Judge Sam Sparks, a U.S. District Judge in Austin, has addressed the very important issue of beer in Texas.  As the judge notes, no one would question the sincere interest of Texans in their beer.  Authentic Beverages Company Inc. filed suit regarding Texas’ beer statutes.  The statutes and regulations divide beer distributors into three tiers, manufacturers, wholesalers and retailers.  These statutes prevent any overlap between the three tiers.  These statutes have made it difficult for the new microbreweries to develop in Texas as they have developed in other states.  

The suit challenged the statutes and regulations on three First Amendment grounds: 1) they prohibit breweries and distributors from telling customers where their product can be bought, 2) they require inaccurate terms, e.g. "malt," "ale" and "malt liquor," 3) prohibit advertising the alcoholic strength of the product.  For example, the plaintiff claims that "ale" is misleading.  Texas uses the term to refer to a specific alcoholic content.  But, in reality "ale" refers to a specific fermentation process, regardless of the alcoholic content. 

The suit is based on commercial free speech and equal protection arguments.  One of the requirements of commercial free speech is that the state must articulate some legitimate government interest in the regulation.  The Texas Alcoholic Beverage Commission and the Attorney General were unable to to articulate a legitimate government interest, found the court.  Indeed, Judge Sparks noted several times throughout the opinion that the AG’s office presented little to no evidence for its positions. 

For example, regarding the distinction between "ale" and "beer," the TABC argued that the misleading definitions used in the Alcoholic Beverage Code work because the average consumer does not appreciate the true difference between ale and beer.  The statutory difference is that ale supposedly has higher alcohol content.  The Court found TABC’s position "laughable."  The TABC was essentially arguing that since no one knew the difference, the Texas Alcoholic Beverage Code could use whatever definition it preferred.  The evidence presented by the plaintiff was to the contrary, that ale actually refers to a specific fermentation process, not the alcohol content. 

The Court found that the defendant, the TABC, failed to present contrary evidence and often failed to even respond to Authentic’s arguments – whether through oversight, laziness or tactical error. 

The plaintiff also advanced Equal Protection arguments.  For example, the regulations prohibit breweries from selling their product at the point of production, but allows wineries to do so.  The laws also prohibits brewpubs from selling to distributors and retailers, but wineries and microbrewers can.  See the Texas Alcoholic Beverage Code, Chap. 74. 

The judge found that Sec. 108.01(a)(4) of the Alcoholic Beverage Code unconstitutional.  The court found that Texas may not require malt beverage producers to use the state definitions of "beer" and "ale."  That does not mean the TABC cannot require producers to accurately label the alcohol content of the product.  But, it does mean the producers may use more accurate definitions.  The court limited the state’s ability to divide producers and retailers.  That is, any such regulations must be more narrowly tailered to achieve the desired end. 

In strong language for a judge, the court said it was "shocked and dismayed" at the "half-hearted" defense by the Texas Attorney General’s Office.  See Judge Sparks’ decision here.  But, Texas beer drinkers have reason to be happy….