TABC Changes What it Means to Be a Beer

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.

The law’s definition of what is a beer did not fit what brewers were producing, said Ron Extract, the co-owner of Austin’s Jester King brewery. The brewery was one of the plaintiffs in the suit against the TABC, along with beer distributor Authentic Beverages and Zax, an Austin restaurant and bar.

The naming rule dates back to at least 1977, when the entire Alcoholic Beverage Code was rewritten. According to TABC spokeswoman Carolyn Beck, the rule could have existed as far back as 1935, when alcohol laws were introduced following the repeal of Prohibition.

Ales, lagers and malt liquor — and, for that matter, porters and stouts — are all essentially made of the same ingredients, Extract said, but differ in ways separate from alcohol content.

“We now feel we can label our beers more truthfully than before,” said Extract. The Texas rules not only contradicted federal definitions for certain types of beer, he said, but common sense as well.

“It made Texas kind of a running joke around the country,” Extract said. “The laws were trying to define things to mean something they didn’t mean.”

In his decision affirming businesses' right for free speech, U.S. District Judge Sam Sparks humorously wrote that TABC’s old rules could be used to justify any restriction on commercial speech.

“TABC’s argument, combined with artful legislative drafting, could be used to justify any restrictions on commercial speech,” Sparks wrote. “For instance, Texas would likely face no [legal] obstacle if it wished to pass a law defining the word ‘milk’ to mean ‘a nocturnal flying mammal that eats insects and employs echolocation.’”

Sparks also noted that state did very little to argue in favor of the new rules, writing that the agency "submitted virtually no summary judgment evidence" against the lawsuit's First Amendment claims.

Beck, the TABC spokeswoman, said the agency was already reviewing the labeling rule prior to the lawsuit, and continues to review the code for potential liabilities.

“Following the judge’s ruling on the Authentic Beverages lawsuit, TABC has been reviewing statutes and rules to see if there are any other regulations that leave the agency vulnerable to the possibility of additional legal action," Beck said.

Sparks threw out a second challenge to TABC rules included in the lawsuit. The plantiffs challenged the practice of having different rules for breweries and brewpubs under both the Equal Protection Act and the Commerce Clause. 

The new rules do not require brewers to change their labels — so any that were designed under the old rules are still legal. But those beer makers that want clarity on their products are free to do so.

The revised labeling law may have had a more immediate impact on the variety of beers available in the state. Applications for beer labels increased from 1,738 in fiscal year 2011 to an estimated 2,685 in fiscal year 2012, according to the TABC. That’s a 54 percent increase. The commission began allowing the labels that follow the new rules about halfway through fiscal 2012.

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.