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Supreme Court OKs interstate wine sales

WASHINGTON—In a ruling that could inspire the nation's wine lovers to pop corks in celebration, the Supreme Court on Monday struck down state laws prohibiting interstate wine sales, saying they amounted to impermissible economic discrimination.

The 5-4 ruling, written by Justice Anthony M. Kennedy, will force 24 states to treat out-of-state wineries the same as those inside their borders. If wine can be sold to consumers in state, then state law can't restrict direct shipments to consumers from out of state.

The change will give a huge boost to small distilleries and Internet-based wine sellers whose businesses depend heavily on distant consumers.

Justices Antonin Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen Breyer joined Kennedy's majority opinion. Dissenting were Chief Justice William H. Rehnquist and Justices John Paul Stevens, Sandra Day O'Connor and Clarence Thomas.

Wine enthusiasts and free-market advocates hailed the ruling.

"This opens up interstate markets just like our Founding Fathers envisioned," said Juanita Swedenburg, the Virginia vintner who challenged New York's law. "They wanted us to be one nation when it comes to trade, not 50 states."

Laws from New York and Michigan were challenged before the court. Officials from those states said that while the opinion forced them to treat in-state and out-of-state wine sellers the same, the court preserved broad state rights to regulate the production, distribution and sale of alcohol within their borders.

The high court's opinion resolves a debate that pitted states' rights against federal power, free trade against protectionism and, to a lesser extent, teetotalers against revelers.

Wine sellers said state laws barring direct-shipment wine sales from out of state violated the Constitution's insistence that interstate commerce be regulated only by Congress, and also the 21st Amendment, which repealed Prohibition. While the amendment gave states broad leeway to control liquor sales, the sellers argued, it didn't permit outright bans of out-of-state wine sales.

The states argued that the 21st Amendment gave them nearly unlimited power to regulate alcohol. They said these laws were necessary to prevent minors from buying wine over the Internet and to prevent wine sellers from evading state taxes.

One federal appeals court had struck down Michigan's law, and another had upheld New York's.

Kennedy's opinion came down in favor of the wine sellers. He rooted the decision in sweeping language about the issue's importance to the nation.

"Time and again, this court has held that, in all but the narrowest circumstances, state laws violate the (Constitution) if they mandate `differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter,''' Kennedy wrote. "This rule is essential to the foundations of the Union."

Kennedy said laws banning interstate wine sales "deprive citizens of their right to have access to the markets of other states on equal terms."

He said the point of the 21st Amendment was to "allow states to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation and use." But the amendment "did not give states authority to pass laws that discriminate against out-of-state goods."

In their written dissents, Stevens and Thomas said the court's ruling conflicted with the original meaning of the 21st Amendment, which they believe empowered states to regulate alcohol however they choose.

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(c) 2005, Knight Ridder/Tribune Information Services.

GRAPHIC (from KRT Graphics, 202-383-6064): 20051605 SCOTUS WINE

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