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LEGAL ISSUES CONCERNING 

STATE ALCOHOL REGULATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS AND 

COMPETITION POLICY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 18, 2010 

Serial No. 111–125 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS AND COMPETITION POLICY

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

CHARLES A. GONZALEZ, Texas 

SHEILA JACKSON LEE, Texas 

MELVIN L. WATT, North Carolina 

MIKE QUIGLEY, Illinois 

DANIEL MAFFEI, New York 

[Vacant] 

HOWARD COBLE, North Carolina 

JASON CHAFFETZ, Utah 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BOB GOODLATTE, Virginia 

DARRELL ISSA, California 

GREGG HARPER, Mississippi 

CHRISTAL SHEPPARD, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

MARCH 18, 2010 

Page 

OPENING STATEMENTS 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Chairman, Subcommittee on Courts and 

Competition Policy ............................................................................................... 1 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts and 

Competition Policy ............................................................................................... 2 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michiigan, Chairman, Committee on the Judiciary, and Member, 

Subcommittee on Courts and Competition Policy ............................................. 3 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 10 

WITNESSES 

The Honorable Bobby L. Rush, a Representative in Congress from the State 

of Illinois 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 14 

The Honorable Mike Thompson, a Representative in Congress from the State 

of California 

Oral Testimony ..................................................................................................... 17 

Prepared Statement ............................................................................................. 19 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee 

Oral Testimony ..................................................................................................... 22 

Prepared Statement ............................................................................................. 24 

The Honorable George Radanovich, a Representative in Congress from the 

State of California 

Oral Testimony ..................................................................................................... 28 

Prepared Statement ............................................................................................. 30 

Mr. James C. Ho, Solicitor General of Texas, Office of the Solicitor General, 

Austin, TX 

Oral Testimony ..................................................................................................... 33 

Prepared Statement ............................................................................................. 35 

Ms. Nida Samona, Chairperson, Michigan Liquor Control Commission, Lansing, MI 

Oral Testimony ..................................................................................................... 36 

Prepared Statement ............................................................................................. 39 

Mr. Stephen Hindy, Chairman and President, Brooklyn Brewery, Brooklyn, 

NY 

Oral Testimony ..................................................................................................... 45 

Prepared Statement ............................................................................................. 47 

Ms. Pamela S. Erickson, Chief Executive Officer, Public Action Management, 

Scottsdale, AZ 

Oral Testimony ..................................................................................................... 51 

Prepared Statement ............................................................................................. 53 

Page

IV 

Mr. Darren Bush, Associate Professor of Law, University of Houston Law 

Center, Houston, TX 

Oral Testimony ..................................................................................................... 84 

Prepared Statement ............................................................................................. 87 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Chairman, Committee on the 

Judiciary, and Member, Subcommittee on Courts and Competition Policy .... 4 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 157 

(1) 

LEGAL ISSUES CONCERNING 

STATE ALCOHOL REGULATION 

THURSDAY, MARCH 18, 2010 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS AND

COMPETITION POLICY

COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Subcommittee met, pursuant to notice, at 1:10 p.m., in room 

2141, Rayburn House Office Building, the Honorable Henry C. 

‘‘Hank’’ Johnson, Jr. (Chairman of the Subcommittee) presiding. 

Present: Representatives Johnson, Conyers, Gonzalez, Jackson 

Lee, Quigley, Maffei, Coble, Chaffetz, Smith, Sensenbrenner, Goodlatte, and Issa. 

Staff present: (Majority) Christal Sheppard, Subcommittee Chief 

Counsel; Anant Raut, Counsel; Rosalind Jackson, Professional Staff 

Member; and (Minority) Stewart Jeffries, Counsel. 

Mr. JOHNSON. This hearing of the Committee on the Judiciary, 

the Subcommittee on Courts and Competition Policy will now come 

to order. Without objection the Chair is authorized to declare a recess. 

Let me start off by saying that as Chairman of the Subcommittee 

on Courts and Competition Policy, I strive to keep all of our hearings balanced. I like for our Members to hear a variety of views, 

so that they can make informed decisions. So you can imagine my 

disappointment when a number of groups whom we invited to testify declined the opportunity. 

My staff reached out to the Wine Institute, Wine America, and 

the Specialty Wine Retailers Association. Collectively, they represent more that 1,000 wineries, yet they couldn’t find a single person to come here today and testify. 

This would have been an excellent opportunity for them to express their point of view. If I were one of their members, I would 

not be happy. 

We also solicited the input of a number of trade associations and 

retailers, including Costco. I thank them for their cooperation. 

Let me assure all of you that my door remains open. I invite all 

of the institutions whom we talked to that were unable to participate today to submit statements for the record. 

The central question of this hearing is: What is the ideal balance 

between state regulation and Federal oversight over the alcoholic 

beverage industry? Now, I have heard that some people already 

have legislation in mind. I think that is premature. 

2 

A system that is working should continue as it is, so if there is 

a compelling reason to change the applicable laws in this country 

let us hear it. Let us bring everything out from behind closed doors. 

In the early part of the last century, this country prohibited alcohol. Ultimately, we reversed course. The 21st Amendment overturned prohibition and affirmed the important role of states in the 

regulation of the alcoholic beverage industry. 

A number of states developed a three-tier system for alcoholic 

beverage distribution: licensed manufacturers sell exclusively to licensed wholesalers, who in turn sell exclusively to licensed retailers. Some say that this system has been responsible for minimizing 

alcohol abuse and consumption by minors. There are others who 

say that this system favors distributors and reduces choice and increases prices for consumers. 

The three-tier system has been challenged on antitrust and constitutional grounds in a number of states. In one of these decisions, 

Granholm v. Heald, the Supreme Court struck down discriminatory 

treatment of out-of-state wineries under the dormant Commerce 

Clause of the Constitution. This decision allowed for the direct 

shipment of wine from out-of-state vineyards, providing a huge 

sales boost to small wineries lacking the scale or resources to work 

with large national distributors. 

In another case, Costco v. Marin, the Ninth Circuit upheld a 

number of Washington State alcohol regulations but struck down 

the post and hold pricing system. The court of appeals held that 

unlike the other state regulations, this one fell outside of the traditional antitrust immunity enjoyed by state regulations because it 

allowed private parties to fix the retail prices of certain alcoholic 

beverages in violation of Federal antitrust laws. 

So today we ask our experts, why do we need to change anything? Aren’t these decisions just clarifying the applicable law or 

are they creating ambiguity? 

Yes, Congress had one intent in mind when it passed the 21st 

Amendment, but it also had a specific intent in mind with every 

antitrust law it passed, just as the original framers had an intent 

in mind when they wrote the Commerce Clause of the Constitution. 

I hope that today’s hearing will shed some light on what the proper 

balance among these laws should be. 

And I now recognize my colleague, Howard Coble, the distinguished Ranking Member of the Subcommittee, for his opening remarks. 

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman, for calling this hearing. 

We have two full panels so I will be brief, Mr. Chairman, but today’s hearing, as you know, is on the legal challenges to state alcohol regulation. 

I am an advocate for state regulation in this area. States are 

generally, without—perhaps an occasional exception—but generally 

the states are in the best position to determine what the appropriate level of regulation is for their citizens. 

I am also an advocate of the three-tier system because I believe 

that it provides an efficient means to maintain quality control on 

alcohol and helps to ensure that alcohol is sold only to adults. 

These are important and laudable goals, and anything that ConVerDate Aug 31 2005 13:04 Nov 12, 2010 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\031810\55481.000 HJUD1 PsN: DOUGA
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gress does in this area should be done with an eye to ensuring that 

we are keeping our constituents safe. 

That said, I am also an advocate in competition and giving consumers more choices. Fortunately, in the last few decades we have 

seen a proliferation of small wineries and breweries. These new 

players have helped expand Americans’ palates. 

I have heard from some of my constituents in the producer industry, and they support alcohol regulation, particularly those requirements—strike that—those regulations that promote quality 

and safety. I think this is encouraging to be aware of that. 

However, they express concern that some alcohol state laws serve 

not to protect consumers but rather to protect the business interests of in-state producers, wholesalers, and retailers, sometimes at 

the expense of competition from out-of-state vendors. Others who 

are small producers of beer and wine depend on the ability to market their products directly to consumers throughout the country. 

While they may have become regional economic engines we should 

not overlook their interests simply because they cannot operate like 

other mass-produced. 

December 25, 2008, Mr. Chairman, marked the 75th anniversary 

of the 21st Amendment, and since that time they have taken their 

responsibility to regulate alcohol very seriously and should be recognized for this. 

I expect our distinguished panels to highlight instances within 

the three-tier system that warrant our attention. These are complicated matters, and as we begin to wade through these issues we 

should not overlook the significance of the 21st Amendment and remember there is always room for improvement, particularly in the 

area of safety. I am grateful that we have such an excellent panel 

of Members to begin with, and then expert witnesses following, 

here today who can shed some light on the complicated legal and 

factual issues that surround state alcohol regulation. 

Mr. Chairman, we have all heard many stories—some humorous, 

some sad—involving alcohol. One of the towns I represent back 

home has long been a traditionally dry town. The voters, however, 

voted to approve the lawful sale and consumption in that town a 

few months ago. It is reported that one of my constituents once 

said, ‘‘There will be beer and wine sold in Asheboro when pigs fly.’’ 

Well, there is a pub in Asheboro now entitled ‘‘The Flying Pig,’’ so 

one never knows what will happen. 

Thank you, Mr. Chairman. I yield back. 

Mr. JOHNSON. Thank you, Mr. Coble. 

I will now recognize Mr. John Conyers, a distinguished Member 

of this Subcommittee and also Chairman of the full Committee on 

the Judiciary. 

Chairman? 

Mr. CONYERS. Thank you very much, Chairman Johnson. I ask 

unanimous consent to put my remarks in the record. 

Mr. JOHNSON. Without objection, so ordered. 

[The prepared statement of Mr. Conyers follows:] 

4 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDICIARY, AND MEMBER, SUBCOMMITTEE ON COURTS AND COMPETITION POLICY


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Mr. CONYERS. And, you know, as Chair of the Committee I am 

supposed to know a lot about everybody on the Committee, and it 

is only appropriate that I announce that today is the birthday of 

Howard Coble. He is now 40 years old. [Laughter.] 

Mr. COBLE. Mr. Chairman, would you yield? [Applause.] 

Thank you. I thank you very much. 

Mr. Chairman, I thank you. 


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And thank you all for the generous reception, but for the gentleman from Michigan’s information, I am only 39. [Laughter.] 

Mr. CONYERS. This is an issue before us about the 21st Amendment and the Commerce Clause, and I have just mentioned to 

some friends earlier today that there is something happening in 

our digital age that more and more modern machines, and techniques, and Web pages, and Internets, and Web sites are creating 

new challenges. In intellectual property, for example, we spend a 

lot of time here trying to persuade not just youngsters in college 

but a lot of people that you may not be able to download property 

that is not your own without the permission of the creator. 

And so here, in this area, we now find out that there are some 

people in the business that are saying, ‘‘The rules that you have 

in this state are different from the people that are outside trying 

to do business and the people that are inside trying to do business,’’ 

and so we—I just feel I am just redescribing the nature of the challenge before us. And so I look forward to this panel. 

Thank you so much. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

And I think I should note for the record that two of our witnesses 

before us have green on today, so—even the Chairman does—so I 

believe that the activities of yesterday have continued on into today 

and will continue tonight as well. 

Next, I would like to recognize the Ranking Member of the full 

Committee on Judiciary, Mr. Lamar Smith, out of Texas. 

Mr. SMITH. Thank you, Mr. Chairman. Let me confess that the 

Chairman of the full Committee beat me to it because I was going 

to thank you, Chairman, for holding this hearing to help celebrate 

Howard Coble’s birthday, but I am glad it was recognized earlier, 

and better to have it recognized twice than not at all. Glad to have 

Howard here. 

Mr. Chairman, America has a long and complicated history with 

alcohol. In 1794 President George Washington sent troops to western Pennsylvania to quash the Whiskey Rebellion, which was 

fought in opposition to the Federal Government’s tax on alcohol to 

pay for the American Revolution. 

Of course, America’s most famous battle with alcohol was the 

prohibition era, from 1920 to 1933, which began with the adoption 

of the 18th Amendment in 1918. While the ban on alcohol was 

well-intentioned, in practice it led to flaunting of the laws, with 

many citizens patronizing speakeasies and consuming bathtub gin. 

Further, while prohibition was meant to promote public safety, the 

proliferation of illegal alcohol distribution by organized criminal enterprises led to an increase in alcohol-related violence. 

In 1933 Congress passed, and the states ratified, the 21st 

Amendment, which repealed prohibition. Section 2 of the 21st 

Amendment sets forth the power of states to regulate alcohol providing that ‘‘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 laws thereof is hereby prohibited.’’ 

The 21st Amendment, in conjunction with the Wilson Act and 

the Webb-Kenyon Act, supplies the basis for state regulation of alcohol. The Wilson Act provides that alcoholic beverages transported 

11 

into a state are subject to the state’s laws to the same extent and 

in the same manner as those such liquids or liquors have been produced in such state or territory. The Webb-Kenyon Act prohibits 

the transportation of alcoholic beverages into a state from outside 

the state if received, possessed, sold, or in any manner used in violation of the receiving state’s laws. 

I say all this for a number of reasons: In response to the 21st 

Amendment most states have enacted several—some form of the 

three-tier system for alcohol distribution. This system separates alcohol producers from alcohol wholesalers from alcohol retailers. 

The inclusion of wholesalers as middlemen in the transaction 

makes it easier for states to regulate alcohol; it makes it possible 

for states to ensure that alcohol is safe; it makes it simpler to ensure that alcohol is sold only to individuals over 21 years old; and 

it provides a straightforward alcohol tax collection system for the 

states. These are all laudable goals, and for those reasons I am 

supportive of the three-tier system. 

Naturally, some alcohol producers and retailers are concerned 

about state liquor regulations that they perceive hurt their ability 

to compete in a particular state. Such concerns have led to a number of legal challenges to various states’ laws on antitrust and dormant Commerce Clause grounds. 

This hearing gives us the opportunity to examine these current 

legal challenges to the Post-Prohibition practices of state regulation 

of alcohol. In doing so we are forced to reconcile the 21st Amendment, Federal statutes, state laws, and judicial doctrines. 

Mr. Chairman, these are complicated legal questions and not 

susceptible to quick solutions. However, I hope that this hearing 

will start to give Congress the information necessary to ensure that 

state regulation of alcohol remains robust. Those regulators are 

best-positioned to determine that alcohol consumption in their 

states is both safe and lawful. 

Thank you, Mr. Chairman. I will yield back. 

Mr. JOHNSON. I thank the gentleman for his statement. 

And now I will start with introductions, and I am pleased to introduce the first panel for today’s hearing, which consists of four 

distinguished Members of Congress. The first is Representative 

Bobby Rush, representing the first district of Illinois; next is Representative George Radanovich, representing California’s 19th district; and after that we have my esteemed colleague from the Judiciary Committee, the Chairman of the Subcommittee on Commercial and Administrative Law, Mr. Steve Cohen; and finally we have 

Representative Mike Thompson, representing California’s first district. 

Thank you all for your willingness to participate in today’s hearing. Without objection, your written statements will be placed into 

the record. We ask that you limit your oral remarks to 5 minutes. 

You will note that we have a lighting system that starts with a 

green light; at 4 minutes it turns yellow; then red at 5 minutes. 

Congressman Rush, will you begin your testimony, please? 

12 

TESTIMONY OF THE HONORABLE BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. Thank you, Mr. Chairman, and Ranking Member 

Coble, and Chairman of the full Committee, Chairman Conyers, 

and Ranking Member of the full Committee, Ranking Member 

Smith. I see my colleague from Illinois—— 

I am delighted to see you here this afternoon. 

And I want to thank you for granting me the opportunity to testify today on state alcohol regulation. I want also to acknowledge 

my colleagues who are participating on this first panel with me. 

Mr. Chairman, as I considered coming before this Subcommittee 

to testify I certainly came to recognize that this is not a matter 

that has been at the forefront of the issues that I am normally associated with in the Congress. However, as I began to examine this 

matter with greater scrutiny I quickly discovered that there existed 

many underlying causes that are or could be greatly impacted by 

the undertaking of this Subcommittee as it seeks to examine statebased regulation of alcoholic beverages. This Subcommittee’s decision to review this matter in light of the 2005 Granholm Supreme 

Court case is both wise and necessary. 

Mr Chairman, in my state of Illinois we have a three-tier system 

of distribution in which, as you are aware, manufacturers or producers sell to licensed wholesalers or distributors, who in turn sell 

to licensed retailers such as bars, packaged-good stores, and restaurants. This system in Illinois is currently under attack in Federal court as a result of a decision last week by the Illinois Liquor 

Control Commission to deny a wholesaler license to an alcohol 

manufacturer who was seeking to acquire 100 percent of a Chicago 

alcohol beverage distributorship. 

While alcohol laws vary by state, Illinois law is viewed as one of 

the strongest in the Nation as it relates to the three-tier system of 

alcohol distribution. Many observers believe that this case and others like it will have a profound effect on the regulation of the industry in Illinois and beyond. While regulation or deregulation may 

be viewed by many through the lenses of what is in the best ‘‘competitive interests’’ of industry, I submit that there are broader aspects of this issue to consider as well. 

Prior to my election to Congress in 1992 I served for 9 years as 

a member of the Chicago city council. As a local alderman I cam 

to appreciate the value of local control of the sale and consumption 

of alcoholic beverages. Indeed, an effective tool of local neighborhoods in Chicago has been the ability to, through ballot referendum, to vote an area dry. Communities plagued by bad actors 

in the alcoholic industry at the retail level have the ability to, absent local liquor control action, to seek remedies as a result of the 

ability of states to regulate the industry. 

My objective is not to protect wholesalers or hurt producers, but 

rather to protect the people of my community who are, in many 

cases, disproportionately overwhelmed with marketing and promotional advertising designed to get them to drink. 

Additionally, I would express a concern about the direction the 

industry is going relative to deregulation and its impact on minority ownership at the wholesaler-distributor level. 

13 

Certainly there is strong belief in Illinois—and I suspect this 

would be the case elsewhere in our Nation—that regulation or the 

removal of state regulatory authority of the alcohol industry would 

have an adverse, negative impact on minority ownership, and I certainly would be in opposition to such a move. 

I believe while there may be some imperfections with the levels 

of regulation state by state, there is significant value to having an 

aggressive not passive role—state role—in the regulation of the alcohol industry. 

The 21st Amendment, which provides states the authority to regulate alcohol within their own boundaries, has been operating since 

the 1930’s, and I believe should Congress decide to act it should be 

to more fully clarify its intent that states be allowed to regulate alcohol sales within their borders. 

With that, Mr. Chairman, I thank you and I yield back the balance of my time if I have any. 

[The prepared statement of Mr. Rush follows:] 

14 

PREPARED STATEMENT OF THE HONORABLE BOBBY L. RUSH, 

A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS


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Mr. JOHNSON. Thank you, sir. 

We will next go with the seating order, so Representative 

Thompson, please proceed with your testimony, yes. 


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TESTIMONY OF THE HONORABLE MIKE THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. THOMPSON. Well, thank you, Mr. Chairman and Ranking 

Member Coble, and Members of the Committee. I appreciate the 

opportunity to testify today, and I appreciate, Mr. Chairman, your 

opening comments when you mentioned that you are going to be 

with open mind to see if there are any compelling reasons why we 

should change existing law. And I know some will try and make 

that compelling argument—I know some would like you to believe 

that this is an issue between beer wholesalers and beer producers, 

but by opening remarks of the different Members of the Committee, I know that you understand that the reach is far greater 

than that. 

You will hear testimony today regarding the power of the 21st 

Amendment versus other constitutional rights. Wholesalers will 

argue for a proposal that would tip the scale completely in the 

favor of state control over alcohol. I have, in my prepared testimony—written testimony that I submit for the record—an address 

on that regard, but I would like to spend my time trying to explain 

how adopting this type of proposal would, in real time, disadvantage two groups that all of us in Congress are very concerned 

about: American businesses, particularly small businesses, and 

American consumers. This proposal is asking Congress to pick 

them, the wholesalers, as winners, and America’s consumers, 

wineries, and breweries as losers. 

My district is home to hundreds of wineries, and I have more 

microbreweries than any other congressional district, and I can tell 

you firsthand that state regulation of alcohol is alive and well. 

States can and states do regulate alcohol sales. 

Few products, if any, come under such heavy regulation. But the 

Supreme Court has ruled that while states can regulate they cannot discriminate. Unfair and discriminatory regulation hurts producers and it directly hurts consumers. 

We have seen this movie before, and in the sequel, a return to 

past practices, the ending is not going to be any better. Hawaii 

used to charge in-state wineries a penny per gallon tax and outof-state wines 85 cents for tax. Arkansas would only allow Arkansas wine to be sold in grocery stores. And in Rhode Island they disallowed retailers from advertising the prices of their products. 

A return to these practices means less choice for consumers and 

unfairly hurts producers. Take wine as an example: All 50 states 

make wine now. There is more than 500 percent growth in wineries 

over the past 30 years. They support well over 1 million jobs, and 

I don’t believe we should be discriminating against business and 

reduce competition that has made our great country and American 

enterprise so fantastic. 

Mr. Chairman and Members, the 21st Amendment does not 

trump the rest of the Constitution; 40 years of court decision has 

made that clear. The 21st Amendment must be balanced with the 

Commerce Clause, Due Process Clause, First Amendment, and it 

can’t violate the Sherman Act. 

Congress backed this up in 2003 when we passed legislation that 

said states can go to Federal court on the 21st Amendment but 

18 

must be consistent with other provisions of the Constitution. States 

have strong rights under the 21st Amendment, but states cannot 

discriminate. I urge you, don’t give one side—the wholesalers—license to harm American consumers and other businesses. It is unconstitutional and it is wrong. 

And I want to reference something that I understand is going to 

be mentioned today, and that is this U.K. study that was done. 

And I want to urge the Members of this Committee, please don’t 

compare apples to lemons. Our system is very different than that 

of the U.K. The idea that wholesaler control reduces underage 

drinking is pretty farfetched. 

The entire industry is interested in preventing underage drinking, but don’t forget kids get alcohol from adults. They get alcohol 

from parents and from friends who buy it legally. And kids who are 

drinking aren’t drinking $80 or even $20 bottles of wine that are 

made in my district or any other wine-producing area in the country. Any mention of kids’ access to alcohol and its relationship to 

state control is no more than a smokescreen. 

I appreciate you taking time to hear these concerns and I urge 

you to move with caution in trying to change a system that is 

working fairly well. Thank you very much. 

[The prepared statement of Mr. Thompson follows:] 

19 

PREPARED STATEMENT OF THE HONORABLE MIKE THOMPSON, 

A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA


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Mr. JOHNSON. Thank you, Representative Thompson. 

Representative Cohen? 

Mr. COHEN. Thank you, Chairman Johnson, Ranking Member 

Coble, and the full Committee Chairman and the Ranking Member, 


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Mr. Smith, who deserves recognition that he didn’t receive yesterday properly on the floor. 

Mr. JOHNSON. And I see we are still receiving the effects of St. 

Patrick’s Day on the panel also. 

TESTIMONY OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Mr. COHEN. Thank you for the opportunity to testify today on 

this important topic. I served as a Tennessee senator for 24 years, 

and 22 of those years were on the State and Local Government 

Committee, which regulates alcohol, and for 15 of those years I 

chaired that committee. From that position I learned about the 

three-tier system and a great appreciation for the need to regulate 

alcohol. 

America has had a relationship, I think, as Mr. Smith mentioned, since our Nation’s earliest days, but that relationship has 

not been without significant challenge. The marketplace has 

changed a lot in 100 years, and 100 years ago we had temperance 

movements and attempts to get involved and change the way we 

imbibed alcohol or the opportunity. 

Much of the attention in the United States was paid to the growing problems, real or perceived, that alcohol consumption might of 

had, and possible abuse. Significant concern about how the product 

was sold in retail arose around saloons and taverns, largely unregulated, and it became the focus of public ire, and I think those 

saloons and taverns of those years were nothing like what we know 

today. 

On-premises establishments not known as ‘‘family friendly’’ 

venues 100 years ago were becoming what the journalists of the 

time referred to as dens of iniquity. Retail outlets were often owned 

by out-of-town people or out-of-state people who really didn’t care 

too much about the community values, they only were concerned 

about selling alcohol. 

Because there was no effective system of regulation in place a 

grassroots movement began to take hold that focused on the problems associated with alcohol and the proposals that the sale, manufacture, and transportation of intoxicating beverages should be prohibited. As a result of this, in 1920 America began a 13-year failed 

experiment known as prohibition. 

In 1933, due to a need to collect revenue through taxation and 

a period of lawlessness that had given rise to organized crime—Mr. 

Quigley, I know in his city they had Al Capone and the Untouchables, Eliot Ness and all that—and to decriminalize the behavior 

many Americans had continued to participate in illegally because 

Americans like to drink and to end much hypocrisy and much governmental corruption that we looked the other way about prohibition was repealed through the 21st Amendment. 

Prohibition was a serious mistake and an attempt at controlling 

adult behavior, which governments really shouldn’t be doing and 

continue to do in Mr. Thompson’s districts and throughout this 

country with other products. But nevertheless, that was a problem, 

and then the repeal took place, and we had certain problems we 

wanted to cure. 

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Prohibition had certain reasons that it arose because problems do 

exist with alcohol and they were ameliorated—there was a desire 

to ameliorate them after prohibition. Two goals that they had in repeal: one was to promote temperance, which is another way to say 

moderation, and the second was to maintain an orderly market. 

These goals continue in the U.S. today as we work to facilitate 

a healthy marketplace for alcoholic beverages through effective regulation. In order to promote temperance states can use a variety 

of laws that work to control alcohol consumption and levy taxes to 

collect revenue. Giving states primary authority over alcohol ensures those attitudes about the product can be more directly reflected in community standards. 

Citizens in my home state of Tennessee have different thoughts 

about alcohol than citizens do, say, in Nevada or Louisiana, even 

though sometimes that is regrettable to me. When policy problems 

arise around the alcohol sale or consumption states are better 

equipped to deal with those problems than the Federal Government 

is. 

Additionally, having states regulate alcohol helps facilitate an orderly market. The state-based alcohol regulatory system in place, 

known as the three-tier system, has done a good job of achieving 

those 21st Amendment goals of promoting temperance and an orderly market. Alcohol suppliers, distributors, and retailers have operated successful businesses within this scheme for more than 75 

years, and at the same time consumers of alcoholic beverages had 

an unrivaled selection of products available to them at fair prices. 

Effective regulation strikes a balance between competition in the 

marketplace and the concerns of public health and safety. Unfortunately, over the last several years many states have begun facing 

deregulatory challenges that cease to strike down effective, timetested state alcohol regulations. 

If we allow the systematic deregulation of the alcohol industry to 

continue we already have an idea of what our regulatory system 

could look like a few more years down the road. I won’t go into details about the dangers of alcohol deregulation the United Kingdom 

experienced, but Ms. Pamela Erickson, who is going to appear on 

the next panel, will be discussing that; I will let her fill in the details, but it doesn’t seem like it has been very effective or good in 

the United Kingdom. 

I am troubled that we are looking at stopping a system that has 

worked for 75 years, that has been effective, and that the public 

at large has not complained about. In Tennessee there is an expression, and I think it is other places as well, ‘‘If it ain’t broke don’t 

fix it.’’ And this one is not broke, and it doesn’t need fixing. 

I commend the Subcommittee for holding today’s hearing and 

look forward to the outcome of this matter in this Committee, and 

thank you for the opportunity to testify. 

[The prepared statement of Mr. Cohen follows:] 

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PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, 

A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE


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Mr. JOHNSON. Thank you, Mr. Cohen. 

Next, Mr. Radanovich? We have 5 minutes and 50 seconds of 

votes with 41 people having voted already. 

Proceed, sir. 


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TESTIMONY OF THE HONORABLE GEORGE RADANOVICH, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. RADANOVICH. Thank you, Chairman Johnson. 

Thank you very much, Chairman Conyers, Ranking Member 

Coble, and Ranking Member Smith of the full Committee. Thank 

you for the opportunity to testify. 

The business of wine is far from the bucolic splendor of the vineyards. It is difficult to sell wine—perhaps more difficult than selling most other products or services in the United States—and 

much of that is due to the level of diversity—and diversity of regulation and control of all aspects of the business. 

The U.S. Department of Treasury’s Tax and Trade Bureau’s production regulations establish uniform baseline standards of identity 

and allow wineries from any state to know where their product is 

categorized on the Federal level. TTB’s permitting system for 

wineries and distilleries, their antitrust-based trade practice laws, 

and their label approval processes all provide a uniform framework 

from which state laws build. 

Despite the current diversity in state control I truly believe that 

the inconsistencies among state control systems would be much 

greater without this important Federal framework. People in the 

wine business here a lot about three-tier distribution, but all know 

that a pure three-tier distribution does not exist in the United 

States. 

Instead, over the years since prohibition was repealed, states 

have chosen to exercise their powers under the 21st Amendment to 

create a hybrid distribution systems that use three-tier principles 

as a framework. In at least 39 states, for example, state laws allow 

in-state wineries to self distribute. 

Self-distribution laws permit the in-state winery to act as its own 

distributor, allowing sales by the winery directly to retail on-and 

off-sale licenses. In California the number of wineries could not 

proliferate without self-distribution, but self-distribution stops at 

the state line and the privilege is only available for in-state 

wineries. 

Self-distribution and winery direct sales are not three-tier concepts. They are methods of distribution that would not be categorized as three-tier. In California as well as in some other states 

these methods of distribution exist in addition to the three-tier distribution method, and wineries can choose to exercise any combination of methods in California to sell their wine. Even in the 

Granholm state of Michigan laws have been changed to allow outof-state wineries to sell wine direct to retailers. 

There is draft legislation floating around the House that is associated with this hearing today. It is being promoted by, I believe, 

the beer wholesalers, and it is a very long, broad, and quite frankly, outrageous wish list. 

Number one, they want Congress to grant states an antitrust exemption. They also want states to allow—they want state laws to 

override Federal and constitutional mandates. They want Congress 

to overturn a long line of judicial decisions that have consistently 

recognized states’ rights to regulate alcohol beverages as long as 

they don’t discriminate. And they want states to be relieved from 

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having to prove that their own statutes and regulations are constitutional. 

As a Member of the Energy and Commerce Committee, I urge 

this Committee to listen carefully and respectfully to today’s testimony, especially to see if what is being proposed here is innovation 

or monopoly protection, whether the marketplace or the government is to decide winners and losers, and whether free market 

economy or one that is controlled by promoting discriminatory legislation to state legislatures will determine how a legal product is 

marketed to legal consumers. 

I ask you to be on the side of states’ rights, but states’ rights that 

are measured by the principles of our country’s Constitution and 

antitrust laws. It is right that they have access to Congress to 

make their request and it is right to allow them a forum to express 

their fears about the holdings in the current series of judicial decisions. They ask a lot, but what they ask is not justified. 

What they fear is nothing less than the U.S. Constitution and 

antitrust laws. There must be extraordinary reasons why states 

should be allowed—or should get a free pass from the Constitution 

or antitrust laws, and I predict that you will not hear any such reasons in your hearing today. 

Thank you, Mr. Chairman. I yield back. 

[The prepared statement of Mr. Radanovich follows:] 

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PREPARED STATEMENT OF THE HONORABLE GEORGE RADANOVICH, 

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Mr. JOHNSON. Thank you. 

With that, we will take a recess. We have got about 35 to 40 

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forward to hearing the persons on the second panel. We shall return. 

[Recess.] 

Mr. JOHNSON. We now turn to our second panel and ask them 

to prepare to testify. I draw the gallery’s attention to the first seat, 

which is an empty seat which is for the wine industry, and so unfortunately no one being here from the wine industry means that 

they will not need to prepare to testify. 

Our first witness is Mr. James Ho. Mr. Ho is the solicitor general 

for the state of Texas, the first Asian-American to hold the office. 

Welcome, Mr. Ho. 

Next is Ms. Nida Samona, chairperson of the Michigan Liquor 

Control Commission. 

Welcome, Ms. Samona. 

Next, Steve Hindy, cofounder, chairman, and president of the 

Brooklyn Brewery. 

Welcome, Mr. Hindy. 

Next we have Pamela Erickson, president and CEO of Public Action Management. She was formerly the executive director of the 

Oregon Liquor Control Commission. 

Thank you for being here, ma’am. 

And finally, we have Professor Darren Bush. Professor Bush is 

an associate professor of law at the Houston Law Center. He as 

also a consulting member of the Antitrust Modernization Commission, a bipartisan taskforce established by the Judiciary Committee 

to critically evaluate antitrust law. 

Welcome, Professor Bush. Any relation, just for the record? 

All right, without—but you would still be welcome. 

Without objection your written statement will be placed into the 

record. And as before, we ask that you limit your oral remarks to 

5 minutes, and our lighting system starts with the green light, 

then the yellow light with 1 minute left, and then red. 

So with no further adieu, Mr. Ho? 

TESTIMONY OF JAMES C. HO, SOLICITOR GENERAL OF TEXAS, 

OFFICE OF THE SOLICITOR GENERAL, AUSTIN, TX 

Mr. HO. Good afternoon, Mr. Chairman and Members. Thank 

you very much for the invitation to appear before the Subcommittee today. My name is Jim Ho. I serve as the solicitor general of the state of Texas under the leadership of Texas Attorney 

General Greg Abbott, but just to be clear, I am appearing today 

solely in my personal capacity, not on behalf of the state. 

I know the Subcommittee’s time is short, so I am just going to 

give a shortened version of my written remarks. It is my understanding that there is some discussion of possible legislation to 

clarify the authority of states to regulate commercial activities involving alcoholic beverages. 

Mr. Chairman, you noted at the outset your—the importance of 

balance in your view. In that spirit I will just make very clear, I 

don’t have a particular dog in this fight. I have no position on the 

legislation; I am certainly not here to express any position on the 

merits of the legislation. But I can certainly testify with respect to 

the constitutional issues—the constitutionality of any proposed legislation based on my experiences litigating in this area. 

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As the Subcommittee knows, the power of states to regulate commerce in alcohol has been the subject of hotly contested litigation 

in numerous courts around the country in recent years. Our office 

has handled a number of such matters on behalf of the state of 

Texas. We won the most recent round in the court of appeals in 

Texas—Louisiana, but there are similar cases being fought in communities across the Nation. 

These cases involve constitutional objections to state laws, but 

make no mistake, this is a unique area of constitutional litigation, 

and I say that because Congress has the power to step in and resolve the litigation itself at any time. In this unique area of constitutional litigation Congress can seize the reins and decide for 

itself whether a particular constitutional challenge should succeed 

or fail simply by passing a Federal statute, and that is because 

these cases involve a doctrine known as the dormant Commerce 

Clause. 

Courts invoke this doctrine, the dormant Commerce Clause, as a 

constitutional limit on states, but courts invoke this doctrine only 

because they are presuming that Congress would prefer that states 

stay out of a particular area of regulation. 

So let me say that again: It is only a presumption about what 

Congress wants in a particular area, and what that means is that 

Congress at any time has the power to make its actual views in 

a particular area known to the courts. And if Congress expresses 

those views courts will follow them. 

What is more, congressional action in this area would reinforce 

important constitutional values. After all, alcohol is the only consumer product to receive special constitutional status, in the form 

of special recognition of state authority to regulate under the 21st 

Amendment. 

Let me also add that—my conclusion here today—that Congress 

has full authority to regulate in this area if it chooses to. That conclusion I don’t really regard as controversial, and if it is a controversial constitutional position, I look forward to hearing why. 

But amongst the community of constitutional lawyers this is pretty 

much a settled issue. 

Courts across the country, including the U.S. Supreme Court, 

have repeatedly acknowledged that if Congress speaks clearly it 

can eliminate entirely constitutional challenges to state laws under 

the dormant Commerce Clause. After all, let us remember the 

whole premise, the whole point of the dormant Commerce Clause 

is to allow courts to step in and fill certain gaps only when Congress has failed to speak. But if courts—I am sorry, if Congress 

does choose to speak the courts will listen. 

Thank you again for the invitation to testify. I would be delighted to answer any questions. 

[The prepared statement of Mr. Ho follows:] 

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PREPARED STATEMENT OF JAMES C. HO


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Mr. JOHNSON. Thank you, sir. 

Next, Ms. Samona? 

TESTIMONY OF NIDA SAMONA, CHAIRPERSON, MICHIGAN 

LIQUOR CONTROL COMMISSION, LANSING, MI 

Ms. SAMONA. Thank you. Mr. Chairman, Ranking Member Cole, 

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gan Liquor Control Commission, and I thank you for the invitation 

to discuss Michigan’s system for regulating alcoholic beverages and 

the need to preserve state control over the health, safety, and the 

welfare of our citizens. 

Experience has taught us that government regulation can be in 

the best public interest. Whether it is financial markets, food safety, mortgages, government has a role in protecting the public. This 

is especially true when it comes to alcohol. 

In 1941 Supreme Court Justice Jackson stated that liquor is ‘‘a 

lawlessness unto itself.’’ That was true then, and it is certainly true 

today. 

Because of their potential abuse and their importance as a source 

of tax revenue for states alcoholic beverages must be highly regulated. History has taught us that regulation is most effective and 

accepted when it is done at the state level. 

The harmful effects on individuals, families, and societies as a 

whole that result for intemperate or underage consumption of alcoholic beverages are dramatically different from those related to the 

use of other products, whether they are measured by scale, severity, nature, or remedy. So, as a consequence states attempt to mitigate these problems through regulation. 

Indeed, alcoholic beverages have always been and remain one of 

the most heavily regulated products in the country, and for good 

reason. Localities and states have enacted a variety of restrictions 

on the manufacture, distribution, and sale of alcoholic beverages— 

the three-tier system. 

Alcohol is the only product that has been the subject of two constitutional amendments. The first was the 18th Amendment, which 

established national prohibition of alcohol; and the second was the 

21st Amendment, which returned primary responsibility for alcohol 

regulation to the states. State of Michigan was the first one to 

enact the 21st Amendment, of all the states. 

Community norms and standards across the country differ widely 

regarding alcohol. This fact underscores the soundness of the constitutional and congressional decisions to rest regulatory authority 

primarily at the state and local level. 

Under the authority provided by the 21st Amendment the Michigan legislature created the Michigan Liquor Control Commission 

and granted it plenary powers to control alcoholic beverages traffic 

in Michigan, including the manufacture, importation, possession, 

transportation, and the sale of alcoholic beverages within the state. 

Among the goals of the commission are controlling the traffic in alcoholic beverages within the state, collecting tax revenue, and protecting both the consumer and the general public from unlawful 

consumption and use of alcohol. 

Michigan’s Liquor Control Code provides for strict regulation and 

control over the alcoholic beverage industry as opposed to fostering 

the significant degree of free enterprise that was afforded to other 

products. This regulation is achieved through a transparent system 

that requires that all alcoholic beverages need to be distributed 

through the commission or its licensees, who are subject to extensive oversight and regulation. 

This system has worked remarkably well for over 75 years. 

Through the delicately balanced and historically tested regulatory 

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scheme Michigan has been able to address critical state interests, 

such as preventing illegal sales to minors, inhibiting overly aggressive marketing and consumption, collecting taxes, creating orderly 

distribution and importation systems, and preventing a recurrence 

of the problems that led to the enactment of the national prohibition. These are all recognized as core interests of the 21st Amendment. 

In 2004 the Heald v. Granholm case struck down the Michigan— 

the New York and Michigan laws which banned wineries from 

being out—from shipping out—from allowing out-of-state wineries 

to ship directly to the doorsteps of customers. The Granholm decision did not invalidate the three-tier system. In fact, Justice Kennedy called it ‘‘unquestionably legitimate,’’ in his opinion. 

State regulatory systems are under siege, and these lawsuits are 

gutting out the effective state regulation that we are asking for 

Congress to come in and to address. Thank you. 

[The prepared statement of Ms. Samona follows:] 

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PREPARED STATEMENT OF NIDA SAMONA


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Mr. JOHNSON. Thank you, Ms. Samona. 

Now, Mr. Hindy? 


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TESTIMONY OF STEPHEN HINDY, CHAIRMAN AND PRESIDENT, 

BROOKLYN BREWERY, BROOKLYN, NY 

Mr. HINDY. Thank you, Chairman Johnson, Representative 

Coble—happy birthday—Members of the Subcommittee. I am 

pleased to present this testimony on behalf of 1,500 small brewers 

in the United States. 

I started my company in 1988. I employ 40 people in Brooklyn 

and am currently expanding my brewery and adding 20 jobs. I also 

brew at an upstate brewery which employs 120 people. 

I am a member of the Brewers Association, the trade association 

of small brewers, and the Beer Institute, the trade group representing large and small brewers and importers of beer in the 

United States. I have had the honor of serving on the boards of 

both organizations. 

Virtually all the beer produced, distributed, and sold in this 

country passes through the three-tier system. Three-tier has served 

our country well in both regulating the safe production and distribution of high-quality beers and in helping to foster the craft 

brewing renaissance that has seen the genesis of 1,500 small breweries in the past 25 years. There has been no comparable renaissance in many countries around the world where large brewing 

companies dominate production, distribution, and retailing. 

The three-tier system is not broken, but consolidation at the distributor level has made it difficult for some small brewers to get 

to market. Some states make exceptions to the three-tier system to 

address this problem. 

When I started Brooklyn Brewery none of the large New York 

City distributors were interested in carrying my beers. I was able 

to distribute my own beer and build my brand and eventually sell 

the rights to my brand to one of those big distributors. 

There have been many similar success stories among small breweries in other states, such as Samuel Adams in Massachusetts, Sierra Nevada in California. Without the right to self-distribute it is 

doubtful we could have established our businesses. 

We do not see any need for a drastic change in the balance between state and Federal authorities that has served the public for 

many years. There has been talk of ceding Federal control of alcoholic beverage regulation to the states. That would be a disaster for 

small brewers and consumers. 

Separate state regulations on formulation, labeling, or advertising would be incredibly expensive for all brewers. Last year in 

my own state of New York, for example, the courts wisely struck 

down a law that would have required brewers to create separate, 

New York-specific labels for any beer sold in that state. This would 

have effectively closed the New York market to smaller brewers 

who could not afford the expense of special, New York-only labels. 

The current system has also served the public interest in controlling the abuse of alcoholic beverages. My review of available national statistics shows that our Nation has made significant 

progress in reducing drinking by underage youth and in drunk 

driving. Brewers, wholesalers, and retailers alike are committed to 

making further progress in these areas. It is not clear—to me at 

least—what a radical change in the Federal-state balance would do 

to these very positive trends. 

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The number one issue facing small brewers is state franchise legislation that gives distributors virtual absolute control of our 

brands. In some states non-performing wholesalers sit on our 

brands to ensure their competitors do not get them. Talk about stifling competition. Beer distributors have significant clout in all 

state legislatures, and there is fear among small brewers that a 

switch to exclusive state regulation would only exacerbate this 

problem. 

In spite of challenges, the three-tier system is alive and well in 

the United States. We want to see that system continue without 

radical changes that could harm the interests of American consumers who responsibly enjoy our products. Representative Cohen, 

I think, said it best this morning: If it ain’t broke, why fix it? 

Thank you. 

[The prepared statement of Mr. Hindy follows:] 

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PREPARED STATEMENT OF STEPHEN HINDY


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Mr. JOHNSON. Thank you, sir. 

Last but—not last, but next, Ms. Erickson, please? 


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TESTIMONY OF PAMELA S. ERICKSON, CHIEF EXECUTIVE 

OFFICER, PUBLIC ACTION MANAGEMENT, SCOTTSDALE, AZ 

Ms. ERICKSON. Thank you, Mr. Chairman and Members of the 

Subcommittee. It is a pleasure to be here and talk about this very 

important issue. 

I am a former alcohol regulator and current alcohol abuse prevention advocate that is deeply concerned about alcohol regulation 

issues. And I am the author of this some what infamous report, 

called ‘‘The Dangers of Alcohol Deregulation: The United Kingdom 

Experience.’’ 

I would like to say that the gentleman that suggested that we 

are comparing apples and oranges is quite correct—lemons and oranges, however you want to say it. That is correct, and the reason 

is that in the United States we have a comprehensive system that 

does control alcohol in a way that fosters moderation and consumption; the United Kingdom no longer has such a system. 

Over a period of 4 decades they slowly deregulated to the point 

where you can sell alcohol 24 hours a day, 7 days a week in bars 

and all kinds of stores. Alcohol has become 70 percent more affordable in just 20 years, which means the marketplace is flooded with 

cheap alcohol that has encouraged people to drink. 

As deregulation occurred over 4 decades consumption rates went 

up, and up, and up. They are now paying the price for deregulation, and let me just give you a couple of statistics. 

Hospital admissions for alcohol liver disease and acute intoxication have doubled over just 10 years. Underage drinking rates are 

twice what ours are. Problems around bars and clubs are so severe 

in London that London has two buses equipped as field hospitals 

to take care of people who have been victims of alcohol-fueled violence or alcohol intoxication every weekend. 

Could this happen to us? Again, I want to emphasize the major 

difference with us. 

We have a comprehensive alcohol regulatory system that regulates the price, it keeps the price not too cheap to push consumption or too high that would encourage bootlegging. We have—usually have limits on outlets. We have limits on promotions that 

would encourage volume consumption. We have measures that address age. We have measures that address drunk driving. 

We have a really good, comprehensive system. So as long as we 

maintain that system and keep it strong we should be okay. 

Our policy is alcohol moderation—moderation in consumption. It 

is a very good policy. If we follow this policy, if people drink in 

moderation there is rarely any harm and there is some health benefit for some people. So it is a good policy. 

There are threats to our system. If we had a court system that 

determined our regulatory measures to be unconstitutional we 

could be quickly deregulated. Also, if market forces became so 

strong that there was domination by large, big box stores that were 

able to offer large quantities of alcohol very cheaply that could create major problems for us. 

So those are things to be concerned about. When I work with 

various states I see deregulation efforts in the retail sector, and it 

is—I worry about the slow drip-drip-drip kind of deregulation occurring here. 

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I believe that our current system is good for business. In my native state of Oregon there is a strong system of regulation, yet a 

flourishing industry of small wineries, craft brewers that produce 

some of the best beer in the world—and that is a fact—and a growing micro-distillery business. Big box stores, independent grocers, 

convenience chains are all able to operate in this flourishing business environment. 

Thank you so much for your attention. 

[The prepared statement of Ms. Erickson follows:] 

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PREPARED STATEMENT OF PAMELA S. ERICKSON


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Mr. JOHNSON. Thank you. 

Last but not least, Professor Bush? 

TESTIMONY OF DARREN BUSH, ASSOCIATE PROFESSOR OF 

LAW, UNIVERSITY OF HOUSTON LAW CENTER, HOUSTON, TX 

Mr. BUSH. Mr. Chairman, Ranking Member Coble, and other distinguished Members of the Judiciary Committee’s Subcommittee on 

Courts and Competition Policy, I want to thank you for giving me 

the opportunity today to speak about the interrelationship between 

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marks today are my own; I speak for no one apart from myself. 

And I speak today based on my experience as a former antitrust 

division trial attorney, as an economist, and as a law professor 

whose research and writing has focused on antitrust issues arising 

in the context of regulated and deregulated industries. 

Rather than repeat the highlights of my written testimony I 

want to walk through the methodology the Supreme Court employs 

in examining whether a state regulation violates the antitrust laws 

or is worthy of a judicially-created exemption from the antitrust 

laws. 

The first fundamental question, as told by the Supreme Court in 

Fisher v. City of Berkeley, is whether the restraint in question is 

unilaterally imposed or is what the Supreme Court has described 

as a hybrid restraint. While state government is free to impose regulation which compels particular conduct for private actors, the 

regulation must not be ‘‘hybrid’’ in that non-market mechanisms 

merely enforce private marketing decisions. Where private actors 

are thus granted a degree of private regulatory power the regulatory scheme may be attacked under the antitrust laws. 

There is a relationship between the Court’s description of hybrid 

restraints and the notion of what it calls active supervision under 

the State Action Doctrine cases. The Court stated that in order for 

a state to create statutory restraint that is exempt from the antitrust laws, one, the challenge restraint must be one clearly articulated and affirmatively expressed as state policy; and two, the policy must be actively supervised by the state itself. 

The history of antitrust enforcement in the realm of liquor is a 

history of state inaction in the second prong of this test, and thus 

a long list of hybrid restraints. In each case the conduct at the crux 

of the case is resale price maintenance, the foreboding of competition at wholesale level. 

In the bulk of these cases the state allowed private actors to set 

prices which were then enforced by a state rule. The typical post 

and hold regulation employed by states that has been subject to 

antitrust challenge involved requirements designed to eliminate all 

price competition from the market. 

With the states engaging in this ‘‘regulation’’—I place the word 

regulation in quotes here—has elected to do is to facilitate tacit or 

overt collusion. These laws serve to facilitate collusion by compelling transparent prices with notification to competitors, the ability 

of competitors to detect and punish deviations from prior listed 

prices, by increasing cost to any competitor seeking to attract market share via price incentives, and by barring wholesalers from 

being able to employ economies of scale. Whether tacit or overt collusion, states employing such devices have given carte blanche to 

coordinated anticompetitive behavior without any regulatory restraint or oversight. 

Antitrust challenges to such regulation do not impinge on the 

state’s authority to regulate under the 21st Amendment. As a beginning point, I note that the cause of antitrust challenge here is 

an abdication of state regulatory authority in favor of the whims 

of a private collusive agreement, whether tacit or overt. 

Secondly, while according to advocates of such schemes the goal 

purportedly advanced is temperance, suggesting that the cheaper 

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the cost of alcohol the more is consumed, the question becomes 

whether the goal is to eliminate alcoholism or to injure consumers 

who are social drinkers and already self-regulate to some degree. 

Regardless, the constitutional balancing to me heavily weighs in 

favor of competition policy, particularly when there are less restrictive alternatives more readily available to the state, namely to actively supervise the regulation in question. 

In light of the foregoing, it is difficult to conceive of this pattern 

of conduct requiring or justifying any sort of statutory immunity. 

And indeed, this is the only type of regulation that has been successfully challenged in the courts. 

I have written elsewhere and submitted to your Subcommittee 

the standards I believe applicable in establishing any statutory immunity under the antitrust laws, which I and my coauthor submitted as consultants to the Antitrust Modernization Commission. 

There are numerous questions that ought to be answered in granting such an immunity, and the burden should be upon those seeking to alter our magna carta of free enterprise. 

In my opinion, no immunity is justified here. The states have 

only been successfully challenged in their regulatory authority to 

the extent they have advocated—abdicated such authority to private actors. Such abdication is not state regulation but the absence 

of regulation and the protection of private actors who may be seeking solely monopoly rents and are not vested in a public interest. 

I will stop here but would like to discuss at some point sort of 

what the standards might be for statutory immunities. Thank you. 

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Mr. JOHNSON. Thank you, sir. 

We will now move to questioning of the witnesses. It will proceed 

in accordance with the 5-minute rule. 

Ms. Samona, what does—what would you, based on your experience, recommend that any legislation include? We have already 

talked about an antitrust exemption. Is that something that you 

would support? 

Ms. SAMONA. Mr. Chairman, thank you for the question. What 

I would propose is for some law or legislation to reaffirm the right 

of states to regulate alcohol as they deem appropriate for their 

state. 

Mr. JOHNSON. Now, is there any particular method or language 

that you would find most appealing? 

Ms. SAMONA. I don’t have any language that is prepared. I would 

be happy to work with—anything to that. At this point I would be 

happy if Members of this Committee are open to that idea and that 

suggestion to do that. 

Mr. JOHNSON. How would you see it—what exactly would you be 

seeking? 

Ms. SAMONA. Well, the two major cases that exist involved the 

state of Michigan. The first one was the Granholm decision, in 

Heald v. Granholm. That case, wineries—out-state wineries—sued 

the state saying that in-state wineries are given this exclusion because they are able to deliver to consumers in the state of Michigan, out-state wineries are not. The argument that we made—and 

we think it is a valid argument and it supports the 21st Amendment—is that those wineries or those businesses that exist in the 

state of Michigan and licensed by the Michigan Liquor Control 

Commission are those that we have complete control over. We 

have—we can go and—— 

Mr. JOHNSON. Okay, well, now let me stop you. I want you to respond precisely to the—the question is, how exactly—what exactly 

would you be proposing with respect to state versus Federal regulation? Would it be a ban on Federal regulation? Would it be a ban 

on state regulation? What exactly is it that you would propose? 

Ms. SAMONA. I would not, certainly, look for a ban on any kind 

of Federal legislation. I think that the Federal legislation that applies to all the states—I think that probably solves many of the 

problems that we are dealing here with. 

At this point we have courts that are issuing orders that are contrary in different areas. The—— 

Mr. JOHNSON. Okay, so you want to try to avoid any and all litigation that may arise from the operation of the three-tier system? 

Ms. SAMONA. Absolutely. I think the clearer Congress speaks 

the—— 

Mr. JOHNSON. All right. 

Ms. SAMONA [continuing]. The less probability of litigation. 

Mr. JOHNSON. Okay. Can I get the views of the other—— 

Ms. SAMONA. Absolutely. 

Mr. JOHNSON [continuing]. Members on this? 

Mr. Ho? 

Mr. HO. Sure. We have heard a couple of times the phrase, ‘‘If 

it ain’t broke don’t fix it.’’ I would just modify that comment slightly and say, that is wonderful. If it ain’t broke, don’t sue. 

140 

Congress has the complete authority to end all of this litigation 

and to say, ‘‘What the states are doing, that is within the states’ 

rights to engage in that regulation and you all just keep doing 

that’’—— 

Mr. JOHNSON. Do you think that—— 

Mr. HO [continuing]. Control. 

Mr. JOHNSON [continuing]. Any circumstance where the courts 

can anticipate any legal arguments that could be good faith arguments supported by evidence and a lawsuit filed? Do you think 

there are any areas where the legislature can accomplish that feat, 

or are we always going to be a litigation society utilizing the third 

coequal branch of government? 

Mr. HO. I think I would respond by saying, the clearer Congress 

can be in setting out what it wants states to be able to do, and not 

to be able to do, the less litigation we will have. The laws that the 

courts are struggling with right now are really just very few words. 

The 21st Amendment—— 

Mr. JOHNSON. It is pretty—— 

Mr. HO [continuing]. And some of these other laws. 

Mr. JOHNSON [continuing]. Pretty clear stuff, but I will tell 

you—— 

Mr. HO. Sure. I mean, you can expand it and sort of explain—— 

Mr. JOHNSON. Right. And you can do that with anything. 

The other witnesses—Mr. Hindy, Ms. Erickson, and Professor 

Bush? 

Mr. HINDY. Well, you know, I am not an attorney, but from what 

I have heard there are plenty of attorneys in this town, so probably 

that is okay. It is interesting to hear Mr. Ho, who I believe is an 

attorney, calling for people not to sue. 

You know, it just seems to me that the primary role of regulation 

of alcoholic beverages right now is with the states, and the Federal 

Commerce Clause just seeks to ensure that there are no discriminatory laws enacted by the states. That seems to me to be a good 

foundation for regulation of alcoholic beverages, served us well for 

75 years, and there is bound to be litigation on any of these arenas 

where there are suppliers who can’t get their products to market. 

Mr. JOHNSON. Thank you. 

Ms. Erickson and Professor Bush, you all are in favor or opposed 

to an antitrust exemption for the alcohol-based products? 

Ms. ERICKSON. Let me give a brief response. I am not a lawyer 

either, so I am going to give you a layperson’s response. 

I think there needs to be recognition that there are legitimate 

reasons for not selling alcohol in a free market, that the marketplace rules need to be somewhat different for alcohol. For example, 

if you are a businessperson you will put in your business plan a 

plan to identify your best customers, those people that buy the 

most of your product, and you are going to aggressively promote to 

those people. But with alcohol a lot of those people who are your 

best customers are alcoholics, so your promotional activities need 

to be somewhat muted. 

So I think some of those specific concerns where the free marketplace creates problems with the sale of alcohol there needs to be 

a clear recognition of that. 

Mr. JOHNSON. All right, thank you. 

141 

And Professor Bush? 

Mr. BUSH. I believe to a large degree they already have an immunity from the antitrust laws. It is called the State Action Doctrine. It is a judicially-created exemption that so long as the state 

has a clearly articulated policy and it actively supervises that policy it exempts them from the antitrust laws. Where they have run 

into trouble is where they have not actively supervised their alcohol regulation and have delegated that authority to private actors 

who are not vested in the public interest. 

In creating a statutory immunity there is a great concern that 

I have written on extensively, and so have others, that the immunity goes beyond what might be necessary. There may not be any 

reasonable justification for the immunity, and there is no telling 

what kind of harm the immunity will do. Moreover, there doesn’t 

seem to be any sort of legitimate justification for the immunity in 

that the one instance of antitrust attack is an instance where the 

states have actually utterly abdicated their authority to private actors. 

Mr. JOHNSON. Thank you, Professor Bush. 

Now I will yield the floor to the Chairman of this Committee, 

Chairman Conyers. 

Mr. CONYERS. I thank you for your courtesy. I only have one 

question, and it is to Nida Samona, who has been the Michigan 

Liquor Control Commissioner and chairperson of that commission. 

Here is what I would like to know: Since the Granholm decision 

has there been any noticeable effect, from your perspective, on 

Michigan’s ability to regulate alcoholic beverages? 

Ms. SAMONA. Thank you for that question. I appreciate that. I, 

too, am a lawyer that sits on this panel, though, you know, my role 

is a little different, but my lawyer hat is not always quite removed. 

Yes, we do see a big difference in regards to what happened with 

the Granholm decision, named after our governor, my boss, and 

that was when the independent business owners—or the independent wineries in the state of Michigan, we had to face an issue 

of the legislature of, do we allow them to ship to customers in the 

state of Michigan, consumers or not, based on the fact that outstate wineries wanted to be able to do the same thing even though 

we had no control or regulatory authority over these out-state 

wineries as we did the in-state wineries. 

We could go to the in-state wineries and check on them daily if 

we wanted to. We licensed them; we could take that license away 

from them at any time if we suspected they did anything that was 

against the laws and the rules of the Liquor Control Commission 

in the state of Michigan. 

What we have had to do is we had to open up the door and allow 

all wineries to ship, through a permit system, to consumers. So if 

you are a winery that is—whether you are in California and Oregon or anywhere else, you can get a permit system—you fill out 

a form, you pay $100, and you ship the wine away. 

Do we have control over it as far as taxes are concerned? Not 

necessarily, because we don’t know if everything is being reported. 

It is an honor system. 

Does it work? We think that we are losing millions of dollars of 

revenue as a result of that. 

142 

And then to piggyback on that, a few years later we had another 

lawsuit that was called the Siesta Village lawsuit against the state 

of Michigan, and that one wanted an out-state retailer to be able 

to ship directly to a consumer in the state of Michigan. 

Again, that retailer is out-state, not licensed by our agency. We 

have not control over them. We don’t know who they are shipping 

to. Are they checking ID? Are they selling products that would be 

products that we would approve in the state of Michigan? We really 

don’t know. 

And again, the rule—the district court ruled against the state of 

Michigan, and so in effect what we had to do was we had to shut 

down all delivery to all customers in the state of Michigan by any 

retailers, in-state or out-state. The millions of dollars that these 

lawsuits have cost the state of Michigan where we could have put 

them in enforcement and other things has been dramatic and crippling, quite honestly. 

And so as a result, our in-state licensees have had to suffer as 

a result of these losses that have existed. We have an open market. 

You can bring in any product in the state of Michigan. If it is a 

beer or wine product bring it through a beer and wine wholesaler 

who is licensed by us and we have control and authority over them; 

if it is a spirits product bring it in through a liquor vendor that 

is licensed and we have authority over them. That is what we are 

talking about is that ability. 

Mr. CONYERS. Thank you, Chairman Samona. Would you please 

keep us abreast of this—of what is happening in Michigan as a result of the decision and your chairing the Michigan Liquor Control 

Commission, because I think the Committee would be interested in 

that? 

Ms. SAMONA. I would be happy to. Thank you. 

Mr. CONYERS. And I thank you, Mr. Chairman and Ranking 

Member, for your courtesy. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Next, we will turn to Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. 

Good to have you all with us this afternoon. 

Ms. Samona, the Internet has changed a great deal in this country. How has the Internet changed your ability to effectively regulate alcohol at the state level and what do you perceive to be your 

greatest threat to effective regulation going forward? 

Ms. SAMONA. And that is our greatest threat, is the Internet, because we know that many of these companies, whether they are 

wine companies or spirits companies, are up 2 or 3 days a week, 

and by the time we are ready to track them and try to find the 

source of them they are down and a new company is up. And we 

are not, you know, blind to the fact of, we know alcohol is coming 

it, whether it is beer, wine, or spirits, illegally through the state 

of Michigan. 

We know that there is millions of dollars that are lost to our 

state as a result of revenue and that there is no system of checking 

where that alcohol is being delivered to, who it is being delivered 

to. Is it a, you know, college town kid that is ordering it for the 

party that is for that weekend? We don’t know. And we have really 

no way of effectively following that ability to do that. We need more 

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money, more resources. Unfortunately, much of that is used on 

these lawsuits. 

Mr. COBLE. Thank you, Chairman Samona. 

Ms. SAMONA. Thank you. 

Mr. COBLE. Ms. Erickson, some states are control states, as we 

all know, that as the alcohol is dispensed through state-administered or state-owned stores. Other states, conversely, allow private 

parties to sell alcohol. 

Have you ever conducted or have you ever seen a study that 

showed the correlation between the level of state involvement in 

the sale of alcohol and the level of alcoholism in a particular state? 

Ms. ERICKSON. Mr. Chairman—Mr. Coble—I believe that there 

are studies that show that generally consumption and problems are 

fewer in control states, and the level of problems in any given state 

is a very, very complicated formula. There are so many things that 

impact it. 

For example, the lowest drinking state in the Nation is Utah. 

Clearly the Mormon Church has a great influence over the drinking patterns in that state. Weather seems to have something to do 

with it because drinking tends to be higher in northern states. 

We don’t know a lot about exactly what makes one state’s drinking patterns a lot different, but I have seen some studies that generally say that problems are somewhat less and that drinking patterns are somewhat less in control states. 

Mr. COBLE. Mr. Hindy, did you say when you opened your brewery you had 14 employees? 

Mr. HINDY. No. When I opened my brewery I had three employees—— 

Mr. COBLE. I thought—— 

Mr. HINDY [continuing]. At the end of this year I will have 60 

employees. 

Mr. COBLE. Okay, 60. 

Mr. HINDY. Yes. 

Mr. COBLE. Well, that is encouraging, given the harsh climate 

that plagues us today. In your view, Mr. Hindy, should states be 

free to discriminate in favor of their own state’s breweries? 

Mr. HINDY. No, I don’t think so. In New York State I distributed 

my own product at the beginning of the company. Any brewer has 

that same right in New York State, so that exception to three-tier 

is legal and appropriate and it has not been challenged. 

Mr. COBLE. I got you. 

Finally, Mr. Ho, you state that—you may have already addressed 

this previously—but you state that Congress has the power to regulation interstate commerce and put to rest some of the legal challenges that have been directed at state alcohol regulation. As a 

state litigator, what tools, if any, do you need from Congress to successfully litigate the cases that come before you? 

Mr. HO. Well, I am pleased to say that the main case we are litigating right now we have won, so far. But having said that, it is 

burdensome, obviously, to have to go through this litigation process. 

Congress could pass legislation, if that is what you are asking 

me, kind of modeled on previous enactments. Just a few years ago 

my understanding is Congress passed legislation in the hunting 

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and fishing area where a court of appeals had struck down some 

state regulations in that area, Congress disagreed with that Ninth 

Circuit ruling and decided to essentially stop that kind of litigation 

from taking place. 

That is the kind of legislation that, if Congress wanted to, it 

could easily pass in this area so that states wouldn’t have to deal 

with the burdens of this kind of litigation. 

Mr. COBLE. Professor Bush, you want to add anything to that? 

Don’t want to snub you; I want to examine you as well. 

Mr. BUSH. It is okay if you snub me, sir. There are a couple of 

things that I think I want to separate out. When we are talking 

about regulation of alcohol there are some pretty basic principles 

of regulation that are typically followed and the Federal Government has followed when it has regulation industries, and one of 

those principles has been one of open access and nondiscrimination 

so that people further up the bottleneck can actually get their products to market. That a pretty standard principle in regulation. 

And to the extent that states have sort of followed those principles of regulation, have actively regulated alcohol beverages and 

have followed those regulatory principles, I think they have been 

relatively safe. Where the states run into trouble, I think, is where 

they sort of don’t follow those tenets and act more protectionist, 

and I am not quite sure that is a good tenet of regulation. 

Mr. COBLE. Thank you. 

Thank you all. 

I yield back, Mr. Chairman. 

Mr. JOHNSON. Thank you, Mr. Coble. 

Next we will have questioning from Mr. Quigley? 

Mr. QUIGLEY. Thank you, Mr. Chairman. 

The earlier panel mentioned that I am from Chicago and its 

unique history on such things. I will tell you, though, that the only 

hearing previous to this one in which we have talked about regulating alcohol was in Chicago, and the question was whether or not 

we should have more 4 o’clock liquor licenses. 

Most bars are forced to close at 2 o’clock, so the issue was, should 

more bars be allowed open later? It gets to many of these issues. 

And the first person who testified really put it in the right perspective. He said, if you don’t know how to get drunk by 2 o’clock you 

don’t know what you are doing. [Laughter.] 

It gets to the same point, though, Ms. Erickson, when it came to 

consumption and cost, and the price that something costs. 

Now, we did do smoking bans there, and we were told that numerous studies show that beyond good parenting the number one 

deterrent to kids smoking was cost. Can you point to anything that 

would help—or if not now, later, as it—how this could be—the cost 

issue could be more pointed as it relates to kids? Granted, obviously, they are not getting them—they are not going in, for the 

most part, and buying; they are getting it from other people. But 

does it still have that impact? 

Ms. ERICKSON. Representative Quigley, the same thing is true for 

alcohol. Professor Alex Wagner, from the University of Florida College of Medicine complete a review of over 100 studies of the relationship of price to consumption and came out with a very strong 

statement that says, when the price goes up people drink less. And 

145 

it is true for all categories of drinkers: heavy drinkers, moderate 

drinkers, very definitely for underage drinkers. 

Price is probably the most powerful driver of consumption, and 

there is a—research is very clear about the connection between 

high consumption and alcohol problems. So the same thing is true 

for alcohol. 

Mr. QUIGLEY. Very good. Thank you. 

Mr. JOHNSON. Okay. Next we will have Mr. Lamar Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

First of all, it is nice to have a friend from Texas here on the 

panel, and Mr. Ho, let me direct my first question to you. In regard 

to the Granholm decision, that created a lot more litigation than 

it was expected to, and what was our experience in Texas as a result of that decision? Has it increased litigation, reduced litigation, 

and what has been the aftermath? 

Mr. HO. We are definitely seeing an increase in litigation after 

Granholm, not just in Texas but across the country, and that is for 

the simple reason that different litigants and different courts and 

different states are trying to figure out exactly how to interpret the 

Granholm decision. 

We just had a case recently—so far we have won in the Fifth Circuit—where we were able to make clear to the court that Granholm 

talks about producers and restricts state authority with regard to 

producers, but it also holds that states have a lot more authority 

with respect to distribution. 

Mr. SMITH. Okay. Thank you, Mr. Ho. 

Ms. Samona, I know you went into it in your testimony a little 

bit, but tell us a little bit in greater detail some of the advantages 

of the three-tier system, both in regard to protecting those underage, to health, to safety, to quality of liquor itself, and so forth. 

Ms. SAMONA. Thank you for the opportunity. Yes, some of the 

main things that we look at and that we think we believe we have 

to control the plenary power that was given to us by the legislature 

when we created our—the Michigan liquor control system is that 

ability to bring in the product, to make sure that that product is 

a safe product that can be brought in and we can track it, where 

it came from, who it came through, where it can go to; the ability 

to collect revenue on it is fundamental for our state and for all 

states—— 

Mr. SMITH. So it helps states collect revenue and increases their 

revenue to them, right? 

Ms. SAMONA. Sure. That is one factor of it. But we never lose the 

health, safety, and welfare aspect of it, and that is fundamental to 

that, is that we make sure that the licensees that exist in the state 

of Michigan are responsible, they understand that overconsumption, serving to minors are things that are critical to what we do 

as an agency and it hurts the entire, you know, industry by having 

licensees like that. 

We have that ability and that power to bring those licensees in, 

to suspend them for a few days if we need to, to take away the license, to go onsite and visit their premises to make sure, to have 

decoy operations that go in, either through us or that local governmental police unit, to make sure that they are not selling to minors, that they are conforming with the laws that exist in the state 

146 

of Michigan and the rules of the Michigan Liquor Control Commission. And they understand, and we have hearings on a weekly 

basis for those that don’t comply, that they have to come in, and 

understand that there is consequences. 

If I can just piggyback one moment on the specific case that Mr. 

Ho spoke of, we were sued—Michigan—for that, under the same 

premise, and that is the Siesta Village case in 2008, and that is 

what we speak about, is that we lost that case. Same argument, 

same principle, things Mr. Ho in Texas, the Fifth Circuit, they 

ruled in favor of the state. The Second Circuit, New York, ruled in 

favor of the state. So it is the incontinuity of this interpretation 

that courts have of these laws that exist that we are asking for a 

more fair, balanced way of approaching that and making it clearer. 

Mr. SMITH. Great. Thank you. 

Ms. SAMONA. Thank you. 

Mr. SMITH. Ms. Erickson, I was here for the earlier panel, and 

if you were you heard one of our witnesses say that we really 

shouldn’t look to the Untied Kingdom for any lessons. And I 

think—whether you said apples and oranges or apples and lemons, 

I am not sure, but the idea was that it wasn’t a valid comparison. 

I just wanted to know whether you agree with that or not and 

if you thought there were lessons that we should learn from Great 

Britain’s deregulation of alcohol, what are they? 

Ms. ERICKSON. Thank you, Representative Smith. 

Actually, I think he has got a point, and that point is that it is 

not a fair comparison because of the fact that we currently have 

a comprehensive regulatory system and the United Kingdom no 

longer does. So it seems unlikely that we will experience the same 

problems that the United Kingdom has unless we deregulate in the 

way that they do. 

So, you know, it is a way to compare lemons and oranges in a 

way that gives us, I think, a good lesson. 

Mr. SMITH. Okay. Thank you. 

Thank you, Mr. Chairman. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Now we will recognize Representative Sheila Jackson Lee. 

Ms. JACKSON LEE. Mr. Chairman, thank you very much. I think 

the work of this Committee is a very important element of fixing 

and improving the laws of this Nation, but I also like the fact that 

you have presented to us a balanced perspective on some of the 

concerns dealing with this question and this industry. 

First of all, I would like to put on the record the obvious, which 

is that all of us—and I guess that is what Ms. Erickson is trying 

to emphasize—have concern about public health and safety. I was 

listening to a news report this morning where they were—I think 

the U.S. News Report was listing the top safe cities for teenage 

driving. Interestingly enough, we can all be happy that D.C. was 

the number one. And with all this powerful drinking and competition here, I am glad that D.C. allows us to walk the streets and 

not be run over by teenagers, so we are grateful for that. 

But we don’t want to play into ignoring the power of alcohol, no 

matter what level it is, and I want to get that on the record, that 

I believe that regulation has its place. And I also believe that competition has its place. 

147 

So with that in mind, Ms. Erickson, I am not going to demonize 

what is happening in Britain. I feel for them and hope that they 

will rally around their own physical and health issues that need to 

be addressed. 

But, Professor Bush, I am going to pose a question to you and 

Mr. Ho, who I understand is here on his own reconnaissance and 

not been released by the state to represent them. But, Professor 

Bush, how do I strike that balance of the question of state regulation where states would subject outside companies to their regulations, which may pose a sense of unfairness, to the question of the 

value of state regulation and to the—juxtaposed to the value of 

competition? How do we strike that balance? 

Mr. BUSH. Well, that is an excellent question, and the—there are 

principles of regulation that the states could and should adopt that 

could strike that balance well. For example, when—I will confess 

that I get wine shipments from outside the state—I am forced to 

sign that I am over 21 and the UPS driver asks for my ID when 

I sign for these wine shipments, and there is, at least from that 

aspect of distribution, you know, some degree of detection of whether I am a minor or not. 

The problem I have is, is the purpose of the restraint to protect 

in-state interests, private interests in terms of creating some monopoly power or is it, in fact, some sort of seeking of restraint so 

that we have temperance? When I was traveling through Utah for 

the first time, a state that is very clearly not liquor-oriented, I was 

marking on a NPR story about how teenagers were consuming 

Nyquil as a substitution away from liquor, which they could not 

get. Probably not the most exciting parties. 

But the notion here is that there is substitution and you have to, 

when you look at these sort of temperance issues, what effects on 

temperance do cartel-type behaviors or collusion-type behaviors 

have on those? Prices go up, and that may generally decrease consumption of alcohol, but is there substitution away to other products, perhaps more dangerous products? 

Those are the kinds of things I would be interested in knowing 

more about. But—— 

Ms. JACKSON LEE. So you could see us striking a balance to respecting the state’s regulatory scheme and also keeping the opportunity for competition? 

Mr. BUSH. Yes. From my perspective there is already a provision 

for doing that, called the State Action Doctrine. So long as the 

states actively regulate and they have a clearly articulated state 

policy, from an antitrust perspective there is no attack. 

Now, if we go the route of advocating some sort of statutory immunity from the antitrust laws the question becomes, where does 

that lead us? And courts have demonstrated time and time again 

with respect to other express immunities that it leads us to someplace that Congress didn’t intend. 

Ms. JACKSON LEE. Mr. Ho, let me ask you—and I got my voice 

in to you before the light, if the Chairman would indulge—you 

were the victor of a decision out of the state of Texas, but tell us 

how you—and I guess it is somewhat challenging because your 

work role is to speak the voice of the state, so I will just hope that 

you can balance it, but how do you strike this Supreme Court deciVerDate Aug 31 2005 13:04 Nov 12, 2010 Jkt 000000 PO 00000 Frm 00151 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\031810\55481.000 HJUD1 PsN: DOUGA
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sion of Granholm and its holding and what it did not hold, and how 

you can balance what is a reasonable request, which is that there 

be a free flow of commerce? 

For example, we have wine country in Texas. I am excited about 

it. I would be happy for their wine to be sold elsewhere. 

So let me yield to you, Mr. Ho, and welcome. It is a delight to 

see you. 

Mr. HO. Thank you. 

Let me first hasten to add that the litigation we are talking 

about we have won so far, but it remains pending in higher courts, 

so that is still an ongoing matter—— 

Ms. JACKSON LEE. And forgive me—higher Federal courts, or you 

are in the—where are you in the jurisdiction? 

Mr. HO. We won a three to zero opinion in the Fifth Circuit—— 

Ms. JACKSON LEE. Fifth Circuit. Thank you. 

Mr. HO [continuing]. That is now going to the en banc court. 

Ms. JACKSON LEE. Right. 

Mr. HO. The plaintiffs have filed with an en banc. We will see 

what happens there. 

You have asked me how we might strike the balance between 

state authority and other values. If I may, I would defer to, frankly, the policymakers here and in Austin and in state capitals as to 

how we should strike that policy. But what I do want to say, 

though, is—— 

Ms. JACKSON LEE. I appreciate that. 

Mr. HO [continuing]. It is as important to ask who should strike 

that balance as it is to ask how that balance should be struck. 

Should state legislatures and Congress strike that balance or 

should courts be in the business of striking that balance? Right 

now it is essentially a mix. 

I mean, state legislatures obviously are passing laws—have laws 

on the books—but Federal courts are—in different settings—I 

think Ms. Samona very well mentioned that different courts are 

coming to different conclusions, and it is really confusing and costly 

in terms of a litigation burden on states and on industry. If somebody else were to strike the balance and to take that issue out of 

the courts that might provide some clarity to the entire industry. 

Ms. JACKSON LEE. Well, I will just finish by saying, you just— 

that is the hook that I am going to hold on to: clarity. And I think 

we need to be deliberative in how we assess that clarity, because 

in addition to the Congress acting we have juxtaposed against state 

legislatures acting. The one thing we don’t want to do is to kill 

what, in a reasoned manner of use, is the right of the American 

people to consume, and we don’t want to do that, we don’t want to 

kill business. 

So I thank you and I thank the Chairman for his indulgence. 

And I thank you for giving us the real question, which is how do 

we strike a balance but how do we get clarity? 

And I yield back. 

Mr. JOHNSON. Thank you. 

Next, we will have questions from Congressman Bob Goodlatte. 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. I thank you for 

holding this hearing. 

149 

And I would like to direct this first question to Professor Bush 

and Mr. Ho. If anybody else wants to join in that is fine. And it 

follows up on the comments of Mr. Smith. 

Lawsuits have been brought challenging state alcohol beverage 

regulation. How successful have these suits been and how big an 

impact are they having on the states’ ability to regulate alcohol? 

Professor Bush? 

Mr. BUSH. I will disclose that I am going to stay safely on the 

side as being an antitrust expert, so I will address the antitrust 

cases and let Mr. Ho discuss the rest. The antitrust cases that have 

been brought against the states have been quite limited in success. 

And as I described in my written testimony and my oral opening 

statement, it is quite limited to where the states have not actively 

supervised state regulation. For example, the post and hold system 

pretty much delegates the authority over pricing to private actors 

in the market with a rubber stamp at the—coming at the end from 

the state. In those instances, in any sort of price restraint that is 

delegated to private actors, the states have not fared well. But that 

is a very small, limited number of antitrust cases, and in most instances the blanket of the State Action Doctrine protects the bulk 

of state regulation. 

Mr. GOODLATTE. Mr. Ho? 

Mr. HO. Thank you for the question. I think the record of litigation has, frankly, been mixed. Different states are fighting different 

issues with litigants, and so different issues result in different results, even on the same issue. 

As my colleague just mentioned, on the very same issues different states are getting different results from different courts on 

precisely the same issue, and that is, frankly, a big part of the burden that we are seeing and the clarity that we were talking about 

earlier—the importance of that clarity. 

There is no question, to answer your question about burden on 

states, we would—I am not here to testify on particular legislation, 

but if you are asking me the effect of this area, we would love, obviously, to free up our resources elsewhere and not have to defend 

these suits. 

I had the honor of serving on Capitol Hill some time ago. I am 

familiar—just to use an example, I am familiar with the fact that 

each and every Member of Congress has a wide area of responsibility and jurisdiction, and you are only given certain limited resources, limited staff. 

Imagine if you were told, ‘‘You have to designate one of your staff 

persons exclusively to doing nothing else other than to just defend 

your right to hold your seat.’’ Would that be a burden on your office? I think it would be. And that is sort of analogous to the burden that we are dealing with. We are having to devote resources 

just to defend the right to enforce these laws. 

Mr. GOODLATTE. Anyone else want to say anything? 

Ms. SAMONA. If I could? 

Mr. GOODLATTE. Ms. Samona? 

Ms. SAMONA. Thank you very much. 

As a state regulator, the chair of the Michigan Liquor Control 

Commission, I think that the issue that you touched upon is the 

critical issue that we are dealing with here, Congressman, is that, 

150 

for example, the lawsuit that Mr. Ho just spoke of, the same issue 

or the same lawsuit—in the state of Michigan that is the Siesta 

Village case that followed Granholm—the court ruled against us. 

In Texas, the court ruled in favor of Texas. In New York, the court 

ruled in favor of New York. 

The same arguments on all three cases and you have got a difference in mix. And now the New York ruling seems like it is going 

to be challenged, so who knows what is going to come up with that? 

The fact is that, you know, there are a lot of holes that need to be 

filled in, and I think Congress is the right person or group set to 

do that. 

You know, Professor Bush talks about this protectionism argument and that if you have—you know, if your protection—you 

know, the State Action Doctrine says if you protect or you give the 

ability of, you know, independent businesses to operate then that 

is where you lose. Well, that is clearly not the case in the Heald— in the Siesta Village case, where it is the same argument in three 

different courts—three different states, three different courts, different rules. 

Mr. GOODLATTE. I have to cut you off because I have got more 

questions—— 

Ms. SAMONA. Thank you. 

Mr. JOHNSON. Mr. Goodlatte, may I ask you to yield the floor on 

that point? 

Mr. GOODLATTE. Sure. 

Mr. JOHNSON. If one state regulates its alcohol distribution what 

does it care if it is not in a different—if it is in a different circuit 

from—a different circuit court ruling, what does that matter to the 

other state? What does that matter to you, being that the law does 

not apply to you as rendered by that other circuit? 

Ms. SAMONA. Well, because what the state—what the court told 

Michigan is that, ‘‘What you are doing is inappropriate and you 

can’t do it anymore.’’ What the court in Texas told Texas is, ‘‘What 

you are doing,’’ which was the same thing as Michigan, ‘‘you can 

do. Continue to do it.’’ And so now you have got differences of how 

do you apply this? It is all the 21st Amendment. It is all alcohol 

we are regulating. How—— 

Mr. JOHNSON. Well, then it goes on up to the U.S. Supreme 

Court from there. 

Ms. SAMONA. It could, yes, if it continues in that direction. The 

problem is, we as a state suffer millions of dollars that we have to 

give away for these lawsuits to continue. And as a result, you 

know, we are burdened with that, and at a time when economy is 

hurting everybody you just don’t have that person power to be able 

to defend those lawsuits and still continue to operate business and 

protect the health, safety, and welfare of your citizens. 

Mr. JOHNSON. Okay. 

I will yield back, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

To follow up on that—and I will ask this to Mr. Ho and Ms. 

Samona or Mr. Bush—Professor Bush, you want to—you indicated, 

Mr. Ho, in your testimony that the Congress can amend the dormant Commerce Clause. Can you give us any examples of the Congress having done this in recent times? 

151 

Mr. HO. Certainly. I think it was just a few years ago that Congress reacted to a Ninth Circuit decision—I think it was the Ninth 

Circuit—that dealt with striking down a state regulation of hunting and fishing. It was Congress’ judgment at that time that that 

decision was incorrect, that states should have those regulatory 

powers, and I believe Congress passed legislation to authorize 

those state laws. 

Congress has done this in any number of other industries—insurance, banking, various other industries where it wanted to preserve 

state authorities, state regulatory power, and the courts have consistently upheld and enforced those Federal statutes. 

Mr. GOODLATTE. So if the Congress wanted to exempt the beer, 

wine, and spirits from the dormant Commerce Clause and Federal 

antitrust laws we could do that? 

Mr. HO. Certainly. 

Mr. GOODLATTE. What would be the disadvantages of doing that? 

Mr. HO. I think there would be policy arguments back and forth 

that I would respectfully refer to the policymakers on, but there is 

no question that Congress has that power. Frankly, Congress exercised that power already when it ratified or proposed the 21st 

Amendment and passed other laws before and after that. 

The question is, what do those laws mean in specific areas? 

Courts have struggled to interpret those very few words that Congress has sent so far, and so I think the question before the body 

is, do you want to send some more instructions so that courts know 

what Congress wants and will simply follow that in a very clear 

way? 

Mr. GOODLATTE. Professor Bush, you want to comment on that? 

Mr. BUSH. Yes. First of all, I just want to point out, there is a 

great risk when you enact any sort of statutory immunity from the 

antitrust laws. I mean, keep in mind that the antitrust laws are 

magna carta free enterprise, as the Supreme Court has said. 

And the risk is, you have to weigh the benefits of the immunity 

with the potential costs. And in this instance an antitrust immunity carves out one particularly really small area of state regulation from what is already protected from the State Action Doctrine. 

In the history of statutory immunities rarely has the immunity 

actually just been limited to what Congress intended; there is usually some unintended consequences. When you are dealing with 

the—in the realm of state regulation and protecting state regulation through the statutory immunity there may be external effects 

outside the state from imposition of a statutory immunity which 

protects state regulation that has, potentially, effect on interstate 

commerce. 

Market conditions often change, and in the context of changing 

market conditions the statutory community may give way, may no 

longer be valid, and the statutory immunity may never actually go 

away because they rarely have any sort of limiting time restraint 

on them. 

I should also point out that when we are contemplating the risks 

of litigation here keep in mind that when you pass Federal legislation involving state regulation of alcohol that will also open doors 

for potential lawsuits. We all know of examples where legislation, 

either contemplated or enacted, has immediately been challenged 

152 

in courts, and I would expect that the states would have to fact 

that kind of litigation challenge as well. 

Mr. GOODLATTE. Yes, Mr. Hindy? 

Mr. HINDY. Congressman, also if—— 

Mr. GOODLATTE. You might want to hit your microphone. I 

don’t—— 

Mr. HINDY. Okay. If states were exempted from the Commerce 

Clause, I think it would open the door for every state having different rules for labeling, for formulation of beers, for licensing, for 

marketing of beer. It would be prohibitive for most brewers to ship 

anywhere but in their home state. It would be disastrously expensive for all brewers. 

And also, imagine—— 

Mr. GOODLATTE. Let me—I am not sure I quite understand that. 

Doesn’t the 21st Amendment to the Constitution give the states 

that authority when it comes to alcohol anyway? 

Mr. HINDY. Yes, but right now they tend to observe the general 

guidelines of the TTB. In other words, labeling is approved by state 

governments, but the—most of what we have to put on a beer label 

is determined by the Federal Government, and it is uniform across 

the country: the warning—the government warning, you know, the 

place where the product is brewed, et cetera. 

New York State recently tried to require a specific label for the 

state because distributors were concerned about people shipping 

empties into the state from other states and getting a deposit. That 

would have been incredibly expensive for small brewers to do, and 

large brewers as well. 

I think the Federal oversight of our industry means there is a 

level of safety and a level of licensing that is uniform across the 

50 states, and ceding that to every state I think would be chaotic. 

Mr. GOODLATTE. I think the Chairman is indicating that my time 

is expired. 

Mr. JOHNSON. Well, you can reserve the balance if you would 

like. 

Next we will hear from Mr. Darrell Issa, a congressman from 

California. 

Mr. ISSA. Thank you, Mr. Chairman. And since the wine industry 

isn’t represented here I might mention that Temecula wine country 

is in my district, and so I come with 30 years of business experience and 10 years of representing wine producers who there, but 

for the ability to ship wine around the country, would probably— 

the small wineries would have no business. 

So I find myself in an odd situation of caring about this issue, 

wanted to ensure that underage drinking is not promoted nor any 

of the other unintended causes of repealing prohibition, or for that 

matter I don’t want to get back to the unintended causes of prohibition. So I am going to sort of jump around here. 

But, Mr. Hindy, you are a beer equivalent of my wine constituents, and this is a Committee that looks at the Constitution in 

every aspect, every direction, not just the 21st Amendment. Is it 

your belief that you have a reasonable right to sell anywhere in the 

world, as a manufacturer of product, unless otherwise restrained 

by Federal law? 

Mr. HINDY. Yes. 

153 

Mr. ISSA. And, Mr. Ho, would you say that if there was a Texas 

brewery that you would have an expectation that that brewery 

should be able to ship its products to the four corners of the earth 

as a promotion of commerce intended by the Constitution? 

Mr. HO. I think as an employee of the Texas attorney general’s 

office I would say that any business should have the right to engage in their business consistent with the laws of the jurisdiction 

they are selling to. 

Mr. ISSA. That wasn’t the question, Mr. Ho. Should Dell be able 

to sell their computers manufactured in Austin everywhere in the 

world and export them without any unreasonable restraint or prejudiced treatment because they simply come from Texas, and we 

don’t like Texans in California? That is what I am asking. 

Mr. HO. I understand and appreciate the spirit of the question 

very—— 

Mr. ISSA. That is why as an individual—you were here as an individual—I wanted your individual interpretation, on behalf of 

Dell. [Laughter.] 

Mr. HO. As a constitutional matter—and I can speak personally 

as a constitutional lawyer—there is a huge difference between computers and, frankly, every other product—huge difference from that 

and alcohol, because alcohol does have this very unique—— 

Mr. ISSA. Yes, but that wasn’t the question. The rest of the world 

does not regulate alcohol the way we do. The exporting of alcohol 

to many of the four corners of the earth is exactly the same as Dell 

computers. As a matter of fact, Dell computers may be more restricted in some countries, like China. 

So back to the same question: Do you see, on behalf of Dell, any 

problem with their having a reasonable right to enjoy the same opportunities anywhere they choose to sell their product in the four 

corners of the earth against domestic interests of that state or that 

Nation? 

Mr. HO. I don’t mean to frustrate you, sir. I speak primarily in 

a legal capacity; I am a lawyer. If the people of the United States, 

for that matter, want to repeal the 21st Amendment that is entirely, entirely within the right of this Congress and, obviously, 

through the state—— 

Mr. ISSA. Okay. I will take that as I am not going to get a square 

on behalf of Dell, and when you go home to Austin, good luck. 

Ms. Samona, maybe I can get a better answer from you. Automobiles are highly regulated around the world. Do you think, within reason, if I want to make a General Motors car and ship it to 

Great Britain, that as long as I comply equally in Great Britain 

with what Great Britain companies do I should have reasonable access, notwithstanding trade barriers that are artificially imposed, 

but generally, do you believe that Michigan companies should have 

that right? 

Ms. SAMONA. I think within reason yes, they should. 

Mr. ISSA. Okay. So can we all ask one question and get a fairly 

quick yes or no? Ultimately, the 21st Amendment was a bargain 

to repeal prohibition but to grant to the states the right to protect 

individuals from harm from alcohol. Is that—could I just get yeses 

from everyone and a no from someone that just disagrees with the 

intent of the 21st Amendment? 

154 

Ms. SAMONA. That was one of its intents, yes. 

Mr. ISSA. Well, they allowed states to stay dry if they wanted, 

but nowhere in the 21st Amendment was there any language that 

intended individuals—or individual states to be able to truly violate the Commerce Clause other than that which was for protection—uniform protection of their people. Maybe some of the more 

professorial folks could help me. 

Mr. BUSH. Actually, one of the shipments of wine I get is from 

Mount Palomar in your district. Yes, it—— 

Mr. ISSA. And thank you. 

Mr. BUSH. There is an issue here of—there is a tension in the 

Constitution between the 21st—the Commerce Clause, of course, 

and I agree with you that the purpose is for the health, safety, and 

welfare of the 21st, of citizens of the state. 

And I certainly do not take—ask states for regulating alcohol, 

per se. I have issues when they regulate alcohol in a way that is 

not consistent with—where they allow some degree of competition 

but in a discriminatory manner or where they totally delegate their 

authority to private actors. 

Mr. ISSA. Right. 

We certainly could pass a law and let the men and women across 

the street decide whether we are within our authority of reconciling 

various constitutional clauses. But wouldn’t it, Mr. Bush, be—Professor Bush—be reasonable to think that we here on the dais may 

want to make it clear that states can protect individuals—meaning 

the retail, distribution, and so on—while in fact interstate clauses 

should be just as supported? As long as they comply with whatever 

in-state people do, out-of-state people should have the same opportunity, and is there any reason to believe that we shouldn’t consider defining that if the courts will not? 

And that means there will be no more questions, only answers 

to anyone that wants to answer that question. 

Ms. SAMONA. I would like to answer that. I think the 21st 

Amendment, with all due respect, Congressman, trumps the Commerce Clause. The Commerce Clause—21st Amendment gives the 

rights of those states to be able to regulate alcohol in a way that 

those states feel is safe and appropriate so they can bring it—— 

Mr. ISSA. That wasn’t the question for Professor Bush. The question had to do with out-of-state entities being allowed, so long as 

they complied as in-state entities did. 

Ms. SAMONA. And that takes me to the next thing: Commerce 

Clause allows you to bring commerce, or goods, back from one state 

to the other as long as that doesn’t harm that state’s laws, rules, 

and/or existing health, safety and welfare issues. So those are two 

separate issues, yet they work together. 

However, the Commerce Clause does not trump the 21st Amendment, and unfortunately we are getting court rulings that say exactly that—— 

Mr. ISSA. Okay, Professor Bush, you get the last word because 

I truly am out of time, about whether or not protectionism among 

the states was justified in the 21st Amendment. 

Mr. BUSH. Protectionism—I define—— 

Mr. ISSA. That is what you call it when you let people in state 

have an advantage over people out of state. We call it protecVerDate Aug 31 2005 13:04 Nov 12, 2010 Jkt 000000 PO 00000 Frm 00158 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\031810\55481.000 HJUD1 PsN: DOUGA
155 

tionism when it is us versus another country. It is protectionism 

if this 21st Amendment allows that as to a product that we are discussing here today. 

Mr. BUSH. I think that that is not the purpose of the 21st 

Amendment. And I think the problem that the states are getting 

in trouble with is engaging in that kind of activity, which may or 

may not have a derivative benefit of temperance. But the fact of 

the matter is, we are an increasingly interstate economy, and these 

state regulations have an interstate effect. And therefore, we have 

to be careful about those kinds of interstate spillovers and the effect on other states’ economies from those type of price restraints. 

Mr. ISSA. Thank you so much, Mr. Chairman, for your indulgence. I yield back. 

Mr. JOHNSON. Thank you, sir. 

I appreciate the testimony from the witnesses today. Without objection Members will have 5 legislative days to submit any additional written questions, which we will forward to the witnesses 

and ask that you answer as promptly as you can to be made part 

of the record. Without objection the record will remain open for 5 

legislative days for the submission of any other materials. 

Today’s hearing raised a number of important issues. Moving forward we must ask ourselves whether state regulation of alcohol 

has been clarified or undermined through recent dormant Commerce Clause and antitrust litigation. Robust state regulation of alcohol is important for the public good, but so, too, are the antitrust 

laws in the United States Constitution. 

And with that, this hearing of the Subcommittee on Courts and 

Competition Policy is adjourned. 

[Whereupon, at 4 p.m., the Subcommittee was adjourned.] 

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