Fans of the Commerce Clause will be delighted to hear of the decision yesterday of a judge of the United States District Court for the Southern District of New York, Richard Berman, who declared that New York State cannot protect in-state producers of wine at the expense of vintners in other states across America. The issue at hand is whether New Yorkers will be allowed to order wine directly from wineries in other states, particularly over the Internet. Since the end of Prohibition the legality of direct interstate wine sales has been a murky area of the law. Most states, when given the power to regulate alcohol that was taken from the federal government, erected three-tier systems: licensed producers, licensed wholesalers, and licensed venders. However, the power to regulate “the transportation or importation into any state” of alcohol has come to be in tension with the Commerce Clause, especially with the rise of the Internet.

Judge Berman’s decision fell in line with a number of rulings that have been arrived at by federal district courts around the country that while states may regulate the importation of alcohol, as per the 21st Amendment, they may not do so in a way which would discriminate against out-of-state sellers, which would violate the Commerce Clause. This is a reasonable accommodation between two potentially conflicting aspects of our nation’s foundational document. The joeys who ride the Seventh United States Appeals Circuit have allowed Indiana to maintain arguably discriminatory rules for out-of-state vintners, but the Eleventh Circuit has recently come close to creating a conflict between the circuits. Specifically, the circuit has ruled that Florida must demonstrate why its felony prohibition on interstate, direct-to-consumer wine shipments is necessary for it to collect taxes from out-of-state wineries, even though these same restrictions do not apply to instate wineries selling directly over the Internet. Provided Florida is unable to meet this burden — the most likely case — the Eleventh Circuit could be in conflict with the Seventh, bring the Supreme Court into the fray.

The Second Circuit could also enter the fray with the New York case, Swedenburg v. Kelly. The lead plaintiff, Juanita Swedenburg, a Northern Virginia vintner who has been blocked from the New York State market, had this to say of the Judge Berman’s decision, as our R.H. Sager reports at page eight of today’s New York Sun: “It is wonderful that the judge has read the Constitution and has applied it in my case.” She may soon be able to get on to try winning back her New York customers, whom she gave up when she found out she was in violation of the law by selling to weekenders who had passed by her vineyard. She may not, however. One remedy Judge Berman is looking at — as opposed to allowing direct sales by out-of-state venders — is prohibiting direct sales not only by out of state vendors but also by those within New York. This is the solution being pushed by wholesalers. This fight has never been about the safety of net-savvy children as the wholesalers have argued (one would have to have imbibed too much of their product to believe that line). It’s about shutting out competition from other states and about ensuring wholesalers get their cut.

Preventing such protectionism was precisely the purpose of our nation’s founders in drawing up the Commerce Clause. Those men drew on their experience under the Articles of Confederation, which saw economic sniping among the states. They wanted to preempt such nonsense. The principle that the federal government would regulate commerce instead of the states was the bedrock upon which America achieved its immense prosperity. Now, a creeping anti-federalism is taking hold in the states. Along with the wine protectionism, which approximately 20 other states are practicing in one form or another, there is also the move, discussed by the Cato Institute’s Veronique de Rugy at right, to “harmonize” sales taxes among states and localities so as to facilitate state collection of sales taxes on Internet commerce. It’s nice to see the relevance of Madison and the founders at the dawn of the 21st century.