v Heald (2005)
SUPREME COURT OF THE UNITED STATES
May 16, 2005
Justice Kennedy delivered the opinion of the Court.
These consolidated cases present challenges to state laws regulating the sale of wine from out-of-state wineries to consumers in Michigan and New York. The details and mechanics of the two regulatory schemes differ, but the object and effect of the laws are the same: to allow in-state wineries to sell wine directly to consumers in that State but to prohibit out-of-state wineries from doing so, or, at the least, to make direct sales impractical from an economic standpoint. It is evident that the object and design of the Michigan and New York statutes is to grant in-state wineries a competitive advantage over wineries located beyond the States’ borders.
We hold that the laws in
both States discriminate against interstate commerce in violation of
the Commerce Clause, Art. I, §8, cl. 3, and that the
discrimination is neither authorized nor permitted by the Twenty-first
Like many other States, Michigan and New York regulate the sale and importation of alcoholic beverages, including wine, through a three-tier distribution system. Separate licenses are required for producers, wholesalers, and retailers.... We have held previously that States can mandate a three-tier distribution scheme in the exercise of their authority under the Twenty-first Amendment. As relevant to today’s cases, though, the three-tier system is, in broad terms and with refinements to be discussed, mandated by Michigan and New York only for sales from out-of-state wineries. In-state wineries, by contrast, can obtain a license for direct sales to consumers. The differential treatment between in-state and out-of-state wineries constitutes explicit discrimination against interstate commerce.
This discrimination substantially limits the direct sale of wine to consumers, an otherwise emerging and significant business. From 1994 to 1999, consumer spending on direct wine shipments doubled, reaching $500 million per year, or three percent of all wine sales. The expansion has been influenced by several related trends. First, the number of small wineries in the United States has significantly increased. By some estimates there are over 3,000 wineries in the country, At the same time, the wholesale market has consolidated. The increasing winery-to-wholesaler ratio means that many small wineries do not produce enough wine or have sufficient consumer demand for their wine to make it economical for wholesalers to carry their products. This has led many small wineries to rely on direct shipping to reach new markets. Technological improvements, in particular the ability of wineries to sell wine over the Internet, have helped make direct shipments an attractive sales channel.
Approximately 26 States
allow some direct shipping of wine, with various restrictions. Thirteen
of these States have reciprocity laws, which allow direct shipment from
wineries outside the State, provided the State of origin affords
similar nondiscriminatory treatment. In many parts of the country,
however, state laws that prohibit or severely restrict direct shipments
deprive consumers of access to the direct market.
The wine producers in the cases before us are small wineries that rely on direct consumer sales as an important part of their businesses. Domaine Alfred, one of the plaintiffs in the Michigan suit, is a small winery located in San Luis Obispo, California. It produces 3,000 cases of wine per year. Domaine Alfred has received requests for its wine from Michigan consumers but cannot fill the orders because of the State’s direct-shipment ban. Even if the winery could find a Michigan wholesaler to distribute its wine, the wholesaler’s markup would render shipment through the three-tier system economically infeasible.
Similarly, Juanita Swedenburg and David Lucas, two of the plaintiffs in the New York suit, operate small wineries in Virginia (the Swedenburg Estate Vineyard) and California (the Lucas Winery). Some of their customers are tourists, from other States, who purchase wine while visiting the wineries. If these customers wish to obtain Swedenburg or Lucas wines after they return home, they will be unable to do so if they reside in a State with restrictive direct-shipment laws. For example, Swedenburg and Lucas are unable to fill orders from New York, the Nation’s second-largest wine market, because of the limits that State imposes on direct wine shipments.
We first address the
background of the suit challenging the Michigan direct-shipment law.
Most alcoholic beverages in Michigan are distributed through the
State’s three-tier system. Producers or distillers of alcoholic
beverages, whether located in state or out of state, generally may sell
only to licensed in-state wholesalers. Wholesalers, in turn, may sell
only to in-state retailers. Licensed retailers are the final link in
the chain, selling alcoholic beverages to consumers at retail locations
and, subject to certain restrictions, through home delivery.
Under Michigan law, wine
producers, as a general matter, must distribute their wine through
wholesalers. There is, however, an exception for Michigan’s
approximately 40 in-state wineries, which are eligible for “wine maker”
licenses that allow direct shipment to in-state consumers.
Some Michigan residents brought suit against various state officials in the United States District Court for the Eastern District of Michigan. Domaine Alfred, the San Luis Obispo winery, joined in the suit. The plaintiffs contended that Michigan’s direct-shipment laws discriminated against interstate commerce in violation of the Commerce Clause. The trade association Michigan Beer & Wine Wholesalers intervened as a defendant. Both the State and the wholesalers argued that the ban on direct shipment from out-of-state wineries is a valid exercise of Michigan’s power under §2 of the Twenty-first Amendment....
New York’s licensing scheme
is somewhat different. It channels most wine sales through the
three-tier system, but it too makes exceptions for in-state wineries.
As in Michigan, the result is to allow local wineries to make direct
sales to consumers in New York on terms not available to out-of-state
wineries. Wineries that produce wine only from New York grapes can
apply for a license that allows direct shipment to in-state consumers.
These licensees are authorized to deliver the wines of other wineries
as well, but only if the wine is made from grapes “at least
seventy-five percent the volume of which were grown in New York state.”
An out-of-state winery may ship directly to New York consumers only if
it becomes a licensed New York winery, which requires the establishment
of “a branch factory, office or storeroom within the state of New
Juanita Swedenburg and David Lucas, joined by three of their New York customers, brought suit in the Southern District of New York against the officials responsible for administering New York’s Alcoholic Beverage Control Law seeking, inter alia, a declaration that the State’s limitations on the direct shipment of out-of-state wine violate the Commerce Clause. New York liquor wholesalers and representatives of New York liquor retailers intervened in support of the State....
We consolidated these cases and
granted certiorari on the following question: “
Time and again this Court has held that, in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” This rule is essential to the foundations of the Union. The mere fact of nonresidence should not foreclose a producer in one State from access to markets in other States. States may not enact laws that burden out-of-state producers or shippers simply to give a competitive advantage to in-state businesses. This mandate “reflect[s] a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation.”
The rule prohibiting state
discrimination against interstate commerce follows also from the
principle that States should not be compelled to negotiate with each
other regarding favored or disfavored status for their own citizens.
States do not need, and may not attempt, to negotiate with other States
regarding their mutual economic interests.
Laws of the type at issue
in the instant cases contradict these principles. They deprive citizens
of their right to have access to the markets of other States on equal
terms. The perceived necessity for reciprocal sale privileges risks
generating the trade rivalries and animosities, the alliances and
exclusivity, that the Constitution and, in particular, the Commerce
Clause were designed to avoid. State laws that protect local wineries
have led to the enactment of statutes under which some States condition
the right of out-of-state wineries to make direct wine sales to
in-state consumers on a reciprocal right in the shipping State.
California, for example, passed a reciprocity law in 1986, retreating
from the State’s previous regime that allowed unfettered direct
shipments from out-of-state wineries. Prior to 1986, all but three
States prohibited direct-shipments of wine. The obvious aim of the
California statute was to open the interstate direct-shipping market
for the State’s many wineries. The current patchwork of
laws–with some States banning direct shipments altogether, others doing
so only for out-of-state wines, and still others requiring
reciprocity–is essentially the product of an ongoing, low-level trade
war. Allowing States to discriminate against out-of-state wine
“invite[s] a multiplication of preferential trade areas destructive of
the very purpose of the Commerce Clause.”
The discriminatory character of the Michigan system is obvious. Michigan allows in-state wineries to ship directly to consumers, subject only to a licensing requirement. Out-of-state wineries, whether licensed or not, face a complete ban on direct shipment. The differential treatment requires all out-of-state wine, but not all in-state wine, to pass through an in-state wholesaler and retailer before reaching consumers. These two extra layers of overhead increase the cost of out-of-state wines to Michigan consumers. The cost differential, and in some cases the inability to secure a wholesaler for small shipments, can effectively bar small wineries from the Michigan market.
The New York regulatory scheme differs from Michigan’s in that it does not ban direct shipments altogether. Out-of-state wineries are instead required to establish a distribution operation in New York in order to gain the privilege of direct shipment. N. Y. This, though, is just an indirect way of subjecting out-of-state wineries, but not local ones, to the three-tier system....New York’s in-state presence requirement runs contrary to our admonition that States cannot require an out-of-state firm “to become a resident in order to compete on equal terms.”
We have no difficulty concluding that New York, like Michigan, discriminates against interstate commerce through its direct-shipping laws.
State laws that discriminate against interstate commerce face “a virtually per se rule of invalidity.” The Michigan and New York laws by their own terms violate this proscription. The two States, however, contend their statutes are saved by §2 of the Twenty-first Amendment, which provides:
“The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”
The States’ position is inconsistent with our precedents and with the Twenty-first Amendment’s history. Section 2 does not allow States to regulate the direct shipment of wine on terms that discriminate in favor of in-state producers.
Before 1919, the temperance movement fought to curb the sale of alcoholic beverages one State at a time. The movement made progress, and many States passed laws restricting or prohibiting the sale of alcohol. This Court upheld state laws banning the production and sale of alcoholic beverages, Mugler v. Kansas, 123 U.S. 623 (1887), but was less solicitous of laws aimed at imports. In a series of cases before ratification of the Eighteenth Amendment the Court, relying on the Commerce Clause, invalidated a number of state liquor regulations....
After considering a series of bills in response to this Court’s [cases], Congress responded to the direct-shipment loophole in 1913 by enacting the Webb-Kenyon Act. The Act, entitled “An Act Divesting intoxicating liquors of their interstate character in certain cases,” provides:
“That the shipment or transportation … of any
spirituous, vinous, malted, fermented, or other intoxicating liquor of
any kind, from one State … into any other State … which said
spirituous, vinous, malted, fermented, or other intoxicating liquor is
intended, by any person interested therein, to be received, possessed,
sold, or in any manner used, either in the original package or
otherwise, in violation of any law of such State … is hereby
The constitutionality of the Webb-Kenyon Act itself was in doubt. [Our prior cases] implied that any law authorizing the States to regulate direct shipments for personal use would be an unlawful delegation of Congress’ Commerce Clause powers. Indeed, President Taft, acting on the advice of Attorney General Wickersham, vetoed the Act for this specific reason. Congress overrode the veto and in Clark Distilling Co. v. Western Maryland R. Co. (1917), a divided Court upheld the Webb-Kenyon Act against a constitutional challenge....
Michigan and New York now argue
the Webb-Kenyon Act went even further and removed any barrier to
discriminatory state liquor regulations. We do not agree. First, this
reading of the Webb-Kenyon Act conflicts with that given the statute in
Clark Distilling. Clark Distilling recognized that the
Webb-Kenyon Act extended the Wilson Act to allow the States to
intercept liquor shipments before those shipments reached the
consignee. The States’ contention that the Webb-Kenyon Act also
reversed the Wilson Act’s prohibition on discriminatory treatment of
out-of-state liquors cannot be reconciled with Clark Distilling’s
description of the Webb-Kenyon Act’s purpose–“simply to extend that
which was done by the Wilson Act.”
The statute’s text does not compel a different result. The Webb-Kenyon Act readily can be construed as forbidding “shipment or transportation” only where it runs afoul of the State’s generally applicable laws governing receipt, possession, sale, or use. Cf. id., at 141 (noting that the Act authorized enforcement of “valid” state laws). At the very least, the Webb-Kenyon Act expresses no clear congressional intent to depart from the principle, unexceptional at the time the Act was passed and still applicable today, that discrimination against out-of-state goods is disfavored.
Last, and most importantly,
the Webb-Kenyon Act did not purport to repeal the Wilson Act, which
expressly precludes States from discriminating. If Congress’ aim in
passing the Webb-Kenyon Act was to authorize States to discriminate
against out-of-state goods then its first step would have been to
repeal the Wilson Act. It did not do so. There is no inconsistency
between the Wilson Act and the Webb-Kenyon Act sufficient to warrant an
inference that the latter repealed the former.
The Wilson Act reaffirmed, and the Webb-Kenyon Act did not displace, the Court’s line of Commerce Clause cases striking down state laws that discriminated against liquor produced out of state. The rule of Tiernan, Walling, and Scott remained in effect: States were required to regulate domestic and imported liquor on equal terms. “[T]he intent of … the Webb-Kenyon Act … was to take from intoxicating liquor the protection of the interstate commerce laws in so far as necessary to deny them an advantage over the intoxicating liquors produced in the state into which they were brought, yet, [the Act does not] show an intent or purpose to so abdicate control over interstate commerce as to permit discrimination against the intoxicating liquor brought into one state from another.”
The ratification of the Eighteenth Amendment in 1919 provided a brief respite from the legal battles over the validity of state liquor regulations. With the ratification of the Twenty-first Amendment 14 years later, however, nationwide Prohibition came to an end. Section 1 of the Twenty-first Amendment repealed the Eighteenth Amendment. Section 2 of the Twenty-first Amendment is at issue here.
Michigan and New York say the provision grants to the States the authority to discriminate against out-of-state goods. The history we have recited does not support this position. To the contrary, it provides strong support for the view that §2 restored to the States the powers they had under the Wilson and Webb-Kenyon Acts. “The wording of §2 of the Twenty-first Amendment closely follows the Webb-Kenyon and Wilson Acts, expressing the framers’ clear intention of constitutionalizing the Commerce Clause framework established under those statutes.”
The aim of the Twenty-first Amendment was to allow States to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use. The Amendment did not give States the authority to pass nonuniform laws in order to discriminate against out-of-state goods, a privilege they had not enjoyed at any earlier time.
Some of the cases decided
soon after ratification of the Twenty-first Amendment did not take
account of this history and were inconsistent with this view.
It is unclear whether the
broad language in Young’s Market was necessary to the result
because the Court also stated that “the case [did] not present a
question of discrimination prohibited by the commerce clause.” 299 U.S.,
at 62. The Court also declined, contrary to the approach we take
today, to consider the history underlying the Twenty-first Amendment. Id.,
at 63—64. This reluctance did not, however, reflect a consensus that
such evidence was irrelevant or that prior history was unsupportive of
the principle that the Amendment did not authorize discrimination
against out-of-state liquors. There was ample opinion to the contrary.
Our more recent cases, furthermore, confirm that the Twenty-first Amendment does not supersede other provisions of the Constitution and, in particular, does not displace the rule that States may not give a discriminatory preference to their own producers.
The modern §2 cases fall into three categories.
First, the Court has held that state laws that violate other provisions of the Constitution are not saved by the Twenty-first Amendment. The Court has applied this rule in the context of the First Amendment, the Establishment Clause, the Equal Protection Clause, the Due Process Clause, and the Import-Export Clause.
Second, the Court has held that §2 does not abrogate Congress’ Commerce Clause powers with regard to liquor. The argument that “the Twenty-first Amendment has somehow operated to ‘repeal’ the Commerce Clause” for alcoholic beverages has been rejected. Though the Court’s language in Hostetter may have come uncommonly close to hyperbole in describing this argument as “an absurd oversimplification,” “patently bizarre,” and “demonstrably incorrect,” the basic point was sound.
Finally, and most relevant to the issue at hand, the Court has held that state regulation of alcohol is limited by the nondiscrimination principle of the Commerce Clause. “When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry.” Brown-Forman, supra, at 579.
Bacchus provides a
particularly telling example of this proposition. At issue was an
excise tax enacted by Hawaii that exempted certain alcoholic beverages
produced in that State. The Court rejected the argument that Hawaii’s
discrimination against out-of-state liquor was authorized by the
Twenty-first Amendment. “The central purpose of the [Amendment] was not
to empower States to favor local liquor industries by erecting barriers
to competition.” Despite attempts to distinguish it in the
instant cases, Bacchus forecloses any contention that §2
of the Twenty-first Amendment immunizes discriminatory direct-shipment
laws from Commerce Clause scrutiny.
Recognizing that Bacchus is fatal to their position, the States suggest it should be overruled or limited to its facts. As the foregoing analysis makes clear, we decline their invitation. Furthermore, Bacchus does not stand alone in recognizing that the Twenty-first Amendment did not give the States complete freedom to regulate where other constitutional principles are at stake. A retreat from Bacchus would also undermine Brown-Forman and Healy. These cases invalidated state liquor regulations under the Commerce Clause. Indeed, Healy explicitly relied on the discriminatory character of the Connecticut price affirmation statute. Brown-Forman and Healy lend significant support to the conclusion that the Twenty-first Amendment does not immunize all laws from Commerce Clause challenge.
The States argue that any decision invalidating their direct-shipment laws would call into question the constitutionality of the three-tier system. This does not follow from our holding. “The Twenty-first Amendment grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system.” Midcal, supra, at 110. A State which chooses to ban the sale and consumption of alcohol altogether could bar its importation; and, as our history shows, it would have to do so to make its laws effective. States may also assume direct control of liquor distribution through state-run outlets or funnel sales through the three-tier system. We have previously recognized that the three-tier system itself is “unquestionably legitimate.” State policies are protected under the Twenty-first Amendment when they treat liquor produced out of state the same as its domestic equivalent. The instant cases, in contrast, involve straightforward attempts to discriminate in favor of local producers. The discrimination is contrary to the Commerce Clause and is not saved by the Twenty-first Amendment.
Our determination that the Michigan and New York direct-shipment laws are not authorized by the Twenty-first Amendment does not end the inquiry. We still must consider whether either State regime “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” The States offer two primary justifications for restricting direct shipments from out-of-state wineries: keeping alcohol out of the hands of minors and facilitating tax collection. We consider each in turn.
The States, aided by several amici, claim that allowing direct shipment from out-of-state wineries undermines their ability to police underage drinking. Minors, the States argue, have easy access to credit cards and the Internet and are likely to take advantage of direct wine shipments as a means of obtaining alcohol illegally.
The States provide little
evidence that the purchase of wine over the Internet by minors is a
problem. Indeed, there is some evidence to the contrary. A recent study
by the staff of the FTC found that the 26 States currently allowing
direct shipments report no problems with minors’ increased access to
wine. FTC Report 34. This is not surprising for several reasons. First,
minors are less likely to consume wine, as opposed to beer, wine
coolers, and hard liquor. Id., at 12. Second, minors who decide
to disobey the law have more direct means of doing so. Third, direct
shipping is an imperfect avenue of obtaining alcohol for minors who, in
the words of the past president of the National Conference of State
Liquor Administrators, “
Even were we to credit the States’ largely unsupported claim that direct shipping of wine increases the risk of underage drinking, this would not justify regulations limiting only out-of-state direct shipments. As the wineries point out, minors are just as likely to order wine from in-state producers as from out-of-state ones. Michigan, for example, already allows its licensed retailers (over 7,000 of them) to deliver alcohol directly to consumers. Michigan counters that it has greater regulatory control over in-state producers than over out-of-state wineries. This does not justify Michigan’s discriminatory ban on direct shipping. Out-of-state wineries face the loss of state and federal licenses if they fail to comply with state law. This provides strong incentives not to sell alcohol to minors. In addition, the States can take less restrictive steps to minimize the risk that minors will order wine by mail. For example, the Model Direct Shipping Bill developed by the National Conference of State Legislatures requires an adult signature on delivery and a label so instructing on each package.
The States’ tax-collection justification is also insufficient. Increased direct shipping, whether originating in state or out of state, brings with it the potential for tax evasion. With regard to Michigan, however, the tax-collection argument is a diversion. That is because Michigan, unlike many other States, does not rely on wholesalers to collect taxes on wines imported from out-of-state. Instead, Michigan collects taxes directly from out-of-state wineries on all wine shipped to in-state wholesalers. Mich. Admin. Code Rule 436.1725(2) (1989) (“Each outside seller of wine shall submit … a wine tax report of all wine sold, delivered, or imported into this state during the preceding calendar month”). If licensing and self-reporting provide adequate safeguards for wine distributed through the three-tier system, there is no reason to believe they will not suffice for direct shipments.
New York and its supporting
parties also advance a tax-collection justification for the State’s
direct-shipment laws. While their concerns are not wholly illusory,
their regulatory objectives can be achieved without discriminating
against interstate commerce. In particular, New York could protect
itself against lost tax revenue by requiring a permit as a condition of
direct shipping. This is the approach taken by New York for in-state
wineries. The State offers no reason to believe the system would prove
ineffective for out-of-state wineries. Licensees could be required to
submit regular sales reports and to remit taxes. Indeed, various States
use this approach for taxing direct interstate wine shipments, e.g.,
N. H. Rev. Stat. Ann. §178.27 (Lexis Supp. 2004), and report
no problems with tax collection. See FTC Report 38—40. This is also the
procedure sanctioned by the National Conference of State Legislatures
in their Model Direct Shipping Bill.
Michigan and New York benefit, furthermore, from provisions of federal law that supply incentives for wineries to comply with state regulations. The Tax and Trade Bureau (formerly the Bureau of Alcohol, Tobacco, and Firearms) has authority to revoke a winery’s federal license if it violates state law. BATF Industry Circular 96—3 (1997). Without a federal license, a winery cannot operate in any State. See 27 U.S.C. § 204. In addition the Twenty-first Amendment Enforcement Act gives state attorneys general the power to sue wineries in federal court to enjoin violations of state law. §122a(b).
These federal remedies, when combined with state licensing regimes, adequately protect States from lost tax revenue. The States have not shown that tax evasion from out-of-state wineries poses such a unique threat that it justifies their discriminatory regimes.
Michigan and New York offer a handful of other rationales, such as facilitating orderly market conditions, protecting public health and safety, and ensuring regulatory accountability. These objectives can also be achieved through the alternative of an evenhanded licensing requirement. FTC Report 40—41. Finally, it should be noted that improvements in technology have eased the burden of monitoring out-of-state wineries. Background checks can be done electronically. Financial records and sales data can be mailed, faxed, or submitted via e-mail.
In summary, the States
provide little concrete evidence for the sweeping assertion that they
cannot police direct shipments by out-of-state wineries. Our Commerce
Clause cases demand more than mere speculation to support
discrimination against out-of-state goods. The “burden is on the State
to show that ‘the discrimination is demonstrably justified,’
States have broad power to regulate liquor under §2 of the Twenty-first Amendment. This power, however, does not allow States to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers. If a State chooses to allow direct shipment of wine, it must do so on evenhanded terms. Without demonstrating the need for discrimination, New York and Michigan have enacted regulations that disadvantage out-of-state wine producers. Under our Commerce Clause jurisprudence, these regulations cannot stand.
We affirm the judgment of the Court of Appeals for the Sixth Circuit; and we reverse the judgment of the Court of Appeals for the Second Circuit and remand the case for further proceedings consistent with our opinion.
It is so ordered.
Justice Stevens, with whom Justice O’Connor joins, dissenting.
Congress’ power to regulate commerce among the States includes the power to authorize the States to place burdens on interstate commerce. Absent such congressional approval, a state law may violate the unwritten rules described as the “dormant Commerce Clause” either by imposing an undue burden on both out-of-state and local producers engaged in interstate activities or by treating out-of-state producers less favorably than their local competitors. A state law totally prohibiting the sale of an ordinary article of commerce might impose an even more serious burden on interstate commerce. If Congress may nevertheless authorize the States to enact such laws, surely the people may do so through the process of amending our Constitution.
The New York and Michigan laws challenged in these cases would be patently invalid under well settled dormant Commerce Clause principles if they regulated sales of an ordinary article of commerce rather than wine. But ever since the adoption of the Eighteenth Amendment and the Twenty-first Amendment, our Constitution has placed commerce in alcoholic beverages in a special category. Section 2 of the Twenty-first Amendment expressly provides that “[t]he transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”
Today many Americans, particularly those members of the younger generations who make policy decisions, regard alcohol as an ordinary article of commerce, subject to substantially the same market and legal controls as other consumer products. That was definitely not the view of the generations that made policy in 1919 when the Eighteenth Amendment was ratified or in 1933 when it was repealed by the Twenty-first Amendment. On the contrary, the moral condemnation of the use of alcohol as a beverage represented not merely the convictions of our religious leaders, but the views of a sufficiently large majority of the population to warrant the rare exercise of the power to amend the Constitution on two occasions. The Eighteenth Amendment entirely prohibited commerce in “intoxicating liquors” for beverage purposes throughout the United States and the territories subject to its jurisdiction. While §1 of the Twenty-first Amendment repealed the nationwide prohibition, §2 gave the States the option to maintain equally comprehensive prohibitions in their respective jurisdictions.
The views of judges who lived through the debates that led to the ratification of those Amendments are entitled to special deference. Foremost among them was Justice Brandeis, whose understanding of a State’s right to discriminate in its regulation of out-of-state alcohol could not have been clearer:
“The plaintiffs ask us to limit [§2’s] broad command. They request us to construe the Amendment as saying, in effect: The State may prohibit the importation of intoxicating liquors provided it prohibits the manufacture and sale within its borders; but if it permits such manufacture and sale, it must let imported liquors compete with the domestic on equal terms. To say that, would involve not a construction of the Amendment, but a rewriting of it… . Can it be doubted that a State might establish a state monopoly of the manufacture and sale of beer, and either prohibit all competing importations, or discourage importation by laying a heavy impost, or channelize desired importations by confining them to a single consignee?”
In the years following the ratification of the Twenty-first Amendment, States adopted manifold laws regulating commerce in alcohol, and many of these laws were discriminatory. So-called “dry states” entirely prohibited such commerce; others prohibited the sale of alcohol on Sundays; others permitted the sale of beer and wine but not hard liquor; most created either state monopolies or distribution systems that gave discriminatory preferences to local retailers and distributors. The notion that discriminatory state laws violated the unwritten prohibition against balkanizing the American economy–while persuasive in contemporary times when alcohol is viewed as an ordinary article of commerce–would have seemed strange indeed to the millions of Americans who condemned the use of the “demon rum” in the 1920’s and 1930’s. Indeed, they expressly authorized the “balkanization” that today’s decision condemns. Today’s decision may represent sound economic policy and may be consistent with the policy choices of the contemporaries of Adam Smith who drafted our original Constitution; it is not, however, consistent with the policy choices made by those who amended our Constitution in 1919 and 1933.
My understanding (and
recollection) of the historical context reinforces my conviction that
the text of §2 should be “broadly and colloquially interpreted. Indeed, the fact that the Twenty-first
Amendment was the only Amendment in our history to have been ratified
by the people in state conventions, rather than by state legislatures,
provides further reason to give its terms their ordinary meaning.
Because the New York and Michigan laws regulate the “transportation or
importation” of “intoxicating liquors” for “delivery or use therein,”
they are exempt from dormant Commerce Clause
scrutiny. As Justice Thomas has demonstrated,
the text of the Twenty-first Amendment is a far more reliable guide to
its meaning than the unwritten rules that the majority enforces today.
I therefore join his persuasive and comprehensive dissenting opinion.
Justice Thomas, with whom The Chief Justice, Justice Stevens, and Justice O’Connor join, dissenting.
A century ago, this Court repeatedly invalidated, as inconsistent with the negative Commerce Clause, state liquor legislation that prevented out-of-state businesses from shipping liquor directly to a State’s residents. The Webb-Kenyon Act and the Twenty-first Amendment cut off this intrusive review, as their text and history make clear and as this Court’s early cases on the Twenty-first Amendment recognized. The Court today seizes back this power, based primarily on a historical argument that this Court decisively rejected long ago. I respectfully dissent....