Opinion ID: 204138
Heading Depth: 1
Heading Rank: 3

Heading: Whether the Twenty-first Amendment Immunizes Facially Neutral Alcohol Statutes from Commerce Clause Scrutiny

Text: We now consider whether, as Massachusetts asserts, the Twenty-first Amendment protects § 19F from invalidation, notwithstanding the fact that it discriminates against interstate commerce in purpose and effect. Whether the Twenty-first Amendment granted states the authority to enact even facially neutral but discriminatory alcohol laws that would otherwise violate the Commerce Clause was not decided by Granholm and the answer is not readily apparent from the text of the Amendment. Granholm holds the interpretation of this amendment instead turns on historical context. Section 2 of the Twenty-first Amendment granted the states the authority to regulate liquor only to the extent that they had done so before Prohibition under two federal laws: the Wilson Act of 1890 [24] and the Webb-Kenyon Act of 1913. [25] See Granholm, 544 U.S. at 484, 125 S.Ct. 1885. The Supreme Court held in Granholm that through these Acts, Congress gave the states newfound powers to regulate alcohol that came within their borders, even if it had traveled in interstate commerce. The Wilson Act did this by allowing states to restrict or prohibit the sale of out-of-state alcohol to the same extent and in the same manner as alcohol that was produced in-state. 544 U.S. at 478, 125 S.Ct. 1885 (quoting 27 U.S.C. § 121) (internal quotation marks omitted). The Webb-Kenyon Act expanded states' regulatory authority by expressly authorizing states to regulate alcohol that traveled in interstate commerce even if it was being shipped solely for consumers' personal use. Id. at 481-84, 125 S.Ct. 1885. These Acts did not, however, exempt states from the Commerce Clause's existing prohibitions on state laws that discriminated against out-of-state goods and favored local interests. Id. at 484-85, 125 S.Ct. 1885. The precise question in Granholm was what effect, if any, the Twenty-first Amendment has upon facially discriminatory state alcohol laws that would otherwise be subject to invalidation under the Commerce Clause. 544 U.S. at 471, 125 S.Ct. 1885. The question of whether the Twenty-first Amendment protects facially neutral laws like § 19F was not before the Court. Massachusetts now contends that the Twenty-first Amendment protects facially neutral laws from invalidation under the Commerce Clause, even if they discriminate in purpose or effect, because it says such laws are distinguishable from facially discriminatory laws for the purposes of the Twenty-first Amendment. In the alternative, Massachusetts asserted at oral argument that the Twenty-first Amendment should lessen Commerce Clause scrutiny of such laws to mere rational basis review. [26] We reject these arguments. Based on our analysis of historical sources, we conclude that the Wilson and Webb-Kenyon Acts did not protect facially neutral state liquor laws from invalidation under the Commerce Clause if they were discriminatory. [27] To hold otherwise, we would have to find that these Acts not only recognized the difference between facially discriminatory and facially neutral but discriminatory state laws, but also affirmatively intended to protect the latter and not the former. All evidence points to the contrary. By the time the Wilson Act became law in 1890, it was well established that under the Commerce Clause, facially neutral state statutes that had a discriminatory effect on out-of-state interests constituted impermissible discrimination, just as facially discriminatory state laws did. The Supreme Court had decided two major discriminatory effects Commerce Clause cases just before the Wilson Act passed. In Robbins v. Taxing Dist. of Shelby County, 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694 (1887), the Court had invalidated a facially neutral state tax on drummers, individuals who drummed up sales by displaying samples, because, inter alia, the tax disproportionately disadvantaged out-of-state merchants and manufacturers. Id. at 490-91, 497-98, 7 S.Ct. 592. And in Minnesota v. Barber, 136 U.S. 313, 10 S.Ct. 862, 34 L.Ed. 455 (1890), the Supreme Court had invalidated a Minnesota statute that required in-state inspection of all meat before it could be sold within the state. Id. at 326, 10 S.Ct. 862. Its reasoning cut broadly: Although this statute is not avowedly or in its terms directed against the bringing into Minnesota of the products of other states, this was the statute's necessary effect. Id. In a separate line of cases, the Supreme Court had also indicated that a state's asserted rationale for a statute would be viewed with skepticism if other evidence, including the statute's effects, pointed strongly to a discriminatory purpose. [I]f the State, under the guise of exerting its police powers, should make such exclusion or prohibition applicable solely to articles, of that kind, that may be produced or manufactured in other States, the Court stated as early as 1879, the courts would find no difficulty in holding such legislation to be in conflict with the Constitution of the United States. Guy v. City of Baltimore, 100 U.S. 434, 443, 25 L.Ed. 743 (1879); see also Austin v. Tennessee, 179 U.S. 343, 349-50, 21 S.Ct. 132, 45 L.Ed. 224 (1900) (suggesting that ostensibly neutral laws that were intentionally applied in a discriminatory manner were invalid in the Commerce Clause context). When drafting the Wilson and Webb-Kenyon Acts, Congress was presumably aware that these types of facially neutral but discriminatory state laws were subject to invalidation under the Commerce Clause. See Edelman v. Lynchburg Coll., 535 U.S. 106, 117 n. 13, 122 S.Ct. 1145, 152 L.Ed.2d 188 (2002); see also N. Star Steel Co. v. Thomas, 515 U.S. 29, 34, 115 S.Ct. 1927, 132 L.Ed.2d 27 (1995). Yet Congress made no reference to the notion that the Wilson and Webb-Kenyon Acts would permit states to enact liquor laws with a discriminatory effect or motive. Although Congress may authorize the States to engage in regulation that the Commerce Clause would otherwise forbid, courts can exempt[] state statutes from the implied limitations of the Clause only when the congressional direction to do so has been unmistakably clear. Maine v. Taylor, 477 U.S. 131, 138-39, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986) (internal quotation marks omitted). The Wilson and Webb-Kenyon Acts do evince an unmistakably clear intention to permit states to regulate alcohol which traveled in interstate commerce the same way as they regulated in-state alcohol. [28] But the two Acts cannot be construed to authorize anything more. Supreme Court decisions and legal scholarship of the era confirm this interpretation. Scott v. Donald, 165 U.S. 58, 17 S.Ct. 265, 41 L.Ed. 632 (1897), involved a challenge to a state law that gave the state liquor commissioner control over all state sales of alcohol and included two other provisions that explicitly disfavored out-of-state manufacturers. Id. at 92, 17 S.Ct. 265. The Court compared the facts to other Commerce Clause cases, including various discriminatory effects cases involving goods other than alcohol, implying that alcohol regulation was not a unique category for the purposes of the non-discrimination rule. Id. at 93-99, 17 S.Ct. 265. The Court's ultimate holding was that [the Wilson Act] was not intended to confer upon any state the power to discriminate injuriously against the products of other states. While states, under the Wilson Act, could enact laws to forbid entirely the manufacture and sale of intoxicating liquors, they cannot . . . establish a system which, in effect, discriminates between interstate and domestic commerce. Id. at 100, 17 S.Ct. 265. Contemporaneous treatises on liquor law likewise concluded that the Wilson Act did not immunize any kind of discriminatory state law from scrutiny under the non-discrimination rule. [29] Against this background, we hold that the Twenty-first Amendment does not exempt facially neutral state alcohol laws with discriminatory effects from the non-discrimination rule of the Commerce Clause. Nor, of course, are such laws exempt when they also discriminate by design. We also reject Massachusetts's alternate contention that the Twenty-first Amendment lessens the degree of Commerce Clause scrutiny for facially neutral but discriminatory state alcohol laws to mere rational basis review. The Supreme Court implicitly rejected this argument in Granholm when it applied the usual, searching degree of scrutiny to invalidate the facially discriminatory laws at issue. 544 U.S. at 489-90, 125 S.Ct. 1885. And there is nothing in the text, legislative history, or contemporaneous understandings of the Wilson or Webb-Kenyon Acts that supports Massachusetts's argument, let alone yields an unambiguous indication of congressional intent to reduce Commerce Clause scrutiny. In the absence of such evidence, Massachusetts's interpretation of the Twenty-first Amendment fails. Finally, we need not address whether § 19F could escape invalidation on the ground that, despite its discriminatory effect and design, the core purposes of the Twenty-first Amendment are sufficiently implicated . . . to outweigh the Commerce Clause principles that would otherwise be offended. Bacchus, 468 U.S. at 275, 104 S.Ct. 3049. Those purposes include promoting temperance, ensuring orderly market conditions, and raising revenue. North Dakota, 495 U.S. at 432, 110 S.Ct. 1986. Massachusetts does not present any argument as to why § 19F serves any of these purposes. [30] In any event, it is unclear that this balancing test survives Granholm. [31]