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Gary M. Galles - Contributor

Mr. Galles is a professor of economics at Pepperdine University. [go to Galles index]


Parsing the 21st Amendment
SCOTUS and interstate wine…
[Gary M. Galles] 12/7/04

The basis of law is language. That is why parsing the language of the Constitution is crucial to jurisprudence. This issue will be on prominent display before the Supreme Court December 7, when Granholm v. Heald will be heard, concerning whether states can apply discriminatory restrictions on direct shipments from out-of-state wineries, when shipments are allowed from in-state wineries.

The case pits the 21st Amendment (“The transportation or delivery into any state…for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”) against the Constitution’s commerce clause, which gives the federal government the sole power to regulate interstate commerce. And the practical consequences are large, as elimination of such restrictions would create a far more competitive market for wine, benefiting both consumers and producers.

The case hinges on what “in violation of the laws thereof” modifies in the 21st Amendment. The reason is that in the Supreme Court’s initial 21st Amendment ruling (the Young’s Market case in 1936), it interpreted that clause as modifying “the transportation or delivery into any state,” giving states virtual carte blanche to restrict importation of liquor in any way they choose. But this reading, which wine distributors and in-state wineries are relying on to maintain protectionist restrictions on interstate wine competition, effectively over-rules the federal government’s Constitutional authority to regulate interstate commerce.

The conflict between these two parts of the Constitution is more apparent than real, however. The legislative history of the 21st Amendment clearly reveals that it was intended to preserve a state’s right to remain “dry” if it chose, against out-of-state as well as in-state liquor suppliers, following the repeal of prohibition. It did not grant states an exception to the federal commerce power for liquor. It did not rewrite the commerce clause, which was so important that the court noted, in Gibbons v. Ogden (1824), that “If there was any one object riding over every other in the adoption of the constitution, it was to keep the commercial intercourse among the states free from all invidious and partial restraints.” The commerce clause was not even mentioned.

That brings us back to parsing the 21st Amendment. Both its history and the principle of interpreting two parts of the same document as consistent rather than contradictory, when possible (especially when the clause to be silently “overturned” is a core part of the highest law of the land) indicates that the Supreme Court’s reading in Young’s Market was incorrect. It did not give states unbounded power to restrict “the transportation or delivery into any state” from outside sources. Instead, it referred to the states’ powers to impose laws on “the delivery or use therein of intoxicating liquors,” which it applied to out-of-state suppliers on the same terms as in-state suppliers.

This reading is far from strained. It reflects the Wilson Act (1890), still in force, which the Supreme Court in Scott v. Donald (1897) said: ”was not intended to confer upon any state the power to discriminate injuriously against the products of other states in articles whose manufacture and use are not forbidden… equality or uniformity of treatment under state laws was intended.” The Webb-Kenyon Act (1913), which the relevant part of the 21st Amendment was modeled after, then prohibited alcohol “shipment or transportation…to be received, possessed, sold, or in any manner used…in violation of any law of such State.” Further, to avoid any misinterpretation, it was re-passed in 1935, after the 21st Amendment was adopted.

Wine drinkers and wineries could gain a great deal in Granholm, as documented by a 2003 FTC study of the high cost of current restrictions. But the ruling will hinge on how the court parses the 21st Amendment. One can only hope the court corrects its earlier misreading in Young’s Market. It would be a shame for a misplaced modifier to continue twisting the commerce clause and denying Americans the benefits of interstate wine competition. tOR

copyright 2004 Gary M. Galles




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