Free To Be Beer!

Texas beer drinkers, take heart! Now you will actually know what you are quaffing. On Dec. 19, Judge Sam Sparks ruled that the Texas Alcoholic Beverage Commission's rules on labeling and advertising beer violate the First Amendment. That's a source of seasonal cheer for Ron Extract, managing partner of Austin-based Jester King Craft Brewery, who said, "We can now speak freely about where our beer is sold, we can speak about the alcoholic content without worrying about any TABC regulations, and we can call beer what it is."

Three local firms – Jester King, Zax Restaurant & Bar, and distribution firm Authentic Beverages – had accused the state of Texas of rewriting the English language when it came to beer labels. Internationally, any fermented, malt-based, alcoholic beverage is a beer. If the fermentation is done at cool temperatures, the beer is a lager; warm, it's an ale. However, the TABC threw those dictionary definitions out, and instead tied the terms to alcohol content: In Texas, a beer is anything below 4% alcohol by volume, while anything above that is an ale or a malt liquor. Sparks compared that to "defining the word 'milk' to mean 'a nocturnal flying mammal that eats insects and employs echolocation.'" Under TABC's logic, he argued, the annual Austin Bat Fest would become the Milk Festival (and, presumably, last year's guest of honor Adam West would be advertised as TV's Milk Man). "Regardless of one's feelings about milk or bats," Sparks continued, "this result is inconsistent with the guarantees of the First Amendment."

Sparks' ruling also removed the outmoded ban on breweries advertising where their products are sold (currently, out-of-state craft brewers have to disable those sections of their websites for Texas customers) and overturned the TABC's ban on advertising the actual alcohol content of a beverage. That was intended to stop breweries from entering "strength wars" to sell the most alcoholic beer on the market, but because they keep people in the dark about what they are drinking, he wrote, "these regulations frustrate this interest as much as they advance it." Throwing out their argument that people could use the false beer/ale dichotomy to calculate strength, he wrote, "TABC appears to advance the laughable argument that, if members of the public are unaware of obscure legal definitions, they are necessarily also unable to compare numbers."

For Jester King, that means that it can finally be truthful in its advertising. Extract called the ruling "a boost for everyone." As for the fear of strength wars, he said, "There's still a lot of federal regulation in place to prevent that, so I'm not too concerned about that issue." Instead, he thought that Sparks' ruling gives consumers "access to accurate information to make their own judgments."

TABC communications director Carolyn Beck noted that Sparks' ruling only applies to advertising and labeling. The state will still use the beer/ale distinction for issues like tax rates and local option liquor elections. The commission has no plans to challenge Sparks' ruling: Instead, it will start working with stakeholders in the new year on "rules that make sense to all sides of the issue," Beck said. In the interim the TABC will issue a marketing practice bulletin to the industry, giving guidance on how to operate after Sparks' ruling. Beck said, "The agency is pleased to have some direction from the judge on some very complicated issues."

However, while Jester King and its co-plaintiffs won on the First Amendment issues, Sparks took a pass on two other challenges to the law. Extract and his fellow litigants had argued that the current prohibition on craft brewers selling directly from the brewery violates both the equal protection and commerce clauses of the U.S. Constitution. It all comes down to Texas' three-tier alcohol distribution system, with breweries on one end, bars and liquor stores on the other, and distributors in the middle. That structure was designed to break the system of tied houses – bars run directly by monopolistic breweries. Sparks simply said that the litigants had failed to provide enough evidence to sufficiently challenge the rules, and so he had to rule in favor of the state.

However, in the conclusion to his ruling, Sparks was very critical of the state's slapdash approach to both writing and defending these rules. In trademark fashion, he launched a brusque critique of the TABC, saying that the loose and often internally contradictory usage of terms like "liquor" and "brewer" was a source of potential confusion. He also said he was "shocked and dismayed" at the attorney general's "halfhearted conduct in this case. ... The State of Texas is lucky the burden of proof was on Authentic for many of its claims, or else the Alcoholic Beverage Code might have fared even worse than it has."