alcohol regulation," he stressed.

Bill seeks to restore "bright line" following Granholm to end "balkanization" created by "patchwork of court decisions no one can follow," Craig claimed. Give state laws presumption of validity, put burden of proof on challengers, he added. Paul pointed out that lawsuits continue, contrary to what suppliers say about cases winding down, with active litigation in almost all Circuits. (Plus AB in Chicago, said Craig.) But bill "goes far beyond" what advocates claim, far beyond Commerce Clause to include "any Act of Congress," and would "overturn standard practices," said Steve. CARE bill "doesn't care about retailers, consumers or suppliers," offered DISCUS' Lynne Omlie. DISCUS prexy Peter Cressy wrote letter to regulators calling claims bill is simple attempt to "enshrine Granholm…either completely disingenuous or they are evidence that the bill is so poorly written they do not fully understand its consequences." Besides, states/politicians would inevitably "overreach" if given oppy by CARE, in Marc's view, as they did before courts stopped them on tax, advertising, labeling, other issues. Yet Craig's call to arms remained: time to say "enough is enough," stand up and act to stop "assault" on state authority.

Even testier comments on some side issues. That included fierce exchange over 1st Circuit decision of Mass law that Craig defended as facially neutral but which got tossed anyway and wine lobbyist who insisted law "meant to discriminate, and it did." Fascinating exchange between distrib advocate Evan Lawson and Marc. Evan asked: "What's wrong with price-fixing" if state determines that's best way to control consumption? Marc said states can control pricing with "active supervision," just can't allow competitors to collaborate. "If that's the best way, what's wrong with that," Evan responded provocatively. Many ways to maintain prices without allowing "terrible public policy of price fixing," Marc asserted. (Not likely many behind bill would defend price fixing. Indeed, Paul told INSIGHTS "bill is not about allowing any tier to fix prices.") Defending "active supervision" too high a burden, Craig suggested, and no cases where that argument successful. But that wasn't all. "Suppliers are trying to take margin from distributors. That's what this is all about," Evan offered, to no response. Evan believes mega suppliers and mega retailers each eyeing distrib margins, that CARE would "dampen" their ability to do so, he told INSIGHTS.

Several barbed points about process too. NBWA has asked Beer Inst, Wine Inst and DISCUS how to improve and haven't gotten any response, said Paul. ("Cricket, cricket, cricket," he mouthed, as in night silence.) Craig said "we recognize the process," that bills get intro'd then get changed, but nothing forthcoming from foes who are simply "digging in their heels and opposing it," noting "obstreperous conduct" by suppliers. (STOP Act as intro'd was opposed by industry, said Paul, then changed and supported.) "Entire supplier tier" opposed to CARE, said Steve and "not incumbent" on suppliers to "rewrite it so it will pass." Also, distribs selling bill as assisting states, but it "entrenches particular interests of wholesalers" and is "beneficial to middle tier." Bill's "stated intentions might be fine," but it "does so much more." Bill "only about state power," countered Craig, and "could hurt distributors too," said Paul.

Regulator from Wash noted his state AG took his name off oft-cited letter NBWA/WSWA uses to support effort. In Wash, if 2d tier had bill that helped Liq Control Board, "we would have seen it." Because of process and "division it creates, leads me to believe we should not take a position." At end of debate Craig and Paul asked for regulator/NCSLA support. Marc and Steve asked them not to support it. Assn likely to take it under advisement. Curtis Coleburn of Va didn't commit, though he did seem to think it's okay to support local industry. He agrees with AG letter and with control states' assn principles of state-based regulation. "But whether this bill gets us there. I don't know." Still plenty of questions about CARE. Be interesting to see how the hearing goes.

(from Insights Express - Jun 23, 2010)