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Booze to go set to go

Good.

The Texas House has passed legislation that would allow restaurants to sell alcohol to go beyond the coronavirus pandemic.

The chamber signed off on House Bill 1024 to permanently allow beer, wine and mixed drinks to be included in pickup and delivery food orders and secure a revenue stream made available to restaurants in the last year in an effort to help those businesses when they closed their dining areas.

Initial approval of the bill came Wednesday, and a formal approval came a day later by a 144-1 vote. The legislation will now head to the Senate, where a version of the measure must still be approved by a committee before it can be considered by the full chamber.

Gov. Greg Abbott originally signed a waiver last March to allow to-go alcohol sales. The waiver was originally to last until last May, but it was extended indefinitely. As lawmakers began their work during the current legislative session, expanding Texans’ access to booze picked up rare bipartisan support.

[…]

The new, permanent alcohol-to-go option could benefit the restaurant industry after it has faced an excruciating year during the coronavirus pandemic. According to the Texas Restaurant Association, 700,000 restaurant employees in Texas lost their jobs in the early days of the pandemic, and thousands of Texas restaurants have closed.

“The TRA is thrilled that restaurants are one step closer to offering alcoholic drinks to-go on a permanent basis,” the association said in a statement following the House vote. “Texans overwhelmingly support alcohol to-go, and the entire industry has rallied around the practice to ensure it is implemented safely.”

See here for the previous update. While nothing is ever certain, I expect this to breeze through the Senate, and we already know Greg Abbott supports it. I saw someone say on Twitter that we may not be able to get other things done but at least we’ll have drinks to go. I’m more upbeat about that – I think this will be a needed boon for the restaurants, and anything that brings us a step closer to dismantling the ridiculous tangle of alcohol laws we have in this state is a positive – but I do recognize that this is likely one of the few laws we’re going to get this session that’s actually worth celebrating. May as well enjoy the wins where you can, there ain’t gonna be many of them.

Drinks to go on the legislative menu

Looks likely to succeed.

As the 87th legislature kicks into high gear in Austin tomorrow, a new bill introduced in both the Texas House and Senate is aiming to make to-go alcohol from restaurants and bars permanent.

Venues in Texas have been able to sell beer, wine and liquor with takeout food orders since the beginning of the coronavirus pandemic, when Gov. Greg Abbott signed an emergency waiver in an effort to help the struggling service industry as it navigated shutdowns and other safety regulations.

The governor allowed to-go mixed drinks in June 2020 after bar and restaurant operators lobbied him to ease the restrictions further. Before that, many offered cocktail kits with the liquor in its original package.

Sen. Kelly Hancock and Rep. Charlie Green filed Senate Bill 298 and House Bill 1094, respectively, on Jan. 7. The bills would allow Texans to buy alcohol from licensed venues, via pick-up and delivery, for off-premise consumption.

“Without Governor Abbott’s temporary waiver allowing restaurants to safely sell alcohol with their to-go food orders, Texas would have seen many more restaurants – small and large – close their doors and lose their employees because of this pandemic,” said Emily Williams Knight, president and CEO of the Texas Restaurant Association (TRA), in a statement. “We know the road to recovery will be long, which is precisely why we need tools like alcohol to-go to become permanent.”

Here’s SB298; HB1094 had not been filed as of when I went looking. You know I support this, and from all evidence so does Greg Abbott, which is perhaps a bit more important. There will likely be some concern about the potential for increased drunk driving, but we do have open container laws, and I’m not aware of any increases in DUI since May when the prohibition on drinks to go was first lifted. There’s still plenty of other things we can do to clean up the byzantine system of alcohol regulation in this state, but I’ll take this as a start.

The bar conundrum

Ugh.

Halloween this year in downtown Austin was a raucous affair. Nightclubs advertised dancing and drink specials. Thousands of people crowded 6th Street, partying shoulder to shoulder, some with masks and some without.

All of this happened as bars in Austin were still under a shutdown order to stop the spread of the coronavirus.

Those bars and nightclubs are some of the more than 2,500 so far that have been permitted to reopen by the state on the promise that in the middle of a pandemic, they’d convert themselves into restaurants.

Shuttering Texas’ nearly 8,000 bars has been one of Gov. Greg Abbott’s most drastic safety restrictions. He most recently allowed bars to open in parts of the state where coronavirus hospitalizations are relatively low, with permission from the local officials.

But in areas where bar bans are still being enforced, many of those businesses are still operating like, well, bars. Just weeks after Halloween, with Thanksgiving on the horizon, frustrated health experts and local officials say the loophole is defeating the purpose of the bar ban and could be one reason the state is battling its largest outbreak in months.

“The restrictions were put in place for a reason,” said Dr. Philip Huang, the director of Dallas Public Health. “And if you get around it, if you’re trying to cheat, then you’re sort of eliminating the reduced transmission that you’re trying to achieve.”

Public health officials and experts have said since this spring that bars pose unique dangers for spreading COVID-19. The Texas Medical Association notes it is one of the worst ways to spread the virus.

“Packed bars, where people are talking very close to each other and they’re shouting, or they’re yelling and people are touching a lot — that’s super high risk,” said Aliza Norwood, a medical expert at the Dell Medical School at the University of Texas at Austin.

If the current trend continues — over 8,300 Texans were hospitalized with confirmed coronavirus infections Monday, up by nearly 900 from last week — “there may be a time in which it is appropriate to shut down bars and restaurants completely,” Norwood said.

Austin health officials agree.

“We are at a precarious spot right now where cases are rising across the country,  cases are rising across Texas,” said Mark Escott, interim Austin-Travis County health authority, before adding, “We really have to find a way to stabilize things to avoid that surge.”

But Abbott, who has concentrated power within himself to take action on COVID-19, said he has no plans to do so. He did not respond to requests for comment.

I’ve been an advocate for taking steps to help bars survive, with the rule interpretation that lets them be classified as restaurants a key component of that. I’ve done this because I want to see these businesses survive and their employees keep their jobs, and I believed it could be done in a reasonably safe fashion, with an emphasis on outdoor and to-go service. That obviously hasn’t worked out so well. The best answer would have been to pay the bars to shut down long enough to get the virus under control. It’s still not too late to do that, but that’s going to require Mitch McConnell’s Senate to take action, and I think we both know that’s not going to happen. One can only wonder what some advocacy from Republicans like Greg Abbott and Ted Cruz and John Cornyn might have accomplished, but that would have required them to take this seriously in the first place. In the meantime, just because these places are open doesn’t mean you have to go to them, or that you have to be inside of them if you still want to support them in some way. Keep yourself safe, at least.

No Walmart liquor stores

Some non-election litigation news of interest.

Texans still won’t be able to purchase liquor at Walmart, after the U.S. Supreme Court rejected a bid by the retail giant that would have allowed the booze to be sold at stores in the state.

Texas is the only state in the nation that does not allow publicly traded companies, like Walmart Inc., to obtain liquor permits — but they are allowed to sell beer and wine.

Walmart claims the law is discriminatory and has argued that 98% of liquor stores in the state are owned by Texans.

Turned away by the nation’s highest court, Walmart will now have to prove intentional discrimination before a federal trial court.

Lawyers for the Texas Alcoholic Beverage Commission said the law is in place to make liquor less readily available and curb its consumption.

“The law precludes large corporations from using their economies of scale to lower liquor prices and increase the density of liquor outlets in the State. This approach has served Texas well — it has consistently ranked among the States with the lowest per capita liquor consumption,” lawyers for the commission stated.

Not sure I buy the cause-and-effect logic there, but whatever. Walmart, which at the time still had a hyphen in its name, originally sued in 2015 in federal court in Travis County. They got a favorable ruling in 2018, which was remanded back to the district court by the Fifth Circuit (opinion here). Walmart had appealed this ruling to SCOTUS, so the denial means they have to go back to the district court and try again under the tougher guidelines set out by the Fifth Circuit. We’ll see if they proceed, or if they decide it might be faster and cheaper to try to elect a bunch of legislators who will pass a bill to do what they want. I’m no fan of Walmart, but I really don’t see the point of this state regulation. Everything we do with alcohol in this state is weird and anachronistic.

Food trucks and bars

I approve of this.

The Texas Alcoholic Beverage Commission approved rules Tuesday intended to make it easier for bars to legally operate as restaurants during the COVID-19 pandemic.

The state agency greatly expanded rules that had already offered a limited lifeline for some bars to temporarily reclassify themselves and generate a sliver of sales during the coronavirus crisis. The goal is to provide more ways for businesses to qualify as restaurants under Gov. Greg Abbott’s executive order GA-28, which prohibits bars from reopening but allows restaurants to remain open at 50% capacity.

TABC’s amendments to Rule 33.5, which deals with food and beverage certificates, go into effect immediately.

The amended rules mean that bars can now reopen whether or not they have commercial-grade kitchens. Off-site food will also be allowed to be sold at the bars. This would include packaged items.

Additionally, bars will be able to more easily partner with food trucks. Sales from these food orders will be able to count toward the TABC’s rule that alcohol must account for less than 51% of the establishment’s gross revenue in order for it to open as a restaurant.

As we have discussed before, the 51% rule is more than a little arbitrary, and bars have deserved more flexibility to operate. I don’t want to downplay the risks here – you are still much better off avoiding indoor spaces and taking any food or drink to go if there isn’t an outdoor seating arrangement. If they comply with the limited capacity rules that apply to restaurants, then I favor approaches like this that let more bars be classified as restaurants, because they need the help. In the absence of federal help, this is the best we can do at this time. (To be fair, not all bar owners agree with this approach. A more serious review of the TABC’s 51% formula is still needed.) Reform Austin, the Dallas Observer, and the Current have more.

It’s still hard out here on bars and restaurants

I continue to worry about our once-thriving hospitality industry.

Hundreds of Texas bars and restaurants are scrambling to change how they operate, maneuvering through loopholes that will allow them to reopen after being closed by Gov. Greg Abbott’s latest shutdown targeting bars.

Abbott has shut bars down twice since the coronavirus pandemic emerged in Texas. The first time bars were swept up in a total lockdown of statewide businesses. But the second time, on June 26, Abbott singled bars out while allowing virtually every other kind of business in Texas to stay open.

But other operations such as restaurants that sell a lot of booze, wineries and breweries were ensnared in the same order and also forced to close because alcohol sales exceeded 51% of total revenue, meaning they were classified as bars.

“Generally everyone has a common sense understanding: ‘What is a bar? And what is a restaurant?’ I think that 51% rule is so broad that it actually picks up or encompasses businesses that we would normally think of as really being restaurants,” said State Rep. John Wray, R-Waxahachie, one of more than 65 lawmakers who signed a letter asking Abbott to update his order’s definition of a restaurant.

Wray gave the example of a burger restaurant, where a patron might buy a burger and two beers. Oftentimes, the beer will cost more than the food, but that doesn’t make the restaurant a bar, he said.

Emily Williams Knight, Texas Restaurant Association president, estimates that about 1,500 restaurants ranging from steak houses to coffee shops that sell wine were “inadvertently” forced to close when Abbott shut down bars, translating to about 35,000 lost jobs in the state.

The Texas Alcoholic Beverage Commission responded to outcry from the service industry with new guidance in a July 30 notice allowing businesses to either demonstrate that they recently had less than 51% alcohol sales or use alcohol sales projections and apply for a Food and Beverage Certificate, documentation that allows them to reopen as a restaurant.

The certificate workaround requires the business to have a permanent kitchen. It allows bars and restaurants to use projected sales numbers instead of requiring past sales to determine if alcohol sales exceed food sales.

The TABC received more than 600 requests from existing businesses for Food and Beverage Certificates since Abbott’s order took place and granted about 300, according to commission spokesperson Chris Porter. Almost 90 businesses have also requested to update their alcohol sales numbers in an effort to reopen.

The Texas restaurant industry is already struggling, with Knight projecting that up to 30% of restaurants in the state could go out of business.

For those forced to shut down due to the bar order, it can be a death sentence and business owners see these changes as their last hope.

[…]

Breweries also found themselves forced to shut down by Abbott’s order, with two-thirds of Texas craft brewery owners predicting that their businesses could close permanently by the end of the year under the current closures, according to a July survey by the Texas Craft Brewers Guild.

Hopsquad Brewing Co., an Austin brewery, reopened as a restaurant using a Food and Beverage Certificate with an onsite food truck serving as its kitchen, General Manager Greg Henny said.

He was lucky, because the brewery already had a food truck on site, Henry said. But he thinks breweries and wineries should have their own classification separate from bars, because they operate differently.

Henny said the guidance from the TABC has been confusing and harmful to breweries. To help other businesses survive the pandemic, the agency allowed “retail and manufacturing businesses” to serve and sell alcohol in a patio or outdoor area that wasn’t part of its original designated premises, which some brewery owners took as being able to reopen.

However, the TABC later released a clarification saying that businesses with more than 51% alcohol sales were not eligible.

“The circumstances are constantly changing as a result of which way the winds are blowing with [the TABC],” he said. “It makes us feel frustrated. We’re fighting tooth and nail just to stay open, and we’ve shown time and time again that we can operate safely,” he said.

State Rep. Matt Krause, R-Fort Worth, and Texas Legislative Tourism Caucus chairman led the efforts behind the letter sent to Abbott asking for an updated restaurant definition.

“You’ve got a lot of these establishments — these restaurants — that are kind of in limbo just because of how much alcohol they sell,” he said. “Restaurants that have already been decimated by the first initial shutdowns with the pandemic [and] by some people’s reluctance to want to come in and eat.”

I’ve beaten this drum before, and I continue to believe that to-go food and drink rules should be as liberal as possible, the 51% rule should be greatly relaxed, all avenues for outdoor seating should be explored, craft breweries and wineries and distilleries should get a break. But let’s be real, the problem won’t be truly solved until we get the damn virus under control, and that means taking mask wearing and social distancing seriously. It would be nice if we had a functional, non-evil federal government that tried to do something to help, but that ain’t happening till January, and we don’t have that kind of time. It would also be nice to get a rescue bill for bars and restaurants passed – there are some bipartisan proposals out there – but, well, see the previous point. We have to hold on for now.

And lord knows, that ain’t easy.

Bars that offer food service are scraping by with booze to-go operations. Their counterparts without kitchens, bound by state rules, can do little but watch their coffers wither.

“We’re all looking at our bank accounts like you would at the life bar in a video game,” said Michael Neff, owner of the Cottonmouth Club downtown. “All of us are just watching that life bar everyday trying to predict how long we have until it disappears.”

The industry had barely got its legs back following the limited reopening that went into effect on May 22 when on June 26 Gov. Greg Abbott ordered the state’s roughly 5,500 bars closed indefinitely. Bar owners, feeling they have been targeted, have decried what they describe as a lack of support from leaders as they square off with the coronavirus. Some have gone as far as filing suit against Abbott seeking to have the closure order overturned.

“Financially it’s just the worst you can imagine,” said Scott Repass, owner of Poison Girl in Montrose.

To be clear, Repass said, he agrees that people should not be drinking in bars right now. But he said there’s little difference between what would be happening at bars if they were open and what continues to happen at cafes and restaurants.

“If you shut down a bar, people are just going to go to a restaurant with a bar,” he said. “There’s just no logic to it, that that is safer than a bar operating at 25 percent capacity. We feel like we were scapegoated.”

I don’t agree with that. Clearly, many more people can be packed into a bar than a restaurant. Again, I’m up for drinks to go and outdoor seating, and maybe bars at 25% capacity with social distancing once we’ve got the numbers down some more, but the bars needed to be closed. Maybe if we’d stayed closed a little longer we wouldn’t have had to close them again, but it was right to close them. All that said, I do agree with this:

Lindsay Rae Burleson, who opened Two Headed Dog with her business partner before the pandemic hit, has been working since March at a Houston distillery making hand sanitizer to make ends meet.

The bar’s fate is uncertain, she said. Government-backed loans have run out, and she decided not to renew her insurance, which would require a substantial downpayment on Aug. 1.

Losing the bar for good would strap her with a debt so large, “it doesn’t even feel like a real number.”

“I worked nine years to get this bar,” the longtime bartender said. “I put everything I had in. I haven’t got a cent of salary, yet.”

Artisan bars and neighborhood ice boxes are part of Houston’s fabric, she said. But now the city is barreling toward a reality in which only the chains may survive.

“That’s not a city I want to live in,” she said. “That’s not a city I want to be a tourist at.”

We’ve gotta beat the virus. We can’t have our nice things until we do. Tell the Senate to pass that $3 trillion bill the House passed back in May to ease people’s financial burden until then, and then work on a bill specifically to help bars and restaurants. It’s a whole lot easier if we let it be.

Beer gardens get jerked around

First, we had this.

Saint Arnold Brewing announced Monday that it will temporarily close its beer garden and restaurant. The reason? Gov. Greg Abbott’s office ruled it is a bar, not a restaurant, and therefore should close according to the latest coronavirus shutdown guidelines.

As a response to the surge in virus cases in Texas, the governor backtracked on his reopening plan, ordering bars to close again on June 29. As most restaurants sell alcohol and most bars sell food, the state’s delineation between the two is a “51 percent rule”: if a venue’s alcohol sales make up 51 percent or more of its total revenue, it is considered a bar.

Brock Wagner, Saint Arnold’s founder and brewer, got a call from a local Texas Alcoholic Beverage Commission (TABC) agent on Friday, saying they had received a complaint that Saint Arnold had reopened in violation of the current pandemic orders. When calculating the brewery’s sales breakdown, the governor’s office took into account the beer Saint Arnold sells to its distributors. In addition to its on-premise operations, the Houston brewery has a solid retail presence across Texas and in Louisiana, producing about 70,000 barrels of beer last year.

“According to that, we are the world’s biggest bar,” said Wagner. He believes this ruling defies common sense, as it does not distinguish beer sold to distributors for retail purposes from a beer sold at the restaurant to a customer.

Wagner tried to appeal the decision and contact the governor’s team over the weekend, but was unsuccessful. The brewery announced the closure on Monday. (The governor’s office did not return a request for comment by press time.)

Saint Arnold is back to doing curbside and drive-through sales only; the shutdown of dine-in operations will result in lost jobs.

“They claim that they want to be opening Texas and keeping people at work,” said Wagner. “Instead there’s decisions like this, which are going to eliminate 75 jobs if we don’t get this reversed.”

That story was from July 13. We’re familiar with the plight of the bars that serve food but not enough food for them to be classified as restaurants. This is an arbitrary distinction, one that doesn’t make a lot of sense, and it’s having a bad effect on a lot of craft breweries. But then it looked like there was a breakthrough last week:

You still may not sit down in a bar for a drink, but you may be able to get served at a Texas brewery or other retail alcohol establishment and then sit down at an outdoor patio to enjoy your drink, provided social distancing is followed.

In a decision issued with little fanfare late last week, the Texas Alcoholic Beverage Commission began allowing retail and the manufacturers of alcohol beverages, like breweries, to reopen their outdoor patios to service again.

Community Impact Newspaper in Houston reported that TABC’s decision follows a direct appeal from St. Arnold’s Brewery, which had been forced to close its beer garden under Gov. Greg Abbott’s late June order that shut down all bars that generate more than 51% of their profits from alcohol sales.

TABC did not notify the news media of the change or make a public announcement about the new order. It has apparently also not been available to answer questions from owners who are confused about qualifying for change.

Still not a reprieve for the bars that had to close their dining rooms, but something. Unfortunately, it didn’t last.

Late Wednesday night, the Texas Alcohol Beverage Commission reversed a recent guideline change that would have let the state’s breweries reopen their patios for service.

The move is an abrupt about-face from last week, when the TABC signaled that brewers could pour product for patrons, so long as they quaffed their beers outside. Under that rule, breweries would have been clear to temporarily modify their licenses to exclude patios and beer gardens from their on-site premises, the Houston Chronicle reports.

However, in the latest turn, the TABC amended its guideline to say that modifying a business premises as unlicensed doesn’t exempt it from Gov. Greg Abbott’s June 26 executive order closing bars and other drinking establishments.

This is ridiculous. If we’ve decided that it’s safe for restaurants to operate at limited capacity, then it surely makes sense for outdoor patio restaurants, which is what these beer gardens are, to do so. Making a certain amount of revenue from alcohol sales should not prevent a restaurant from being treated like any other restaurant. We’re so in thrall to these ridiculous ancient laws and the all-powerful lobbies that keep them on the books that we’ve lost the plot. It just makes no sense at all. Like many businesses in Texas right now, craft breweries are having a rough time. Let’s not go out of our way to make it rougher.

UPDATE: And the pendulum has swung back in favor of beer gardens, though there are still issues with the 51% rule and the overall ability of small brewers to do their business. But it’s at least something.

There’s a lot of COVID litigation out there

Texas Lawyer surveys the landscape.

The COVID-19 pandemic has created a growing subset of new business litigation in Texas: companies suing the government over shutdown orders or definitions of essential versus nonessential businesses.

One of the latest examples to make headlines was a large group of bar owners who sued Texas Gov. Greg Abbott over his order that closed bars again because of the rising infection rate in the Lone Star State.

But Texas Lawyer’s research revealed that the bar litigation was at least the 15th similar lawsuit filed in the state since the onset of the pandemic in early March. It’s likely that there are even more cases filed in small or mid-sized cities in Texas.

One of the most interesting legal claims raised by this type of litigation is whether the governor has exceeded his authority under the Texas Disaster Act to suspend laws in the state, said Brad Nitschke, partner in Jackson Walker in Dallas, who has been tracking COVID-19 litigation.

“The executive is given a large toolbox to respond to emergency situations. To some extent, at least, it sort of has to be that way,” Nitschke said. “I think we are more accustomed in Texas to what that looks like for a hurricane or tornado, or a catastrophic drought.”

Using the same statute to respond to a pandemic is sort of like trying to put a square peg into a round hole, he added.

“It’s clear the governor has significant authority to act in the case of a disaster,” Nitschke said. “I think the unique circumstance of a pandemic like this one is going to give courts a chance to figure out what the outer limits of that authority may be.”

[…]

It will be tough for plaintiffs to win these sorts of cases, said Christy Drake-Adams, assistant general counsel of the Texas City Attorneys Association and the Texas Municipal League.

Drake-Adams noted that the league’s insurance risk pool has seen eight similar lawsuits against small and mid-sized Texas cities, which generally argue about the definition of essential versus nonessential businesses.

“They think they should have been allowed to continue operating, because they were an essential business,” explained Drake-Adams.

She said that government defendants who are fighting these types of lawsuits have a strong defense: That governmental immunity protects them from the claims.

“To the extent that plaintiffs are throwing in constitutional claims, I would say it’s pretty clear that the government has broad authority to act to protect the public health and to regulate in times of emergency, and that authority is expressly provided in law. It’s not clear that anyone’s constitutional rights have been violated as a result of those regulations,” Drake-Adams said.

There was a quote in there from Jared Woodfill about why the plaintiffs are right, but 1) screw that guy, and 2) we’ve heard from him plenty in the stories about each individual lawsuit he’s filed. This was the first time I’d seen an analysis from someone not connected to any of the lawsuits, though since cities or counties are the defendants in some of them, the perspective given here isn’t fully objective, either. Texas Lawyer reviewed the Hunton Andrews Kurth COVID-19 Complaint Tracker for the basis of this story; you can see media coverage of that tracker here. About half of the lawsuits involve the state (two), a state agency (one), or local governments (five), the rest are between private entities. I feel like it will be multiple years before there’s little to no litigation of interest of this nature to continue tracking.

Second lawsuit filed by bars against Abbott

This one was expected.

Several Texas bar owners filed a $10 million federal lawsuit Tuesday afternoon against Gov. Greg Abbott, in an attempt to void his executive order shutting down bars for a second time since the beginning of the coronavirus pandemic.

All of the plaintiffs are members of the Texas Bar and Nightclub Alliance. This is the second lawsuit filed against Abbott this week after more than 30 Texas bars filed a lawsuit in Travis County over his recent shutdown order on Monday.

In addition to the damages, the lawsuit asks the court to stop Abbott from enforcing his executive order which closes bars and to prevent him from issuing similar orders in the future without proper notice. The suit said Abbott should give businesses more than 24 hours notice before shutting them down, “unless in the case of imminent threat of harm.” The lawsuit also asks that future shutdown orders have a clear end date and lay out conditions that would have to be met for the order be extended.

[…]

The lawsuit noted that the Texas Alcoholic Beverage Commission recently posted a notice on its website saying it observed a “high level of compliance” by permit holders. The lawsuit claims that Abbott is abusing his emergency powers “without proper legal notice.”

“With the erratic legal situation fueled (if not created) by the Governor and given that Plaintiffs have largely complied with the spirit & letter of the Governor’s voluntary guidelines, it came as an unfortunate surprise,” the lawsuit states.

The bar owners say in the suit that Abbott’s order violates their constitutional rights for due process, equal protection, and their patrons right to assembly, and “may very well leave long-term scarring on the republican form of government if left unchecked.”

“It wasn’t like he even reduced the bars and nightclubs to 25% — we’re closed to 100%,” said Michael Klein, one of the plaintiffs and Texas Bar and Nightclub Alliance president, drawing a distinction between bars and other businesses which are allowed to operate at limited occupancies. “You better have some pretty good scientific evidence if you’re going to take one group of alcoholic beverage licenses over another, or one group of businesses.”

See here and here for the background. The Woodfill lawsuit was filed in state court and this one is in federal court, and someone who is much better versed in legal matters than I am will need to explain the reasons for that. I actually think these guys have some reasonable claims – sufficient notice, a deadline and criteria for the order, etc – though whether those claims are justiciable in federal court is a question I can’t answer. I figure both sets of plaintiffs are going to ask for an order suspending this action on Abbott’s part, and if so we’ll get some kind of rulings quickly. I have no idea what to expect, but can’t wait to see what happens.

The pause effect on bars and restaurants

I feel terrible for them, but what could we do at this point?

Ed Noyes was trying to get some shut-eye when he woke up to seven different texts Friday morning.

Three of the five bartenders at his Fort Worth establishment — plus his girlfriend — delivered the news: Malone’s Pub had to shutter immediately under the governor’s orders. His employees wanted reassurances: Would the business survive? Should they file for unemployment? What were his next steps?

“We were just all in shock,” Noyes said.

On Friday morning, Gov. Greg Abbott delivered another economic blow to bars and other places that receive more than 51% of their gross receipts from selling alcohol. The establishments had to shut down by noon after a statewide surge in coronavirus infections officials said was largely driven by activities like congregating bars. There’s no immediate plan for when they’ll be able to reopen.

“The announcement just came out of nowhere,” Noyes said. “When I went to bed last night I thought we’d be open for the weekend, so this really blindsided me.”

Restaurants were ordered to scale back their operations to 50% capacity. And Abbott also banned river-rafting trips. They were his most drastic actions yet to respond to the post-reopening coronavirus surge in Texas.

But bars arguably faced one of the biggest challenges to operating in pandemic. Every tantalizing aspect of the nighttime hotspots — large crowds, prolonged bouts of close contact, mouths constantly open to drink or speak — clash with the health guidelines put in place as COVID-19 ravages the state.

[…]

Last weekend, the Texas Alcoholic Beverage Commission launched “Operation Safe Open” to ensure bars and restaurants were following coronavirus safety rules. As of Wednesday, 17 bars — out of nearly 600 businesses visited by the commission — got their alcohol permits suspended for 30 days.

In some enclaves, residents have complained about staff not wearing masks, social distancing measures not being enforced and tables not being cleaned after use.

“I went with a friend for a quick night out,” Steven Simmons, who lives in Tyler, said of a June 11 visit to a local pub. “Easy to enter the bar, just checked IDs and that was it. No social distancing being enforced, no hand sanitizer anywhere, tables were not cleaned after use or anything. Employees were not wearing a mask at all.”

But in other parts of Texas, including Austin and San Antonio, some bar owners say they’re trying to strike a balance between their livelihoods and business and public safety.

“We joke at the Friendly Spot Ice House that we make a ‘bestie pack,’” said Jody Newman, the owner of the San Antonio hotspot. “The pact is that people ‘friendly’ distance, that they mask up, that they have clean hands and that they be friendly and understand we’re all going through this together.”

Still, since opening during the first week in June, Newman said she’s seen about 30% of the business she would normally get at this time of year.

With Friday’s announcement, Newman said, “thousands and thousands of livelihoods hang in the balance.”

Here’s a local view of this dilemma.

“The whole thing is a mess for everyone. Obviously, we’ll have to adjust again,” said Alli Jarrett, owner of Harold’s Restaurant & Tap Room in the Heights, adding that reducing capacity means she will not be able to bring back workers she had hoped to re-employ. “It’s not just restaurants. It’s every single business – every segment of the population. We’re all in the same boat. It’s just really, really hard.”

[…]

Brian Ching, owner of Pitch 25 in EaDo, fears the worst. “I don’t know if the business will be here in a month, two months,” said Ching, who also is readying another bar, East End Backyard, to open in July. “We were able to get PPE but we’ve burned through it all.”

He is most concerned for his workers, he said. “This time around, being closed with no PPE, we are likely going to have to furlough employees. I feel for all of them. There seems to be no end in sight.”

Bar owner Andy Aweida said he worries what the bar shutdown will mean not just to his staff but to all those in the bar industry.

“We did everything we were asked and did it well. It’s unfair to them and many others. So many people are doing what is needed and playing by the rules,” said Aweida, a partner in the Kirby Group whose bars include Heights Bier Garten, Wooster’s Garden and Holman Draft Hall. “I truly feel horrible for all those amazing employees, staff and many other good, hard-working people this affects.”

Lindsey Rae, who opened Two Headed Bar in Midtown only six months ago, conceded that the first year for any business is the toughest. But the bar closures are catastrophic.

“This is going to be a financial disaster for us,” she said. “We are down 85 percent since the pandemic. All of our revenues are exhausted. We can only afford to operate for about one more month unless Gov. Abbott will give us some gleam of hope.”

Hope, however, seemed fading on Friday for Lukkaew Srasrisuwan, owner of the new Thai restaurant Kin Dee in the Heights. She saw six reservations cancel after the announcement.

“This is going in the wrong direction,” she said. “We are complying with the guidelines. We are a small restaurant and we just opened. This is tough.”

At 75 percent capacity, Kin Dee was “doing OK,” Srasrisuwan said. But not for long. “We can’t sustain at this level for more than one or two months,” she said. “I’ve seen the number of COVID-19 increase so I am not surprised by Gov. Abbott’s announcement but I am worried. We don’t want to lose our staff but I don’t know how to keep operating at this rate.”

For some restaurant owners, Abbott’s pullback was not unexpected.

“It’s about time, to be honest. I thought we reopened too soon,” said Christopher Williams, chef/owner of Lucille’s in the Museum District. “It’s the most responsible thing I’ve heard from (Abbott) in a while.”

Williams said he will be able to weather the capacity reduction because he was able to remain solvent by streamlining his menu, dropping prices, and increasing take-out. “At a time like this everyone needs to take profitability out of the equation. It’s about sustainability.”

George Mickelis, owner of the iconic Cleburne Cafeteria, said he was grateful for Abbott’s decision, and said he would be able to continue staying in business even at 50 percent.

“Obviously, no one wants to return to a complete shutdown and we pray that that is absolutely never necessary again,” Mickelis said. “We are all Texas tough and we will prevail.”

Two things can be true at once. This is a terrible blow to a crucial part of the Texas economy and culture. I’m much more of a restaurant person than a bar person these days, but bars are a key ingredient to neighborhood life, and a vital hang-out place for many people. They also employ a lot of people who’ve just been put back out of work at a time when we don’t know if there will be further federal assistance coming and the state of Texas has gone back to requiring out-of-work people to be actively job searching in order to get unemployment benefits. It’s also the case that we should have been a lot more careful and deliberate in allowing bars to reopen in the first place, precisely because everything about them makes them a prime vector for spreading a disease like COVID-19. I don’t know what else we could have done now, but it’s surely the case there are things we can and should have done differently before now.

Other businesses are now in a similar bind.

In the backyard of her business, Cutloose Hair, salon co-owner Ashley Scroggins watched a livestream Friday morning on her phone. On the screen was an image of Harris County Judge Lina Hidalgo speaking of the risks of COVID-19 to the region.

“Today we find ourselves careening toward a catastrophic and unsustainable situation,” Hidalgo said. “Our current hospitalization rate is on pace to overwhelm the hospitals in the near future.” She called for nonessential workers to stay at home.

Scroggins put down her phone and put on her mask. Then she walked into her salon, shut down the online booking system and began calling upcoming reservations: The salon was closing until cases subsided.

Officials have moved to contain the number of known COVID-19 cases spiking across the state, often through conflicting messages that left businesses attempting to weigh health risks against economic concerns.

While Hidalgo recommended nonessential workers stay home, she no longer had the power to enforce such a plan because Gov. Greg Abbott had superseded it with his own plan to reopen the state. Friday morning, Abbott rolled back portions of that plan — ordering bars and tubing and rafting establishments to suspend services and restaurants to cap dine-in capacity at 50 percent — but maintained other businesses could remain open.

That left salons, restaurants, gyms, offices, retailers and other businesses Friday to decide whether to heed Hidalgo’s call to return to the stay-at-home precautions she had the power to enact in March.

Many, like Cutloose Hair, decided shutting down on-premise operations was the right thing to do.

“It’s not getting better,” Scroggins said of the pandemic. “And the only way we can truly support our city is just to do what they’re asking us to do.”

It’s not an easy choice for many. My company, for which I’ve been working from home since March 6, two weeks before the city shut down, has suspended its plan to start bringing workers back to the office until further notice. I suspect there will be a lot more like this, and there should be. If you can reasonably work from home, there’s no good reason not to.

One possible small bit of hope for the bars and restaurants:

Under current state rules, restaurants and bars can sell beer, wine and liquor, but only in closed containers with their manufacturer’s seal intact.

The organization Margs For Life is lobbying to change that.

Founder Kareem Hajjar, also a partner in the Austin law firm Hajjar Peters LLP, is talking with Texas food and beverage associations to build support for an emergency order to let bars sell mixed drinks in containers that they seal on premises.

“While that work continues today, Margs For Life has evolved into a community of people who are either in the industry or support the industry, where we can share news and events, and help one another be as profitable as possible during this pandemic,” Hajjar told the Current.

Margs for Life’s proposed rule change, proponents say, would help restaurants and bars reduce inventory — and allow some facing dire financial circumstances to stay afloat.

“I’m privileged that I work at a bar that has granted me the ability to do to-go cocktail kits… But bars and restaurants would benefit from FULL to-go kits,” said David Naylor, a bartender at San Antonio craft-cocktail bar The Modernist, via a Facebook post. “Manhattans expertly built, Negronis that don’t require you to amass a stocked bar… ALL these are possible if [Gov. Abbott] would allow it.”

Abbott has expressed support for this idea.

Abbott originally signed a waiver March 18 allowing to-go alcohol sales, in an effort to support struggling restaurants after they closed their dining areas. The waiver was originally to last until May 1, but it was extended indefinitely. Abbott teased that this change could be permanent, tweeting at the time, “From what I hear from Texans, we may just let this keep on going forever.”

Abbott again tweeted late Saturday that he supports the idea of extending his temporary waiver. State Rep. Tan Parker, R-Flower Mound, replied, saying that he will file a bill in the upcoming legislative session to make it happen, also advocating to allow restaurants to continue selling bulk retail food items to go.

[…]

The Texas Restaurant Association submitted a proposal Thursday evening to Abbott’s office, asking to expand the waiver to also allow mixed drinks with liquor to be prepared, resealed and sold.

Cathy Lippincott, owner of Güero’s Taco Bar in Austin, said its margarita to-go kits were very popular during the beginning of the restaurant shutdowns, but as dining rooms began to reopen, sales dwindled. Now, days could go by without the restaurant selling a single kit.

Under the Texas Alcoholic Beverage Commission guidelines, restaurants can only serve liquor in manufacturer-sealed bottles and with the purchase of food. For several restaurants, including Güero, this means their drinks are served in do-it-yourself kits, where customers mix the ingredients and liquor together.

Lippincott believes that if mixed drinks were also allowed to be served to go, she could see that being a popular option.

I support this as well, and any action that can be taken now to achieve this should be taken. And then, when the Lege convenes in January, we should not only pass a law to make this permanent, but also revisit all of our archaic and anti-competitive laws that govern the manufacture and sale of beer, wine, and liquor. You know what I’m talking about. Let’s please at least let this terrible pandemic be a catalyst for something good.

We may actually get beer to go this session

Well, what do you know?

The Texas Senate restored a measure Wednesday allowing breweries to sell beer to go from their taprooms to a bill allowing the Texas Alcoholic Beverage Commission to continue operating. It also approved a measure that would loosen restrictions on the number of liquor store permits individuals can hold.

State Sen. Dawn Buckingham, R-Lakeway, said her amendment allowing breweries to sell beer to go — something allowed in every state except Texas — would foster job creation, economic development, entrepreneurship and tourism.

“We stand our best when we stand together, and we come together on issues that have been divisive in the past,” Buckingham said during the floor debate. “Our constituents elected us to be bold — and with that, I give you beer to go, baby.”

[…]

The Senate’s beer-to-go amendment was made possible largely by an agreement between the Wholesale Beer Distributors of Texas, a large lobby group representing the interests of beer distributor; the Texas Craft Brewers Guild, which represents the interests of local breweries; and the Beer Alliance of Texas, another group representing distributors.

The Wholesale Beer Distributors of Texas didn’t sign on when the truce was originally made in February but agreed to the sign on with the other two groups earlier this month.

See here and here for the background. The bill that was approved, HB 1545, is as noted the sunset bill for the TABC, so the addition of beer to go (as well as an amendment allowing for earlier beer and wine sales on Sunday, which was struck in the Senate process) was technically shenanigans, but the best kind of shenanigans. Also added was an amendment that greatly raised the number of liquor store permits am individual can hold. These changes now head back to the House for approval, and if that happens it’s on to Greg Abbott for a signature. I will be holding a beer in reserve to raise when and if that happens. Here was a Twitter thread from the Texas Craft Brewers Guild from before the Senate hearings on HB1545, here’s a statement from State Rep. Eddie Rodriguez, who had filed his own beer-to-go bill and was the one who successfully amended HB1545 in the House. The Current and the Chron have more.

House liberalizes beer sales

It was a bit of shenanigans, but all things considered that seems entirely fitting.

The Texas House voted Thursday to extend beer and wine sales on Sundays and to let craft breweries to sell beer to go.

Those new expansions of alcohol sales were amendments to a broader bill regarding the efficiency and operations of the Texas Alcoholic Beverage Commission that must pass this legislative session in order to avoid shutting down the agency.

Both amendments were opposed by the bill’s author, state Rep. Chris Paddie, R-Marshall. Paddie still cast a vote for the legislation, which received preliminary passage along a 135-0 vote, though he noted that the bill was no longer “completely clean.”

[…]

The two amendments proposed by state Reps. Drew Springer, R-Muenster, and Eddie Rodriguez, D-Austin, consumed most of the debate Thursday. Springer’s amendment would allow beer and wine sales to begin at 10 a.m. instead of noon on Sundays in licensed retailers such as convenience and grocery stores. It passed in a 99-40 vote. In laying out his amendment, Springer said his motion would put wine and beer sales in line with what’s currently allowed at on-premise consumption locations, such as restaurants and bars.

“We allow country clubs to sell mimosas at 10 a.m.,” Springer said during the debate on the House floor.

He also said his proposal won’t affect liquor stores, which aren’t allowed to operate on Sundays.

The passage of Springer’s amendment was met with a chipper response from state Rep. Terry Canales, D-Edinburg, who exclaimed upon its passage: “This is freedom. This is eagles!”

The House narrowly approved Rodriguez’s amendment allowing craft breweries to sell beer to go — something that’s already legal in every other state, the representative said Thursday evening.

Here’s HB1545, which is now on its way to the Senate. Because this was supposed to be just a sunset bill, there’s a very good chance both of these amendments will be removed from the bill in the upper chamber. But who knows, maybe the time has come. I wouldn’t bet on it, but crazier things have happened.

Time again for craft brewers to get their legislative hopes up

We’ve seen this movie before. I hope for a better ending, but I’m keeping those hopes modest.

Texas is the only state in the country that prohibits some breweries from selling six-packs, bottles and growlers of beer to-go, but a pair of bills filed for consideration during the 86th legislative session aim to change that.

Sen. Dawn Buckingham (R-Lakeway) and Rep. Eddie Rodriguez (D-Austin) introduced companion bills SB 312 and HB 672, respectively, which would allow manufacturing breweries to sell beer to drinkers for off-premise consumption.

[…]

In 2015, North Texas’ Deep Ellum Brewing Co. and the now-defunct Grapevine Craft Brewery sued the Texas Alcohol and Beverage Commission over the issue and lost. Earlier this year, the court ruled in favor of the TABC, citing the potential impact to Texas’ three-tier system, which aims to avoid conflicts of interest between alcohol manufacturers, distributors and retailers.

In the decision, however, the judge noted that off-premise sales were granted to distilleries and wineries by the legislature, not the courts. That and the support shown for to-go sales during both the Republican and Democratic conventions in 2018 is giving the Texas beer industry hope that the legislation will pass.

I noted the lawsuit back in 2015, but missed that it had been decided. The story here has always been that the beer distributors’ lobbyists are mightier than everyone else. Maybe this year it will be different – hope springs eternal – but it is always safer to bet on the house. Alas.

Our increasingly non-dry state

There are now only five counties in Texas where you can’t buy alcohol.

On Election Day in Stanton, just north of Midland, Ron Black was skeptical that a particular measure on the ballot would pass.

“Well, I think at first it was uh, nobody thought it would go through because they’ve tried it so many times, you know. I can’t tell you how many times it’s gone to the ballot,” Black said.

Black manages the Lawrence Brothers grocery in Stanton. The vote was whether to keep Stanton dry – that is to prohibit the sale of alcohol – or to allow the sale of beer and wine at stores like Black’s. But to his surprise, Stanton went wet after all. And it’s part of a long-term trend that’s washing over Texas.

To put it in perspective: in 1996, there were 53 dry counties in Texas. By 2011 that number dropped to 25. And as of Election Day when Stanton, the seat of Martin County went wet, there are now just five dry counties in Texas – in a state whose attitudes toward alcohol have always been complex, but tended to be more conservative than the country as a whole.

“Texas is slightly earlier than the nation and slightly later than the nation in terms of how long its Prohibition was enforced,” said Brendan Payne, a history professor at North Greenville University and an expert in Prohibition in Texas.

[…]

But the real shift toward dry county extinction came from the passage of House Bill 1199 during the Texas legislative Session in 2003.

“That is what revolutionized our alcohol laws,” said John Hatch, president of Texas Petition Strategies. To hold a wet-dry election in Texas prior to 2003, you had to get signatures from 35 percent of a jurisdiction’s registered voters, each of which had to sign their name exactly as it appeared on their voter ID card, with their voter ID number. And you only had 30 days to do it. It was more difficult to get booze on the ballot than an actual candidate. Hatch asked the legislature to change the law.

“They gave us everything we asked for,” Hatch said. “We went from needing 35 percent of all voters to 35 percent of the last election for governor. So it made it a lot more manageable. We doubled the amount of time from 30 days to 60 days. We made the signature requirement the same as any other petition: if you sign your name “Michael Marks,” that’s good enough.”

A flood of elections followed. In the 15 years preceding the law, there were about 150 wet-dry elections statewide. In the 15 years following the law, there were close to 950 elections. Nearly 80 percent of those went wet.

Fascinating. I’ve noted a few of these elections over the years – Lubbock County, whose dryness I experienced as a visitor in the 80s, was a big one – but I didn’t realize how close to extinction the notion of a dry county was. It’ll be interesting to see how much longer the last five holdouts hang on. Congratulations to the people of Martin County. Please celebrate responsibly.

Spec’s sues TABC

Another lawsuit to watch.

The state’s largest liquor chain — Spec’s Wine, Spirits and Finer Foods — is suing the Texas Alcohol Beverage Commission for “abusive regulatory overreach” over an enforcement action that dragged on for almost two years before falling apart in administrative proceedings last year, court documents show.

The federal lawsuit, filed in Houston in late August but only recently unsealed, alleges that the TABC “wrongfully and maliciously” attempted to “extort” money from Spec’s by threatening to effectively shut the company down or by making the family-owned business fork over more than $700 million in civil penalties.

The TABC, citing the pending litigation, declined to comment.

In a stinging rebuke of the TABC last year, a pair of administrative law judges said the agency failed to prove dozens of allegations and chastised the agency for failing to disclose evidence to their own witness (and the court). The judges also called out the agency for “stacking” charges, a tactic commonly used to pressure defendants into a settlement. In the end, the judges recommended no fines be assessed against the liquor chain.

Now Spec’s is seeking an unspecified amount of money for damages that include lost profits, more than $1 million in attorneys fees and harm to its reputation. The lawsuit includes a request to impose exemplary, or punitive, damages — which are three times the amount of actual damages.

“Acting under color of law, [the TABC] threatened and pursued groundless allegations and enforcement actions,” the lawsuit says. “[The TABC] intentionally trumped up false claims in knowing violation of the law.”

The lawsuit also alleges the agency provided false testimony during the spring proceedings, which were the administrative equivalent of a trial.

The whole story is fascinating, and more than a little gross and enraging on the part of the TABC. Follow the links in the Trib story to see how all that went down last year. They’ve done a lot to clean up their operations, but stains like that don’t come out on their own. The TABC is in for a spanking from the legal system, and it’s one they have coming. The only question is how big the number will be.

The Huffman influence

Oops.

Sen. Joan Huffman

A lawsuit filed in state district court Monday alleges that the Texas Alcoholic Beverage Commission improperly fired one of its sergeants after he told federal law enforcement that state Sen. Joan Huffman had blocked an investigation into a Longview bar she and her husband partially owned.

The whistleblower lawsuit against the TABC — where the former sergeant, Marcus Stokke, worked for 16 years — says that last year Stokke told the FBI, a federal prosecutor and the agency’s internal affairs department that Huffman interfered in an investigation into Graham Central Station. The bar had drawn scrutiny for failing to report multiple “breaches of the peace” that took place on or near its premises, including a sexual assault, according to the lawsuit, which was filed in Austin.

[…]

According to the lawsuit, agency officials told Stokke to discontinue an investigation into Graham Central Station and erase digital and print records documenting the bar’s alleged wrongdoing.

Stokke, who the lawsuit says oversaw 24 counties in northeast Texas for the liquor agency, contacted law enforcement authorities in May 2017 and lost his job the following October. Stokke provided the Tribune with a copy of his termination letter which outlines a number of reasons for his dismissal, including insubordination and unethical conduct. The lawsuit says those claims are false.

“It was total retaliation,” Stokke said in an interview. He is seeking at least $200,000 in damages as well as reinstatement to his old job at the TABC.

Asked how he knew Huffman had interfered in the investigation, Stokke said he does “not have any evidence that she actually, you know, conspired or told anybody to falsify records or delete records or anything like that.”

But, he said, the reason the agency officials gave when they instructed him to end the investigation was, “this is really political and there’s a state senator involved.”

That’s pretty thin, to be honest. Huffman denies the allegation, and it’s easy to see why. I hope there’s something to this, because if not it would have been better all around to not say anything.

You may finally be able to buy booze at Walmart and Costco now

I agree with this.

A protectionist Texas law that has kept Walmart, Costco and other giant retailers from selling hard liquor was found unconstitutional by a federal judge this week, prompting cheers from free-market advocates — and vows of a quick appeal from one of the parties on the losing side.

The Texas law that was struck down — unique in the United States — forbids publicly traded businesses from owning liquor stores while allowing family-owned companies to grow into giant chains without fear of competition from large national or international corporations.

If the late Tuesday ruling by U.S. District Judge Robert Pitman survives appeals, Texas consumers — like those in at least 31 other states and many foreign countries — will be able to buy vodka, tequila and bourbon from Walmart-owned stores and from other multinational retailer outlets.

“For decades, these laws have stood in stark contrast to Texas values,” said Travis Thomas, spokesman for Texans for Consumer Freedom, which advocates for free-market reforms in Texas. “The State of Texas should not pick winners and losers in private industry.”

[…]

Experts said an appeal could take more than a year to play out in the federal court system — longer if it were to wind up in the U.S. Supreme Court. In the meantime, Texans can expect the status quo in liquor retailing. If publicly traded companies are allowed eventually to sell distilled spirits, existing law would still require the companies to build separate facilities, though they can be adjacent to existing stores.

See here and here for the background. The Texas Package Stores Association, which represents the state’s liquor store owners, has vowed to appeal, and I’d expect this to go the distance. As you know, I’m no fan of Walmart, but on this issue I think they’re in the right. Now if we could only bring a similar sense of sanity to the state’s ridiculous beer laws, we’d really have something.

Crowler conundrum concluded

Finally.

Mike McKim held an empty aluminum can under a tap and pulled the handle, filling the can with Real Ale Brewery’s Helles beer. He fitted a pull tab lid on top, slotted the can into his “crowler” machine, and pushed a button. He told the story of the equipment’s origins, invented by Colorado-based brewery Oskar Blues.

Then the founder of Cuvée Coffee in Austin explained how the state of Texas took it away from him, fined him more than $30,000, kept it for months after judges told them to return it and sparked a lawsuit that cost him more than $40,000 in legal fees.

“[TABC charged us with] illegally manufacturing an illicit product,” McKim said. “Basically, brewing beer. We’re not brewing beer. We buy beer, put it on tap, and put it in a can. Who cares whether I’m putting it in this little Dixie cup or in a bottle or a can, what difference does it make? And that’s why we went to court.”

McKim’s battle with the Texas Alcoholic Beverage Commission officially drew to a close on Thursday, when he got his crowler machine back after more than a year of separation. The coffee bar sold its first crowler since 2015 on Friday. And McKim’s story has inspired two pieces of legislation this session.

[…]

Cuvée Coffee’s story became the impetus for HB 908, which allows draft beer to be sold for off-premise consumption in both crowlers and growlers. Its author, state Rep. Ramon Romero, Jr., D-Fort Worth, wrote a letter to TABC Executive Director Sherry Cook early March this year admonishing the agency for its failure to return Cuvée’s machine months after a judge ordered them to do so.

“TABC has so many other things to worry about,” Romero said. “We’ve been working with TABC to crack down on human trafficking, bars taking advantage of women, to some degree creating environments that are very dangerous for women. We’ve been working on all these things and if it was up to me, that would be what they’re focusing their attention on — not small businesses trying to innovate.”

On Monday morning, McKim testified in support of SB 813 and told the Senate Affairs Committee he had to spend $41,300 fighting the TABC over the crowler machine. Sen. Bryan Hughes, R-Mineola, said he filed the bill to give individuals and businesses the ability to sue regulatory agencies for unreasonable regulatory actions. He hopes it will deter agencies from pursuing potentially frivolous regulatory actions.

“If I’m an agency and I’m messing with a Texan, there is no downside, no risk from the agency’s standpoint,” Hughes said. “There’s nothing keeping the agency from pursuing a frivolous action. If they lose in court and appeal like they did with Mr. McKim, there’s nothing keeping them from pulling out all the stops and punishing a business owner. The idea behind SB 813 is to even things up a bit.”

See here and here for the background. This was always a ridiculous difference-without-a-distinction action by the TABC, and it’s good that they have admitted defeat. I support HB908, though I’d like to know more about SB813 before taking a side on it. The bottom line is that our beer laws and how we enforce them continue to be silly, though hopefully now slightly less silly. There’s a lot more room for a lot less silliness, if we want there to be.

What makes a Texas wine?

Texas grapes, obviously. Or maybe not so obviously.

Rep. Jason Isaac

Chris Brundrett sat in a barn surrounded by barrels of wine he helped curate and swirled a glass of water in his hand, perhaps imagining it was something else.

Brundrett, accompanied by others from the state’s wine industry, drove home his pitch: “If we can just pump out wine from California and slap a picture of the Alamo or a longhorn on it and sell it,” he said, should wineries be able to put a “made in Texas” label on it?

A co-owner and winemaker at William Chris Vineyards between Fredericksburg and Johnson City, Brundrett was explaining why he backed House Bill 1514 by state Rep. Jason Isaac, R-Dripping Springs, which would require that wines with a Texas label be made only with Texas-grown grapes.

Under federal law, wine can have an appellation of origin from a state if a minimum 75 percent of its grapes are grown in that state. The other 25 percent can come from anywhere.

“I believe having something labeled as Texas should be from Texas,” Isaac told the Tribune, adding that his bill would encourage more Texas grape production.

Last year Texas produced about 3.8 million gallons of wine, according to the Texas Alcoholic Beverage Commission, and the state had more than 400 active permits to bottle, produce and sell wine. A separate study in 2015 found the wine industry contributed more than $2 billion to the state’s economy.

Grape growers and vineyard owners are scattered on the labeling issue. Paul Bonarrigo, co-owner of Messina Hof Winery, the state’s third-largest wine producer in 2016, said he was opposed to the measure, and the Texas Wine and Grape Growers Association said they don’t back Isaac’s bill, either.

[…]

Back at the Capitol, Isaac said that while 100 percent Texas wine was the goal, some in the industry contend that it might be too challenging to use only Texas grapes by September when the bill would go into effect if passed.

Isaac said he would look into offering an amended version of HB 1514 that would phase in the change, with benchmarks at 80 or 90 percent before requiring 100 percent Texas grapes. Isaac also said his bill would allow the Texas Department of Agriculture to allow exceptions to the threshold if severe weather or drought damaged state grape crops.

I don’t have any particular objection to this bill, though I think the federal 75/25 standard is perfectly adequate. Surely there’s some value in giving the wineries a bit of slack in a bad year. As long as there is a standard that everyone can accept and it is fairly enforced, I’m okay with whatever.

A win for beer

Hooray!

All you want for Christmas is a crowler to go? It probably won’t happen that quickly, but an administrative judge’s recommendation could move the state a step closer to letting bars and restaurants sell takeaway beer in the sealed, 32-ounce aluminum cans that sparked a passionate debate last year when officials cracked down on retailers who used them.

“I’m ecstatic,” said Todd Hayden, owner of Hop Scholar Ale House in the Spring area. ” … We sold a ton of beer in crowlers.”

Until last fall, that is, when Texas alcohol regulators ordered bars simply to stop using crowler-filling machines or risk losing their sales licenses or facing thousands of dollars in fines. Seven retailers, including three in the Houston area, received written warnings.

Selling beer for off-premise consumption in growlers, typically glass or stainless-steel bottles that are capped by hand, remained legal for retailers with the proper sales license. But the Texas Alcoholic Beverage Commission declared the crowler machines require a manufacturing license to operate. Only licensed brewpubs that make beer and can sell it to-go were allowed to continue using them.

Hayden and others put the machines in storage, but Cuvee Coffee of Austin challenged regulators by continuing to sell crowlers. TABC agents seized its equipment in September 2015. The company eventually sued in state District Court, but it was ordered to go through the administrative hearings process first.

Round 1 goes to Cuvee. In a decision dated last week, administrative judge John Beeler sided with the retailer on all counts and recommended that TABC return the equipment and change its rules.

See here for the background. Basically, the administrative judge agreed that crowlers are not usable in a manufacturing process and thus should not be subject to this requirement. The TABC can accept this ruling and adjust accordingly, or it can file an exception in the hope of getting the judge to change some part of his ruling. The deadline for that is December 2. It may still be awhile after that before the crowler machines come out of storage, but barring anything unusual this is a great result for Texas and everyone who drinks beer. Austin 360 and the Current have more.

Microbreweries win their distribution rights lawsuit

Excellent news.

beer

A Texas law that prohibits brewers from selling territorial rights to distribute their beer is unconstitutional, a judge ruled Thursday, serving up a major victory to beer companies seeking to expand their presence in stores, bars and restaurants throughout the state.

The decision says the government has no compelling interest in prohibiting brewers from seeking cash compensation when negotiating a contract with distributors, who have almost exclusive authority to handle sales between producers and retailers.

“This law, it was written by beer distributors to enrich big beer distributors and that is not a legitimate state interest,” said Matt Miller, senior attorney and head of the Austin office of the Institute for Justice, which litigated the case on behalf of Texas craft brewers Live Oak, Revolver and Peticolas.

The law, passed three years ago, allows brewers and distributors to negotiate for things like equipment and marketing efforts, but not direct compensation. That denies brewers who have worked to build up their business the ability to “capture the value of their brand” once they are large enough to require a distributor, said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild.

A cash infusion from a distribution contract also would allow smaller breweries to expand operations, hire new employees and build up marketing teams to increase sales, Vallhonrat said.

Thursday’s ruling by state District Judge Karin Crump in Austin came after both the brewers and the Texas Alcoholic Beverage Commission sought summary judgments in the lawsuit. After considering depositions from both sides, Crump declared the law violates state constitutional protection for economic liberty.

[…]

Plaintiff Chip McElroy, founder of Live Oak Brewing Co. in Austin and one of the law’s most vocal critics, called it “unjust … unconstitutional … just plain wrong.”

“It took our property and gave it to them for free,” McElroy said Thursday.

Arif Panju, another Institute for Justice attorney in the case, said the ruling applies to out-of-state breweries as well. Miller said it protects all entrepreneurs looking to build up their businesses.

Miller said the ruling will help breweries going forward but does not address those who struck distribution deals while the 2013 law was in effect.

The Texas Alcoholic Beverage Commission has 30 days to file an appeal. A spokesman said agency lawyers are in touch with the Texas Attorney General’s Office and likely will appeal.

See here and here for the background, and here for a copy of the ruling. I hope the TABC will reconsider its inclination to appeal. This law serves no one’s interests except those of the Wholesale Beer Distributors of Texas. The state should not be spending its own resources pursuing a reversal of this ruling. As noted elsewhere in this story, if the original bill that forbade the microbreweries from selling their distribution rights had been about any other commodity, it would have been laughed out of the Capitol. Surely we have better things to do than this.

More from Austin 360:

Brewers and their fans might be rejoicing their victory right now, but they’re still holding their breaths over two other beer-related cases in Texas courts.

One case involves an issue that brewers unsuccessfully pushed for in the 2013 legislative session. As a result, Dallas’ Deep Ellum Brewing sued the Texas Alcoholic Beverage Commission last year to try and get breweries the ability to sell beer to-go from their facilities — something that wineries and distilleries in Texas are both able to do. (Operators of brewpubs, which sell food in addition to beer, also can sell their products to the public.)

Also, Cuvee Coffee decided to go to battle with the TABC over the issue of whether retailers can sell crowlers, which the TABC argues are one-use cans, rather than aluminum growlers, that only manufacturers of beer can sell.

Both cases are expected to be resolved within the next couple of weeks.

See here for more on the Deep Ellum lawsuit, and here for more on Cuvee Coffee. Let’s hope for a clean sweep. I’ll keep my eyes open for further news. The DMN has more.

Making the Heights a little less dry

From Swamplot:

beer

A GROUP CALLED the Houston Heights Beverage Coalition PAC is hoping to bring about a vote on allowing beer and wine sales in the technically dry section of the Houston Heights. The group published a notice on May 5th announcing an application to the city to start collecting the petition signaturesrequired to get the measure on a local option ballot.

[…]

The group’s immediate goal isn’t to do away with all alcohol restrictions, and the proposed ballot measure wouldn’t get rid of the current private-club workaround frequently employed by area bars and restaurants. But the proposal would lift existing barriers for stores trying to sell beer and wine to becarried away elsewhere — an issue that forced the recently closed Fiesta Mart at N. Shepherd and 24th St. to install its traditionally-in-the-parking-lot Beverage Mart a full 4 blocks away on the corner with 28th St. (across the northern boundary of the zone).

Here’s a map of the dry area, which hasn’t slowed the proliferation of places to dine and imbibe in the Heights. Many of them are east of Oxford, which puts them outside the zone. Others, like the Down House, do the “private club” dodge, while Torchy’s on 19th inherited a grandfathered license from a defunct icehouse. When I first read this story, I thought it would be about repealing the ban for eateries and drinkeries, but apparently not. The Press has since given some clarification about who and what is behind this.

The chair of the [Houston Heights Beverage Coalition PAC] is an attorney named Steve Reilley, a founding partner of the Thompson & Reilley law firm. He says that the main impetus for this action is that the group simply wants to have “a nice grocery store in the neighborhood.” He pointed out the recent closing of the Fiesta location in the area and says that retailers are unwilling to expand or move in owing to the inability to sell beer and wine. “They can’t make the money without the beer and wine sales. We hope we are able to bring these stores in if we are able to alter the statute,” he said. “We want the same nice stores you see in other parts of town and [to] have them be economically viable in The Heights.”

H-E-B is one of the grocery store chains that are eyeing building a store in The Heights, but nothing definitive has happened on that yet, according to Swamplot. We asked Reilley if H-E-B was one of the members of the Houston Heights Beverage Coalition. “I believe they have definitely expressed interest in it and they’re definitely going to support this,” he said. “It is my understanding that if it passes, they are going to very likely move into The Heights. To that degree, yes, they’re part of it, and I believe they will be part of it going forward.” We left a message for H-E-B’s director of public affairs in Houston to see if the grocery store chain has any comment, and will update this article if we receive a response.

Reilley said other grocery chains are part of the special interest group but said he wasn’t able to confirm that. He referred us to John Hatch of Texas Petition Strategies of Austin, a company that has been hired to oversee collecting signatures and, if the issue makes it onto the ballot, stumping for a passing vote. We left a phone message for Hatch but have not yet received a call back.

The press release says, “TPS has conducted over 300 petition efforts in 170 different Texas communities, with more than an 83% the efforts passing — including efforts in Brazoria County, Lumberton, Lubbock, Dallas and Fort Worth.”

I gather from recent activity on the Heights Kids message board that people have been out knocking on doors to gather petition signatures, with an aim of having something on the ballot this November. I also gather that some folks are not clear on the details of this issue – specifically, why part of the Heights is “dry”, what exactly that means, and why there needs to be an election to change it. That may add to their challenge. A this subsequent comment notes that there are some potentially tricky legal issues involved as well, meaning that however this shakes out someone may wind up suing over whatever the result is. Any lawyers in the crowd want to comment on that? In any event, we’ll keep an eye on this. I live outside the “dry” zone, so I (presumably) wouldn’t get to vote on this. If you’ve been asked to sign a petition, leave a comment and let us know. More here from Swamplot.

The latest example of how nuts our beer laws are

Ridiculous.

The latest flashpoint between Texas beer lovers and state beer law is a 32-ounce aluminum can that bars and restaurants fill with beer and sell to be consumed off-site. The can, called a crowler, is praised for its convenience and ability to keep beer fresh for longer than traditional to-go packaging.

The problem, state regulators say, is that the law prohibits retailers who do not have a manufacturing license from operating the filling machine.

On Tuesday, the Texas Alcoholic Beverage Commission made its most forceful statement to date, sending in agents to seize one from a bar that failed to cease operations after being ordered to do so.

The Cuvee Coffee Bar in Austin recounted the event on social media, giving it a Twitter hashtag of #crowlergate and setting the stage for another potential legal fight in the ongoing effort to change the alcohol code in Texas.

The friction began in late spring, when regulators heard about the growing popularity of crowlers and began investigating, often undercover. Several bars and restaurants were told to stop crowler sales and seven, including three in the Houston area, received letters threatening fines and a suspension of their beer and wine licenses.

They were given 30 days to remove the machine, which retails for $3,600.

In announcing Tuesday’s seizure at Cuvee, the TABC acknowledged the likelihood of a legal challenge.

“We know this issue is important to craft beer retailers and their customers, and we support all citizens’ right to petition the Commission, the Legislature or the courts if they feel a provision in the Alcoholic Beverage Code is unfair,” assistant chief for audit and investigations Dexter K. Jones said in a statement.

“However, we do not support the continued violation of the law just because a retailer disagrees with it. Cuvee Coffee ignored our repeated warnings and discussions, and that conduct resulted in TABC seizing the illegal equipment and subjecting its permit to a civil penalty. Other retailers who engage in illegal canning risk similar consequences.”

Local bar owners say crowlers have several advantages over growlers, the glass or metal containers more commonly used for to-go sales. Sealed cans keep beer fresher by insulating it from oxygen and any sunlight, they say, and they are convenient because customers don’t have to plan ahead and bring a growler with them when they go out.

This was the latest chapter in this story, but the first shots were fired back in July, and got heated up earlier this month. At its heart it’s a question of semantics – is a sealed one-use can fundamentally different than a reusable glass bottle? – but however you look at it, the bottom line is that our current laws make something that ought to be allowed illegal. This needs to change, partly because we’re not in 1933 any more, partly because the state allows wineries and distilleries freedom to operate that breweries and brewpubs don’t have, but mostly because it’s a bad deal for consumers. There’s already litigation over the state of Texas beer laws – it’s unclear whether this action will turn into a separate lawsuit or not – and I suppose there’s always hope for further change from the Lege. But one way or the other, this needs to change. Austin 360 and Eater Austin have more.

Craft beer lawsuit

This ought to be interesting.

On the same day merger talk surfaced regarding the world’s two biggest beer companies, a small Dallas brewery announced its own effort to shake up the industry in Texas.

Deep Ellum Brewing Co. launched the crowd-funded “Operation Six-Pack to Go” on Wednesday and said it had filed a federal lawsuit this week attempting to accomplish what multiple efforts in the Texas Legislature have failed to do: Give in-state breweries the right to sell their beverages directly to consumers for off-premise consumption.

While such sales are allowed at wineries, distilleries and brewpub restaurants, brewery visitors must drink any beer they buy before they leave.

John Reardon, the Deep Ellum founder leading the latest charge to allow these so-called dock sales, said antiquated laws hinder growth in the state’s rapidly expanding craft-beer industry. He and other craft brewers have long contended that to-go sales would provide startups with extra capital to expand and give all brewers a powerful marketing tool as people who visit the breweries take their product home and share with friends.

[…]

The lawsuit, filed in federal court in Austin against the Texas Alcoholic Beverage Commission and its three commissioners, calls the ban unconstitutional.

“The U.S. Constitution prohibits a state from creating irrational and arbitrary distinctions between similarly situated entities,” the lawsuit reads. “Texas, however, does just that by creating distinctions between various types of alcoholic beverage producers, which in turn harm those directly involved, including Texas businesses, citizens and tourists, and ultimately the Texas economy.”

Danielle Teagarden, a Seattle-based attorney who specializes in brewery law, said in these types of lawsuits states must provide some “rational” reason for the different treatment and show that it helps meet a legitimate state goal, such as facilitating taxation or maintaining orderly operation of the market. She said it is not a high standard and states have successfully defended their laws.

“It just has to move the dial a little bit toward that goal,” said Teagarden, who writes and edits the Brewery Law Blog.

[…]

The craft brewers should not expect any support from the wholesalers, said Rick Donley, president of the Beer Alliance of Texas, which represents some of the state’s biggest distributors.

Donley worked closely with craft brewers in 2013 to develop a package of successful bills that, among other things, gave production breweries the right to sell a limited amount of beer on site as long as it is poured and consumed there. This March, when the craft brewers returned to Austin in hope of lifting the ban on dock sales, Donley fought back strenuously. On Wednesday, he again insisted that the laws are not harming the craft segment of the industry.

“My god, they’re growing at 20 percent (annually),” he said. “Most companies would love to have that kind of growth.”

Donley said the crafts should wait until the 2-year-old reforms have been in place long enough to see their full impact in the marketplace before trying to further tinker with the three-tier system.

“We have done everything in the world, bending over backward to help craft brewers,” Donley said. “They’re just never satisfied. … They want more, more, more.”

Teagarden, the legal expert, noted that in 2011 a federal judge in Austin ruled against an importer that made similar claims about the different ways breweries and wineries are treated. However, Judge Sam Sparks said the company had failed to provide any evidence the TABC reasons were not rational. The regulators do not have the burden of proof, he wrote.

In another aspect of that same case, the plaintiffs claimed victory because Sparks overturned a TABC requirement that beer be labeled either “Beer” or “Ale,” a distinction that had no scientific basis and was often cited by out-of-state breweries as a reason they could not afford to do business in Texas.

At the time, fellow plaintiff Jester King Brewery of Austin highlighted one of the judge’s comments regarding the failed part of the lawsuit: “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.”

You can go here if you’d like to contribute to the crowdfunding effort for the lawsuit. There was another lawsuit filed in state court in December 2014 over the requirement for microbreweries to give away their territorial distribution rights for free. I don’t know where that stands right now, but keep it in mind when you read Rick Donley’s words about what a bunch of whiners the microbrewers are, as opposed to those paragons of virtue the distributors and big brewers who are only just trying to hold on to the advantages they’ve always had. We’ll see what the court makes of this one.

Making Pearland wet

It always amazes me that there are still cities that don’t allow alcohol sales in this day and age.

Absher is one of about 1,000 Pearland residents who have signed a petition to remove all restrictions on the city’s alcohol laws: opening up the possibility for bars, clubs and liquor stores within city limits. A group of residents is hoping to put the measure on the November ballot – they need to get almost 8,000 signatures by June 22.

Proponents say Pearland’s current liquor rules are unnecessarily restrictive and antiquated in a city that’s now grown to more than 130,000 people. They say tax dollars are unnecessarily going to nearby cities.

“It’s not stopping anyone from drinking in Pearland, it’s just putting that revenue into Houston or Friendswood or Sugarland,” said Kevin Murphy, a member of Leadership Pearland, a leadership program sponsored by the city’s chamber of commerce that’s spearheading the petition drive.

If Pearland gets its election, it would be part of a greater trend across Texas. In 2003, the state had 35 completely “wet” counties, or counties that had no restrictions on alcohol, and 51 completely “dry” counties, which banned alcohol sales, said Chris Porter, spokesman for the Texas Alcoholic Beverage Commission.

As of November, Texas had 49 completely “wet” counties and 10 completely “dry” ones, Porter said.

[…]

In 2007, Pearland removed a longtime restriction that required restaurants to register as “private clubs,” and patrons to sign up for those private clubs, to serve alcohol.

Now the city is looking to go even further. City councilman Tony Carbone said people visiting the city for conferences or other events “are not able to go out and have any drinks or anything.”

Removing restrictions would also help Pearland develop an identity as a city at a time when many of the new residents that have contributed to the suburb’s exponential growth look for entertainment elsewhere, like Houston.

“We want to have these things in Pearland,” said city councilman Greg Hill. “We don’t want to have to drive to Houston.”

Hill said most residents he’s spoken with are in favor of easing restrictions. But he said the hard part would be securing enough signatures to get it on the ballot, as many residents are not connected to local politics.

“The hard part is not going to be getting the vote to pass,” he said.

Anything that gets people more involved in their local politics is a good thing, if you ask me. I support this kind of effort on general principle, and I support it here. See this Community Impact story for more.

Wal-Mart sues Texas

It’s about booze.

Wal-Mart filed a lawsuit in an Austin federal court on Thursday challenging a Texas law that forbids the company from owning and operating liquor stores in the state.

The lawsuit says the Texas Alcoholic Beverage Commission code prevents Wal-Mart from obtaining a permit to sell hard alcohol because it is a publicly traded corporation.

Wal-Mart spokesman Lorenzo Lopez said the company is seeking a “fair and level playing field so we can offer our customers a full assortment of adult beverages.”

“This is counter to Texas’ belief in free enterprise and fair competition, limits our customer’s choice and keeps the price of spirits artificially high, all of which harm Texas consumers,” Lopez said in an email.

I’m not exactly a fan of Wal-Mart, but it’s hard to see the rationale for that law. I’m guessing it’s another remnant of Prohibition that never got updated or deleted, and now it has a constituency behind it in the existing retailers. Any lawyers want to weigh in on this one?

The battle over booze sales comes to Tomball

I always enjoy a good story about when a county or town votes on whether or not to repeal Prohibition-era restrictions on local alcohol sales.

Eight decades ago, the oil started flowing in Tomball and the whiskey soon followed. The boomtown began attracting a rough and rowdy crowd, prompting the town’s leaders a few years later to pass a law prohibiting the sale of hard liquor.

Two world wars, several social revolutions and a digital age later, the statute remains on the books. Only now, residents call this part of town historic “Old Town Tomball” and count the trendy shops and restaurants where one might imagine enjoying a Margarita or a Bloody Mary, in addition to the beer and wine sales that are now permitted.

That’s why many around town are looking with anticipation to Nov. 4, when voters will have a chance to repeal the Depression-era restriction.

“We would really be only going from moist to wet. We were never completely dry,” explains Bruce Hillegeist, president of the Greater Tomball Chamber of Commerce.

[…]

Tomball garnered the nickname “Oiltown USA” as the oil started gushing in 1933, the same year that Prohibition was repealed. Saloons and brothels soon sprouted up along the railroad tracks near the train depot, residents said.

“Boys were being bad. The area was getting too wild. So the town leaders decided to take control and ban the sale of all distilled spirits except beer or wine,” Wilson said.

Both the oil boom and brothels have long since gone bust.

“I don’t think the statute ever really toned things down back then,” she said. “They probably just drank more beer.”

The town’s mayor and chamber of commerce fully support this change as another step to draw people to Old Town Tomball, which is being revitalized by the opening of quaint shops and restaurants and the restoration of historic buildings.

As it happens, Tomball is named after a prohibitionist and fervent opponent of the demon rum, Thomas Ball. That’s because Ball – a lawyer and congressman credited with being the “father” of the Port of Houston – was responsible for routing the railroad tracks through this tiny community 32 miles northwest of Houston. The citizens of the town, which was then called Peck, were so grateful for their own train depot in 1907 that they changed the town’s name to honor him.

His connection to Tomball would later thwart an attempt to be elected governor, though. His opponent, James Ferguson, obtained photos of the town that bore his name. The images showed four saloons boasting nickel beer and 10-cent shots as well as houses of ill repute doing a brisk business.

Awesome. If there’s any organized opposition to this proposal, it went unreported in the story. Some of these referenda have been pretty hotly contested, but that doesn’t appear to be the case here. As I’ve said before, I don’t really understand the point of these laws and I support the efforts to repeal them. Good luck, Tomball.

The dry Heights

What’s a guy got to do to get a drink around here?

Heights dry map

Eighty years after the repeal of Prohibition – the anniversary of which came and went with hardly a toast last week – there is a sliver of Houston where the booze is still banned.

And for more than 100 years, that’s been just fine with the residents of the Houston Heights.

Back when it was a city on its own and not a historic Houston neighborhood in the shadows of the skyscrapers, Heights Mayor David Barker led a campaign to rid it of the saloons that were springing up on 19th Street.

One of those saloons had become famous due to Jennie Yon Yon, a monkey who would ascend into the sky every Sunday afternoon in a hot air balloon to entertain the festive crowds.

It was never, it seems, a moral issue pitting pros against antis. The good people of the City of Houston Heights simply wanted to protect their property values, says Sister Mary Agatha, an Incarnate Word teacher who grew up there, in the book she wrote on the neighborhood.

The boundaries of this island in alcoholic seas are not neat. But they basically follow an elongated area between the North Loop and I-10, bounded on the east by Studewood and on the west by North Durham.

There are irregularities to this rectangle, though, which have spread confusion over the years.

“The question of boundaries affected by the law comes more frequently to the Heights library for solution than any other purely local inquiry,” Sister Mary Agatha tells us. The Heights was annexed by Houston in 1918 and one would have thought that 15 years later, when the repeal of Prohibition opened the beer taps across the country, that would have applied to the dry Heights.

It didn’t. The legal underpinnings of that reality, however, were not resolved until 1937, when the Texas Supreme Court said the Heights was dry and would remain so until the people within the original boundaries of the neighborhood voted to make it other.

This is a subject that has been discussed in some depth – see, for example, Houstorian from 2007 and this Houston Heights newsletter from 2009; the Leader News had a story in November as well – but it’s one of the quirkier things about Houston’s history, so it’s always interesting. One of the irregularities as I understand it is that at least in some places, the eastern border is Oxford, not Studewood. This is why so many bars and restaurants with full bars have popped up on White Oak just west of Studewood, but very little has happened past where Onion Creek is. I’m not sure if this is the case at 11th Street or not; Berryhill has a full bar, but I’ve heard that they’re on a site that used to be an icehouse and they inherited a grandfathered exception to the dry regulations as a result. Like the story says, it’s confusing. I seriously doubt anything will change about the status quo. Residents of the neighborhood don’t want any more places that sell alcohol near them. Several of the existing bars and restaurants on White Oak encountered resistance from nearby residents that were concerned about noise and drunks, and some contention remains to this day. There are ways around the restrictions. Some places do BYOB, some operate as “private clubs” for which you have to buy a token membership before you can imbibe. One way or another it all works out.

Drinking al fresco

From the Things You Might Not Have Realized department.

beer

“It is a commonly-held belief that it’s illegal to walk down the street drinking a beer in Texas. However, that is not always the case.”

Those words, which we recently happened upon at the Texas Alcoholic Beverage Commission website, sparked wary excitement. We’d always chafed under the assumed strictness of Houston drinking laws, even fearing that we might receive a ticket for drinking in Houstonia’s unfenced Heights yard. Until, that is, we researched the Texas legal code, which states that public drinking is prohibited only in certain areas of state parks and wherever a city has specifically deemed it illegal. In 1994, the City of Houston successfully petitioned to ban drinking in public within the entire Central Business District (the area roughly bounded by Dowling Street and I-45, McGowen Street and Buffalo Bayou). On the one hand, you can’t drink on downtown’s streets, or Midtown’s or EaDo’s. On the other, it’s open season for open containers everywhere else.

Public intoxication, which the TABC defines as inebriation that “may endanger the person or another,” is illegal everywhere, of course. But there’s no law against strolling Allen Parkway with a Lone Star while taking in the skyline, or sipping margaritas to-go in Eleanor Tinsley Park. Just keep things classy and under control, not like you would in NOLA.

I’m a pretty moderate drinker these days, so this knowledge is of limited practical use to me. It’s still good to know, and hey, maybe it will be of more use to you. Link via Swamplot.

Amazon wine

You may soon be able to order wine from Amazon.com, depending on where you live.

Amazon.com Inc. AMZN -0.88% is planning an online marketplace for wine sales directly to consumers, said executives for several California wineries, marking the Seattle Web giant’s second foray into the business in three years.

Amazon hosted a workshop [last week] at a resort in Napa, Calif., and invited members of the Napa Valley Vintners association, said Terry Hall, a spokesman for the group. He said about 100 wineries attended the event.

At the event, Amazon said the marketplace would begin in the coming weeks and the online retailer will charge wineries a 15% commission of the sale price, as well as a monthly fee of about $40, according to people familiar with the workshop.

[…]

In 2009, Amazon pulled back from an effort to sell and ship wine after its partner, New Vine Logistics, suspended operations amid financial troubles. This latest effort would spare Amazon the cost and difficulty of shipping fragile and heavy wine bottles by passing that responsibility on to the vineyards themselves.

Wine sales online are challenging due to a patchwork of state-by-state rules that limit which companies can sell alcoholic beverages. And shippers must ensure that recipients signing for packages are at least 21-years-old, the legal limit.

The question you may be asking now is “Will I be able to order wine through Amazon to be shipped to Texas?” And the answer is…I’m not sure. Last year, the TABC cracked down on out of state resellers who were shipping to Texas without a state sales tax permit. The TABC addresses the question of direct shipping of wine to Texas consumers, and one of the things they say is “Under current state law, wholesalers / distributors are not authorized to ship wine directly to consumers in Texas”. However, out of state wineries may ship to Texas if they obtain a direct shipper’s permit, pay sales and excise taxes, and ship to a TABC permitted carrier. So I guess the question is whether Amazon would be considered a wholesaler/distributor in this scenario, or if the fact that the wineries themselves are doing the shipping opens a loophole for this to be permitted. I sense a legislative opportunity here, or failing that, future litigation. Anyone want to be a test case?

What does it mean to be a beer?

Boy, is that a deep question or what?

Until recently, beer drinkers who took their time to read the labels on their bottles or cans may have encountered some head-scratching fine print concerning Texas.

Underneath the name of Brooklyn Brewery’s Brooklyn Lager, for instance, was the note “In Texas, malt liquor.” Even closer inspection would reveal that the word “beer” did not appear on the label.

The labeling quirks were the result of a law that required all malt beverages (read: beer) containing more than 4 percent alcohol by weight to be labeled as either “ale” or “malt liquor” to be sold in Texas. The same law also prevented any drink with an alcohol content of more than 4 percent from being advertised in Texas as a “beer.”

“It made for a very awkward label,” said Eric Ottaway, the general manager of Brooklyn Brewery. “Try writing a description without using the word ‘beer.’”

That rule was overturned in December following a lawsuit, and the Texas Alcoholic Beverage Commission officially changed its labeling rules on July 24. Now, brewers can essentially label their products by whatever name they’d like, as long as the label includes the alcohol content. The judgment against TABC said its rules for labeling violated the First Amendment rights of beer makers by dictating what language they could and could not use to describe their products.

That would be the Jester King lawsuit, and it was a good thing for the industry and for us consumers. But you can’t talk about beermaking in Texas without bringing up the elephant in the room:

Small breweries have tried and failed to lobby the Legislature for changes to the code for a number of years, according to Leslie Sprague of Open the Taps, a craft brewing advocacy association. Sprague said the label law change could pressure the state into more changes in the future. Sprague said the laws Open the Taps is most interested in changing include rules that prevent breweries from selling beers on their premises and brewpubs from distributing their products to stores.

Earlier this year, the state Senate commissioned a working group of interested parties — including craft brewers, wine makers, distilleries, distributors and wholesalers — to consider other parts of the code that could be updated. The reason behind the group is at least in part to help avoid more future lawsuits, according to state Sen. Leticia Van de Putte, who helped organize it.

“Our alcohol beverage code has a lot of inconsistencies,” Van de Putte said.

“The alcoholic beverage code did not keep up with the market and technology,” she added, although she pointed out that law changes in the 1990s benefited the Texas wine industry. “It’s all over the place. I think there are things that we need to clean up,” she said.

Indeed. You can read more about Open The Taps and their efforts here and here. I do believe we will eventually fix what’s wrong with our anachronistic beer laws, as there is no good justification for them, but it won’t happen without a lot of people pitching in to make it happen.

There’s an app for binge drinking

There will be, anyway. And it’s not what you’re thinking because it’s the TABC that’s developing it.

As college students from across the nation head to Texas beaches for spring break, the Texas Alcoholic Beverage Commission is already making plans to have new tools at its disposal for next year’s partiers — mobile phone apps that it hopes will curb excessive and underage drinking.

One app will allow users to gauge their motor skills through a series of increasingly difficult tests, and the other would let anyone file a complaint against an establishment if it is suspected of serving alcohol to a minor or of breaking rules against serving too much alcohol to customers.

Although both apps are still in development, the former is designed to make people more aware of how much alcohol can affect them. Even basic tasks become difficult to perform as a person’s blood alcohol content rises.

The motor skills tests will be an educational component of a website, which will also have videos that discuss the dangers if individuals are unaware of their blood alcohol content.

The other app will enable anyone to file a complaint with the TABC to report suspected sales of alcohol to minors or overserving. Although those complaints can already be filed online,the TABC hopes that the app’s short-term costs will help to bring more minors — and the retailers who sell to them — into compliance.

I don’t know why any law enforcement agency would not have (or at least be developing) an app that would enable people to file complaints with them. It’s their most basic function, and it’s well-suited for that. How many underage drinkers will be narc’ed on as a result of this I couldn’t say, but having the app is still something I’d expect the TABC to do.

Can ban lawsuit moves to Travis County

Some new plaintiffs, too.

A group of river-related businesses has sued the City of New Braunfels, Texas Land Commissioner Jerry Patterson and Mark Vickery , executive director of the Texas Commission on Environmental Quality, over a ban on disposable containers on rivers within New Braunfels city limits that went into effect this year.

The suit, filed [last] Monday in a Travis County District Court, seeks a permanent injunction against the ordinance, claiming it is unconstitutional and effectively bans alcohol on the river. An attempted alcohol prohibition on the rivers was tossed out in 2000, in part because of a Texas Alcoholic Beverage Commission letter saying the city didn’t have the authority to ban alcohol.

[…]

Patterson is among the parties in this latest suit because he is the effective trustee of state-owned public waterways, the suit said. It said Vickery is named because the so-called can ban “unlawfully seeks to regulate and control municipal solid waste management activities that are within TCEQ’s jurisdiction.”

The story says that a “nonsuit” was filed by plaintiffs on Wednesday, which I presume means that the earlier litigation is no longer active. I welcome feedback on that from the lawyers out there.

Brewers win one in court

From CultureMap:

A small but significant victory was had for craft beermakers and drinkers Monday when a federal judge ruled (partially) in favor of Austin’s Jester King Brewery in a lawsuit against the Texas Alcoholic Beverage Commission.

Jester King filed a motion for summary judgement in Federal court in October over what it deemed to be violations of both its First and 14th Amendment rights.

Its First Amendment right to free speech, Jester King argued (along with two co-plaintiffs — a distribution company and an Austin restaurant) was violated by the TABC’s oft-criticized demand that any beer stronger than 4 percent be labeled as ale and anything with less than 4 percent alcohol by weight be labeled beer. The celebrated craft brewery argued that misusing technical terms as shorthand for alcoholic strength ignored hundreds of years of beer-making tradition and, in effect, misrepresented its brews and brewing processes to the public.

Jester King also claimed its 14th Amendment right to equal protection is obstructed by Texas’ three-tier system, which mandates that breweries (which produce beer on-site and distribute it to consumers) may not sell their wares on site while brewpubs (which produce and sell on-site) may not distribute it to consumers.

Here’s some background and analysis of the ruling, along with the wit and wisdom of Judge Sam Sparks, courtesy of Freetail’s Brewed And Never Battered blog. Briefly, this is what the ruling means:

To summarize, the ruling has the following effects:

TABC cannot prohibit you from telling customers or advertising where they can buy your products
TABC cannot require you to label your products by their definition of “beer” and “ale”
TABC cannot prohibit you from advertising the strength of your products by prohibiting words like “strong”, “prewar strength”, “full strength”, etc

There’s more to it than that, so go read all the links. The bits about how the TABC was essentially unable to justify its regulations was fascinating, and I hope inspiring to the next Legislature. That will be necessary, because the ruling did not strike down the regulations that forbid breweries to sell their wares directly to visitors even though wineries can do so. Keep pestering your State Rep and State Senator about this, because in the end it’s their job to make this happen. Plaintiff Jester King, I Love Beer, and Beer, TX have more.