TABC Amends Labeling Rules

AUSTIN - The Texas Alcoholic Beverage Commission (TABC) formally changed their labeling rules on July 24th following a lawsuit challenging the restrictive rules in December of last year.

Austin's Jester King Craft Brewery sued the TABC in 2011 in civil court, claiming the rules infringed on their business' First Amendment rights to represent their products.

The old rules included arbitrary definitions for "beer," "ale" and "malt liquor" based on alcohol content that were required to appear on beer labels to meet agency approval, with many submissions disallowed for no reason other than not including the specified terminology.

The new rules place no restrictions on the commercial naming or description printed on beer labels, as long as the alcohol content is included.

Jester King Wins Judgment Against TABC

AUSTIN - A federal court ruled Monday in Jester King's favor on several key issues in a suit brought against the Texas Alcoholic Beverage Commission (TABC).

Judge Sam Sparks of the US District Court ruled in favor of Jester King, Authentic Beverages Company and Austin's Zax Restaurant & Bar with regard to their First Amendment challenges of restrictive beer labeling laws included in the TABC Code. As a result, breweries will no longer be bound by arbitrary label definitions of "beer," "ale" or "malt liquor," or descriptions of strength or alcohol content that have proved troublesome in the past.

Judge Sparks writes:

Although the Code is free to define "beer" and "ale" as it sees fit, Texas may not compel malt beverage producers to use those terms, and only those terms, in advertising and labeling. Accordingly, all statutes and regulations that compel such speech, including Texas Administrative Code, Title 16, Sections 45.77 and 45.90, are declared unconstitutional. Again, nothing prevents Texas or TABC from passing appropriate regulations requiring producers to include accurate statements about the alcohol content of their products in labeling or advertising; absent a constitutionally sound justification, however, Texas may not dictate the exact words producers must use to do so.

The restriction of brewers advertising or promoting retail locations where their products can be purchased was also lifted, with some Texas breweries already preparing their websites to include commercial listings.

However, Judge Sparks ruled that the plaintiffs failed to produce sufficient evidence for overturning the restriction of direct sales from breweries, citing:

Authentic bears the burden of demonstrating there is no reasonably conceivable basis which might support the classifications in the challenged sections of the Code...

The ruling affirmed Texas has the right to regulate businesses in such a way, with changes in this respect necessarily coming through the legislature.

The TABC responded favorably, releasing a statement that said they have no plans to appeal.

Jester King Sues TABC

AUSTIN - Jester King has filed a motion in federal court for summary judgment against the Texas Alcoholic Beverage Commission (TABC).

Along with two other co-plaintiffs, Jester King is challenging the TABC Code requirements regarding the content and wording contained on beer labels, such as the arbitrary "ale" or "malt liquor" legal designations and prohibited terms that may reflect alcoholic strength. Such unnecessary requirements have long been problematic for out-of-state breweries seeking label approval for their products to be sold in Texas.

Another change sought is the restriction on brewers in advertising or communicating retail locations where their products may be purchased, a legal holdover from a stricter three-tier interpretation. Jester King is seeking the elimination of both these current restrictions on the basis that they violate the right to free speech guaranteed by the First Amendment to the US Constitution.

Jester King is also challenging the restriction of breweries from selling direct to the public and that of brewpubs selling to retailers or distributors, both changes that were pushed unsuccessfully in the last legislative session. The claim against the TABC Code here is violation of the Equal Protection Clause of the Fourteenth Amendment.

A third challenge involves the requirement of foreign breweries to obtain a separate licence to sell their products in Texas, an additional burden that is not requried of foreign wineries or distilleries.

A ruling on this case is expected sometime later this year.

Texas Brewing Legislation Fails

AUSTIN - All three pending bills in the State House of Representatives were left to expire as the current Texas legislative session ended this week.

House bills HB 602, HB 660 and HB 2436 all dealt with modest modifications to the state's TABC codes for selling beer directly to the public. HB 660 and HB 2436 were left pending in committee, whereas HB 602 successfully passed committee but was never placed on the calendar. None were ever scheduled for a vote on the House floor.

Another Beer Bill Introduced

AUSTIN - A third bill has been introduced into the current legislative session regarding brewers and their ability to sell beer, HB 2436.

Sponsored by Austin's Rep. Eddie Rodriguez (D), HB 2436 is more broadly written than either HB 660 or HB 602, and seeks to allow brewers to sell directly to the public with a cap of 5000 barrels annually.

Texas Brewpub Legislation

AUSTIN - Two new bills have been introduced into the current state legislative session that could impact Texas brewing laws, HB 660 and HB 602.

Sponsored by San Antonio's Rep. Mike Villarreal (D), HB 660 seeks to allow brewpubs to bottle and enter distribution for off-premise consumption.

Sponsored by Houston's Rep. Jessica Farrar (D), HB 602 seeks to allow breweries to charge for tours and to give bottled beers away to paying participants for off-premise consumption. The current language of this bill does not provide for brewers to ultimately sell directly to consumers.