President Clinton Signs Twenty-first Amendment Enforcement Act
 
November 22, 2000
 

At the end of October, President Bill Clinton signed into law the “Trafficking Victims Protection Act of 2000.” Included in that legislation was the compromised version of Senate Bill 577, entitled the “Twenty-first Amendment Enforcement Act.”

The legislation initially was introduced by Senator Orrin Hatch (R-Utah), the Chairman of the Senate Judiciary Committee. At the behest of the wine industry, amendments were added by Senator Diane Feinstein (D-Calif.) and others. As the legislature worked its way through Congress, a tremendous battle ensued between different tiers of the alcohol industry. Wholesalers from all segments of the industry argued that the legislation was necessary to protect the established three-tier system, and prevent illegal sales of alcohol to minors and other unlawful consumers. Artisan wineries and microbreweries in the supplier tier of the industry resisted the legislation, arguing that responsible direct shipment was an economic necessity, as well as a consumer mandate. The compromised legislation signed into law by President Clinton strikes a balance between the competing needs of these industry interests.

The new law provides state alcohol regulators with a federal form in which to pursue out-of-state persons or businesses that ship alcohol directly to consumers regardless of existing state laws. The Twenty-first Amendment Enforcement Act authorizes the attorney general of a state to seek injunctive relief in a federal court against any person or entity that violates the beverage laws of that state, where the person or entity is operating outside the state’s boundaries and jurisdiction. The new law does not allow state regulators to seek damages or criminal penalties; the only judicial relief available under the law is an injunction issued by a federal judge. However, any person or entity who violates a federal injunction, or fails to follow its requirements, is subject to financial penalties and/or imprisonment as a sanction for “contempt of court.”

It is likely that the new federal law will strengthen the position of state regulators, especially in jurisdictions (like Florida and Alabama) where judges have ruled that state courts do not have personal jurisdiction to prosecute out-of-state defendants.