Amicus Curiae Brief — Granholm v. Heald

Supreme Court, U.S

FILED

3 2004

IN THE OFFICE OF THE CLERK

A

A —

No. 03-1116, 03-1120

Supreme Court of the Gnited States

JENNIFER M. GRANHOLM. GOVERNOR OF MICHIGAN. ef al.

Petitioners.

Vv.

ELEANOR HEALD. ef al..

Respondents.

MICHIGAN BEER & WINE WHOLESALERS ASSOCIATION.

Petitioner.

Vv.

ELEANOR HEALD, ef al..

Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

BRIEF OF AMICI CURIAE NAPA VALLEY VINTNERS,

SONOMA COUNTY WINERIES ASSOCIATION,

MONTEREY COUNTY VINTNERS AND GROWERS

ASSOCIATION, EL DORADO WINERY ASSOCIATION,

AMADOR VINTNERS’ ASSOCIATION, TFMECULA

VALLEY WINEGROWERS ASSOCIATION, AND SANTA

CRUZ MOUNTAINS WINEGROWERS’ ASSOCIATION

IN SUPPORT OF RESPONDENTS

MARK E. HADDAD CARTER G. PHILLIPS*

ALYCIA A. DEGEN SIDLEY AUSTIN BROWN &

SIDLEY AUSTIN BROWN & WOOD LLP

WOOD LLP 1501 K Street. N.W.

555 W. Fifth Street, 40th Floor Washington, D.C. 20005

Los Angeles, California 90013 (202) 736-8000

(213) 896-6000

Counsel for Amici Curiae

September 23, 2004 * Counsel of Record

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 - WASHINGTON. D.C. 20001

QUESTION PRESENTED

Whether a State’s regulatory scheme that permits in-state

wineries directly to ship alcohol to consumers but restricts the

ability of out-of-state wineries to do so violates the dormant

Commerce Clause in light of Section 2 of the 2lst

Amendment?

(i)

TABLE OF CONTENTS

re

tt rc ncesnecconceneveosevoceesosesaceoes

INTEREST OF AMICI CURIAE ...........c.0ccseesseessesesseseees

SUMMARY OF ARGUMENT. ..............cccccsscsesesseeesseeees

Sin itaddliteennnnansisnacnnenssensensnescceesocccesccecseeeoess

I. THE WILSON AND WEBB-KENYON ACTS

WITHDREW THE IMMUNITY FROM STATE

REGULATION AFFORDED LIQUOR IN

INTERSTATE COMMERCE, BUT DID NOT

GRANT STATES POWER TO DISCRIMINATE

AGAINST IMPORTED LIQUOR. .....0.......cccccceeees

A. Before Prohibition, The Court Invalidated

Both Discriminatory And Non-Discriminatory

Liquor Laws Under The Commerce Clause.......

B. The Wilson Act Partially Lifted The Immunity

Afforded Imported Liquor, But Did Not

Authorize Discrimination ...............:ccccceeeeeeees

C. The Webb-Kenyon Act Closed The Hole

Opened By Rhodes, But Did Not Empower

BONES TO TIRCTIIIEIS..000cccccccccceseccccssescccesescseeees

D. The Failure Of Prohibition Prompted Passage

Of The Twenty-First Amendment But

Provided No Basis To Empower States To

Discriminate Against Interstate Commerce In

eT

(ili)

iv

TABLE OF CONTENTS—continued

Il. SECTION 2 OF THE TWENTY-FIRST

AMENDMENT EFFECTIVELY WROTE THE

WEBB-KENYON AND WILSON ACTS INTO

THE CONSTITUTION, BUT DID NOT

AFFECT THE RULE AGAINST DISCRIMIN-

ATORY STATE REGULATION OF LIQUOR...

A. The Debates Surrounding Section 2 Demon-

strate That It Was Intended To Constitution-

alize The Commerce Clause Framework

Established Under The Wilson And Webb-

TE I ccccsistessniccsnsiaitaacisinniibaiiiibiasidiininndaaiaiangin

B. Congress's Rejection Of A Proposed Section 3

To The Twenty-First Amendment Does Not

Suggest That Section 2 Was Intended To Do

More Than Write The Webb-Kenyon And

Wilson Acts Into The Constitution.....................

lll. THE DECISION IN YOUNG'S MARKET IS

CONSISTENT WITH THE HISTORY OF THE

TWENTY-FIRST AMENDMENT ................ceeeeee

ee ie Dccnsnnencnsnnnninsensnnssscunsenammmnemnanmnmainnaaianetot

Page

30

v

TABLE OF AUTHORITIES

CASES Page

44 Liquormart, Inc. v. Rhode Island, 517 U.S.

SEIU cecanciciatipinnenmsenscssiuateaneiatesaaneeisensnennates 29

324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987)... 29

Bacchus Imports, Lid. v. Dias, 468 U.S. 263

SEE iiceicouesisnitnniaideetpdiideeanipsinaptbuapinatiabimdeianiimaiaies 29, 30

Bowman v. Chi. & N.W. Ry., 125 U.S. 465

STI eEiicsahntssesssiecsnniomenteishiesiaieciilinbeiabiusiatinileanialigiataaaiis 2, 7,8

Brown-Forman Distillers Corp. v. N.Y. State

Liquor Auth., 476 U.S. 573 (1986) .............ccc00000 29

Cal. Retail Liquor Dealers Ass'n v. Midcal

Aluminum, Inc., 445 U.S. 97 (1980) ............0000008 29

Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691

STi ee sciccensanenunineasasiensabimnmniniensinnvninaisinnmsamaniiniees 29

Clark Distilling Co. v. W. Md. Ry., 242 U.S. 311

ETOP cssiieinannteiiinantcaiensdinediidbeeniientinsiinicinals 3, 13, 14, 18

Collins v. Yosemite Park & Curry Co., 304 U.S.

Fe ee rcnttcenenmeneeinimemennmeiien 29

Craig v. Boren, 429 U.S. 190 (1976)....... 1, 3, 20, 28, 29

Dep't of Revenue v. James B. Beam Distilling

Sic ee Ces ee Ce cciccisninniiindiintindntiantinenes 29

Healy v. Beer Inst., 491 U.S. 324 (1989).............. 29, 30

Hostetter v. Idlewild Bon Voyage Liquor Corp.,

BEG a ee iericentntianitntiiininianaieapeianiants 29, 30

Indianapolis Brewing Co. v. Liquor Control

Comm'n, 305 U.S. 391 (1939) .......cccccccceeeeeeeeeeeees 28

Joseph S. Finch & Co. v. McKittrick, 305 U.S.

UT cciniertsinceinitahtticeuhdsinianmtonaiiiaaaaitaiuattaciiaiaaaiaaiaia 28

Larkin vy. Grendel's Den, Inc., 459 U.S. 116

ST assiceieteiciiieaheauleshieiiaatiiechainiaaiaiaiiamtaneaiaiibleathtiadas 29

Leisy v. Hardin, 135 U.S. 100 (1890) .............00000 2,8

Mahoney v. Joseph Triner Corp., 304 U.S. 401

STITT ssnecchensthheupinindeiehtheiahelideadahtietalialinaiaatahindnanit 28

McCormick & Co. v. Brown, 286 U.S. 131

Een neer voodoo ere were 21, 28

vi

TABLE OF AUTHORITIES—continued

Page

Mugler v. Kansas, 123 U.S. 623 (1887).............04.. 5

Pabst Brewing Co. v. Crenshaw, 198 U.S. 17

ITT csesitescitacienetdniatesssinieitsiamnentianatinaiiadpediltiatapapdadeteaatation 10

In re Rahrer. 140 U.S. 545 (1891) ..................0. 3, 10, 11

Rhodes v. lowa. 170 U.S. 412 (1898) .................. 2. 3, 11

Scott v. Donald. 165 U.S. 58 (1897) ............ 1, 2, 3, 9, 10

State Bd. of Equalization v. Young's Market Co.,

es re scrcctaninnminneintinene 4, 26, 27, 28

Tiernan v. Rinker, 102 U.S. 123 (1880)................ 2, 5.6

United States v. Frankfort Distilleries, Inc., 324

Rtas cae rr iceicvnianitannesnensemadentininiaininiininingnian 29

lance v. WA. Vandercook Co., 170 U.S. 438

Se iccinntensssnctorenienitnsmmmemmiamemmnnmemenens 10

Walling v. Michigan, 116 U.S. 446 (1886) ............. 2,6

Wisconsin vy. Constantineau, 400 U.S. 433

SUT sciiipeeaiindehieitaepecacinanaietiaiiiasiesababiaidanaidéiabimanneniian 29

CONSTITUTION AND STATUTES

es I eI a cietinsineiieniaseenininnniaianincnaneniinainn 2

I i cnnccesitinscanstisaninstenesbaseasiitibaaaiicias 18,19

, SE Bierccciananiainntiatinianntasinatinn 20

Act of Aug. 8. 1890. ch. 728, 26 Stat. 313 .............. )

Act of Mar. 1. 1913. ch. 90, 37 Stat. 699 0. 13

National Prohibition Act, ch. 85, 41 Stat. 305

TTT ciscsccbeenieenicintestasiasdinteeanieaniauatenaateauntalidinatansmmasentuainias 19

Act of Aug. 27. 1935, ch. 740. 49 Stat. 877............ 13

Sear ain TF IT eceennnunsicnietinedianianaiisiihitieaiedmpdabemeidiasiel 9

i i cccniasiontaitenietiendaualtaaimeiniesimbummmisentingts 13

LEGISLATIVE HISTORY

H.R. Reg No. 62-1461 (1913)...............c.scsrsscseee 12,15

49 Cong. Rec. 699-703 (1912) .........sccressssereeees 11,17

SEE eres 16

PE 16

Vil

TABLE OF AUTHORITIES—continued

Page

49 Cong. Rec. 2,687-90 (1913) .......cccceeeceees 16, 17, 18

ee 16, 17

I cttcenenssitenctnninenmnesin 16, 17

Pe, SED, Gr Ee cectttscreserenmcnnins 24

4.141-47 (1933)... 19, 21, 22, 25, 26

Ee 21, 22

EE 22, 23

GRO CURE crrscnssnenecssnnien 19, 24

SCHOLARLY AUTHORITIES

J.G. Woolley & W.E. Johnson, Temperance

Progress in the Century (1903) ........ccccccesceeeeeees 5

L. Rogers, /nterstate Commerce in Intoxicating—

Liquors Before the Webb-Kenyon Act, 4 Va. L.

SD. Fe COE erennrnmenneninnnnenennaeen 12

Ratification of the Twenty-First Amendment to the

Constitution of the United States (E.S. Brown

Os FE ceeterneerneenennnimemnsnsimnniion 24

OTHER AUTHORITY

H. Hoover, The New Day: Campaign Speeches of

Herbert Hoover, 1928 (1928), available at

http://www. bartleby.com/66/88/ 28888. html....... 19

INTEREST OF AMICI CURIAE'

Amici are organizations whose members are vintners and

winegrowers located throughout the State of California.

California is one of the oldest wine-growing regions in the

country. Its vintners have long sold wine not only to

consumers in California but nationwide. For example, at

issue in Scott v. Donald, 165 U.S. 58 (1897), one of the key

nineteenth century Commerce Clause discrimination cases

discussed in some detail below, was the ability of vintners in

California to sell their wines in South Carolina through the

State dispensary on terms equal to those of South Carolina’s

vintners. Although much has happened since those early

battles over 100 years ago, California vintners continue to

have a strong interest in ensuring that the Commerce Clause

affords them non-discriminatory access to consumers

throughout the United States.

Amici are described in the Appendix and include Napa

Valley Vintners, Sonoma County Wineries Association,

Monterey County Vintners and Growers Association, El

Dorado Winery Association, Amador Vintners’ Association,

Temecula Valley Winegrowers Association, and Santa Cruz

Mountains Winegrowers’ Association.

SUMMARY OF ARGUMENT

The Court has recognized that Section 2 of the Twenty-first

Amendment effectively enshrined in the Constitution the

powers granted the States by the Webb-Kenyon and Wilson

Acts. See Craig v. Boren, 429 U.S. 190, 206 (1976). This

Court has never had occasion to review in any detail,

however, the implications of those Acts, and of the decisions

of this Court that prompted and construed them, to ascertain

' Pursuant to Rule 37.6, counsel for amici states that no counsel for a

party authored this brief in whole or in part and no person, other than

amici, its members, or its counsel made a monetary contribution to the

preparation of this brief. All parities have consented to the filing of this

brief, and copies of the consents have been filed with the Clerk.

»

the scope of Section 2. Such a review is particularly

appropriate for this case. for it refutes conclusively the notion

that Section 2 repealed the anti-discrimination principle of the

Commerce Clause. U.S. Const. art. 1. § 8.

Instead. the history of Section 2 reveals that Congress was

concerned with an entirely different Commerce Clause

problem. the “immunity” from burdensome state laws that

was afforded to liquor once it was placed in interstate

commerce. That immunity meant that States with laws that

prohibited the manufacture and sale of domestically produced

liquor could not apply those laws even-handedly to imported

liquor: they could neither intercept shipments of such liquor

into their state nor bar its sale. The Twenty-first amendment

eliminated that immunity. but had no effect whatsoever upon

the longstanding prohibition against protectionist state laws

that discriminated in favor of in-state producers.

Prior to the enactment of the Webb-Kenyon Act. this Court

repeatedly struck down state liquor laws under the Commerce

Clause. In one line of cases. the Court declared

unconstitutional state laws that imposed discriminatory taxes

on imported liquor while exempting domestic liquor, as well

as other laws that discriminated against imported liquor. See

Scout v. Donald. 165 U.S. 58 (1897): Walling v. Michigan,

116 U.S. 446 (1886): Tiernan v. Rinker. 102 U.S. 123 (1880).

In a second line of cases, the Court struck down state laws

that. although non-discriminatory, imposed direct and

impermissible burdens on interstate commerce in liquor. See

Rhodes v. lowa, 170 U.S. 412 (1898); Leisy v. Hardin, 135

U.S. 100 (1890): Bowman vy. Chi. & N.W. Ry.. 125 U.S. 465

(1888). The Court in Leisy explained that shipments of liquor

across state lines are in interstate commerce, and hence are

“immune” from state regulation until after the liquor has been

sold in its original package. even though the State may

prohibit the sale of domestic liquor. 135 U.S. at 124.

3

In response to the holding in Leisy, Congress passed the

Wilson Act of 1890. That Act did not empower a State to

discriminate in favor of its local liquor industry. Scott, 165

U.S. at 100-01. Instead, the Wilson Act allowed States to

prohibit the sale of imported liquor, regardless of whether it

was in its original package. /n re Rahrer, 140 U.S. 545, 564

(1891). Nonetheless, the Court held that the immunity of

liquor in interstate commerce persisted under the Wilson Act,

and thus States could not prohibit importation of liquor for

personal use. Rhodes, 170 U.S. at 422-23.

To close the loophole opened by Rhodes, Congress passed

the Webb-Kenyon Act. That Act gave States the power to

block the importation of liquor for use in violation of state

law, Clark Distilling Co. v. Western Maryland Railway, 242

U.S. 311, 324 (1917), but it did not empower them to

discriminate. The effect of the Webb-Kenyon Act on the

holdings in Rhodes, Leisy and Bowman, regarding the

immunity of imported liquor from state regulation, was

mentioned repeatedly in the congressional debates on the Act.

Conversely, there is nothing in the language, purpose or

history of the Webb-Kenyon Act that suggests that it was

designed to change the rule against discriminatory regulation

in Scott, Walling and Tiernan.

The history of the Twenty-first Amendment thus

demonstrates that Section 2 of the Amendment was intended

simply to “constitutionaliz[e] the Commerce Clause frame-

work established under [the Webb-Kenyon and Wilson Acts]”

after the repeal of Prohibition. Craig, 429 U.S. at 206. The

Senate debates demonstrate that Section 2 was needed to

secure the Webb-Kenyon Act against both repeal by Congress

and constitutional attack. The debates make clear that the

purpose and effect of Section 2 is to lift the “immunity” from

state regulation that otherwise would attach to liquor in

interstate commerce so that liquor could be intercepted before

it reached the “consignee.” Section 2 thus was coincident

with, and did not extend, the Webb-Kenyon Act. There was

4

no suggestion that Section 2 was needed to permit States to

discriminate. Had Section 2 been intended to change the

longstanding rule against discriminatory state regulation of

liquor. someone would have mentioned it explicitly.

Finally. the history and purpose of Section 2 are consistent

with the Court's post-Amendment caselaw. In recent de-

cades. the Court has recognized that a broad (and as she wr

here. wholly ahistorical) reading of the Twenty-first Amend-

ment that would obliterate the anti-discrimination principle of

the Commerce Clause is unwarranted. But even the Court's

first decision construing the Twenty-first Amendment, State

Board of Equalization v. Young's Market Co., 299 U.S. 59

(1936). is consistent with the history of the Amendment.

Despite the breadth of certain language in its opinion, the

Court in }oung’s Market had no occasion to determine

whether the Twenty-first Amendment overturned the Court's

long line of cases declaring unconstitutional discriminatory

state liquor laws because the Court determined that the case

simply did “not present a question of discrimination

prohibited by the commerce clause.” /d at 62. Young's

Market involved only a fee that imposed a “direct burden” on

interstate commerce. and thus the holding there was fully

consistent with the scope of Section 2, which ensures that

States may enforce even-handed laws against liquor products

in interstate commerce without facing claims that those

products are immune from regulation under the Commerce

Clause.

5

ARGUMENT

I. THE WILSON AND WEBB-KENYON ACTS

WITHDREW THE IMMUNITY FROM STATE

REGULATION AFFORDED LIQUOR IN INTER-

STATE COMMERCE, BUT DID NOT GRANT

STATES POWER TO DISCRIMINATE AGAINST

IMPORTED LIQUOR.

A. Before Prohibition, The Court Invalidated Both

Discriminatory And Non-Discriminatory Liquor

Laws Under The Commerce Clause.

By the late nineteenth century, the temperance movement

was in full swing. A number of States had passed prohibition

laws that outlawed the manufacture or sale of intoxicating

liquors. Other States that had not yet become completely

“dry” imposed substantial restrictions on the manufacture or

sale of intoxicating liquors. See generally J.G. Woolley &

W.E. Johnson, Temperance Progress in the Century 142-51,

177-78, 343-45 (1903) (discussing state liquor laws from the

1860s through the turn of the century). This Court had

recognized the States’ broad police powers to regulate, and

even prohibit altogether, the manufacture or sale of

intoxicating liquors within their borders. See Mugler v.

Kansas, 123 U.S. 623, 661-62 (1887). Nonetheless, the Court

repeatedly held that the Commerce Clause restricted the

States” power over imported liquor.

In one line of cases, the Court declared unconstitutional

state regulations that discriminated against imported liquor.

In Tiernan, the Court considered a Texas statute that imposed

an annual tax on persons who sold “spirituous, vinous, malt,

and other intoxicating liquors,” but exempted those persons

who sold only wine or beer manufactured in Texas. 102 U.S.

at 127-28. The Court explained that “commerce . . . between

the States . . . is of national importance and admits and

requires uniformity of regulation; [and] that the object of

vesting this power in the general government was to insure

6

this uniformity against discriminating State legislation.” /d.

at 126. The Court determined that the Texas law was

“inoperative, so far as it makes a discrimination against wines

and beer imported from other States.” /d. at 127. As the

Court explained, a tax “cannot be exacted for the sale of beer

and wines when [of] foreign manufacture, if not exacted from

their sale when of home manufacture.” Jd.’

Six years later, in Walling v. Michigan, 116 U.S. 446

(1886). the Court struck down a Michigan tax that

discriminated against imported liquor while exempting locally

produced liquor. The Court in Walling summed up the

governing rule:

A discriminating tax imposed by a State operating to the

disadvantage of the products of other States when

introduced into the first mentioned State, is, in effect, a

regulation in restraint of commerce among the States,

and as such is a usurpation of the power conferred by the

Constitution upon the Congress of the United States.

Id. at 455.

In a second line of cases. the Court struck down non-

discriminatory liquor regulations that, although they pur-

ported to treat imported and domestic liquor the same,

nonetheless imposed direct and impermissible burdens on

interstate commerce. In Bowman, the Court considered an

lowa law that (for all but medicinal, sacramental, or other

limited purposes) prohibited the manufacture and sale of

intoxicating liquors in the State. To enforce this ban, the

lowa law also prohibited common carriers from transporting

° Because the plaintiffs sold /iguors, which were not subject to the

discriminatory tax exemption that applied to sellers of only wines and

beer. the Court affirmed the dismissal of the plaintiffs’ suit seeking to

enjoin enforcement of the tax. The Court explained, “There is no reason

why [plaintiffs] should be exempted from the tax when selling brandies

and whiskies and other alcoholic drinks . . . because they could not be thus

taxed if their occupation was limited to the sale of wines and beer.”

Tiernan, 102 U.S. at 128.

J

liquor into lowa from another State without prior certification

that the recipient of the liquor—the “consignee’”—was

authorized by Iowa to sell the liquor. Although the Court did

not view the restriction on transportation of imported liquor

as discriminating against imported liquor, the Court

nonetheless struck down the law as burdening interstate

commerce. 125 U.S. at 500.

The Court began by noting that in matters involving

commerce with foreign countries or between the States,

Congress’s “non-action ... with respect to any particular

commodity .. . is a declaration . . . that the commerce in that

commodity . . . shall be free.” /d at 485. Although lowa

could “prohibit all domestic commerce in [intoxicating

liquors] between its own inhabitants,” Iowa “cannot, without

the consent of Congress, express or implied, regulate com-

merce between its people and those of the other States of the

Union in order to effect its end, however desirable such

regulation might be.” /d. at 493.

The Court expressly rejected the argument that only

regulations that discriminate against the persons or products

of other States run afoul of the Commerce Clause. The Court

explained that nondiscriminatory regulations “directly affec-

ting interstate commerce” likewise are prohibited. /d. at 496-

97. The Court acknowledged the State’s concern that a

domestic prohibition against the manufacture and sale of

intoxicating liquor could not be made effective unless it could

be enforced against imported liquor. The Court, however,

held that “the power to regulate or forbid the sale of a

commodity, after it has been brought into the State, does not

carry with it the right and power to prevent its introduction by

transportation from another State.” /d. at 500.

The Court left open whether the State could prohibit the

sale of imported liquor after it arrived in the State. In his

dissent, however, Justice Harlan predicted that if the

Constitution conferred the right to import liquor, it also would

confer the right to sell the liquor in its “original package[],”

8

and States would find it impossible to enforce even non-

discriminatory laws against the sale of liquor. /d at 514

(Harlan, J., dissenting). A person who wanted to sell liquors

in lowa “need only arrange to have them delivered to him

from some point in another State, in packages of varying

sizes, aS may suit customers. Or, he may erect his. . .

warehouse, just across the lowa line . . . and thence. . .

transport liquors into lowa, in original packages.” /d. at 514-

15 (Harlan, J.. dissenting).

The Court addressed the question left open in Bowman in

Leisy, and proved Justice Harlan prescient. It held that lowa

could not prohibit the sale by a “consignee” of imported

liquor in the original package. 135 U.S. at 124. The Court

explained that under Bowman, liquor moving in interstate

commerce is immune from state regulation. /d. at 119. It “is

only after the importation is completed, and the property

imported has mingled with and become a part of the general

property of the State. that its regulations can act upon it.” /d.

Because such mingling does not occur until the imported

property is sold. the immunity from state regulation extends

through the sale of the imported liquor in its original package,

meaning that the importer not only had the right to import

liquor into lowa, he also “had the right to sell it.” /d. at 124.

Following Leisy. the broad immunity from state regulation

afforded imported liquor under the Commerce Clause placed

lowa in an untenable position. lowa was able to prohibit the

manufacture and sale of domestic liquor, but unable to stop

sales of imported liquor. To achieve their temperance goals,

lowa and other “dry” States needed authority to treat

domestic and imported liquor the same.

B. The Wilson Act Partially Lifted The Immunity

Afforded Imported Liquor, But Did Not

Authorize Discrimination.

In response to Leisy, Senator Wilson of lowa introduced,

and Congress passed. the Wilson Act of 1890. By its plain

9

language, the Wilson Act was intended to permit States to

treat imported and domestic liquor the same:

That all fermented, distilled or other intoxicating liquors

or liquids frunsported into any state or territory or

remaining therein for use, consumption, sale or storage

therein, shall upon arrival in such state or territory be

subject to the operation and effect of the laws of such

State or territory, enacted in the exercise of its police

powers, fo the same extent and in the same manner as

though such liquids or liquors had been produced in such

state or territory, and shall not be exempt therefrom by

reason of being introduced therein in original packages

or otherwise.

Act of Aug. 8, 1890, ch. 728, 26 Stat. 313 (emphases added).’

This Court then squarely held that the Wilson Act did not

empower a State to discriminate in favor of its local liquor

industry. In Scott, the Court considered a South Carolina law

that required all liquor to be sold to consumers through

dispensaries run by a state liquor authority. The law discrimi-

nated against imported liquor by establishing preferences for

the state authority to purchase domestic liquor, by limiting the

retail price of domestic, but not imported, wines, and by

imposing testing requirements on imported liquors. 165 U.S.

at 92-93.

After reviewing its cases striking down liquor regulations,

the Court concluded that the Wilson Act “was not intended to

confer upon any State the power to discriminate injuriously

against the products of other States in articles whose manu-

facture and use are not forbidden, and which are therefore the

subjects of legitimate commerce.” /d at 100. To the

contrary, under the Wilson Act, “equality or uniformity of

treatment under state laws was intended.” /d The Court

acknowledged that a State “may forbid entirely the

* The Wilson Act has never been repealed and remains codified as

amended at 27 U.S.C. § 121.

10

manufacture and sale of intoxicating liquors,” or it “may

provide equal regulations for the inspection and sale of all

domestic and imported liquors and be valid.” /d. Neverthe-

less. the Wilson Act did not authorize the State to “establish a

system which, in effect, discriminates between interstate and

domestic commerce in commodities to make and use which

are admitted to be lawful.” /d Accordingly, the Court held

that “when a State recognizes the manufacture, sale and use

of intoxicating liquors as lawful, it cannot discriminate

against the bringing of such articles in, and importing them

from other States.” /d. at 101.

In short. Scott leaves no doubt that the Wilson Act had no

effect on the line of cases that held that discriminatory laws

violate the Commerce Clause. Subsequent cases confirmed

the point... The Wilson Act thus was intended to lift the

immunity afforded imported liquor under the Commerce

Clause and thereby permit a State to prohibit the sale of

imported liquor in its original package to the same extent the

State prohibited the sale of domestic liquor. /n re Rahrer,

140 U.S. at 564.°

* See Vance v. W.A. Vandercook Co., 170 U.S. 438, 449-50 (1898)

(explaining that although the Wilson Act “authorizes a state law to attach

to an original package so as to prevent its sale. it did not contemplate and

sanction the operation of a state law which injuriously discriminated

against the products of other States, and which in consequence of such

discrimination was not a police law in the correct sense of those words”);

Pabst Brewing Co. v. Crenshaw, 198 U.S. 17, 28 (1905) (explaining that

under the Wilson Act. the determination that a law is a valid police

regulation “as to liquor manufactured in Missouri, in the absence of

discrimination, is necessarily conclusive also as to the character of the law

when applied to a similar article shipped from other States into Missouri

after arrival at its destination. and when held for sale and consumption in

that State”) (emphasis added).

“In Jn re Rahrer. the Court rejected the argument that the Wilson Act

was an unconstitutional delegation of Congressional power, explaining

that Congress “simply removed an impediment to the enforcement of the

state laws in respect to imported packages in their original condition,

created by the absence of a specific utterance on its part.” 140 U.S. at

564. Congress “imparted no power to the state not then possessed, but

1]

Nevertheless, the Court did hold that the immunity afforded

goods in interstate commerce persisted with respect to

imported liquor in one important respect. The Court held that

the Wilson Act did not authorize a State to prohibit

importation of liquor for personal use. In Rhodes, the Court

revisited the same Iowa law that was struck down in Bowman.

The Court recognized that the Wilson Act allowed the lowa

law to attach to imported liquor at an earlier time than the

Commerce Clause would allow, and that lowa thus could

prohibit the sale of imported liquor. 170 U.S. at 420. The

question in Rhodes was whether that Act permitted lowa law

to attach the moment the imported liquor reached the state

line, before the completion of delivery to the consignee. /d.

The Court construed the words “upon arrival” in the Wilson

Act to mean that state law could attach only after delivery to

the consignee, and not before then. /d at 421. The Court

noted that the Wilson Act was enacted in direct response to

the holding in Leisy that the immunity of goods in interstate

commerce precluded lowa from prohibiting their sale. /d. at

423. The Wilson Act thus did not permit States to intercept

shipments of liquor at the state border. /d.

The decision in Rhodes opened a substantial loophole in

state prohibition laws. Although a State could prohibit the

sale of imported liquor after it was delivered to the consignee,

the State was powerless to stop the flow of liquor across its

borders. As a result, the mail-order liquor trade into dry

States flourished under the Wilson Act. See 49 Cong. Rec.

699-700 (1912) (statement of Sen. Sanders noting that the

trade had grown to about 20,000,000 gallons of liquor per

year under the Wilson Act). Bootleggers also boldly

imported liquor, secure in the knowledge that state officials

were powerless to touch the liquor until after it was delivered.

Congressman Webb explained the problem to Congress:

allowed imported property to fall at once upon arrival within the local

jurisdiction.” /d.

12

To illustrate, sometime ago there were three packages of

liquor [one barrel containing 500 half-pint bottles of

liquor, one barrel containing 250 pint bottles of liquor,

and a third barrel containing 140 quarts of liquor]

shipped into a town in a near-by State, consigned to

individuals of doubtful character, one of whom had

previously been convicted of selling liquor in violation

of the law of the State. . .. Owing to the character of the

packages and the reputation of the consignees, the civil

authorities were morally certain that these three pack-

ages of liquor were going to be used in violation of the

State laws as soon as the consignees received them...

yet not one of [the State's] officers dared touch the

liquor while it remained . . . undelivered. The sacred

law of interstate commerce protected these shipments of

“blind-tiger™ [illegal] liquor from molestation by State

officers. not only while in transit. not only while they

remained in the express office or depot, but also until

they were actually delivered to those who intended to

violate the State laws.

H.R. Rep. No. 62-1461, at 2 (1913). Congress considered a

series of bills to address the limits of the Wilson Act, and in

1913, in the Webb-Kenyon Act, Congress provided the dry

States with the power to intercept interstate shipments of

liquor. See L. Rogers, /nterstate Commerce in Intoxicating

Liquors Before the Webb-Kenyon Act. 4 Va. L. Rev. 353, 365,

369-70 (1917).

C. The Webb-Kenyon Act Closed The Hole Opened

By Rhodes, But Did Not Empower States To

Discriminate.

The Webb-Kenyon Act gave States the power to block the

importation of liquor for use in violation of state law.

Specifically. the Act provides that the “shipment or

transportation .. . of any . . . intoxicating liquor of any kind,

from one State . . . into any other State ... which... is

intended . . . to be received, possessed, sold, or in any manner

13

used, either in the original package or otherwise, in violation

of any law of such State . . . is hereby prohibited.” Act of

Mar. 1, 1913, ch. 90, 37 Stat. 699, 699-700 (codified as

amended at 27 U.S.C. § 122).° The Webb-Kenyon Act thus

closed the gap that the Wilson Act left open. And it remains

closed.

In Clark Distilling Co., the Court recognized that the

Webb-Kenyon Act “was enacted simply to extend that which

was done by the Wilson Act.” 242 U.S. at 324. Of particular

relevance here, the Act’s “purpose was to prevent the

immunity characteristic of interstate commerce from being

used to permit the receipt of liquor through such commerce in

States contrary to their laws, and thus in effect afford a means

by subterfuge and indirection to set such laws at naught.” /d.

(emphasis added).

At issue in Clark Distilling was a West Virginia law that

forbade the sale of intoxicating liquors, including for personal

use. /d at 316. The State sought to preclude a common

° The complete text of the Webb-Kenyon Act is as follows:

That the shipment or transportation, in any manner or by any means

whatsoever, of any spirituous, vinous, malted, fermented, or other

intoxicating liquor of any kind, from one State, Territory, or District

of the United States, or place noncontiguous to but subject to the

jurisdiction thereof, into any other State, Territory, or District of the

United States, or place noncontiguous to but subject to the jurisdiction

thereof, or from any foreign country into any State, Territory, or

District of the United States, or place noncontiguous to but subject to

the jurisdiction thereof, which said spirituous, vinous, malted,

fermented, or other intoxicating liquor is intended, by any person

interested therein, to be received, possessed, sold, or in any manner

used, either in the original package or otherwise, in violation of any

law of such State, Territory, or District of the United States, or place

noncontiguous to but subject to the jurisdiction thereof, is hereby

prohibited.

Ch. 90, 37 Stat. at 699-700. The Webb-Kenyon Act was re-enacted by

Congress after the Twenty-first Amendment was ratified and remains

codified at 27 U.S.C. § 122. Act of Aug. 27, 1935, ch. 740, tit. Il,

§ 202(b), 49 Stat. 877, 877-78.

14

carrier from shipping liquor, intended for personal use, into

the State. The Court noted that under Leisy, the State’s action

would be unconstitutional as an impermissible direct burden

on interstate commerce. /d. at 320. Under the Webb-Kenyon

Act. however, the State’s action was permissible; it did not

matter that the State had not actually outlawed personal use of

liquor, because it had outlawed shipment for personal use,

which brought the state law within the scope of the Webb-

Kenyon Act. /d. at 323-24. :

The Court also held that the Webb-Kenyon Act was not an

unconstitutional delegation of congressional power to the

States. The Court explained that “the will which causes the

prohibitions to be applicable is that of Congress, since the

application of state prohibitions would cease the instant the

act of Congress ceased to apply.” /d. at 326. The Court noted

that under Leisy, interstate commerce in liquor was immune

from state regulation unless Congress provided otherwise. /d.

at 328-29. Congress had provided otherwise in the Wilson

Act. by which Congress “divest{ed]” interstate shipments of

liquor of their interstate commerce character so as to “strip

them of the right to be sold in the original package free from

state authority.” /d. at 330. The Webb-Kenyon Act was “but

a larger degree of exertion of the identical power which was

brought into play in the [Wilson Act],” which had been

upheld in /n re Rahrer, and thus the Webb-Kenyon Act

likewise was constitutional.” /d.

The Court recognized in Clark Distilling that the historical

environment of the Webb-Kenyon Act, including the debates

on its passage. demonstrates that the purpose of the Act was

to close the hole left open by the Wilson Act by further

removing the immunity of liquor in interstate commerce,

thereby giving States the ability to interrupt liquor shipments

within their borders, according to their general prohibition

policies. /d. at 322. The history of the Webb-Kenyon Act

reflects no intent to change the long-standing rule against

discriminatory state regulation.

. 15

Congressman Webb explained that the Webb-Kenyon Act

was intended to address the problem that “under the preseni

law and decisions [the Wilson Act and the decision in

Rhodes |, no State can interfere with the interstate shipment of

liquor until it has been actually delivered to the consignee.”

H.R. Rep. No. 62-1461, at 2. “[B]ecause of this present state

of the law no State official is permitted to touch any interstate

shipment of liquor consigned to a ‘blind tiger [an illegal seller

of liquor],’ ‘bootlegger,” or ‘speak-easy’ until after it has been

delivered to such violator of the State law.” /d. Congress-

man Webb further explained that the proposed law would

permit the State officers “to seize such liquor . . . and try it

upon the question of whether it was intended to be used in

violation of the laws of the State, and if the jury should find

that it was so intended the delivery to the consignee would be

prevented and the liquor confiscated.” /d.

Senator Kenyon of lowa (the laws of which State were

declared unconstitutional in Bowman, Leisy and Rhodes)

likewise explained that the bill was intended to address the

immunity from state regulation afforded imported liquor

under the Commerce Clause, and to allow the States to treat

imported liquor according to their general liquor prohibitions

(and foreshadowed what was to come with Section 2 of the

Twenty-first Amendment):

| am not concerned at all with the question of whether a

State in the exercise of its police power might adopt a

law prohibiting the manufacture or sale of intoxicating

liquors. If it does do so, it ought to be able to make that

law effective. If it adopts the contrary policy, it should

be permitted to maxse that effective. If intoxicating

liquors can be freely shipped into a State which has a

prohibitory law and the State government is powerless to

prevent it, and the Federal Government is likewise

powerless to prevent it, if this liquor is to remain in the

twilight zone between Federal and State jurisdiction,

16

then. indeed. it is time for some further amendment to

our Constitution.

49 Cong. Rec. 761 (1912).

The effect of the Webb-Kenyon Act on the holdings in

Rhodes. Leisy and Bowman was mentioned repeatedly in the

debates.’ Conversely, no one ever suggested at any time that

the Webb-Kenyon Act would change the rule in Scoft,

Walling or Tiernan, to permit States to discriminate against

in-state and out-of-state liquors. Given that Scott held that the

Wilson Act did not authorize States to discriminate, if the

Webb-Kenyon Act had been intended to change the result of

Scott, it is inconceivable that such an intent would have been

left unspoken during the extensive debates.

Senator Root raised the concern that the Act placed “no

limit upon the regulation by every State” of interstate traffic

in liquor. 49 Cong. Rec. 2.915 (1913). Senator Stone made it

clear. however, that the Act concerned only the ability of

States to treat imported liquor the same as domestic liquor; it

“would merely put the shipper outside of Missouri or lowa or

Arkansas upon a level, that is upon terms of equality, so far as

State law and regulation go, with the shipper within the

State.” /d. at 2.917. Indeed, permitting discrimination would

have been inconsistent with the very purpose of the Act, as

Congressman Webb explained:

{The Act will] remove the restrictions which now bind

the action of the States in their efforts to honestly

enforce their lawful prohibition enactments. ... No man

outside of my State ought to have a superior right to the

citizen within my State. . . . If a man has not a right in

my State to sell liquor, then certainly a citizen living in

the District of Columbia ought not to have a superior

right to enable him to sell it inside my State.

” See, e.g.. 49 Cong. Rec. at 764-67; 49 Cong. Rec. 2,529, 2,689-90,

2.794-96, 2.807, 2.817, 2.834, 2,909-10 (1913).

17

Id. at 2,807. Instead of authorizing discrimination, the Webb-

Kenyon Act “only stops the business of selling liquor within

dry territory by persons outside that territory in violation of

law.” 49 Cong. Rec. at 700 (statement of Sen. Sanders).

There is no merit to Petitioners’ contention that the

Senate’s rejection of a proposed section 2 to the Webb-

Kenyon Act reflects a congressional intent to permit discrimi-

nation. To the contrary, the deletion of the language reflects

nothing more than legislative expediency. Senate bill 4043

originally included, in a section 2, the language of the Wilson

Act, amended to make the state law attach “upon arrival

within the boundaries of such State or Territory and before

delivery to the consignee.” 49 Cong. Rec. at 2,687 (emphasis

added). The bill that had already been approved by the House

contained only language similar to that in section | of the

Senate bill. See id. at 2,918, 2,920. Senator Gallinger moved

to delete section 2 “in the hope and belief that it will more

likely become a !aw than if we send the Senate bill to the

House as a separate and independent measure, couched in

different language from that which is employed in the House

bill.” /d. at 2,918. Section 2 thus was deleted solely to

conform the Senate bill to the House bill. There was no

discussion whatsoever of any need to delete the proposed

Section 2 in order to permit States to engage in otherwise

unconstitutional discrimination.*

*In discussing the proposed section 2, Senator Kenyon raised the

concern that there was “some incongruity” between section |, which

prohibited shipments of liquor with the intent to violate the law of the

State, and section 2, which “would seem to recognize the transportation of

liquors and at the same time apply the police powers.” 49 Cong. Rec. at

702; see also id. at 2,687. Senator McCumber raised the concern that

section 2 could be construed as an unconstitutional delegation of

congressional authority, whereas section | was cast in prohibitory terms

and made Section 2 unnecessary. /d. at 702-03. Other Senators were

concerned that section 2 might be used to interfere with personal use of

liquor, arguing that under section 2, a State could “interrupt an interstate

shipment of liquor when it arrives within its borders,” regardless of

whether the shipment was intended to be used in violation of state law. /d.

18

Moreover. the Court has declared that “the power to

regulate which was manifested in the Wilson Act and that

which was exerted in enacting the Webb-Kenyon Law are

essentially identical, the one being but a larger degree of

exertion of the identical power which was brought into play in

the other.” Clark Distilling, 242 U.S. at 330. The power that

was manifested in the Wilson Act did not permit States to

engage in discrimination. Scoff, 165 U.S. at 100. The

deletion of the proposed section 2 thus did not clear the way

for discriminatory state regulations.

The manifest purpose of the Webb-Kenyon Act was to

remove the immunity from state regulation that the transpor-

tation of imported liquor into dry States continued to bear

after the Wilson Act. so that States could seize liquor

shipments in violation of state law before they reached the

consignee. In sum, there is nothing in the language, purpose

or history of the Webb-Kenyon Act to suggest that it was

intended to change the rule of Scott and empower States to

discriminate by erecting protectionist barriers to imported

liquor.

D. The Failure Of Prohibition Prompted Passage Of

The Twenty-First Amendment But Provided No

Basis To Empower States To Discriminate

Against Interstate Commerce In Liquor.

The struggle of the dry States to enforce their laws against

imported liquor was temporarily suspended in 1919 with the

ratification of the Eighteenth Amendment. That Amendment

prohibited “the manufacture, sale, or transportation of

intoxicating liquors within, the importation thereof into, or the

exportation thereof from the United States and all territory

subject to the jurisdiction thereof for beverage purposes.”

U.S. Const. amend. XVIII, § 1. Congress and the States had

“concurrent power” to enforce the Amendment by

at 2.688. None of the objections to proposed section 2 centered on

discrimination.

19

“appropriate legislation.” /d. § 2. With the passage of the

Volstead Act in 1919, the country officially became “dry.”

National Prohibition Act, ch. 85, 41 Stat. 305 (1919).

By 1933, the country was in general agreement that the

“Noble Experiment” had failed. Illegal traffic in liquor was

rampant. Consumption of intoxicating beverages remained

popular, leading even upstanding citizens to flout the prohi-

bition laws.'°

Moreover, the Eighteenth Amendment had effected an

unprecedented transfer of police power from the States to the

federal government. Although the States had authority under

the Eighteenth Amendment to pass legislation to enforce the

Amendment, federal legislation was supreme and so the

responsibility for enforcement fell largely on the federal

government. As Senator Wagner explained in the debates

surrounding repeal of the Eighteenth Amendment,

[T]he question which has troubled the American people

since the eighteenth amendment was added to the

Constitution was not at all concerned with liquor. It was

a question of government; how to restore the

constitutional balance of power and authority in our

Federal system which had been upset by national

prohibition.

76 Cong. Rec. 4,144 (1933) (emphasis added). Section 2 of

the Twenty-first Amendment restored that balance effectively

by writing the relief from Commerce Clause immunity

* “Our country has deliberately undertaken a great social and economic

experiment, noble in motive and far-reaching in purpose.” H. Hoover,

The New Day: Campaign Speeches of Herbert Hoover, 1928, at 29 (1928),

available at http://www.bartleby.com/66/88/28888 html.

'° As Congressman LaGuardia explained during the repeal debates, “A

change in our liquor policy is necessary, not only because of the

widespread violation of the law by the criminal element but the general

and universal disregard of the law by well-meaning, law-abiding people.”

76 Cong. Rec. 4,514 (1933).

20

provided by the Wilson and Webb-Kenyon Acts into the

Constitution.

Il. SECTION 2 OF THE TWENTY-FIRST AMEND-

MENT EFFECTIVELY WROTE THE WEBB-

KENYON AND WILSON ACTS INTO THE

CONSTITUTION, BUT DID NOT AFFECT THE

RULE AGAINST DISCRIMINATORY STATE

REGULATION OF LIQUOR.

With the repeal of the Eighteenth Amendment, States once

again were faced with the prospect that the immunity from

state regulation afforded liquor in interstate commerce would

frustrate state efforts to remain “dry” following the end of

nationwide prohibition. Congress addressed this concern in

Section 2 of the Twenty-first Amendment,'' which provides:

“The transportation or importation into any State, Territory,

or possession of the United States for delivery or use therein

of intoxicating liquors. in violation of the laws thereof, is

hereby prohibited.” U.S. Const. amend. XXI, § 2. Section 2

was included not to expand the scope of the Webb-Kenyon

and Wilson Acts. but to preserve them against repeal or

constitutional attack.

A. The Debates Surrounding Section 2 Demonstrate

That It Was Intended To Constitutionalize The

Commerce Clause Framework Established

Under The Wilson And Webb-Kenyon Acts.

As this Court has recognized, the “wording of § 2...

closely follows the Webb-Kenyon and Wilson Acts,

expressing the framers’ clear intention of constitutionalizing

the Commerce Clause framework established under those

Statutes.” Craig. 429 U.S. at 205-06 (footnote omitted). Prior

to Prohibition. Congress (through the Webb-Kenyon Act) had

granted dry States the ability to intercept out-of-state liquor

' Section 1 of the Amendment repealed the Eighteenth Amendment.

U.S. Const. amend. XXI, § 1. Section 3 provided for ratification by

conventions rather than by the state legislatures. /d. § 3.

21

before delivery to the consignee. Although the Webb-

Kenyon Act was not repealed by the Eighteenth Amendment,

McCormick & Co. v. Brown, 286 U.S. 131, 141 (1932), its

constitutionality was not considered sufficiently secure to

ensure that States that chose to remain dry could protect

themselves against unrestrained importation of liquor. Two

central themes emerge from the Senate debate on Section 2:

(1) Section 2 was needed to secure the Webb-Kenyon Act

against both constitutional attack and repeal; and (2) Section

2 was coincident with, and did not extend, the Webb-Kenyon

Act.

The need to secure the Webb-Kenyon Act from

constitutional attack and repeal was highlighted by Senator

Borah. After Senator Robinson proposed to strike Section 2

from the resolution entirely, 76 Cong. Rec. 4,170 (1933),

Senator Borah argued that Section 2 was necessary because

absent Section 2, Congress would be “asking the dry States to

rely upon the Congress of the United States to maintain

indefinitely the Webb-Kenyon law.” /d.; see also id. at 4,141

(statement of Sen. Blaine).

Moreover, Senator Borah argued, the Webb-Kenyon Act

was “still of doubtful constitutionality and which, as it was

upheld by a divided court, might very well be held

unconstitutional upon a re-presentation of it.” /d. at 4,170.

As Senator Borah explained,

The Webb-Kenyon Act was sustained by the Supreme

Court of the United States by a divided court. The

President of the United States—President Taft, who was

afterwards Chief Justice—vetoed it on the ground that it

was unconstitutional. The Aitorney General of the

United States rendered an opinion to the effect that it

was unconstitutional. Elihu Root, when in the Senate,

argued that it was unconstitutional. Mr. Justice

Sutherland, who is now upon the Supreme Bench,

argued before the Senate that it was unconstitutional.

22

Id: see also id. at 4.141 (statement of Sen. Blaine). Senator

Borah went on to describe the “history of the fight of the dry

States to remain dry and be protected.” from Bowman and

Leisy through the Wilson Act and the Webb-Kenyon Act. /d.

at 4.170-72. Section 2 was necessary. he argued, to ensure

that there would never be a return to the situation that

Bowman and Leisy had created. /d. at 4.172. After Senator

Robinson withdrew his challenge to Section 2, Senator Borah

responded:

All this was sought to be remedied by the Webb-Kenyon

Act. and I am very glad indeed the able Senator from

Arkansas has seen fit to recognize the justice and

fairness to the States of incorporating it permanently into

the Constitution of the United States.

Id. Thus, as Senator Blaine. speaking on behalf of the Senate

Judiciary Committee. which had proposed the Twenty-first

Amendment, explained, Section 2 was included “to assure the

so-called dry States against the importation of intoxicating

liquor into those States.” /d. at 4.141.

The Senate debates over Section 2 also made clear that its

purpose and effect would be to lift the “immunity” from state

regulation that otherwise would attach to liquor in interstate

commerce. to allow imported liquor to be intercepted before it

reached the “consignee” and thus “assist the States that want

to be dry to remain dry.” /d. at 4,168. For example, Senator

Walsh specifically referred to the Court’s ruling in Rhodes,

which he described as holding “that under the existing

Constitution the right obtains on the part of any citizen to pass

his goods into another State, and they remain under the

protection of the Federal Constitution until they actually reach

the hands of the consignee.” /d. at 4.219. As Senator Walsh

explained. under Rhodes, imported liquor “is immune from

any control by State statutes until it actually reaches the

possession of the consignee.” /d. He stated that he supported

Section 2 because it. like the Webb-Kenyon Act, would

“make the intoxicating liquor subject to the laws of the State

23

once it passed the State line and before it gets into the hands

of the consignee as well as thereafter.” /d Senator Glass

then echoed this point in his response, stating that under

Section 2, “there can be no consignee of intoxicating liquors

in a dry State.” /d.

Conversely, the issue of what one “wet” State could do

regarding competing liquor from another “wet” State simply

was not under consideration. As Senator Glass explained,

“Liquors may be shipped across a State in interstate com-

merce from one wet State to another wet State, but [Section 2}

as I have drafted it prohibits the shipment of intoxicating

liquors into a State whose laws prohibit the manufacture, sale,

or transportation of liquors.” /d.

Although Senators Borah and Walsh took pains to discuss

the problem of the immunity afforded liquor moving in

interstate commerce, which was at issue in the Court's

decisions in Bowman, Leisy and Rhodes, there was no

discussion by any Senator of the decisions in Scott, Walling

or Tiernan, or of any issue involving the States’ authority to

discriminate against interstate commerce. As noted above,

the Court previously had held in Scott that the Wilson Act did

not permit States to discriminate against interstate commerce

in liquor, and Congress made no effort to grant States that

power in the Webb-Kenyon Act. Had Section 2 been inten-

ded to change the longstanding rule against discriminatory

state regulation of liquor, some mention of it would have been

made during the debates. However, the debates are tellingly

silent on this point. In short, the history of Section 2 makes it

clear that Section 2 was intended simply to preserve the

Webb-Kenyon and Wilson Acts against repeal or constitu-

tional attack; it was not intended to affect the long-standing

rule against discriminatory state liquor laws.

Neither the House debate nor the State Ratification

Conventions included any substantial discussion of Section

24

2.'° Nonetheless. the sporadic discussions of Section 2 in the

House of Representatives make clear that members of the

House viewed it as nothing more than an “attempt|] to protect

dry States.” 76 Cong. Rec. at 4,518 (statement of Rep.

Robinson). Congressman Lea, in an extension of remarks on

an appropriation bill. prior to the House debates on the

proposed Amendment. characterized Section 2 as “the

extreme of State rights.” /d at 2.776. But his concern was

that because Congress already had the authority to prevent

interstate shipments of liquor in violation of state laws,

Section 2 was unnecessary and might require the federal

government to sanction “unwise™ state laws. /d Others in

the House stressed that the Amendment returned to the States

the power to choose whether to be dry, as well as the

responsibility for enforcing their prohibition laws, matters

that nationwide Prohibition had temporarily vested in the

federal government. See id. at 4,523-24 (statement of Rep.

McSwain). There was no suggestion that Section 2 would do

anything more than enshrine the Webb-Kenyon and Wilson

Acts into the Constitution.

B. Congress's Rejection Of A Proposed Section 3 To

The Twenty-First Amendment Does Not Suggest

That Section 2 Was Intended To Do More Than

Write The Webb-Kenyon And Wilson Acts Into

The Constitution.

Congress's rejection of a proposed Section 3 has no bearing

on whether Section 2 overruled the longstanding prohibition

against discriminatory state liquor regulations. Proposed

Section 3 would have provided Congress with “‘concurrent

“Like the Senate debate. the House debate largely focused on

ratification by conventions instead of legislatures and whether the

Amendment would prevent the return of the saloon. See, e.g, 76 Cong.

Rec. at 4.511 (Statement of Rep. Guyer); id at 4,515 (Statement of Rep.

Celler). The state conventions generally focused on the question of repeal

and did not debate Section 2. See generally Ratification of the Twenty-

First Amendment to the Constitution of the United States (E.S. Brown ed.,

1938)

25

power to regulate or prohibit the sale of intoxicating liquors to

be drunk on the premises where sold.”"” 76 Cong. Rec. at

4.141. This provision was proposed in order to give Congress

the power “to prevent the restoration of the saloon.” /d.

(statement of Sen. Blaine). This provision was the subject of

fervent objections that it “does not correct the central error of

national prohibition” because it “does not restore to the States

responsibility for their local liquor problems [or] withdraw

the Federal Government from the field of local police

regulation into which it has trespassed.” /d at 4,144

(statement of Sen. Wagner). As Senator Wagner succinctly

explained, if the proposed Section 3 were adopted, the

country would “have expelled the system of national control

{of liquor] through the front door of section | and readmitted

it forthwith through the back door of section 3.” /d. at 4,147.

Section 3 thus was eliminated because it would have given

the federal government too much power over local liquor

matters, thus ignoring the lessons of Prohibition.

In arguing against Section 3, Senator Blaine stated that

“[t]he purpose of section 2 is to restore to the States by

constitutional amendment absolute control in effect over

interstate commerce affecting intoxicating liquors which enter

the confines of the States.” /d at 4,143. Considered in

isolation, this statement could suggest that the scope of

Section 2 was intended to relieve the States of all Commerce

Clause constraints on their authority. Senator Blaine made

that one statement, however, not as an explication of the

scope of Section 2, but as part of an argument against the

inclusion of Section 3. He stated that under Section 2, the

States “are granted larger power in effect and are given

greater protection, while under section 3 the proposal is to

take away from the States the powers that the States would

have in the absence of the eighteenth amendment.” /d.

Senator Blaine therefore argued that “section 3 is inconsistent

with section 2, and the two sections are incompatible, and that

section 3 ought to be taken out of the resolution.” /d Thus,

26

when viewed in context, it becomes clear that Senator

Blaine’s statement did not refer to the wholesale repeal of the

Commerce Clause to permit discriminatory and protectionist

state laws. Instead. Section 3°s deletion restored to the States

their police powers to regulate, or even prohibit, the use of

liquor in saloons or elsewhere within their borders. The

statement thus cannot carry the weight of a conclusion that

Section 2 would permit wet States to engage in discr mination

against other wet States.

*_* * &

In sum, the history of the Twenty-first Amendment shows

that—despite numerous decisions by this Court striking down

discriminatory state laws—Congress never attempted to grant

States the right to discriminate. Instead, Congress chose to

enshrine the Webb-Kenyon and Wilson Acts into the

Constitution to ensure that the immunity from State regulation

afforded liquor in interstate commerce would never again

prevent dry States restricting the flow of liquor across their

borders. The history of the Amendment thus demonstrates

that the Amendment had no effect on the traditional rule that

the Commerce Clause prohibits economic protectionism.

Ill. THE DECISION IN YOUNG’S MARKET IS

CONSISTENT WITH THE HISTORY OF THE

TWENTY-FIRST AMENDMENT.

The Court has long recognized that the Twenty-first

Amendment does not provide the States with unfettered

authority over intoxicating liquors.'’ Nevertheless, it is useful

to look closely at State Board of Equalization v. Young's

Market Co.. 299 U.S. 59 (1936). both because it was the

Court's first case to construe the Amendment and because, for

a short period. the case was cited as support for a broad

reading of the Amendment. A careful reading of Young's

Market demonstrates it is not inconsistent with the history of

the Twenty-first Amendment and presents no obstacle to a

” See infra notes 14-15.

27

clear holding that the Amendment did not sub silentio repeal

the anti-discrimination principle of the Commerce Clause.

In Young's Market, several wholesalers challenged a

California regulation that imposed a license fee of $500 for

the privilege of importing beer to any place within California.

The license to import did not include the privilege of selling,

for which wholesalers paid a separate license fee of $50. The

plaintiffs claimed that importer’s license requirement

discriminated against wholesalers of imported beer, in

violation of the Commerce Clause. /d. at 60-61.

The Court, however, expressly determined that the case

simply did “not present a question of discrimination

prohibited by the commerce clause.” /d. at 62. The Court

explained that the California regulations imposed “no

discrimination against [the plaintiffs] qua wholesalers”

because “[t]he fee exacted for the privilege of selling, and the

conditions under which a sale may be made, are the same

whether the beer to be sold is imported or domestic or is

both.” /d. at 61. Any Commerce Clause concerns raised by a

fee for the privilege of importing were raised “not because it

resulted in discrimination, but because the fee would be a

direct burden on interstate commerce,” which would have

raised such concerns “even if the State had exacted an equal

fee for the privilege of transporting domestic beer from its

place of manufacture to the wholesaler’s place of business.”

Id. at 62. Because the case did not involve discrimination, the

Court had no occasion to determine whether the Twenty-first

Amendment overturned the Court’s long line of cases striking

down discriminatory state liquor laws.

The holding in Young's Market is consistent with the

historical understanding that the Twenty-first Amendment

addressed the “immunity” problem of liquor in interstate

commerce by writing the Webb-Kenyon and Wilson Acts into

the Constitution, but had no effect on the longstanding rule

against discrimination. Any Commerce Clause concerns

arose in Young's Market because the fee was a “direct burden

28

on interstate commerce.” /d. at 62. As explained above, the

Webb-Kenyon and Wilson Acts were intended to permit

States to impose such “direct burdens,” which previously had

been prohibited by Bowman, Leisy and Rhodes. See, e.g.,

McCormick, 286 U.S. at 142-43. Because Young's Market

involved only a fee that imposed a “direct burden” on

interstate commerce, the result in Young's Market thus

requires no departure from the conclusion that Section 2 was

intended merely to “constitutionaliz[e] the Commerce Clause

framework established under those statutes.” Craig, 429 U.S.

at 205-06. Further, because all of the plaintiffs were

California citizens. Young's Market, 299 U.S. at 60, the

Court's holding went no further than to decide that the State

could impose such a “direct burden™ by charging local entities

a fee for the “privilege of importation.” It does not follow

that a State may bar an out-of-state producer from entering a

market that the State has determined should be open to in-

State producers.

Shortly after }oung's Market was decided, the Court,

without further discussion of Section 2 or the fact that

Young 's Market did not involve discrimination, relied upon

dicta in Young's Market to conclude that “the right of a State

to prohibit or regulate the importation of intoxicating liquor is

not limited by the commerce clause.” Joseph S. Finch & Co.

\. McKittrick, 305 U.S. 395, 398 (1939); Indianapolis

Brewing Co. vy. Liquor Control Comm'n, 305 U.S. 391, 394

(1939): see also Mahoney vy. Joseph Triner Corp., 304 U.S.

401. 403-04 (1938) (“[S]ince the adoption of the Twenty-first

Amendment. the equal protection clause is not applicable to

imported intoxicating liquor.”). However, the Court in

Young's Market admitted that it did not consider the history

of Section 2. 299 U.S. at 63-64. When the history of the

Amendment is considered, it becomes clear that Section 2 left

intact the anti-discrimination principle of the Commerce

Clause. and that the holding in Young's Market provided no

29

basis for reading Section 2 more broadly than its language

and evident purpose would support.

In any event, subsequent decisions of this Court have made

it clear that the Twenty-first Amendment does not have the

tremendous breadth that certain language in Young's Market

and the cases that immediately followed may suggest.'* The

Twenty-first Amendment does not affect the restraints of

equal protection, free speech, due process, establishment of

religion or the Import-Export Clause.'* It also should not be

read to repeal the anti-discrimination component of the

Commerce Clause in the area of intoxicating liquors. See

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984)

(holding that a discriminatory tax exemption in favor of

'* See Healy v. Beer Inst., 491 U.S. 324, 340-41 (1989); id. at 344

(Scalia, J., concurring); 324 Liquor Corp. v. Duffy, 479 U.S. 335, 352

(1987) (holding that the Twenty-first Amendment did not save a state law

that authorized price fixing by wholesalers); Brown-Forman Distillers

Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 584-85 (1986) (holding

that the Twenty-first Amendment did not save New York’s price

affirmation law); Bacchus Imports, Lid. v. Dias, 468 U.S. 263, 276

(1984); Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 716 (1984)

(holding that state liquor regulations were preempted despite the Twenty-

first Amendment); Cal. Retail Liquor Dealers Ass'n v. Midcal Aluminum,

Inc., 445 U.S. 97, 109, 114 (1980) (holding that the Twenty-first

Amendment did not save California’s wine pricing system from violating

the Sherman Act ); Hostetter v. Idlewild Bon Voyage Liquor Corp., 377

U.S. 324, 331-32 (1964); United States v. Frankfort Distilleries, Inc., 324

U.S. 293, 299 (1945) (explaining that Twenty-first Amendment “has not

given the states plenary and exclusive power to regulate the conduct of

persons doing an interstate liquor business outside their boundaries”);

Collins v. Yosemite Park & Curry Co., 304 U.S. 518, 538 (1938)

(rejecting the argument that the Twenty-first Amendment gave California

the right to regulate the importation from other States to, and sale of liquor

within, Yosemite National Park).

'S See 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)

(plurality opinion) (commercial speech); Larkin v. Grendel's Den, Inc.,

459 U.S. 116 (1982) (Establishment Clause); Craig, 429 U.S. at 206-07

(equal protection); Wisconsin v. Constantineau, 400 U.S. 433 (1971) (due

process); Dep't of Revenue v. James B. Beam Distilling Co., 377 U.S. 341

(1964) (Import-Export Clause).

30

locally-produced wines and liquors is not saved by the -

Twenty-first Amendment); cf. Healy v. Beer Inst., 491 U.S.

324, 340-41 (1989) (holding that the State’s price affirmation

statute violated the Commerce Clause because it discrimi-

nated against brewers and shippers of imported beer, and had

the effect of controlling commerce occurring outside the

State): id. at 344 (Scalia, J.. concurring) (explaining that the

law's “discriminatory character eliminates the immunity

afforded by the Twenty-first Amendment’).

To the contrary. “[t]o draw a conclusion from [the Court’s

early Section 2 cases] that the Twenty-first Amendment has

somehow operated to ‘repeal’ the Commerce Clause

wherever regulation of intoxicating liquors is concerned

would . . . be an absurd oversimplification.” Hostetter v.

Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 331-32

(1964). As the history of the Twenty-first Amendment

demonstrates. the purpose of Section 2 of the Amendment

was simply to write the Webb-Kenyon and Wilson Acts into

the Constitution; it “was not to empower States to favor local

liquor industries by erecting barriers to competition” Bacchus

Imports, 468 U.S. at 276.

CONCLUSION

The Court should affirm the judgment of the court of

appeals.

Respectfully submitted,

MARK E. HADDAD CARTER G. PHILLIPS*

ALYCIA A. DEGEN SIDLEY AUSTIN BROWN &

SIDLEY AUSTIN BROWN & WOOD LLP

WOOD LLP 1501 K Street, N.W.

555 W. Fifth Street. 40th Floor Washington, D.C. 20005

Los Angeles. California 90013 (202) 736-8000

(213) 896-6000

Counsel for Amici Curiae

September 23, 2004 * Counsel of Record

la

APPENDIX

Amici include the following organizations of California

vintners and winegrowers:

Napa Valley Vintners: The Napa Valley Vintners is a

nonprofit regional trade association with an _ active

membership of nearly 250 Napa Valley wineries. Founded in

1943, the Napa Valley Vintners represents a tradition of

dedicated vintners and grape growers who have worked and

cared for this premier wine-growing region since the early

1800s. Today, the members of the Napa Valley Vintners

focus on preserving Napa Valley as a viticultural and

enological treasure, producing the highest quality wines, and

promoting the Napa Valley Appellation both nationally and

internationally as one of the finest wine-growing regions in

the world.

Sonoma County Wineries Association: The Sonoma

County Wineries Association is a trade association committed

to promoting the wines of the fourteen wine-growing

appellations in Sonoma County, California. Franciscan

mission fathers laid the foundation for the Sonoma County

wine industry with the planting of mission vineyards in 1823.

Today, in Sonoma County, there are more than 190 wineries,

over half less than 20 years old. The Sonoma County

Wineries Association membership includes 170 Sonoma

County wineries and vineyards, including small, family-

owned wineries that, as they did over 150 years ago, continue

to exist comfortably alongside larger entities, each producing

premium wine in its own unique style.

Monterey County Vintners and Growers Association: The

Monterey County Vintners and Growers Association

(MCVGA) was formed in 1973 to establish Monterey County

aS a premium wine grape-growing region. Since that time,

Monterey Wine Country has grown to over seventy-five

vintners and growers and boasts nearly 40,000 acres of

2a

grapes, making it one of the largest premium wine grape-

growing regions in California. The Monterey County

Vintners and Growers Association briags together the talents

and resources of grape growers and wine producers to

promote and support their leadership in the art, the science

and the business of wine.

El Dorado Winery Association: The El Dorado Winery

Association is a trade association that is comprised of

nineteen, small, family wineries in El Dorado County,

California. Wines have been produced in El Dorado County

since the early 1850s. Today, the members of the El Dorado

Winery Association make fine wine in small lots, producing

from just over one thousand cases of wine per year to about

thirty thousand cases per year. The members of the El

Dorado Winery Association are dedicated to developing and

promoting the El Dorado Appellation.

Amador Vintners’ Association: The Amador Vintners’

Association is a regional trade association of twenty-five

wineries from Amador County. California. Located in the

western foothills of the Sierra Nevada mountain range in

central California, Amador County boasts 2,700 acres of wine

grapes—a high percentage of which are farmed organically—

and twenty-five wineries. Wines have been produced in

Amador County since the Gold Rush of the 1850s, and some

of the vineyards planted during that era survive to this day.

The twenty-five member wineries of the Amador County

Vintners Association are primarily small, family-owned

operations whose proprietors make and sell their own wines.

Temecula Valley Winegrowers Association: The

Temecula Valley Winegrowers Association is a regional trade

organization of wineries, winegrowers, and related businesses

in and around California’s Temecula Valley. Mission

vineyards were established in Temecula in 1820, and today,

the wineries and vineyards of Temecula Valley produce some

of the finest wines and winegrapes in the world. The seventy-

five members of the Temecula Valley Winegrowers

3a

Association are dedicated to promoting the making and

growing of quality wine and winegrapes in the Temecula

Appellation.

Santa Cruz Mountains Winegrowers’ Association: The

Santa Cruz Mountains Winegrowers’ Association is a

regional organization of wineries, vineyards, and businesses

in the Santa Cruz Mountains of California. The Santa Cruz

Mountains has been recognized as a premium wine producing

region since the late 1800’s. Although few of those original

wineries survived Prohibition, today, there are over sixty,

small, family-owned wineries in this unique grape-growing

region. The more than 180 members of the Santa Cruz

Mountains Winegrowers’ Association focus on producing the

highest quality wines and promoting the Santa Cruz

Mountains Viticultural Appellation.