August 3, 1999

House Passes Bill to Restrict Online Liquor Sales

By JERI CLAUSING

ASHINGTON -- The House overwhelmingly passed a bill on Tuesday that would restrict online liquor sales, overriding objections from California lawmakers that the proposal favored liquor wholesalers over small wineries and breweries trying to broaden their reach through electronic commerce.

The bill, passed 310 to 112, would allow state attorneys general to go to Federal court to prosecute out-of-state companies that violate state restrictions on alcohol sales. Similar legislation has already passed the Senate, attached to an appropriation bill.

Related Article Bill on Internet Liquor Sales Becomes Larger (July 21, 1999)

Although the proposal was largely intended to reduce the availability of alcohol to minors shopping online, the issue became much broader, pitting large liquor distributors that often have state-sanctioned monopolies against budding small businesses.

While the White House has generally opposed any new regulations on electronic commerce, it has not yet voiced an official position on the House or Senate bills.

States can regulate the import and sales of liquor within their borders, and almost every state prohibits or limits the direct shipment of alcohol from out of state to residents or unlicensed sellers. Attorneys general, however, have been reluctant to take action against growing mail-order and online sales because there was no effective way for them to prosecute out-of-state companies.

Aggressively opposing the bill, however, were representatives from California and other areas with wineries and breweries that are often unable to distribute their products through the traditional wholesalers that are licensed by states.

There are more than 1,600 small wineries in the country, vying for limited shelf space in traditional retail outlets. So many of the vintners have gone online.

Prohibiting online sales "will restrict interstate commerce and limit consumers' choice around the country," said Representative Lois Capps, a California Democrat, who argued that the bill put unfair restrictions on "law-abiding citizens."

More than 1,600 small wineries vie for limited shelf space in traditional retail outlets. So many of the vintners have gone online.

"If this were a bill to cut down on under-age drinking, I'd vote for it," Mrs. Capps said. "But it's not. It's an attack on our vintners."

But Representative Joe Scarborough, a Florida Republican who sponsored the bill, disputed that assertion, saying the proposal would only affect illegal sales.

The bill, he said, is about the right of states to enforce their laws.

If that is the case, said Representative Zoe Lofgren, another California Democrat, the House should extend the same power to state attorneys general trying to enforce their gun laws on out-of-state sellers.

"If we're going to give attorney generals in our states the ability to protect citizens from a $20 bottle of Cabernet, then they ought to be able to protect them equally from AK-49s, tec-9s and other weapons of mass destruction," she said.

Ms. Lofgren proposed two amendments to broaden the bill to online gun sales, but both were ruled nongermane.

The House did approve an amendment by two Republicans, Representatives Bob Goodlatte of Virginia and Christopher Cox of California, specifying that the bill does not give states any authority to impose new or discriminatory taxes on Internet liquor sales.

The amendment also makes clear that Internet service providers cannot be held liable for illegal online sales.

Although the White House has generally opposed any new regulations on electronic commerce, it has not yet voiced an official position on the House or Senate bills.

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Related Sites
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• Representative Lois Capps

• Representative Joe Scarborough

• Representative Zoe Lofgren

• Representative Bob Goodlatte

• Representative Chris Cox

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Jeri Clausing at jeri@nytimes.com welcomes your comments and suggestions.

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