Opinion ID: 2597548
Heading Depth: 4
Heading Rank: 2

Heading: Modification of federal regulations in the 1970s and 1980s, and adoption by Oregon of its more stringent wine labeling regulations

Text: Beginning in the mid-1970s, the BATF, which in 1972 had been delegated the task of creating and enforcing federal regulations (see ante, fn. 43), began to consider proposals to further define and regulate appellations of origin. In connection with that inquiry, the BATF also began to consider how better to regulate the use in brand names of terms of geographic or viticultural significance. (42 Fed.Reg. 30517, 30518 (June 15, 1977).) [55] In 1978 the BATF adopted, but then postponed enforcement of, new brand-name rules, [56] and it also adopted new regulations concerning appellations of origin including a new subcategory within appellations of origin known as viticultural areas. (43 Fed.Reg. 37672, 37674, 37678 (Aug. 23, 1978).) [57] The 1978 federal appellations of origin regulation expressly recognized the enforceability of state laws in relation to placing a viticultural area designation on a wine label, making the right to so label a wine contingent on compliance with, among other things,  the laws and regulations of all of the States contained in the viticultural area.  (27 C.F.R. former 4.25a(e)(3)(iv) (1978-1981); id., former § 4.25a(e)(3)(v) (1981-1986), italics added.) [58] Prior to and during this same period of federal regulatory action and consideration of geographic brand-name regulations (see ante, fn. 56), in 1977 the State of Oregon departed from the federal labeling regulations in substantial ways, imposing more stringent state rules concerning matters such as percentage content of Oregon appellation wines, [59] use of semi-generic place names, [60] percentage content of varietal wines, [61] use of the term estate bottled, [62] and the use of geographic brand names. [63] In each of these respects, Oregon reserved the right to disapprove wine labels that had been granted a valid federal certificate of label approval. [64] For present purposes, the most relevant of these various departures from federal wine labeling regulations concerns Oregon's geographic brand-name rule. Effective March 1, 1977, Oregon Administrative Rule 845-10-292(6)(e) provided that appellation names  including the names of Oregon counties, and the names of Oregon wine-producing regions Willamette Valley, Umpqua Valley, and Rogue Valley  shall not be used in a brand name, in the name of a winery or in any other manner on a label unless 100 percent of the grapes used to produce the wine were grown within the boundaries of that appellation of origin.  (Italics added.) The regulation included a grandfather clause permitting use by a winery of a brand name which has been in use by that winery on its approved labels prior to January 1, 1977.  (Or.Admin.R.XXX-XX-XXX(6)(e) (1977), italics added.) [65] Like the other Oregon labeling rules that specifically exceed the federal regulations, this Oregon geographic brand regulation remains in force today, more than a quarter-century after its adoption. (See Or. Admin. R. XXX-XXX-XXXX(4)(f) (2004)). [66] We find these Oregon regulations relevant to our current inquiry in three interrelated respects. [67] First, the state regulations  especially the strict geographic brand-name rule, and the estate-bottled rule  demonstrate that Oregon has long imposed labeling rules that are both (i) more stringent than the federal rules and (ii) go far beyond 27 Code of Federal Regulations section 4.25(b)(1)(iii)'s authorization for states to regulate the composition, method of manufacture, [or] designation of wines. . . . Second, it is clear that the BATF has long been aware of these stricter Oregon rules and apparently views them as enforceable. The Oregon regulations had been in place for approximately 16 months at the time the BATF adopted its 1978 regulation concerning the use of viticultural area appellations on wine labels. That 1978 BATF regulation, as noted above, expressly acknowledged and required compliance with the laws and regulations of all the States contained in the viticultural area. (27 C.F.R. former § 4.25a(e)(3)(iv) (1978-1981); id., former 4.25a(e)(3)(v) (1981-1986), italics added.) By so providing, the BATF, as of 1978, acknowledged the propriety and enforceability of the more stringent labeling rules promulgated by the states. Indeed, any doubt in this regard is dispelled by the BATF's action and comments seven years later (in late January 1986) when, in the course of repealing as a federal requirement 27 Code of Federal Regulations former section 4.25a(e)(3)(v)'s rule concerning compliance with state regulations relating to viticultural areas, the BATF expressly and repeatedly acknowledged both the existence and the enforceability of Oregons more stringent wine labeling regulations. [68] The BATF explained that although it had decided, with regard to viticultural areas, to eliminate compliance with state laws as a federal requirement, the underlying substantive state law requirements relating to viticultural areas would remain, to be enforced solely by the respective states. The BATF observed: State laws and regulations of the state in which the wine was fermented or finished will, of course, continue to apply to the producing winery. These state laws and regulations are enforced by the state involved. (51 Fed. Reg. 3773, 3774 (Jan. 30, 1986), italics added.) [69] Third and finally, the Oregon geographic brand-name regulation, in particular, sheds light upon the BATF's apparent understanding of the grandfather clause at issue in this case. Almost 10 years after Oregon adopted its restrictive geographic brandname labeling regulation, the BATF, after considering various options over the preceding decade (see ante, fn. 56, and post, fn. 70), amended 27 Code of Federal Regulations section 4.39(i)(1) in the manner at issue in this case, to prohibit the use of labels with brand names implying that a wine was made with grapes grown in the area suggested by the brand name, unless at least 75 percent of the grapes used to make the wine were in fact from that area. But, as noted above, the new federal regulation also contained a grandfather clause that lies at the center of the controversy in this case, under which such otherwise misleading labels are not prohibited, so long as the label was in use prior to July 1986 and the label discloses the true appellation of origin of at least 75 percent of the grapes actually used to make the wine inside the bottle. ( Id., § 4.39(i)(2)(ii).) [70] In view of the BATF's explicit acknowledgement, only four months prior to its adoption of the provision at issue in the present case, that the Oregon labeling regulations are proper and enforceable (see 51 Fed.Reg. 3773, 3774 (Jan. 30, 1986)), it is reasonable to assume that the BATF, when it adopted the grandfather clause, was aware of Oregon's more stringent geographic brand-name labeling rule. And yet the BATF said nothing in its new provision or in its discussion of that new rule to suggest that the new rule preempted Oregon's long-standing, closely related, and more stringent brand-name labeling rule. Accordingly, contrary to Bronco's theory that the BATF itself viewed or views its wine labeling regulations as preempting more stringent state regulations, we conclude that the history of the federal and Oregon wine labeling regulations in the mid-1970s through the present reveals no evidence of any such intent. Instead, that history strongly indicates that the BATF has long contemplated that the states will enforce their own stricter labeling requirements, and that the agency did not and does not view its labeling regulations as preempting more stringent state regulations such as section 25241.