The I-1183 coalition has filed a lawsuit in Thurston County Superior Court challenging the rules adopted by the Washington State Liquor Control Board in the implementation of I-1183, the liquor privatization initiative approved last November.
The I-1183 coalition includes the Washington Restaurant Association, the Northwest Grocery Association and Costco Wholesale Corp.
The lawsuit claims that the LCB is circumventing the language of the initiative by arbitrarily restricting the wholesale distribution and pricing of wine and spirits. This approach, according to the coalition, erodes small businesses’ ability to compete in the marketplace, protects distributors from competition and increases prices for consumers.
The coalition also claims that despite public opposition from businesses and consumers, the LCB has ignored the costs of its actions and has opted instead to violate the language of the initiative, creating anti-competitive barriers for Washington businesses.
The lawsuit challenges the following rules in the board’s implementation package:
The I-1183 coalition contends that these rules violate statutory rulemaking requirements and represent action beyond and contrary to the LCB’s authority.
Additionally, the coalition believes this rulemaking violates the Supremacy and Commerce clauses, as well as the Washington State Constitution.
The coalition says the LCB rules will chiefly benefit two large, out-of-state distributors by restricting competition, limiting product movement and availability, and imposing unauthorized fees and restrictions on Washington businesses.
“Thousands of small businesses throughout the state will be harmed by the LCB’s rules, which impede competition and transfer market power away from the consumer,” said Anthony Anton, WRA president and CEO. “We recognize how difficult this transition has been for the LCB, and are hopeful they will reverse course and fix these erroneous rules.”
The Liquor Control Board said it is reviewing the lawsuit filed plaintiffs who were the key authors and the primary financial supporters of Initiative 1183.
A statement from the LCB said: “The plaintiffs’ media message is one-sided and inaccurate.
“The Board is confident in the rules drafted to implement I-1183. The Board’s rulemaking was based on its own interpretation, with advice and counsel of its assigned Sr. Assistant Attorney General. It was fully vetted as the soundest legal interpretation.
“The plaintiffs allege in the lawsuit itself that the Board made the rules this way because it didn’t like Initiative 1183 or that the Board’s rules make the cost of liquor so high. This is not true.
“As a public agency, the Board was neutral throughout the campaign and implementation, and successfully defended the initiative in the Supreme Court against a constitutional challenge. The truth is that the price of liquor is higher because of 10 percent fees at distribution and 17 percent at retail that the plaintiffs themselves drafted and voters approved in 2011. The taxes are the exact same spirits and liter taxes customers have paid for many years. A Frequently Asked Questions (FAQ) fact sheet on liquor prices is available on the Board website.
“The Board rule-making process was open, transparent and extended over several months. The Board and staff took extraordinary steps in order to be inclusive of all impacted parties, including the plaintiffs. Unfortunately, there are many different financial relationships that are impacted by I-1183. What benefits one entity is likely to negatively impact others.
“More information about Initiative 1183 as well as an audio clip of the February 22, 2012, public hearing is available on the LCB website at www.liq.wa.gov.”
