SENATE AMENDED

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DONATUCCI, J. TAYLOR, BELFANTI, BEYER, BRENNAN, CARROLL, DALEY, DeLUCA, EVERETT, FRANKEL, HALUSKA, HARHAI, JOSEPHS, MARSHALL, MELIO, MILLER, M. O'BRIEN, PAYNE, PETRI, PYLE, REICHLEY, SIPTROTH, K. SMITH, WATSON, W. KELLER, DENLINGER, FABRIZIO, GOODMAN, HARKINS AND PHILLIPS, FEBRUARY 6, 2009

SENATOR PIPPY, LAW AND JUSTICE, IN SENATE, AS AMENDED, JUNE 15, 2010   

AN ACT

Amending the act of April 12, 1951 (P.L.90, No.21), entitled, as

reenacted, "An act relating to alcoholic liquors, alcohol and

malt and brewed beverages; amending, revising, consolidating

and changing the laws relating thereto; regulating and

restricting the manufacture, purchase, sale, possession,

consumption, importation, transportation, furnishing, holding

in bond, holding in storage, traffic in and use of alcoholic

liquors, alcohol and malt and brewed beverages and the

persons engaged or employed therein; defining the powers and

duties of the Pennsylvania Liquor Control Board; providing

for the establishment and operation of State liquor stores,

for the payment of certain license fees to the respective

municipalities and townships, for the abatement of certain

nuisances and, in certain cases, for search and seizure

without warrant; prescribing penalties and forfeitures;

providing for local option, and repealing existing laws,"

further providing for definitions, for malt and brewed

beverages manufacturers', distributors' and importing

distributors' licenses, for malt and brewed beverages

alternating brewers' licenses, for distributors' and

importing distributors' restrictions on sales, storage, etc.,

and for breweries.,

This act shall be construed as an enactment of the General

Assembly's support for the 3-tier system for alcoholic beverages

production, distribution and sale that, through uniform

Statewide regulation, provides this Commonwealth regulatory

authority over the production, storage, distribution,

transportation, sale and consumption of alcoholic beverages by

and to its citizens, for the benefit of the public health and

welfare and this Commonwealth's economic stability. The General

Assembly intends that the liquor laws shall be enforced in order

to restrict sales to minors, collect all State and local taxes

due on the commerce in alcoholic beverages, establish open,

transparent and accountable distribution systems for alcoholic

beverages and the intent to exercise, to the fullest extent

allowed, all the authority granted a state under the Twenty-

first Amendment.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  The definition of "distributor" in section 102 of

the act of April 12, 1951 (P.L.90, No.21), known as the Liquor

Code, reenacted and amended June 29, 1987 (P.L.32, No.14) and

amended May 31, 1996 (P.L.312, No.49), is amended and the

section is amended by adding definitions a definition to read:

<--

Section 102.  Definitions.--The following words or phrases,

unless the context clearly indicates otherwise, shall have the

meanings ascribed to them in this section:

* * *

"Contract brewing" shall mean the arrangement by which a

<--

manufacturer of malt or brewed beverages hires or contracts with

another manufacturer of malt or brewed beverages to produce its

malt or brewed beverage.

* * *

"Distributor" shall mean any person licensed by the board to

engage in the purchase only from [Pennsylvania] small certain 

<--

manufacturers authorized by subsection (a.3) and certified by

<--

the board and from importing distributors and the resale of malt

or brewed beverages, except to importing distributors and

distributors, in the original sealed containers as prepared for

the market by the manufacturer at the place of manufacture, but

not for consumption on the premises where sold, and in

quantities of not less than a case or original containers

containing one hundred twenty-eight ounces or more which may be

sold separately.

* * *

"Small manufacturer" shall mean a manufacturer with a maximum

<--

production of seventy-five thousand barrels of malt or brewed

beverages per year. In determining the annual production, the 

small manufacturer shall include a portion of the production of

any other manufacturer who holds, directly or indirectly, an

ownership interest in it or with whom it has a distribution

agreement in this Commonwealth. If another manufacturer holds,

directly or indirectly, an ownership interest in the small

manufacturer, the percentage of that interest shall be applied

to the manufacturer's total production of malt or brewed

beverage products to determine the amount that shall be included

in determining the maximum production for the small

manufacturer. If the small manufacturer has a distribution

agreement with a larger manufacturer for distribution in this

Commonwealth, the distributing manufacturer's total distribution

in this Commonwealth shall be added to the small manufacturer's

production to determine whether the seventy-five thousand barrel

mark has been reached. Only malt or brewed beverages for which

the small manufacturer is responsible for paying the malt

beverage tax shall be considered in calculating the total number

of barrels produced per year by the small manufacturer.

* * *

Section 2.  Section 431 of the act, amended December 20, 1996

(P.L.1513, No.196), December 21, 1998 (P.L.1202, No.155) and

December 8, 2004 (P.L.1810, No.239), is amended to read:

Section 431.  Malt and Brewed Beverages Manufacturers',

Distributors' and Importing Distributors' Licenses.--(a)  The

board shall issue to any person a resident of this Commonwealth

of good repute who applies therefor, and pays the license fee

hereinafter prescribed, a manufacturer's license to produce and

manufacture malt or brewed beverages, and to transport, sell and

deliver malt or brewed beverages from the place of manufacture

only in original containers, in quantities of not less than a

case or original containers containing one hundred twenty-eight

ounces or more which may be sold separately anywhere within the

Commonwealth. The application for such license shall be in such

form and contain such information as the board shall require.

All such licenses shall be granted for a license period to be

determined by the board. Every manufacturer shall keep at his or

its principal place of business, within the Commonwealth daily

permanent records which shall show, (1) the quantities of raw

materials received and used in the manufacture of malt or brewed

beverages and the quantities of malt or brewed beverages

manufactured and stored, (2) the sales of malt or brewed

beverages, (3) the quantities of malt or brewed beverages stored

for hire or transported for hire by or for the licensee, and (4)

the names and addresses of the purchasers or other recipients

thereof. Every place licensed as a manufacturer shall be subject

to inspection by members of the board or by persons duly

authorized and designated by the board, at any and all times of

the day or night, as they may deem necessary, for the detection

of violations of this act or of the rules and regulations of the

board, or for the purpose of ascertaining the correctness of the

records required to be kept by licensees. The books and records

of such licensees shall at all times be open to inspection by

members of the board or by persons duly authorized and

designated by the board. Members of the board and its duly

authorized agents shall have the right, without hindrance, to

enter any place which is subject to inspection hereunder or any

place where such records are kept for the purpose of making such

inspections and making transcripts thereof. Whenever any checks

issued in payment of filing and/or license fees shall be

returned to the board as dishonored, the board shall charge a

fee of five dollars ($5.00) per hundred dollars or fractional

part thereof, plus all protest fees, to the maker of such check

submitted to the board. Failure to make full payment or pay the

face amount of the check in full and all charges thereon as

herein required within ten days after demand has been made by

the board upon the maker of the check or upon notification to

the board by the Department of Revenue or the Department of

Labor and Industry of its objection, the license of such person

shall immediately become invalid and shall remain invalid until

payment and all charges are received by the board.

(a.1)  [Any [out of State] Except for manufacturers certified

<--

by the board to engage in self-distribution, any manufacturer

whose products are sold and delivered within this Commonwealth

shall be authorized: to rent, lease or otherwise acquire space

from an importing distributor or bailee for hire authorized by

this act at no more than two locations per manufacturer for use

of a segregated portion of a warehouse or other storage facility

owned or operated by the importing distributor or bailee for

hire at which the [out of State] manufacturer may store,

repackage and sell malt or brewed beverages to any importing

distributor to whom the [out of State] manufacturer has granted

distribution rights pursuant to subsection (b) or to any

purchaser outside this Commonwealth for delivery outside this

Commonwealth; or to ship to its storage facility outside this

Commonwealth. Such manufacturer may compensate the importing

distributor or bailee for hire for any related storage,

repackaging or delivery services. The [out of State] 

manufacturer must file with the Liquor Control Board the rate of

compensation to be paid. No manufacturer may rent, lease or

<--

otherwise acquire space for more than two storage facilities. A

separate written application must be filed to acquire storage

licenses, and the board may establish the information that must

be provided on the application. The initial filing must be made

prior to any payments being made, and any subsequent changes in

the rate of compensation must be filed within thirty days of any

such change. Nothing in this act authorizing storage facilities

for [out of State] manufacturers is intended to make any change

in the manner malt or brewed beverages are distributed through

the three-tier system.

[(a.2)  The board shall issue to [a holder of a

<--

manufacturer's license] a manufacturer no more than two storage

<--

licenses per manufacturer to cover storage facilities separate

from the location of the manufacturing facility. A manufacturer

may use its storage facilities to receive, store, repackage,

sell to an importing distributor or distributor and distribute

<--

malt or brewed beverages in the same manner as it can at its

place of manufacture or it may rent, lease or otherwise acquire

space from an importing distributor or bailee for hire

authorized by this act in the same manner as [an out of State] a 

<--

manufacturer as set forth in subsection (a.1). No manufacturer

<--

may rent, lease or otherwise acquire space for more than two

storage facilities under subsection (a.1) or this subsection. A

separate written application must be filed to acquire storage

licenses, and the board is empowered to establish what

information must be provided on that application. Nothing in

this act authorizing off-site storage facilities for

manufacturers is intended to make any change in the manner malt

or brewed beverages are distributed through the three-tier

system.]

<--

(a.3)  In order to continue to be eligible as a small

<--

manufacturer, the small manufacturer may not produce in excess

of seventy-five thousand barrels of malt or brewed beverages per

year, as calculated under section 102. The board shall certify

that a manufacturer is eligible as a small manufacturer upon the

written request of the manufacturer, on a form prescribed by the

board, for such certification. A request for certification may

be submitted by a manufacturer that holds a manufacturer's

license and believes it is eligible as a small manufacturer or

it may be submitted by a manufacturer for a manufacturer's

license.

(a.4)  A small manufacturer that is located outside of this

Commonwealth and holds a manufacturer's license is deemed to

have submitted to the jurisdiction of the board, any other

Commonwealth agency and the courts of this Commonwealth for

purposes of enforcement of this section and any related laws,

rules or regulations. The small manufacturer shall also be

subject to citation by the enforcement bureau under section 471

and nonrenewal by the board under section 470. The Department of

Revenue may promulgate regulations requiring the filing of

periodic reports by a small manufacturer subject to the

provisions of this subsection to ensure compliance with the

provisions of this section.

(a.5)  A small manufacturer that holds a valid manufacturer's

license may deliver malt or brewed beverages it has manufactured

to any holder of any retail license issued by the board if it

uses its own vehicles. A small manufacturer may not use the

services of a transporter-for-hire or other commercial carrier

to deliver malt or brewed beverages in this Commonwealth. A

small manufacturer that delivers malt or brewed beverages under

this subsection shall not be entitled to utilize storage

services or facilities otherwise available under subsection

(a.1) or (a.2).

(a.3)  Any manufacturer of malt or brewed beverages that

<--

holds a valid manufacturer's license and whose total production

in the prior calendar year did not exceed one hundred fifty

thousand barrels and which has been certified by the board as

eligible to engage in self-distribution may deliver annually up

to seventy-five thousand barrels of malt or brewed beverages

that is has manufactured or has had contract-brewed for it,

excluding malt or brewed beverages that it has contract-brewed

for another, directly to any holder of any hotel, club,

restaurant, eating place retail dispenser, importing distributor

or distributor license issued by the board. A manufacturer of

malt or brewed beverages that engages in self-distribution may

use its own vehicles, leased vehicles or the services of a

transporter for hire or other common carrier to deliver such

quantity of this malt or brewed beverages to the holder of any

hotel, club, restaurant, eating place retail dispenser,

importing distributor or distributor license issued by the board

in this Commonwealth. A manufacturer of malt or brewed beverages

that engages in self-distribution may not terminate its primary

relationship with an importing distributor in favor of self-

distribution of any brand or brands previously distributed by

such importing distributor unless the termination complies with

section 431(d)(4).

(a.4)  In order to be eligible and continue to be eligible

for the self-distribution rights set forth in this section, a

manufacturer of malt or brewed beverages must submit information

as required by the board on a form and at such times as

prescribed by the board. This information shall include a

certification that total production did not exceed one hundred

fifty thousand barrels in the prior calendar year and

affirmation that self-distribution will not exceed the annual

barrelage limits set forth in this section. The board shall

review the written request of the manufacturer and grant

certification if the manufacturer meets the requirement of this

section. In determining the annual barrel production, the board

shall include a portion or the production of any other

manufacturer who holds, directly or indirectly, an ownership

interest in this applicant or with whom this applicant has a

distribution agreement in this Commonwealth. If another

manufacturer holds, directly or indirectly, an ownership

interest in the applicant, the percentage of that interest shall

be multiplied by the owning manufacturer's total production of

malt or brewed beverage products to determine the amount that

shall be added in determining the production of the applicant.

If the applicant has a distribution agreement with another

manufacturer for distribution in this Commonwealth, the

distributing manufacturer's total self-distribution in this

Commonwealth shall be added to the manufacturer's self-

distribution to determine whether the seventy-five thousand

barrel mark has been reached. Only such malt or brewed beverages

for which the manufacturer is responsible for paying the malt

beverage tax shall be considered in calculating the total number

of barrels produced per year by the manufacturer, except to the

extent provided in this subsection for adjustment in the case of

an owning manufacturer or a manufacturer with which it has a

distribution agreement.

(a.5)  Prior to being certified to engage in self-

distribution, a manufacturer of malt or brewed beverages that

holds a manufacturer's license, if not already registered in

this Commonwealth, shall obtain a certificate of authority to do

business in this Commonwealth from the Corporation Bureau of the

Department of State. By submitting an application to engage in

self-distribution, a manufacturer of malt or brewed beverages is

deemed to have submitted to the jurisdiction of the board, any

other Commonwealth agency and the courts of this Commonwealth

for purposes of enforcement of this section and any related

laws, rules or regulations. The manufacturer shall also be

subject to and comply with section 444. The Department of

Revenue may promulgate regulations requiring the filing of

periodic reports by any manufacturer subject to this subsection

to ensure compliance with this section.

(a.6)  A manufacturer of malt or brewed beverages that has

been certified as eligible to engage in self-distribution may

distribute malt or brewed beverages it has manufactured to the

holder of any importing distributor, distributor or hotel, club,

restaurant, eating place retail dispenser license issued by the

board if it uses its own vehicles which are marked and

identified as required pursuant to board regulations, or uses

the services of a transporter-for-hire. A manufacturer that

distributes malt or brewed beverages under this subsection shall

not be entitled to utilize for sales or deliveries to importing

distributor, distributor or hotel, club, restaurant or eating

place retail dispenser licensees storage services or facilities

otherwise available under subsection (a.1).

(b)  The board shall issue to any reputable person who

applies therefor, and pays the license fee hereinafter

prescribed, a distributor's or importing distributor's license

for the place which such person desires to maintain for the sale

of malt or brewed beverages, not for consumption on the premises

where sold, and in quantities of not less than a case or

original containers containing one hundred twenty-eight ounces

or more which may be sold separately as prepared for the market

by the manufacturer at the place of manufacture. The board shall

have the discretion to refuse a license to any person or to any

corporation, partnership or association if such person, or any

officer or director of such corporation, or any member or

partner of such partnership or association shall have been

convicted or found guilty of a felony within a period of five

years immediately preceding the date of application for the said

license: And provided further, That, in the case of any new

license or the transfer of any license to a new location, the

board may, in its discretion, grant or refuse such new license

or transfer if such place proposed to be licensed is within

three hundred feet of any church, hospital, charitable

institution, school or public playground, or if such new license

or transfer is applied for a place which is within two hundred

feet of any other premises which is licensed by the board: And

provided further, That the board shall refuse any application

for a new license or the transfer of any license to a new

location if, in the board's opinion, such new license or

transfer would be detrimental to the welfare, health, peace and

morals of the inhabitants of the neighborhood within a radius of

five hundred feet of the place proposed to be licensed. The

board shall refuse any application for a new license or the

transfer of any license to a location where the sale of liquid

fuels or oil is conducted. The board may enter into an agreement

with the applicant concerning additional restrictions on the

license in question. If the board and the applicant enter into

such an agreement, such agreement shall be binding on the

applicant. Failure by the applicant to adhere to the agreement

will be sufficient cause to form the basis for a citation under

section 471 and for the nonrenewal of the license under section

470. If the board enters into an agreement with an applicant

concerning additional restrictions, those restrictions shall be

binding on subsequent holders of the license until the license

is transferred to a new location or until the board enters into

a subsequent agreement removing those restrictions. If the

application in question involves a location previously licensed

by the board, then any restrictions imposed by the board on the

previous license at that location shall be binding on the

applicant unless the board enters into a new agreement

rescinding those restrictions. The board shall require notice to

be posted on the property or premises upon which the licensee or

proposed licensee will engage in sales of malt or brewed

beverages. This notice shall be similar to the notice required

of hotel, restaurant and club liquor licensees.

Except as hereinafter provided, such license shall authorize

the holder thereof to sell or deliver malt or brewed beverages

in quantities above specified anywhere within the Commonwealth

of Pennsylvania, which, in the case of distributors, have been

purchased only from persons licensed under this act as small 

<--

manufacturers or importing distributors, and in the case of

importing distributors, have been purchased from manufacturers

or persons outside this Commonwealth engaged in the legal sale

of malt or brewed beverages or from manufacturers or importing

distributors licensed under this article. In the case of an

importing distributor, the holder of such a license shall be

authorized to store and repackage malt or brewed beverages owned

by a manufacturer at a segregated portion of a warehouse or

other storage facility authorized by section 441(d) and operated

by the importing distributor within its appointed territory and

deliver such beverages to another importing distributor who has

been granted distribution rights by the manufacturer as provided

herein. The importing distributor shall be permitted to receive

a fee from the manufacturer for any related storage, repackaging

or delivery services. In the case of a bailee for hire hired by

a manufacturer, the holder of such a permit shall be authorized:

to receive, store and repackage malt or brewed beverages

produced by that manufacturer for sale by that manufacturer to

importing distributors to whom that manufacturer has given

distribution rights pursuant to this subsection or to purchasers

outside this Commonwealth for delivery outside this

Commonwealth; or to ship to that manufacturer's storage

facilities outside this Commonwealth. The bailee for hire shall

be permitted to receive a fee from the manufacturer for any

related storage, repackaging or delivery services. The bailee

for hire shall, as required in Article V of this act, keep

complete and accurate records of all transactions, inventory,

receipts and shipments and make all records and the licensed

areas available for inspection by the board and for the

Pennsylvania State Police, Bureau of Liquor Control Enforcement,

during normal business hours.

Each [out of State] manufacturer of malt or brewed beverages,

excluding small manufacturers except for those manufacturers of

<--

malt or brewed beverages certified as eligible to engage in

self-distribution, whose products are sold and delivered in this

Commonwealth shall give distributing rights for such products in

designated geographical areas to specific importing

distributors, and such importing distributor shall not sell or

deliver malt or brewed beverages manufactured by the [out of

State] manufacturer to any person issued a license under the

provisions of this act whose licensed premises are not located

within the geographical area for which he has been given

distributing rights by such manufacturer. Should a licensee

accept the delivery of such malt or brewed beverages in

violation of this section, said licensee shall be subject to a

suspension of his license for at least thirty days: Provided,

That the importing distributor holding such distributing rights

for such product shall not sell or deliver the same to another

importing distributor without first having entered into a

written agreement with the said secondary importing distributor

setting forth the terms and conditions under which such products

are to be resold within the territory granted to the primary

importing distributor by the manufacturer.

When a [Pennsylvania] small manufacturer of malt or brewed

<--

beverages licensed under this article names or constitutes a

distributor or importing distributor as the primary or original

supplier of his product, he shall also designate the specific

geographical area for which the said distributor or importing

distributor is given distributing rights, and such distributor

or importing distributor shall not sell or deliver the products

of such manufacturer to any person issued a license under the

provisions of this act whose licensed premises are not located

within the geographical area for which distributing rights have

been given to the distributor and importing distributor by the

said manufacturer: Provided, That the importing distributor

holding such distributing rights for such product shall not sell

or deliver the same to another importing distributor without

first having entered into a written agreement with the said

secondary importing distributor setting forth the terms and

conditions under which such products are to be resold within the

territory granted to the primary importing distributor by the

manufacturer. Nothing herein contained shall be construed to

prevent any manufacturer from authorizing the importing

distributor holding the distributing rights for a designated

geographical area from selling the products of such manufacturer

to another importing distributor also holding distributing

rights from the same manufacturer for another geographical area,

providing such authority be contained in writing and a copy

thereof be given to each of the importing distributors so

affected.

(b.1)  (1)  Any person in this Commonwealth or elsewhere who

shall purchase or in any manner whatsoever acquire or otherwise

succeed to the business of a manufacturer, assets or rights to

import, market, ship into this Commonwealth or distribute a

brand of beer, or to use and exploit any trademark incorporated

as part of a brand of beer produced by such a manufacturer shall

be obligated to all terms of the manufacturer's franchise

agreements in effect on the effective date of the purchase,

acquisition or succession, or, if earlier, at the time the

agreement contemplating the purchase, acquisition or succession

is actually made.

(2)  "Purchase" or "acquisition," for purposes of this

section, includes, but is not limited to, a purchase,

acquisition, lease, license or assignment of all or a

controlling interest in the capital stock or operating assets,

including brand trademarks rights; merger; any corporate

reorganization or consolidation; and also, without limitation,

any license, cross-license, joint venture or other agreement or

arrangement, directly or indirectly, transferring, substituting

or materially changing the person or persons authorized by the

one owning or controlling a brand or any trademark as part of a

brand, to produce, import, ship, market or distribute the brand

of beer into or within this Commonwealth.

(3)  "Manufacturer," as used in this subsection, shall mean

any person, including any agent of such person, who (i) is

licensed as a manufacturer of malt or brewed beverages located

within the Commonwealth of Pennsylvania, (ii) holds a

distributor or importing distributor license, or (iii)

manufactures any malt beverage, has title to any malt beverage

products or has the contractual right to distribute any malt

beverage product, whether licensed in this Commonwealth or not,

who enters into an "agreement" with any importing distributor

licensed to do business in this Commonwealth.

(b.2)  Any secondary relationship between an importing

<--

distributor and a manufacturer existing as of the effective date

of this subsection shall remain in effect and shall not be

subject to this section, except to the extent required by the

severability provisions of this amendatory act adding this

subsection.

(b.3)  Any manufacturer of malt or brewed beverages that

brews some or all of its product in a brewery building that is

more than one hundred fifty years old and whose principal

corporate office is located in that building may engage in

direct sales to licensees who are licensed on the effective date

of this subsection and whose principal place of business is in

the same county as the brewery, and to nonlicensees, all subject

to the restrictions stated herein, without the requirement of

first being sold to importing distributors and distributors.

Sales under this subsection shall be for pickup only at the

brewery of product that was brewed in this Commonwealth, and

shall be in such quantities and package configurations as are

otherwise authorized by law for sale by manufacturers of malt or

brewed beverages. Any such product picked up by licensees at the

brewery shall not be resold to other licensees whose principal

place of business is outside the county where the brewery is

located.

(c)  The aforesaid licenses shall be issued only to reputable

individuals, partnerships and associations who are, or whose

members are, citizens of the United States and [have for two

years prior to the date of their applications been] are 

residents of the Commonwealth of Pennsylvania or to reputable

corporations organized or duly registered under the laws of the

Commonwealth of Pennsylvania. Such licenses shall be issued to

corporations duly organized or registered under the laws of the

Commonwealth of Pennsylvania only when it appears that all of

the officers and directors of the corporation are citizens of

the United States and [have been] are residents of the

Commonwealth of Pennsylvania [for a period of at least two years

prior to the date of application], and that at least fifty-one

per centum of the capital stock of such corporation is actually

owned by individuals who are citizens of the United States and

[have been] are residents of the Commonwealth of Pennsylvania

[for a period of at least two years prior to the date of

application]: Provided, That the provisions of this subsection

with respect to residence requirements shall not apply to

individuals, partners, officers, directors and owners of capital

stock, of corporations licensed or applying for licenses as

manufacturers of malt or brewed beverages, nor shall the

provisions of this subsection with respect to stockholder

requirements apply to corporations licensed or applying for

licenses as manufacturers of malt or brewed beverages.

(d)  (1)  All distributing rights as hereinabove required

shall be in writing, shall be equitable in their provisions and

shall be substantially similar as to terms and conditions with

all other distributing rights agreements between the

manufacturer giving such agreement and its other importing

distributors and distributors shall not be modified, cancelled,

terminated or rescinded by the manufacturer without good cause,

and shall contain a provision in substance or effect as follows:

"The manufacturer recognizes that the importing distributor and

distributor are free to manage their business in the manner the

importing distributor and distributor deem best and that this

prerogative vests in the importing distributor and distributor

the exclusive right to establish a selling price, to select the

brands of malt or brewed beverages they wish to handle and to

determine the efforts and resources which the importing

distributor and distributor will exert to develop and promote

the same of the manufacturer's products handled by the importing

distributor and distributor. However, the manufacturer expects

that the importing distributor and distributor will price

competitively the products handled by them, devote reasonable

effort and resources to the sale of such products and maintain a

reasonable sales level." "Good cause" shall mean the failure by

any party to an agreement, without reasonable excuse or

justification, to comply substantially with an essential,

reasonable and commercially acceptable requirement imposed by

the other party under the terms of an agreement.

(2)  After January 1, 1980, no manufacturer shall enter into

any agreement with more than one distributor or importing

distributor for the purpose of establishing more than one

agreement for designated brand or brands of malt or brewed

beverages in any one territory. Each franchise territory which

is granted by a manufacturer shall be geographically contiguous.

All importing distributors shall maintain sufficient records to

evidence compliance of this section. With regard to any

territorial distribution authority granted to an importing

distributor by a manufacturer of malt or brewed beverages after

January 1, 1996, the records shall establish that each and every

case of a brand of malt or brewed beverages for which the

importing distributor is assigned was sold, resold, stored,

delivered or transported by the importing distributor, either

from a point or to a point with the assigned geographically

contiguous territory, to any person or persons, whether such

person or persons are licensed by this act or not licensed by

this act.

(3)  Except for discontinuance of a brand or a valid

termination for good cause, the purchaser of the assets of the

manufacturer as defined in this act shall become obligated to

all the territorial and brand designations of the agreement in

effect on the date of purchase. Purchase of assets as defined

for the purposes of this act shall include, but not be limited

to, the sale of stock, sale of assets, merger, lease, transfer

or consolidation.

(4)  The court of common pleas of the county wherein the

licensed premises of the importing distributor or distributor

are located is hereby vested with jurisdiction and power to

enjoin the modification, rescission, cancellation or termination

of a franchise or agreement between a manufacturer and an

importing distributor or distributor at the instance of such

importing distributor or distributor who is or might be

adversely affected by such modification, rescission,

cancellation or termination, and in granting an injunction the

court shall provide that no manufacturer shall supply the

customers or territory of the importing distributor or

distributor by servicing the territory or customers through

other importing distributors or distributors or any other means

while the injunction is in effect: Provided, however, That any

injunction issued under this subsection shall require the

posting of sufficient bond against damages arising from an

injunction improvidently granted and a showing that the danger

of irrevocable loss or damage is immediate and that during the

pendency of such injunction the importing distributor or

distributor shall continue to service the accounts of the

manufacturer in good faith.

(5)  [The provisions of this subsection shall not apply to

<--

[Pennsylvania] small manufacturers [whose principal place of

<--

business is located in Pennsylvania] unless they name or

<--

constitute a distributor or importing distributor as a primary

or original supplier of their products subsequent to the

effective date of this act, or unless such [Pennsylvania] small 

<--

manufacturers have named or constituted a distributor or

importing distributor as a primary or original supplier of their

products prior to the effective date of this act, and which

status is continuing when this act becomes effective.] 

<--

Notwithstanding the requirements of paragraph (1) and section

492(19), subject to the limitations set forth in this

subsection, unless the parties mutually agree to the contrary in

their written agreement, a manufacturer of malt or brewed

beverages whose total production in the prior twelve complete

calendar months, calculated as set forth in subsection (a.4),

did not exceed one hundred fifty thousand barrels of malt or

brewed beverages may modify, cancel, terminate or rescind an

agreement entered into after the effective date of this

subsection with an importing distributor or distributor without

good cause as permitted by this subsection. Termination without

good cause is permitted only if:

(A)  the manufacturer gives prior written notice of the date

of termination to the importing distributor or distributor. The

date of termination shall be not less than one hundred eighty

days after the importing distributor or distributor's receipt of

such notice. The notice shall include an affidavit executed by

the manufacturer attesting that its total production in the

twelve complete calendar months immediately preceding the notice

of termination, calculated as set forth in subsection (a.4), did

not exceed one hundred fifty thousand barrels of malt or brewed

beverages;

(B)  the brand or brands being terminated represented three

per centum or less of the aggregate case equivalent sales volume

of malt or brewed beverages sold by the importing distributor or

distributor during the twelve complete calendar months set forth

in clause (A); and

(C)  the manufacturer pays to the importing distributor or

distributor prior to the effective date of termination the fair

market value of the importing distributor's or distributor's

business with respect to the terminated brand or brands.

Each importing distributor or distributor who receives a

notice of termination shall, within forty-five days after

receipt of such notice, provide the manufacturer a written

affidavit attesting to the percentage of the total case

equivalent sales volume of malt or brewed beverages sold by the

importing distributor or distributor that the brand or brands to

be terminated represented during the twelve complete calendar

months as set forth in clause (A). Failure of an importing

distributor or distributor to provide an affidavit to the

manufacturer within the forty-five days shall be deemed an

admission that the manufacturer represents three per centum or

less of the aggregate case equivalent sales volume of malt or

brewed beverages sold by the importing distributor or

distributor during the prior twelve completed calendar months as

set forth in clause (A).

If the manufacturer and the importing distributor or

distributor cannot agree on the fair market value of the

importing distributor's or distributor's business with respect

to the terminated brand or brands to be paid, either party may

bring an action in the court of common pleas to determine such

fair market value and to resolve any other issues in dispute.

For purposes of this subsection, "fair market value" means the

amount a willing seller, under no compulsion to sell, would be

willing to accept, and a willing buyer, under no compulsion to

purchase, would be willing to pay for the importing

distributor's or distributor's business with respect to the

terminated brand or brands where both have knowledge of the

relevant facts.

(e)  In addition to the fees under section 614-A of the act

of April 9, 1929 (P.L.177, No.175), known as "The Administrative

Code of 1929," the board shall assess a fee surcharge of ninety-

five dollars ($95.00) for a distributor's license and a fee

surcharge of four hundred seventy dollars ($470.00) for an

importing distributor's license and a fee surcharge of seventy-

five dollars ($75.00) for brand registration. Money collected

under this subsection shall be placed in a restricted account in

The State Stores Fund. The board may use the money in this

account to implement section 216. In the event the provisions of

section 447(a)(2) and/or (c) are held invalid, then this

subsection shall be void and shall not apply.

(f)  (1)  Any malt or brewed beverage produced outside this

Commonwealth that is repackaged by a bailee for hire or

importing distributor on behalf of an out of State manufacturer

must be returned to the out of State manufacturer and come to

rest out of State before it may reenter this Commonwealth. Such

repackaged malt or brewed beverages must be distributed through

the three-tier system. Any malt or brewed beverage that is

repackaged by a bailee for hire or importing distributor on

behalf of an in State manufacturer must be returned to the in

State manufacturer and come to rest at the in State

manufacturer's licensed facility.

(2)  For purposes of this section, "repackage" shall mean any

change or alteration to the containers or container

configuration of a case.

Section 3.  Section 431.1(d) of the act, added February 21,

2002 (P.L.103, No.10), is amended to read:

Section 431.1.  Malt and Brewed Beverages Alternating

Brewers' Licenses.--* * *

(d)  [Malt and brewed beverages manufactured under the

<--

authority of an alternating brewer's license must be distributed

in this Commonwealth only through specific importing

distributors who shall first have been given distributor rights

for such products in designated geographical areas through the

distribution system required for [out-of-State] manufacturers

<--

under section 431(b) as well as all other pertinent sections of

this act.] The alternating brewer must comply with section 444.

<--

* * *

Section 4.  Section 441(g) of the act, added December 20,

1996 (P.L.1513, No.196), is amended to read:

Section 441.  Distributors' and Importing Distributors'

Restrictions on Sales, Storage, Etc.--* * *

(g)  All malt or brewed beverages purchased by an importing

distributor from a [Pennsylvania] manufacturer of malt or brewed

beverages [or from any person located outside this Commonwealth] 

for resale shall be invoiced to the importing distributor, shall

come physically into the possession of such importing

distributor and shall be unloaded into and distributed from the

licensed premises of such importing distributor. The board may

act to further define and control the storage and distribution

of malt or brewed beverages in conformity with this section and

this act.

Section 5.  Section 446 of the act, amended June 30, 1992

(P.L.327, No.66), May 31, 1996 (P.L.312, No.49) and January 6,

2006 (P.L.1, No.1), is amended to read:

Section 446.  Breweries.--Holders of a brewery license may:

(1)  Sell malt or brewed beverages produced and owned by the

brewery on the licensed premises under such conditions and

regulations as the board may enforce, to individuals for

consumption on the premises [and]. Additionally, a small

<--

manufacturer may sell malt or brewed beverages produced and

owned by the brewery on the licensed premises under such

conditions and regulations as the board may enforce to hotel,

restaurant, club and public service liquor licensees.

(2)  Operate a restaurant or brewery pub on the licensed

premises under such conditions and regulations as the board may

enforce: Provided, however, That sales on Sunday may be made

irrespective of the volume of food sales if the licensed

premises are at a public venue location. The holder of a brewery

license may sell at its brewery pub premises Pennsylvania wines

it has purchased from either the holder of a Pennsylvania

limited winery license or from the board: Provided, however,

That said wines must be consumed at the licensed brewery pub

premises.

(3)  [Use brewery storage and distribution facilities for the

<--

purpose of receiving, storing and distributing malt or brewed

beverages manufactured outside this Commonwealth if the

beverages are distributed in this Commonwealth only through

specific importing distributors who shall have first been given

distributing rights for such products in designated geographical

areas through the distribution system required for [out-of-

<--

State] manufacturers under section 431(b) as well as all other

<--

pertinent sections of this act.] The manufacturer of the

<--

beverages must comply with section 444.

(4)  Apply for and hold a hotel liquor license, a restaurant

liquor license or a malt and brewed beverages retail license to

sell for consumption at the restaurant or brewery pub on the

licensed brewery premises, liquor, wine and malt or brewed

beverages regardless of the place of manufacture, under the same

conditions and regulations as any other hotel liquor license,

restaurant liquor license or malt and brewed beverages retail

license, but must brew at least two hundred fifty barrels per

year. Each holder of a brewery license who receives a hotel

liquor license, a restaurant liquor license or a malt or brewed

beverages retail license to operate a brew pub shall not sell

directly to any person licensed by this act, except if any malt

or brewed beverage is to be distributed in this Commonwealth it

shall be only through specific importing distributors who shall

have first been given distributing rights for such products in

designated geographical areas through the distribution system

required for [out-of-State] manufacturers under section 431(b)

as well as all other pertinent sections of this act.

Section 6.  The provisions of this act are severable. If any

<--

provision of this act or its application to any person or

circumstance is held invalid, the invalidity shall not affect

other provisions or applications of this act which can be given

effect without the invalid provision or application.

Section 6.  The provisions of this act are severable. If any

<--

provision of this act or its application to any person or

circumstance is held invalid, the invalidity shall not affect

other provisions or applications of this act which can be given

effect without the invalid provision or application.

Section 7.  This act shall take effect as follows:

<--

(1)  The requirement in section 431(b) that certain

manufacturers are required to give distribution rights for

their products in this Commonwealth shall take effect in 150

days.

(2)  This section shall take effect immediately.

(3)  The remainder of this act shall take effect in 60

days in 90 days.

<--