The Shutdown and the First Amendment

What happens if a commercial speech licensing scheme is on hold -- and thus the speakers can't speak -- because of the federal government shutdown?

Federal law requires brewers to get pre-approval for their beer bottle labels, apparently in order to avoid "various false, misleading, obscene, or misleading statements, and the disparagement of competitors' products." But though the pre-approval generally comes within three weeks, it's now on hold because of the government shutdown. The motion for a preliminary injunction in Atlas Brew Works, LLC v. Whitaker (D.D.C. filed Jan. 15, 2019) argues that this violates the First Amendment. (The case is being litigated by Alan Gura, who is famous mostly for his Second Amendment cases, but who handles many First Amendment ones as well.) An excerpt:

Americans' fundamental right to free speech requires no Congressional authorization. The government can shut down speech regulators. It cannot shut down the First Amendment. The lack of political will to operate what might be a valid restriction on protected speech is the government's problem, not a speaker's. The Framers would have recoiled at the notion that anyone would fear criminal prosecution for speaking, merely because Congress has not enacted a bill funding the operation of a content-based prior restraint on their speech.

Yet such is the predicament facing Washington, D.C.'s Atlas Brew Works. Atlas, a neighborhood production craft brewer, sits on forty barrels of The Precious One—a perishable, seasonal apricot-infused India pale ale that Atlas cannot label for interstate shipment. The federal government stands ready to prosecute Atlas should it ship The Precious One, because it has not approved the content of that beer's keg label. On the other hand, for lack of Congressional appropriation, the government cannot review Atlas's application for label approval. And this is not Atlas's only label pending approval. Atlas must be able to continue publishing new labels to remain in business. As the government would have it, however, prosecuting Atlas for speaking without a license is "essential." The processing of Atlas's request for permission to speak, not so much.

The situation is unacceptable. This Court may be unable to solve the political branches' budgetary standoff, but it remains in the business of securing fundamental rights. The bottom line is that Atlas suffers a categorical prohibition of its constitutionally-protected speech, as well as an indefinite content-based prior restraint on that speech. The Court should immediately enjoin the government from requiring that Atlas obtain a legally-unavailable license to exercise fundamental First Amendment speech rights….

The First Amendment secures the right to publish beer labels. At least in part, beer labels come within the First Amendment's protection because "information on beer labels constitutes commercial speech." Rubin v. Coors Brewing Co., 514 U.S. 476, 481 (1995). "The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish … even a communication that does no more than propose a commercial transaction is entitled to the coverage of the First Amendment." Edenfield v. Fane, 507 U.S. 761, 767 (1993).

Atlas's consumers share the brewer's First Amendment interest in its beer labels. "If there is a right to advertise, there is a reciprocal right to receive the advertising …." Va. State Bd. of Pharmacy v. Va. Citizens Consumer Council, 425 U.S. 748, 757 (1976) (footnote omitted). "[That] interest is substantial: the consumer's concern for the free flow of commercial speech often may be far keener than his concern for urgent political dialogue." Bates v. State Bar of Ariz., 433 U.S. 350, 364 (1977). Doubtless many consumers would prefer using Atlas's beer labels than listening to federal budget debates. The two activities might even have a symbiotic relationship.

This is not to suggest that the government may not regulate beer labels. But as precedent condemning beer label censorship attests, such regulations must meet First Amendment standards. See Rubin, supra, 514 U.S. 476; Bad Frog Brewery, Inc. v. New York State Liquor Authority, 134 F.3d 87 (2d Cir. 1998); Flying Dog Brewery, LLLP v. Mich. Liquor Control Comm'n, 597 Fed. Appx. 342 (6th Cir. 2015); Hornell Brewing Co. v. Brady, 819 F. Supp. 1227 (E.D.N.Y. 1993).

At least for now and for the foreseeable future, the COLA requirement's application to Atlas's beer labels cannot survive First Amendment scrutiny…. TTB's now-conceptual, inoperative licensing mechanism is irrelevant. Indeed, the licensing of Atlas's speech is itself a constitutional impossibility …. When an administrative process exists by which people may obtain relief from a prohibition, but Congress has not appropriated money to fund that process, the underlying prohibition is subject to constitutional challenge. See Schrader v. Holder, 704 F.3d 980, 992 (D.C. Cir. 2013) ("[w]ithout the relief authorized by [18 U.S.C. §] 925(c), the federal firearms ban will remain vulnerable to a properly raised as-applied constitutional challenge")….

"Traditionally, First Amendment questions arising in the arena of 'commercial speech' have occasioned scrutiny under the standard of Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980)." "Under Central Hudson, protected speech may be regulated if the governmental interest is 'substantial.' Any such regulation must 'directly advance[] the governmental interest asserted.' When analyzing this requirement, the Supreme Court 'has commonly required evidence of a measure's effectiveness.' Finally, any regulation cannot be 'more extensive than is necessary to serve that interest,' a standard the government cannot satisfy 'if it presents no evidence that less restrictive means would fail.'" …

The government cannot argue that the current state of affairs reflects considered legislative judgment to advance any regulatory interest. When Congress enacted the FAA Act in 1935, it apparently assumed that someone would administer it. The FAA Act's licensing guidelines, and those found in the TTB's regulations, reflect the government's position in weighing the interests at stake. These do not prescribe a categorical prohibition, which went into effect as an unintended consequence of a political dispute wholly unrelated to beer labels. Atlas suffers from a prohibition of its protected First Amendment speech unsupported by any regulatory concerns about that speech….

Whatever the government's concerns with beer labels, those concerns led it to regulate, not to prohibit. No "careful calculation" supports the current prohibition on the publication of Atlas's beer labels in interstate commerce. Lorillard Tobacco Co. v. Reilly, 533 U.S. 525 (2001), is instructive. In that case, the Supreme Court accepted that the government has a substantial interest in preventing underage tobacco use, "but it is no less true that the sale and use of tobacco products by adults is a legal activity." In considering the constitutionality of restrictions on outdoor tobacco advertising, the Court offered, "[w]e must consider that tobacco retailers and manufacturers have an interest in conveying truthful information about their products to adults, and adults have a corresponding interest in receiving truthful information about tobacco products." Id. The state lost. "The breadth and scope of the regulations, and the process by which the Attorney General adopted the regulations, do not demonstrate a careful calculation of the speech interests involved." Id. at 562.

Even if government were permitted to conjure an interest in support of the present prohibition on beer label speech, that prohibition would only be "another case of 'burn[ing] the house to roast the pig.'" Sable Commc's of Cal., Inc. v. FCC, 492 U.S. 115, 131(1989) (quoting Butler v. Michigan, 352 U.S. 380, 383 (1957)). "[A] speech regulation cannot unduly impinge on the speaker's ability to propose a commercial transaction and the adult listener's opportunity to obtain information about products." Lorillard, 533 U.S. at 565. The current prohibition bars Atlas from offering The Precious One on tap outside the District of Columbia, makes it impossible for Atlas to sell any of its planned new beers, and prevents Atlas from updating the labels for existing products. Regardless of the government's supposed regulatory interest, this prohibition goes too far….

Central Hudson left open the question of whether traditional prior restraint doctrine applies to commercial speech, suggesting in dicta that it "may not apply." Central Hudson, 447 U.S. at 571 n.13. The D.C. Circuit has held the question open as well, Pearson v. Shalala, 164 F.3d 650, 660 (D.C. Cir. 1999), but courts tend to apply the prior restraint doctrine to commercial speech. "[T]he prior restraint doctrine does play a role in evaluating the regulation of commercial speech." Nutritional Health Alliance v. Shalala, 144 F.3d 220, 227 (2d Cir. 1998); Desert Outdoor Advertising v. City of Moreno Valley, 103 F.3d 814, 818-19 (9th Cir. 1996) (striking down prior restraint on commercial billboards); In re Search of Kitty's East, 905 F.2d 1367, 1371 (10th Cir. 1990); but see Disc. Tobacco City & Lottery, Inc. v. United States, 674 F.3d 509, 532-33 (6th Cir. 2012). The Fourth Circuit recently upheld a prior restraint on commercial speech not because the speech was commercial in nature, but because it was "likely false or misleading." Handsome Brook Farm, LLC v. Humane Farm Animal Care, Inc., 700 Fed. Appx. 251, 264 (4th Cir. 2017).

The government cannot require Atlas to obtain a license in order to speak—a license aggressively reviewed for content under rules mandating some statements and forbidding others, as interpreted by the licensing authority—and then shutter the licensing office indefinitely. No one knows when the TTB will reopen. That question that can only be answered by reference to the stubbornness of the President and Congressional leaders in sticking to their respective positions regarding the construction of a wall on the Mexican border. The delay is not "specified," nor has it been "brief." If TTB opens tomorrow, Atlas would still have to wait perhaps another three weeks for a decision—or more, considering what would be TTB's substantial backlog. The commercial aspects of Atlas's speech should make no difference in the analysis. "Although the interests of the commercial speech at issue here may not equate with those of political speech, we agree that the special protections of the First Amendment justified the exercise of equitable jurisdiction in this case." Kitty's East, 905 F.2d at 1371 (footnote omitted). The Court cannot force the TTB to review Atlas's label, but it should lift the prior restraint….