No. 93-1631

In the Supreme Court of the United States

OCTOBER TERM, 1994

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
PETITIONER

v.

COORS BREWING COMPANY

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT 

BRIEF FOR THE PETITIONER

DREW S. DAYS, III
Solicitor General

FRANK W. HUNGER
Assistant Attorney General

EDWIN S. KNEEDLER
Deputy Solicitor General

RICHARD H. SEAMON
Assistant to the solicitor General

MICHAEL JAY SINGER
JOHN S. KOPPEL
Attorneys

Department of Justice
Washington, D.C. 20530
(202)514-2217

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QUESTION PRESENTED

Section 5(e) (2) of the Federal Alcohol Administration
Act, 27 U.S.C. 205(e) (2), prohibits statements of alcohol
content on the labels of malt-beverage containers unless
such statements are required by state law. The question
presented is whether that labeling restriction comports
with the First Amendment.

(I)

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II

PARTIES TO THE PROCEEDING

Petitioner, the defendant below, is the Secretary of the
Treasury. The other defendant below was the Director
of the Bureau of Alcohol, Tobacco and Firearms within
the Department of the Treasury. Respondent is the Coors
Brewing Company, which was substituted for the Adolph
Coors Company, the plaintiff below, pursuant to this
Court's order of August 2, 1994, granting respondent's
motion for substitution. Also participating in the pro-
ceedings below were the Speaker and Bipartisan Leader-
ship Group of the United States House of Representa-
tives, which initially participated as defendants-intervenors
but later withdrew from the case in order to allow de
fendants to be represented exclusively by the Department
of Justice.

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TABLE OF CONTENTS

Opinions below . . . . 1
Jurisdiction . . . .2
Constitutional, statutory, and regulatory provisions
involved . . . . 2
Statement . . . . 2
A. The statutory and regulatory background . . . .3
B. The proceedings in this case . . . . 12
Summary of argument . . . . 16

Argument:

The statutory prohibition of alcohol-content state-
ments on malt-beverage labels in 27 U.S.C.
205 (e) (2) comports with the First Amendment . . . . 18
I. The labeling restriction satisfies the Central
  Hudson test for measuring the validity of gov-
  ernment regulation of commercial speech . . . . 18
  A. The labeling restriction advances a substan-
   tial governmental interest . . . . 20
  R The labeling restriction materially advances
   the asserted governmental interest . . . . 25
   1. The evidence establishes a continuing
     threat of strength wars among malt-
     beverage brewers . . . . 25
   2. The labeling restriction combats the risk
     of strength wars in a direct and material
     way . . . . 26
  C. The labeling restriction is narrowly tailored
   to advance the government's substantial
   interest . . . . 34
II. The labeling restriction is entitled to an added
  presumption of validity . . . . 37

(III)

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          IV

Argument & Continued:             Page

A. The labeling restriction is entitled to an
added presumption of validity because it
regulates speech promoting a socially harm-
ful activity . . . . 38

B.  The labeling restriction is entitled to an
   added presumption of validity because it
   facilitates the enforcement of state laws
   within the ambit of the Twenty-first Amend-
   ment . . . .  41

Conclusion . . . . 47

     TABLE OF AUTHORITIES

Cases:

A.L.A. Schechter Poultry Corp. V. United States,
295 U.S. 495 (1935) . . . . 9
Arrow Distilleries, Inc. V. Alexander, 109 lF.2d 397
(7th Cir.), cert. denied, 310 U.S. 646 (1940) ..21, 22, 45
Bacchus Imports, Ltd. V, Dias, 468 U.S. 263
(1984) . . . . 24, 40
Board of Trustees v. Fox, 492 U.S. 469 (1989)  . . . . 19, 31,
                				32, 34, 39, 43
Bolger v. Youngs Drug Products Corp., 463 U.S.
60 (1983) . . . . 29
Bose Corp. V. Consumers Union of United States,
Inc., 466 U.S. 485 (1984) . . . . 19
Burson V. Freeman, 112 S. Ct. 1846 (1992) . . . . 28
California V. LaRue, 409 U.S. 109 (1972) l7, 38, 41,
               42, 43, 44, 46, 47
California Retail Liquor Dealers Ass'n v. Midcal
Aluminum, Inc., 445 U.S. 97 (1980) 4, 24, 40
Capital Broadcasting Co. V. Mitchell, 333 F'. Supp.
582 (D.D.C. 1971), aff'd mem., 405 U.S. 1000
(1972) . . . . 28, 39
Capital Cities Cable, Inc. V. Crisp, 467 U.S. 691
(1984) . . . . 24, 40, 44
Central Hudson Gas & Elec. Corp. V. Public Serv.
Comm'n, 447 U.S. 557 (1980) . . . .13, 18, 27, 34, 36, 39
City of Cincinnati V. Discovery Network, Inc., 113
s. ct. 1505 (1993) . . . . 19

---------------------------------------- Page Break ----------------------------------------                    

V

Cases-Continued:               Page

City of Newport V. Iacobucci, 479 U.S. 92 (1986 ).. 43
Continental Distilling Corp. v. Shultz, 472  F.2d
1367 (D.C. Cir. 1972) . . . . 3
Craig V. Boren, 429 U.S. 190 (1976) . . . . 4, 40, 43
Doran V. Salem Inn, Inc., 422 U.S. 922 (1975) . . . . 43
Dunagin V. City of Oxford, 718 F.2d 738 (5th Cir.
1983), cert. denied, 467 U.S. 1259 (1984) . . . 19, 28, 37,
                   				39,  43
Eden field v. Fane, 113 S. Ct. 1792 (1993) . . . .15, 19, 20,
                				25, 26, 40, 41
Edge Broadcasting Co. V. United States, 5 F.3d 59
(4th Cir. 1992), rev'd, 113 S. Ct. 2696 (1993 ) . . . . 23
Falls City Indus., Inc. V. Vanco Beverage, Inc., 460
U.S. 428 (1983) . . . . 27
44 Liquor Mart, Inc. v. Racine, 829 F. Supp. 543
(D.R.I. 1993), aff'd in part, rev'd in part sub
nom. 44 Liquormart, Inc. V. Rhode Island, Nos.
93-1893 & 93-1927 (May 2, 1994), opinion with-
drawn and judgment vacated, aff'd in part, rev'd
in part mem. (lst Cir. July 8, 1994) . . . . 27
Friedman V. Rogers, 440 U.S. 1 (1979) . . . . 40
Hatter v. Nebraska, 205 U.S. 34 (1907) . . . . 32
Hanf v. (United States, 235 F.2d 710 (8th Cir.),
cert. denied, 352 U.S. 880 (1956) . . . .22, 45
Harris v. State, 122 F.2d 401 (Okla. Crim. App.
1942) . . . . 45
Hayes v. United States, 112 F.2d 417 (lOth Cir.
1940) . . . . 22, 45
Healy V. The Beer Inst., 491 U.S. 324 (1989) . . . . 27
Hostetter V. Idlewild Bon Voyage Liquor Corp.,
377 U.S. 324 (1964) . . . . 24, 41
Ibanez V. Florida Department of Business & Pro-
fessional Regulation, 114 S. Ct. 2084 (1994)  . . . .19, 21,
                  				25,43
Kordel v. United States, 335 U.S. 345 (1948 ) . . . . 32
Larkin V. Grendel's Den, Inc., 459 U.S. 116
(1982) . . . . 43
Lockhart v, McCree, 476 U.S. 162 (1986) . . . . 19
Metromedia, "Inc. V. City of San Diego, 453 U.S.
490 (1981) . . . . 32

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          VI

Cases-Continued:

National Distributing Co. V. United States Treas
  ury  Dep't, 626 F.2d 997 (D.C. Cir. 1980) . . . .3, 9
New York State Liquor Authority V. Bellanca, 452
  U.S. 714 (1981 ) . . . . 43
Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447
  (1978) . . . . 19, 29-30, 34, 39, 40
Oklahoma Telecasters Ass'n V. Crisp, 699 F.2d 490
  (lOth Cir. 1983), rev'd sub nom. Capital Cities
  Cable, Inc. V. Crisp, 467 U.S. 691 (1984) . . . .19, 28, 39
Old Monastery Co. V. United States, 147 F.2d 905
(4th Cir.), cert. denied, 326 U.S. 734 (1945) . . . . 22, 45
Posadas de Puerto Rico Associates v. Tourism Co.,
478 U.S. 328 (1986) . . . . 17,  27, 28, 32, 36,
               			37, 38, 39, 40, 41
Princess Sea Indus., Inc. V. State, 635 F.2d 281
(Nev. 1981), cert. denied, 456 U.S. 926 (1982 ).. 28, 39
Queensgate Investment Co. V. Liquor Control
Comm'n, 433 N.E.2d 138 (Ohio), appeal dis-
missed, 459 U.S. 807 (1982) . . . . 27, 39
R.M.J., In re, 455 U.S. 191 (1982) . . . .20, 34
Rankin v. McPherson,, 483 U.S. 378 (1987) . . . .19
Rhode Island Liquor Stores Ass'n v. Evening Call
Pub. Co., 497 A.2d 331 (R.I. 1985) . . . . 27, 39
S & S Liquor Mart, Inc. V. Pa-stove, 497 A.2d 729
(R.I. 1985) . . . . 27, 39
San Francisco Arts & Athletics, Inc. v. United
States Olympic Comm., 483 U.S. 522 (1987) . . . . 32
Stone v. Mississippi, 101 U.S. 814 (1880) . . . . 40
South Dakota v Dole, 483 U.S. 203 (1987) . . . .23
324 Liquor Corp. v. Duffy, 479 U.S. 335 ( 1987) . . . .21, 24,
                 					 40,   45
Turner Broadcasting System, Inc. v. FCC, No. 93-
44 (June 27, 1994) . . . . 19, 28, 30
United States V. Edge Broadcasting Co., 113 S. Ct.
2696 (1993) . . . . 19,  20, 23, 24, 27,
               			29, 32, 34, 39, 40
United States v. Obrien , 391 U.S. 367 (1968) . . . . 42
United States v. Williams, 112 S. Ct. 1735 (1992 ).. 35
Walters V. National Ass'n of Radiation Survivors,
473 U.S. 305 (1985) . . . . 19

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          VII

Cases-Continued:               Page

William Jameson & Co. V. Morgenthau:

25 F. Supp. 771 (D.D.C. 1938), vacated, 307
  Us. 171 (1939) . . . . 3
307 US. 171 (1939) . . . . 46
Williamson V. Lee Optical Co., 348 U.S. 483
(1955) . . . . 43

Constitution, statutes, and regulations:

U.S. Const.:

Art. I, 8, Cl. 3 (Commerce Clause) . . . . 40, 46
Art. IV,  3 . . . . 44
Amend. I . . . . passim
Amend. XVIII . . . . 38
Amend. XXI . . . . passim
   Section 2 . . . . 2, 46
Alcoholic Beverage Labeling Act of 1988, Pub. L.
No. 100-690, Tit. VIII, 8001 (a) (3), 102 Stat.
4517-4521:
102 Stat. 4518 (27 U.S.C. 213) . . . . 40
102 Stat. 4518-4521 (27 U.S.C. 213 et seq.) . . . .37
102 Stat. 4519 (27 U.S.C. 215) . . . . 40
Federal Alcohol Administration Act, ch. 814, 49
stat. 977 (1935) :
 2(a), 49 Stat. 977 . . . . 3
3,49 Stat. 978 . . . . 3
4,49 Stat. 978-981 . . . . 3
 4 (d), 49 Stat. 979 . . . . 3-4
4 (e), 49 Stat. '379 . . . . 3-4
5,49 Stat. 981-985 . . . . 3
7,49 Stat. 985-986 . . . . 3
Federal Alcohol Administration Act, 27 U.S.C. 201
et seq. . . . 2, 3
 2(a), 27 U.S.C. 202 (a) (repealed) . . . . 3
3,27 U.S.C. 203 . . . . 3,  20, 21, 44
4,27 U.S.C. 204 . . . . 3, 21
 4(a) (2) (C),27 U.S.C. 204 (a) (2) (C) . . . . 21
               4, 21
4 (d), 27 U.S.C. 204(d) . . . . 4, 21
 4(e), 27 U.S.C. 204 (e) . . . . 4

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VIII

Statutes and regulations-Continued:        Page
    5,27 U.S.C. 205 . . . . 2, 3
   5 (e), 27 U.S.C. 205 (e) . . . .5, 6
   5 (e) (2),27 U.S.C. 205 (e) (2) . . . . passim
   5 (f), 27 U.S.C. 205 (f ) . . . . 5
    5(f) (2),27 U.S.C. 205 (f) (2) . . . .4, 5, 12, 13,
                			14, 17, 21, 22, 32
    7,27 U.S.C. 207 . . . .2, 3
    17(a) (7),27 U.S.C. 211 (a) (7) . . . . 4
Liquor Tax Administration Act, ch. 830,  510(a),
  49 Stat. 1964 (1936) . . . . 3
Reed Amendment, ch. 162, 5, 39 Stat. 1069
  (1917) . . . . 44
Webb-Kenyon Act, ch. 90, 37 Stat. 699 (1913 ) . . . . 44
18 U.S.C. 1262 . . . . 44
18 U.S.C. 1304 . . . . 23
18 U.S.C. 1307 . . . .23
27 U.S.C. 122 . . . . 44
Ala. Code  28-3 A-6 (c) (1986) . . . . 10
Ky. Rev. Stat. Ann. $244.520 (Bobbs-Merrill
  1981) . . . . 10, 11
Me. Rev. Stat. Ann. tit. 28-A, 711 (1) (A) (West
  1988) . . . . 10
Mass. Ann. Laws ch. 138, 15 (Law. Co-op. 1981)..12
Mo. Rev. Stat. 312.310 (Supp. 1993) . . . .12
N.Y. Alto. Bev. Cont. Law App.  84.6(a)
  (McKinney 1987) . . . . 10
Ohio Rev. Code Ann. $4301.03 (D) (Supp. 1993) . . . .10
Okla. Stat. Ann. tit. 37, $163.19 (b) (West 1985).. 12
Pa. Stat. Ann. tit. 47,  4-493(7) (1969) . . . . 10
S.C. Code Ann. $61-13-800 (Law. Co-op. 1990) . . . . 10
S.D. Codified Laws Ann. $39-13-11 (1987) . . . . 10 
Va. Code Ann. $4.1 -103.8 (Michie 1993) . . . . 10
27 C.F.R.:

   Section 7.10 . . . . 4
   Section 7.26 . . . .  2
   Section 7.26 (a) . . . .6
   Section 7.26 (b)-(d) . . . .6, 37
   Section 7.29 . . . . 2

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          IX

Regulations-Continued:            Page

Section 7.29 (f) . . . .6
Section 7.29 (g) . . . . 6
Sections 7.40-7.42 . . . .6
Section 7.50 . . . . 6
Section 7.54 . . . . 2
Section 7.54 (c) . . . . 6
Ale. Bev. Comm'n of Ind. Bull. 23 (Aug. 4, 1938). . . .10
Ariz. Comp. Admin. R. & Regs. R4-15-220 (6)
(1990) . . . . 10
Ark. Ale. Bev. Cont. Div. Regs.  2.17 (1991 ) . . . . 11
Cal. Code Regs. tit. 4, 130 (1990) . . . . 11
Colo. Code Regs.  46-112.3.C (1993) . . . . 11
Corm. Agencies Regs.  30-6-A35 (m) (1976 ) . . . .10
Del. Ale. Bev. Cont. Comm. Regs. R. 13 (b)
(1991) . . . . 10
D.C. Mun. Regs. tit. 23, 910 (1988) . . . . 10
Ill. Admin. Code tit. 11,  100,70(b) (9) (1991 )....10
Kan. Admin. Regs. (1985):
 14-7-2(c) . . . . 11
 92-8-9a . . . .11
Mich. Admin. Code r. 436.1611 (1989) . . . .10
Minn. R. 7515.1110, subp. 2 (1985) . . . . 12
Mont. Admin. R. 42.13-201 (2) (1993) . . . . 12 
N.J. Admin. Code tit. 13, 2-27.1 (1990) . . . .10
or. Admin. R. (1992):
 845-10-205 (2) . . . . 12
845-10-205 (4) . . . . 12
R.I. Liq. Cont. Admin. Regs. No. 17 (1992) . . . .10
Tex. Admin. Code tit. 16, $45.79 (1991) . . . . 10
Utah Admin. R. 96-l-3(3) (1991) . . . .10
Va. Ale. Bev. Cont. Bd. Regs.  5 (A) (3) (1991 )..10
W. Va. Non-Intox. Beer Comm'n Regs.  176-1-3.1
(1990) . . . . 11
Wis. Admin. Code 7.21 (Dep't of Revenue)
(1991) . . . . 11

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X

Miscellaneous:

76 Cong. Rec. (1932):
   p. 8 . . . . 38
   p. 16 . . . . 38
   p. 26 . . . . 45
   p. 27 . . . . 38
   p. 791 . . . . 45
76 Cong. Rec. (1933):
   p. 2776 . . . . 45
   p. 4138 . . . . 45
   p. 4143 . . . . 45
   p. 4144 . . . . 45
   p. 4146 . . . . 45
   p. 4147 . . . . 45
   p. 4148 . . . . 45
   p. 4155 . . . . 45
   p. 4156 . . . . 45
   p. 4168 . . . . 45
   p. 4172 . . . . 45
   p. 4173 . . . . 45
   p. 4177 . . . . 45
   p. 4221 . . . . 45
   p. 4226 . . . . 38
   p. 4565 . . . . 7
79 Cong. Rec. (1935):
   pp. 11,713-11,714 . . . . 44
   p. 11,714. . . . 21
   p. 11,723 . . . . 22
   pp. 11,729-11,730 . . . . 21
   p. 11,788 . . . . 21
p. 12,936 . . . . 21, 38
p. 12,943 . . . . 38
de Ganahl, The Scope of Federal Power Over Alco-
holic Beverages Since the Twenty-first Amend-
ment, 8 Geo. Wash. L. Rev. 819 (1940 ) . . . .  44, 45
Dep't of Treasury Order No. 120-01 (June 6,
1972) . . . . 12
Exec. Order No. 6474 (Dee. 4, 1933) . . . . 7
37 Fed. Reg. 11,696 (1972) . . . . 12

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XI

Miscellaneous-Continued:            Page

54 Fed. Reg. (1989):
p. 3591 . . . . 37
p. 3594 . . . . 37
58 Fed. Reg. 21,228 (1993) . . . . 15
H.R. 1420, 103d Cong., 1st Sess. (1993) . . . . 30
H.R. Rep. No. 1542, 74th Cong., 1st Sess. (1935) ..7, 9, 21,
                 				27, 38, 46
Hearing Before the FACA With Reference to Pro-
posed Regulations Relative to the Labeling of
Products of the Brewing Industry (Nov. 1,
1934) . . . . 7,  8, 22
Lydick, State Control of Liquor Advertising Under
the United States Constitution, 12 Baylor L.
L. Rev. 43 (1960) . . . . 45
Modern Brewery Age (Blue Book) (53d ed.
1993) . . . . l0, 11, 12
Note, Federal Alcohol Administration Act, 24 Gee.
L.J. 433 (1936) . . . . 45
Regulations Relating to the Labeling of Domestic
Products of the Brewing Industry (Mar. 1,
1935) . . . . 8-9
Rev. Rul. 62-95, 1962-1 C.B. 362 . . . . 6
S. 2595, 99th Cong., 2d Sess. (1986) . . . .30
S. Rep. No. 1215, 74th Cong., 1st Sess. (1935) . . . .7, 9,
                  				21, 38
Spaeth, The Twenty-First Amendment and State
Control Over Intoxicating Liquor: Accommodat-
ing the Federal Interest, 79 Calif. L. Rev. 161
(1991) . . . . 38, 45

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IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1994

      No. 93-1631

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
       PETITIONER

     v.

COORS BREWING COMPANY

   ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE TENTH CIRCUIT

BRIEF FOR THE PETITIONER

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-9a)
is reported at 2 F.3d 355. The prior opinion of the court
of appeals (Pet. App. 10a-31a) is reported at 944 F.2d
1543.

       JURISDICTION

The judgment of the court of appeals was entered on
August 23, 1993. A petition for rehearing was denied on
December 1, 1993. Pet. App. 55a-56a. On February 22,
1994, Justice Ginsburg extended the time for filing a peti-
tion for a writ of certiorari to and including March 31,
1994. On March 22, 1994, Justice Ginsburg further ex-
tended the time for filing a petition for a writ of certiorari
to and including April 15, 1994, and the petition was
filed on that date. The petition for a writ of certiorari
was granted on June 13, 1994. Joint Appendix ( J.A. )

(1)

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2

363. The jurisdiction of this Court rests upon 28 U.S.C.
1254(1).

CONSTITUTIONAL STATUTORY, AND
REGULATORY PROVISIONS INVOLVED

The First Amendment to the United States Constitu-
tion provides in pertinent part: "Congress shall make no
law * * * abridging the freedom of speech."

The Twenty-first Amendment to the United States Con-
stitution provides in pertinent part:

Section 2. 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.

Section 5 of the Federal Alcohol Administration Act
(FAAA), 27 U.S.C. 205, is reproduced at Pet. App.
57a-65a.
Section 7 of the FAAA, 27 U.S.C. 207, provides in
pertinent part:

Any person violating any of the provisions of section
* * * 205 of this title shall be guilty of a misde-
meanor and upon conviction thereof be fined not
more than $1,000 for each offense.

The relevant portions of 27 C.F.R. 7.26, 7.29, and
7.54 are reproduced at Pet. App. 66a-72a.

STATEMENT

This case concerns the constitutionality of a portion of
27 U.S.C. 205(e)(2), a provision in the Federal Alcohol
administration Act (FAAA or Act), 27 U.S,C. 201 et
seq. Section 205(e)(2) in relevant part prohibits state-
ments of alcohol content on the labels of malt beverages,
unless such statements are required by state law. Congress
matted the labeling restriction in Section 205(e)(2) to
Curb "strength wars" among brewers of malt beverages

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3

such as the one that arose after Prohibition was repealed.
The Tenth Circuit held that the labeling restriction vio-
lates the First Amendment. This Court granted certiorari
to review that holding.

A. The Statutory And Regulatory Background

1. The FAAA, 27 U.S.C. 201 et seq., was enacted
"[i]n order effectively to regulate interstate and foreign
commerce in distilled spirits, wine, and malt beverages,
to enforce the twenty-first amendment, and to protect the
revenue and enforce the postal laws with respect to dis-
tilled spirits, wine, and malt beverages." 27 U.S.C. 203.1
To carry out those purposes, Section 2(a) of the Act
created the Federal Alcohol Administration (FAA) as a
division within the Department of the Treasury. FAAA,
ch. 814, 49 Stat. 977 ( 1935), repealed by the Liquor
Tax Administration Act, ch. 830,  501 (a), 49 Stat.
1964 ( 1936) (making FAA an independent establish-
ment of the government). Sections 3 and 4 of the Act
required certain participants in the alcoholic beverage in-
dustry (other than brewers) to obtain a permit from the
Secretary of the Treasury. 49 Stat. 978-981 (current
versions at 27 U.S.C. 203, 204). Section 5 of the Act
proscribed certain types of "[u]nfair competition" and
"unlawful practices. " 49 Stat. 981-985 (current version
at 27 U.S.C. 205). Violations of Section 5 were punish-
able as misdemeanors under Section 7, 49 Stat. 985-986
(current version at 27 U.S.C. 207), and by suspension
or revocation of a permit under Section 4(d) and (e),

____________________(footnotes)

 1  See also National Distributing Co. V. United States Treasury
Dep't, 626 F.2d 997, 1004 (D.C. Cir. 1980) (discussing history
and purpose of FAAA) ; Continental Distilling Corp. V. Shultz,
472 F.2d 1367, 1369-1370 (D.C. Cir. 1972) (same) ; William
Jameson & Co. v. Morgenthau, 25 F. Supp. 771, 774 (D.D.C. 1938)
(three-judge court) (rejecting constitutional challenge to FAAA),
vacated for lack of substantial federal question, 307 U.S. 171 (1939)
(per curiam).
                         
---------------------------------------- Page Break ----------------------------------------                   

4

49 Stat. 979 (current versions at 27 U.S.C. 204(d) and
(e)).2

This case involves a challenge to the portions of the
Act codified as Section 205(e) (2) and Section 205(f ) (2)
of Title 27. Those provisions prohibit numerical and
descriptive statements of alcohol content on the labels
of malt-beverage containers and in advertisements for
malt beverages.  Section 205 (e) (2) requires the con-
tainers of all alcoholic beverages to be labeled

in conformity with such regulations * * * [of the
Secretary] (2) as will provide the consumer with
adequate information as to the identity and quality
of the products [and] the alcoholic content thereof

___________________(footnotes)

2 Neither the FAAA nor any other federal statute restricts the
amount of alcohoI that malt beverages may contain. That matter
has been left to the States, consistent with the long "history of
state regulation of alcoholic beverages" and Congress's solicitude
for the States' broad discretion in this area. See Craig V. Boren,
429 U.S. 190, 205-206 (1976) ; see also California Retail Liquor
Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97, 107 n.10
(1980). In turn, many States restrict the alcohol content of malt
beverages. See J.A. 357-360 (survey of state laws).

3 The term "malt beverage" is defined by statute (27 U.S.C.
211 (a) (7) ) and regulation (27 C.F.R. 7.10) as:
  
A beverage made by the alcoholic fermentation of an infu-
sion or decoction, or combination of both, in potable brewing
water, or malted barley with hops, or their parts, or their
products, and with or without other malted cereals, and with
or without the addition of unmalted or prepared cereals, other
carbohydrates or products prepared therefrom, and with or
without the addition of carbon dioxide, and with or without
other wholesome products suitable for human food consumption.

Thus, the term "malt beverage" encompasses all types of what is
commonly referred to as "beer," and hereafter we use the two terms
interchangeably. For purposes of this case, however, it is impor-
tant to distinguish the terms "malt beverage" and "malt liquor."
While the term "malt beverage" includes "malt liquor," the latter
term is not defined by the FAAA or regulations; rather, it is a
term that has come to be used in the industry to refer to the type
of beer with the highest alcohol content. See Pet. App. 7a n.4;
J.A. 208.

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5

(except that statements of, or statements likely to be
considered as statements of, alcoholic content of malt
  beverages are prohibited unless required by State
  law * * *).
 
27 U.S.C. 205(e) (2) (emphasis added). Section 205
(f) (2) requires print and broadcast advertisements for all
alcoholic beverages to be

in conformity with such regulations * * * [of the Sec-
  retary] (2) as will provide the consumer with ade-
  quate information as to the identity and quality of
  the products advertised [and] the alcoholic content
thereof (except the [sic] statements of, or statements
  likely to be considered as statements of, alcoholic
content of malt beverages and wines are prohibited).

27 U.S.C. 205(f) (2) (emphasis added).
Both Sections 205 (e) (2) and 205 (f) (2) are designed
to operate in a manner that is consistent with state law.
The labeling restriction in Section 205(e)(2), by its
terms, applies unless state law requires disclosure of al-
cohol content on malt-beverage labels. The advertising
restriction in Section 205(f)(2) applies, by virtue of the
penultimate paragraph of Section 205(f), only in States
that adopt similar restrictions for beer that is wholly in
intrastate commerce: Thus, a State may choose whether

___________________(footnotes)

4 The penultimate paragraph of Section 205 (f) provides in per-
tinent part:
In the case of malt beverages, the provisions of this subsec-
tion and subsection (e) of this section shall apply to the
labeling of malt beverages sold or shipped or delivered for
shipment or otherwise introduced into or received in any State
from any place outside thereof, or the advertising of malt bev-
erages intended to be sold or shipped or delivered for ship-
ment or otherwise introduced into or received in any State
from any place outside thereof, only to the extent that the
law of such State imposes similar requirements with respect
to the labeling or advertising, as the case may be, of malt
beverages not sold or shipped or delivered for shipment or
otherwise introduced into or received in such State from any
place outside thereof.

Although the penultimate paragraph of Section 205(f) refers to
Section 205 (e), ATF and its predecessors have long interpreted it

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6

the federal labeling or advertising restriction will apply
within its borders.
Implementing regulations prohibit the disclosure of al-
cohol content on malt-beverage labels, except where dis-
closure is required by state law (27 C.F.R. 7.26(a),
7.29 (g) ), and they prohibit the disclosure of alcohol con-
tent in print and broadcast beer advertising, to the extent
that the State imposes similar advertising restrictions on
beer that remains in the State (27 C.F.R. 7.50, 7.54(c)).
The labeling restriction covers both numerical designa-
tions of alcohol content and descriptive terms suggestive
of high alcohol content, such as " `strong,' `full strength,'
`extra strength,' `high test, ` `high proof,' [and] `full alco-
hol strength.' " 27 C.F.R. 7.54(c); 27 C.F.R. 7.29(f).
The labeling restriction does not, however, preclude beer
labels or advertising that identifies a beer as "low" or
"reduced" alcohol, "non-alcoholic," or "alcohol-free," in
accordance with the Secretary's definition of those terms.
27 C.F.R. 7.26(b)-(d); see also 27 C.F.R. 7.29(f),
7.54 (c). The labeling restriction is enforced by regula-
tions requiring the bottlers of malt beverages to obtain
certificates of label approval from the Secretary (or to
obtain exemptions from that requirement ). 27 C.F.R.
7.40-7.42; see also 27 U.S.C. 205(e).
2. In enacting the FAAA, Congress prohibited state-
ments of alcohol content in malt-beverage labeling and
advertising in order to curb "strength wars" among brew-
ers of the sort that arose in the wake of the repeal of
Prohibition by the Twenty-first Amendment.
As discussed in the legislative history of the FAAA,
the adoption of the Twenty-first Amendment "took place

___________________(footnotes)

not to require a State to enact its own malt-beverage labeling re-
striction in order for the federal malt-beverage labeling restriction
to apply in that State. Instead, under the plain terms of section
205 (e) (2), the federal labeling restriction applies unless a State
affirmatively requires disclosure of alcohol content on malt-beverage
labels. See, e.g., Rev. Rul. 62-95, 1962-1 C.B, 362. Coors has
noted that interpretation without challenging it.  See 89-1203
Resp. C.A. Br. 16 n.16.

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7

with unexpected speed." H.R. Rep. No. 1542, 74th
Cong., 1st Sess. 3 ( 1935). The Amendment was pro-
posed to the legislatures of the States by the Seventy-
second Congress on February 20, 1933, and was ratified
by the requisite number of States less than ten months
later, on December 5, 1933. See ibid.; 76 Cong. Rec.
4565 ( 1933). Because Congress was not in session at
that time, the President signed an executive order to fill
the perceived regulatory vacuum by approving continued
regulation of the alcoholic beverage industry under the
voluntary code system that had been developed pursuant
to the National Industrial Recovery Act (NIRA). Exec.
Order No. 6474 (Dec. 4, 1933); see H.R. Rep. No.
1542, supra, at 3-4. According to the committee reports
on the bill that became the FAAA, the Act "[i]n gen-
eral * * * incorporates the greater part of the system
* * * enforced by the Government under the codes. "
H.R. Rep. No. 1542, supra, at 4; S. Rep. No. 1215, 74th
Cong., 1st Sess. 3 (1935). The Tenth Circuit accord-
ingly recognized in its first decision in this case that the
history of regulations adopted under the code system is
relevant to interpretation of the Act. Pet. App. 17a n.4.
The regulations initially proposed by the Federal Al-
cohol Control Administration ( FACA ) pursuant to the
executive order did not prohibit numerical statements of
alcohol content in beer labeling or advertising. Hearing
Before the FA CA With Reference to Proposed Regula-
tion.  Relative to the Labeling of Products of the Brewing
Industry (Nov. 1, 1934) (FACA Hearing), Clerk's Rec-
ord (CR ) 15, at 3-4. Instead, the proposed regulations
prohibited only descriptive statements such as " `full
strength', `extra strength', `high test', `high proof', [and]
`prewar proof'." ld. at 3. At the hearing on the proposed
regulations, however, witnesses unanimously supported a
broader prohibition that would bar even seemingly ob-
jective numerical designations of alcohol content. For
example, the first witness at the hearing, George McCabe,
counsel to the Brewers Code Authority, stated (id. at 7):

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8

We would like a regulation of the F. A.C.A. which
would outlaw any declaration of alcoholic content on
labels for fermented malt liquors except in States
where such a requirement is made by the State law.
* * * [T]he alcoholic declaration has been produc-
tive of more deception than any one part of the label,
Some brewers went haywire * * * and were trying to
sell their beer on an alcohol basis, and they resorted,
as you all know, to the use of all sorts of numbers
and figures, numerals, to convey the impression that
the beer contained an excessive amount of alcohol,
which it did not contain.

Mr. McCabe then read a letter from a major brewer,
which he described as "fairly expressive of the general
sentiment of the industry," recommending that "all refer-
ence to alcoholic content * * * be eliminated from label-
ing [and] advertising," in light of the "trouble with this
sort of thing during the past 18 months." Id. at 8. Other
witnesses explained that, although "the legitimate brewer
does not desire to sell his beer on the basis of alcohol,"
but rather "as a food product" (id. at 25), some brewers
"seem[ed] to be of the opinion that to sell beer they
should sell the public alcohol" (id. at 29). The latter
brewers' practice of disclosing alcohol content led "legiti-
mate" brewers to conclude that "in order to meet com-
petition it was necessary to increase the alcoholic content
of the[ir] beer." Id. at 59. The witnesses predicted that
a prohibition on statements of alcohol content would "get
* * * beer back to a low alcoholic content." Id. at 73;
see also id. at 33 ("if you just write the alcoholic content
off the label, you are going to have a lower alcoholic con-
tent beer than you are if you require the alcoholic con-
tent to be stated on the label"). The resulting regulation
provided in relevant part that "[t]he alcoholic content
and/or the percentage and quantity of the original ex-
tract shall not be stated unless required by State or Fed-
eral laws or regulations." Regulations Relating to the

 ---------------------------------------- Page Break ----------------------------------------

9

Labeling of Domestic Products of the Brewing Industry
 9(a), at 4 (Mar. 1, 1935) (attached as appendix to
FA CA Hearing ).5
The House committee report on the bill that became
the FAAA expressed the judgment that "[m]alt beverages
should not be sold on the basis of alcohol content." H.R.
Rep. No. 1542, supra, at 12. It explained that "attempts
to sell beer and other malt beverages on the basis of alco-
holic content are attempts to take advantage of the ignor-
ance of the consumer and of the psychology created by
prohibition experiences." Ibid. The report found that
"[legitimate members of the industry have suffered seri-
ously from unfair competition resulting from labeling and
advertising" that stated alcoholic content. Ibid. The report
also found that "irrespective of th[e] falsity" of such state-
ments, "their abuse has grown to such an extent since
repeal that the prohibition of all such statements is in
the interest of the consumer and the promotion of fair
competition ." Id. at 12-13. More broadly, the report
concluded, based on "[experience prior to prohibition,"
that the States "could not alone" protect their citizens
from "unscrupulous advertising" and "deceptive labeling
practices," due to "the diversity of their laws and the fact
that practically all alcoholic beverage producers and large-
scale distributors did an interstate business." Id. at 2-3 ."
3. Labeling restrictions on malt beverages are cur-
rently in effect in all 50 States by virtue of either posi-
tive state law or acquiescence in the federal labeling re-
striction in Section 205(e)(2).

___________________(footnotes)

 Regulation of the alcoholic-beverage industry continued under
the code system until this Court struck down the NIRA in .A.L.A.
Schechter Poultry Corp. V. United States, 295 U.S. 495 (1935).
See National Distributing Co., 626 F.2d at 1005; H.R. Rep. No.
1542, supra, at 3.

The Senate report similarly found that abusive "labeling or
advertising was one of the "serious social and political evils"
that "were in large measure responsible for bringing on prohibi-
tion" and that "cannot be reached by the States." S. Rep. No.
215, supra, at 6-7.

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10

Twenty-one States and the District of Columbia pro-
hibit statements of alcohol content on the labels of some
or all types of malt beverages.7 Several States in this

___________________(footnotes)

7 Ala. Code 28-3A-6(c) (1986) (requiring brewers to file fed-
eral certificates of label approval with the State) ; Ariz. Comp.
Admin. R. & Regs. R4-15-220 (6) (1990) (requiring compliance
with federal labeling requirements); Corm. Agencies Regs. $30-6-
A35 (m) (1976) (expressly incorporating federal labeling require-
ments as state law) ; Del. Ale. Bev. Cont. Comm. Regs. R. 13 (b)
(1991) (requiring compliance with federal labeling requirements) ;
D.C. Mun. Regs. tit. 23, 910 (1988) (incorporating federal label-
ing provisions in part) ; Modern Brewery Age (Blue Book) 267
(53d ed. 1993) ('digest of alcohol labeling requirements for D. C.) ;
Ill. Admin. Code tit. 11,  100.70(b) (9) (1991) (no beer containers
"shall have affixed thereto any label or statement showing the alco-
holic content thereof") ; Ale. Bev. Comm'n of Ind. Bull. 23 (Aug. 4,
1938) (malt-beverage labels may not indicate alcohol content by
numerals or descriptive terms) ; Ky. Rev. Stat. Ann.  244.520
(Bobbs-Merrill 1981) (malt-beverage labels may not "refer[] in
any manner to the alcoholic strength") ; Me. Rev. Stat. Ann. tit.
28-A,  711(1) (A) (West 1988) (malt-beverage label may not
"refer [ ] in any manner to the alcohol content"); Mich. Admin.
Code r. 436.1611 (1989) (requiring compliance with federal label-
ing requirements) ; N.J. Admin. Code tit. 13,  2-27.1 (1990)
(requiring compliance with federal labeling requirements); N.Y.
Alto. Bev. Cont. Law App.  84.6 (a) (McKinney 1987) (prohibiting
disclosure of alcohol content on malt-beverage labels) ; Ohio Rev.
Code Ann.  4301.03(D) (SUPP. 1993) ; Pa. Stat. Ann. tit. 47,
 4-493(7) (1969) (malt-beverage labels may not "in any manner
refer [] to the alcoholic contents") ; R.I. Liq. Cont. Admin. Regs.
No. 17 (1992) (federal labeling requirements "will be enforced" by
State) ; S.C. Code Ann.  61-13-800 (Law. Co-op. 1990) (requiring
compliance with federal labeling requirements) ; S.D. Codified
Laws Ann. $39-13-11 (1987) (compliance with federal labeling
requirements deemed compliance with state law) ; Modern Brewery
Age, supra, at 271 (indicating that South Dakota requires malt-
beverage labels to state "Not over 3.2$% alcohol by weight," appar-
ently precluding other statements of alcohol content) ; Tex. Admin.
Code tit. 16, 345.79 (1991) (" [the alcoholic content * * * shall
not be stated" on malt-beverage labels) ; Utah Admin. R. 96-1-3 (3)
(1991) (requiring compliance with federal labeling requirements) ;
Va. Ale. Bev. Cont. Bd. Regs.  5(A) (3) (1991) (requiring com-
pliance with federal labeling requirements) ; cf. Va. Code Ann.
$4.1 -103.8 (Michie 1993) (Virginia Board may by regulation

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11

category expressly incorporate Section 205 (e) (2) of the
FAAA or its implementing regulations.8
In addition, 20 States have effectively adopted Section
205 (e) (2 )`s prohibition on alcohol content labeling by
acquiescence i.e., by not invoking their authority under
Section 205 (e) (2) to require such statements on labels.
See Re. Rul. 62-95, 1962-1 C.B. 362.
Finally, 10 States require an alcohol-content statement
on labels of malt-beverage containers, but only with re-
spect to malt beverages above or below a certain alcohol
percentage.10

___________________(footnotes)
       
establish labeling requirements) ; W. Va. Non-Intox. Beer Comm'n
Regs.  176-1-3.1 (1990) ("[t]here shall not be any statement as to
alcoholic content on the bottle and can label" of malt beverages) ;
Wis. Admin. Code 7.21 (Dep't of Revenue) (1991) (requiring
compliance with federal labeling requirements).

8  See statutes and regulations cited in note 7, supra, for Ala-
bama, Arizona, Connecticut, Delaware, Michigan, New Jersey,
South Carolina, Utah, Virginia, and Wisconsin.

9  See Modern Brewery Age, supra, at 266-272, which indicates
that  the federal prohibition of malt-beverage alcohol content state-
ments on labels is in effect, by virtue of the State's not requiring
such statements, in 19 States: Alaska , Florida, Georgia, Hawaii,
Iowa , Kentucky", Louisiana, Maryland, Massachusetts (with re-
spect to malt beverages containing more than 3.2%. alcohol by
weight), Mississippi, Nebraska, Nevada, New Hampshire, New
Mexico, North Carolina, North Dakota, Tennessee, Vermont, and
Wyoming. Our research indicates that there are two additional
States, Idaho and Washington, that have acquiesced in the fed-
eral prohibition, but that Kentucky has enacted its own statute
prohibiting statements of alcohol content on malt-beverage con-
tainer, rather than simply acquiescing in the federal prohibi-
tion. See Ky. Rev. Stat. Ann. $244.520 (Bobbs-Merrill 1981), cited
in note 7, supra.

10 Ark. Alc. Bev. Cont. Div. Regs. 2.17 (1991) (requiring
malt beverages containing mm-e than 5% alcohol by weight to be
labeled as such) ; Cal. Code Regs. tit. 4, 130 (1990) (prohibiting
alcohol-content statements on labels of malt beverages containing
more than 4 , alcohol by weight) ; Colo. Code Regs.  46-112.3.C
(1993) (malt-beverage labels must indicate that alcohol content
is not. more than 3.2 by weight) ; Kan. Admin. Regs. 14-7-
2(c), 92-8-9a (1985) (malt-beverage labels must state "does

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          12

B. The Proceedings In This Case

1. In April 1987, the Adolph Coors Company ap-
plied to the Bureau of Alcohol, Tobacco and Firearms
(ATF) within the Treasury Department for approval
of proposed labels and advertisements that included state-
ments of the alcohol content of Coors' beer.  J.A. 60-
65.11. ATF denied the application based on Sections
205(e) (2) and 205(f) (2). Pet. App. 73a-74a.
2. a. In July 1987, Coors filed this action against the
Secretary and the Director of ATF in the United States
District Court for the District of Colorado. Coors sought
a declaratory judgment that the labeling and advertising
restrictions in Sections 205(e) (2) and 205(f)(2) and
their implementing regulations violate the First Amend-
ment; Coors also sought an injunction barring enforc
ment of those provisions. J.A. 54-59. On cross-motions
for summary judgment, the district court held that both
Section 205 (e) (2) and Section 205 (f) (2) violate the
First Amendment, and it enjoined their enforcement. Pet.
App. 43a-54a.
b. The Tenth Circuit reversed and remanded. Pet.
App. 10a-31a. It applied the four-part test articulated in

___________________(footnotes)

not contain more than 3.2% alcohol by weight") ; Mass. Ann.
Laws ch. 138, 115 ( Law. Co-op. 1981) (malt beverages contain-
ing 3.2% alcohol by weight or less "shall be so labelled") ; Minn,.
R. $7515.1110, subp. 2 (1985) (malt-beverage labels must state
"contains not more than 3.2 percent of alcohol by weight") ; Mo.
Rev. Stat. 312.310 (Supp. 1993) (malt-beverage labels must
state "alcoholic content not in excess of 3.2% by weight or 4%
by volume]") ; Mont. Admin. R. $42-13-201 (2) (1993) (" [a]l-
cohol content by weight must be noted on the labels of all malt
beverages" containing more than 7% alcohol by weight) ; Okla.
Stat. Ann. tit. 37, 163.19 (b) (West 1985) (malt-beverage label
may not indicate that alcohol content exceeds 3.2% by weight) ;
Or. Admin. R. 845-10-205(2), (4) (1992 j ; Modern Brewery Age,
supra, at 270-271 (Oregon requires disclosure of alcohol con-
tent on labels of malt beverages containing more than 4% al-
cohol by weight).
11 ATF is currently responsible for administering the FAAA.
See Dep't of Treasury Order No. 120-01 (June 6, 1972) (formerly
No. 221), reproduced at 37 Fed. Reg. 11,696 (1972).

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           13

Central Hudson Gas & Elec. Corp. V. Public Serv.
Comm'n, 447 U.S. 557 (1980), for analyzing restric-
tions on commercial speech. Applying the first part of
the Central Hudson test, the Tenth Circuit determined
that Sections 205 (e) (2) and 205 (f) (2) regulate non-
misleading commercial speech regarding a lawful activ-
ity. Pet. App. 15a.
Applying the second part of the test, the Tenth Cir-
cuit held that the labeling and advertising restrictions
are intended to further the federal government's "substan-
tial" interest in "maintain[ing] moderate levels of alcohol
in beer in order to protect the consumer." Pet. App. 19a.
In that connection, the Tenth Circuit criticized the dis-
trict court for "focus[ing] primarily on the validity of the
asserted ends given the passage of time and changed cir-
cumstances." Ibid. The Tenth Circuit found it "irrele-
vant that the circumstances giving rise to a particular
piece of legislation have changed so long as the legisla-
tion continues to serve some valid and substantial gov-
ernment interest." ld. at 20a. The Tenth Circuit con-
cluded that the government had advanced "a legitimate
and substantial interest" in this case by identifying "a
continuing danger of strength wars similar to those that
existed in 1935." Ibid.
The Tenth Circuit held, however, that there were dis-
puted issues of fact with regard to the third and fourth
parts of the Central Hudson test. Pet. App. 21a-3 la.
It determined that "the record here does not unambigu-
ously reflect a correct legislative judgment that the
enacted means directly advance the intended ends." ld.
at 21a. In the court's view, "the link between advertising
and strength wars is not self-evident," ibid., and there
were "genuine issues of material fact underlying the ques-
tion of whether * *  * the complete prohibition of [state-
ments of alcohol content] results in a `reasonable fit' be-
tween the legislature's goal and the means chosen to
reach it," id. at 31a. The court of appeals accordingly
reversed the order granting summary judgment in favor

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14

of Coors and remanded the case to the district court for
further proceedings. Ibid.
3. a. On remand, the government introduced exten-
sive evidence concerning current conditions in the malt-
beverage industry. Much of that evidence related to the
malt-liquor segment of the industry. See, e.g., J.A. 207-
214, 217-222; see also J.A. 92-93, 108-109. The govern-
ment's evidence demonstrated that a primary reason why
people choose malt liquor instead of other types of beer
is because of its high alcohol content (J.A. 127, 344, 348,
350, 352-353, 356 ), and that malt-liquor producers mar-
ket their product by emphasizing its high alcohol content
(J.A. 127-128, 341, 343, 345-347, 350-351, 355-356; see
also Defendants' Trial Exh. (DX ) CS (at 11.)). The
evidence included numerous recent instances of efforts
to market malt beverages on the basis of high alcohol
content, in violation of the FAAA's labeling and ad-
vertising restrictions. See, e.g., J.A. 309-340; see also
DXS R, S, and LJ through X. That evidence was not
limited to the malt-liquor segment of the market. It
showed, for example, that Coors had distributed wallet
cards listing the alcohol content of its beers and those of
its competitors. J.A. 206-207, 335-336, 342; see also
J.A. 209-210 (Olympia beer), 216-217, 337-338
(Lowenbrau beer).
The district court upheld the advertising restriction in
Section 205 (f) (2), but it struck down the labeling re-
striction in Section 205(e) (2). J.A. 361-362; Pet. App.
32a-42a. The court found that there is a continuing
threat of strength wars that justifies a prohibition on
statements of alcohol content in advertising, id. at 34a,
but it regarded labeling as different because it believed
statements of alcohol content on labels would be used by
consumers primarily to limit their intake of alcohol, id.
at 37a.
b. Coors did not challenge the district court's ruling
upholding the advertising restriction in Section 205
(f) (2). The government, by contrast, did appeal from

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           15

the district court's ruling striking down the labeling re-
striction in Section 205(e)(2).12
c. A different panel of the Tenth Circuit affirmed.
Pet. App. 1a-9a. The panel began by rejecting the gov-
ernment's contention that it was required, under the third
part of the Central Hudson test, to show only that Con-
gress "reasonably believed" that the labeling restriction
would further the goal of preventing strength wars. The
court expressed the view that this Court, in Edenfield v.
Fane, 113 S. Ct. 1792 ( 1993), had adopted a "much
stricter" standard for applying the third part of the Cen-
tral Hudson test. Pet. App. 5a.
The Tenth Circuit then held that, under the stricter
test, the government had failed to show that the labeling
restriction furthers the goal of preventing strength wars
"in a direct and material way." Pet. App. 7a.13 The
court recognized that the legislative history supported
Congress's judgment that the labeling restriction would
"result [] over the long term in beers with a lower alcohol
content ." /d. at 6a, quoting id. at 17a. But focusing on
what it perceived to be "changes in the malt beverage
industry," the court determined that the government's evi-
dence of a continuing threat of strength wars was insuffi-
cient in three ways. Id. at 6a-9a. First, the court dis-
counted the evidence on the ground that it primarily con-
cerned the malt-liquor segment of the market. Id. at 7a.
Second, the court believed that there was an "absence
of any record evidence indicating that there are strength
wars in states or other countries where alcohol content
labeling is already required." Id. at 8a. Finally, the
court was unable to discern any evidence that "Coors

___________________(footnotes)

12 After the district court's ruling, ATF published an interim
rule suspending enforcement of the regulatory provisions that
implement the statutory labeling restriction in Section 205 (e) (2).
58 Fed. Reg. 21,228 (1993).
13 The Tenth Circuit accordingly found it unnecessary to decide
whether the labeling restriction satisfies the "reasonable fit"
requirement of the fourth part of the Central Hudson test.  Pet.
App. 9a n.6.

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16

would engage in a strength war if it were able to disclose
the alcohol content of its malt beverages." ld. at 8a-9a.14

     SUMMARY OF ARGUMENT

I. The labeling restriction in Section 205(e)(2) satis-
fies the Central Hudson test for determining whether a
regulation of commercial speech comports with the First
Amendment. First, Section 205 (e) (2) advances the sub-
stantial federal interest of preventing strength wars among
malt-beverage brewers, in a manner that facilitates state
regulation of alcoholic beverages. Moreover, the con-
tinuing risk of strength wars is real, and Section 205
(e) (2) combats that risk in a direct and material way.
Finally, Section 205 (e) (2) is narrowly tailored to
achieve that purpose.
The Tenth Circuit misapplied the Central Hudson test
in declaring Section 205(e) (2) unconstitutional. In ap-
plying the second part of the test, the Tenth Circuit
failed to identify fully the federal interest that Section
205 (e) (2) was designed to serve. Specifically, the court  
ignored clear evidence that Congress intended Section
205 (e) (2) to operate in tandem with, and facilitate the
enforcement of, state laws regulating alcoholic beverages.
In applying the third part of the Central Hudson test,    
the Tenth Circuit made several errors. The court failed    
to recognize the self-evident proposition that, if the ad-
vertising of a product characteristic is prohibited, con-
sumers are unlikely to select a product on the basis of
that characteristic.  Furthermore, the court gave no
weight to historical evidence that a strength war existed
at the time Section 205(e) (2) was enacted, focusing in-
stead on perceived "changes in the malt beverage indus-
try." Pet. App. 6a. Finally, the court misunderstood the
significance of the evidence in the record concerning
recent violations of the federal advertising and labeling
restrictions in the malt-beverage industry.

___________________(footnotes)

14 The Tenth Circuit subsequently rejected the government's
petition for rehearing and suggestion of rehearing en banc. Pet.
App. 55a-56a.

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17

   Although the Tenth Circuit did not address whether
    Section 205 (e) (2) satisfies the fourth part of the Cen-
    tral Hudson test, which inquires whether there is a "rea-
    sonable fit" between the legislative means and the legis-
    lative ends, the court expressed the belief that a reason-
    able fit is lacking because the labeling restriction in Sec-
    tion 205 (e) (2) covers all types of malt beverages,
    whereas the threat of a strength war, in the court's view,
    exists only in the malt-liquor segment of the malt-
    beverage industry. That view cannot be reconciled with
    the district court's unchallenged holding that the evidence
    in the record supported the advertising restriction in Sec-
    tion 205 (f) (2), which applies to all types of malt bev-
    erages, Nor can it be squared with evidence in the record
    that brewers of other types of beer, including Coors, have
    sought to compete on the basis of high alcohol content.
    More fundamentally, Congress could reasonably believe
    that a labeling restriction applicable to all types of malt
    beverages would be more effective in preventing strength
    wars than one applicable only to malt liquor.
     11. Any doubt as to whether the labeling restriction
    in Section 205(e) (2) comports with the First Amend-
    ment should be resolved in favor of the statute's validity.
    The labeling restriction is entitled to an added presump-
    tion of validity, over and above the presumption of con-
    stitutionality normally accorded an Act of Congress,
    under two lines of cases. One line of cases recognizes
    that legislatures have broader latitude to regulate speech
    that promotes a socially harmful activity, such as al-
    cohol consumption, which could be banned altogether,
    than they have to regulate other types of speech. See,
    e.g., Posadas de Puerto Rico Associates v. Tourism Co.,
     478 U.S. 328 ( 1986). The other line of cases holds that
    state laws regulating alcohol are entitled to an added
     presumption of validity when challenged on free speech
    grounds. See, e.g., California v. LaRue, 409 U.S. 109
     (1972). The labeling restriction in Section 205 (e) (2)
      is entitled to the same presumption, because it was en-
     acted to enforce the Twenty-first Amendment by facili-
    tating the enforcement of state laws regulating alcohol.
                                                                         
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         18

When accorded that presumption, the labeling restriction
plainly comports with the First Amendment.

        ARGUMENT

THE STATUTORY PROHIBITION OF ALCOHOL-
CONTENT STATEMENTS ON MALT-BEVERAGE
LABELS IN 27 U.S.C. 205(e) (2) COMPORTS WITH THE
FIRST AMENDMENT

The Tenth Circuit held that the portion of 27 U.S.C.
205 (e) (2) that prohibits statements of alcohol content
on the labels of malt-beverage containers violates the
First Amendment. In so holding, the Tenth Circuit relied
on this Court's Central Hudson test for reviewing regula-
tions of commercial speech. As discussed in Point I
below, the Tenth Circuit misapplied the Central Hudson
test, and for that reason alone the judgment below should
be reversed. Moreover, as discussed in Point II below,
Section 205 (e) (2) should be reviewed under a less
stringent standard than is applied under the Central
Hudson test. A less stringent standard of review is re-
quired under this Court's decisions concerning the regula- ,
tion of speech that promotes socially harmful activities,
such as alcohol consumption, and this Court's decisions  
concerning free speech challenges to state alcohol regula-
tions. Those two lines of decisions require courts to ac-
cord greater deference than is accorded under th
and fourth parts of the Central Hudson test to legislative 
judgments regarding the existence of a harm for which
a legislative remedy is required, the extent to which the ;
challenged regulation alleviates that harm, and the fit
between the legislative means chosen and the legislative
objective to be achieved.

I.   THE LABELING RESTRICTION SATISFIES THE
  CENTRAL HUDSON TEST FOR MEASURING THE
  VALIDITY OF GOVERNMENT REGULATION OF
  COMMERCIAL SPEECH

This Court in Central Hudson articulated a four-part
test for reviewing `First Amendment challenges to govern-
ment regulation of commercial speech (447 U.S. at 566):

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19

At the outset, we must determine whether the expres-
sion is protected by the First Amendment. For com-
mercial speech to come within that provision, it at
least must concern lawful activity and not be mis-
leading. Next, we ask whether the asserted govern-
mental interest is substantial. If both inquiries yield
positive answers, we must determine whether the reg-
ulation directly advances the governmental interest
asserted, and whether it is not more extensive than is
necessary to serve that interest.

See Ibanez v. Florida Department of Business & Profes-
sional Regulation, 114 S. Ct. 2084, 2088-2089 ( 1994);
United States v. Edge Broadcasting Co., 113 S. Ct. 2696,
2703 ( 1993); Edenfield v. Fane, 113 S. Ct. 1792, 1798
( 1993); City of Cincinnati V. Discovery Network, Inc.,
113 S. Ct. 1505, 1510 (1993); Board of Trustees v.
Fox, 492 U.S. 469, 475 (1989). The labeling restric-
tion in Section 205(e)(2) satisfies the Central Hudson
test. The Tenth Circuit's contrary holding rests on several
legal errors.15

___________________(footnotes)

15 To the extent that the Tenth Circuit's holding rests on findings
of fact, those findings are not entitled to deference in this
Court. In a First Amendment challenge, an appellate court must
"independently decide" whether the record supports the judg-
ment below. See Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447,
463 (1978) ; see also, e.g., Rankin V. McPherson, 483 U.S. 378,
385 n.8 (1987) ; Bose Corp. V. Consumers Union of United States,
Inc., 466 U.S. 485, 499-511 (1984) ; Dunagin V. City of Oxford, 718
F.2d 738, 748 n.8 (5th Cir. 1983) (en bane) (plurality opinion
of Reavley, J.), cert. denied, 467 U.S. 1259 (1984) ; Oklahoma
Telecasters Ass'n V. Crisp, 699 F.2d 490, 497 (lOth Cir. 1983),
rev'd on other grounds sub nom. Capital Cities Cable, Inc. V.
Crisp, 467 U.S. 691 (1984). Furthermore, to the extent that the
Tenth Circuit disagreed with the congressional findings underlying
Section 205 (e) (2), Congress's findings, rather than the court's,
are entitled to deference. See Turner Broadcasting System, Inc. v.
FCC, No. 93-44 (June 27, 1994), slip op. 43; Lockhart V. McCree,
476 U.S. 162, 168 n.3 (1986) ; Walters V. National Ass'n of Radia-
tion Survivors, 473 U.S. 305, 331 n.12 (1985).

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20

A. The Labeling Restriction Advances A Substantial
Governmental Interest

The first step in the Central Hudson inquiry relevant
here 16 requires a court to "identify with care" the inter-
ests asserted by the government. Edenfield, 113 S. Ct.
at 1798. The Tenth Circuit failed to use the requisite
care in identifying the governmental interest underlying
the labeling restriction in Section 205(e) (2).
1. The Tenth Circuit recognized that Congress's cen-
tral goal in enacting the labeling restriction in Section
205 (e) (2) was to curb strength wars among malt-
beverage brewers. Pet. App. 4a. The court ignored, how-
ever, the further purpose of Congress to pursue that goal
in a manner that would respect and facilitate, and not
supplant, state regulation of alcohol pursuant to the
Twenty-first Amendment.
It is clear from the text of the FAAA that Congress
intended to facilitate state regulation of alcohol. One of
the express purposes of the FAAA is "to enforce the
twenty-first amendment," 27 U.S.C. 203; that Amend-

___________________(footnotes)

16 As the first part of the Central Hudson test reflects, commer-
cial speech must be truthful to qualify for even the "lesser pro-
tection" afforded to commercial speech by the First Amendment.
Edge Broadcasting, 113 S. Ct. at 2703. Thus, "false, misleading,
or deceptive commercial speech may be banned" without implicat-
ing the First Amendment. See, e.g., Ibanez, 114 S. Ct. at 2088;
In re R.M.J., 455 U.S. 191, 202-203 (1982). The brief of amicus
curiae Center for Science in the Public Interest (at 4-6) argues
that the statements of alcohol content for which Coors sought
certificates of label approval are inherently misleading, because
they can mislead consumers into incorrectly believing that a
serving of beer has less alcohol than a serving of other types of
alcoholic beverages. That argument was not advanced by the
government in the courts below. See 89-1203 Opening Br. for
Defendants-Appellants 15; cf. 89-1203 C.A. Br. of Appellants, the
Speaker and Bipartisan Leadership Group of the U.S. House of
Representatives 26 n. 16.

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          21

ment, in turn, "directly qualities the federal commerce
power," thereby enhancing state power over alcohol. 324
Liquor Corp. v. Duffy, 479 U.S. 335, 346 (1987). Other
provisions of the FAAA reflect a similar intent to enhance
state authority over alcohol. Section 203, for example,
provides that the requirement to obtain a federal permit
to produce and distribute most types of alcoholic bever-
ages (see p. 3, supra) "shall not apply to any agency
of a State or political subdivision thereof." 27 U.S.C.
203. In addition, Section 204 requires the Secretary to
deny a permit to any person whose "operations i[are] pro-
posed to be conducted * * * in violation of the law of the
State in which they are to be conducted." 27 U.S.C.
204 (a) (2) (C). Furthermore, Section 204 conditions all
permits "upon compliance * * * with the twenty-first
amendment and laws relating to the enforcement thereof."
27 U.S.C. 204(d). Finally, and most relevant here, both
the labeling provisions in Section 205(e)(2) and the
advertising provisions in Section 205(f) (2) are expressly
designed to operate in tandem with state laws on the
same subject. See pp. 5-6, supra.17
Congress's purpose in the FAAA to facilitate the en-
forcement of state laws was the basis for one of the
earliest decisions upholding the statute against a constitu-
tional challenge. In Arrow Distilleries, Inc. v. Alexander,
109 F.2d 397, cert. denied, 310 U.S. 646 ( 1940), the
Seventh Circuit upheld an order of the FAA suspending
a liquor producer's permit because of its failure to obtain

___________________(footnotes)

17 The legislative history of the FAAA confirms that Congress
intended to enhance the ability of the States to enforce their own
laws regulating alcohol. See 79 Cong. Rec. 11,714 (1935) (bill
that became FAAA reflected Congress's belief that it "must do
something to supplement legislation by the States to carry out
their own policies" ) (remarks of Rep. Cullen) ; S. Rep. No. 1215,
74th Cong., 1st Sess. 3 (1935) ; H.R. Rep. No. 1542, 74th Cong.,
1st Sess. 4 (1935) ; see also 79 Cong. Rec. 11,729-11,730 (remarks
of Rep. Tarver), 11,788 (remarks of Rep. McCormack), 12,936
(1935 ) (remarks of Sen. George).

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          22

certificates of label approval and its misbranding of alco-
holic beverages. The court rejected the contention that
the Twenty-first Amendment deprived Congress of the au-
thority to enact the FAAA. The court found nothing in
the Amendment "to deny to Congress the power to legis-
late in aid of the state prohibitions [governing alcohol]."
ld. at 400. On the contrary, the court determined that
"[t]he twenty-first amendment authorizes Congress to take
affirmative action to make effective the prohibition of the
amendment against the importation or transportation of
alcoholic beverages into states in violation of the laws
thereof." Id. at 401. The court concluded that the FAAA
is a valid exercise of that authority, because it "make[s]
effective the protection which the twenty-first amendment
gives to the states." Ibid. See also Hanf v. United States,
235 F.2d 710, 717 (8th Cir. ) (Twenty-first Amendment
imposed "an additional burden of enforcement" on the
federal government, which FAAA was designed to shoul-
der), cert. denied, 352 U.S. 880 (1956); Old Monastery
Co. v. United States, 147 F.2d 905, 907 (4th Cir.),
cert. denied, 326 U.S. 734 ( 1945);" Hayes' v. United
States, 112 F.2d 417,422 ( 10th Cir. 1940).
The conclusion in Arrow Distilleries fully applies to
the labeling restriction in Section 205(e)(2). As wit-
nesses at the FACA Hearing in 1934 explained, state
alcohol regulations at that time (as now) often included
regulations that restrict the alcohol content of malt bever-
ages. FACA Hearing 10-11, 38-39, 60, 62, 75-76; see
also 79 Cong. Rec. 11,723 ( 1935) (remarks of Rep.
85Celler) (describing state laws limiting alcohol content
of malt beverages). Those restrictions differed from State
to State (and continue to do so, see J.A. 357-360). If a
State imposes a restriction on alcohol content, the restric-
tion reflects a judgment by that State regarding the maxi-
mum alcohol content appropriate for the health and wel-
fare of its citizens. The labeling restriction in Section
205 (e) (2), along with the advertising restriction in Sec-
tion 205 (f) (2), gives effect to such a judgment by an

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23

individual State by making it less likely that a citizen
from that State will travel to another State to purchase
beer with a higher alcohol content. Cf. South Dakota V.
Dole, 483 U.S. 203,205-208 ( 1987).
2. In Edge Broadcasting, this Court reviewed a First
Amendment challenge to a federal statute that, like the
FAAA, was designed to complement state laws. Edge
Broadcasting makes it clear that the Tenth Circuit mis-
applied the second part of the Central Hudson test and
that that error undermined the Tenth Circuit's entire
analysis.
At issue in Edge Broadcasting were the federal stat-
utes (18 U.S.C. 1304 and 1307) that prohibit lottery
advertising in States that do not operate lotteries, but
permit lottery advertising in States that do operate lot-
teries. 113 S. Ct. at 2700-2701. The Fourth Circuit held
that the statutes violated the First Amendment because,
as applied to Edge Broadcasting, they "d[id] not directly
advance the governmental interest asserted." Edge Broad-
casting Co. v. United States, 5 F.3d 59, 62 ( 1992) (per
curiam ), rev'd, United States v. Edge Broadcasting Co.,
supra. The Fourth Circuit based its holding on the fact
that Edge Broadcasting's listeners in North Carolina, a
State that does not operate a lottery, were "inundated"
with lottery advertisements from neighboring Virginia,
which does operate a lottery. ibid. The Fourth Circuit de-
cided that, with respect to that audience, the federal re-
striction provided only "ineffective or remote" support for
"North Carolina's desire to discourage gambling." Ibid.
This Court reversed the Fourth Circuit's decision. Edge
Broadcasting, 113 S. Ct. at 2704. The Court explained
that the Fourth Circuit erred when it relied on the fact
that the federal prohibition of lottery advertising operates
only in nonlottery States to conclude that the prohibition
provided only "remote" support for the goal of protecting
the interests of nonlottery States, such as North Carolina.
That fact, instead, reflected Congress's intent to further

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24

the additional goal of protecting the interests of States,
such as Virginia, that operate lotteries (ibid.):

In response to the appearance of state-sponsored
lotteries, Congress might have continued to ban all
radio or television lottery advertisements, even by
stations in States that have legalized lotteries. This
it did not do. * * * Instead of favoring either the
lottery or the nonlottery State, Congress opted to
support the antigambling policy of a State like North
Carolina * * *. At the same time it sought not to
unduly interfere with the policy of a lottery sponsor-
ing State such as Virginia. * * * This congressional
policy of balancing the interests of lottery and non-
lottery States is the substantial governmental interest
that satisfies Central Hudson, the interest which the
courts below did not fully appreciate.

Like the Fourth Circuit in Edge Broadcasting, the
Tenth Circuit in this case did not fully appreciate Con-
gress's goal of accommodating a matrix of state laws.
Appreciation of that goal is essential to a proper analysis
of the labeling restriction under Central Hudson. If
Congress's sole purpose had been to curb strength wars
among malt-beverage brewers, it might well have enacted
a different statute. For example, Congress might have
chosen to limit the alcohol content of malt beverages.18
That limitation would have directly furthered the goal of
preventing strength wars. But it would also have inter-
fered with the State's authority to regulate alcoholic bever-
ages (by devising their own limits on alcohol content or

___________________(footnotes)

18 Congress might reasonably have concluded that it had au-
thority to. impose federal limits on alcohol content pursuant to
its power to regulate interstate commerce. See 324 Liquor Corp.
v. Duffy, 479 U.S. 335, 346-347 (1987) ; Bacchus Imports, Ltd. v.
Dias, 468 U.S. 263, 274-276 (1984) ; Capital Cities Cable Inc. V.
Crisp, 467 U.S. 691, 714 (1984) ; California Retail Liquor Dealers
Ass'n V. Midcal Aluminum, Inc., 445 U.S. 97, 110 (1980) ; Hos-
tetter V. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 331-
332 (1964) .

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25

choosing to impose no such limits) to a greater extent
than does the labeling restriction.
In sum, Edge Broadcasting makes clear that a court
must accurately identify the governmental interest under-
lying a restriction on commercial speech, as required
under the second part of the Central Hudson test, before
it can accurately determine whether the restriction directly
advances the governmental interest, as required under the
third part of the Central Hudson test. The Tenth Circuit's
failure at the outset fully to identify the interests under-
lying the labeling restriction in Section 205(e)(2) under-
mined its subsequent analysis.

B. The Labeling Restriction Materially Advances The
Asserted Governmental Interest

The third part of the Central Hudson test requires the
government to show "that the harms it recites are real
and that its restriction will in fact alleviate them to a
material degree." Ibanez, 114 S. Ct. at 2089, quoting
Edenfield, 113 S. Ct. at 1800. The government made
that showing here. It established that there is a continuing
threat of strength wars among malt-beverage brewers and
that the labeling restriction materially combats that threat.

I.  The Evidence Establishes A Continuing Threat
Of Strength Wars Among Malt-Beverage
Brewers

The Tenth Circuit did not question the adequacy of
the government's showing that there were strength wars
among malt-beverage brewers when Section 205 (e) (2)
was enacted. Indeed, the court recognized that "the Act's
legislative history * * * contains testimony `that labels
displaying alcohol content resulted in a strength war
wherein producers competed for market share by putting
increasing amounts of alcohol in their beer.' " Pet. App.
6a, quoting id. at 18a (first court of appeals opinion).
Coors did not present any evidence rebutting the evidence

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26

before Congress proving the existence of a strength war.
Thus, it is undisputed that the harm at which the labeling
restriction in Section 205(e) (2) is aimed was "real"
Edenfield, 113 S. Ct. at 1800) at the time of its enact-
ment.
It is also undisputed that there continues to be a threat
of strength wars in the malt-beverage industry. As the
court of appeals observed, the government presented evi-
dence ( 1 ) "that malt beverage manufacturers already are
competing and advertising on the basis of alcohol strength
in the malt-liquor segment of the market"; (2) "that con-
sumers who prefer malt liquor do so primarily because
of its higher alcohol content"; and ( 3 ) "that a number
of manufacturers have tried to advertise malt liquor * * *
to tout its alcohol strength." Pet. App. 7a. The court
noted, moreover, that "Coors does not contest * * * the
existence of such a threat." ibid.19

2. The Labeling Restriction Combats The Risk Of
Strength Wars In A Direct And Material Way

Although the Tenth Circuit did not doubt that there is
a continuing threat of strength wars, it determined that
"the Government has offered no evidence to indicate that
the appearance of factual statements of alcohol content
on malt-beverage labels would lead to strength wars or
that their continued prohibition helps to prevent strength
wars." Pet. App. 9a. That determination is flawed in
three respects.
a. First, the Tenth Circuit erred by failing to discern
any link between the advertising of a product charac-

___________________(footnotes)

19 The parties disagree over the scope of the current threat of
strength wars in the malt-beverage industry. Coors has contended
that the threat exists only in the malt-liquor segment of the
industry. The government has contended that the threat is not so
limited. Because this issue implicates the question whether Sec-
tion 205 (e) (2) is overly broad insofar as it applies to all malt-
beverage labeling, we address it in our discussion of the fourth
part of the Central Hudson test. See pp. 34-37, infra.

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27

teristic (in this case, high alcohol content) and the extent
to which consumers choose the product on the basis of
that characteristic. Pet. App. 21a. This Court has rec-
ognized as a matter of common sense that a restriction on
the advertising of a product decreases demand for the
product. See Edge Broadcasting, 113 S. Ct. at 2707;
Posadas de Puerto Rico Associates V. Tourism Co., 478
U.S. 328, 342 ( 1986); Central Hudson, 447 U.S. at 569.
It follows that a restriction on the advertising of a product
characteristic will decrease the extent to which consumers
select the product on the basis of that characteristic. The
Tenth Circuit accordingly erred in failing to hold that the
labeling restriction directly advances Congress's goal of
ensuring that "[m]alt beverages should not be sold on
the basis of alcoholic content." H.R. Rep. No. 1542,
74th Cong., 1st Sess, 12 (1935).20

___________________(footnotes)

20 In a related context, this Court has recognized that people
cross state lines to purchase beer at lower prices. See Healy v.
The Beer Inst., 491 U.S. 324, 326 (1989) ; Falls City Indus., Inc.
V. Vanco Beverage, Inc.. 460 U.S. 428, 437 & n.8 (1983). It is
just such behavior, which reflects the close connection between
consumer purchasing decisions and product information, that has
led the lower federal courts and the state courts to uphold, against
First Amendment challenges, state restrictions on price advertis.
ing: of alcoholic beverages. See Queensgate Investment Co. V.
Liquor Control Comm'n, 433 N.E.2d 138 (Ohio) (per curiam),
appeal dismissed for want of a substantial federal question, 459
U.S. 807 ( 1982),cited with approval in Edge Broadcasting, 113
S. Ct. at 2707; S & S Liquor Mart, Inc. v. Pastore, 497 A.2d 729
(R.L 1985)  Rhode Island Liquor Stores Ass'n V. Evening Call
Pub. Co., 497 A.2d 331 (R.I. 1985). "Common sense tells us that
a lifting of the ban on price advertising will lead to a more com-
petitive market. " 44 Liquor Mart, Inc. V. Racine, 829 F. Supp.
543, 554 (D.R.I. 1993), aff'd in part, rev'd in part sub nom, 44
Liquormart, Inc. V. Rhode Island, Nos. 93-1893 & 93-1927 (May 2,
1994), opinion withdrawn and judgment vacated, aff'd in part, rev'd
in part mem. (lst Cir. July 8, 1994) ; see S & S Liquor Mart, 497
A.2d at 735. Part of the reason such restrictions reduce the con-
sumption of alcohol, of course, is that they prevent alcohol vendors
from engaging in price competition. Just as alcohol price adver-

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28

b. Second, the court ignored the historical evidence
upon which the labeling restriction in Section 205(e) (2)
was based. Cf., e.g., Burson v. Freeman, 112 S. Ct. 1846,
1856 (1992) (plurality opinion) (examining history of
statute challenged on First Amendment grounds). The
court recognized that the evidence before Congress when
it enacted Section 205(e)(2) showed ( 1 ) "that labels
displaying alcohol content resulted in a strength war";
and (2) "that not disclosing the alcohol content on malt
beverages would relieve marketplace pressures to produce
beer on the basis of alcohol content," and would thereby
"result[] over the long term in beers with a lower alcohol
content." Pet. App. 6a. Thus, the evidence clearly sup-
ported Congress's determination, at the time of Section
205 (e) (2)'s enactment, that the disclosure of alcohol
content had led to strength wars and that the prohibition
of alcohol-content statements would prevent them. Those
determinations by Congress are entitled to "substantial
deference." Turner Broadcasting System, Inc. V. FCC,
No. 93-44 (June 27, 1994), slip op. 42.21

___________________(footnotes)

tising restrictions prevent "price wars," so too do alcohol-content
advertising restrictions prevent "strength wars."  Cf. Capital
Broadcasting Co. V. Mitchell, 333 F. Supp. 582 (D.D.C. 1971)
(upholding against First Amendment challenge ban on broadcast
of cigarette advertising), aff'd mem., 405 U.S. 1000 (1972) ;
Dunagin v. City of Oxford, supra (upholding against First Amend-
ment challenge prohibition of most forms of alcohol sign adver-
tising), cited with approval in Posadas, 478 U.S. at 347 n.10;
Oklahoma Telecasters Ass'n V. Crisp, supra (rejecting First
Amendment challenge to prohibition of all alcohol advertising
except for one storefront sign) ; Princess Sea Indus., Inc. V. State,
635 P.2d 281 (Nev. 1981) (upholding against First Amendment
challenge restrictions on brothel advertising), cert. denied, 456
U.S. 926 (1982) .

21 The court of appeals appeared to believe that its disregard of
the historical evidence was justified by Eden field, which it read as
adopting a "much stricter" standard for applying the third part
of the Central Hudson test than this Court had applied in earlier

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29

The Tenth Circuit ignored the historical evidence
underlying the labeling restriction because of what it per-
ceived to be "changes in the malt beverage industry and
market since 1935." Pet. App. 6a; see also id. at 48a-
50a (first district court opinion). In particular, the court
believed that the evidence showed that "the vast majority
of consumers in the United States value taste and lower
calories-both of which are adversely affected by in-
creased alcohol strength." Id. at 8a. Based on that evi-
dence, the Tenth Circuit found it unlikely that permitting
statements of alcohol content on labels would lead to
strength wars. Id. at 9a.
The Tenth Circuit erred in relying on evidence that
most beer consumers currently value taste and lower
calories, qualities that, Coors asserted, would be adversely
affected by increased alcohol strength. The history of the
FAAA shows that at the time the labeling restriction was
enacted, many consumers preferred high alcohol beer.
Even if we assume that the majority preference has
changed since that time, it can change again in the fu-
ture.22 The validity of an Act of Congress should not
depend upon such cyclical shifts in consumption patterns.
Cf. Bolger v. Youngs Drug Products Corp., 463 U.S. 60,
71 ( 1983) (insufficiency of original motivation for re-
striction on commercial speech does not invalidate restric-
tion if it continues to advance other legitimate purposes);
Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447, 460

___________________(footnotes)

decisions. Pet. App. 5a. Edenfield, however, did not purport to
heighten the showing required under the third part of the Central
Hudson test, and the subsequent decision in Edge Broadcasting
confirms that the third part of the Central Hudson test remains
the same. 113 S. Ct. at 2704.
22 See J.A. 256 (testimony of Coors official, stating: " our rea-
son for being in business * * * is to meet consumer demand for a
particular product. And right now, the consumer demand is for
lighter and lower alcohol beer.") (emphasis added).

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30

(1978) (same)23.  Moreover, the Tenth Circuit's reliance
on the current preference of consumers for taste and
lower calories ignores the role that the advertising and
labeling restrictions have played in promoting those pref-
erences, as distinguished from a preference based on al-
cohol content. There accordingly is every reason to ex-
pect that consumer preferences might change if respond-
ent and other brewers were free to market malt beverages
on the basis of their alcohol content. See Center for
Science in the Public Interest Amicus Br. 15-17 (dis-
cussing current popularity of "ice" beer because of labels
displaying its enhanced alcohol content).
In any event, the government showed that the current
demand for high alcohol beer is large enough to pose a
threat of strength wars. It showed that people who drink
malt liquor choose it because of its high alcohol content,
and that malt liquor is marketed on the basis of its high
alcohol content. See p. 14, supra. Although the evidence
indicated that malt liquor presently accounts for only 3%
of the malt-beverage market, the evidence of the strong
competition in that segment of the market also estab-
lished that brewers consider it sufficiently large to war-
rant efforts to dominate it. See, e.g., J.A. 213, 244, 347;
Deposition of Lutz E. Issleib 54-55, 58, 64-65; see also
J.A. 157-158 (describing market in U.K. for high alcohol
content beer). The evidence also showed that brewers
would increase the alcohol content of their malt liquors if
their competitors did so. See, e.g., Deposition of Lutz E.
Issleib 66 (statement of chairman and chief executive of
Pabst Brewing Company that "I play follow the leader,"

___________________(footnotes)

23 Congress is in a better position than the Courts to determine
whether changed conditions warrant amendment or repeal of legis.
lation. Turner, supra, slip op. 42. Significantly, Congress has
on several occasions declined to enact bills to repeal the labeling
restriction in Section 205 (e) (2). See S. 2595, 99th Cong., 2d Sess.
(1986) ; H.R. 1420, 103d Cong., 1st Sess. (1993).

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31

and that his company would keep up with the competi-
tion in the area of alcohol content).24
c. Finally, the Tenth Circuit improperly analyzed the
evidence concerning recent violations of the labeling and
advertising restrictions. That evidence showed, among
other things, that malt-liquor manufacturers have violated
the labeling and advertising restrictions of the FAAA by
using "descriptive terms such as `power,' `strong char-
acter,' [and] `dynamite[]' * * * to tout * * * alcohol
strength." Pet. App. 7a. The Tenth Circuit thought it
significant that the evidence primarily concerned the malt-
liquor segment of the malt-beverage industry, and that
violations in that segment of the market have primarily
involved "descriptive," as distinguished from numerical,
statements of alcohol content. Id. at 7a-8a & n.5. The
court thus suggested that the government's interest in pre-
venting strength wars could be adequately served by a
labeling restriction that applies only to malt liquor, and
not other types of malt beverages, and that prohibits only
descriptive, and not numerical, statements of alcohol
content.
i. The Tenth Circuit erred, in striking down the re-
striction under the third part of the Central Hudson test,
by relying on its view that the labeling restriction could
be more narrowly tailored. The question whether a stat-
ute is "more extensive than necessary" is relevant to the
fourth, not the third, part of the test. Fox, 492 U.S. at
475-481. The court of appeals' error is significant be-
cause under the fourth part of the Central/ Hudson test,
courts are required to accord substantial deference to
Congress's judgment regarding the "fit" between the legis-

___________________(footnotes)

24 The evidence of continuing marketplace pressure upon brewers
to compete on the basis of high alcohol content was not limited to
the malt-liquor segment of the industry. As discussed above, the
evidence showed that Coors distributed wallet cards disclosing the
alcohol content of its beer and that of its competitors. See p.
14, supra.

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32

lative means and the legislative ends. Id. at 479-481; see
Edge Broadcasting, 113 S. Ct. at 2707; San Francisco
Arts & Athletics, Inc. v. United States Olympic Comm.,
483 U.S. 522, 539 (1987); Posadas, 478 U.S. at 341-
342; Metromedia, Inc. v. City of San Diego, 453 U.S.
490, 509 ( 1981). The Tenth Circuit, however, accorded
no deference to Congress's judgment regarding the proper
scope of the labeling restriction.
ii. Furthermore, the Tenth Circuit failed to explain
why the government's evidence was not sufficient to sus-
tain the labeling restriction in Section 205(e)(2), while
the same evidence was held sufficient, in a ruling by the
district court that respondent did not challenge on appeal,
to sustain the advertising restriction in Section 205
(f) (2). There is nothing in law or logic to support the
conclusion that the same evidence that sustained the ad-
vertising restriction in Section 205(f) (2) does not also
sustain the labeling restriction in Section 205(e)(2).
See Kordel v. United States, 335 U.S. 345, 351 ( 1948)
("Every labeling is in a sense an advertisement."); see
also Halter v. Nebraska, 205 U.S. 34 (1907).
The district court attempted to justify upholding the
advertising restriction while striking down the labeling
restriction on the ground that the labeling restriction does
not add much to what is accomplished by the advertis-
ing restriction. Pet. App. 37a-38a. In Edge Broadcast-
ing, however, this Court condemned similar reasoning as
"represent[ing] too limited a view of what amounts to
direct advancement of the governmental interest," 113
S. Ct. at 2706, and failing to allow adequate "room for
legislative judgments," id. at 2707.25 The advertising and

___________________(footnotes)

25 The Court in Edge Broadcasting rejected a radio station's
contention that the federal statutes that prohibit lottery advertis-
ing do not directly advance the government's goal of decreasing
gambling in States that do not operate lotteries, because the stat-
utes only modestly decreased the amount of lottery advertising to
which people who listened to the radio station were exposed. Edge
Broadcasting, 113 S. Ct. at 2706-2707. Coors advanced a similar

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33

labeling restrictions at issue here operate in tandem and
are mutually reinforcing. The court of appeals therefore
erred in excising the labeling component of the inte
grated regulatory scheme.
iii. Finally, the Tenth Circuit misunderstood the sig-
nificance of the fact that most recent violations of the
advertising and labeling restrictions have involved de
scriptive, rather than numerical, statements of alcohol
content. See Pet. App. 7a-8a. That fact signifies only
that malt-beverage brewers cannot circumvent the restric-
tions on numerical statements as easily as they can the
restrictions on descriptive statements. By the same token,
it is easier to ascertain a violation of the numerical-
statement restriction than to ascertain a violation of the
descriptive-statement restriction, because the latter deter-
mination may require consideration of the connotations
of a descriptive term and the context in which the term
is used. See J.A. 102. Thus, the fact that the restriction
on numerical statements is easier to enforce (and, from
all that appears in the record, more consistently complied
with ) supports, rather than undermines, the validity of
the  restriction.26

___________________(footnotes)

contention here: namely, that Section 205 (e) (2) does not directly
advance the government's goal of preventing strength wars, be-
cause it only modestly decreases the extent to which beer can be
marketed based on its high alcohol content, in light of the other
labeling and advertising restrictions on statements of alcohol con-
tent that Coors does not challenge. Under Edge Broadcasting,
Coors' contention should be rejected.

26 The Tenth circuit also erred in stating that there is no evi-
dence from other countries to support the effectiveness of the
labeling restriction in preventing strength wars. Pet. App. 8a.
In fact, there is evidence in the record concerning Canada and
Britain, where disclosure of alcohol content is permitted, suggest-
ing that the labeling ban has the effect of preventing strength
wars. The record establishes that: (1) there has been a trend
toward consumption of higher alcohol content beverages in the
United Kingdom since the advent of alcohol-content labeling (J.A.
180-181, 189 ) ; (2) respondent's own beer has a higher alcohol level

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        34

C. The Labeling Restriction Is Narrowly Tailored To
Advance The Government's Substantial Interest

The fourth part of the Central Hudson test asks
whether the government's restriction is narrowly tailored
to advance the government's asserted interest. Fox, 492
U.S. at 480; Central Hudson, 447 U.S. at 565. It "re-
quires] a fit between the restriction and the government
interest that is not necessarily perfect, but reasonable."
Edge Broadcasting, 113 S. Ct. at 2705. There is a rea-
sonable fit between the labeling restriction in Section
205 (e) (2) and Congress's goal of combatting strength
wars in a manner consistent with state alcohol regulation.
The labeling restriction does not prohibit the advertising
of malt beverages; rather, it prohibits only the advertis-
ing of a single product characteristic. Moreover, the
labeling restriction does not altogether prohibit the dis-
closure of the alcohol content of malt beverages; it pro-
hibits only the use of that information in labeling and
other forms of advertising, and thus allows brewers or
the media to supply alcohol-content information outside
of the advertising context. J.A. 214-215, 260; cf. Ohralik,
436 U.S. at 458 (attorney disciplinary rule before the
Court "does not prohibit a lawyer from giving unsolicited
legal advice; it proscribes the acceptance of employment
resulting from such advice" ). Thus, the scope of the
labeling restriction "is `in proportion to the interest
served.' " Fox, 492 U.S. at 480, quoting In re R. M. J.,
455 U.S. at 203.
1. Although the Tenth Circuit did not consider the
labeling restriction in Section 205(e)(2) under the
fourth part of the Central Hudson test, it suggested that
a "reasonable fit" is lacking because the labeling restric-
tion applies to all types of malt beverages, whereas the
evidence of a continuing threat of strength wars primarily

___________________(footnotes)

in Canada, where the alcohol content of malt beverages is shown on
the label (J.A. 278-279) : and (3) the light beer market is smaller
in Canada than in the United States (J.A. 279-280).

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35

concerned one type of malt beverage: malt liquor. Pet.
App. 7a, 9a n.6. 27
Congress could reasonably have believed that a label-
ing restriction applicable to all types of malt beverages
would be more effective than one applicable only to malt
liquor. Congress's concern was not about a particular
type of beer; its concern was about a particular type of
beer-drinker: a person who, in the absence of a prohibi-
tion on the disclosure of alcohol content, would choose a
beer based on its high alcohol strength. A labeling restric-
tion applicable to all types of malt beverages more effec-
tively prevents those people from choosing a malt bever-
age based on high alcohol content than would a restriction
applicable only to malt liquor. First, a labeling restric-
tion applicable to all malt beverages would generally
prevent consumers from knowing with certainty even that
malt liquors, as a category, have higher alcohol content
than other types of malt beverages. J.A. 267 (testimony
of Coors official that "there are a percent of consumers
who do not currently know that certain categories of
beer have more or less alcohol"). In addition, such a
labeling restriction would prevent consumers from choos-
ing among brands of any type of malt beverage (not just
among brands of malt liquor) on the basis of their high
alcohol  content.28

___________________(footnotes)

 Although the Tenth Circuit found it unnecessary to decide
whether the labeling restriction satisfies the fourth part of the
Central Hudson test, the issue was fully briefed and argued in
both courts below and was raised in the government's certiorari
petition. Defendants' Tr. Br. (CR 46), at 69-76; II Trial Tr. 287-
293; Pet. 21-23. It is therefore properly before this Court. See,
e.g., United States V. Williams, 112 S. Ct. 1735, 1738-1739 (1992).

28 The same reasoning justifies Congress's enactment of an ad-
vertising restriction that, like the labeling restriction, applies to
all types of malt beverages. As discussed above, however, neither
court below explained why the labeling restriction should be
struck down, even though the advertising restriction was upheld.
See Pp. 32-33, supra.

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36

The differing effects of a labeling restriction applicable
to all types of malt beverages and one applicable only to
malt liquor can be illustrated by considering people who
have just reached legal drinking age. Those young people,
like many alcohol consumers at the end of Prohibition,
may wish to choose a beer based on its high alcohol con-
tent. The young drinkers may not know that malt liquor
is the type of beer with the highest alcohol content. They
would readily be able to figure that out, however, if the
disclosure of alcohol content were prohibited only with
respect to beers the alcohol content of which exceeded a
certain level.29
Furthermore, the government presented evidence at
trial showing that the problem of strength wars is not
limited to the malt-liquor segment of the market. For
example, the government showed that Coors produced
Coors Extra Gold, a higher alcohol beer, to increase its
share of the market, and that Coors' goal in bringing this
litigation is to correct the "consumer misperception" that
its beer has less alcohol than the competing brands. J.A.
251-253, 275-277, 342. That is precisely the type of
behavior-i.e., increasing the alcohol content of beer in
order to increase one's share of the market, or emphasiz-
ing that one's product has as much alcohol as the com-
petition-that Section 205 (e) (2) is designed to discour-
age. The court of appeals itself acknowledged the force
of this point on the prior appeal, observing that "Coors'
admission at oral argument that it desires to publish the
alcohol content of its products to dispel Coors' image of
being a `weak' beer testifies to the viability of the govern-
ment's interest." Pet. App. 20a. 30

___________________(footnotes)

29 For example, if the disclosure of alcohol content were pro-
hibited with respect to beer that contained more than 5% alcohol
by volume but were required for beer that contained 5% or less
alcohol, a consumer could safely conclude that beer that was not
labeled according to its alcohol content contained more than 5%
alcohol.

30 Cf. Posadas, 478 U.S. at 341-342 ("The Puerto Rico Legisla-
ture obviously believed * * * that advertising of casino gambling

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          37

2. The fit between the labeling restriction and the goal
of preventing strength wars cannot be challenged on the
ground that the restriction prevents people from choosing
beer on the basis of its low alcohol content. ATF has
construed Section 205 (e) (2) to permit brewers to label
and advertise their beers as "reduced alcohol" and "low
alcohol." 54 Fed. Reg. 3591, 3594 (1989) (adding 27
C.F.R. 7.26(b)-(d)). That construction of Section 205
(e) (2) permits consumers who wish to limit their alcohol
content to do so effectively, without providing particularly
useful information to consumers who wish to select a beer
based on its high alcohol content.
3. Nor can the labeling restriction be challenged on
the ground that strength wars could be combated just as
effectively by requiring labeling that discloses the risks
of alcohol abuse. As this Court explained in a similar
context, "it is up to the legislature to decide whether or
not such a `counterspeech' policy would be as effective"
as the labeling restriction. Posadas, 478 U.S. at 344.
Congress has in fact required health warnings on the
labels of most alcoholic-beverage containers. 27 U.S.C.
213 et seq. The fourth part of the Central Hudson test
does not force Congress to choose between the two
methods of regulation. See Dunagin, 718 F.2d at 751 &
n.9.

II. THE LABELING RESTRICTION IS ENTITLED TO
  AN ADDED PRESUMPTION OF VALIDITY

Any doubt as to whether the labeling restriction com-
ports with the First Amendment should be resolved in
favor of its validity. A presumption of validity, over and
above the presumption of constitutionality normally ac-

___________________(footnotes)

would serve  to increase the demand for the product adver-
tised * * * and the fact that appellant has chosen to litigate this
case all the way to this Court indicates that appellant shares the
legislature's view.") ; Central Hudson, 447 U.S. at 569 ("There is
an immediate connection between advertising and demand for elec-
tricity. Central Hudson would not contest the advertising ban
unless it believed that promotion would increase its sales.").

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38

corded an Act of Congress, is warranted here for two
reasons. First, this Court and other courts have recog-
nized that legislatures have broader latitude to regulate
speech that promotes socially harmful activities, such as
alcohol consumption, than they have to regulate other
types of speech. See, e.g., Posadas, supra. Moreover,
this Court has consistently held that state laws regulating
alcohol are entitled, by virtue of the Twenty-first Amend-
ment, to an "added presumption" of validity when chal-
lenged on free speech grounds. California v. LaRue, 409
U.S. 109, 118 ( 1972). The federal labeling restriction is
also entitled to that presumption, because it was enacted
to enforce the Twenty-first Amendment by facilitating the
enforcement of state laws regulating alcohol.

A. The Labeling Restriction Is Entitled To An Added
Presumption Of Validity Because It Regulates
Speech Promoting A Socially Harmful Activity

"Legislative regulation of products or activities deemed
harmful, such as cigarettes, alcoholic beverages, and
prostitution, has varied from outright prohibition on the
one hand, to legalization of the product or activity with
restrictions on stimulation of its demand on the other
hand." Posadas, 478 U.S. at 346 (citation omitted).
The Nation's experience with Prohibition, mandated by
the Eighteenth Amendment, demonstrated that an out-
right ban on alcohoI consumption led to harms, such as
the growth of organized crime and widespread disregard
of the law, that were equal to or greater than the harms
caused by the banned activity.31 That experience was
fresh in Congress's mind when it enacted the labeling re-
striction in Section 205(e) (2), See S. Rep. No. 1215,

___________________(footnotes)

31 See 76 Cong. Rec. 8 (remarks of Rep. Sabath), 16 (remarks
of Rep. McKeown j, 27 (1932) (remarks of Rep. Horr) ; 76
Cong. Rec. 4148 (remarks of Sen. Wagner), 4226 (1933) (remarks
of Sen. Tydings). See generally Spaeth, The Twenty-First Amend-
ment and State Control Over Intoxicating Liquor: Accommodating
the Federal Interest, 79 Calif. L. Rev. 161, 162, 176-180 (1991).

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39

supra, at 3; H.R. Rep. No. 1542, supra, at 2; see also,
e.g., 79 Cong. Rec. 12,936 (remarks of Sen. George),
12,943 ( 1935) (remarks of Sen. Copeland). Especially
in light of the Prohibition experience, the labeling restric-
tion represents a reasonable restriction on the promotion
of an activity that Congress has reasonably deemed
harmful.
This Court and other courts have repeatedly upheld
reasonable restrictions on the advertising of activities that
society deems harmful but has chosen for various reasons
to tolerate. See Edge Broadcasting, 113 S. Ct. at 2700
(lotteries); Posadas, 478 U.S. at 344-347 (casino gam-
bling); Queensgate Investment Co. V. Liquor Control
Comm'n, 433 N.E.2d 138 (Ohio) (per curiam) (liquor
price advertising), appeal dismissed for want of a sub-
stantial federal question, 459 U.S. 807 (1982 ); Capital
Broadcasting Co. v. Mitchell, 333 F. Supp. 582 (D.D.C.
1971 ) (broadcast cigarette advertising), aff'd mem., 405
U.S. 1000 (1972); Dunagin v. City of Oxford, 718 F.2d
738 (5th Cir. 1983) (en bane) (signs advertising liquor),
cert. denied, 467 U.S. 1259 (1984); Oklahoma Tele-
casters Ass'n v. Crisp, 699 F.2d 490 ( 10th Cir. 1983)
(prohibition of all alcohol advertising except for one
storefront sign), rev'd on other grounds sub nom. Capital
Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984); S & S
Liquor Mart Inc. v. Pastore, 497 A.2d 729 (R.I. 1985)
(alcohol price advertising); Rhode Island Liquor Stores
Ass'n v. Evening Call Pub. Co., 497 A.2d 331 (R.L
1985 ) (same); Princess Sea Indus., Inc. v. State, 635
P.2d 281 (Nev. 1981) (brothel advertising), cert. denied,
456 U.S. 926 (1982). These decisions indicate that
legislatures are entitled to especially broad latitude in
regulating speech that promotes activities that the legisla-
tures reasonably determine give rise to especially great
social harms.
Greater deference to legislative judgment with regard
to socially harmful activities is justified by the rationale
underlying this Court's commercial speech doctrine. As

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40

a general matter, commercial speech enjoys only "a
limited measure of protection, commensurate with its
subordinate position in the scale of First Amendment
values." Fox, 492 U.S. at 477 (quoting Ohralik, 436
U.S. at 456); see Edge Broadcasting, 113 S. Ct. at 2703;
Central Hudson, 447 U.S. at 563. That is because com-
mercial speech "is `linked inextricably' with the commer-
cial arrangement that it proposes," Edenfield, 113 S. Ct.
at 1798 (quoting Friedman v. Rogers, 440 U.S. 1, 10
n.9 ( 1979) ), and commercial activity is "an area tradi-
tionally subject to government regulation," Edge Broad-
casting, 113 S. Ct. at 2703 (quoting Ohralik, 436 U.S.
at 456). The government's greater interest in, and au-
thority over, regulation of commercial activity gives it
greater interest in, and authority over, regulation of "the
expression itself," Edenfield, 113 S. Ct. at 1798, than it
has with respect to other forms of expression.
Certain commercial activities, such as gambling and the
sale of alcoholic beverages, have traditionally been con-
sidered to pose particularly great risks of social harm.
See, e.g., Posadas, 478 U.S. at 341 (casino gambling);
Stone v. Mississippi, 101 U.S. 814, 818 (1880) (lot-
teries); Alcoholic Beverage Labeling Act of 1988, Pub.
L. No. 100-690, Tit. VIII, 8001 (a) (3), 102 Stat. 4518,
4519 (codified at 27 U.S.C. 213, 215) (congressional
findings regarding harms of alcohol consumption and
abuse). Such activities accordingly have long been sub-
ject to particularly close regulation by the States and the
federal government. See Edge Broadcasting, 113 S. Ct.
at 2700-2701 (history of lottery regulation); Craig v.
Boren, 429 U.S. 190, 205-206 & nn. 18-19 ( 1976) (his-
tory of alcohol regulation). Indeed, the States plainly
have authority under the Twenty-first Amendment to im-
pose an outright ban on alcohol sales and consumption
within their borders. See, e.g., California Retail Liquor
Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97,
110 (1980 ). Similarly, the federal government's author-
ity to regulate alcohol under the Commerce Clause is

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41

broad. See, e.g., 324 Liquor Corp. v. Duffy, 479 U.S.
335, 346-347 (1987 ); Bacchus Imports, Ltd. v. Dias,
468 U.S. 263, 274-276 (1984); Capital Cities Cable,
Inc. v. Crisp, 467 U.S. 691, 712-713 (1984); California
Retail Liquor Dealers Ass'n, 445 U.S. at 108-110;
Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S.
324, 331-332 (1964).
The particularly strong governmental interest in regulat-
ing activities such as alcohol consumption gives rise to a
concomitantly strong interest in regulating speech promot-
ing those activities. Cf. Edenfield, 113 S. Ct. at 1798;
Posadas, 478 U.S. at 345-347. By the same token, be-
cause such speech is "linked inextricably" (Edenfield, 113
S. Ct. at 1798) to a socially harmful activity, it warrants
even less protection under the First Amendment than
other forms of commercial speech. Thus, the balance of
interests tips more sharply in favor of upholding a regula-
tion of speech in this area than in other areas of com-
mercial activity. For that reason alone, any doubt as to
whether the labeling restriction in Section 205(e)(2)
satisfies the Central Hudson test for regulations of com-
mercial speech must be resolved in favor of upholding the
restriction.

B. The Labeling Restriction Is Entitled To An Added
Presumption Of Validity Because It Facilitates The
Enforcement Of State Laws Within The Ambit Of
The Twenty-first Amendment

The labeling restriction respondent challenges is, how-
ever, supported by more than general principles of First
Amendment law concerning prohibitions against the pro-
motion of socially harmful conduct. Here, there is af-
firmative support elsewhere in the Constitution itself-in
the subsequently ratified Twenty-first Amendment-for
the labeling restriction.  In light of the Twenty-first
Amendment, this Court held in California v. LaRue, 409
U.S. 109 ( 1972), that state laws regulating alcohol are
entitled to an "added presumption in favor of * * * valid-

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42

ity" when challenged under the Speech Clause of the First
Amendment. Id. at 118. The federal labeling restriction
is also entitled to such an added presumption; and, when
accorded that presumption, it plainly comports with the
First Amendment.
1. The Court in LaRue rejected a free speech chal-
lenge to state regulations that banned nude dancing and
similar conduct in bars and nightclubs. See 409 U.S. at
111-112. The Court "d[id] not disagree" with the lower
court's determination that the regulations, on their face,
proscribed speech entitled to First Amendment protection.
ld. at 116. But the Court "d[id] not believe," as the
lower court had, that the regulations should be reviewed
under the standard announced in United States v. O'Brien,
391 U.S. 367 ( 1968). LaRue, 409 U.S. at 116. In-
stead, the Court adopted a less stringent standard of
review.
The Court in LaRue adopted a less stringent standard
of First Amendment review because the regulations before
it were within the ambit of the Twenty-first Amendment.
The Court determined that "the broad sweep" of the latter
Amendment "requires" that state laws regulating alcohol
be accorded an "added presumption in favor of * * *
validity." 409 U.S. at 114, 118-119. The Court explained
that, while the States "require no specific grant of au-
thority in the Federal Constitution" to regulate alcohol
(since such regulation falls within their police power),
"the case for upholding state regulation in the area cov-
ered by the Twenty-first Amendment is undoubtedly
strengthened by that enactment." Id. at 114-115.
The LaRue Court upheld the challenged regulations
under the standard of review required in light of the
Twenty-first Amendment. The Court observed that the
regulations were based on the State's conclusion that "the
sale of liquor by the drink and lewd or naked dancing
and entertainment should not take place in bars and cock-
tail lounges." 409 U.S. at 115. In the Court's view, that
conclusion was "not * * * an irrational one." Id. at 116.

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43

The Court also rejected the argument that the regulations
were over-inclusive. It determined that "[n]othing in the
record * * * or in common experience compel[led] the
conclusion" that more narrowly tailored regulations would
have been equally effective. Ibid. The Court accordingly
held that the State's "choice" of legislative means "cannot
* * * be deemed an unreasonable one under the holdings
of our prior cases." Ibid., citing Williamson v. Lee
Optical Co., 348 U.S. 483,487-488 (1955).
LaRue makes it clear that this Court reviews free
speech challenges to state alcohol regulations under a less
stringent standard than applied under Central Hudson.
Dunagin, 718 F.2d at 745 ("The test applied in LaRue
* * * is less strict than that applied in Central Hudson
Gas.")32. The third part of the Central Hudson test re-
quires a State to show "that the harms it recites are real
and that its restriction will in fact alleviate them to a
material degree." Ibanez, 114 S. Ct. at 2089. By con-
trast, LaRue requires only that the State's judgment as to
the existence of a harm and the effectiveness of the chal-
lenged regulation in preventing that harm be "not * * *
irrational." 409 U.S. at 116. The fourth part of the
Central Hudson test requires a court to determine
whether the State has chosen "means narrowly tailored to
achieve the desired objective." Fox, 492 U.S. at 480, By
comparison, LaRue requires the court to uphold the legis-
lative means as not "unreasonable" unless the record or
common experience "compels" a contrary conclusion.

___________________(footnotes)

32 Although the Court has declined to extend LaRue beyond the
free speech context, see Larkin V. Grendel's Den, Inc., 459 U.S. 116,
122 n.5 (1982) (dictum) ; Craig V. Boren, 429 U.S. 190, 207-208
(1976), it has repeatedly applied LaRue in that context, including
in decisions subsequent to Central Hudson. See City of Newport
V. Iacobucci, 479 U.S. 92, 95 (1986) (per curiam); New York
State Liquor Authority V. Bellanca, 452 U.S. 714 (1981) (per
curiam) ; Doran V. Salem Inn, Inc., 422 U.S. 922, 932-933 (1975) ;
see also Dunagin, 718 F.2d at 745 (finding it " [n]otabl[e]" that
Bellanca was decided after Central Hudson Gas and Craig V.
Boren" ).

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           44

409 U.S. at 116 (citing Williamson v. Lee Optical Co.,
supra).
2. Section 205(e)(2) should be reviewed under the
LaRue standard, even though it is a federal, rather than
a state, provision. As explained above (pp. 3, 20-23,
supra), Congress enacted the FAAA, of which Section
205 (e) (2) is a part, expressly for the purpose of enforc-
ing the Twenty-first Amendment. 27 U.S.C. 203; see
also 79 Cong. Rec. 11,713-11,714 (1935) (remarks of
Rep. Cullen). Moreover, Congress designed Section
205 (e) (2) to operate in tandem with state laws regulat-
ing alcohol and facilitate their enforcement, Accordingly,
the principles of LaRue are fully applicable here. To con-
clude otherwise would mean that a state law could be
upheld while a federal law necessary to the effective en-
forcement of the state law could be invalidated.33
There is no basis in the text or history of the Twenty-
first Amendment for such a dual standard. On the
contrary, the significant authority over alcohol conferred
by "the broad sweep of the Twenty-first Amendment"
( LaRue, 409 U.S. at 114) is not limited to the States.
The Amendment also applies to "Territories]" and "pos-
sessions]" of the United States, which are governed by
federal law. See U.S. Const. Art. IV, 3. Moreover,
the Twenty-first Amendment was based on earlier pre-
Prohibition federal statutes that were designed to assist
state regulation of alcohol.34 Finally, in proposing the

___________________(footnotes)

33 Because the labeling restriction in Section 205(e) (2) may be
overridden by a State, this Court need not decide whether LaRue
would apply to a federal provision in a case involving "conflicting
state and federal efforts to regulate * * * liquor." Capital City,
467 U.S. at 713.

34 The Webb-Kenyon Act, ch. 90, 37 Stat. 699 (1913) (codified
at 27 U.S.C. 122), prohibited the shipment in interstate commerce
of liquor intended to be received, possessed, sold, or in any manner
used in violation of the law of the State into which it was shipped.
The Reed Amendment, ch. 162,  5, 39 Stat. 1069 (1917), made
violations of the Webb-Kenyon Act a federal crime. See also 18
U.S.C. 1262 (making it a federal crime to transport any intoxicat-

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45

Twenty-first Amendment to the States, Congress under-
stood that such federal legislation would be necessary to
make the authority conferred on the States by the Amend-
ment fully effective. See, e.g., 76 Cong. Rec. 26 (remarks
of Rep. Horr), 791 ( 1932) (remarks of Rep. Blanton);
76 Cong. Rec. 2776 (remarks of Rep. Lea), 4168 (re-
marks of Sen. Fess), 4172 (remarks of Sen. Borah), 4221
( 1933) (remarks of Sen. Barkley).35 The long history

___________________(footnotes)

ing liquor into a State that prohibits sale of beverages containing
more than 4%  alcohol by volume). See generally de Ganahl, The
Scope of Federal Power Over Alcoholic Beverages Since the
Twenty-first Amendment, 8 Gee. Wash. L. Rev. 819, 822-823 (1940) ;
Lydick, State Control of Liquor Advertising Under the United
States Constitution, 12 Baylor L. Rev. 43, 47-48 (1960) ; Spaeth,
supra, 79 Calif. L. Rev. at 181-182.

35 Courts and commentators writing shortly after the ratification
of the Twenty-first Amendment expressed the view that the Amend-
ment itself provides Congress with authority to enact legislation
that facilitates the enforcement of state laws regulating alcohol,
Arrow Distilleries, 109 F.2d at 401; Old Monastery, 147 F.2d at
906-907; Hayes v. United States, 112 F.2d at 422; Hanf V. United
States, 235 F.2d at 717-718; Harris V. State, 122 P.2d 401, 405
(Okla. Crim. App. 1942) ; see also de Ganahl, supra, 8 Gee. Wash.
L. Rev. at 830; Note, Federal Alcohol Administration Act, 24
Gee. L.J. 433, 435 (1936). The conclusion that the Twenty-first
Amendment is an independent source of congressional authority
is not undermined by Congress's removal from the proposed Amend-
ment of a provision (proposed Section 3) that would have given
Congress "concurrent power to regulate or prohibit the sale of
intoxicating liquors to be drunk on the premises where sold." 76
Cong. Rec. 4138 (1933) ; see also 324 Liquor Corp., 479 U.S. at
353-356 (O'Connor, J., dissenting). The omission of proposed
Section 3 appears to have been prompted by concern that it would
enable the federal government to regulate at the local level in :
manner that was inconsistent with state regulation of alcohol
76 Cong, Rec. 2776 (remarks of Rep. Lea), 4143 (remarks of Sen
Blaine), 4144 (remarks of Sen. Wagner), 4146 (remarks of Sen.
Borah), 4147 (remarks of Sen. Wagner), 4155 (remarks of Ser
Brookhart), 4156 (remarks of Sen. Hebert), 4173 (remarks o
Sen. Borah), 4173, 4177 (1933) (remarks of Sen. Black). Th
labeling and advertising restrictions in the FAAA do not implicat
that concern, because they govern only alcoholic beverages that

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46

of federal assistance to support the States' efforts to reg-
ulate alcohol requires that the federal labeling restriction
be reviewed under the same standard that applies to the
state laws that it was enacted to support.36
3. The federal labeling restriction is plainly constitu-
tional under the LaRue standard.
First, the labeling restriction is reasonably related to
preventing a harm that Congress rationally sought to
avoid. It is based on Congress's judgment that "[m]alt
beverages should not be sold on the basis of alcoholic con-
tent." H.R. Rep. No. 1542, supra, at 12. Here, as in
LaRue, that legislative judgment was justified by "evi-
dence from the [legislative] hearings" of particular abuses
and by "the principle that [a legislature] may reason from
the particular to the general." 409 U.S. at 115. Thus,
Congress's conclusion that competition among brewers on
the basis of high alcohol content should be prohibited was

___________________(footnotes)

move or are intended for movement in interstate, commerce, and
they apply in a manner that is consistent with state regulation. In
any event, this Court need not resolve the issue of whether the
Twenty-first Amendment is an independent source of congressional
authority in deciding whether to apply the principle of LaRue in
this case. In our view, LaRue governs here because the FAAA is
within Congress's authority under the Commerce Clause, see Wil-
liam Jameson & Co. V. Morgenthau, 307 U.S. 171, 173 (1939) (per
curiam) (challenge to FAAA raised "no substantial question of
constitutional validity") ; see also Appellant's Statement as to
Jurisdiction at 8-10, William Jameson & Co. V. Morgenthau, No.
717 (0.T. 1938) (arguing, inter alia, that FAAA exceeded con-
gressional authority under Commerce Clause) ; Brief for Appel-
lant at 22-23, William Jameson & Co. V, Morgenthau, No. 717
(0.T. 1938) (same), and because Section 205 (e) (2) is designed
to enhance the enforcement of state alcohol laws.

36 In States that have expressly adopted the federal labeling re-
striction as state law or otherwise adopted the same substantive
restriction, see pp. 10-11 & nn.8, 10, supra, the validity of the fed-
eral restriction appears to be compelled by the text of the Twenty-
first Amendment, which states in relevant part: "The transporta-
tion or importation into any State * * * for delivery or use therein
of intoxicating liquors, in violation of the laws thereof, is hereby
prohibited." U.S. Const. Amend. XXI, 2.

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          47

"not * * * an irrational one." Id. at 116. It accordingly
must be sustained under LaRue.
Moreover, the means chosen by Congress to prevent
such competition likewise must be sustained under LaRue.
LaRue gives a legislature "wide latitude as to choice of
means." 409 U.S. at 116. Congress acted within that
broad latitude in prohibiting statements of alcohol con-
tent on malt-beverage labels. Here, as in LaRue, "[n]oth-
ing in the record * * * or in common experience compels
the conclusion" that other means-such as a labeling re-
striction applicable only to malt liquor or a requirement
that alcoholic-beverage labels include warnings of the
health dangers of alcohol-would have been equally effec-
tive in achieving the legislative goal. Ibid. Thus, the fit
between the legislative means and the legislative ends
"cannot * * * be deemed an unreasonable one," ibid.,
and it therefore satisfies the LaRue standard. Section
205 (e) (2) thus comports with the First Amendment.

        CONCLUSION

The judgment of the court of appeals should be
reversed.

Respectfully submitted.

DREW S. DAYS, 111
Solicitor General

FRANK W. HUNGER
Assistant Attorney General

EDWIN S. KNEEDLER
Deputy Solicitor General

RICHARD H. SEAMON
Assistant to the Solicitor General

MICHAEL JAY SINGER
JOHN S. KOPPEL
Attorneys

AUGUST 1994

* U.S. GOVERNMENT  PRINTING  OFFICE; 1994    301157   86185

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No. 93-1631

In the Supreme Court of the United States

OCTOBER TERM, 1993

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
ET AL., PETITIONERS

v.

ADOLPH COORS COMPANY

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

DREW S. DAYS, III
Solicitor General

FRANK W. HUNGER
Assistant Attorney General

EDWIN S. KNEEDLER
Deputy Solicitor General

RICHARD H. SEAMON
Assistant to the Solicitor General

Department of Justice
Washington, D.C. 20530
(202)514-2217

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QUESTION PRESENTED

Section 5(e)(2) of the Federal Alcohol Administration
Act, 27 U.S.C. 205(e)(2), prohibits statements of alcohol
content on the labels of malt-beverage containers unless
such statements are required by state law. The question
presented is whether that prohibition violates the First
Amendment.

(1)

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11

PARTIES TO THE PROCEEDING

Petitioners, the defendants below, are the Secretary of
the Treasury and the Director of the Bureau of Alcohol,
Tobacco and Firearms within the Department of the
Treasury. Respondent, the plaintiff below, is the Adolph
Coors Company. Also participating in the proceedings
below were the Speaker and Bipartisan Leadership Group
of the United States House of Representatives, which
initially participated as defendants-intervenors but later
withdrew from the case.

TABLE OF CONTENTS

Opinions below  . . . . 1 
Jurisdiction  . . . . 1
Constitutional, statutory, and regulatory provisions
involved  . . . . 2
Statement  . . . . 2
Reasons for granting the petition  . . . .13 
Conclusion  . . . . 27
Appendix A  . . . . 1a
Appendix B  . . . . 10a
Appendix C  . . . . 32a
Appendix D  . . . . 43a
Appendix E  . . . . 55a
Appendix F  . . . . 57a
Appendix G  . . . . 66a
Appendix H  . . . . 73a
  
    TABLE OF AUTHORITIES

Cases:

Arrow Distilleries, Inc. v. Alexander, 109 F.2d
  397 (7th Cir.), cert. denied, 310 U.S. 646 (1940) . .15
Bacchus Imports, Ltd. v. Dias, 468 U.S. 263
  (1984)  . . . . 15
Board of Trustees v. Fox, 492 U.S. 469(1989)  . . . . 21
Burson v. Freeman, 112 S. Ct. 1846 (1992)  . . . . 19
California v. LaRue, 409 U.S. 109 (1972)'. . . . . . . . 19, 25
California Retail Liquor Dealers Ass'n v. Midcal
Aluminum, Inc., 445 U.S. 97(1980) . . . . 3, 15

(111)

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Iv

Cases - Continued:               Page

Capital Broadcasting Co. v. Mitchell, 333  f. Supp.
582 (D. D.C. 1971), aff'd mem., 405 U.S. 1000
(1972) . . . . 17
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691
(1984) . . . . 15
Central Hudson Gas & Elec. Corp. v. Public Serv.
Common, 447 U. S. 557(1980) . . . . 9, 16
City of Newport v. Iacobucci, 479 U.S. 92 (1986) . . 20
Continental Distilling Corp. v. Shultz, 472 F.2d
1367 (D. C. Cir. 1972)  . . . .  3
Craigv. Boren, 429 U.S. 190(1976)  . . . .  3
Doran v. Salem Inn, inc., 422 U.S. 922 (1975) . . . . 20
Dunagin v. City of Oxford, 718 F.2d 738 (5th Cir.
1983), cert. denied, 467 U.S. 1259(1984) . . . .17
Edenfield v. Fane, 113 S. Ct. 1792 (1993) . . . .12, 19
Edge Broadcasting Co. v. United States, 5 F. 3d
59 (4th Cir. 1992), rev'd, 113 S. Ct. 2696 (1993) . . 13, 14
Falls City Indus., Inc. v. Vanco Beverage, Inc.,
460 U. S. 428(1983) . . . . 17
44 Liquor Mart, Inc. v. Racine, 829 F. Supp. 543
(D. R. I. 1993) . . . . 17
Halter. Nebraska, 205 U.S. 34 (1907) . . . . 21
Healy v. The Beer Inst., 491 U.S. 324 (1989) . . . . 17
Hornell  Brewing Co. v. Brady, 819 F. Supp. 1227
(E. D. N. Y. 1993) . . . . 21
Hostetter v. Idlewild Bon Voyage Liquor Corp.,
377 U. S. 324(1964) . . . . 15
Kordel v. United States, 335 U.S. 345 (1948) . . . . 21
Metromedia, Inc. v. City of San Diego, 453 U.S.
490(1981 ) . . . .  22
New York State Liquor Authority v. Bellanca, 452
U. S. 714 (1981 ) . . . . 20
Oklahoma Telecasters Ass'n v. Crisp, 699 F.2d 490
(lOth Cir. 1983), rev'd sub nom. Capital Cities
Cable, Inc. v. Crisp, 467 U.S. 691 (1984) . . . .17
Posadas de Puerto Rico Assocs. v. Tourism Co.,
478 U. S. 328 (1986 )  . . . . 16.18.22

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v

Cases - Continued:               Page

Princess Sea Indus., Inc. v. State, 635 P.2d 281
  (Nev. 1981), cert. denied, 456 U.S. 926 (1982) . . 17
Queensgate Investment Co. v. Liquor Control
  Comm'n, 433 N.E.2d 138 (Ohio), appeal dis-
  missed, 459 U. S. 807 (1982) . . . .17
Rhode Island Liquor Stores Ass'n v. Evening Call
  Pub. Co., 497 A.2d 331 (R.I. 1985) . . . . 17
S & S Liquor Mart, Inc. v. Pastore, 497 A.2d 729
  (R. L 1985) . . . . 17
San Francisco Arts & Athletics, Inc. v. United
  States Olympic Comm., 483 U.S. 522 (1987) . . . . 22
South Dakota. Dole, 483 U.S. 203 (1987) . . . .17
324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987) . . . 15
United States v. Edge Broadcasting Co., 113 S. Ct.
  2696 (1993 )  . . . . 13.14.15. 16,19,21-22
William Jameson & Co. v. Morgenthau, 25 F.
  Supp. 771 (D.D.C. 1938), vacated, 307 U.S. 171
  (1939) . . . . 3

Constitution, statutes and regulations:

U.S. Const.:
Amend. I  . . . . 2, 9, 13, 17, 19, 20, 27
Amend. XXI . . . . 6, 15

Federal Alcohol Administration Act, 27 U.S.C. 201
et seq  . . . .  3
3,27 U. S. C. 203 . . . .3, 15
4,27 U. S. C. 204  . . . . 3
5,27 U. S. C. 205 . . . . 2, 3
5(e), 27 U. S. C. 205(e)  . . . . 3, 4, 6
5(e)(2), 27 U.S.C. 205(e)(2)  . . . . . passim
5(f), 27 U. S. C. 205(f) . . . . 3, 4, 5
5(f)(2), 27 U.S.C. 205(f)(2)  . . . . 9, ll, l6, 2O, 2l
7,27 U. S. C. 207 . . . . 2
17(a)(7), 27 U. S. C. 211(a)(7) . . . .3

National Industrial Recovery Act, 15 U.S.C. 701
et seq  . . . .  6
18 U. S. C. 1304 . . . . 13
18 U. S. C. 1307 . . . . 13

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VI

Statutes and regulations - Continued:        Page

Ala. Code28-3A-6(c) (1986) . . . . 24
Ky. Rev. Stat. Ann. $244.520 (Bobbs-Merrill
  1981) . . . . 24, 25
Me. Rev. Stat. Ann. tit. 28-A, 71 l(l)(A) (West
  1988)  . . . . 24
Mass. Ann. Laws ch. 138, 15 (Law. Co-op.
  1981) . . . . 26
Mo. Rev. Stat.  312.310 (SUPP. 1993) . . . .26
N.Y. Alto. Bev. Cent. Law App.  84.6(a)
  (McKinley 1987) . . . .  24
Ohio Rev. Code Ann.  4301.03(D) (SUPP. 1993) . . 24
Okla. Stat. Ann. tit. 37,  163.19(b) (West 1985) . . 26

Pa. Stat. Ann. tit. 47 (1969):
4-493 (7).... 24
4-493(8).... 21
C. Code Ann.61-13-800 (Law. Co-op. 1990) . . 24
S.D. Codified Laws Ann. 39-13-11 (1987) . . . . 24
Va. Code Ann.  4.1-103.8 (Michie 1993) . . . . 25

27 C. F. R.:
Section 7.10  . . . . 3 
Section 7.20(a)  . . . .5 
Section 7.26  . . . . 2
Section 7.26(a)  . . . . 5 
Section 7.26(b)-(d)  . . . . 5, 23 
Section 7.29  . . . . 2
Section 7.29(f)  . . . .5 
Section 7.29(g)  . . . . 5
Sections 7.40-7.42  . . . .6 
Section 7.50  . . . . 5
Section 7.54  . . . . 2
Section 7.54(c)  . . . .5 
Ale. Bev. Comm'n of Ind. Bull. 23 (Aug. 4, 1938) . .24
Ariz. Comp. Admin. R. & Regs. R4-1 5-220(6)
(1990)  . . . . 24

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          VII

Regulations - Continued:

Ark. Ale. Bev. Cont. Div. Regs. 2.17 (1991)  . . . .26 
Cal. Code Regs. tit. 4,  130(1990)  . . . . 26
Colo. Code Regs.  46-112.3.C (1993)  . . . .24 
Corm. Agencies Regs.  30-6-A35(m) ( 1976)  . . . .24 
Del. Ale. Bev. Cent. Comm. Regs. Rule 13(b)
  (1991)  . . . . 24
D.C. Mun. Regs. tit. 23, 910(1988)  . . . .24 
111. Admin. Code tit. 11,  100.70(b)(9) (1991)  . . . .24 
Kan. Admin. Regs. (1985):
   14-7-2(c)  . . . . 26
   92-8-9a  . . . . 26
Mich. Admin. Code r. 436.1611 (1989)  . . . .24 
Minn. R.7515.1110, subp. 2(1985 ) . . . .26 
Mont. Admin. R.  42.13-201(2) (1993)  . . . .26 
N.J. Admin. Code tit. 13, $2-27.1 (1990)  . . . . 24
Or. Admin. R. (1992):
   845-10-205(2)  . . . . 26
   845-10-205(4)  . . . . 26
R.1. Liq. Cont. Admin. Regs. No. 17 (1992)  . . . .24 
Tex. Admin. Code tit. 16, $ 45.79(1991)  . . . . 24
Utah Admin. R. 96-1-3(3) (1991)  . . . . 25
Va. Ale. Bev. Cont. Bd. Regs.  5(A)(3) (1991)  . . . .25 
W. Va. Non-Intox. Beer Comm'n Regs. 176-1-3.1
  (1990)  . . . . 25
Wis. Admin. Code 7.21 (Dep't of Revenue)
  (1991)  . . . . 25

Miscellaneous:

76 Cong. Rec. 4565 (1933 )  . . . .6
54 Fed. Reg. (1989):
   p. 3591  . . . . 23
   p. 3594  . . . . 23

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          VIII

Miscellaneous - Continued:

58 Fed. Reg. 21,228 (1993 )  . . . .11 
H.R. Rep. No. 1542, 74th Cong., 1st Sess. (1935) . . 6, 8
					          15, 18
Hearing Before the FA CA With Reference to
  Proposed Regulations Relative to the Labeling
  of Products of the Brewing Industry (Nov. 1,
1934) . . . . 7, 8, 16
Modern Brewery Age (Blue Book) (53rd ed.
1993)  . . . . 24, 25, 26
S. Rep. No. 1215, 74th Cong., 1st Sess. (1935) . . . . 6, 8, 15

---------------------------------------- Page Break ----------------------------------------

In the Supreme Court of the United States

        OCTOBER TERM, 1993

No.

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
     ET AL., PETITIONERS

v.

ADOLPH COORS COMPANY

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
   FOR THE TENTH CIRCUIT

The Solicitor General, on behalf of the Secretary of the
Treasury, et al., respectfully petitions for a writ of cer-
tiorari to review the judgment of the United States Court
of Appeals for the Tenth Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, la-9a)
is reported at 2 F. 3d 355. The prior opinion of the court of
appeals (App., infra, 10a-31a) is reported at 944 F.2d
1543.

JURISDICTION

The judgment of the court of appeals was entered on
August 23, 1993. A petition for rehearing was denied on
December 1, 1993. App., infra, 55a-56a. On February 22,

(1)

---------------------------------------- Page Break ----------------------------------------

2

1994, Justice Ginsburg extended the time for filing a peti-
tion for a writ of certiorari to and including March 31,
1994. On March 22, 1994, Justice Ginsburg further ex-
tended the time for filing a certiorari petition to and in-
cluding April 15, 1994. The jurisdiction of this Court is in-
voked under 28 U.S.C. 1254(1).

CONSTITUTIONAL, STATUTORY, AND REGULATORY
     PROVISIONS INVOLVED

The First Amendment to the United States Constitution
provides in pertinent part: "Congress shall make no law
* * * abridging the freedom of speech."
Section 5 of the Federal Alcohol Administration Act
(FAAA), 27 U.S.C. 205, is reproduced at App., infra,
57a-65a.
Section 7 of the FAAA, 27 U.S.C. 207, provides in per-
tinent part:

Any person violating any of the provisions of section
* * * 205 of this title shall be guilty of a misdemeanor
and upon conviction thereof be fined not more than
$1,000 for each offense.

The relevant portions of 27 C.F.R. 7.26, 7.29, and 7.54
are reproduced at App., infra, 66a-72a.

STATEMENT

This case concerns the constitutionality of Section
5(e)(2) of the Federal Alcohol Administration Act (FAAA
or Act), which prohibits the disclosure of statements of
alcohol content on the labels of malt beverages. 27 U.S.C.
205(e)(2). Congress enacted the labeling prohibition to
curb "strength wars" among brewers of malt beverages
that arose in the wake of the repeal of Prohibition. The
Tenth Circuit held that the labeling restriction in Section
205(e)(2) violates the First Amendment. We seek review of

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3

that holding, which not only strikes down an Act of Con-
gress the validity of which has been assumed for almost 60
years, but also casts serious doubt on the constitutionality
of similar labeling restrictions that have been adopted by
the majority of the States.
1. a. The FAAA, 27 U.S.C. 201 et seq., was enacted
"[i]n order effectively to regulate interstate and foreign
commerce in distilled spirits, wine, and malt beverages, to
enforce the twenty-first amendment, and to protect the
revenue and enforce the postal laws with respect to dis-
tilled spirits, wine, and malt beverages." 27 U.S.C. 203;
see also Continental Distilling Corp. v. Shultz, 472 F.2d
1367, 1369-1370 (D.C. Cir. 1972); William Jameson & CO.
v. Morgenthau, 25 F. Supp. 771, 774 (D.D.C. 1938)
(three-judge court), vacated for lack of substantial federal
question, 307 U.S. 171 (1939) (per curiam). To carry out
those purposes, Sections 3 and 4 of the Act require certain
participants in the alcoholic beverage industry (not in-
cluding brewers) to obtain a permit from the Secretary of
the Treasury. 27 U.S.C. 203,204. In addition, Section 5 of
the Act, 27 U.S.C. 205, proscribes certain types of
"[u]nfair competition" and "unlawful practices." 1
This case involves a challenge to the portions of Section
205(e) and Section 205(f) that prohibit statements of the
alcohol content of malt beverages. 2 Section 205(e) requires

___________________(footnotes)

1 Neither the FAAA nor any other federal statute regulates the
amount of alcohol that malt beverages may contain. That matter has
been left to the States, consistent with the long "history of state regula-
tion of alcoholic beverages" and Congress's solicitude for the States'
broad discretion in this area. See Craig v. Boren, 429 U.S. 190,
205-206 (1976); see also California Retail Liquor Dealers Ass'n v.
Midcal Aluminum, inc., 445 U.S. 97, 107 n. 10 (1980). In turn, many
States restrict the alcohol content of malt beverages. See Defendants'
Exhibit (DX) DA (at 272-273 (survey of state laws)).

2 The term "malt beverage" is defined by statute (27 U .S. C.
211 (a)(7)) and regulation (27 C.F. R. 7.10) as

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           4

the containers of alcoholic beverages to be labeled

in conformity with such regulations * * * [of the Sec-
retary] (2) as will provide the consumer with adequate
information as to the identity and quality of the prod-
ucts [and] the alcoholic content thereof (except that
statements of, or statements likely to be considered as
statements of, alcoholic content of malt beverages are
prohibited unless required by State law * * *).

Section 205(f) requires print and broadcast advertisements
for alcoholic beverages to be

in conformity with such regulations * * * [of the
Secretary] (2) as will provide the consumer with ade-
quate information as to the identity and quality of the
products advertised [and] the alcoholic content there-
of (except the [sic] statements of, or statements likely
to be considered as statements of, alcoholic content
of malt beverages and wines are prohibited).

Both Sections 205(e) and 205(f), however, are designed to
operate in a manner consistent with state laws governing

---------------------------------------- Page Break ----------------------------------------.

  [a] beverage made by the alcoholic fermentation of an infusion
or decoction, or combination of both, in potable brewing water,
or malted barley with hops, or their parts, or their products, and
with or without other malted cereals, and with or without the ad-
dition of unmalted or prepared cereals, other carbohydrates or
products prepared therefrom, and with or without the addition of
carbon dioxide, and with or without other wholesome products
suitable for human food consumption.

Thus, "malt beverage" encompasses all types of beer. For purposes of
this case, it is important to distinguish the terms "malt beverage" and
"malt liquor." While the term "malt beverage" includes "malt liquor,"
the latter term is not defined by the FAAA or regulations; rather, it is
used in the industry to refer to the type of beer with the highest alcohol
content. See App., infra, 7a n.4; C.A. App. 172.

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5

wholly intrastate commerce in malt beverages. 3

Implementing regulations prohibit the disclosure of
alcohol content on beer labels, except where disclosure is
required by state law (27 C.F. R. 7.26(a), 7.29(g)), and they
similarly prohibit the disclosure of alcohol content in print
and broadcast beer advertising (27 C.F.R. 7.54(c)). The
prohibitions cover both numerical designations of alcohol
content and descriptive terms suggestive of high alcohol
content, such as " `strong, ` `full strength,' `extra strength,'
`high test,' `high proof,' [and] `full alcohol strength.' " 27
C.F.R. 7.54(c); see also 27 C.F.R. 7.29(f), (g). The pro-
hibitions do not, however, preclude beer labels or other
advertisements that identify a beer as "low" or "reduced"
alcohol, "non-alcoholic," or "alcohol-f ree," in accordance
with the Secretary's definition of those terms. 27 C. F. R.
7.26(b)-(d); see also 27 C.F.R. 7.29(f), 7.54(c). See p. 23,
infra. The labeling prohibition is enforced by regulations
requiring the bottlers of malt beverages to obtain certifi-

___________________(footnotes)

3 The penultimate paragraph of Section 205(f) provides in pertinent
part:

In the case of malt beverages, the provisions of this subsection
and subsection (e) of this section shall apply to the labeling of
malt beverages sold or shipped or delivered for shipment or
otherwise introduced into or received in any State from any place
outside thereof, or the advertising of malt beverages intended to
be sold or shipped or delivered for shipment or otherwise in-
troduced into or received in any State from any place outside
thereof, only to the extent that the law of such State imposes
similar requirements with respect to the labeling or advertising, as
the case may be, of malt beverages not sold or shipped or de-
livered for shipment or otherwise introduced into or received in
such State from any place outside thereof.

See also 27 C.F.R. 7.20(a), 7.50.

---------------------------------------- Page Break ----------------------------------------

6

cates of label approval from the Secretary. 27 C.F. R.
7.40-7.42; see also 27 U.S.C. 205(e).
b. Congress included restrictions in the FAAA on the
disclosure of alcohol content in beer labeling and other
advertising in order to curb "strength wars" among
brewers that arose in the wake of the repeal of Prohibition
by the Twenty-first Amendment. The FAAA replaced in-
terim regulations under a voluntary code system that had
been developed under the National Industrial Recovery
Act and approved by the President for use after the repeal
of Prohibition, pending the enactment of federal legisla-
tion addressing problems in the alcoholic beverage in-
dustry that could not adequately be addressed by the
States.4 According to the committee reports on the bills
that became the FAAA, the statute "[i]n general * * * in-
corporates the greater part of the system * * * enforced by
the Government under the codes." H.R. Rep. No. 1542,
74th Cong., 1st Sess. 4 (1935); S. Rep. No. 1215, 74th
Cong., 1st Sess. 3 (1935). The Tenth Circuit accordingly
recognized in its first decision in this case that the history
of the regulations adopted under the code system is rele-
vant to interpretation of the Act. App., infra, 17a n.4.
The regulations initially proposed by the Federal
Alcohol Control Administration (FACA) did not prohibit
statements of alcohol content in beer labeling or advertis-

___________________(footnotes)

4 As discussed in the legislative history of the FAAA, the adoption of
the Twenty-first Amendment "took place with unexpected speed." H. R.
Rep, No. 1542, 74th Cong., 1st Sess. 3 (1935). The Amendment was
proposed to the legislatures of the States by the Seventy-second Con-
gress on February 20, 1933, and was ratified by the requisite number of
States less than ten months later, on December 5, 1933. See ibid.; 76
Cong. Rec. 4565 (1933). Because Congress was not in session at that
time, the President approved temporary regulation of the alcoholic
beverage industry under the voluntary code system in order to fill the
perceived regulatory vacuum. H .R. Rep. No. 1542, supra, at 3-4.

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7

ing. Hearing Before the FACA With Reference to Pro-
posed Regulations Relative to the Labeling of Products of
the Brewing Industry (Nov. 1, 1934) (FACA Hearing),
Clerk's Record (CR) 15, at 3-4. Instead, the proposed
regulations prohibited only descriptive statements such as
" `full strength', `extra strength', `high test', `high proof',
[and] `prewar proof' ." Id. at 3. At the hearing on the pro-
posed regulations, however, witnesses unanimously sup-
ported a broader prohibition that would bar even seemingly
objective numerical designations of alcohol content. For
example, the first witness at the hearing, George McCabe,
counsel to the Brewers Code Authority, stated (id. at 7):

We would like a regulation of the F.A.C.A. which
would outlaw any declaration of alcoholic content on
labels for fermented malt liquors except in States
where such a requirement is made by the State law.
* * * [T]he alcoholic declaration has been productive
of more deception than any one part of the label.
Some brewers went haywire * * * and were trying to
sell their beer on an alcohol basis, and they resorted,
as you all know, to the use of all sorts of numbers and
figures, numerals, to convey the impression that the
beer contained an excessive amount of alcohol, which
it did not contain.

Mr. McCabe then read a letter from a major brewer,
which he described as "fairly expressive of the general sen-
timent of the industry," recommending that "all reference
to alcoholic content * * * be eliminated from labeling
[and] advertising," in light of the "trouble with this sort of
thing during the past 18 months." Id. at 8. Other witnesses
explained that, although "the legitimate brewer does not
desire to sell his beer on the basis of alcohol," but rather
"as a food product" (id. at 25), some brewers "seem[ed] to
be of the opinion that to sell beer they should sell the

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8

public alcohol" (id. at 29). The latter brewers' practice of
disclosing alcohol content led "legitimate" brewers to con-
clude that "in order to meet competition it was necessary
to increase the alcoholic content of the[ir] beer." Id. at 59.
The witnesses predicted that a prohibition on statements
of alcohol content would "get * * * beer back to a low
alcoholic content ." Id. at 73; see also id. at 33 ("if you just
write the alcoholic content off the label, you are going to
have a lower alcoholic content beer than you are if you re-
quire the alcoholic content to be stated on the label").
The House committee report on the bill that became the
FAAA expressed the judgment that "[m]alt beverages
should not be sold on the basis of alcohol content ." H.R.
Rep. No. 1542, supra, at 12. The report explained that "at-
tempts to sell beer and other malt beverages on the basis of
alcoholic content are attempts to take advantage of the ig-
norance of the consumer and of the psychology created by
prohibition experiences." Ibid. The report found that
"[legitimate members of the industry have suffered seri-
ously from unfair competition resulting from labeling and
advertising" that states alcohol content. Ibid. The report
also found that "irrespective of th[e] falsity" of such state-
ments, "their abuse has grown to such an extent since
repeal that the prohibition of all such statements is in the
interest of the consumer and the promotion of fair com-
petition." Id. at 12-13. More broadly, the report found,
based on "[experience prior to prohibition," that the
States "could not alone" protect their citizens from
"unscrupulous advertising" and "deceptive labeling prac-
tices," due to "the diversity of their laws and the fact that
practically all alcoholic beverage producers and large-scale
distributors did an interstate business." Id. at 2-3.5

___________________(footnotes)

5 The Senate report similarly found that abusive "labeling or adver-
 ising" was one of the "serious social and political evils" that "were in
large measure responsible for bringing on prohibition" and "that can-
not be reached by the States." S. Rep. No. 1215, supra, at 6-7.

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9

2. a. In April 1987, respondent, the Adolph Coors
Company, applied to the Bureau of Alcohol, Tobacco and
Firearms (ATF) within the Treasury Department for ap-
proval of labels and advertisements that included state-
ments of the alcohol content of Coors' beer. C.A. App.
6-10. ATF denied the application based on Sections
205(e)(2) and 205(f)(2). App., infra, 73a-74a.
b. In July 1987, Coors filed this action against the
Secretary and the Director of ATF in the United States
District Court for the District of Colorado. Coors sought
a declaratory judgment that the prohibition of alcohol
content statements in Sections 205(e)(2) and 205(f)(2) and
their implementing regulations violates the First Amend-
ment; Coors also sought an injunction barring enforce-
ment of those provisions. C.A. App. 5. On cross-motions
for summary judgment, the district court held that the
provisions violate the First Amendment, and it enjoined
their enforcement. App., infra, 43a-54a.
c. The Tenth Circuit reversed. App., infra, 10a-31a. It
applied the four-part test articulated in Central Hudson
Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557
(1980), for analyzing restrictions on commercial speech.'
The Tenth Circuit first determined that Sections 205(e)(2)
and 205(f)(2) regulate lawful activity that is not mislead-
ing. App., infra, 15a. The Tenth Circuit next held that
those provisions are intended to further the federal

___________________(footnotes)

6 App., infra, 14a, quoting Central Hudson, 447 U.S. at 566:

At the outset, we must determine whether the expression is pro-
tected by the First Amendment. For commercial speech to come
within that provision, it at least must concern lawful activity and
not be misleading. Next, we ask whether the asserted govern-
mental interest is substantial. If both inquiries yield positive
answers, we must determine whether the regulation directly ad-
vances the governmental interest asserted, and whether it is not
more extensive than is necessary to serve that interest.

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10

government's "substantial" interest in "maintain[ing]
moderate levels of alcohol in beer in order to protect the
consumer. " Id. at 19a.7 But the court held that there were
disputed issues of fact with regard to the third and fourth
parts of the Central Hudson test. Id. at 21a-31a.8 It ac-
cordingly reversed the order granting summary judgment
in favor of Coors and remanded to the district court for
further proceedings. Id. at 3 la.
3. a. On remand, the government introduced exten-
sive evidence concerning current conditions in the malt
beverage industry. Much of that evidence related to the
malt liquor segment of the industry. See, e.g., C.A. App.
171-193. The government's evidence demonstrated that a
primary reason why people drink malt liquor instead of
other types of beer is to get drunk, C.A. App. 80, 88. 9 and
that malt liquor producers market their product by em-

___________________(footnotes)

7 The Tenth Circuit criticized the district court for "focus[ing]
primarily on the validity of the asserted ends given the passage of time
and changed circumstances." App., infra, 19a. The court of appeals
found it "irrelevant that the circumstances giving rise to a particular
piece of legislation have changed so long as the legislation continues to
serve some valid and substantial government interest ." Id. at 20a. The
court of appeals concluded that the government had advanced "a
legitimate and substantial interest" here by identifying "a continuing
danger of strength wars similar to those that existed in 1935." Ibid.

8 The court of appeals determined that "the record here does not
unambiguously reflect a correct legislative judgment that the enacted
means directly advance the intended ends. " App., infra, 21a. In the
court's view, "the link between advertising and strength wars is not
self-evident ," ibid., and there were "genuine issues of material fact
underlying the question of whether * * * the complete prohibition of
[statements of alcohol content] results in a `reasonable fit' between the
legislature's goal and the means chosen to reach it," id. at 3 la.
9 See also, e.g., DXS AW (at 10), BZ (at 2), CD (at 9), CE (at 5), CI
(at 19), CL (at II, 17); Deposition of Hubert Nelson (Nelson Dep.) 10.

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11

phasizing its potency, C.A. App. 201.10 The evidence in-
cluded numerous recent cases of marketing efforts that
violated the regulations prohibiting statements of alcohol
content. See, e.g., C.A. App. 171-193; DXS C, D, and O
through X. That evidence was not limited to the malt li-
quor segment of the market. C.A. App. 171, 174, 181,
187; DX AJ. It showed, for example, that Coors had dis-
tributed wallet cards listing the alcohol content of its own
beers and those of its competitors. C.A. App. 171,
197-198; DXS AZ, BA, BB.
The district court upheld the advertising restriction in
Section 205( f,)(2), but it struck down the labeling restric-
tion in Section 205(e)(2). App., infra, 32a-42a. The court
found that there was a continuing threat of strength wars
that justified a prohibition on statements of alcohol con-
tent in advertising, id. at 34a, but it regarded labeling as
different because it believed that statements of alcohol
content on labels would be used by consumers primarily to
limit their intake of alcohol, id. at 37a.
b. Coors did not challenge the district court's ruling
upholding Section 205( f)(2)'s prohibition of alcohol con-
tent statements in advertising. The government, by con-
trast, did appeal from the district court's ruling striking
down the labeling restriction in Section 205(e)(2). 11
c. A different panel of the Tenth Circuit affirmed.
App., infra, 1a-9a. The panel began by rejecting the
government's contention that it was required, under the

___________________(footnotes)

10 See also, e.g., DXS B, C, D, BT, CA, CD (at 4), CE (at 5), CL (at
17), CS (at 11); Nelson Dep. 15, 25, 33, 123.

11 ATF published an interim rule suspending enforcement of the
regulatory provisions that implement the statutory labeling restric-
tion. 58 Fed. Reg. 21,228 (1993). At the same time, ATF stated: "The
Government continues to believe the [labeling] prohibition to be Con-
stitutional. " Ibid.

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12

third part of the Central Hudson test, to show only that
Congress "reasonably believed" that the labeling restric-
tion would further the goal of preventing strength wars.
The court expressed the view that this Court, in Edenfield
v. Fane, 113 S. Ct. 1792 (1993), had adopted a "much
stricter" standard for applying the third part of the Central
Hudson test. App., infra, 5a.
The Tenth Circuit then held that, under the stricter test,
the government had failed to show that the labeling re-
striction furthers the goal of preventing strength wars "in a
direct and material way. " App., infra, 7a.12 The court
recognized that the legislative history supported
Congress's judgment that the labeling restriction would
"result[ ] over the long term in beers with a lower alcohol
content. " Id. at 6a, quoting id. at 17a (first court of ap-
peals decision). But focusing on perceived "changes in the
malt beverage industry," the court determined that the
government's evidence of a continuing threat of strength
wars was insufficient in three ways. Id. at 6a-9a. First, the
court discounted the evidence on the ground that it pri-
marily concerned the malt liquor segment of the market.
Id. at 7a. Second, the court believed that there was an
"absence of any record evidence indicating that there are
strength wars in states or other countries where alcohol
content labeling is already required. " Id. at 8a. Finally, the
court was unable to discern any evidence that "Coors
would engage in a strength war if it were able to disclose
the alcohol content of its malt beverages. " Id. at 8a-9a. 13

___________________(footnotes)

12 The court accordingly found it unnecessary to decide whether
Section 205(e)(2) satisfies the "reasonable fit" requirement of the
fourth part of the Central Hudson test. App., infra, 9a n.6.
13 The Tenth Circuit rejected the government's petition for rehear-
ing and suggestion of rehearing en bane. App., infra, 55a-56a.

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13

   REASONS FOR GRANTING THE PETITION

The Tenth Circuit has declared unconstitutional a long-
standing Act of Congress that prohibits the disclosure of
alcohol content on the labels of malt-beverage containers.
The Tenth Circuit's decision rests in part on an error
similar to the one that this Court granted certiorari to cor-
rect last term in United States v. Edge Broadcasting Co.,
113 S. Ct, 2696, 2703 (1993). The Tenth Circuit here, like
the Fourth Circuit in Edge Broadcasting, ignored that one
of the goals underlying the challenged federal statute is to
integrate its operation with a variety of state laws. The
Tenth Circuit also erred by adopting a "much stricter"
standard of review under the third part of the Central
Hudson test than this Court has applied, and by ignoring
historical and record evidence supporting the labeling
restriction in Section 205(e)(2). The Tenth Circuit's errors
warrant review by this Court, not only because the deci-
sion below invalidates an Act of Congress that directly ad-
vances the legitimate governmental interest in preventing
strength wars, but also because it casts serious doubt on
the validity of comparable labeling restrictions that have
been adopted in the majority of the States.
1. a. In Edge Broadcasting, this Court granted certio-
rari "[b]ecause the court below declared a federal statute
unconstitutional and applied reasoning that was question-
able under [the Court's] cases relating to the regulation of
commercial speech. " 113 S. Ct. at 2703. The same is true
here.
At issue in Edge Broadcasting were the federal statutes
(18 U.S.C. 1304 and 1307) that prohibit lottery advertising
in States that do not operate lotteries but permit lottery
advertising in States that do operate lotteries. 113 S. Ct. at
2700-2701. The Fourth Circuit held that the statutes vio-
lated the First Amendment because, as applied to Edge
Broadcasting, they "d[id] not directly advance the govern-
mental interest asserted. " Edge Broadcasting Co. v.

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          14

United States, 5 F.3d 59, 62 (1992) (per curiam), rev'd,
United States v. Edge Broadcasting Co., supra. The
Fourth Circuit based its holding on the fact that Edge
Broadcasting's listeners in North Carolina, a State that
does not operate a lottery, were "inundated" with lottery
advertisements from neighboring Virginia, which operates
a lottery. Ibid. The Fourth Circuit decided that, with
respect to that audience, the federal restriction provided
only "ineffective or remote" support for "North Carolina's
desire to discourage gambling." Ibid.
This Court reversed the Fourth Circuit's holding. Edge
Broadcasting, 113 S. Ct. at 2704. The Court emphasized
that the fact upon which the Fourth Circuit had relied did
not mean that the federal statutes provided only "remote"
support for the goal of protecting the interests of non-
lottery States like North Carolina; it meant, instead, that
the statutes supported the additional goal of protecting the
interests of States, like Virginia, that have state-sponsored
lotteries (ibid. ):

In response to the appearance of state-sponsored lot-
teries, Congress might have continued to ban all radio
or television lottery advertisements, even by stations
in States that have legalized lotteries. This it did not
do. * * * Instead of favoring either the lottery or the
nonlottery State, Congress opted to support the anti-
gambling policy of a State like North Carolina * * *.
At the same time it sought not to unduly interfere
with the policy of a lottery sponsoring State such as
Virginia. * * * This congressional policy of balancing
the interests of lottery and nonlottery States is the
substantial governmental interest that satisfies Cen-
tral Hudson, the interest which the courts below did
not fully appreciate.

Like the Fourth Circuit in Edge Broadcasting, the Tenth
Circuit in this case did not fully appreciate the federal in-
terests underlying Section 205(e)(2)'s prohibition of state-

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15

ments of alcohol content on malt-beverage containers.
The Tenth Circuit recognized that Congress's central goal
was to prevent "strength wars" among the brewers of malt
beverages. App., infra, 4a. The Tenth Circuit ignored,
however, the clear evidence of congressional intent to pur-
sue that goal in a manner that would respect and facilitate,
and not supplant, state regulation of alcohol pursuant to
the Twenty-first Amendment.14 Congress might have
chosen to prevent strength wars by enacting federal restric-
tions on the alcohol content of malt beverages, rather than
restrictions on statements of their alcohol content. "This it
did not do. " Edge Broadcasting, 113 S. Ct. at 2704.15 In-
stead, Congress adopted a measure that reflects not only
the goal of preventing strength wars but also the goal of
respecting state authority over alcoholic beverages.
The Tenth Circuit's first error was in failing to discern
any "link between advertising and strength wars. " App.,
infra, 21a. There is a clear link, however, between dis-

___________________(footnotes)

14 One of the stated purposes of the FAAA is "to enforce the
twenty-first amendment. " 27 U .S.C. 203; see also Arrow Distilleries,
Inc. v. Alexander, 109 F.2d 397,401 (7th Cir.), cert. denied, 310 U.S.
646 (1940). The legislative history confirms that Congress was careful
to adopt measures that were "appropriate and within the constitu-
tional power of Congress, " in light of the Twenty-first Amendment's
recognition of each State's authority over "[t]he transportation or im-
portation * * * of intoxicating liquors" across its border "for delivery
or use therein." S. Rep. No. 1215, 74th Cong., 1st Sess. 3 (1935);
H.R. Rep. No. 1542, 74th Cong., 1st Sess. 4 (1935); see also Arrow
Distilleries, 109 F.2d at 400-401.
15 Congress could reasonably have concluded that it had authority
to impose federal limits on alcohol content pursuant to its power to
regulate interstate commerce. See 324 Liquor Corp. v. Duffy, 479
U.S. 335, 346-347 (1987); Bacchus Imports, Ltd. v. Dias, 468 U.S.
263, 274-276 (1984); Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691,
714 (1984); California Retail Liquor Dealers Ass'n v. Midcal
Aluminum, Inc., 445 U.S. 97, 110 (1980); Hostetter v. Idlewild Bon
Voyage Liquor Corp., 377 U.S. 324, 331-332 (1964).

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16

couraging the purchase of beer on the basis of its high
alcohol content and prohibiting statements of alcohol con-
tent in beer labeling and advertising. This Court has recog-
nized as a matter of common sense that advertising stimu-
lates consumer demand for the product being advertised.
See Edge Broadcasting, 113 S. Ct. at 2707; Posadas de
Puerto Rico Assocs. v. Tourism Co., 478 U.S. 328, 342
(1986); Central Hudson, 447 U.S. at 569. It should be
equally self-evident that manufacturers are unlikely to
compete with each other on the basis of a product char-
acteristic that they cannot advertise. And if consumers
cannot readily obtain information about a product's char-
acteristic, they are unlikely to make purchases based on
that characteristic.
The Tenth Circuit also failed to consider the matrix of
state laws that Congress intended to respect in enacting the
FAAA. As an initial matter, Sections 205(e)(2) and
205(f)(2) operate in tandem with state labeling and adver-
tising laws applicable to wholly intrastate commerce in
malt beverages. See pp. 4-5 & note 3, supra, and pp. 23-27,
infra.
In addition, as witnesses at the FACA Hearing in 1934
explained, state alcohol regulations at that time (as now)
often included restrictions on the alcohol content of malt
beverages. FACA Hearing 10-11, 38-39, 60, 62, 75-76.
Those restrictions differed from State to State (and con-
tinue to do so, see DX DA (at 272-273)). If a State imposes
a restriction on alcohol content, the restriction reflects a
judgment by that State regarding the maximum alcohol
content appropriate for the health and welfare of its
citizens. The FAAA's restrictions on the disclosure of
alcohol content give effect to such a judgment by an in-
dividual State by making it less likely that a citizen of that
State will travel to another State to purchase beer with a

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17

higher alcohol content. 16. In this respect, the FAAA provi-
sions operate like the federal statute at issue in South
Dakota v. Dole, 483 U.S. 203, 205 (1987), which condi-
tioned federal highway funds on a State's enactment of

___________________(footnotes)

16 In a related context, this Court has recognized that People cross
state lines to purchase beer at lower prices. See Healy v. The Beer
Inst., 491 U.S. 324, 326 (1989); Falls City Indus., Inc. v. Vanco
Beverage, Inc., 460 U.S. 428, 437 & n.8 (1983). lt. is just such be-
havior, which reflects the close connection between consumer pur-
chasing decisions and product information, that has led the lower
federal courts and the state courts to uphold, against First Amend-
ment challenges, state restrictions on price advertising of alcoholic
beverages. See Queensgate Investment Co. v. Liquor Control
Comm'n, 433 N.E.2d 138 (Ohio) (per curiam), appeal dismissed for
want of a substantial federal question, 459 U.S. 807 (1982); S & S
Liquor Mart, Inc. v. Pastore, 497 A.2d 729 (R. 1. 1985); Rhode Island
Liquor Stores Ass'n v. Evening Call Pub. Co., 497 A.2d 331 (R. 1.
1985). "Common sense tells us that a lifting of the ban on price adver-
tising will lead to a more competitive market ." 44 Liquor Mart, Inc. V.
Racine, 829 F. Supp. 543, 554 (D.R.I. 1993); accord S & S Liquor
Mart, 497 A.2d at 735. Part of the reason such restrictions reduce the
consumption of alcohol, of course, is that they prevent alcohol ven-
dors from engaging in price competition. Just as alcohol price adver-
tising restrictions prevent "price wars," so too do alcohol content re-
strictions prevent "strength wars. " The Tenth Circuit's contrary con-
clusion therefore cannot be squared with the case law concerning re-
strictions on price advertising. Cf. Capital Broadcasting Co. v.
Mitchell, 333 F. Supp. 582 (D.D.C. 1971) (upholding against First
Amendment challenge ban on broadcast of cigarette advertising),
aff'd mem., 405 U.S. 1000 (1972); Dunagin v. City of Oxford, 718
F.2d 738 (5th Cir. 1983) (upholding against First Amendment
challenge prohibition of most forms of alcohol sign advertising), cert.
denied, 467 U.S. 1259 (1984); Oklahoma Telecasters Ass'n v. Crisp,
699 F.2d 490 (lOth Cir. 1983) (rejecting First Amendment challenge to
prohibition of all alcohol advertising except for one storefront sign),
rev'd on other grounds sub nom. Capital Cities Cable, Inc. v. Crisp,
467 U.S. 691 (1984); Princess Sea Indus., Inc. v. State, 635 P.2d 28 I
(Nev. 1981) (upholding against First Amendment challenge re-
strictions on brothel advertising), cert. denied, 456 U.S. 926 (1982).
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           18

laws prohibiting people under 21 years of age from
possessing alcoholic beverages. This Court upheld that ex-
ercise of Congress's spending power, holding that the con-
dition was "directly related to one of the main purposes
for which highway funds are expended - safe interstate
travel. " Id. at 208.
In sum, the Tenth Circuit failed to identify the full
governmental interests underlying the challenged federal
statute, as did the Fourth Circuit in Edge Broadcasting.
The federal restrictions on statements of alcohol content
directly advance Congress's goals of ensuring that "[m]alt
beverages should not be sold on the basis of alcohol con-
tent ," H.R. Rep. No. 1542, 74th Cong., 1st Sess. 12
(1935), and supplementing state restrictions on labeling,
advertising, and alcohol content.
b. Furthermore, the Tenth Circuit applied the wrong
standard in analyzing Section 205(e)(2) under the third
part of the Central Hudson test. The government ac-
knowledged below that, under that part of the test, it was
required to show that Section 205(e)(2) "directly advances"
the interest in preventing strength wars among malt
beverage producers. 92-1348 Gov't C.A. Br. 23. The
government emphasized, however, that such a showing is
not limited to evidence regarding current conditions in the
beer industry; the court also had to consider whether
"Congress `reasonably]' believed, `when it enacted the
[labeling] restrictions at issue here,' that the statutory pro-
hibition would further its objective." Ibid., quoting
Posadas, 478 U.S. at 341-342. The government ac-
cordingly argued that both the legislative history of the
labeling restriction and the evidence in the record regard-
ing current conditions support the conclusion that the
restriction directly advances the asserted governmental in-
terest.

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          19

The Tenth Circuit rejected that position. It read this
Court's decision in Edenfield v. Fane, 113 S. Ct. 1792
(1993), as adopting a "much stricter" standard for apply-
ing the third part oft he Central Hudson test. App., infra,
5a. Applying a heightened standard, the court accorded no
weight to the historical evidence, even though the court
recognized that it supports Congress's judgment that the
labeling restriction in Section 205(e)(2) would "result[ J
over the long term in beers with a lower alcohol content ."
Id. at 6a, quoting id. at 17a. Instead, based on perceived
"changes in the malt beverage industry" (id. at 6a), the
court required the government to demonstrate the "con-
tinuing validity" of that judgment (id. at 7a).
The Tenth Circuit misread Edenfield. Edenfield did not
purport to heighten the showing required under the third
part of the Central Hudson test, and the subsequent deci-
sion in Edge Broadcasting confirms that the third part of
the Central Hudson test remains the same. 113 S. Ct. at
2704. Nor does Edenfield sanction the Tenth Circuit's
disregard (App., infra, 6a-9a) of the historical evidence
supporting Section 205(e)(2) in its second decision. See
Burson v. Freeman, 112 S. Ct. 1846, 1856 (1992) (plurali-
ty); cf. id. at 19a (first court of appeals decision).
Indeed, the Tenth Circuit would have been justified in
analyzing Section 205(e)(2) under a less stringent standard
than this Court has required in Central Hudson and its
progeny. Unlike the provisions at issue in those decisions,
Section 205(e)(2) was intended to facilitate the enforce-
ment of state laws regulating alcoholic beverages. In Cali-
fornia v. LaRue, 409 U.S. 109 (1972), this Court held that,
in a First Amendment challenge, such state laws are en-
titled to an "added presumption in favor of * * * validity."
Id, at 118; see id. at 114 ("the broad sweep of the Twenty-
first Amendment has been recognized as conferring some-
thing more than the normal state authority over public

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20

health, welfare, and morals"); see also, e.g., City of
Newport v. Iacobucci, 479 U.S. 92,95 (1986) (per curiam);
New York State Liquor Authority v. Bellanca, 452 U.S.
714 (198 1) (per curiam); Doran v. Sa/em Inn, Inc., 422
U.S. 922, 932-933 (1975). The same should hold true in a
First Amendment challenge to federal laws, such as Sec-
tion 205(e)(2), that complement state alcohol laws. To
conclude otherwise would mean that a state law could be
upheld while a federal law necessary to effective enforce-
ment of the state law could be invalidated. Such a result
would be particularly anomalous where, as here, the
operation of the federal law and numerous state laws is
closely integrated. See pp. 24-27, infra.
c. The Tenth Circuit's primary criticism of the govern-
ment's showing under the third part of the Central Hudson
test was that it "relie[d] primarily" on evidence regarding
the malt liquor segment of the malt beverage industry.
App., infra, 7a. 17 The Tenth Circuit believed that evidence
of a risk of strength wars among malt liquor producers did
not justify a labeling restriction covering the entire in-
dustry. Ibid, The Tenth Circuit's analysis was flawed.
In the first place, the Tenth Circuit's analysis is at odds
with the district court's unchallenged holding that the
advertising restriction in Section 205(f)(2), which applies to
all malt beverages, satisfies the third part of the Central
Hudson test. App., infra, 34a. There is nothing in law or
logic to support the conclusion that the same evidence that
sustained the advertising restriction in Section 205(f)(2)
does not also sustain the labeling restriction in Section

___________________(footnotes)

17 The government also presented evidence Of unlawful statements
of alcohol content outside the malt liquor segment of the market, in-
cluding evidence concerning Coors' use of "wallet cards" comparing
the alcohol content of its beers to those of its competitors. See C.A.
App. 171, 174, 181-182, 186-187. The Tenth Circuit ignored that evi-
dence.

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21

205(e)(2). See Kordel v. United States, 335 U.S. 345, 351
(1948) ("Every labeling is in a sense an advertisement.");
Halter v. Nebraska, 205 U.S. 34 (1907); see also Hornell
Brewing Co. v. Brady, 819 F. Supp. 1227, 1237 (E. D.N. Y.
1993); Pa. Stat. Ann. tit. 47, 4-493(8) (1969) (making it
unlawful to publish or post "any advertisement of any
malt or brewed beverage including a label" referring to
alcoholic strength) (emphasis added).
The Tenth Circuit also erred by considering the labeling
restriction in Section 205(e)(2) in isolation, without regard
to the advertising restriction in Section 205(f)(2). The
Tenth Circuit found the evidence insufficient to show that,
in the absence of Section 205(e)(2), there would be
strength wars. Even assuming that Section 205(e)(2) were
insufficient by itself to prevent strength wars, however,
that would not condemn the provision. Congress did not
intend Section 205(e)(2) to bear that burden on its own.
Section 205(e)(2) was intended to act in concert with Sec-
tion 205( f)(2)'s restriction upon advertising.
d. In any event, the Tenth Circuit should have anal-
yzed the question of whether Section 205(e) (2)'s prohibi-
tion of malt beverage alcohol content statements was over-
ly broad (insofar as it applies to all types of beer and not
just malt liquor) under the fourth (not the third) part of
the Central Hudson test. The fourth part examines
whether the challenged provision is "more extensive than is
necessary" to achieve its asserted purpose. Board of
Trustees v. Fox, 492 U.S. 469,475-481 (1989). If the Tenth
Circuit had properly examined the matter under the fourth
part of the Central Hudson test, it would have been obli-
gated to accord substantial deference to Congress's judg-
ment on the "fit" between the legislative means and
the legislative ends. Id. at 479-481; see Edge Broad-

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          22

casting, 113 S. Ct. at 2707; San Francisco Arts &
Athletics, Inc. v. United States Olympic Comm., 483 U.S.
522, 539 (1987); Posadas, 478 U.S. at 341-342;
Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 509
(198 1). There plainly is a reasonable fit between the pro-
hibition of statements of alcohol content on beer labels
and Congress's goal of preventing strength wars.
The Tenth Circuit thought that Congress could prevent
strength wars equally effectively by prohibiting statements
of alcohol content only with respect to malt liquor, and
not with respect to other types of beer. See App., infra,
7a-8a. Congress, however, could reasonably have conclud-
ed otherwise. Congress's concern was not about a par-
ticular type of beer; its concern was about a particular type
of beer-drinker: people who, in the absence of a prohibi-
tion on the disclosure of alcohol content, would choose a
beer based on its alcohol strength. A universal labeling
ban - i. e.,  one applicable to all types of malt
beverages - would more effectively prevent those people
from choosing a malt beverage based on its high alcohol
content than would a ban applicable only to malt liquor.
First, a universal labeling ban would generally prevent
consumers from knowing with certainty even that malt li-
quors, as a category, have higher alcohol content than
other types of beer. 11 Tr. 194 (testimony of Coors official
that "there are a percent of consumers who do not current-
ly know that certain categories of beer have more or less
alcohol"). In addition, a universal labeling ban would
generally prevent consumers from choosing among brands
of any type of malt beverage on the basis of their high
alcohol content.
The differing operation of the universal labeling ban
and a ban applicable only to malt liquor can be illustrated

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23

by considering people who have just reached legal drink-
ing age. Those young people, like many alcohol consumers
at the end of Prohibition, may have a pent-up desire for
intoxicating beverages. The young drinkers may not know
that malt liquor is the type of beer with the highest alcohol
content. They would readily be able to figure that out,
however, if the disclosure of alcohol content was pro-
hibited only with respect to beers the alcohol content of
which exceeded a certain number. 18
The fit between the labeling restriction in Section
205(e)(2) and the goal of preventing strength wars cannot
be challenged on the ground that the restriction prevents
persons from choosing beer on the basis of its low alcohol
content. ATF has construed Section 205(e)(2) to permit
brewers to label and advertise their beers as "reduced
alcohol" and "low alcohol." 54 Fed. Reg. 3591, 3594
(1989) (adding 27 C.F.R. 7.26(b)-(d)). Thus, Section
205(e)(2) only prevents people from selecting any type of
beer because of its high alcohol content.19
2. Review of the Tenth Circuit's decision is warranted
because it invalidates an Act of Congress that has gov-
erned the labeling of malt beverages for almost sixty years.
Review is warranted for the additional reason that the
decision below casts serious doubt on the constitutionality

___________________(footnotes)

18 For example, if the disclosure of alcohol content was prohibited
with respect to beer that contained more than 5% alcohol, and was re-
quired for beer that contained 5% or less alcohol, a consumer could
safely conclude that beer that did not disclose its alcohol content con-
tained more than 5%  alcohol.
19 The court of appeals also erred in believing that there was no evi-
dence from other countries to support the effectiveness of the labeling
restriction in preventing strength wars. App., infra, 8a. In fact, there
was evidence in the record concerning Canada and Britain, where dis-
closure of alcohol content is permitted, suggesting that the labeling
ban has the effect of preventing strength wars. C.A. App. 156, 220.

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24

of numerous state laws that prohibit statements of alcohol
content on malt-beverage containers.
Twenty-one States and the District of Columbia pro-
hibit statements of alcohol content on the labels of some
or all types of beer. 20 Included in this category is Utah,

___________________(footnotes)

20 Ala. Code  28-3A-6(c) (1986) (requiring brewers to file federal
certificates of label approval with the State); Ariz. Comp. Admin. R.
& Regs. R4-1 5-220(6)(1990) (requiring compliance with federal label-
ing requirements); Corm. Agencies Regs.  30-6-A35(m) (1976) (ex-
pressly incorporating federal labeling requirements as state law); Del.
Ale. Bev. Cent. Comm. Regs. Rule 13(b) ( 1991) (requiring compliance
with federal labeling requirements); D.C. Mun. Regs. tit. 23, 910
(1988) (incorporating federal labeling provisions in part); Modern
Brewery Age (Blue Book) 267 (53rd ed. 1993) (digest of alcohol label-
ing requirements for D.C. ); Ill. Admin. Code tit. 11,  100.70(b)(9)
(1991) (no beer containers "shall have affixed thereto any label or
statement showing the alcoholic content thereof"); Ale. Bev. Comm'n
of Ind. Bull. 23 (Aug. 4, 1938) (malt beverage labels may not indicate
alcohol content by numerals or descriptive terms); Ky. Rev. Stat.
Ann. $244.520 (Bobbs-Merrill 1981) (malt beverage labels may not
"refer[ ] in any manner to the alcoholic strength"); Me. Rev. Stat.
Ann. tit. 28-A,  711(l)(A) (West 1988) (malt beverage labels may not
"refer[ ] in any manner to the alcohol content"); Mich. Admin. Code
r. 436.1611 (1989) (requiring compliance with federal labeling re-
quirements); N.J. Admin. Code tit. 13, $2-27.1 (1990) (requiring
compliance with federal labeling requirements); N.Y. Alto. Bev.
Cent. Law App.  84.6(a) (McKinney 1987) (prohibiting disclosure of
alcohol content on malt beverage labels); Ohio Rev. Code Ann.
 4301.03(D) (Supp. 1993); Pa. Stat. Ann. tit. 47,  4-493(7) (1969)
(malt beverage labels may not "in any manner refer[ ] to the alcoholic
contents"); R. 1. Liq. Cent. Admin. Regs. No. 17(1992) (federal label-
ing requirements "will be enforced" by State); S.C. Code Ann.
$61-13-800 (Law. Co-op. 1990) (requiring compliance with federal
labeling requirements); S.D. Codified Laws Ann. $39-13-11 (1987)
(compliance with federal labeling requirements deemed compliance
with state law); Modern Brewery Age, supra, at 271 (indicating that
South Dakota requires malt beverage labels to state "[n]ot over 3.2070
alcohol by weight, " apparently precluding other statements of alcohol
content); Tex. Admin. Code tit. 16,  45.79 (1991) ("[t]he alcoholic

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25

which is located in the Tenth Circuit. Several States in this
category, including Utah, expressly incorporate Section
205(e)(2) of the FAAA or its implementing regulations. 21
It is far from clear that any of the laws in this category
would be upheld under the Tenth Circuit's analysis, even if
they were accorded the "added presumption * * * of * * *
validity" articulated in California v. LaRue, 409 U.S. at
118.
In addition, 20 States have adopted Section 205(e) (2)'s
prohibition on alcohol content labeling by acquiescence -
i.e., by not requiring such statements on labels as a matter
of state law.22 Two of those States, Wyoming and New

___________________(footnotes)

content * * * shall not be stated" on malt beverage labels); Utah
Admin. R. %-1-3(3) (1991) (requiring compliance with federal label-
ing requirements); Va. Ale. Bev. Cent. Bd. Regs.  5(A)(3) (1991) (re-
quiring compliance with federal labeling requirements); cf. Va. Code
Ann. $ 4.1-103.8 (Michie 1993) (Board may by regulation establish
labeling requirements); W. Va. Non-Intox. Beer Comm'n Regs.
 176-1-3.1 (1990) ("[t]here shall not be any statement as to alcoholic
content on the bottle and can label" of malt beverages); Wis. Admin.
Code  7.21 (Dep't of Revenue) (1991) (requiring compliance with
federal labeling requirements).

21 See statutes and regulations cited in note 20, supra, for Alabama,
Arizona, Connecticut, Delaware, Michigan, New Jersey, South
Carolina, Utah, Virginia, and Wisconsin.

22  See Modern Brewery Age, supra, at 266-272, which indicates that
the federal prohibition of malt beverage alcohol content statements on
labels has been adopted, by virtue of the State's not requiring such
statements, in 19 States: Alaska, Florida, Georgia, Hawaii, Iowa,
Kentucky, Louisiana, Maryland, Massachusetts (with respect to malt
beverages containing more than 3.2% alcohol by weight), Mississippi,
Nebraska, Nevada, New Hampshire, New Mexico, North Carolina,
North Dakota, Tennessee, Vermont, and Wyoming. Our research in-
dicates that there are two additional States, Idaho and Washington,
that adopt the federal prohibition by acquiescence, but that Kentucky
has enacted its own statute prohibiting statements of alcohol content
on malt-beverage containers, rather that simply acquiescing in the
federal prohibition. See Ky. Rev. Stat. Ann. $244.520 (Bobbs-Merrill
1981).

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26

Mexico, are in the Tenth Circuit. The effect of the Tenth
Circuit's decision is to invalidate a prohibition that has
previously been in effect in those two States and to create
uncertainty regarding the regulatory framework in the
other 18 States as well. See note 20, supra.
Finally, 10 States require an alcohol content statement
on labels of malt-beverage containers, but in most cases
only with respect to beer above or below a certain alcohol
percentage. 23 Included in this category are the two remain-
ing Tenth Circuit States: Kansas and Oklahoma. The deci-
sion below casts doubt on the validity of those laws insofar
as they prohibit alcohol content statements on the labels of
some beer.
In sum, the vast majority of the States prohibit state-
ments of alcohol content on malt beverage labels at least

___________________(footnotes)

23 Ark. Ale. Bev. Cont. Div. Regs.  2.17 (1991) (requiring malt
beverages containing more than 5% alcohol by weight to be labeled as
such); Cal. Code Regs. tit. 4,  130 (1990) (prohibiting alcohol content
statements on labels of malt beverages containing more than 4%
alcohol by weight); Colo. Code Regs. 46- 112.3 .C (1993) (malt
beverage labels must indicate that alcohol content is not more than
3.2% by weight); Kan. Admin. Regs.  14-7-2(c), 92-8-9a (1985)
(malt beverage labels must state "does not contain more than 3.2%
alcohol by weight"); Mass. Ann. Laws ch. 138,  15 (Law. Co-op.
198 1) (malt beverages containing 3.2070 alcohol by weight or less "shall
be so labeled"); Minn. R. $7515.1110, subp. 2 (1985) (malt beverage
labels must state "contains not more than 3.2 percent of alcohol by
weight"); Mo. Rev. Stat. { 312.310 (Supp. 1993) (malt beverage labels
must state "alcoholic content not in excess of [3 .2 by weight or 4V'O
by volume]"); Mont. Admin. R. 42. 13-201(2) (1993) ("[alcohol con-
tent by weight must be noted on the labels of all malt beverages" con-
taining more than 7% alcohol by weight); Okla. Stat. Ann. tit. 37,
163. 19(b) (West 1985) (malt beverage labels may not indicate that
alcohol content exceeds 3.2% by weight); Or. Admin. R.
845-10-205(2), (4) (1992); Modern Brewery Age, supra, at 270-271
(Oregon requires disclosure of alcohol content on labels of malt
beverages containing more than 4% alcohol by weight).

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   27

under certain circumstances, either by positive law or by
acquiescing in Section 205(e) (2)'s prohibition. As a result,
the First Amendment issue raised by this case is of signifi-
cant and far-reaching importance for numerous States as
well as the United States. Review by this Court therefore is
warranted.

        CONCLUSION

The petition for a writ of certiorari should be granted.
Respectfully submitted.

         DREW S. DAYS,
        Solicitor General

           FRANK W. HUNGER
          Assistant Attorney General

           EDWIN S. KNEEDLER
          Deputy Solicitor General

           RICHARD H. SEAMON
          Assistant to the Solicitor General

APRIL 1994

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      APPENDIX A

UNITED STATES COURT OF APPEALS
    TENTH CIRCUIT

        No. 92-1348

  ADOLPH COORS COMPANY, PLAINTIFF-APPELLEE

          v.

LLOYD BENTSEN, * IN HIS OFFICIAL CAPACITY AS SECRETARY
OF THE UNITED STATES DEPARTMENT OF TREASURY; AND
STEVE HIGGINS. IN HIS OFFICIAL CAPACITY AS DIRECTOR
OF THE BUREAU OF ALCOHOL, TOBACCO AND FIREARMS,
  DEFENDANTS-APPELLANTS

        AND

SPEAKER AND BIPARTISAN LEADERSHIP OF THE U.S. HOUSE
REPRESENTATIVES. INTERVENOR-DEFENDANT

        Aug. 23, 1993

Before TACHA and BARRETT, Circuit Judges, and
BROWN, District Judge.**

___________________(footnotes)

* Lloyd Bentsen is substituted for Nicholas Brady pursuant to
Fed. R. App.P 43(c)(l).

** Honorable Wesley E. Brown, Senior District Judge, United
States District Court for the District of Kansas, sitting by designation.

          (la)

---------------------------------------- Page Break ----------------------------------------

         2a

TACHA, Circuit Judge.

Appellants (collectively referred to as the "Govern-
ment") appeal a district order declaring the portion of 27
U.S.C.  205(e)(2) which prohibits statements of alcohol
content on malt beverage labels to be an unconstitutional
restraint on commercial speech in violation of the First
Amendment. The Government also appeals the court's
order enjoining the Government from enforcing that pro-
vision. We exercise jurisdiction under 28 U.S.C. 1291
and affirm.

        I. Background

Congress enacted the Federal Alcohol Administration
Act ("Act"), 27 U.S.C. 201-211, in 1935 after the repeal
of Prohibition. The Act contains comprehensive regula-
tions of the alcoholic beverage industry, including provi-
sions that were intended to remedy industry practices
which Congress had determined were unfair, deceptive,
and harmful to both competitors and consumers. Two
such provisions prohibit statements of alcohol content on
malt beverage. 1 labels and advertisements unless such dis-
closures are required by state law. 27 U.S.C.  205(e)(2),
(0(2).2

___________________(footnotes)

1 "Malt beverage" is defined at 27 C.F.R. 7.10.

2 Section 205 provides in relevant part:

It shall be unlawful for any person engaged in business as a
distiller, brewer, rectifier, blender, or other producer, or as an
importer or wholesaler, of distilled spirits, wine, or malt
beverages . . . directly or indirectly or through an affiliate:

          *****

(e) Labeling
To sell or ship or deliver for sale or shipment, or otherwise in-
troduce in interstate or foreign commerce, or to receive therein,

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          3a

In 1987, Adolph Coors Co. ("Coors") sought the
Bureau of Alcohol, Tobacco and Firearm's approval for
proposed labels and advertisements that disclosed the
alcohol content of its malt beverages. The bureau denied
the request pursuant to  205(e)(2) and (f)(2). Coors then
brought this action to challenge the decision, arguing that
the provisions impose an unconstitutional restraint on
commercial speech in violation of the First Amendment.
The district court granted summary judgment for Coors
and the Government appealed. On appeal, we evaluated

___________________(footnotes)

or to remove from customs custody for consumption, any dis-
tilled spirits, wine, or malt beverages in bottles unless such pro-
ducts are bottled, packaged, and labeled in conformity with such
regulations, to be prescribed by the Secretary of the Treasury,
with respect to packing, marking, branding, and labeling and size
and fill of container . . . (2) as will provide the consumer with
adequate information as to the identity and quality of the prod-
ucts, the alcoholic content thereof (except that statements of, or
statements likely to be considered as statements of, alcoholic con-
tent of malt beverages are prohibited unless required by State law
 . . . . ).

        *****

(f) Advertising
  To publish or disseminate or cause to be published or dissemi-
nated by radio broadcast, or in any newspaper, periodical or
other publication or by any sign or outdoor advertisement or any
other printed or graphic matter, any advertisement of distilled
spirits, wine, or malt beverages, if such advertisement is in, or is
calculated to induce sales in, interstate or foreign commerce, or is
disseminated by mail, unless such advertisement is in conformity
with such regulations, to be prescribed by the Secretary of the
Treasury, . . . (2) as will provide the consumer with adequate in-
formation as to the identity and quality of the products adver-
tised, the alcoholic content thereof (except the statements of, or
statements likely to be considered as statements of, alcoholic con-
tent of malt beverages and wines are prohibited) . . . . 

27 U.S.C. 205 (emphasis added).

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          4a

the provisions under the four-part test for restrictions on
commercial speech set forth in Central Hudson Gas &
Electric Corp. v. Public Service Commission of New
York, 447 U.S. 557, 100 S. Ct. 2343, 65 L. Ed.2d 341
(1980):

At the outset, we must determine whether the expres-
sion is protected by the First Amendment. For com-
mercial speech to come within that provision, it at
least must concern lawful activity and not be mislead-
ing. Next, we ask whether the asserted governmental
interest is substantial. If both inquiries yield positive
answers, we must determine whether the regulation
directly advances the governmental interest asserted,
and whether it is not more extensive than is necessary
to serve that interest.

Id. at 566, 100 S. Ct. at 2351. Applying the first two parts
of the test, we concluded that the proposed labels and
advertisements were commercial speech protected by the
First Amendment and that the Government had asserted a
legitimate and substantial interest in preventing strength
wars among malt beverage brewers. See Adolph Coors
Co. v. Brady, 944 F.2d 1543, 1547-49 (lOth Cir. 1991)
("Coors l"). We reversed and remanded, however, holding
that there were genuine issues of material fact as to
whether the statutory prohibitions directly advance the
Government's interest in preventing strength wars and
whether there is a reasonable fit between the Government's
asserted interest and the complete prohibitions imposed by
the statute. See id. at 1554.
After conducting a trial on remand, the district court
held that the relevant portion of  205(f)(2) is constitu-
tional, but that the portion of  205(e)(2) which prohibits
statements of alcohol content on malt beverage labels im-
poses an unconstitutional restraint on commercial speech

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          5a

in violation of the First Amendment because it neither
directly advances nor reasonably fits the goal of pre-
venting strength wars. The Government now appeals the
district court's judgment with respect to  205(e)(2) and we
limit our review to that provision.

        11. Discussion

The Government has the burden of proving that the
labeling prohibition of  205(e)(2) directly advances its in-
terest in preventing strength wars. 3 We stated in Coors I
that the Central/ Hudson test requires "an immediate con-
nection between the prohibition and the government's
asserted end. If the means-end connection is tenuous or
highly speculative, the regulation cannot survive constitu-
tional scrutiny. " 944 F.2d at 1549 (internal quotations
omitted). The Government challenges this standard on ap-
peal and, relying on Posadas de Puerto Rico Association
v. Tourism Co., 478 U.S. 328, 106 S. Ct. 2968, 92 L. Ed.2d
266 (1986), argues that the Government need only demon-
strate that Congress reasonably believed that the statutory
prohibition would further its objective when it enacted the
labeling restriction. See id. at 341-42, 106 S. Ct. at 2976-77.
Since the Government filed its appellate brief, however,
the Supreme Court has decided Edenfield v. Fan, _
Us.    13 S. Ct. 1792, 123 L. Ed.2d 543 (1993), in
which articulates a standard that is consistent with our
pronouncements in Coors I and much stricter than the
"reasonably believed" standard the Government would
have us adopt. In Edenfield, the Court stated that, under
this third prong of the Central Hudson test, courts must

___________________(footnotes)

3 The parties do not dispute that the labeling of malt beverages'
alcohol content is protected commercial speech under the first part of
the Central Hudson test or that the Government has a substantial in-
terest in preventing strength wars under the second part.

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          6a

determine "whether the challenged regulation advances
[the government's] interests in a direct and material way."
Id., at _ 113 S. Ct. at 1798. It went on to say that the
party restricting commercial speech carries the burden of
justifying the restriction and that "[t]his burden is not
satisfied by mere speculation or conjecture; rather, a
governmental body seeking to sustain a restriction on
commercial speech must demonstrate that the harms it
recites are real and that its restriction will in fact alleviate
them to a material degree." Id., at , 113 S. Ct. at 1800.
This burden also applies to prophylactic regulations like
the challenged prohibition in  205(e)(2) where the
Government prohibits conduct at the outset rather than
waiting until harm has occurred. Id., at _, 113 S. Ct. at
1803 (prophylactic ban "in no way relieves the State of the
obligation to demonstrate that it is regulating speech in
order to address what is in fact a serious problem and that
the preventative measure it proposes will contribute in a
material way to solving that problem").
The Government asserts that the prohibition on speech
contained in 205(e)(2) was imposed to prevent strength
wars among malt beverage manufacturers. This assertion
is supported by the Act's legislative history which contains
testimony "that labels displaying alcohol content resulted
in a strength war wherein producers competed for market
share by putting increasing amounts of alcohol in their
beer." Coors I, 944 F.2d at 1548. There was also hearing
testimony "that not disclosing the alcohol content on malt
beverages would relieve marketplace pressures to produce
beer on the basis of alcohol content, resulting over the
long term in beers with a lower alcohol content." Id. The
Government argues that, despite changes in the malt
beverage industry and market since 1935, 205(e)(2)
directly advances its crusade against the continuing danger
of strength wars. After reviewing the record, we conclude

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7a

that, although the Government's interest in preventing
strength wars is legitimate and is within its regulatory
authority, the prohibition in  205(e)(2) does not advance
this interest in a direct and material way.
The Government relies primarily on anecdotal evidence
that malt beverage manufacturers already are competing
and advertising on the basis of alcohol strength in the malt
liquor sector of the market. 4 The record contains evidence
that consumers who prefer malt liquor do so primarily be-
cause of its higher alcohol content and that a number of
manufacturers have tried to advertise malt liquor - in
violation of the regulations - by using descriptive terms
such as "power, " "strong character," "dynamite," and
"bull" to tout its alcohol strength. On the basis of this
evidence, the Government makes an inferential and con-
clusory argument that the "experience of the malt liquor
industry establishes the continuing validity of the statutory
scheme" as applied to all malt beverages as well as "the
very real danger of strength wars if the labeling ban is
struck down ."
This argument is unavailing. Although the evidence may
support the Government's assertion that there is a continu-
ing threat of strength wars which it aims to prevent, Coors
does not contest either the existence of such a threat or the
Government's interest in preventing strength wars. The
critical question is whether the evidence shows the re-
quired relationship between the labeling prohibition that
Coors is challenging and the threat of strength wars.
Coors is challenging the prohibition on factual statements

___________________(footnotes)

4 "Malt liquor" is the term used to designate those malt beverages
with the highest alcohol content, whereas light beer and non-alcoholic
beer are malt beverages containing reduced alcohol content. Malt li-
quors represent approximately three percent of the malt beverage
market.

---------------------------------------- Page Break ----------------------------------------

8a

regarding the percentage of alcohol by volume rather than
the prohibition on the sort of descriptive terms that have
been used in the malt liquor sectors The Government
simply has not shown a relationship between the publica-
tion of such factual information and strength wars.
The Government's argument is further undermined by
the absence of any record evidence indicating that there
are strength wars in states or other countries where alcohol
content labeling is already required. See Edenfield, _
U.S. at _ 113 S. Ct. at 1800 (noting lack of anecdotal
evidence from states that do not impose similar restric-
tions). In fact, there is uncontroverted evidence that
brewers in the United States have no intention of increas-
ing alcohol strength, regardless of labeling regulations, be-
cause the vast majority of consumers in the United States
value taste and lower calories - both of which are ad-
versely affected by increased alcohol strength.
Finally, the Government asserts that Coors is challeng-
ing the labeling restrictions because of its desire to counter
a consumer perception that its malt beverages contain less
alcohol than competing brands, This assertion, however,
does not show directly, or even imply, that Coors would
engage in a strength war if it were able to disclose the

___________________(footnotes)

5 The Act's implementing regulations distinguish these two types of
statements. Coors is challenging the type of restriction contained in 27
C.F. R.  7.26(a) which provides that "[t]he alcoholic content and the
percentage and quantity of the original extract shall not be stated
unless required by State law." Coors is not challenging 7.29(f),
which provides that "[l]abels shall not contain the words `strong', `full
strength', `extra strength' . . . or similar words or statements, likely to
be considered as statements of alcoholic content ." Nor does it
challenge 7.29(g), which provides that "[l]abels shall not contain any
statements, designs, or devices whether in the form of numerals, let-
ters, characters, figures, or otherwise, which are likely to be con-
sidered as statements of alcoholic content."

---------------------------------------- Page Break ----------------------------------------

9a

alcohol content of its malt beverages on their labels. In
fact, the opposite inference is more plausible - if Coors
could overcome the misperception by simply publishing
the percentage of alcohol content on the label, it would
have no incentive to produce stronger beverages.
We find that the Government has offered no evidence to
indicate that the appearance of factual statements of
alcohol content on malt beverage labels would lead to
strength wars or that their continued prohibition helps to
prevent strength wars. Instead, it has offered only inferen-
tial arguments that are based on mere speculation and con-
jecture and fails to show that the prohibition advances the
Government's interest in a direct and material way.6  We
therefore hold that the portion of 27 U.S.C.  205(e)(2)
which prohibits statements of alcohol content on malt
beverage labels imposes an unconstitutional restraint on
commercial speech in violation of the First Amendment.
AFFIRMED.

___________________(footnotes)

6 Because we conclude that the Government has failed to satisfy its
burden under the third part of the Central Hudson test, we need not
proceed to the fourth part to determine whether there is a reasonable
fit between the prohibition and the Government's interest.

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10a

APPENDIX B

UNITED STATES COURT OF APPEALS
    TENTH CIRCUIT

NOS. 89-1203, 89-1239

ADOLPH COORS COMPANY, PLAINTIFF-APPELLEE

v.

NICHOLAS BRADY, IN HIS OFFICIAL CAPACITY AS SECRETARY
OF' THE UNITED STATES DEPARTMENT OF TREASURY;
STEVE HIGGINS, IN HIS OFFICIAL CAPACITY AS DIRECTOR
  BUREAU OF ALCOHOL, TOBACCO AND FIREARMS,
       DEFENDANTS-APPELLANTS

AND

SPEAKER AND BIPARTISAN LEADERSHIP GROUP OF THE
UNITED STATES HOUSE OF REPRESENTATIVES,
   lNTERVENOR-DEFENDANT-APPELLANT

CENTER FOR SCIENCE IN THE PUBLIC INTEREST;
G. HEILEMAN BREWING COMPANY, AMICUS CURIAE

Sept. 23, 1991

Before MCKAY, MCWILLIAMS and SEYMOUR, Circuit
Judges.

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11a

SEYMOUR, Circuit Judge.

Nicholas Brady, Secretary of the Treasury, et al. (the
Treasury), and interveners Speaker and Bipartisan Leader-
ship Group of the United States House of Representatives
(the House), appeal the district court's grant of summary
judgment in favor of Adolph Coors Co. (Coors). The
district court ruled that 27 U.S.C.  205(e) and 205(f)
(1988), which prohibit the disclosure of alcohol content in-
formation in advertising or labeling malt liquor, constitute
an illegal restraint on free speech in violation of the First
Amendment, and enjoined the government's enforcement
of the statute's restrictions. We reverse and remand.

           I.

In 1987, Coors submitted an application to the Bureau
of Alcohol, Tobacco and Firearms (BATF) requesting ap-
proval for labels and advertisements for its Coors and
Coors Light beer that would disclose the alcohol content
of these products. The BATF denied Coors' application
stating that sections 205(e)(2) and 205(f)(2) prohibit labels
or advertisements disclosing the alcohol content of malt
beverages unless such disclosure is required by state law. 1

___________________(footnotes)

1 27 U.S. C.  205(e)(2) and 205(f)(2) (1988) provide in relevant
part:

 205. Unfair competition and unlawful practices

  It shall be unlawful for any person engaged in business as a
distiller, brewer, rectifier, blender, or other producer, or as an
importer or wholesaler, of distilled spirits, wine, or malt
beverages, or as a bottler, or warehouseman and bottler, of dis-
tilled spirits, directly or indirectly or through an affiliate:
"  . . . . 
"(e) Labeling
 
 "To sell or ship or deliver for sale or shipment, or otherwise in-
troduce in interstate or foreign commerce, or to receive therein,

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                               I
On July 2, 1987, Coors filed a complaint against the
Secretary of the Treasury, and the Director of the BA
alleging that sections 205(e) and 205(f) violate Cod
rights under the Free Speech Clause of the First Amend-
ment because they prohibit Coors from disclosing truth
information as to the alcohol content of its malt bever-
ages. Coors asked the district court to set aside the BATF's
denial Of Coors labeling and advertisement application 1
and to declare the statutory sections invalid.    

___________________(footnotes)
   
or to remove from customs custody for consumption, any dis-
tilled spirits, wine, or malt beverage in bottles, unless such prod-
ucts are bottled, packaged, and labeled in conformity with such ,
regulations, be prescribed by the Secretary of the Treasury
with respect to packaging, marking, branding, and labeling and
size and fill of container . . . (2) as will provide the consumer with
adequate information as to the identity and quality of the prod-
ucts, the alcoholic content thereof (except that statements of, or
statements likely to be considered as statements of, alcoholic con-
tent of malt beverages are prohibited unless required by State law
and except that, in case of wines, statements of alcoholic content
shall be required only for wines containing more than 14 per cen-
turn of alcohol by volume) . . . . 
" . . . . 

(f) Advertising

To publish or disseminate or cause to be published or dissem-
nated by radio broadcast, or in any newspaper, periodical o
other publication or by any sign or outdoor advertisement or and
other printed or graphic matter, any advertisement of distilled
spirits, wine, or malt beverages, if such advertisement is in, or is
calculated to induce sales in, interstate or foreign commerce, or is
disseminated by mail, unless such advertisement is in conformity
with such regulations, to be prescribed by the Secretary of the 
Treasury . . . (2) as will provide the consumer with adequate in
formation as to the identity and quality of the products adver- 
 tised, the alcoholic content thereof (except the statements of, or 
statements likely to be considered as statements of, alcoholic con- ,
tent of malt beverages and wines are prohibited) . . . . "

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The Treasury admitted in its answer that sections
205(e)(2) and 205(f)(2) are unconstitutional under the First
Amendment. The Justice Department, acting on behalf of
the Treasury and BATF, also asserted that the Executive
Branch believed restricting the labeling and advertising of
the alcoholic content of malt beverages to be unconstitu-
tional. The House, however, moved to intervene in order
to defend the constitutionality of the statute.
The House and Coors filed cross-motions for summary
judgment. Following a hearing, the district court issued an
order holding that sections 205(e)(2) and 205(f)(2) con-
stitute an illegal restraint on speech under the First
Amendment, and enjoining the BATF from enforcing
those provisions. The Treasury, which now defends the
constitutionality of the statutory sections, and the House
seek a reversal of the district court's order. The relevant
facts and legal arguments presented to the district court
and the legal conclusions drawn therefrom are summar-
ized below.

II.

To review a summary judgment order, we apply the
same standard used by the trial court under Fed. R.Civ. P.
56. Osgood v. State Farm Mut. Auto Ins. Co., 848 F.2d
141, 143 (lOth Cir. 1988). Rule 56 directs that summary
judgment is appropriate where there is no genuine issue of
material fact and the moving party is entitled to a judg-
ment as a matter of law. This court determines whether,
under the correct interpretation of the substantive law,
there exist material factual disputes which preclude sum-
mary judgment. See id.; see also Anderson v. Liberty Lob-
by, Inc., 477 U.S. 242,247-48, 106 S. Ct. 2505,2509-10,91
L. Ed.2d 202 (1986). In determining whether a material
issue of fact exists, we review the record in the light most

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          14a

favorable to the party opposing summary judgment.
McKenzie v. Mercy Hosp., 854 F.2d 365, 367 (lOth Cir.
1988). The district court's conclusions of law are reviewed
de novo. Id.
Commercial speech is that which does " `no more than
propose a commercial transaction.' " Virginia Pharmacy
Bd. v. Virginia Citizens Consumer Council, Inc., 425 U.S.
748, 762, 96 S. Ct. 1817, 1825-26, 48 L. Ed.2d 346 (1976)
(quoting Pittsburgh Press Co. v. Human Relations
Comm'n, 413 U.S. 376, 385, 93 S. Ct. 2553, 2558-59, 37
L. Ed.2d 669 (1973)). Advertising has been recognized as
commercial speech. Zauderer v. Office of Disciplinary
Counsel, 471 U.S. 626, 637, 105 S. Ct. 2265, 2274, 85
L. Ed .2d 652 (1985). Product labels, which are part of a
firm's marketing plan to provide certain information to
the consumer, also constitute commercial speech. See id.;
Central Hudson Gas v. Public Serv. Comm'n, 447 U.S.
557, 563, 100 S. Ct. 2343, 2350, 65 L. Ed.2d 341 (1980)
(noting that "[t]he First Amendment's concern for com-
metrical speech is based on the information function of
advertising").
Regulations limiting commercial speech that are chal-
lenged on First Amendment grounds are subject to a four-
part analysis described by the Supreme Court as follows:

"At the outset, we must determine whether the express-
sion is protected by the First Amendment. For com-
metrical speech to come within that provision, it at
least must concern lawful activity and not be mislead-
ing. Next, we ask whether the asserted governmental
interest is substantial. If both inquiries yield positive
answers, we must determine whether the regulation
directly advances the governmental interest asserted,
and whether it is not more extensive than is necessary
to serve that interest. "

Central Hudson, 447 U.S. at 566, 100 S. Ct. at 2351.

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          15a

          A.

In order for commercial speech to come within the pro-
tection of the First Amendment under the first prong of
the Central Hudson test, it must concern a lawful activity
and not be misleading. Id. The labeling and advertising of
malt beverages relate to an activity lawful under federal
law. U.S. Const. amend. XXI,  1 (repeal of Prohibition);
see also Dungeon v. City of Oxford, 718 F.2d 738 (5th Cir.
1983) (although alcohol sales and consumption may be il-
legal in some state counties, such activity is nonetheless
considered lawful for First Amendment purposes). More-
over, as the district court correctly noted, consumers have
a substantial interest in knowing the alcohol content of
beer. For example, many state statutes prohibit certain
activities (such as driving) at or past a specific level of in-
toxication. Rec., vol. II, at 53. Consequently, restrictions
on alcohol content disclosure are within the ambit of First
Amendment protection. 2

          B.

Under the second prong of the Central Hudson test, we
must assess the strength of the government's interest in
regulating the disclosure of alcohol content. The legisla-
tive history introduced in evidence below reveals the Con-

___________________(footnotes)

2 The House argued below that alcohol content disclosure is in-
herently misleading. The district court rejected this contention. On ap-
peal, the Justice Department, on behalf of defendants, has taken the
position that "accurate and specific statements of alcohol content by
Coors of its malt beverages" would not be misleading. Opening Brief
of Defendants-Appellants at 15. The House has apparently aban-
doned its position that disclosure of malt beverage alcohol content
a/one is misleading and does not urge the position as a basis for rever-
sal. See Opening Brief of Intervenor-Defendant-Appellant at 26-27
n. 16.

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gressional interests underlying sections 205(e) and 205(f).
The Federal Alcohol Administration Act (FAAA), which
became law in 1935 shortly after the repeal of Prohibition,
was designed as a comprehensive statute to deal with prac-
tices 3. within the alcohol beverage industry that Congress
had judged to be unfair and deceptive, resulting in harm to
both competitors and consumers. When reporting favor-
ably to Congress on the FAAA, the House Ways and
Means Committee summarized its conclusions with
respect to alcohol content disclosure as follows:

"The variation of alcoholic content has little con-
sumer importance and the industry recognizes that at-
tempts to sell beer and other malt beverages on the
basis of alcoholic content are attempts to take ad-
vantage of the ignorance of the consumer and the
psychology created by prohibition experiences.
  "Legitimate members of the industry have suffered
seriously from unfair competition resulting from
labeling and advertising that uses such terms as
`strong', `extra strength', ` high test', `high proof', `pre-
war strength', ` 14 percent original extract', and from
brand names or other statements or references which
include conspicuous numerals or symbols intending
to suggest that the numerals or symbols represent the
alcoholic content. Usually such representations of ex-
cess alcoholic content are false, but irrespective of
their falsity, their abuse has grown to such an extent
since repeal that the prohibition of all such statements
is in the interest of the consumer and the promotion
of fair competition."

___________________(footnotes)

3 In addition to the prohibitions at issue in this case, Congress
enacted regulations restricting the use of exclusive outlets, 27 U.S. C.
Q 205(a), tied houses,  205(b), and commercial bribery,  205(c).

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17a

Federal Alcohol Administration Act: Hearings Before the
Ways and Means Committee, HR8539, 74th Cong., 1st
Sess. (1935). The legislation thus stemmed from the belief
that withholding alcohol content information would bene-
fit the consumer and promote fair competition within the
industry.
Testimony given during Federal Alcohol Control Ad-
ministration (FACA) hearings 4. confirms that one of the
concerns underlying the movement to prohibit the
disclosure of the alcohol content of malt beverages was
that such disclosures tended to be misleading and were
therefore subject to misuse. Testimony showed that ac-
curate readings of alcohol content were difficult to obtain
due to the "very peculiar" conditions of the brewing in-
dustry, namely that the malt crops and the atmospheric
pressures and temperatures of fermenting cellars varied.
Rec., vol. I, dot. 15, at 36-37. Given these problems, the
alcohol content of beer could not be accurately measured
and disclosed without allowing for a .4-.5 percent error of
margin. ld. at 38-39. Testimony also suggested that not
disclosing the alcohol content of malt beverages would
relieve marketplace pressures to produce beer on the basis
of alcohol content, resulting over the long term in beers
with a lower alcohol content. Id. at 33.

___________________(footnotes)

4 FACA hearings were held just prior to the drafting and adoption
of the FAAA on November 1, 1934. Federal Alcohol Regulations were
a precursor to the FAAA. The FAAA Senate Report states:

"The bill embodies in statutory form so much of the former code
system as the committee now deems appropriate and within the
constitutional power of Congress to enact. "

S. Rep. No. 1215, 7th Cong., 17 [sic] Sess. 2 (1935). Because the
drafters of the FAAA intended to adopt many FACA regulations,
these hearings are relevant to congressional intent with respect to the
FAAA. The hearings were introduced into evidence in the district
court by Coors. See rec., vol. I, dot. 17, at 9 n. 5 (Plaintiff's Response
to Motion for Summary Judgment), and rec., vol. I, dots. 15 and 16.

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The legislative history reveals congressional concern re-
garding the effect of "strength wars" on brewers and the
consuming public. In the FACA hearings, witnesses testi-
fied that statements of alcohol content on malt beverages
should be prohibited to avoid this evil. Ralph W. Jackman
of the Wisconsin State Brewers Association testified that
labels displaying alcohol content resulted in a strength war
wherein producers competed for market share by putting
increasing amounts of alcohol in their beer. See id. at
34-38. Jack man testified that "the legitimate brewer does
not desire to sell his beer on the basis of alcohol." Id. at
34. He said that brewers were unable to market beer on the
basis of taste and flavor, however, because the practice of
disclosing the alcohol content of malt beverages generally
exerted market pressure on brewers to increase the alcohol
content of their own products. See id. at 40. Alexander H.
Bell, another representative of the brewing industry,
echoed Mr. Jackman's testimony:

  "I have steadfastly urged that beer be sold as a
beverage, with limited alcohol content, not as an in-
toxicant. That was followed for some little time by
one of the local brewers here, till they found that in
order to meet the competition it was necessary to in-
crease the alcohol content of the beer to some extent. "

Id. at 68. Jackman further testified that competitors in the
marketplace would benefit because producing beer with a
greater amount of alcohol was more costly. See id. at 35.
Finally, industry witnesses testified that beer with a lower
alcohol content would appease the "drys, " who opposed
drinking, and thus nondisclosure of alcohol content would
benefit the industry as a whole.
The asserted government interest central to this case is
the prevention of strength wars among the brewers. Con-
gress believed that, in the long run, the market as regu-

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19a

lated by section 205(e) and (f) would produce a lower
alcohol beer for the benefit of the industry and the con-
suming public. The interests outlined above, as asserted,
are substantial. It is a reasonable, legitimate legislative in-
terest within Congress' commerce power to regulate the
marketing of beer in interstate commerce to ensure fair
competition, and to maintain moderate levels of alcohol in
beer in order to protect the consumer from the otherwise
unchecked "mistakes and excesses" of the brewing in-
dustry. See Opening Brief for the Defendants-Appellants
at 4.5
In assessing the strength of the government's interests in
withholding the alcohol content of the beers, the district
court focused primarily on the validity of the asserted ends
given the passage of time and changed circumstances. The
court concluded that the factual circumstances that had
given rise to the statute in 1935 no longer exist, and conse-
quently, the statute no longer serves a substantial interest.
The court first noted that because there are fewer brewers
producing a large percentage of the market share, "it's
very difficult for the court to see how there is any unfair
competition or antitrust aspect to this. " Rec., vol. II, at
52.

___________________(footnotes)

5 Contrary to Coors' contentions, the fact that Congress pursued
non-commercial as well as commercial aims in enacting  205(e) and
205(f) does not detract from either the legitimacy or substantiality of
Congress' aims. See infra at 27. The noncommercial protective aims of
this legislation are consistent with the Commerce Clause.

"One permissible and particularly potent form of federal com-
merce regulation is the imposition of protective conditions on the
privilege of engaging in activity that affects interstate
commerce. . . . [T]he Supreme Court has consistently upheld
congressional use of protective conditions to combat activities
largely disfavored for largely noncommercial reasons."

Laurence Tribe, Constitutions Law 5-6 at 311-12 (2d ed. 1988).

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          20a

It is irrelevant that the circumstances giving rise to a
particular piece of legislation `have changed so long as the
legislation continues to serve some valid and substantial
government interest. See Boiger v. Young Drug Prods.,
463 U.S. 60, 71, 103 S. Ct. 2875, 2883, 77 L. Ed.2d 469
(1983); Ohralik v. Ohio State Bar Ass'n, 436 U.S. 447,
460, 98 S. Ct. 1912, 1920-12, 56 L. Ed.2d 444 (1978). The
fact that the malt beverage industry and market have
changed does not compel the conclusion that strength wars
are no longer a real danger to the consuming public as well
as to the brewers. The government argues that, in spite of
changed circumstances, there is a continuing danger of
strength wars similar to those that existed in 1935, as evi-
denced by Coors' advertising campaign, current market
conditions, and consumer demand. See Opening Brief of
Defendants-Appellants at 17-18. Coors' admission at oral
argument that it desires to publish the alcohol content of
its products to dispel Coors' image of being a "weak" beer
testifies to the viability of the government's interest. See
Testimony of Oral Argument. Nov. 6, 1990 (on file with
Clerk of Court for Tenth Circuit). The House argues that
the statute has continuing validity given that the emerging
trend in the beer industry toward many small breweries
may precipitate the strength war problems associated with
the marketplace of 1935. Opening Brief of Intervenors-
Defendants at 24 n. 51. Similarly, the government still
asserts its interest in protecting the public against the "ex-
cesses" of the brewing industry. Opening Brief for Defend-
ants-Appellants at 4, 22. Given all of these circumstances,
it is apparent that the government has asserted a legitimate
and substantial interest supporting the continuing validity
of the legislation at issue.

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       C.

We next assess whether the regulation at issue "directly
advances" the government's asserted interest. See Central
Hudson, 447 U.S. at 566, 100 S. Ct. at 2351. Whether
legislation "direct}y advances" the government's end re-
quires us to focus on the relationship between the govern-
ment's interest and the prohibition on speech. Id. at 569,
100 S. Ct. at 2353. There must be an "immediate connec-
tion" between the prohibition and the government's
asserted end. Id. If the means-end connection is "tenuous"
or "highly speculative", the regulation cannot survive con-
stitutional scrutiny. Id.
We begin our analysis by noting that the record here
does not unambiguously reflect a correct legislative judg-
ment that the enacted means directly advance the intended
ends. Unlike a number of cases in the commercial speech
area, the link between advertising and strength wars is not
self-evident. See, e.g., Posadas de Puerto Rico Assocs. v.
Tourism Co., 478 U.S. 328, 341-42, 106 S. Ct. 2968,
2976-77, 92 L. Ed.2d 266 (1986) (link between ban on
gambling advertising and level of gambling self-evident);
Central Hudson, 447 U.S. at 566, 100 S. Ct. at 2353 (link
between advertising ban and sales self-evident); Dunagin
v. City of Oxjord, 718 F.2d 738, 747-49 & n. 8 (5th Cir.
1983) (link between advertising and increased alcohol use
deemed self-evident; separate analysis of means-end con-
nection therefore not conducted), cert. denied, 467 U.S.
1259, 104 S. Ct. 3553, 82 L. Ed.2d 855 (1984). In addition,
this is not a case where we can defer to the legislature on
the basis of precedent which already has established that
the legislature's chosen means directly advances the
asserted ends. See, e.g., Metromedia v. City of San Diego,
453 U.S. 490, 509 n. 14, 101 S. Ct. 2882, 2893 n. 14, 69
L. Ed.2d 800 (1981) (plurality relied on established line

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of cases to ratify legislature's judgment that banning com-
mercial billboards would improve traffic safety). On the
other hand, we cannot agree with the district court that, as
a matter of law, the government's asserted end is not
directly advanced by the promotion on advertising the
alcohol content of beer.
The party urging the prohibition on speech has the
burden of justifying such a restriction. See Board of
Trustees v. Fox, 492 U.S. 469, 109 S. Ct. 3028, 106
L. Ed.2d 388 (1989) (FOX 111). In FOX v. Board of Trustees,
841 F.2d 1207, 1213 (2d Cir. 1988) (Fox II), the Second
Circuit considered whether a prohibition placed on cor-
porations conducting product demonstrations in campus
dormitories directly advanced the University's interest in
prevention of crime, protection against consumer ex-
ploitation, preservation of residential tranquility, and the
promotion of education. The court of appeals concluded
that the district court erred in assessing whether the legisla-
tion directly advanced the asserted governmental interests
because it had only considered whether the legislative
means were reasonably related to the legislative ends. Id.
The appellate court rejected the district court's deferential
review, stating:

  "The burden . . . shifts to the state not merely to
assert that it has a substantial interest but to demon-
strate that interest by real evidence . . . . 
  "It is less clear, however, that the Regulation direct-
ly advances the State's interests; the Regulation can-
not be sustained if it only provides `ineffective or
remote support for the government's purpose.' Cen-
tral Hudson, 447 U.S. at 564, 100 S. Ct. at 2350 . . . . 
Whether SUNY offered sufficient evidence to meet its
burden is not evident as the district court considered
only whether the Regulation was reasonably related
to the asserted governmental interests, not whether it
directly advanced them."

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Id. (emphasis added).

In reviewing the Second Circuit's decision in Fox 11, the
Supreme Court held:

"The Court of Appeals did not decide, however,
whether Resolution 66-156 directly advances these in-
terests, and whether the regulation it imposes is more
extensive than is necessary for that purpose. . . . We
think that remand was correct, since further factual
findings had to be made. "

FOX III, 492 U.S. at 475-76, 109 S. Ct. at 3032-33 (empha-
sis added). The Supreme Court reversed the Second Cir-
cuit's decision with respect to the terms of the appellate
court's remand order detailing how the "more extensive
than necessary prong" of the analysis should be applied,
but the Court did not further comment on the terms of the
remand with respect to the "directly advance" prong. This
tacit approval of the Second Circuit's approach to whether
the legislative means "direct advance" the legislative ends
comports with the Supreme Court's statement in Fox 111
that "the State bears the burden of justifying its restric-
tions." Id. at 480, 109 S. Ct. at 3034-35; see also Linmark
Assocs. v. Township of Willingboro, 431 U.S. 85, 95-96,
97 S. Ct. 1614, 1619-20, 52 L. Ed.2d 155 (1977) (record evi-
dence required to establish nexus between legislative ends
and means); cf. Dunagin, 718 F.2d at 748 n. 8 (noting that
particularized findings of fact should play a limited role in
determining the constitutionality of any given statute).
Requiring the government to affirmatively demonstrate
a nexus between its legislative means and ends may appear
an undue judicial intrusion on the legislative function. Fox
111, 492 U.S. at 478-81, 109 S. Ct. at 3033-35 (deference
should be accorded governmental decision-makers).
Nonetheless, the "directly advance" prong of the Central
Hudson analysis compels a reviewing court to assess

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whether the legislative ends are served by the legislative
means: a determination that the legislature presumably
made in enacting the legislation at issue. Therefore, we
cannot simply assume that particular means will ac-
complish certain ends because the legislature presumed
they would and enacted them into law.
In this case, Congress chose to regulate alcohol content
disclosure in order to remove the pressure to produce malt
beverages with ever-increasing alcohol content. Coors in-
troduced, and the district court considered, evidence that
the legislation as enacted now provides only "ineffective or
remote support for the government's purpose." Central
Hudson, 447 U.S. at 564, 100 S. Ct. at 2350; see, e.g., rec.,
vol. II, at 22-24 and 29. In assessing whether the prohibi-
tion at issue directly advanced the government's ends, the
district court did not have the benefit of FOX 111. The court
first looked at the issue in conjunction with whether Con-
gress was pursuing a substantial end. See rec., vol. II, at
51-52. It then indicated it would merge its consideration of
"directly advance" with its "less restrictive means"
analysis:

  "Whether the governmental interest is directly ad-
vanced by the statute is an interesting question, be-
cause we still have the ability of the Bureau, BATF, to
regulate, if this statute is declared unconstitutional, in
violation of the First Amendment. We still have the
opportunity for regulation to make sure that there is
no misleading type of information given. "

Id. at 53-54. As a consequence, the district court did not
separately consider whether the facts presented by both
sides presented a genuine issue of material fact on whether
the legislative means directly advanced the legislative ends.
The record before us demonstrates that there is a question
of material fact. Summary judgment in favor of Coors
was thus inappropriate.

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          25a 

          D.

If the district court determines on remand that Con-
gress' substantial interest in controlling strength wars
among breweries is directly advanced by the regulation of
alcohol-content advertising, it must then assess whether
the absolute prohibition of such advertising is more exten-
sive than necessary to serve the government's interest.
Subsequent to the district court's decision in this case, the
Supreme Court formulated a standard for the "no more
extensive than necessary" element of the Central Hudson
analysis:

"What our decisions require is a "it" between the
legislature? ends and the means chosen to accomplish
those ends,' - a fit that is not necessarily perfect, but
reasonable; that represents not necessarily the single
best disposition but one whose scope is `in proportion
to the interest served,' that employs not necessarily
the least restrictive means but, as we have put it in the
other contexts discussed above, a means narrowly
tailored to achieve the desired objective . . . . 
  "We reject the contention that the test we have de-
scribed is overly permissive. It is far different, of
course, from the `rational basis' test used for Four-
teenth Amendment equal protection analysis. There it
suffices if the law could be thought to further a
legitimate governmental goal, without reference to
whether it does so at inordinate cost. Here we require
the government goal to be substantial, and the cost to
be carefully calculated."

Fox III, 492 U.S. at 480, 109 S. Ct. at 3034-35 (citations
omitted) (emphasis added). The Court placed the burden
firmly on the government to demonstrate that restrictions
were in proportion to the interest served: "Moreover, since
the State bears the burden of justifying its restrictions, it

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must affirmatively establish the reasonable fit we require. "
Id. (citation omitted).
The district court here concluded that the absolute pro-
hibition of alcohol content advertising does not satisfy the
fourth prong of the Central Hudson test because "there
[could] be a much less extensive regulation carefully drawn
to achieve the objectives that are argued for by the defend-
ant intervener in this case other than the flat prohibition ."
Rec., vol. II, at 54. Rendering its decision without the
benefit of the precedent established by FOX 111, the district
court misperceived the nature of the "no more extensive
than necessary" analysis. For a regulation of speech to
pass constitutional muster, it need not be demonstrated
that the government chose the least restrictive means;
rather, the governmental goal must be "substantial" and
the cost "carefully calculated." Fox 111, 492 U.S. at 480,
109 S. Ct. at 3034-35. The Court in Fox 111 emphasized the
limits of judicial review in this respect and the necessity of
deferring to the legislature's judgment as to what "reason-
able" means best effectuate the governmental end: "[W]e
leave it to governmental decisionmakers to judge what
manner of regulation may best be employed. " Id. In addi-
tion, the Court stated that it chose not to adopt a least-
restrictive-means requirement in order to "provide the
Legislative and Executive Branches needed leeway in a
field (commercial speech) `traditionally subject to govern-
mental regulation.' " Id. at 481, 109 S. Ct. at 3035 (quoting
Ohralik, 436 U.S. at 455-56, 98 S. Ct. at 1918-19).
As discussed above, the government has asserted a
substantial interest in preventing strength wars for the
benefit of both consumers and producers. The possibility
of less extensive means of regulation does not require the
conclusion that the chosen means are impermissible. The
legislative history here demonstrates that the legislature
reasonably could have concluded that strength wars and

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their attendant dangers could be eliminated by prohibiting
alcohol content disclosure. See Fox 111, 492 U.S. at 480,
109 S. Ct. at 3034-35; San Francisco Arts & Athletics Inc.
v. United States Olympic Comm., 483 U.S. 522, 539, 107
S. Ct. 2971,2982, 97 L. Ed.2d 427 (1987); Posadas de Puer-
to Rico Assocs., 478 U.S. at 344, 106 S. Ct. at 2978; cf.
Capital Broadcasting Co. v. Mitchell, 333 F. Supp. 582,
585 (D. C.Cir. 1971) (three-judge court) ("Congress had
convincing evidence that the Labeling Act of 1965 had not
materially reduced the incidence of smoking"), aff'd sub
nom. Capital Broadcasting Co. v. Acting Attorney
General, 405 U.S. 1000, 92 S. Ct. 1289, 31 L. Ed.2d 472
(1972); Dunagin, 718F.2dat751 ("We do not believe that
a less restrictive time, place and manner restriction, such
as a disclaimer warning of the dangers of alcohol, would
be effective. The state's concern is not that the public is
unaware of the dangers of alcohol. . . . The concern in-
stead is that advertising will unduly promote alcohol con-
sumption despite known dangers").
The district court apparently concluded that the legisla-
tion currently fails the more-restrictive-than-necessary
analysis because it represents an incorrect balance between
the consumers' interest in having complete disclosure and
the government's interest in preventing strength wars. See
rec., vol. 11, at 52-53. The court reasoned that because the
government has a relatively insubstantial interest in pre-
venting strength wars when compared to the consumers'
countervailing interest in disclosure, the statute is uncon-
stitutional. Id. Relevant case law suggests that a court may
evaluate the competing interests in this manner to con-
clude that, as a constitutional matter, the ends cannot
justify the scope of the regulation at issue. Thus, in Fox
111, the Court stated that the scope of a regulation must be
" `in proportion to the interest served.' " 492 U.S. at 480,
109 S. Ct. at 3034-35 (citation omitted). In Bolger, 463

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          28a

U.S. at 75, 103 S. Ct. at 2885, the court struck down a
statute prohibiting the mailing of condom advertisements
because the asserted interest of shielding recipients from
offensive materials was insufficient to justify the suppres-
sion of speech. With respect to the governmental interest
articulated in Bolger, the Court concluded:

"Because the proscribed information `may bear on
one of the most important decisions' parents have a
right to make, the restriction of `the free flow of
truthful information' constitutes a `basic' constitu-
tional defect regardless of the strength of the govern-
ment's interest. "

Id. at 75, 103 S. Ct. at 2885 (citation omitted). Similarly, in
Linmark Associates, the Court concluded that the interest
in ensuring racial integration could not, as a constitutional
matter, justify the suppression of "for sale" signs on
homes because the suppression weighed unfavorably
against "one of the most important decisions [people] have
a right to make: where to live and raise their families. " 431
U.S. at 96, 97 S. Ct. at 1620.
However, neither relevant precedent nor the record in
this case require the conclusion that the public's interest in
information relating to alcohol content so outweighs the
government's interest in nondisclosure as to render the
statute unconstitutional. We have held that legislation
prohibiting alcohol advertisements promotes a substantial
interest in health and welfare, which otherwise would be
adversely affected by alcohol consumption. Oklahoma
Telecasters Ass'n v. Crisp, 699 F.2d 490, 498 (10th Cir.
1983), rev'd on other grounds sub nom. Capital Cities
Cables, Inc. v. Crisp, 467 U.S. 691, 104 S. Ct. 2694, 81
L. Ed .2d 580 (1984). Similarly, in Dunagin, 718 F.2d at
747, the Fifth Circuit upheld a statute that significantly
restricted liquor advertising by local media as a legitimate

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29a

way to avoid the undue promotion of alcohol consump-
tion, in the interest of the public welfare.
Coors notes that the balance struck in favor of non-
disclosure in Oklahoma Telecasters and Dunagin was
altered by the fact the state legislatures had promulgated
the statutes at issue pursuant to the authority granted them
under the Twenty-first Amendment. Coors argues that be-
cause the regulation in this case was promulgated by Con-
gress, the balance of interests weigh in favor of disclosure.
Thus, in Oklahoma Telecasters, we stated that "when the
Twenty-first Amendment is considered in addition to
Oklahoma's substantial interest under its police power, the
balance shifts in the state's favor, permitting regulation of
commercial speech that might otherwise not be permissi-
ble. " 699 F.2d at 502 (emphasis added). In Dunagin, the
Fifth Circuit upheld the validity of the advertising regula-
tion noting that precedent establishing the state's special
interest in regulating alcohol "help[ed] establish the
balance in favor of the state," 718 F.2d at 750.
Oklahoma Telecasters does not require us to conclude
that the federal government has no constitutional basis to
substantiate its interest, or that the federal government's
interest in regulating alcohol content disclosure is insuffi-
cient to justify a restraint on speech. 6 The Twenty-first
Amendment did not completely abrogate Congressional
power to regulate under the Commerce Clause. See Arrow
        
___________________(footnotes)

 6  As demonstrated by the regulation itself, which is effective only if
not contradicted by state law, Congress may have a less compelling in-
terest than state legislatures in the labeling and advertising of the
alcohol content of malt beverages. See 27 U.S.C. 205(e) and 205(f).
Because the statute at issue expressly states that alcohol content may
not be disclosed unless required by state law, we need not address "
whether the holdings in Oklahoma Telecasters and Dunagin demon-
strate that Congress has attempted to trump those powers expressly
granted to the states by the Twenty-first Amendment.

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          30a

Distilleries, Inc. v. Alexander, 109 F.2d 397 (7th Cir.)
(FAAA not unconstitutional on ground that Twenty-first
Amendment deprived Congress of power to enact inter-
state alcohol regulation), cert. denied, 310 U.S. 646, 60
S. Ct. 1095,84 L. Ed. 1412 (1940); see also South Dakota v.
Dole, 483 U.S. 203,209, 107 S. Ct. 2793,2797,97 L. Ed.2d
171 (1987) (Twenty-first Amendment does not preclude
Congress from indirectly establishing minimum drinking
age by exercising its spending power); Craig v. Boren, 429
U.S. 190, 97 S. Ct. 451, 50 L. Ed.2d 397 (1976) (Twenty-
first Amendment not pro tanto repeal of Commerce
Clause, but merely requires that each provision "be con-
sidered in the light of the other, and in the context of the
issues at stake in any concrete case"); United States v.
Frankfort Distilleries, Inc., 324 U.S. 293, 297-99,65 S. Ct.
661, 663-65, 89 L. Ed. 951 (1945) (federal anti-trust prose-
cution of alcohol producers and distributors consistent
wit h Twenty-first Amendment). We conclude that Con-
gress has sufficient residual authority to regulate the
marketplace for the benefit of consumers and producers
under the Commerce Clause even though it may result in
indirect regulation of alcohol. See id. Like the state
legislatures in Oklahoma Telecasters and Dunagin, there-
fore, Congress may constitutionally regulate alcohol
advertisements,
Coors makes a similar argument with respect to the
decision rendered in Posadas. There, the Supreme Court
stated that the advertising ban was permissible as "the
greater power [of the state] to completely ban casino
gambling necessarily includes the lesser power to ban
advertising of casino gambling. " 478 U.S. at 345-46, 106
S. Ct. at 2979. The Court did not state that the greater
power to ban gambling was necessary to ban gambling
advertising. The Court relied on the fact that Puerto Rico
had the greater power to ban gambling to distinguish

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          31a

Posadas from those cases that struck down regulations
restricting information pertaining to constitutionally pro-
tected conduct. 7 Id. The Court also stated that finding
Puerto Rico possessed the power to ban gambling adver-
tisements was necessary to avoid the anomalous result of
concluding that Puerto Rico had the police power to make
gambling illegal but not to prohibit the advertising of gam-
bling. Id. Consequently, Congress need not possess the
greater power to completely regulate alcohol sales, a
power expressly reserved to the states under the Twenty-
first Amendment, in order to reconcile Posadas with the
holding in this case that Congress can regulate alcohol
advertisements consistent with the First Amendment.

          III.

In sum, we hold that Coors' proposal to advertise the
alcohol content of beer is commercial speech protected by
the First Amendment, and that the public's interests in
disclosure are significant. We also hold that the interests
asserted by Congress and demonstrated in the legislative
history are legitimate and substantial. We conclude that
there are genuine issues of material fact underlying the
question of whether the federal regulation of alcohol con-
tent advertising directly advances the government's assert-
ed interest in preventing strength wars, and whether the
complete prohibition of such advertising results in a "rea-
sonable fit" between the legislature's goal and the means
chosen to reach it, within the meaning of Fox 111.
The district court judgment in favor of Coors is RE-
VERSED and the case is REMANDED for further pro-
ceedings consistent with this opinion.

___________________(footnotes)

7  We note that the sale and consumption of alcohol
stitutionally protected activities and can be prohibited.

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         32a

        APPENDIX C

[1] IN THE UNITED STATES DISTRICT COURT
   FOR THE DISTRICT OF COLORADO

      Civil Action No. 87-Z-977

    ADOLPH COORS COMPANY, PLAINTIFF

          vs.

    NICHOLAS BRADY, ET AL., DEFENDANTS

REPORTER'S TRANSCRIPT
(Trial to Court: Bench Ruling)

Proceedings before the HONORABLE ZITZ L. WEIN-
SHIENK, Judge, United States District Court for the
District of Colorado, commencing at 11:00 a.m., on the
28th day of October, 1992, in Courtroom C-502, United
States Courthouse, Denver, Colorado.

        APPEARANCES

BRADLEY, CAMPBELL, CARNEY & MADSEN, by K.
PRESTON OADE, JR., 1717 Washington Avenue, Golden,
Colorado, 80401, appearing for the plaintiff.
PATRICtA M. RUSSOTTO and ROBIN S. ROSENBAUM, At-
torneys at Law, U.S. Department of Justice, Civil Divi-
sion, 901 E Street, N. W., Room 912, Washington, D. C.,
20530, appearing for the defendants.

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          33a

[2] (The following proceedings were had and entered of
record after the presentation of evidence and the argu-
ments of counsel:)
THE COURTROOM DEPUTY: The matter now
before the Court is Adolph Coors Company vs. Nicholas
Brady, et al., Civil Action No. 87-Z-977.
THE COURT: Good afternoon.
Well, the first thing 1 would like to do is to thank the at-
torneys for a very well presented case, for your coopera-
tion. There have been a few little glitches in that; but
basically there has been good cooperation, and I ap-
preciate it.
It's been most interesting. My conclusions today - my
findings and conclusions, I propose to read into the
record. I have taken to heart what you said about actually
doing a written opinion and publishing, and I probably
will do that within the next few weeks. But the opinion to-
day will be in effect. And the published opinion will pretty
much follow along what I am saying. It may expand a little
bit and cite a few more cases.
We start with the Tenth Circuit opinion and in reversing
the last decision that this court made, pointing the error of
my ways to me, although I believe that Fox 111 had not
been decided at the time that I made the last decision; but
we do have the law clearly presented through the case Fox
111 that [3] has been referred to at length and the Tenth
Circuit opinion.
The Tenth Circuit has told us that Coors' proposal to
advertise alcoholic content is commercial speech and is
protected by the First Amendment. They have also told us
that the public interest in disclosure of alcoholic content is
significant.
Now, in addition, the Tenth Circuit has concluded that
there is some significant and legitimate and substantial in-
terest by Congress in preventing strength wars; and this

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34a

has been demonstrated, they indicate, by the legislative
history of Congress. So those are givens.
The issues that the circuit court has asked us to consider
at this hearing are the following; and I'm reading now
from page 1554 of the Tenth Circuit opinion. It's 944 F.2d
1543, Adolph Coors Company v. Brady, at page 1554:
"The question is whether the federal regulation of
alcohol content directly advances the Government's
asserted interest in preventing strength wars. A second
question is whether the complete prohibition of such
advertising results in a `reasonable fit' between the legisla-
ture's goal and the means chosen to reach it within the
meaning of Fox III. "
Perhaps I should put on the record the cite of Fox 111;
Board of Trustees v. Fox, 492 United States 469, 1989
case.
Defendant's attorney argues that Congress makes the
law. I couldn't agree more. Congress makes the law. But
we [4] know from Fox 111 that a party who is urging pro-
hibited - urging that commercial speech be prohibited has
a burden of justifying it.
Now, the evidence in this case concerning strength wars
relating to malt liquor is substantial and convinces this
court that as to 27 United States Code 205 paragraph (f),
which relates to advertising and which indicates that the
prohibition is in the form of an exception which says that
"except statements of or statements likely to be considered
as statements of alcoholic content of malt beverages and
wines are prohibited in advertising" - as to that statute, I
am satisfied and convinced that the defendant has met its
burden. The prohibition of advertising does advance the
Government's legitimate interest in - as to strength wars
and as to preventing strength wars. And I don't think that
the plaintiff is in real dispute with this position.

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          35a

Plaintiff agrees that ATF must regulate statements of
alcoholic content in connection with advertising. Plaintiff
also tells us in argument that Coors has no intention of
marketing products based on alcoholic strength and is not
asking for this. And I agree after hearing the evidence in
this case that attempts to market alcoholic content as a
product attribute are not legitimate attempts. They are
contrary to substantial congressional policy.
Therefore, the Court determines after listening to the [5]
evidence and the arguments of counsel that the statement
in 27 United States Code section 205(0(2) meets the test set
forth in Fox III and in the Tenth Circuit opinion.
And this brings us to the more difficult question of
whether the exception in the preceding subparagraph, 27
United States Code 205(e)(2), meets the test. The conclu-
sion that 1 reach after carefully considering the testimony
I've heard and the depositions that I've read is that it does
not for this reason: No evidence that I have heard has con-
vinced me that placing the alcoholic content on the can or
other container will directly advance the Government's in-
terest in preventing strength wars.
Now, the Tenth Circuit in their opinion spoke in terms
of advertising; but it is important to note that subsection
(e) refers to labeling. The content of alcohol on the can is
not really advertising as we generally think of it, although
in closing argument yesterday, Mr. Oade talked about
whether a picture of a can, for example, of Coors beer
with an alcoholic content listed on it could be advertised in
the media, or would it have to sit down on a bed of flowers
with the flowers or the decoration covering the alcoholic
content.
I don't think I really have to decide that specific issue. 1
prefer to think of the issue that has been presented, and
that appears to me to be clearly an issue for decision as a
difference between the labeling of the alcoholic content on

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          36a

the [6] container and the advertising of alcoholic content
as an attribute of the beer and marketing it in that way.
So the two statutes that are before us actually spell
out - one says "labeling" as a heading, the other says
"advertising." The advertising one, as we've just discussed,
stands. The labeling statute, from the evidence I've heard,
does not meet the test. So even though the Tenth Circuit is
talking in terms of advertising or uses the word "advertis-
ing," I'm going to consider that as meaning advertising
and labeling.
Prohibiting the alcoholic content disclosure of malt
beverages on labels has little, if anything, to do with the
type of advertising that promotes strength wars. That is
the conclusion I reach from listening to the testimony and
reading the depositions.
In Canada, where alcoholic content is listed on the cans,
there is no evidence of price (sic) wars; and although
Defendant urges that because the beer in Canada may be
slightly stronger in alcoholic content than the average beer
in the United States that some inference should be drawn
from this or raised, I disagree. First of all, it's a very small
percentage; and there may be many other factors to ac-
count for why Canadians like their beer slightly stronger
than Americans like their beer.
The question raised by the Tenth Circuit again is
whether the regulation of speech passes constitutional
muster, [7] or to use their language on page 1552 of their
decision, "For regulation of speech to pass constitutional
muster, it need not be demonstrated that the Government
chose the least restrictive means; rather, the government
goal must be substantial and the cost carefully calculated."
Now, the goal may be substantial in this case; but
whether the means to that goal prohibiting the listing of
the alcoholic content on a can or a bottle is necessary for
the goal, whether the cost has been sufficiently calculated

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          37a

in that prohibition, is what concerns the Court. The
evidence that I have heard in this case does not show me
that there is any real connection with this. The testimony
of Mr. Gundee, for example, in talking about the survey in
Canada, indicates that Canadians - more Canadians know
the alcoholic content of the beer that they're drinking than
American citizens, or the American beer drinkers. Canada
of course, does allow content on labels.
The result of the goal - of the poll is that citizens, both
in Canada and in the United States, drinkers, want to
know the alcoholic content. They want the information;
and the indication is they want it not to drink higher-
alcohol beer but to be more responsible and for many to
reduce the alcoholic content of what they're drinking. The
testimony that I have heard has indicated to me that there
is a trend, not a trend towards the malt liquors, which are
the high end of the alcohol, but a trend towards the light
beers, which are the low end. [8] And there are significant
reasons why beer drinkers are interested in light beers, low
calories, moderation, so that they can have perhaps a cou-
ple beers before they - with dinner, perhaps, before they
step into a car and subject themselves to the laws of the
various states relating to driving under the influence or
driving while ability impaired. It's extremely important
that they be able to know the content of what they're
drinking. People do want this information. They want it
to be responsible people, drinkers, the evidence has
shown. They do not just want it to try to drink stronger
beers.
The evidence shows that the high-strength brews do not
have the same popular appeal as the low-strength and the
light beers, either abroad or in the United States; and I
refer to the depositions both of Mr. Ambler and Mr.
Nelson.

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          38a

In the deposition of Mr. Black, who has been with ATF
many years, he indicates that he supports disclosure of
alcoholic content. He would not be opposed to a change in
the statute as long as ATF could regulate the advertising.
And I think that's really the key. As long as the advertising
does not promote "Buy a beer because it's stronger,"
quote/unquote, as long as ATF has a hand in the advertis-
ing, there is little danger of strength wars.
Basically, I could go through the testimony of all the
witnesses I've heard, from Mr. Cates all the way through
to Mr. Rechholtz, and none of the witnesses, none of the
depositions [9] that I have read, no credible evidence that I
have heard, lead me to believe that giving alcoholic con-
tent on labels will in any way promote strength - alcoholic
strength wars, as long as ATF has the authority to regulate
the use of this content in advertising.
And therefore, the Court concludes that subparagraph
(e) - and we're again for the record talking about 27
U .S.C. section 205(e)(2) and the exception therein - does
not make a reasonable fit, does not advance the govern-
ment interest, and is an unconstitutional restraint on com-
mercial speech.
Those regulations which pertain to (e) fall with the
statute. Plaintiff has mentioned some of them, and I don't
intend to, because I think by indicating that section (e)
does not meet constitutional muster, the regulations that
pertain to (e) fall by the way, although I strongly urge
ATF - and I'm sure that Counsel will communicate this -
to draft new regulations as soon as possible and as neces-
sary to make sure that advertising is controlled, if this case
is not going to be appealed, in any case. If it's not going to
be appealed, I think we need the new regs right away.
I would also hope that Counsel could urge ATF to con-
sider some uniform way of considering alcoholic content.
I know we have heard testimony of  percentage by weight,

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          39a

percentage by volume; and it is confusing. It may be that
because Canada and the other countries measure percent-
age by [10] volume, it may make sense for that to be a uni-
form way of measuring the alcoholic content of malt
beverages in this country.
The Court intends to reduce these short remarks on the
record to an opinion. We will publish it. It's going to be up
to the defendant and perhaps in consultation not only with
ATF but with Congress to decide whether in view of this
decision, which is much more limited than my previous
decision - whether there will or will not be an appeal. If
there will bean appeal, I strongly urge cooperation on the
appeal wit h both counsel, with all counsel.
And we are going to be turning back to both sides all ex-
hibits that have been admitted, because we have no room
to store them. And each attorney is going to have to keep
in his or her possession the exhibits for the Tenth Circuit,
especially if you are going to have an appeal. And the ex-
hibits, for example, which were not admitted, although I
think we ended up admitting almost all exhibits. And the
depositions, as soon as I take all my sticky - stickies off of
them - we'll give those back to you, too.
Now, any questions? Anything that you feel should be
on the record as proposed findings or decisions?
MR. OADE: Your Honor, we would simply ask that the
Court enter a permanent injunction against the defendants
from enforcing these statutory provisions and the imple-
menting [11 ] regulations and that that injunction be
entered forthwith.
THE COURT: You're probably going to want some sort
of a stay on that so that you can at least consider with your
clients whether you need to appeal or not.
MS. RUSSOTTO: I believe there is an automatic ten-
day stay in any event; but yes, we will certainly be consid-
ering whether or not we will be seeking a stay. I obviously

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          40a

can't make any commitment in that regard at this point,
but we will certainly be considering that over the next ten
days.
THE COURT: How many days?
MS. RUSSOTTO: The next ten days. I believe the
rule - the rule of civil procedure - I don't recall exactly
which one it is now - mentions -
THE COURT: Well, you have 30 days to appeal.
MS. RUSSOTTO: I realize that, your Honor.
I think we have 60 days actually to appeal.
THE COURT: Pardon?
MS. RUSSOTTO: 1 think we have 60 days actually to
appeal.
THE COURT: Oh, you're the Government. That's
right.
MS. RUSSOTTO: In any event, we will be making a
decision rather quickly whether or not to seek a stay.
THE COURT: All right. Today is the 28th of October
and the Government - the defendant is asking for ten days
to [12] consider this before any injunction go into effect.
And I think that's reasonable, Mr. Oade. Your clients
have waited a while; they can wait just a little longer.
How about the 9th? The Court will order that a perma-
nent injunction against enforcing subsection (e) of 27
U.S.C. 205, or the exception therein - now, I'm not de-
claring the whole - Everyone understands that we're not
talking about section (e) being unconstitutional. We're
simply talking about the specific language, which is "ex-
cept that statements of or statements likely to be con-
sidered as statements of alcoholic content of malt bever-
ages are prohibited unless required by state law ." And
that's the end of it. I think that's the only language - that's
the only language that I'm prohibiting.
MR. OADE: We understand that, you Honor; and I
think the record is also clear that the implementing regu-

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41a

lations that use words like "strong" or "extra strength" -
we don't challenge those, either.
THE COURT: That's my understanding.
MR. OADE: The record is very clear on the scope of the
relief sought in this case.
THE COURT: Those implementing regulations that
you're mentioning are actually implementing regulations
to the exception in (f), the advertising side, which I am not
touching.
MR. OADE: We understand that, your Honor.
THE COURT: All right. The permanent injunction,
then, [13] will go into effect on November 9, unless I hear
something more by stipulation of the parties or unless
there is something that is ordered in this case.
MS. RUSSOTTO: Very well.
THE COURT: Anything else that we need to put on the
record?
MS. RUSSOTTO: We have no further remarks to make
on the record, your Honor.
MR. OADE: We have nothing further, your Honor, ex-
cept to thank the Court for your hard work and for
reading all of those depositions.
THE COURT: There were a lot; and I didn't know I was
going to be in trial as much, so it took a while. Let me also
indicate, I think there is room here for some real discus-
sion on whether this truly makes sense, because I sincerely
feel that this is a solution that makes sense to everybody,
including ATF. And rather than just appeal it for the pur-
pose of appealing it, please talk together, think long and
hard about it, because the First Amendment is important.
And I think this perhaps takes care of the real problem
which you sincerely have presented to the Court.
Okay. Thank you, and the Court is in recess.

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    42a

(Thereupon , the trial was concluded and the Court re-
cessed at 11: 30 am.)
  
*****

REPORTER'S CERTIFICATE

I certify that the foregoing is a correct transcript from
the record of proceedings in the above-entitled matter.
Dated at Denver, Colorado, this 28th day of October,
1992.

_____________________
Paul A. Zuckerman

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43a

APPENDIX D

[1] IN THE UNITED STATES DISTRICT COURT
   FOR THE DISTRICT OF COLORADO

Civil Action No. 87-Z-977

ADOLPH COORS COMPANY, PLAINTIFF

vs.

   JAMES BAKER, ET AL., DEFENDANTS

          AND

SPEAKER AND BIPARTISAN LEADERSHIP GROUP OF THE
UNITED STATES HOUSE OF REPRESENTATIVES,
      lNTERVENOR-DEFENDANTS

    REPORTER'S TRANSCRIPT
(Hearing on Cross-Motions for Summary Judgment)

Proceedings before the HONORABLE ZITZ L. WEIN- 
SHIENK, Judge, United States District Court for the
District of Colorado, commencing at 8:50 a.m., on the
31st day of May, 1989, in Courtroom C-204, United States
Courthouse, Denver, Colorado.

APPEARANCES

BRADLEY, CAMPBELL, CARNEY & MADSEN, by K.
PRESTON OADE, Attorney at Law, 171 Washington
Avenue, Golden, Colorado, 80401-1994, appearing for the
plaintiff.
MICHAEL  J. NORTON, Acting United States Attorney, by

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          44a

*****

         RULING

THE COURT: The briefing and the arguments today
have pinpointed what is a very interesting issue, and that is
the constitutionality based on a First Amendment
challenge to two [47] small parts of a statute, very
specifically the exception clauses within the parentheses of
27 United States Code 205(e)(2) and 205(f)(2). And we're
not talking, as I understand, about the whole of (e) and (f)
or even (e)(2) or (f)(2), but rather just the parenthetical
clause within those two subsections, which state, reading
from the one in (e)(2), ". . . except that statements of or

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          45a

statements likely to be considered as statements of
alcoholic content of malt beverages are prohibited unless
required by state law and except that -" whoops. We're
talking about wines. So we're not even talking about the
whole exception clause. We're only talking about that part
of the exception clause that refers to malt beverages, not
the part that refers to wines.
And let me just take a look at - Under (f)(2), the excep-
tion clause ". . . except the statements of or statements
likely to be considered of alcoholic content of malt
beverages and wines"; and in this case, we're concerned
only with malt beverages. So what we're talking about is
whether that prohibition on limiting alcoholic content of
malt beverages contained within those two parenthetical
exceptions to 27 U.S. C. 205(e)(2) and (f)(2) can stand con-
stitutional muster.
This case arose because Plaintiff, Adolph Coors Com-
pany, desired certain advertising or packaging on their
product and went to the Bureau of Alcohol, Tobacco, and
Firearms, BATF, for approval. BATF refused approval
because of [48] the statute in question, however agreed
with the plaintiff that the statutory prohibition against
listing any alcoholic content of beer was unconstitutional.
We then had the intervener defendant step into the case
to create a case or controversy. The intervener defendant
is the Speaker and Bipartisan Leadership Group of the
U.S. House of Representatives, representing the leader-
ship of the House and I presume the House of Represen-
tatives -
MS. JARUZELSKI: Yes, that's our institutional
mechanism.
THE COURT: - through the leadership.
This intervener defendant has made a very forceful
argument that the Court should not interfere with a 
statute, even a statute passed by Congress 50-odd years

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          46a

ago, and declare it unconstitutional unless the ruling was
compelling. And basically, the argument has been made
very forcefully by Defendant that the Court should not in-
terfere with the legislative decisions made by Congress.
However, if a statute is in violation of the First Amend-
ment, whether it be a Federal statute or state statute, the
only way that that ruling can be made is by the judicial
branch, by the court, unless Congress itself chooses to
amend or to repeal the statute, which Congress has not
done in this case.
The pivotal case, the important case for decision of
whether a statute violates the First Amendment protec-
tions [49] concerning commercial speech is Central Hud-
son Gas & Electric v. Public Service Commission, which is
447 U.S. 557, a 1980 Supreme Court decision. In that deci-
sion, the Supreme Court said the following, and I'm
reading now from page 566 of the decision:
"In commercial speech cases, then, a four-part analysis
has developed. At the outset, we must determine whether
the expression is protected by the First Amendment. For
commercial speech to come within that provision, it at
least must concern lawful activity and not be misleading.
Next we ask whether the asserted governmental interest is
substantial. If both inquiries yield positive answers, we
must determine whether the regulation directly advances
the governmental interest asserted and whether it is not
more extensive than is necessary to serve that interest. "
And thus, in 1980, the Supreme Court set forth the
landmark case in the commercial speech area which
establishes this four-part test and requires a court to do a
balancing test, to consider the factors that are set forth by
the Supreme Court.
First factor: Does the commercial message accurately
inform the public about lawful activity in a manner that is

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47a

not misleading, or as stated by the Supreme Court, does it
concern lawful activity and is not misleading?
I've listened carefully to the arguments of Counsel; and
it appears to the Court that the argument stated by the - or
[50] stated in the amicus brief has some merit. What is
misleading, it appears to the Court, is the status quo,
rather than a truthful statement about alcoholic content.
It is very difficult for this court to see how a truthful state-
ment can be misleading. Mere disclosure of the alcoholic
content cannot be deceptive almost by definition.
I think what is being argued by Intervener Defendant is
that the manner of the disclosure can be deceptive, but the
manner of disclosure of the alcoholic content certainly is
subject to appropriate regulations which can prevent
misleading information or prevent false impressions that
people can drink more or that insignificant percentages are
significant.
The legislative hearings that have been discussed in
argument were hearings that took place in the 30's, ap-
proximately a year after Prohibition was ended; and the
conditions in the 1930's, a short period after prohibition,
is certainly not the condition of the present time, the
1980's:
We have - we have modern brewing technologies - This
has been pointed out, and I think there is no dispute over
this - in the present day, where the percentage can be very
clearly pinpointed. In the 1930's, there were 680-some
brewers. Today, 90 percent of the malt liquor is made by 5
breweries; and we have other very substantial differences
between the 30's and the 80's, the late 80's, because today
with the importance of automobiles and the desire of
drivers to be responsible [51] drinkers and to know how
much alcohol they are drinking, there is certainly a very
strong reason for making information available so that

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48a

citizens will be able to judge how much alcoholic intake
they have, if they're going to be driving a car.
1 would note that the point made in the amicus brief is
compelling that the differences between having some light
beer, for example, with little alcoholic content, and malt
liquor, with heavy alcoholic content, might make all the
difference between a driver being not at all affected by a
social drink and a driver being unable to operate a vehicle,
And this is a very powerful and persuasive reason why the
status quo of not allowing consumers to know the
alcoholic content is what is misleading, rather than a
truthful statement.
In looking at the first prong, then, of the Hudson test,
there certainly would be - it certainly would be lawful ac-
tivity to advise the consumer about alcoholic content in
beverages, malt beverages; and it certainly would not be
misleading simply to list the alcoholic content.
I would just simply note that alcoholic content is listed
as far as wines are concerned and at least by proof in hard
liquor.
We then go to the second test of Central Hudson, and
that is whether the asserted government interest is substan-
tial. And perhaps that should be considered with the third
test, [52] which is whether the regulation or in this case,
the statute, directly advances the governmental interest.
Do we have a substantial governmental interest in
preventing consumers from knowing the alcoholic con-
tent? And it appears to the court that the answer has to be
no. It's very difficult for the Court to see how there is any
unfair competition or antitrust aspect to this. We do not
have the same fair competition problems that existed in
the 30's; and of course, this court must look to the present
time and the present situation in looking at these tests in
Hudson. 

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49a

Under the present situation, with fewer brewers produc-
ing a large percentage of the market, we certainly don't
have the same situation as the 1930 situation of 680-Plus
brewers brewing beers in small factories, and so forth.
Fair competition, I have to agree with the plaintiff, is real-
ly not an interest.
Consumer deception? I've already mentioned this on the
first prong; and it appears to me that in the 80's, we have
knowledgeable consumers, we have consumers who have
an interest in knowing alcoholic content, not just because
of mere curiosity but because of the very important advent
of the automobile and other forms of transportation. I
might mention that we have skiing statutes which indicate
that skiers, for example, should ski safely; and that means
without having an over amount of alcohol in their bodies
when they are skiing, so [53] they don't ski recklessly.
Alcohol content is important for consumers to know in
many different respects; and this is something, even
though I will agree that the plaintiff cannot assert the posi-
tions of the consumer because they're not representing the
consumer, the Court can simply - can certainly consider
the present state of affairs as far as what consumers need
to know. The status quo, which does not let a consumer
know the difference between alcoholic content of light
beers and very strong malt liquor, for example, has to be
more deceiving than letting this information be available
to the public.
I realize that state statutes do control in many, if not
most states, concerning the light beers. But we do have
states such as Washington, who are not asserting that right
to' control under the general welfare; and in the State of
Washington and other states, certainly this problem lloms
[sic]. But in this present day of the automobile, where it is
important for the consumer to understand what they are
drinking and where indeed the driver's tests in many states

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          50a

check new drivers to make sure they understand the laws
and understand how much alcohol is usually contained in
beer, wine, and more potent drinks, it is important for
consumers to be able to see what alcoholic content is.
Whether the governmental interest is directly advanced
by the statute is an interesting question, because we still
[54] have the ability of the Bureau, BATF, to regulate, if
this statute is declared unconstitutional, in violation of the
First Amendment. We still have the opportunity for
regulation to make sure that there is no misleading type of
information given.
I understand the argument that this could be
misleading, but the point is I think that it isn't the
disclosure of the alcoholic content which is misleading but
the manner in which it is disclosed; and that certainly can
be regulated by much less extensive prohibition.
And that takes us to the fourth point of Hudson, which
is that as stated by the Supreme Court: whether it is not
more extensive than is necessary to serve that interest. The
statutory prohibition says no listing unless by state law. It
says alcoholic content of malt beverages is prohibited
unless required by state law. Certainly there can be a much
less extensive regulation carefully drawn to achieve the ob-
jectives that are argued by the defendant intervener in this
case other than the flat prohibition.
I see none of the cases that have been cited by In-
tervener Defendant which convinces this court that the
decision should go otherwise. There have been cases cited,
a Fifth Circuit case I had a chance to look at. It concerns
the use of the term "realtor" and whether that term can be
used and limited to members of the board of the national
association of realtors. That really is a case which is far
different, and [55] regulation by the state there is far dif-
ferent than what we're talking about here.

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51a

Experience in Canada, which is a neighboring country,
which has a lot of similarities - it's not identical, of course,
to the United States but has a lot of similarities - is impor-
tant. And the plaintiff has pointed out that Canada has
not regulated alcoholic content by prohibiting it and that
indeed the - I think it appears to be unrebutted that the
trend in Canada is towards lower alcoholic content of beer
and not greater. And it is urged that consumers knowing
the alcoholic content of beer may tend to drink the lower
alcoholic content: the whole trend toward light beers, for
example. So even though the Canadian experience is not
determinative, nevertheless I think it may be shown that
the great specters of all the bad things that can happen if
this small exception in the statute is stricken are merely
specters and will not necessarily come to be; and Canada
and other countries are pointed to as examples that this is
not the case in countries which do not have this prohibi-
tion.
The Court is satisfied that the - in examining the test in
Central Hudson that this very small part of the statute, the
exception clause within the parentheses referring to malt
liquors in these two subsections stands as an unconstitu-
tional restraint on commercial speech under the test in
Hudson and shall not be enforced.
[56] The case came to be because Coors asked BATF
to approve certain labeling; and at this time, the parties
are just Coors for the plaintiff, BATF as the defendant,
and of course, the defendant intervenor, who is asserting
the interest of the House of Representatives. But I have no
problem in declaring today that the statute constitutes an
unconstitutional restraint on commercial speech and that
it may not be enforced, it shall not be enforced.
And again, I want to make very clear that when we're
talking about the statute, we're talking about the excep-

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52a

tional - the exception within the parentheses referring to
malt beverages contained in 27 U.S.C. 205(e)(2) and (f)(2).
And it's only that limited amount of wording within the
exception clause referring to malt beverages.
May I inquire, because we only have parties at this time
of Coors, BATF, and of course the House of Represen-
tatives - may 1 inquire whether there - are you asking that
this order be - I'm not sure what the - how broadly this
order should be stated. I have no problem in saying that it
shall not be in force as to Coors and BATF can go ahead
and consider whether their label is proper. But we certain-
ly don't have other breweries included with the plaintiff.
MR. OADE: Your Honor, I believe if it's unconstitu-
tional, the BATF cannot enforce it against anybody; and
that's the relief that we asked for in our complaint, and
[57] we just ask that they consider our application on the
merits and anybody else's as well, your Honor.
THE COURT: Well, they obviously have to consider
your application on the merits. It's very difficult to see
how the statute can be an unconstitutional restraint on
commercial speech and not be enforced against you but
can be enforced against others.
MR. OADE: That's what we asked for in our com-
plaint: that it be declared unconstitutional and the BATF
be enjoined from enforcing 205(e)(2) and 205(f)(2).
THE COURT: I think you have to be again careful,
because 205(e)(2) and 205(f)(2) are broader than what I am
declaring as an unconstitutional restraint.
MR. OADE: Insofar as it prohibits the advertisement of
percentage alcohol content of malt beverages and state-
ments on the label.
THE COURT: That is correct.
MR. OADE: Yes.
THE COURT: Did you want to respond in any way?

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          53a

MS. JARUZELSKI: Our only response would be to call
to the Court's attention that it is clear that to the extent
this is enjoined, it's enjoined in this jurisdiction; and while
that would be the law of this jurisdiction, this court does
not have power to enforce a nationwide ban. And that's
clear from, for example, the Amaron case, which came up
through the District [58] Court in New Jersey to the Third
Circuit and ultimately to the Supremes.
THE COURT: I'm not sure I agree with you. This is a
Federal Court. Coors is a Federal brewer selling
throughout all 50 states and perhaps - and I'm sure
abroad, although we're not talking about international
sales. But my decision applies as far as Coors is concerned,
as far as BATF is concerned, nationwide.
MS. JARUZELSKI: I would respectfully disagree, your
Honor, but -
THE COURT: I don't see how you can possibly argue
that it's limited only to Colorado, when the sales of Coors
are nationwide and this is a national statute or a Federal
statute, not a state statute.
MS. JARUZELSKI: I can only say that that has been
the position that has been taken in other cases where
district courts have tried to enjoin Federal agencies nation-
wide.    
THE COURT: Well, we have the attorney sitting in
court representing - the local attorney representing BATF;
and my order will be that BATF shall not enforce this un-
constitutional restraint concerning Coors; and as far as
I'm concerned, that's - that has to be nationwide. I frankly
feel that it should not be enforced, since I'm declaring it
unconstitutional.
Assuming this is going to be appealed and there is [59]
going to be a circuit decision that's going to look at it and
assuming that the circuit agrees with me, it would be an
absolutely impossible situation for BATF to enforce this
as to one brewer and not as to others.

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54a

Mr. Pharo, I don't know if you have a position on this
or not.
MR. PHARO: Well, your Honor, I think courts
throughout the country that have jurisdiction over the
government enjoin action, and it's normally nationwide;
so that would be my guess, would be that your order
would be enforceable or declare it unconstitutional as to
all brewers and it would be nationwide.
THE COURT: Well, maybe I should make a decision
on this. 1 was going to hear the comments of the parties,
but it seems to me that it's an absolutely impossible situa-
tion to declare something unconstitutional just as to a cer-
tain area or as to a certain brewer; and the Court therefore
will order that this statute is unconstitutional as a restraint
on commercial speech, the limited part of the statute that
I've previously described, and that it shall not be enforced
by BATF. And we'll certainly allow the intervener defen-
dant to appeal this decision, and I welcome Tenth Circuit
inquiry into it.
I may very well reduce this verbal decision to writing
within the next week or two, and I will send copies of it to
all concerned. But the decision will be effective as of to-
day, [60] and what I've said on the record will be incor-
porated by reference as if fully set forth and stands as the
declaratory judgement of the Court.
I want to thank the attorneys. It's been very interesting,
and I appreciate the briefs and the very excellent argu-
ment. 1 don't know if we have anyone present from
Heileman Brewery, but the amicus brief that Heileman did
was also very helpful.
MR. OADE: Thank you, your Honor; and I'll thank
Heileman on behalf of the Court.
THE COURT: Okay. If there is nothing further, we'll
take a short recess and then come back and call up the next
case.
(Thereupon, the hearing was concluded and the Court
recessed at 10:50 a.m.)

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       55a

      APPENDIX E

UNITED STATES COURT OF APPEALS
  FOR THE TENTH CIRCUIT

ADOLPH COORS COMPANY, PLAINTIFF-APPELLE

           v.

NICHOLAS BRADY, IN HIS OFFICIAL CAPACITY AS SECRETARY
OF THE UNITED STATES DEPARTMENT OF TREASURY;
STEVE HIGGINS, IN HIS OFFICIAL CAPACITY AS DIRECTOR
OF THE BUREAU OF ALCOHOL, TOBACCO AND FIREARMS,
       DEFENDANT-APPELLANTS

           AND

SPEAKER AND BIPARTISAN LEADERSHIP GROUP OF THE
     U.S. HOUSE OF REPRESENTATIVES,
    INTERVENOR-DEFENDANT-APPELLANT

      Entered December 1, 1993

         ORDER

Before MCKAY, Chief Judge, BARRETT, LOGAN,
SEYMOUR, MOORE, ANDERSON, TACHA, BALDOCK, BRORBY,
EBEL and KELLY, Circuit Judges, and BROWN* District
Judge.

___________________(footnotes)

* Honorable Wesley E. Brown, Senior District Judge, United States
District Court for the District of Kansas, sitting by designation.

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This matter comes on for consideration of appellants'
petition for rehearing and suggestion for rehearing in
banc.
Upon consideration whereof, the petition for rehearing
is denied by the panel that rendered the decision.
In accordance with Rule 35(b), Federal Rules of Ap-
pellate Procedure, the suggestion for rehearing in bane
was transmitted to all of the judges of the court who are in
regular active service. No member of the panel and no
judge in regular active service on the court having re-
quested that the court be polled on rehearing in bane, Rule
35, Federal Rules of Appellate Procedure, the suggestion
for rehearing in bane is denied.

Entered for the Court
ROBERT L. HOECKER, Clerk

By /s/

Patrick Fisher

PATRICK FISHER
Chief Deputy Clerk

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          57a

        APPENDIX F

      STATUTORY PROVISIONS

Title 27:

205. Unfair competition and unlawful practices

It shall be unlawful for any person engaged in business
as a distiller, brewer, rectifier, blender, or other producer,
or as an importer or wholesaler, of distilled spirits, wine,
or malt beverages, or as a bottler, or warehouseman and
bottler, of distilled spirits, directly or indirectly or through
an affiliate:

(a) Exclusive outlet

To require, by agreement or otherwise, that any re
engaged  in the sale of distilled spirits, wine, -or malt
beverages, purchase any such products from such person
to the exclusion in whole or in part of distilled spirits,
wine, or malt beverages sold or offered for sale by other
persons in interstate or foreign commerce, if such require-
ment is made in the course of interstate or foreign com-
merce, or if such person engages in such practice to such
an extent as substantially to restrain or prevent transac-
tions in interstate or foreign commerce in any such prod-
ucts, or if the direct effect of such requirement is to pre-
vent, deter, hinder, or restrict other persons from selling
or offering for sale any such products to such retailer in in-
terstate or foreign commerce; or

(b) "Tied house"

To induce through any of the following means, any
retailer, engaged in the sale of distilled spirits, wine, or
malt beverages, to purchase any such products from such
person to the exclusion in whole or in part of distilled
spirits, wine, or malt beverages sold or offered for sale by
other persons in interstate or foreign commerce, if such

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          58a

inducement is made in the course of interstate or foreign
commerce, or if such person engages in the practice of
using such means, or any of them, to such an extent as
substantially to restrain or prevent transactions in in-
terstate or foreign commerce in any such products, or if
the direct effect of such inducement is to prevent, deter,
hinder, or restrict other persons from selling or offering
for sale any such products to such retailer in interstate or
foreign commerce: (1) By acquiring or holding (after the
expiration of any existing license) any interest in any
license with respect to the premises of the retailer; or (2) by
acquiring any interest in real or personal property owned,
occupied, or used by the retailer in the conduct of his
business; or (3) by furnishing, giving, renting, lending, or
selling to the retailer, any equipment, fixtures, signs, sup-
plies, money, services, or other thing of value, subject to
such exceptions as the Secretary of the Treasury shall by
regulation prescribe, having due regard for public health,
the quantity and value of articles involved, established
trade customs not contrary to the public interest and the
purposes of this subsection: or (4) by paying or crediting
the retailer for any advertising, display, or distribution
service; or (5) by guaranteeing any loan or the repayment
of any financial obligation of the retailer; or (6) by extend-
ing to the retailer credit for a period in excess of the credit
period usual and customary to the industry for the par-
ticular class of transactions, as ascertained by the
Secretary of the Treasury and prescribed by regulations by
him; or (7) by requiring the retailer to take and dispose of
a certain quota of any of such products; or

(c) Commercial bribery

To induce through any of the following means, any
trade buyer engaged in the sale of distilled spirits, wine, or
malt beverages, to purchase any such products from such
person to the exclusion in whole or in part of distilled

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spirits, wine, or malt beverages sold or offered for sale by
other persons in interstate or foreign commerce, if such in-
ducement is made in the course of interstate or foreign
commerce, or if such person engages in the practice of us-
ing such means, or any of them, to such an extent as
substantially to restrain or prevent transactions in in-
terstate or foreign commerce in any such products, or if
the direct effect of such inducement is to prevent, deter,
hinder, or restrict other persons from selling or offering
for sale any such products to such trade buyer in interstate
or foreign commerce: (1) By commercial bribery; or (2) by
offering or giving any bonus, premium, or compensation
to any officer, or employee, or representative of the trade
buyer; or

(d) Consignment sales

To sell, offer for sale, or contract to sell to any trade
buyer engaged in the sale of distilled spirits, wine, or malt
beverages, or for any such trade buyer to purchase, offer
to purchase, or contract to purchase, any such products on
consignment or under conditional sale or with the privilege
of return or on any basis otherwise than a bona fide sale,
or where any part of such transaction involves, directly or
indirectly, the acquisition by such person from the trade
buyer or his agreement to acquire from the trade buyer
other distilled spirits, wine, or malt beverages - if such
sale, purchase, offer, or contract is made in the course of
interstate or foreign commerce, or if such person or trade
buyer engages in such practice to such an extent as sub-
stantially to restrain or prevent transactions in interstate
or foreign commerce in any such products of if the direct
effect of such sale, purchase, offer, or contract is to pre-
vent, deter, hinder, or restrict other persons from selling
or offering for sale any such products to such trade buyer
in interstate or foreign commerce: Provided, That this

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          60a

subsection shall not apply to transactions involving solely
the bona fide return of merchandise for ordinary and
usual commercial reasons arising after the merchandise
has been sold; or

(e) Labeling

To sell or ship or deliver for sale or shipment, or other-
wise introduce in interstate or foreign commerce, or to
receive therein, or to remove from customs custody for
consumption, any distilled spirits, wine, or malt beverages
in bottles, unless such products are bottled, packaged and
labeled in conformity with such regulations, to be
prescribed by the Secretary of the Treasury, with respect
to packaging, marking, branding, and labeling and size
and fill of container (1) as will prohibit deception of the
consumer with respect to such products or the quantity
thereof and as will prohibit, irrespective of falsity, such
statements relating to age, manufacturing processes,     i !'
analyses, guarantees, and scientific or irrelevant matters as
the Secretary of the Treasury finds to be likely to mislead
the consumer; (2) as will provide the consumer with ade-
quate information as to the identity and quality of the
products, the alcoholic content thereof (except that
statements of, or statements likely to be considered as
statements of alcoholic content of malt beverages are pro-
hibited unless required by State law and except that, in
case of wines, statements of alcoholic content shall be re-
quired only for wines containing more than 14 per centum
of alcohol by volume), the net contents of the package,
and the manufacturer or bottler or importer of the pro-
duce; (3) as will require an accurate statement, in the case
of distilled spirits (other than cordials, liqueurs, and
specialties) produced by blending or rectification, if
neutral spirits have been used in the production thereof,
informing the consumer of the percentage of neutral

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61a

spirits so used and of the name of the commodity from
which such neutral spirits have been distilled, or in case of
neutral spirits or of gin produced by a process of con-
tinuous distillation, the name of the commodity from
which distilled; (4) as will prohibit statements on the label
that are disparaging of a competitor's products or are false,
misleading, obscene, or indecent; and (5) as will prevent
deception of the consumer by use of a trade or brand name
that is the name of any living individual of public prom-
inence, or existing private or public organization, or is a
name that is in simulation or is an abbreviation thereof,
and as will prevent the use of a graphic, pictorial, or
emblematic representation of any such individual or
organization, if the use of such name or representation is
likely falsely to lead the consumer to believe that the pro-
duct has been indorsed, made, or used by, or produced
for, or under the supervision of, or in accordance with the
specifications of, such individual or organization: Provid-
ed, That this clause shall not apply to the use of the name
of any person engaged in business as a distiller, brewer,
rectifier, blender, or other producer, or as an importer,
wholesaler, retailer, bottler, or warehouseman, of distilled
spirits, wine, or malt beverages, nor to the use by any per-
son of a trade or brand name used by him or his
predecessor in interest prior to August 29, 1935; including
regulations requiring, at time of release from customs
custody, certificates issued by foreign governments cover-
ing origin, age, and identity of imported products: Provid-
ed further, That nothing herein nor any decision, ruling,
or regulation of any Department of the Government shall
deny the right of any person to use any trade name or
brand of foreign origin not presently effectively registered
in the United States Patent and Trademark Office which
has been used by such person or predecessors in the United

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62a

States for a period of at least five years last past, if the use
of such name or brand is qualified by the name of the
locality in the United States in which the product is pro-
duced, and, in the case of the use of such name or brand
on any label or in any advertisement, if such qualification
is as conspicuous as such name or brand.
It shall be unlawful for any person to alter, mutilate,
destroy, obliterate, or remove any mark, brand, or label
upon distilled spirits, wine, or malt beverages held for sale
in interstate or foreign commerce or after shipment
therein, except as authorized by Federal law or except pur-
suant to regulations of the Secretary of the Treasury
authorizing relabeling for purposes of compliance with the
requirements of this subsection or of State law.
In order to prevent the sale or shipment or other in-
troduction of distilled spirits, wine, or malt beverages in
interstate or foreign commerce, if bottled, packaged, or
labeled in violation of the requirements of this subsection,
(1) no bottler of distilled spirits, no producer, blender, or
wholesaler of wine, or proprietor of a bonded wine
storeroom, and no brewer or wholesaler of malt beverages
shall bottle, and (2) no person shall remove from customs
custody, in bottles, for sale or any other commercial pur-
pose, distilled spirits, wine, or malt beverages, respective-
ly, after such date as the Secretary of the Treasury fixes as
the earliest practicable date for the application of the pro-
visions of this subsection to any class of such persons (but
not later than August 15, 1936, in the case of distilled
spirits, and December 15, 1936, in the case of wine and
malt beverages, and only after thirty days' public notice),
unless, upon application to the Secretary of the Treasury,
he has obtained and has in his possession a certificate of
label approval covering the distilled spirits, wine, or malt
beverages, issued by the Secretary in such manner and

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63a

form as he shall by regulations prescribe: Provided, That
any such bottler of distilled spirits, or producer, blender,
or wholesaler of wine, or proprietor of a bonded wine
storeroom, or brewer or wholesaler of malt beverages shall
be exempt from the requirements of this subsection if,
upon application to the Secretary, he shows to the satisfac-
tion of the Secretary that the distilled spirits, wine, or malt
beverages to be bottled by the applicant are not to be sold,
or offered for sale, or shipped or delivered for shipment,
or otherwise introduced, in interstate or foreign com-
merce. Officers of internal revenue are authorized and
directed to withhold the release of distilled spirits from the
bottling plant unless such certificates have been obtained,
or unless the application of the bottler for exemption has
been granted by the Secretary; and customs officers are
authorized and directed to withhold the release from
customs custody of distilled spirits, wine, and malt
beverages, unless such certificates have been obtained.
The District Courts of the United States, and the United
States court for any Territory shall have jurisdiction of
suits to enjoin, annul, or suspend in whole or in part any
final action by the Secretary upon any application under
this subsection; or

(f) Advertising

To publish or disseminate or cause to be published or
disseminated by radio broadcast, or in any newspaper,
periodical or other publication or by any sign or outdoor
advertisement or any other printed or graphic matter, any
advertisement of distilled spirits, wine, or malt beverages,
if such advertisement is in, or is calculated to induce sales
in, interstate or foreign commerce, or is disseminated by
mail, unless such advertisement is in conformity with such
regulations, to be prescribed by the Secretary of the
Treasury, (1) as will prevent deception of the consumer

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          64a

with respect to the products advertised and as will pro-
hibit, irrespective of falsity, such statements relating to
age, manufacturing processes, analyses, guaranties, and
scientific or irrelevant matters as the Secretary of the
Treasury finds to be likely to mislead the consumer; (2) as
will provide the consumer with adequate information as to
the identity and quality of the products advertised, the
alcoholic content thereof (except the [sic] statements of, or
statements likely to be considered as statements of,
alcoholic content of malt beverages and wines are pro-
hibited), and the person responsible for the advertisement;
(3) as will require an accurate statement, in the case of
distilled spirits (other than cordials, liqueurs, and
specialties) produced by blending or rectification, if
neutral spirits have been used in the production thereof,
informing the consumer of the percentage of neutral
spirits so used and of the name of the commodity from
which such neutral spirits have been distilled, or in case of
neutral spirits or of gin produced by a process of con-
tinuous distillation, the name of the commodity from
which distilled; (4) as will prohibit statements that are
disparaging of a competitor's products or are false,
misleading, obscene, or indecent; (5) as will prevent
statements inconsistent with any statement on the labeling
of the products advertised. This subsection shall not apply
to outdoor advertising in place on June 18, 1935, but shall
apply upon replacement, restoration, or renovation of any
such advertising. The prohibitions of this subsection and
regulations thereunder shall not apply to the publisher of
any newspaper, periodical, or other publication, or radio
broadcaster, unless such publisher or radio broadcaster is
engaged in business as a distiller, brewer, rectifier, or
other producer, or as an importer or wholesaler, of dis-
tilled spirits, wine, or malt beverages, or as a bottler, or

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65a

warehouseman and bottler, of distilled spirits, directly or
indirectly or through an affilite.
The provisions of subsections (a), (b), and (c) of this
section shall not apply to any act done by an agency of a
State or political subdivision thereof, or by any officer or
employee of such agency.
In the case of malt beverages, the provisions of subsec-
tions (a), (b), (c), and (d) of this section shall apply to tran-
sactions between a retailer or trade buyer in any State and
a brewer, importer, or wholesaler of malt beverages out-
side such State only to the extent that the law of such State
imposes similar requirements with respect to similar tran-
sactions between a retailer or trade buyer in such State and
a brewer, importer, or wholesaler of malt beverages in
such State, as the case may be. In the case of malt
beverages, the provisions of this subsection and subsection
(e) of this section shall apply to the labeling of malt
beverages sold or shipped or delivered for shipment or
otherwise introduced into or received in any State from
any place outside thereof, or the advertising of malt
beverages intended to be sold or shipped or delivered for
shipment or otherwise introduced into or received in any
State from any place outside thereof, only to the extent
that the law of such State imposes similar requirements
with respect to the labeling or advertising, as the case may
be, of malt beverages not sold or shipped or delivered for
shipment or otherwise introduced into or received in such
State from any place outside thereof.
The Secretary of the Treasury shall give reasonable
public notice, and afford to interested parties opportunity
for hearing, prior to prescribing regulations to carry out
the provisions of this section.

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66a

        APPENDIX G

      REGULATORY PROVISIONS

27 C. F. R.:

 7.26. Alcoholic content.

(a) The alcoholic content and the percentage and
quantity of the original extract shall not be stated unless
required by State law. When alcoholic content is required
to be stated, but the manner of statement is not specified
in the State law, it shall be stated in percentage of alcohol
by weight or by volume, and not by proof or by max-
imums or minimums. Otherwise the manner of statement
shall be as specified in the State law.
(b) The terms `low alcohol" or "reduced alcohol" may
be used only on malt beverage products containing less
than 2.5 percent alcohol by volume.
(c) The term "non-alcoholic" may be used on malt
beverage products, provided the statement "contains less
than 0.5 percent (or .5070) alcohol by volume" appears in
direct conjunction with it, in readily legible printing and
on a completely contrasting background.
(d) The term "alcohol-free" may be used only on malt
beverage products containing no alcohol.

7.29 Prohibited practices.

(a) Statements on labels. Containers of malt
beverages, or any labels on such containers, or any carton,
case, or individual covering of such containers, used for
sale at retail or any written, printed, graphic, or other mat-
ter accompanying such containers to the consumer shall
not contain:
(1) Any statement that is false or untrue in any par-
ticular, or that, irrespective of falsity, directly, or by am-

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67a

biguity, omission, or inference, or by the addition of ir-
relevant, scientific or technical matter, tends to create a
misleading impression.
(2) Any statement that is disparaging of a competitor's
products.
(3) Any statement, design, device, or representation
which is obscene or indecent.
(4) Any statement, design, device, or representation of
or relating to analyses, standards, or tests, irrespective of
falsity, which the Director finds to be likely to mislead the
consumer.
(5) Any statement, design, device, or representation of
or relating to any guarantee, irrespective of falsity, which
the Director finds to be likely to mislead the consumer.
Money-back guarantees are not prohibited.
(6) A trade or brand name that is the name of any liv-
ing individual of public prominence, or existing private or
public organization, or is a name that is in simulation or is
an abbreviation thereof, or any graphic, pictorial, or
emblematic representation of any such individual or
organization, if the use of such name or representation is
likely falsely to lead the consumer to believe that the pro-
duct has been endorsed, made, or used by, or produced
for, or under the supervision of, or in accordance with the
specifications of, such individual or organization: Provid-
ed, That this paragraph shall not apply to the use of the
name of any person engaged in business as a producer, im-
porter, bottler, packer, wholesaler, retailer, or ware-
houseman, of malt beverages, nor to the use by any person
of a trade or brand name that is the name of any living in-
dividual of public prominence, or existing private or
public organization, provided such trade or brand name
was used by him or his predecessors in interest prior to
August 29, 1935.

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68a

(b) Simulation of Government stamps. No label shall
be of such design as to resemble or simulate a stamp of the
United States Government or of any State or foreign
government. No label, other than stamps authorized or re-
quired by the United States Government or any State or
foreign government, shall state or indicate that the malt
beverage contained in the labeled container is brewed,
made, bottled, packed, labeled, or sold under, or in accor-
dance with, any municipal, State, Federal, or foreign
government authorization, law, or regulation, unless such
statement is required or specifically authorized by Federal,
State, or municipal, law. or regulation, or is required or
specifically authorized by the laws or regulations of the
foreign country in which such malt beverages were pro-
duced. If the municipal or State government permit
number is stated upon a label, it shall not be accompanied
by an additional statement relating thereto, unless re-
quired by State law.
(c) Use of word "bonded'; etc. The words "bonded",
"bottled in bond", "aged in bond", "bonded age", "bottled
under customs supervision", or phrases containing these
or synonymous terms which imply governmental supervi-
sion over production, bottling, or packing, shall not be
used on any label for malt beverages.
(d) Flags, seals, coats of arms, crests, and other in-
signia. Labels shall not contain, in the brand name or
otherwise, any statement, design, device, or pictorial
representation which the Director finds relates to, or is
capable of being construed as relating to, the armed forces
of the United States, or the American flag, or any
emblem, seal, insignia, or decoration associated with such
flag or armed forces; nor shall any label contain any state-
ment, design, device, or pictorial representation of or con-
cerning any flag, seal, coat of arms, crest or other insignia,

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69a

likely to mislead the consumer to believe that the product
has been endorsed, made, or used by, or produced for, or
under the supervision of, or in accordance with the
specifications of the government, organization, family, or
individual with whom such flag, seal, coat of arms, crest,
or insignia is associated.
(e) Curative and therapeutic claims. Labels shall not
contain any statement, design, representation, pictorial
representation, or device representing that the use of malt
beverage has curative or therapeutic effects if such state-
ment is untrue in any particular or tends to create a
misleading impression.
(f) Use of words Wrong' 'full' strength': and similar
words. Labels shall not contain the words "strong", "full
strength", "extra strength", "high test", "high proof",
"pre-war strength", "full oldtime alcoholic strength", or
similar words or statements, likely to be considered as
statements of alcoholic content, except where required by
State law. This does not preclude use of the terms "low
alcohol, " *'reduced alcohol," "non-alcoholic, " and
"alcohol-free," in accordance with 7.26 (b), (c), and (d).
(g) Use of numerals. Labels shall not contain any
statements, designs, or devices whether in the form of
numerals, letters, characters, figures, or otherwise, which
are likely to be considered as statements of alcoholic con-
tent, unless required by State law.
(h) Coverings, cartons, or cases. Individual coverings,
cartons, cases, or other wrappers of containers of malt
beverages, used for sale at retail, or any written, printed,
graphic, or other matter accompanying the container shall
not contain any statement or any graphic pictorial, or
emblematic representation, or other matter, which is pro-
hibited from appearing on any label or container of malt
beverages.

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70a

7.54 Prohibited statements.

(a) General prohibition. An advertisement of malt
beverages shall not contain:
(1) Any statement that is false or untrue in any
material particular, or that, irrespective of falsity, direct-
ly, or by ambiguity, omission, or inference, or by the addi-
tion of irrelevant, scientific or technical matter, tends to
create a misleading impression.
(2) Any statement that is disparaging of a competitor's
products.
(3) Any statement, design, device, or representation
which is obscene or indecent.
(4) Any statement, design, device, or representation of
or relating to analyses, standards, or tests, irrespective of
falsity, which the Director finds to be likely to mislead the `
consumer.
(5) Any statement, design, device, or representation of
or relating to any guarantee, irrespective of falsity, which
the Director finds to be likely to mislead the consumer.
Money-back guarantees are not prohibited.
(6) Any statement that the malt beverages are brewed,
made, bottled, packed, labeled, or sold under, or in accor-
dance with, any municipal, State, or Federal authoriza-
tion, law, or regulation; and if a municipal or State permit
number is stated, the permit number shall not be accom-
panied by any additional statement relating thereto.
(7) The words "bonded", "bottled in bond", "aged in
bond",  "bonded age", "bottled under customs
supervision", or phrases containing these or synonymous
terms which imply governmental supervision over produc-
tion, bottling, or packing.
(b) Statements inconsistent with labeling. (1) Adver-
tisements shall not contain any statement concerning a
brand or lot of malt beverages that is inconsistent with any

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71a

statement on the labeling thereof.
(2) Any label depicted on a bottle in an advertisement
shall be a reproduction of an approved label.
(c) Alcohol content. Advertisements shall not contain
the words "strong," "full strength," "extra strength," "high
test, " `high proof, " "full alcohol strength," or any other
statement of alcohol content, or any statement of the
percentage and quantity of the original extract, or any
numerals, letters, characters, or figures, or similar words
or statements, likely to be considered as statements of
alcohol content, except where required by State law. This
does not preclude use of the terms "low alcohol," "reduced
alcohol," " non-alcoholic ," and "alcohol-free," as used on
labels, in accordance with  7.26 (b), (c), and (d).
(d) C/ass. (1) No product containing less than one-half
of 1 per centum of alcohol by volume shall be designated
in any advertisement as "beer", "lager beer", "lager",
"ale", "porter", or "stout", or by any other class or type
designation commonly applied to fermented malt
beverages containing one-half of 1 per centum or more of
alcohol by volume.
(2) No product other than a malt beverage fermented
at a comparatively high temperature, possessing the
characteristics generally attributed to "ale," "porter," or
"stout" and produced without the use of coloring or
flavoring materials (other than those recognized in stan-
dard brewing practices) shall be designated in any adver-
tisement by any of these class designations.
(e) Curative and therapeutic claims. Advertisements
shall not contain any statement, design, representation,
pictorial representation, or device representing that the use
of malt beverages has curative or therapeutic effects if
such statement is untrue in any particular or tends to
create a misleading impression.

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72a

(f) Confusion of brands. Two or more different
brands or lots of malt beverages shall not be advertised in
one advertisement (or in two or more advertisements in
one issue of a periodical or a newspaper or in one piece of
other written, printed, or graphic matter) if the advertise-
ment tends to create the impression that representations
made as to one brand or lot apply to the other or others,
and if as to such latter the representations contravene any
provision of $$7.50 through 7.54 or are in any respect un-
true.
 (g) F1ags, seals, coats Of arms, crests, and other in-
signia. No advertisement shall contain any statement,
design, device, or pictorial representation of or relating to,
or capable of being construed as relating to the armed
forces of the United States, or of the American flag, or of
any emblem, seal, insignia, or decoration associated with
such flag or armed forces; nor shall any advertisement
contain any statement, device, design, or pictorial
representation of or concerning any flag, seal, coat of
arms, crest, or other insignia, likely to mislead the con-
sumer to believe that the product has been endorsed,
made, or used by, or produced for, or under the supervi-
sion of, or in accordance with the specifications of the
government, organization, family, or individual with
whom such flag, seal, coat of arms, crest, or insignia is
associated.
(h) Deceptive advertising techniques. Subliminal or
similar techniques are prohibited. "Subliminal or similar
techniques," as used in this part, refers to any device or
technique that is used to convey, or attempts to convey, a
message to a person by means of images or sounds of a
very brief nature that cannot be perceived at a normal level
of awareness.

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73a

APPENDIX  H

[SEAL]
   DEPARTMENT OF THE TREASURY
BUREAU OF ALCOHOL, TOBACCO AND FIREARMS
     WASHINGTON, D.C. 20226

[MAY 04, 1987]
                                         
Adolph Coors Company
Golden, CO 80401

Gentlemen:

We have reviewed your letter dated April 15, 1987, sub-
mitting two applications for label approval, as well as
print and broadcast advertisements. All of these items
contain reference to the alcohol content of the beer and
you asked that we approve them unconditionally for use in
all market areas.

Pursuant to existing law, 27 U.S.C. 205(e)(2) prohibits
statements of alcoholic content on labels of malt beverages
unless required by state law. Further, section 205(f)(2)
prohibits statements in advertising of alcoholic content of
malt beverages in states which prohibit such statements by
similar law.

We have reviewed your proposed labels and advertising
copy, all of which contain statements of specific alcoholic
content, e.g., your proposed Coors beer label which states
"contains 4.6V0 alcohol by volume. " In view of the specific
wording of the statute, we are unable to approve your Ap-
plications for Certificates of Label Approval unless such
labels are used in states where statements of specific alco-
holic content are required. Furthermore, in view of the

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74a

specific wording of section 205(f)(2), we are unable to ap-
prove the statements of specific alcoholic content in your
advertising copy for states which have laws similar to sec-
tion 205(f)(2).

You may consider our letter to be ATF's final agency ac-
tion on this issue. We understand your desire to utilize the
unqualified reference to alcohol content on malt beverage
labels and advertising material, but ATF is charged with
the responsibility for administering the statutory provi-
sions of the Federal Alcohol Administration Act as they
are written.

/s/ B. Weininger
  BRUCE L. WEININGER
  Chief, Industry Compliance Division

Enclosures

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No. 93-1631

In the Supreme Court of the United States

OCTOBER TERM, 1993

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
ET AL., PETITIONERS

v.

COORS BREWING COMPANY

ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

DREW S. DAYS, III
Solicitor General

Department of Justice
Washington, D.C. 20530
(202)514-2217

---------------------------------------- Page Break ----------------------------------------

      TABLE OF AUTHORITIES

Cases:

Page

Bell v. Wolfish, 441 U.S. 520 (1979)  . . . .11 
Bigelow v. Virginia, 421 U.S. 809 (1975)  . . . .14 
Board  of  Trustees  v. Fox, 492 U.S. 469 (1989)  . . . .18, 20 
California v. LaRue, 409 U.S. 109 (1972)  . . . . 19, 20
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984)  . . . .15 
Central Hudson Gas & Elec. Corp. v. Public Serv.
Comm., 447  U.S. 557 (1980)  . . . . 4
Dunagin v. City of Oxford, 718 F.2d 738 (5th Cir. 1983),
cert. denied, 467 U.S. 1259 (1984)  . . . .4 
Edenfield v. Falls, 113 S. Ct. 1792 (1993)  . . . .19 
FEC v. National Conservative Political Action Comm.,
470 U.S. 480 (1985)  . . . . 18
Fedway Assoc., Inc. v. United States Treasury, Bureau
of Alcohol, Tobacco, & Firearms, 976 F.2d 1416 (D.C.
Cir. 1992)  . . . . 2
Friedman v. Rogers, 440 U.S. 1 (1979)  . . . .19 
Kordel v. United States, 335 U.S. 345 (1948)  . . . .16 
Lockhart v. McCree, 476 U.S. 162 (1986)  . . . . 4
Metromedia, Inc. v. City of San Diego, 453 U.S. 490
(1981)  . . . . 14
Meyer v. Grant, 486 U.S. 414 (1988)  . . . .18 
North Dakota v. United States, 495 U.S. 423 (1990)  . . . .15 
Posadas de Puerto Rico Associates v. Tourism Co.,
478 U.S. 328 (1986) . . . . 10, 16, 17, 18
San Francisco Arts & Athletics, Inc. v. United States
Olympic Comm.,,, 483 U.S. 522 (1987)  . . . .  20
South Dakota v. Dole, 483 U.S. 203 (1987)  . . . .  15
Turner Broadcasting Sys., Inc. v. FCC, 114 S. Ct.
2445 (1994)  . . . .   4
United Parcel Service Inc. v. Mitchell, 451 U.S. 56
(1981) . . . . 11

(III)

---------------------------------------- Page Break ----------------------------------------

IV

Cases-Continued:                   Page

United States v. Edge Broadcasting Co., 113 S. Ct. 2696
(1993) . . . . 7, 13, 14
United States v. 0'Brien, 391 U.S. 367 (1968)  . . . .  19
Virginia State Bd. of Pharmacy v. Virginia Citizens
Consumer Council, Inc., 425 U.S. 748 (1976)  . . . .  14
Williamson v. Lee  optical  Co, 348 U.S. 438 (1955)  . . . .  20

Constitution, statutes, regulations and rule:

U.S. Const.:
Amend. I  . . . . 14, 18, 19
Amend. XXI  . . . . 4,5, 15, 19
Act of Jan. 2, 1975, Pub. L. No. 93-583, 1, 88 Stat.
1916  . . . .  14
Federal Alcohol Administration Act, ch. 814, 49 Stat.
977  . . . .  1
 5, 49 Stat. 981 (27 U.S.C. 205)  . . . .2  
 5(e), 49 Stat. 982 (27 U.S.C. 205(e))  . . . .  1
 5(e)(l), 49 Stat. 982 (27 U.S.C. 205(e)(l))  . . . .  2
 5(e)(2), 49 Stat 982 (27 U.S.C. 205(e)(2)) . . . . . 1, 2, 4, 9, 16
   5(f)(2), 49 Stat. 984 (27 U.S.C. 205(f)(2))  . . . . 4
Cal. Code Regs. tit. 4, 130 (1994)  . . . . 8
Ky. Rev. Stat. Ann. $244.520 (Michie/Bobbs-Merrill
1994)  . . . . 8
Ky. Off. of the Atty Gen., OAG 94-50 (July 18, 1994),
1994 WL 400864  . . . . 8
Me. Act of Apr. 20, 1994, ch. 730, 711, 1994 Me. Legis.
Serv. CH. 730 (S.P. 614) (L.D. 1712) (West)  . . . .8 
Pa. Act. No. 80(Oct. 5, 1994)  . . . . 8
Tex. Alto. Bev. Code Ann. $101.41 (West 1994)  . . . .8 
27 C.F.R. 7.26(b)-(d)  . . . . 17
Fed. R. App. P. 28(j)  . . . . 12

Miscellaneous:

79 Cong. Rec. (1935):
P. 11,714  . . . .13 
   11,723  . . . . 12
54 Fed. Reg. 3591 (1989)  . . . . 17 
58 Fed. Reg. 21,228 (1992)  . . . . 9 
H.R. Rep. No. 1542, 74th Cong., 1st Sess. (1935)  . . . . 2, 3 

---------------------------------------- Page Break ----------------------------------------

v

Miscellaneous-Continued:              Page

Hearing Before the FACA With Reference to Proposed
Regulations Relative to the Labeling of Products of the
Brewing Industry (Nov. 1, 1934)  . . . . 3
Hearings on H.R. 8870 Before the Senate Comm. on
Finance, 74th Cong., 1st Sess. (1935) . . . . 3
S. Rep. No. 1215, 74th Cong., 1st Sess. (1935)  . . . .  3
Suein L. Hwang, Miller Brewing Gets Heat for New Ice
Beer Ads, Wall St. J., Oct. 12, 1994  . . . . 6
Eben Shapiro, Molson Ice Ads Raise Hackles of Regu-
lators, Wall St. J., Feb. 25, 1994  . . . .  16

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OCTOBER TERM, 1994

No. 93-1631

LLOYD BENTSEN, SECRETARY OF THE TREASURY,
         PETITIONER

v.

COORS BREWING COMPANY

    ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
    FOR THE TENTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

1. Coors asserts (Resp. Br. 11) that there is "nothing" in
the text or history of the Federal Alcohol Administration Act
(FAAA), ch. 814, 49 Stat. 977, to show that Congress enacted
the labeling restriction in 27 U.S.C. 205(e)(2) to curb strength
wars among malt beverage producers. According to Coors,
"[t]he only basis for the labeling provision that can be gleaned
from the legislative history is a concern that alcohol content
labels on malt beverages might be misleading." Resp. Br. 15;
see also Amicus Br. of Beer Inst. 15 & n.8. That is incorrect.
The text and history of the FAAA make clear that the
labeling restriction was enacted to prevent malt beverage
producers from competing on the basis of high alcohol content.
The text of Section 205(e) shows that Congress's purpose
was not limited to preventing malt beverage alcohol content

(1)

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2

statements that are misleading. Subsection (e)(1) of Section
205 authorizes the Secretary of the Treasury to promulgate
regulations prohibiting "such statements [on labels] * * * as
the Secretary * * * finds to be likely to mislead the
consumer. " 27 U.S.C 205(e)(l). The prohibition against
alcohol content statements on malt beverage labels, however,
is not left as a subject for regulation under subsection (e)(1).
It is specifically dealt with in a separate provision: subsection
(e) (2). Subsection (e)(2), moreover, prohibits all alcohol
content statements on malt beverage labels, not just those
"likely to mislead the consumer."
The legislative history of the FAAA shows that Congress
prohibited all malt beverage alcohol statements, regardless of
their accuracy, in order to prevent competition among malt
beverage producers on the basis of high alcohol strength-i. e.,
to prevent strength wars. The House committee report on the
bill that became the FAAA expressed the judgment that
"[m]alt beverages should not be sold on the basis of alcohol
content." H.R. Rep. No. 1542, 74th Cong., 1st Sess. 12 (1935).
The report explained that the sale of malt beverages on the
basis of high alcohol content had resulted in "unfair
competition" that had caused "[l]egitimate members of the
industry * * * [to] suffer[]." ibid. The report accordingly
concluded that "the prohibition of all such statements" was
necessary, irrespective of their falsity," to protect "the in-
terest of the consumer and the promotion of fair competition."
Id. at 12-13 (emphasis added). The prohibition of malt beverage
alcohol content statements was accordingly included in
Section 205 as one form of "unfair competition" that, as the
title of Section 205 indicates, is proscribed by that provision.
See FAAA 5, 49 Stat. 981; see also Fedway Assocs., Inc. v.
United States Treasury, Bureau of Alcohol, Tobacco &
Firearms, 976 F.2d 1416, 1420 (D.C. Cir. 1992) (interpreting
FAAA provision in light of its title).

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3

As we explain in our opening brief, extensive evidence of the
"unfair competition" described in the House report was
presented at the hearing on the labeling regulations proposed
by the Federal Alcohol Control Administration (FACA)
pursuant to the Executive Order that, in the wake of the
repeal of Prohibition, had extended the code system governing
the alcoholic beverage industry under the National Industrial
Recovery Act. See U.S. Br. 7-9. Although Coors criticizes
the government's reliance on the FACA hearing on the
ground that the FACA regulations "were replaced by the
FAAA" (Resp. Br. 12), that criticism is unfounded. The
House and Senate committee reports stated that, with
specified exceptions (none of which included the labeling and
advertising restrictions), the bill that became the FAAA
"incorporate[d] the greater part of the system * * * enforced
by the Government under the codes." H.R. Rep. No. 1542,
supra, at 4; S. Rep. No. 1215, 74th Cong., 1st Sess. 3 (1935);
see also Hearings on H.R. 8870 Before the Senate Comm. on
Finance, 74th Cong., 1st Sess. 9 (1935) (statement by FACA
Chairman that "advertising control" of alcoholic beverage
industry was "highly successful" under the code system and
that "the same result would follow from this bill.) 1
In sum, the text and history of the FAAA reflect
Congress's determination that beer companies were
competing on the basis of high alcohol content, that such
competition was "unfair" and adverse to "the interest of the

___________________(footnotes)

1 Coors also errs in asserting (Resp. Br. 14) that the testimony at the
FACA hearing regarding strength wars was limited to "isolated remarks
by one witness," Ralph W. Jackman. See U.S. Br. 7-8 (discussing
testimony of George McCabe, counsel to Brewers Code Authority,
presenting views that were "fairly representative of the general sentiment
of the industry"); see also, e.g., Hearing Before the FACA With Reference to
Proposed Regulations Relative to the Labeling of Products of the Brewing
Industry 59 (Nov. 1, 1934) (testimony of Alexander H. Bell about a brewer
who found that "in order to meet competition it was necessary to increase
the alcoholic content of the beer to some extent").

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4

consumer," and that a prohibition on alcohol content
statements in malt beverage labeling and advertising would
prevent such unfair competition. Although Congress did not
set forth those determinations in separate statutory findings,
it was not required to do so. Turner Broadcasting Sys., Inc. v.
FCC, 114 S. Ct. 2445, 2471 (1994) ("Congress is not obligated,
when enacting its statutes, to make a record of the type that
an administrative agency or court does to accommodate
judicial review."). Moreover, because the congressional
determinations underlying the labeling and advertising
restrictions on malt beverage alcohol statements concern
"legislative," as distinguished from "adjudicative," facts, they
are entitled to substantial deference. See, e.g., Lockhart v.
McCree, 476 U.S. 162, 168 n.3 (1986) (citing Dunagin v. City of
Oxford, 718 F.2d 738 (5th Cir. 1983) (plurality opinion of
Reavley., J.) (upholding against First Amendment challenge
prohibition of most forms of signs advertising alcohol), cert.
denied, 467 U.S. 1259 (1984)).
2. In this Court, as in the court of appeals, Coors does not
squarely challenge our submission that, at the time of its
enactment, the labeling restriction in Section 205(e)(2) (as
well as the advertising restriction in Section 205( f )(2))
directly advanced the government's substantial interest in
preventing strength wars among beer companies-and
therefore satisfied the third part of the Central Hudson test.
See Central Hudson Gas & Elec. Corp. v. Public Serv.
Comm `n, 447 J.S. 567, 566 (1980); U.S. Br. 25-26. Instead,
Coors, like the court of appeals, relies on supposed changes in
the malt beverage market since Section 205(e)(2) was enacted.
Resp. Br. 17-19. Especially in light of the distinct consti-
tutional foundation that the Twenty-first Amendment
continues to furnish for regulation of the sale of alcoholic
beverages, the burden properly lies with Coors to show that
labeling restrictions that were valid at the time they (and the
Twenty-first Amendment) were adopted can no longer

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5

reasonably be regarded as furthering a substantial govern-
mental interest. This Coors has failed to do. In any event,
Coors' reliance on asserted changes in the malt beverage
market is misplaced.2
a. Coors' primary argument is that there is "no evidence"
that alcohol content statements in malt beverage labeling and
advertising would lead to strength wars, because "the high-
strength brews do not have the same popular appeal as the
low-strength and the light beers." Resp. Br. 17. That
argument is flawed.
The flaw in Coors' argument is most apparent when viewed
against Coors' own efforts to dispel the consumer perception
that its beer contains less alcohol than other brands. The
record shows that Coors distributed wallet cards to show that
Coors beer contains as much, if not more, alcohol than
competing brands. See U.S. Br. 14. The record also shows
that Coors produced Coors Extra Gold, a higher alcohol beer,
to increase its share of the market. See id. at 36. Finally,
Coors sought approval from the Bureau of Alcohol, Tobacco
and Firearms ( ATF) to put alcohol content statements on its
labels and in its advertising, and brought this action when
approval was denied, in order to dispel the consumer
perception that Coors beer is weak. Ibid.; see also Pet. App.
20a. Thus, Coors' own conduct refutes its contention that

___________________(footnotes)

2 Contrary to the contention of Coors and two of its amici, however, the
government is not taking the position in this Court that changes in the malt
beverage industry since 1935 are altogether irrelevant to the consti-
tutionality of the labeling restriction. See Resp. Br. 10; Amicus Br. of Beer
Inst. 15-17; Amicus Br. of U.S. Tel. Ass'n, et al. 4. For example, changes in
brewing technology plainly may be relevant to the continued force of the
concern expressed in the legislative history of the FAAA that the alcohol
content of malt beverages was, at that time, difficult to measure. As we
explain in our opening brief, our challenge to the judgment below is based,
among other things, on the fact that the Tenth Circuit ignored the historical
evidence underlying the labeling restriction and focused exclusively on
perceived changes in the industry. U.S. Br. 29.

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6

beer companies would not compete on the basis of high alcohol
content if the advertising and labeling restrictions were
struck down.3
Coors' reliance on the current consumer preference for
low-alcohol beers is flawed at a more fundamental level as
well. It assumes that the current preference has nothing to
do with the advertising and labeling restrictions. Common
sense, however, points to a contrary conclusion. As we
discuss in our opening brief, it is obvious that the restrictions
effectively prevent consumers from selecting beer on the
basis of high alcohol content. U.S. Br. 26-27. At the same
time, ATF's regulations permit consumers to choose a beer on
the basis of its low alcohol content. See id. at 6. It is logical
to conclude that this state of affairs has encouraged the

___________________(footnotes)

3 Coors argues that "[t]he net effect of the federal prohibition, with
respect to Coors, is that consumers are drinking stronger beers than they
think." Resp. Br. 19 n.19. That argument attempts to divert attention from
Coors' own conduct, which demonstrates Coors' belief that it will sell more
of its beer if it can persuade people that its beer is as strong as other
brands. This Court has relied on similar conduct by litigants in finding that
a commercial speech restriction satisfies the "directly advances" part of the
Central Hudson test. See U.S. Br. 36 n.30. Moreover, the evidence in the
record shows that other beer companies share Coors' belief that they will
suffer in the marketplace if consumers believe that their brand has less
alcohol than the competition. See, e.g., Deposition of Lutz E. Issleib 66
(statement of chairman and chief executive of Pabst Brewing Company that
"I play follow the leader" with respect to alcohol content of its products);
J.A. 127, 267, 352; see also Amicus Br. of Center for Science in the Public
Interest 16 (quoting statement by Issleib, upon learning that competitor's
brand of "ice" beer was selling because of its high alcohol content: "So I
immediately called Milwaukee and said, Add the alcohol! Let's beef it up.
They got 5.65 [% alcohol by volume], so mine is 5.7."); see also Suein L.
Hwang, Miller Brewing Gets Heat for New Ice Beer Ads, Wall St. J., Oct.
12, 1994, at B11 (reporting statement by Anheuser-Busch official that "some
brewers appear to be marketing ["ice" beers] on the basis of their allegedly
higher strength.").

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7

consumption of low-alcohol beer compared to that of high-
alcohol beer.
Furthermore, Coors' reliance on the current consumer
preference for low-alcohol beer misapprehends the "directly
advances'' part of the Central Hudson test. Coors erroneously
assumes that, under the "directly advances" inquiry, the
government must show that, in the absence of the re-
strictions, most people would select beer on the basis of high
alcohol content. See Resp. Br. 23-24.4 It is sufficient, how-
ever, that enough people would do so to cause beer companies
to compete on the basis of high alcohol content. See United
States v. Edge Broadcasting Co., 113 S. Ct. 2696 (1993), dis-
cussed in U.S. Br. 32-33 & n.25.
The government made such a showing here. As discussed
in the government's opening brief, the evidence shows that
Coors and other companies have promoted their beer on the
ground that it contains as much or more alcohol than
competing brands. U.S. Br. 14. The evidence also shows that
competition in the malt liquor segment of the market is
intense and has been marked by violations of the labeling and
advertising restrictions. Ibid.; see also id. at 36.5 Finally,
Coors' own expert admitted that, if the restrictions are struck

___________________(footnotes)

4 To argue otherwise would trap Coors in an obvious contradiction.
Coors repeatedly asserts that, in the absence of the restrictions, some people
would select a beer based on its low alcohol Content. See, e.g., Resp. Br. 4,
7, 17-19,33. Coors thus cannot reasonably dispute that, in the absence of the
restrictions, other people would select a beer based on its high alcohol
content.
5 Coors errs in suggesting (Resp. Br. 5, 18) that the violations in the
malt liquor segment of the market all concerned "descriptive," as opposed
to numerical, statements of high alcohol content. See, e.g., J.A. 207-208,325.
Moreover, as explained in our opening brief, the fact that most such
violations have involved descriptive statements signifies only that beer
companies cannot circumvent the prohibition of numerical alcohol content
statements as easily as the prohibition of descriptive alcohol content
statements. See U.S. Br. 33; see also J.A. 102.

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8

down, beer companies will probably produce more high-alcohol
beers. J. A. 136-149.
b. Coors' challenge is not supported by "[empirical
evidence from the many states and countries that permit or
"require alcohol content labeling on malt beverages." Resp.
3r. 20 (italics omitted). As we explain in our opening brief,
alcohol content statements are prohibited on malt beverage
labels, at least under certain circumstances, in every State
and the District of Columbia; no State has an across-the-board
rule that permits, much less requires, all malt beverage labels
to include alcohol content statements. U.S. Br. 9-11. Thus,
the absence of strength wars in the States suggests that the
federal labeling restrictions, in tandem with state laws, have
been effective. 6
The evidence concerning other countries, construed most
favorably to Coors, is inconclusive. Although Coors argues
that only the evidence that favors its position should be
accorded significance, it recognizes that there is evidence to

___________________(footnotes)

6 Coors correctly notes (Resp. Br. 31 n.31, 2a, 5a, lOa) that, as a result of
recent legislative or regulatory changes, four States listed in our opening
brief (U.S. Br. 10 n.7, 11 n.10) as having state-imposed prohibitions against
alcohol content statements on malt beverage labels-California, Texas,
Maine, and Kentucky-have eliminated those prohibitions. Cal. Code Regs.
tit. 4,  130 (1994); Tex. Alto. Bev. Code Ann.  101.41 (West 1994); Me. Act
of Apr. 20, 1994, ch. 730, 5711, 1994 Me. Legis. Serv. CH. 730 (S.P. 614)
(L.D. 1712) (West); Ky. Rev. Stat. Ann. 244.520 (Michie/Bobbs-Merrill
1994). In addition, one State listed in both Coors' brief and our brief (Resp.
Br. 9a; U.S. Br. 10 n.7) as prohibiting such statements, Pennsylvania, has
recently repealed that prohibition. Pa. Act No. 80 (Oct. 5, 1994). It appears
that the elimination of state restrictions in at least two of those States was
prompted in part by the district court's decision in this case striking down
the federal labeling restriction. See Statement of Cal. Dep't of Alto. Bev.
Contr. (copies lodged with the Clerk of this Court); Ky. Off. of the Att'y
Gen., OAG 94-50 (July 18, 1994), 1994 WL 400864 (KY-AG database). In
any event, because none of those five States requires alcohol content
statements on malt beverage labels, such statements are prohibited by the
federal labeling restriction.

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9

the contrary. Compare Resp. Br. 20 & nn.21-22 (citing
evidence about Canada and the United Kingdom to support its
position) with id. at 21 n.22 ("no relevant conclusion can be
drawn" from the evidence regarding those countries that
favors government's position). Indeed, Coors' expert cast
doubt on the relevance of all such evidence when he admitted
that "beer, more than most categories, is very national." J.A.
172.
c. Coors asserts that ATF "does not believe [the federal
labeling restriction] serves the asserted interest." Resp. Br.
21 (italics omitted). ATF has made clear, however, that it
believes that the labeling restriction is constitutional. See 58
Fed. Reg. 21,228 (1992). Moreover, although ATF has recom-
mended to Congress that it change the restriction, that
recommendation reflects the agency's view that the recom-
mended changes involve policy (not constitutional) issues that
are for Congress (not the courts) to resolve.7
As we explain in our opening brief, however, Congress has
revisited this issue on several occasions and has declined to
enact bills that would repeal the labeling restriction in
Section 205(e)(2). See U.S. Br. 30 n.23. At the same time, it
has enacted legislation requiring health warnings in alcoholic
beverage labeling and advertising. Id. at 37, 40; see also
Amicus Br. of Wine Inst. 8 (citing legislative material as
evidence that Congress has "encouraged" a "[r]ethinking [ofl
the government's policy in this area"). Under those
circumstances, ATF's views plainly do not support the
conclusion that Congress no longer believes that the labeling
restriction serves a substantial governmental purpose.
d. Coors argues that the labeling restriction in Section
205(e)(2) is irrational in light of other provisions that require
statements of alcohol content on the labels of distilled spirits

___________________(footnotes)

7 One of respondent's amici likewise believes that "the question of
alcohol labeling" is one that "Congress should revisit." Amicus Br. of
Public Citizen 6 n.1.

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10

and of wine that contains more than 1490 alcohol by volume.
Resp. Br. 25. That argument is without merit.
This Court rejected a similar argument in Posadas de
Puerto Rico Associates v. Tourism Co., 478 U.S. 328 (1986).
There, a tourism company argued that it was irrational for
Puerto Rico to ban casino-gambling advertising directed at
residents of Puerto Rico "because other kinds of gambling
* * * may be advertised to the residents of Puerto Rico." Id.
at 342. The Court rejected that argument in light of the
history of other kinds of gambling, which, the Court ex-
plained, justified the legislature's conclusion that "the risks
associated with casino gambling were significantly greater
than those associated with the more traditional kinds of
gambling."Id. at 343.
Historical considerations similarly justify Congress's
distinctive treatment of alcohol content statements in the
labeling and advertising of malt beverages. At the time of the
FAAA's enactment, the evidence of unfair competition on the
basis of high alcohol content concerned only the malt beverage
industry. See U.S. Br. 6-9, 28; see also pp. 2-4, supra. That
evidence justified Congress's conclusion that the risk of
strength wars among malt beverage brewers was more
significant than the risk of such wars among producers of
other alcoholic beverages. That conclusion continues to be
justified by, inter alia, evidence that beer is the drink of
choice among underage drinkers and young adults, for whom
alcohol abuse poses a particularly grave risk. See Amicus Br.
of Center for Science in the Public Interest 9-10; Amicus Br.
of Council of State Gov'ts, et at. 17 n6.8

___________________(footnotes)

8 There is no merit to Coors' other arguments in support of its challenge
to the rationality of the labeling restriction. Coors argues (Resp. Br. 26)
that the restriction is irrational in light of ATF's failure to prohibit use of
the term "malt liquor, " which connotes high alcohol content. ATF advises
us, however, that it has not adopted such a prohibition because it would be
difficult to enforce, given the longstanding and widespread use of the term

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11

3. Coors does not dispute our submission that Congress
intended the FAAA's labeling and advertising restrictions to
operate in tandem with and facilitate the regulation of alcohol
by the States. See U.S. Br. 5-6, 21-22 & n.17. Instead, Coors
asserts that the government is barred from making that
submission because it was not raised below. Resp. Br. 28.
That assertion is incorrect, as the government explained
when Coors made the same assertion in opposing the govern-
ment's petition for a writ of certiorari in this case. See Br. in
Opp. 15 n.7; Reply 3 n.1.9 Coors also contends (Resp. Br. 31)

___________________(footnotes)

"malt liquor," and would probably only lead beer companies to devise new
terms for high-strength beers. Coors next argues (id. at 26-27) that it
makes no sense for the labeling restriction to apply unless a State requires
the disclosure of alcohol content on malt-beverage labels, while the
advertising restriction does not apply unless a State imposes similar
restrictions on intrastate beer. For one thing, it is too late for Coors to
challenge the government's longstanding view that the labeling restriction
applies in States that have not enacted similar restrictions as a matter of
state law, see e.g., Rev. Rul. 62-1962-1 C.B. 362; Coors admits that it did not
advance such a challenge below. Resp. Br. 2 n.3. Nor is the issue properly
before the Court merely because it is addressed in two of the amicus briefs.
Amicus 13r. of Beer Inst. 9 n. Amicus Br. of Ass'n of Nat'] Advertisers, Inc.
(ANA) 6-10; see, e.g., United Parcel Semite, Inc. v. Mitchell, 451 U.S. 56,60
n.2 (1981); Bell v. Wolfish, 441 U.S. 520, 531 n.13 (1979). The government's
view has never been challenged in any prior case by any beer company or
beer advertiser. In any event, it was not irrational for Congress to regulate
labeling more stringently than advertising by having the federal labeling
restriction apply in the absence of a State law to the contrary. Congress
could reasonably determine that alcohol-content comparisons at the point of
sale pose a greater threat than alcohol content disclosure in advertising.
Although Coors disputes the reasonableness of such a determination by
asserting that a beer company could put alcohol content statements on in-
store advertising even if it could not put such statements on the labels of the
beer itself (Resp. Br. 27), Coors does not suggest that such a practice is
occurring, or permitted, anywhere in the country.
9 Coors and one of its amici also criticize the government's "eleventh
hour" reliance on Edge Broadcasting. Resp. Br. 30; Amicus Br. of Beer Inst.
11. The criticism is unfounded. This Court's decision in Edge Broadcasting

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12

that the federal restrictions do not facilitate the enforcement
of state laws regulating alcoholic beverages. That contention
does not withstand scrutiny.
Coors first argues that, because (in its view) the federal
labeling and advertising restrictions do not advance Con-
gress's purpose of preventing strength wars among malt
beverage producers, they do not facilitate state laws having a
similar purpose. Resp. Br. 28. We have shown above and in
our opening brief that the premise of that argument is
incorrect. See U.S. Br. 25-33; pp. 4-10, supra.
Coors next claims (Resp. Br. 29) to have difficulty under-
standing our " `border crossing' argument." It is simple. As
Coors recognizes (id. at 19 n.18, 35 n.37), many States limit
the alcohol content of malt beverages sold within the State.
See also J.A. 357-360. A resident of such a State must travel
to a different State if he or she wants to buy higher-alcohol
beer. Before doing so, however, the resident must determine
which other State permits the sale of higher-alcohol beer.
The federal labeling and advertising restrictions generally
prevent the resident from making that determination. They
accordingly give effect to the State's judgment regarding the
maximum alcohol content appropriate for its citizens. 10

___________________(footnotes)

was not issued until after the government had filed its opening and reply
briefs in the Tenth Circuit and that court had heard oral argument in this
case. On the same day that this Court issued its decision in Edge
Broadcasting, the government advised the Tenth Circuit of that decision in
a letter submitted pursuant to Fed. R. App. P. 28(j) and thereafter cited
the decision in its rehearing petition (at 11) to the Tenth Circuit in this case.
10 Coors dwells at some length on the wide variety of state laws
regarding the labeling and advertising of malt beverages to show that
some States have taken approaches to the disclosure of malt beverage
alcohol content that reflect a policy of disclosure in certain circumstances.
See Resp. Br. 30-31 & n.31, 34 n.35, 35 n.37. That showing confirms that the
federal labeling and advertising restrictions have permitted state
experimentation and diversity in this area, and is thus consistent with
Congress's intention in enacting the FAAA "to supplement legislation by

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13

Coors also argues (Resp. Br. 29) that the federal
restrictions will not prevent citizens of one State from finding
out the alcohol content of the beer sold in another State if the
latter State has overridden the federal restrictions. That
does not mean, however, that the restrictions fail directly to
advance Congress's goal of preventing strength wars.
Rather, it shows that the restrictions were also designed to
accommodate the matrix of state laws that existed both when
the FAAA was enacted and now. Coors, like the party
challenging the federal restriction on commercial speech in
Edge Broadcasting, ignores the "congressional policy of
balancing the [differing] interests" of the States. 113 S. Ct. at
2704; see also Amicus Br. of Council of State Gov'ts 19.11
4. Coors contends (Resp. Br. 31-37) that the federal
labeling restriction is not narrowly enough tailored to achieve
its purpose. At the outset, Coors argues (id. at 31) that, in
reviewing the fit between the labeling restriction and the
purposes underlying it, the Court should apply a stricter
standard than the "reasonable fit" standard required under

___________________(footnotes)

the States to carry out their own policies." 79 Cong. Rec. 11,714 (1935)
(remarks of Rep. Cullen); see also id. at 11,723 (remarks of Rep. Celler)
(describing variety of state laws on alcoholic beverages); see also U.S. Br.
21 n.17 (citing other portions of debate reflecting intention to enhance
ability of States to regulate alcoholic beverages).

11 Coors points out (Resp. Br. 30) that whereas the federal ban on lottery
advertising at issue in Edge Broadcasting applied only in States that
themselves banned lotteries, the federal labeling restriction at issue here
applies unless a State enacts a law requiring alcohol content statements on
malt beverage labels. That difference does not make Edge Broadcasting
inapposite. It merely reflects that Congress structured the two statutes
differently, taking account of the nature of the commercial activity to be
regulated. Thus, the FAAA was shaped, as the congressional debate
reveals, by Congress's judgment that "[t]he liquor industry is too big and
the constitutional and practical limitations on the States are so considerable
that they alone cannot do the whole job." 79 Cong. Rec. 11,714 (1935)
(remarks of Rep. Cullen).

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14

the fourth part of the Central Hudson test. See also Amicus
Br. of Public Citizen 12.12 Coors' argument rests on the
erroneous assertion that the labeling restriction is "a
categorical prohibition" against the disclosure of the alcohol
content of malt beverages. Resp. Br. 31. Elsewhere Coors
recognizes that it and other beer companies may disclose the
alcohol content of their beer "as long as that information is
not on a label or in an advertisement," id. at 22, and in States
that require such disclosure. 13 Because this case does not
involve "the government's power to compel total silence" (id.
at 9 n.5), Coors' strict scrutiny argument is without merit.14

___________________(footnotes)

12 One of Coors' amici, the Washington Legal Foundation (WLF),
similarly argues that the Court has applied strict scrutiny to laws that
"suppress[] * * * accurate, factual information on the ground that its
dissemination will allegedly impair the achievement of governmental
objectives." Amicus Br. of WLF 3; see also id. at 4. That argument cannot
be reconciled with this Court's application of the Central Hudson test,
rather than a strict scrutiny standard, in Posadas and Edge Broadcasting.

13 Moreover, factual news reporting about the alcohol content of malt
beverages is not prohibited under ATF regulations (J.A. 215), contrary to
the suggestion of amicus WLF (see Amicus Br. of WLF 13, 15). Nor are
"statements on the health benefits of moderate drinking" (Amicus Br. of
Wine Inst. 2), unless they are made in connection with advertising and
promotion (see id. at 6-7).

14 Coors also argues that strict scrutiny is appropriate because the
FAAA was enacted before commercial speech was accorded First
Amendment protection. Resp. Br. 32. That argument cannot be reconciled
with Edge Broadcasting, in which this Court applied the Central Hudson
test, to uphold a federal statute enacted prior to this Court's modern
commercial speech jurisprudence. See Edge Broadcasting, 113 S. Ct. at
2701 (reviewing lottery statute as amended in January 1975, see Act of Jan.
2, 1975, Pub. L. No. 93-583, 31, 88 Stat. 1916, prior to Bigelow v. Virginia,
421 U.S. 809 (1975), which was identified in Metromedia, Inc. v. City of San
Diego, 453 U.S. 490, 505 (1981), as the earliest decision of this Court
foreshadowing modern commercial speech doctrine); see also Virginia State
Bd. of Pharmacy v, Virginia Citizens Consumer Council, Inc., 425 U.S. 748,
759-760 (1976).

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15

Likewise without merit is Coors' argument that Congress
could have achieved its goals by limiting the alcohol content of
malt beverages instead of restricting alcohol content state-
ments in the labeling and advertising of such beverages.
Resp. Br. 35-36. As we explain in our opening brief, Congress
reasonably could have concluded that a federal limit on alcohol
content would have interfered with the States' authority to
regulate alcoholic beverages to a greater extent than do the
federal labeling and advertising restrictions. U.S. Br. 24-25.
Coors acknowledges as much when it asserts that authority
over the labeling of alcoholic beverages does not "implicate
the `core 32 power' conferred [upon States] by the Twenty-
first Amendment." Resp. Br. 44 (quoting Capital Cities
Cable, Inc. v. Crisp, 467 U.S. 691, 713 (1984)). 15 Moreover,
contrary to Coors' assertion, labeling restrictions do occupy
an important place in the regulation of alcoholic beverages
under the Twenty-first Amendment. See North Dakota v.
United States, 495 U.S. 423, 432 (1990) (plurality opinion).

___________________(footnotes)

15 Coors therefore errs when it attempts to distinguish this case from
Posadas on the ground that "in Posadas, it was undisputed that there was
no direct regulation of conduct that could have effectively accomplished the
government's purposes," because "[p]rohibiting casino gambling altogether
would have frustrated the government's pursuit of tourist income." Resp.
Br. 36 n.39. So too here, a federal limit on the alcohol content of malt
beverages would have frustrated Congress's purpose of facilitating, rather
than displacing, state laws regulating alcohol. Coors argues, however, that
Congress could have enacted a federal limit on the alcohol content of malt
beverages that could be overridden by state laws adopting higher or lower
limits. Id. at 35. Coors does not explain why its proposal is not subject to
the same criticism that Coors elsewhere levels against the federal labeling
restriction: i.e., that it "does not respect state authority" because it
"affirmatively imposes a federal [restriction] unless the state enacts
contrary legislation." Id. at 30. In any event, in the absence of labeling and
advertising restrictions, Coors' proposal would likely encourage the sort of
hazardous behavior addressed by the federal statute upheld in South
Dakota v. Dole, 483 U.S. 203, 208-209 (1987) (interstate travel by young
people to buy beer in states with lower legal drinking age).

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16

Congress therefore cannot be faulted for pursuing an
approach toward labeling in Section 205(e)(2) that respects
State regulatory authority.
Coors also proposes several labeling and advertising
restrictions that it claims are more narrowly tailored than
the existing federal restrictions. Resp. Br. 36-37. As
discussed in our opening brief, however, Congress reasonably
could have concluded that those proposals would be less
effective. See U.S. Br. 34-37. In particular, restrictions
applicable only to malt beverages with the highest alcohol
content, such as malt liquor, would not prevent the
competition on the basis of high alcohol content that was
shown to exist in other segments of the market. A restriction
applicable only to descriptive statements of alcohol content,
but not numerical statements, would not prevent violations of
the sort that have already occurred. See p. 9 n.5, wpra
(violations have included numerical statements). Finally, a
restriction applicable to forms of advertising other than
labeling ignores that "[ e]very labeling is in a sense an
advertisement." Kordel v. United States, 335 U.S. 345, 351
(1948)."
There is no support for Coors' claim that the labeling and
advertising restrictions prevent people from choosing a beer

  ___________________(footnotes)
                
16 Thus, Amicus WLF is misguided in its attempt to draw a sharp
"contrast" between "advertising and promotion" and the "straightforward
furnishing of an unvarnished fact" on a label. Amicus Br. of WLF 6 n.2; cf.
Eben Shapiro, Molson Ice Ads Raise Hackles of Regulators, Wall St. J.,
Feb. 25, 1994, at B1 (describing television advertisements depicting malt
beverage label with alcohol content statement). Another Coors' amicus,
Public Citizen, proposes, as a more "narrowly tailored" alternative to the
federal labeling restriction, a new tax on malt beverages tied to their
alcohol content (a proposal to which Coors does not subscribe). See Amicus
Br. of Public Citizen 13. The existence of such additional means of
preventing strength wars, however, does not demonstrate that the means
chosen are invalid. See Posadas, 478 U.S. at 344.

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17

based on its low alcohol content. Resp. Br. 33.17. ATF
regulations permit beers having the lowest alcohol content to
be labeled as such. 27 C.F.R. 7.26(b)-(d).18 Moreover, con-
sumers who want to find out the alcohol content of a beer may
get that information from its producer. J.A. 214-215,260.19
5. In Posadas, this Court distinguished between
commercial speech concerning activity that "could have been]
prohibited * * * altogether" and commercial speech con-
cerning activity that "was constitutionally protected and
could not have been prohibited." 478 U.S. at 345. The Court
indicated that restrictions on the first category should be
reviewed under a less stringent standard than restrictions on
the second. Id. at 345-346. The Court reasoned that "because
the government could have enacted a wholesale prohibition of

___________________(footnotes)

17 As an initial matter, the assertions by Coors and its amici regarding
the "danger[ ]" that a consumer who wants a low-alcohol beer will
unwittingly choose a high-alcohol beer (see Resp. Br. 33-34; Amicus Br. of
Public Citizen 6-7) are at odds with Coors' position elsewhere in its
submission. Thus, Coors goes to great lengths to dismiss high-alcohol malt
beverages as a "fringe product" that are readily identifiable by their
"rougher and harsher" taste. Resp. Br. 18-19. Moreover, according to
Coors, the alcohol content of "mainstream" malt beverages is kept low
because the effect of alcohol upon taste "ensure[s] that any increases in
alcohol content would be very slight." Id. at 19; see also J.A. 145 (testimony
of Coors' expert that "mainstream" beer in U.S. is in "3.5 to 5.5[% alcohol
content] bracket").

18 Although Coors suggests that the regulations may conflict with the
FAAA (Resp. Br. 2 n.2), ATF reasonably construes the statute to prohibit
only competition on the basis of high alcohol content. See 54 Fed. Reg. 3591
(1989).

19 Amicus WLF asserts that the "regulatory scheme seems well
calculated to chill the speech" of producers asked to provide alcohol content
information. Amicus Br. of WLF 7. To the contrary, ATF has and
exercises the authority to provide guidance in this area. See Amicus Br. of
Wine Inst. 7 (discussing ATF proposal to promulgate rules to provide
guidance on health claims in advertising and labeling of alcoholic
beverages).

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18

the underlying conduct * * * it is permissible for the
government to take the less intrusive step of allowing the
conduct, but reducing the demand." Id. at 346; see also Meyer
v. Grant, 486 U.S. 414, 424 (1988). Coors simply ignores that
reasoning in contending that Posadas does not support a less
stringent standard of review for commercial speech promoting
an activity that could be prohibited altogether. Resp. Br. 38-
39.20
Coors errs in asserting that the application in this case of
the less strict standard of review contemplated by Posadas
would invite "judicial policy judgments about the social value
of particular commercial activities." Resp. Br. 40. As this
Court has recognized, the sale of alcohol has traditionally
been subject to stringent regulation at both the state and
federal level. See Posadas, 478 U.S. at 346; see also U.S. Br.
40-41 (citing cases). This case thus falls squarely within the
reasoning of Posadas.21

___________________(footnotes)

20  Nor can the reasoning of Posadas concerning the two types of
commercial speech be dismissed as "dicta," as amici Beer Institute (at 19)
and ANA (at 19) contend.
21 The standard of review under Posadas does not "count[] the
government's interest in inhibiting socially harmful activity twice," as
amicus Wine Institute claims (at 10). Instead, the Posadas standard
recognizes that, with respect to commercial speech about certain activities,
such as gambling and the sale of alcoholic beverages, the government has a
particularly strong regulatory interest, commensurate with the partic-
ularly serious social harms those activities have traditionally been
understood to cause. That recognition accords with other decisions of this
Court that relate the appropriate standard of review to the nature of the
speech at issue. Compare, e.g., FE C v. National Conservative Political
Action Comm., 470 U.S. 480, 493 (1985) (applying strict scrutiny to
restrictions on political speech by private persons, because such speech is at
the "core" of the First Amendment), with Board of Trustees v. Fox, 492
U.S. 469, 478 (1989) (less stringent standard of review applies to commercial
speech because it occupies a "subordinate position in the scale of First
Amendment values").

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19

6. The Constitution itself establishes the strength of
legislative policy judgments regarding the sale and use of
alcoholic beverages, for the Twenty-first Amendment
"confer[s] something more than the normal state authority
over public health, welfare, and morals." California v.
LaRue, 409 U.S. 109, 114 (1972). It therefore is appropriate in
this case to apply a less stringent standard of review than is
normally applied to restrictions on commercial speech, based
on LaRue and subsequent cases holding that laws within the
ambit of the Twenty-first Amendment are entitled to an
"added presumption in favor of the[ir] validity" when
challenged under the Speech Clause of the First Amendment.
Id. at 118. Because the federal labeling restriction facilitates
the enforcement of such state laws, it is entitled to the added
presumption of validity applied in LaRue. See U.S. Br. 44-45
& n.35.
Coors ignores the reasoning of LaRue by asserting that
the regulation challenged there "was valid under the First
Amendment, without regard to the Twenty-first Amendment."
Resp. Br. 43; see also Amicus Br. of Wine Inst. 11-12.22 The
Court in LaRue held that because the regulation was within
the ambit of the Twenty-first Amendment, that Amendment
"require[d]" (409 U.S. at 119) the application of a less strin-
gent standard of review than would otherwise apply under
United States v. 0'Brien, 391 U.S. 367 (1968), to a restriction
on expressive activity. The Court in La Rue accordingly

___________________(footnotes)

22 Coors attempts to distinguish LaRue on the ground that the
regulation at issue in LaRue applied only to unprotected "conduct," whereas
the legislation at issue here applies to pure "speech." Resp. Br. 43; see also
Amicus Br. of WLF 17. That attempt is unavailing. The Court in LaRue
determined that "at least some of the performances to which these
regulations address themselves are within the limits of the constitutional
protection of freedom of expression." 409 U.S. at 118. By the same token,
the Court has recognized that commercial speech is "linked inextricably"
with the commercial conduct it concerns. Edenfield v. Fane, 113 S. Ct. 1792,
1798 (1993) (quoting Friedman v. Rogers, 440 U.S. 1,10 n.9 (1979)).

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20

upheld the regulation under a standard that was plainly less
stringent than the 0'Brien test. 409 U.S. at 116 (citing
Williamson v. Lee Optical Co., 348 U.S. 483,487-488 (1955)).
Just as the O`Brien test was inappropriate in LaRue, the
Central Hudson test is inappropriate here. See San
Francisco Arts & Athletics, Inc. v. United States Olympic
Comm., 483 U.S. 522, 537 n.16 (1987) (O'Brien and Central
Hudson test were "substantially similar" as applied to chal-
lenged legislation); see also Fox, 492 U.S. at 478. To conclude
otherwise would justify the invalidation of federal legislation
that is necessary to, and designed to ensure, the effective
enforcement of state laws regulating alcohol.

                         *  *   *   *   *   

For the foregoing reasons, as well as those set forth in our
opening brief, the judgment of the court of appeals should be
reversed.

Respectfully submitted.

DREW S. DAYS, III
Solicitor General

OCTOBER 1994