It is no secret that the wine industry is heavily regulated by the federal government. It is also no secret that many of those laws are old, dating back nearly 100 years to the end of Prohibition. This can create the sense that those laws are rigid and lock the wine industry into how things were in the 1930s. 

While it is true that many beverage alcohol laws could stand to be updated to the 21st century, it's not necessarily the case that they are inherently outdated. This is largely thanks to the procedure of administrative rulemaking, which empowers relevant federal agencies to interpret statutes and determine how best to apply them to the fields they regulate.

Under this process, Congress passes a broadly applicable law that becomes part of the Federal Code (for example, requiring domestic wine producers to be licensed). The agency tasked with administering that law—for beverage alcohol, the Trade and Tax Bureau (TTB)—then undergoes rulemaking to develop the details and particulars of how to apply that law (such as what the process of applying for a wine production license will look like).

Rulemaking does not exist in a vacuum with agencies willy-nilly handing out decrees. Instead, the agencies must go undertake what is called “notice and comment” rulemaking, which requires a lengthy back-and-forth where the agency solicits suggestions from the public and interested parties, drafts potential rules based on the responses, goes back to the public for review, and then, at last, publishes the finalized set of rules.

However, if you’re not looking, it may seem unexpected or random when the TTB issues a new or amended regulation. And if you miss it entirely, you can get caught applying yesterday’s rules to today’s operations. As such, wine producers—and everyone involved in the wine industry—would do well to pay close attention whenever the TTB undertakes rulemaking.

TTB rulemaking in 2023

The first place to look for active rulemaking is on the TTB’s site for Notices of Proposed Rulemaking, or more specifically for notices related to wine. These sites provide a handy place to review what the TTB is currently engaged on. You can also find links there to the Federal Register for each proposed rule, where the details are published and, most importantly, where you can submit your own comments to perhaps influence the TTB’s decisions. (While anyone is generally able to comment on a proposed rulemaking, if you belong to a guild or other industry organization, it might be best to work with them instead of going it alone, as they may have the resources to produce a more polished submission and will have the louder voice that comes with collective action.)

As of publication, the TTB is working on four pieces of rulemaking, one of which with the potential to greatly alter the wine market. 

That rulemaking seeks comments on Trade Practice Regulations, a critical though at times arcane aspect of beverage alcohol law. Trade practice law governs how different members of the alcohol industry can interact, with a focus on inter-tier relationships. The primary focus of trade practice law is on restricting undue influence, particularly on retailers, that could result in privileging one producer’s products over another’s or otherwise creating any kind of exclusive dealing.

However, trade practice is a very broad area of law, encompassing many different ways to conduct business (most of them perfectly legal outside of alcohol sales), which makes touching those rules a little fraught. On top of that, trade practice laws relate to some of the fundamental principles of the post-Prohibition era (e.g., preventing the return of “tied-house” saloons) and reflect what lawmakers back in the 1930s were most concerned about. 

While the TTB (and its antecedent agencies) have adjusted trade practice regulations over the years, it has been several decades since any meaningful reform. As such, a key focus of this current rulemaking is to figure out what (if anything) should be done to make trade practice rules relevant to the modern era. 

Hopefully, the TTB will recognize that the alcohol market has changed in more ways than just the internet. Indeed, many of the trade practice laws were originally written at a time when the alcohol industry looked more like a pyramid, with a few very large producers selling to a crowded field of small, locally focused wholesalers, who in turn sold to a vast sea of tiny mom-and-pop retailers. Today, though, that neat picture has been revamped into something more like an hourglass, with thousands of producers and retailers, ranging in size from massive international conglomerates to a couple people in a garage, connected by a narrow band of very large wholesalers. If the TTB’s real goals are to stimulate competition and create a more even playing field for the small players, then it may need to look beyond how the rules are written to how it can best enforce those rules against businesses with deep pockets and armies of attorneys.

New AVAs

The other active rulemaking the TTB is engaged in is related to adding new American viticultural areas (AVAs). While this may not be as monumental an effort as trade practice reform, it is nevertheless important, especially for the wineries located in those proposed AVAs. Gaining AVA status lets those wineries advertise their unique provenance and terroir, helping to distinguish them in the eyes of consumers. There are currently 267 AVAs available for wineries, and more are proposed every year, making this an important area for wineries that could benefit from using a distinct AVA.

What else may happen in 2023?

2023 is young, leaving plenty of time for the TTB to propose new rulemakings. Indeed, there are pretty good signs that they may introduce a proposal around adding nutritional information to wine labels. This idea has come up many times, but there seems to be increasing interest among consumers for more disclosure on what they are drinking. If this does come to pass—if the TTB does adopt rules for wine labels to include nutritional data—that would have a major impact on the wine industry, requiring costly laboratory analysis and an overhaul of wine labels.

That said, there is a lot of public support for adding nutritional information to all alcohol labels, and it will become required later this year on all wine labels sold in the EU. If the TTB does propose such rules, it may just be keeping up with the trend.

Whatever happens with active and possible rulemaking, it has the potential to drastically affect the wine industry. Rulemaking may seem staid and in-the-weeds, but it’s still important for all wine producers to keep a keen eye on what changes to its laws the federal government might make.