The Supreme Court has agreed to weigh in on the constitutionality of an 1868 federal law that imposes a tax on distilled spirits but also bans home distilleries – that is, the at-home production of spirits like bourbon and whiskey. The penalties for violating the law include fines of up to $10,000, five years in prison, or both. In a list of orders from the justices’ Oct. 16 conference, the court announced that it had granted review in Department of Justice v. McNutt.
The justices will likely hear oral argument in the case early next year, with a decision to follow by late June or early July.
The lawsuit was filed in 2023 by a nonprofit, the Hobby Distillers Association, and some of its individual members, who want to be able to operate home distilleries. The U.S. Court of Appeals for the 5th Circuit ruled that the ban on home distilleries violates two different provisions of the Constitution: the taxation clause, which gives Congress the power to “lay and collect Taxes … to pay the Debts and provide for the common Defence and general Welfare of the United States”; and the necessary and proper clause, which gives Congress the power to “make all Laws which shall be necessary and proper for carrying into Execution” its listed powers.
The Constitution gives Congress the power to impose a tax on distilled spirits, the 5th Circuit determined, but it concluded that the ban on home distilleries exceeds that power. Not only does the ban not raise revenue, the court of appeals wrote, it prevents the production of spirits that could generate revenue. The court of appeals similarly rejected the government’s contention that the ban guards against tax evasion, explaining that “preventing activity lest it give rise to tax evasion places no limit whatsoever on Congress’s power under the taxation clause.”
The federal government came to the Supreme Court in August, asking the justices to weigh in. It contended that “[a] law is necessary and proper if it is ‘convenient’ or ‘useful’ for carrying an enumerated power into effect, and ‘plainly adapted’ to that legitimate end.” That is precisely what the ban on home distilleries does, the government argued. “Congress restricted home distilling because a distiller can more easily conceal a distilling operation or thwart necessary inspections—thereby evading the requisite tax—if the still is located in” a house or a structure attached to that house.
The challengers agreed that the court should grant review, although they urged the justices to leave the 5th Circuit’s ruling in place. The case, they said, “presents fundamental questions of the extent of federal power and the powers reserved to the states and the people.”
In a separate case, Ream v. Department of the Treasury, the U.S. Court of Appeals for the 6th Circuit reached the opposite conclusion from the 5th Circuit, holding that the ban on home distilleries is a necessary and proper exercise of Congress’s power to collect the federal tax on distilled spirits. John Ream, a retired aerospace engineer and the owner of a brewery who wants to be able to distill his own spirits, then came to the Supreme Court in July, asking the justices to weigh in on the legality of the ban and on the broader question of Congress’ power to regulate “local, noncommercial conduct.”
The federal government agreed that the justices should take up the question at the center of Ream’s petition for review, but it urged the court to grant its own petition, in McNutt, instead. On Monday, the justices did just that.
Amy Howe, SCOTUS Blog
