The day was sunny, and outside temperatures were delightful, but the Committee on Beverage Alcohol Practice managed to attract a fair-sized audience to its Spring Meeting program on AATF=s New Wine Label Regulations: What People Should Know, and Who Should Tell Them.@

The panel was moderated by committee chair Richard Blau, a partner in the law firm of Holland & Knight LLP. The panelists were Elizabeth Johnson, a Holland & Knight partner specializing in First Amendment issues, and two associates from Holland & Knight=s Beverage Alcohol Practice Area, Grace Yang and Elizabeth DeConti.

Ms. Yang provided the historical perspective necessary to understand the current regulatory regime, which proceeds from section 2 of the 21st Amendment to the Constitution of the United States. That section reserves to the states the power to regulate sales of alcoholic beverages within their borders, and reads as follows: AThe transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.@

Ms. Yang explained that the states have responded with laws designed to combat the evils perceived to have existed prior to Prohibition. In the late 19^th century, manufacturers began investing in saloons and driving out independent retailers. Manufacturer-owned saloons became known as Atied houses.@ Aggressive tied-house advertising, including so-called Astrength wars,@ created a backlash that led to the temperance movement and, eventually, Prohibition. When the 21st Amendment was passed many state regulators banned tied houses and passed strict regulations on manufacturer advertising to prevent a return of aggressive marketing practices.

The 21st Amendment, of course, did not repeal the Commerce Clause, and Congress similarly banned tied houses and aggressive marketing practices by passing the Federal Alcohol Administration Act (FAAA), codified in Title 27 of the United States Code.

The net result of federal and state bans on tied houses is a current-day, three-tier marketing system whereby manufacturers sell to wholesalers who sell to retailers who sell to the public.

The Bureau of Alcohol, Tobacco and Firearms (ATF) administers the FAAA and has issued new regulations governing wine label content and revocation. As reported in the Spring issue of AThe Bar,@ the Beverage Alcohol Practice Committee=s newsletter, the new ATF regulations pull in opposite directions. ATF regulations generally prohibit alcoholic beverage labels from touting any health benefits. ATF=s new label content regulations permit wine makers for the first time to suggest that consumers consult their physicians or the USDA on the health effects of wine consumption. At the same time, the new label revocation regulations, if adopted, would permit ATF to unilaterally revoke label approval if the agency determines that the maker is attempting to market its product to under-age drinkers. (See the Spring issue of The Bar for a more comprehensive discussion).

The new revocation regulations are part of a broader effort by state and federal governments to curb direct shipping and direct marketing (manufacturer-to-consumer shipping and marketing). They see such practices as violating tied-house laws and promoting under-age drinking. Ms. Yang noted that consumers like direct shipping because of lower prices but that regulators and citizen groups are concerned that this will lead to increased alcohol consumption by minors. States, wholesalers and retailers are opposed to direct shipping because of lost revenue and lost taxes. Some states, such as Florida, have made it a felony to direct ship alcoholic beverages into the state.

Of course, label content regulations must pass muster under the First Amendment, which protects commercial speech. Ms. Johnson reviewed several commercial speech cases applying the test in Central Hudson Gas & Elec. Corp. v. Public Service. Comm=n, 447 U.S. 557 (1980), which holds that commercial speech is protected if it is not false or misleading and does not involve unlawful activity but which also holds that government nevertheless may regulate commercial speech content if the regulation advances a substantial government interest in a direct and material way and represents the least restrictive means of enforcement.

Ms. Johnson observed that the commercial speech cases tend to be fact driven, which probably explains why one court has found a Adirty@ gesture on a beer label deserving of protection, and another court has found a Adirty@ word on a beer label not deserving of protection.

Ms. Johnson highlighted the Supreme Court=s holding in Rubin v. Coors Brewing Co., 514 U.S. 476 (1995), striking down section 5(e)(2) of the FAAA. That section generally prohibits adult beverage labels from displaying alcohol content. The court held that this prohibition failed to advance the government=s interest in stifling Astrength wars@ in a direct and material way and that less restrictive alternatives existed such as limiting alcohol content, regulating advertising or focusing on malt liquor, the market segment allegedly threatened.

Ms. Deconti rounded out the program with an examination of state police powers, and Mr. Blau concluded the program by opining that more uniform regulation of the industry was needed to enable domestic players to compete in a global market economy.

Ed Schoenbaum, vice chair of the State Administrative Law Committee, appeared before the section council during the Spring Meeting to ask the section=s support for a resolution proposed by the Judicial Division of the ABA and the National Conference of Administrative Law Judges (NCALJ) that endorses the promulgation of initial and continuing education requirements for state administrative law judges.

According to NCALJ, ALJs hear more cases than members of the judicial branch. State ALJs hear cases involving, among other things, unemployment insurance benefits, professional licensing, driver=s licenses, welfare, utility and insurance rates, workers= compensation, taxation, pollution control, civil service, and employment discrimination. While a majority of states mandate minimum educational requirements for members of the judiciary, there are no comparable requirements for ALJs. The NCALJ would like to see the following standards put in place for state ALJs.

1. State agencies would have the responsibility to provide adequate official time and funding for education and training.

2. NCALJ and the National Association of Administrative Law Judges would be responsible for providing educational programs.

3. ALJs would be required to attend an orientation session before taking the bench.

4. Orientation would cover transition to the bench, ethical and professional standards, overview of procedural rules and evidentiary standards, alternative dispute resolution techniques, hearing management, decision writing and substantive law.

5. Non-legally trained ALJs would also be given an introduction to the law generally, and to administrative law and theory and legal research, in particular.

6. Orientation methods of teaching would include observing pre-hearing conferences and hearings and conducting hearings with a mentoring judge.

7. Continuing education would be mandatory.

8. A minimum number of hours in prescribed courses would be required on a continuing basis. The number of hours would be guided by a state=s continuing legal and/or judicial education requirement.

9. Continuing education methods would include observing hearings and discussing cases with a mentoring judge, and could be supplemented by tapes and correspondence courses.

The council agreed to support adoption of the resolution by the ABA at the annual meeting in August, provided that the accompanying report indicate that ALJ education standards will continue to be developed in the future. The proposed resolution is as follows:

RESOLVED, That to improve administrative adjudication, the American Bar Association endorses the principle that education and training are essential to the professionalism, quality and efficiency of the administrative judiciary and supports implementation of the AStandards for the Education of the Administrative Judiciary@ dated August 1999, prepared by the American Bar Association Judicial Division National Conference of Administrative Law Judges and the National Association of Administrative Law Judges.

Sid Shapiro, vice chair of the Regulatory Initiatives Committee, provided the council with the following update on asbestos litigation.

Legislation was introduced in both houses of Congress in 1998 to create a mandatory procedure for resolving future asbestos injury claims, spawned in part by the holding in Amchem Products, Inc. v. Windsor, 117 S. Ct. 2231 (1997), that a global class-action settlement is not permissible under current law.

Defendants looking for an efficient administrative solution have proposed a resolution for adoption by the ABA which would urge Congress to create a public agency with exclusive jurisdiction over asbestos injury claims. The Section of Administrative Law and Regulatory Practice has been requested to lend its support.

The proposed resolution is as follows:

1. That Congress address the problems created by litigation of asbestos claims in state and federal courts by establishing an administrative process with exclusive jurisdiction to resolve such claims.

2. That the administrative process be modeled on the procedures of:

a. federal mass disability programs that utilize:

i. an administrative judiciary located in a public agency;

ii. alternative dispute resolution (ADR) and other settlement procedures;

iii. objective medical criteria to define degrees of impairment;

iv. a schedule of compensatory payments;

v. attorney fee limitations; and

vi. federal court review of final determinations.

b. disability and pension fund guarantee programs that assess financial responsibility for compensation programs.

The council voted to make this an action item at the annual meeting in Atlanta, where it will be considered along with competing proposals and where other interested groups, such as the tort and insurance practice groups, will have an opportunity to comment.