Tuesday, December 7, 2004

Supreme Court oral argument in Swedenburg case

The Supreme Court will hear oral arguments today in the wine distributor case, Swedenburg.  Here are two links to NPR coverage of the case from today and yesterday.  At issue in the case is the reconciliation of the 21st Amendment which repealed Prohibition and relegated regulation of alcohol to the states with the  Commerce Clause, which gives Congress the exclusive power to regulate commerce between the states.   The case has important implications for the market for wine, not only for the small distributors who brought the challenge but also for Internet distribution.

For what it's worth here's my prognostication about how the case should (and probably will come out):  The 21st Amendment was not enacted to give states blanket license to regulate the interstate sale of alcohol.  Instead, the Amendment was meant to overrule the 18th Amendment which prohibited the sale of all alcohol throughout the states.  The language in the 21st Amendment that prohibits the "transportation or importation" into a state in violation of the state's laws is a statement about the police power of the state to regulate alcohol and was not meant to limit the Commerce Clause.  Consequently, states can regulate alcohol as long as the state regulation does not come into conflict with the Commerce Clause.   

I am not sure if the Court will address the conflict of the state regulation with the Commerce Clause (the so-called Dormant Commerce Clause doctrine).  If the Court does address the dormant commerce clause, my sense is that the regulation would be unconstitutional either because it is facially discriminatory against other states or because of a disparate effect on interstate commerce.

Whatever the result, the case will be useful to follow in order to gauge how this Court draws the line between permissable state regulation of the marketplace and impermissable state restriction on competition.  The dispute has created and will continue a spirited debate. 


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