The United States Supreme Court has dabbled on the edges of alcohol regulation in the past two terms. Last year in the Hemani case, a firearms and marijuana matter, the issue of “habitual drunkard” and context around the passage of those laws was discussed at length. This term, a case involving the seizure of an airplane for bringing a six pack of beer to “dry territory” in Alaska will be discussed in the Jouppi case.
However, a more direct examination of a specific alcohol law will take place as the Supreme Court has granted review of the Fifth Circuit’s decision in the McNutt v. Department of Treasury. This is a challenge to a 160 year old law set up to collect revenue from alcohol. One aspect of the law was to ban distillation of spirits at home. The Supreme Court has decided to review this case which has the question presented as: “Whether the prohibition on the production of distilled spirits in particular locations, including “in any
dwelling house” or “in any shed, yard, or inclosure connected with any dwelling house,” 26 U.S.C. 5178(a)(1)(B), is necessary and proper for carrying into execution Congress’s enumerated power to lay and collect taxes.“
This case is not a 21st Amendment case or a dormant Commerce Clause case normally covered on this blog. Rather, it is an old fashioned examination of what is meant by Article One, Section 8, Clause 18 of the Constitution. Supporters of the law say it is a reasonable measure to take the necessary steps to collect and preserve government revenue while detractors say the law is beyond the scope of the power of Congress and regulates private conduct. It will be interesting how broad or narrow into this clause the Supreme Court goes.
Here is the text of Article I, Section 8, Clause 18:
[The Congress shall have Power . . . ] To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
The Supreme Court granted the review of the 5th Circuit case (McNutt) but did not yet formally act on the pending 6th Circuit case (Ream). The 5th Circuit struck down the law while the 6th Circuit upheld the same law. The 6th Circuit case is still listed as being discussed in conference but has no order granted or denied. There were concerns over standing raised by the government in the 6th Circuit case so the 5th Circuit case may limit concerns on that issue. There were many libertarian groups weighing in on the 6th Circuit case. Many of them also weighed in on the Jouppi case.
A briefing schedule will be formalized in the next few weeks with briefs due before oral argument early in 2027. A decision will be made by the end of the term in June 2027.
(previous post) Supreme Court Delays Decision on Federal Home Distilling Ban
Today, the Supreme Court announced a series of orders related to cases that they will and will not consider. They also pushed back decisions on a few cases. The decision on the federal home distilling ban was pushed back to the next Supreme Court conference on October 16. If a decision is reached at that conference we will find out on October 19. The docket on this case can be found here.
(previous post) Supreme Court Asked to Resolve Circuit Split Over Federal Home Distilling Ban
The government lost one case in the 5th Circuit and the government won one case in the 6th Circuit. The losing party in the 6th Circuit has filed a petition for certiorari with the United States Supreme Court to resolve this conflict. The petition can be found here.
The big news to watch is the federal government’s response. Do they appeal their 5th Circuit loss? Their appeal would be due in early September on that case. The government may ask for more time to respond to the cert petition in the 6th as well. It will make for a very interesting fall as this case may generate lots of academic attention on the underlying issue of the power of Congress to legislate commerce.
Interestingly, the alcohol industry news today covered the death of an employee at a distillery that exploded in Guadeloupe. The news article can be read here.
(previous post) Circuit Courts Split on Federal Home Distilling Ban
Two federal circuit courts have recently considered challenges to the 1868 law banning home distilling. One court has struck down the ban, while another court has upheld it. This issue is part of a running national debate about the scope of the powers of Congress to regulate commerce and taxation and will be appealed to the Supreme Court.
At issue are the laws which prohibits the production of distilled spirits at home. Some home distillers and the Hobby Distillers Association through their libertarian think tank and related law firms brought a lawsuit in Texas while a single plaintiff via a libertarian think tank brought a lawsuit in Ohio.
Recently, the Fifth Circuit upheld a Texas district court which had struck the constitutionality of the home distilling prohibition laws in question. The Fifth Circuit panel held that the tax code’s ban improperly tries to stop an activity — distilling spirits at home — before it becomes taxable in the name of preventing tax evasion. The Fifth Circuit held that this violates the Constitution’s taxation clause, which allows Congress to tax only “existing subjects,” not activities that might generate taxes in the future.
The Fifth Circuit held, “The government defends the statutory prohibition on at-home distillation of spirits as a “necessary and proper” exercise of Congress’s power to “tax.” We disagree. First, contrary to the government’s assumption, Section 5178 and Section 5601 are outside the scope of Congress’s taxing power under the Constitution. Second, contrary to federalism principles, the statutory prohibition is not plainly adapted to executing Congress’s taxing power and violates the Necessary and Proper Clause.”
However, two weeks later, the Sixth Circuit upheld the law against its challenge. While the Ohio district court dismissed the case on standing grounds, the majority in the Sixth Circuit would have granted standing but ruled against the plaintiffs on the merit. Circuit Court Judge Mathis dissented and said the plaintiff did not have standing so he would not reach the merits of the constitutional claims.
The Sixth Circuit’s opinion pointed out that this 160-year-old law was not just dropped on the American citizen out of the sky. It noted the contested history of alcohol tax evasion in the United States starting with the Whiskey Rebellion. It noted the comprehensive set of hearings held by Congress to determine a system to stymie tax evasion before passage of the challenged laws in 1868. “In 1868, evasion of excise taxes on spirits had been rampant for literally all of the nation’s history. By all appearances, spirits distilled at home were no exception. The 1868 Act was a monumental effort, running some 109 sections, to bring these “stupendous frauds” to an end.”
The Court concluded that Congress did not exceed its taxing authority or the use of laws necessary and proper to collect them with this legislation that has served without objection for a long time. “Indeed, for us to conclude that a law of 160 years’ vintage, with this kind of empirical pedigree, has all along been both unnecessary and improper, would border on rationalist conceit… The rule that Ream challenges addressed an actual problem that had confounded the federal government from its earliest days. The home-distilling ban was lawful when enacted, and remains so today.” The plaintiff’s lawyer has announced he will appeal the decision to the Supreme Court. Briefings will be started over the summer, and the Supreme Court would likely decide whether or not to take this appeal late in the fall of 2026 with a hearing in 2027 if they decide to take this case.
The 5th and 6th Circuit opinions can be found below:
Leave a Reply