The Uniform Law Commission Has Made Lives Easier for All of Us.
By Robert M. Tobiassen *
The Uniform Law Commission was founded in 1892 to formulate uniform and model laws for the States to consider adopting to ensure consistency in commerce, child custody rules, easement relocations, and accuracy of criminal records, among others, between the States. Over 300 model and uniform acts have been completed and presented to the various states as recommendations and best practices. As nationwide commerce grew so did the number of uniform and model acts. The ULC works by consensus among the members and observers.
The best example of the work that the ULC does is the Uniform Commercial Code (UCC). The UCC makes our daily lives easier (and results in many law school courses for aspiring practitioners). Every time you buy a car and take out a loan, the lender takes a security interest in your car to collateralize the loan. Checks you write, wire transfers you make, shipping terms like “FOB” are commercial conditions governed by the UCC, enacted now in all States in various forms. Of importance is the fact that unique state commercial practices are usually retained by the states when adopting the recommendations of the ULC. The ULC does not dictate; rather, it analyzes issues and recommends solutions that will further the interest of the American public in consistency in their daily life.
This “obscure” institution became a topic of conversation after respected Wine Journalist, W. Blake Gray, posted an article on Wine Searcher, questioning the current work being done on a uniform act on administration and enforcement of State laws authorizing “direct to consumer” sales, where such laws exist. The Alcohol Direct Shipping Compliance Act and the ULC Committee information is here. This three-year project is coming to a close with final text being approved but subject to a “style” review before completion. What happens next is the text is sent to the various states for consideration, debate, and potential adoption (or rejection) where the legislators of the states involved either see the value of consistency of regulation or, just as likely, are locked into their 21st Amendment based system and reject the ULC recommendations.
The Commissioners represent each of the States and U.S. territories and are lawyers, judges, state legislators, law faculty members, and others with wide ranges of business experience, with the insights they bring with them to develop and evaluate the text of an act. This breadth is vital. Those Commissioners working on the uniform act to enforce DTC laws are not beverage alcohol experts; rather, they bring a practical experience of how business works in evaluating the text. Over 70 observers sit in meetings or Zoom calls with the Commissioners as the text is developed and finalized. Observers are experts in beverage alcohol State and Federal regulation, marketing, promotion, business transactions, trade association lobbying, shipping companies, delivery carriers, producers, importers, wholesalers, and retailers, and many others in the business of the commercial beverage alcohol market in the U.S.
The ULC goal is not to recommend adoption (or repudiation) of current state laws and policies permitting DTC of wine and spirits; rather, the goal to recommend consistent policies for regulating such commercial transactions where the state at issue has permitted its consumers to enjoy the privilege of having access to the national and international marketplace for beer, wine, and spirits.
I participate as an observer, one of those 70 people. Everyone is heard, everyone’s revisions are considered and frequently accepted or accepted with a revision, rejected with an explanation, or supported by the existing practice in some States. Wine Institute and the National Wine Retailers Association attended as observers and vocal ones at that. One may disagree with the final language of the uniform act, but that does not mean they were not heard and given an opportunity to defend their positions, nor does it mean that the ULC recommendations will be the final language. The three-year process was transparent. Relevant documents have been available to the public through the ULC website.
Here are the key elements of the model act:
It requires no State to change its current DTC laws.
It encourages the adoption of an enforcement framework to assist the States in administering the current DTC laws.
It focuses on violations of a state’s existing law, typically unlicensed shipping into a state that requires a DTC shipper’s license from a seller that is entitled to obtain that permit.
The nationwide marketplace for DTC means that States with customers receiving shipments from out of State sources must be able to enforce their rules and obtain compliance data for activities taking place outside the State.
It explicitly incorporates due process protections.
Beverage alcohol products remain a controversial commodity in the U.S. with nearly 34 percent of the legal drinking age adults never consuming a beverage alcohol product so good faith and aggressive enforcement of the DTC laws is essential to build trust with the local communities where these DTC consumers and neighbors live.
The ULC cannot affect any states right under section 2 of the 21st Amendment to make laws restricting (or allowing) access to alcoholic beverages.
To be clear, I understand the concerns of the Wine Institute on this uniform act, not because they do not endorse enforcement of the DTC laws, but Wine Institute has dedicated three or more decades getting virtually all States to accept DTC wines from producers. It is an amazing accomplishment. So, they do not want State legislatures reopening the existing DTC laws for fear that the bill would become a “Christmas tree” where everybody gets a present from under the tree. Be it on Capitol Hill or in every State House today, unexpected add-on amendments appear on the floor of the Chamber or in the closeted portions of the Capital Building and that will undoubtedly be the case with the ULC recommendations on alcoholic beverage DTC.
Gray’s article cites Tom Wark, director of the National Association of Wine Retailers (NAWR) and one of the 70 observers as saying the act is unconstitutional. Wine Institute did not question constitutionality in its criticism. Neither have the other 70 observers unaffiliated with NAWR or the advisor from the American Bar Association. The provisions in the uniform act are not uncommon in other State licensing policies and are supported by the 21st amendment to the U.S. Constitution. However, Tom is correct in his criticism if the ULC is interpreted to somehow override the states unquestioned 21st Amendment right to regulate alcohol in an even handed and non-discriminatory way. Interestingly, Wine and Spirits Wholesalers of America (WSWA) has the same criticism of the ULC as does NAWR. However, their concern is that the ULC recommendations will encourage DTC where it does not currently exist.
States do not have to adopt this uniform law on DTC enforcement but should be given that option. The respect earned by the ULC over the past 100 plus years and the wide-range of observer experts that participated in this three-year effort resulted in a quality product. This means that the State legislatures interested in DTC enforcement provisions should not have to “reinvent the wheel” and expend legislature resources to develop its own bill text.
I grew up in San Francisco near City College, the community college, that I walked by every day when I was in High School. Carved over the main entrance is “The Truth Will Make You Free.” Transparency, accurate information, and truthful facts will allow each of you and your State legislatures to reach a rationale decision on whether to adopt this new uniform act once the ULC gives it final approval. If this blog article does that, then I will count it as successful regardless of the legislature’s outcome.
*This article solely reflects my views and opinions and not those of the National Association of Beverage Importers (NABI) or any other organization.
This blog is dedicated to occasional (and hopefully interesting) reports of state and national alcoholic beverage regulatory developments that we encounter in our practice. Booze Rules (and any comments below) are intended for informational use only and are not to be construed as legal advice. If you need legal advice please consult with your counsel.