I hope you like a good mystery, because the United States Supreme Court gave us one when it decided to overturn more than 40 years of established law and ruled that federal agencies are no longer entitled to deference when they interpret the meaning of a statute.
This deference, known as the Chevron Doctrine, may seem arcane and irrelevant to wine consumers. But it will likely have a big effect. We just don’t know how yet.
Wait, What’s Going On?
Back in 1984, the Supreme Court, in a case called Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., held that if Congress passed a law administered by a federal agency, and the law’s meaning wasn’t clear, then the courts must defer to the agency’s interpretation of it as long as the interpretation was reasonable.
So, according to attorney Sean O’Leary, also known as the Irish Liquor Lawyer and a specialist on liquor law and policy, if the Alcohol and Tobacco Tax and Trade Bureau (TTB) issues regulations and someone challenges them, then the TTB’s interpretation would likely stand. “It gives them the victory before the fight,” he says.
But in June 2024 the Supreme Court, in a case called Loper Bright Enterprises v. Raimondo, found that it’s a court’s duty to interpret laws, and an agency’s interpretation is not entitled to binding deference.
The effect of throwing out the Chevron Doctrine is that now federal courts will no longer have to defer to an agency’s judgment. They will have more leeway in deciding whether an agency acted reasonably or overstepped its bounds.
The good news is that sometimes an agency’s interpretation of a law has been overbroad, out of touch with industry norms, impractical, or overly burdensome. Jettisoning Chevron deference makes it easier to correct such actions.
However, many, if not most, rules are the result of months or years of research and consideration of public input and thus well thought out. Moreover, the agencies, not the courts, are subject matter experts, particularly in highly technical fields. The courts can take this expertise into account but are not subject matter experts, and the courts may (and do) make mistakes.
Without Chevron deference to agency interpretations, different courts may also come to different conclusions about a rule, and a lower court decision is more likely to be overturned on appeal. This leads to inconsistency and uncertainty regarding how to comply with the law.
And now that an agency’s interpretation is no longer entitled to deference, we can expect more legal challenges to those interpretations.
How Does This Change Impact Wine Consumers?
While states regulate much of the alcohol industry, the federal government has a heavy hand in it, as well, and not just the TTB. Alcohol, including wine, is subject to all sorts of rules, including those from the Department of Health and Human Services, the Department of Agriculture, the Federal Trade Commission, and the Department of Labor.
One may think that these concerns only apply to those subject to the rules, such as wineries, wine stores, distributors, and restaurants. Not true. The Supreme Court’s killing of the Chevron Doctrine will also affect wine consumers. Here’s what might occur.
1. Rules Meant to Protect Consumers May be Thrown Out or Abandoned
As more existing rules will now be challenged in court, we can expect that some of them are rules meant to protect consumers.
For instance, the TTB has ruled that a wine producer cannot advertise its wine as having health benefits on the grounds that it’s misleading. But no statute states that; it’s the TTB’s interpretation.
According to renowned wine writer W. Blake Gray, if that’s successfully challenged, then we might start seeing wine labels and ads claiming that wine is “clean and healthy” even when it isn’t.
And some potential rules may not get off the ground. For instance, after considerable delay, the TTB only this year asked for input regarding whether and how ingredient, allergen, and other information should be included on wine labels. Many consumers submitted comments in favor of adding this information for health and safety reasons.
However, many in the wine industry were strongly opposed to these additions. Without the Chevron Doctrine, the TTB may be more hesitant about issuing a rule sure to be controversial and decide to hold off. That means that consumers will still be without this information.
2. Wine May be Cheaper; Visiting Options May Increase
It typically costs money to comply with a rule. As we can expect some existing regulations to be tossed out and others not promulgated, there probably will be fewer regulations overall. That could be beneficial to wine consumers.
“If there are fewer regulations there are fewer costs of doing business and that [reduction may be passed on to consumers],” says O’Leary. “Loper got rid of an arduous [pricing] requirement and lowers the costs of doing business. Overturning Chevron could be positive that way for the consumer,” he says.
It can also provide flexibility in the marketplace.
“Sometimes the lack of clarity and specificity in a regulation gives a business maneuverability to do things and let the market run so long as there are certain parameters,” O’Leary explains.
So, for example, a winery currently not legally allowed to operate a tasting room or provide certain food may in the future be able to do so. As Gray points out, breweries could overturn “tied house” laws so they can own and operate pubs.
3. Agencies May Issue Clearer Rules
Agencies may work harder to create rules and guidelines that are less arbitrary and better researched in an effort to avoid or successfully beat costly legal challenges. That could bode well for wine consumers.
For instance, the TTB in light of Loper might craft a well-balanced rule that addresses consumers’ desires for more information without unduly burdening the wine industry. That would be a win for everyone.
So while we don’t know yet what rules are in play and the outcomes, we know the wine industry will undergo changes and they will affect wine consumers.
We’ll just have to see how much gas there is after Chevron.
We hope that this information on the ways the Supreme Court’s Killing of the Chevron Doctrine may affect wine consumers illuminating.
What rules do you think are most vulnerable to new challenges now that Chevron deference has been eliminated? What rules or guidelines would you like to see challenged – or are considering challenging yourself? Send us a message at info@winewithourfamily.com. Always feel free to reach out to us with any questions or feedback.
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