Question Submitted by Burt, 123119 OKAG, 2019 OK AG 13

Docket Nº:2019 OK AG 13
Party Name:Question Submitted by: A. Keith Burt, Director and Secretary to Alcoholic Beverage Law Enforcement (ABLE) Commission
Attorney:MIKE HUNTER, ATTORNEY GENERAL OF OKLAHOMA
Judge Panel:ZACH WEST, ASSISTANT SOLICITOR GENERAL
Case Date:December 31, 2019
Court:Oklahoma Attorney General Opinions
 
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2019 OK AG 13

Question Submitted by: A. Keith Burt, Director and Secretary to Alcoholic Beverage Law Enforcement (ABLE) Commission

No. 2019 OK AG 13

Oklahoma Attorney General Opinions

December 31, 2019

Oklahoma Attorney General Opinions

MIKE HUNTER, ATTORNEY GENERAL OF OKLAHOMA

I.

BACKGROUND

A. Federal and state regulation of interstate commerce.

¶0 This office has received your request for an official Attorney General Opinion in which you ask, in effect, the following question: Does the U.S. Supreme Court decision in Tennessee Wine and Spirits Retailers Association v. Thomas, 139 S.Ct. 2449 (2019), render the residency requirements in Article 28A, Section 4(A) & (B) of the Oklahoma Constitution unenforceable pursuant to the federal Constitution?

¶1 Article I, Section 8 of the U.S. Constitution provides that "Congress shall have Power... [t]o regulate Commerce... among the several States." U.S. CONST. art. I, § 8, cl. 3. Although the Commerce Clause "says nothing about the protection of interstate commerce in the absence of any action by Congress," it has long been interpreted by the U.S. Supreme Court as including an implicit "negative" or "dormant" component that prohibits states from discriminating against or unduly burdening interstate commerce. CDR Sys. Corp. v. Okla. Tax Comm'n, 2014 OK 31, ¶ 11, 339 P.3d 848, 853 (quoting Quill Corp. v. North Dakota, 504 U.S. 298, 309 (1992), and Gen. Motors Corp. v. Tracy, 519 U.S. 278, 287 (1997)). Put differently, this "'negative' aspect of the Commerce Clause prohibits economic protectionism--that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors." New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273 (1988).

¶2 Historically speaking, this doctrine "reflect[s] a central concern of the Framers that was an immediate reason for calling the Constitutional Convention: the conviction that in order to succeed, the new Union would have to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation." Granholm v. Heald, 544 U.S. 460, 472 (2005) (alteration in original) (quoting Hughes v. Oklahoma, 441 U.S. 322, 325-26 (1979)).

B. State regulation of alcohol products.

¶3 In 1933, federal prohibition of alcohol ended with the passage of the Twenty-first Amendment to the U.S. Constitution. The Amendment also provided, however, that "transportation or importation into any State... for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." U.S. CONST. amend. XXI, § 2 (emphasis added). Thus, while federal prohibition was abolished, states were given broad leeway to continue prohibition, or to otherwise regulate the sale and import of alcohol products. This led to debate regarding the interaction between states' authority to regulate alcohol and the "dormant" or "negative" aspect of the federal Commerce Clause. Put simply, did the dormant Commerce Clause apply with full force to state regulations implemented through specific authority granted by the Twenty-first Amendment?

¶4 That question is open no longer. In 2005, for example, the U.S. Supreme Court held that state statutes that "allow in-state wineries to sell wine directly to consumers in that State but... prohibit out-of-state wineries from doing so" violate the dormant Commerce Clause. Granholm, 544 U.S. at 466. The Court found it "evident that the object and design" of the statutes was "to grant in-state wineries a competitive advantage over wineries located beyond the States' borders," and held that such "discrimination is neither authorized nor permitted by the Twenty-first Amendment." Id.

¶5 More recently, the U.S. Supreme Court granted certiorari in Tennessee Wine and Spirits Retailers Association v. Thomas to decide "[w]hether the Twenty-first Amendment empowers States, consistent with the dormant Commerce Clause, to regulate liquor sales by granting retail or wholesale licenses only to individuals or entities that have resided in-state for a specified time." See Petition for a Writ of Certiorari, Tennessee Wine, 2018 WL 3533084 (July 20, 2018), certiorari granted 139 S.Ct. 52 (Sept. 27, 2018). This question stemmed from a Tennessee statute that required an applicant for a retail liquor store license be a resident of Tennessee for two years prior to applying. Tennessee Wine, 139 S.Ct. 2449, 2456-57 (2019). 1

¶6 On June 26, 2019, the U.S. Supreme Court struck down Tennessee's two-year "durational residency" requirement as unconstitutional. Tennessee Wine, 139 S.Ct. 2449. As in Granholm, the Tennessee statute was not saved by the Twenty-first Amendment, which "cannot be given an interpretation that overrides all previously adopted constitutional provisions." Id. at 2468. Indeed, the Court noted, it had already held in the past that alcohol regulations must comply with the Free Speech, Establishment, Equal Protection, and Due Process Clauses, among others, so the Commerce Clause would be no different. Id. at 2469. The aim of the...

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