Texas judge gives breweries partial victory

Texas breweries won a partial victory when U.S. District Judge Sam Sparks ruled in favor of Jester King Brewery in a First Amendment claim against the Texas Alcoholic Beverage Commission. Sparks ruled that sections of the Texas Alcoholic Beverage Code and the Texas Administrative Code are unconstitutional and a violation of the First Amendment. Among other things, the code prohibits breweries from letting customers know where they can find their products.

The code also required beer at 5% alcohol by volume to be called just that, while higher alcohol by volume brews had to be labeled “malt liquor” or “ale.”

However, Sparks did not overrule the TABC’s ability to prohibit craft brewers from selling beer to customers on-site, even though wineries are allowed to do that. The breweries will continue to try to get the law changed through the legislative process.

Jester King stated in a press release after the ruling:

“We were disappointed, but not too surprised, that Judge Sparks ruled against our claims that Texas’s disparate treatment of breweries and brewpubs violated the Equal Protection Clause and that its treatment of foreign breweries violated both the Equal Protection Clause and the Commerce Clause. The TABC never gave any reason why Texas should be able to prohibit craft brewers from selling beer to customers on-site, while allowing wineries to do so, or why Texas should be able to favor foreign wineries over foreign breweries, and Judge Sparks did not speculate on why that might be. But the legal standards are different and more demanding for challenges brought under the Equal Protection Clause than the First Amendment, and we were unable to persuade Judge Sparks to strike down these discriminatory laws. We were encouraged, however, by Judge Sparks’s observation that ‘The State of Texas is lucky the burden of proof was on [the Plaintiffs] for many of its claims, or else the Alcoholic Beverage Code might have fared even worse than it has.'”

Founder Brock Wagner of Saint Arnold Brewing, the largest craft brewery in the state, added perspective.

“We are happy to see the silly definitions of ‘beer’ and ‘ale’ that the TABC unilaterally and nonsensically came up with be struck down. That has never made sense. That is really the only good news for us. The meat of the lawsuit from our perspective was denied, namely the part that said allowing wineries to retail and not giving breweries the same right is discriminatory,” he said.

“There is a hidden expense to this lawsuit for all Texas breweries. The TABC is now going to have to come up with a new way of differentiating between beers that are above and below 4% alcohol by weight (which roughly translates into 5% alcohol by volume). There are some retail licenses in the state that only allow the sale of beers below 4% ABW. In fact there are some counties and precincts that only allow beers under 4%. This part of the law is quite legal. Once the TABC comes up with its method for signifying these categories, we will have to change all of our labels. This is not an enormous expense, but will probably cost us at least a few thousand dollars. All Texas breweries are going to incur a similar expense.”