[Congressional Record Volume 145, Number 38 (Wednesday, March 10, 1999)]
[Senate]
[Pages S2509-S2510]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 577. A bill to provide for injunctive relief in Federal district 
court to enforce State laws relating to the interstate transportation 
of intoxicating liquors; to the Committee on the Judiciary.


               The Twenty-First Amendment Enforcement Act

  Mr. HATCH. Mr. President, today I am proud to introduce the Twenty-
First Amendment Enforcement Act. This legislation will provide a 
mechanism enabling States to more effectively enforce their laws 
regulating the interstate shipment of alcoholic beverages.
  Interstate shipments of alcohol directly to consumers are increasing 
exponentially. Unfortunately, along with that growing commerce, 
problems associated with that trade are also growing. While I certainly 
believe that interstate commerce should be encouraged, and while I do 
not want small businesses stifled by unnecessary or overly burdensome 
and complex regulations, I do not subscribe to the notion that 
purveyors of alcohol are free to avoid State laws which are consistent 
with the power bestowed upon them by the Twenty-First Amendment.
  All States, including the State of Utah, need to be sure that the 
liquor that is brought into their State is labelled properly and 
subject to certain quality control standards. States need to protect 
their citizens from consumer fraud and have a claim to the tax revenue 
generated by the sale of such goods. And of the utmost importance, 
States need to ensure that minors are not provided with unfettered 
access to alcohol. Unfortunately, indiscriminate direct sales of 
alcohol have opened a sophisticated generation of minors to the perils 
of alcohol abuse.
  I can tell you that my home State of Utah, which has some of the 
strictest controls in the nation on the distribution of alcohol, is not 
immune from the dangers of direct sales. A recent story which ran on 
KUTV in Salt Lake City showed how a thirteen year old was able to 
purchase beer over the internet and have it shipped directly to her 
home--no questions asked. If a thirteen year old is capable of ordering 
beer and having it delivered by merely borrowing her brother's credit 
card and making a few clicks with her mouse, there is something very 
wrong with the level of control that is being exercised over these 
sales. Of course the Utah case is not an isolated example. Stings set 
up by authorities in New York and Maryland have also shown how easy it 
is for minors to obtain alcohol.
  Debate over the control of alcoholic beverages has been raging for as 
long as this country has existed. Prior to 1933, every time individuals 
or legislative bodies engaged in efforts to control the flow and 
consumption of alcohol, whether by moral persuasion, legislation or 
Constitutional Prohibition, others were equally determined to repeal, 
circumvent or ignore those barriers. However, the Twenty-First 
Amendment did, for a time, create an ordered system for the 
distribution of alcohol.
  The Twenty-First Amendment was ratified in 1933. That amendment ceded 
to the States the right to regulate the importation and transportation 
of alcoholic beverages across their borders. By virtue of that grant of 
authority, each State created its own unique regulatory scheme to 
control the flow of alcohol. Some set up State stores to effectuate 
control of the shipment into, and dissemination of alcohol within, 
their State. Others refrained from direct control of the product, but 
set up other systems designed to monitor the shipments and ensure 
compliance with its laws. But whatever the type of State system 
enacted, the purpose was much the same: to protect its citizens and 
ensure that its laws were obeyed.
  Although not perfect, the systems set up by the States worked 
reasonably well for many years. However, modern technology has opened 
the door for abuse and created the need for further governmental action 
to address those abuses. No longer must a State prosecute just an 
errant neighborhood retailer for selling to a minor--now, the ones 
selling to minors and others in violation of a State's regulatory laws 
are a continent away. A small winery can create its own web page and 
accept orders over the internet; a large retailer can advertise 
nationally in the New York Times and accept orders over the phone; an 
ad can be placed in a magazine with a national circulation offering 
sales through an 800 number.
  Let me emphasize that there are many companies engaged in the direct 
interstate shipment of alcohol who do not violate State laws. In fact, 
many of these concerns look beyond their own interests and make 
diligent efforts to disseminate information to others to ensure that 
State laws are understood and complied with by all within the 
interstate industry.
  I should also note that I am certainly sympathetic to the small 
wineries and specialty micro-breweries who feel that the requirement 
that they operate through a three tier system (producer-wholesaler-
retailer) which does not embrace them may, in effect, shut them out of 
the marketplace. They make the argument that if wholesalers do not 
carry their product, they have no other avenue to the consumer other 
than through direct sales. However, if there is a problem with the 
system, we need to fix the system, not break the laws.
  Federal law already prohibits the interstate shipment of alcohol in 
violation of State law. Unfortunately that general prohibition lacks 
any enforcement mechanism. The legislation I am introducing simply 
provides that mechanism by permitting the Attorney General of a State, 
who has reasonable cause to believe that his or her State laws 
regulating the importation and transportation of alcohol are being 
violated, to be permitted to file an action in federal court for an 
injunction to stop those illegal shipments.
  This bill is balanced to ensure due process and fairness to both the 
State bringing the action and the company or individual alleged to have 
violated the State's laws. The bill:
  1. Permits the chief law enforcement officer of a State to seek an 
injunction in federal court to prevent the violation of its laws 
regulating the importation or transportation of alcohol;
  2. Allows for venue for the suit where the defendant resides and 
where the violations occur;
  3. Does not require the posting of a bond by the requesting party;
  4. Does not permit an injunction without notice to the opposing 
party;
  5. Requires that any injunction be specific as to the parties, the 
conduct and the rationale underlying that injunction;
  6. Allows for quick consideration of the application for an 
injunction and conserves court resources by avoiding redundant 
proceedings;
  7. Mandates a bench trial; and
  8. Does not preclude other remedies allowed by law.
  Some will argue that State courts are capable of handling this issue. 
Unfortunately, States have had mixed success in enforcing their laws 
through State court actions. Companies and individuals have raised 
jurisdictional, procedural and legal defenses that have stalled those 
efforts, and that continue to hamper effective enforcement. It is, in 
part, because of those inconsistent rulings, that federal leadership is 
needed in this area.
  Moreover, the scope and limitations of a State's ability to 
effectively enact laws under the Twenty-First Amendment are essentially 
federal questions that need to be decided by a federal court, and 
perhaps ultimately, by the Supreme Court. Only through such rulings can 
both the States and companies seeking to conduct interstate shipments 
be assured of consistency in interpretation and enforcement of the 
laws.

[[Page S2510]]

  The introduction of a bill is just the beginning of the legislative 
process. It is my hope that, working together, we can reach an 
agreement on how best to balance legitimate commercial interests with 
the Constitutional rights of the States as ceded to them by the Twenty-
First Amendment.
  I ask unanimous consent that a copy of the legislation be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 577

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Twenty-First Amendment 
     Enforcement Act''.

     SEC. 2. SHIPMENT OF INTOXICATING LIQUOR INTO STATE IN 
                   VIOLATION OF STATE LAW.

       The Act entitled ``An Act divesting intoxicating liquors of 
     their interstate character in certain cases'', approved March 
     1, 1913 (commonly known as the ``Webb-Kenyon Act'') (27 
     U.S.C. 122) is amended by adding at the end the following:

     ``SEC. 2. INJUNCTIVE RELIEF IN FEDERAL DISTRICT COURT.

       ``(a) Definitions.--In this section--
       ``(1) the term `attorney general' means the attorney 
     general or other chief law enforcement officer of a State, or 
     the designee thereof;
       ``(2) the term `intoxicating liquor' means any spirituous, 
     vinous, malted, fermented, or other intoxicating liquor of 
     any kind;
       ``(2) the term `person' means any individual and any 
     partnership, corporation, company, firm, society, 
     association, joint stock company, trust, or other entity 
     capable of holding a legal or beneficial interest in 
     property, but does not include a State or agency thereof; and
       ``(3) the term `State' means any State of the United 
     States, the District of Columbia, the Commonwealth of Puerto 
     Rico, or any territory or possession of the United States.
       ``(b) Action By State Attorney General.--If the attorney 
     general of a State has reasonable cause to believe that a 
     person is engaged in, is about to engage in, or has engaged 
     in, any act that would constitute a violation of a State law 
     regulating the importation or transportation of any 
     intoxicating liquor, the attorney general may bring a civil 
     action in accordance with this section for injunctive relief 
     (including a preliminary or permanent injunction or other 
     order) against the person, as the attorney general determines 
     to be necessary to--
       ``(1) restrain the person from engaging, or continuing to 
     engage, in the violation; and
       ``(2) enforce compliance with the State law.
       ``(c) Federal Jurisdiction.--
       ``(1) In general.--The district courts of the United States 
     shall have jurisdiction over any action brought under this 
     section.
       ``(2) Venue.--An action under this section may be brought 
     only in accordance with section 1391 of title 28, United 
     States Code.
       ``(d) Requirements For Injunctions and Orders.--
       ``(1) In general.--In any action brought under this 
     section, upon a proper showing by the attorney general of the 
     State, the court shall issue a preliminary or permanent 
     injunction or other order without requiring the posting of a 
     bond.
       ``(2) Notice.--No preliminary or permanent injunction or 
     other order may be issued under paragraph (1) without notice 
     to the adverse party.
       ``(3) Form and scope of order.--Any preliminary or 
     permanent injunction or other order entered in an action 
     brought under this section shall--
       ``(A) set forth the reasons for the issuance of the order;
       ``(B) be specific in terms;
       ``(C) describe in reasonable detail, and not by reference 
     to the complaint or other document, the act or acts to be 
     restrained; and
       ``(D) be binding only upon--
       ``(i) the parties to the action and the officers, agents, 
     employees, and attorneys of those parties; and
       ``(ii) persons in active cooperation or participation with 
     the parties to the action who receive actual notice of the 
     order by personal service or otherwise.
       ``(e) Consolidation of Hearing With Trial on Merits.--
       ``(1) In general.--Before or after the commencement of a 
     hearing on an application for a preliminary or permanent 
     injunction or other order under this section, the court may 
     order the trial of the action on the merits to be advanced 
     and consolidated with the hearing on the application.
       ``(2) Admissibility of evidence.--If the court does not 
     order the consolidation of a trial on the merits with a 
     hearing on an application described in paragraph (1), any 
     evidence received upon an application for a preliminary or 
     permanent injunction or other order that would be admissible 
     at the trial on the merits shall become part of the record of 
     the trial and shall not be required to be received again at 
     the trial.
       ``(f) No right to trial by jury.--An action brought under 
     this section shall be tried before the court.
       ``(g) Additional remedies.--
       ``(1) In general.--A remedy under this section is in 
     addition to any other remedies provided by law.
       ``(2) State court proceedings.--Nothing in this section may 
     be construed to prohibit an authorized State official from 
     proceeding in State court on the basis of an alleged 
     violation of any State law.''.
                                 ______