By Ondray T. Harris, CEI
Last week, the Fifth Circuit issued a remarkable decision in McNutt v. U.S. Department of Justice — one that reaches far beyond the niche world of hobby distilling. At stake was a more than 150-year-old federal prohibition on at-home distilling. What the court ultimately confronted, however, was a much broader question central to our constitutional structure of enumerated powers: whether Congress may use its taxing power to prohibit peaceful, private conduct inside the home.
The court’s answer was no.
For generations, federal law has made it a crime to distill spirits at home, even for personal use. The government defended the prohibition as a necessary tool to enforce federal excise taxes on alcohol. If individuals could distill at home, the argument went, it would be harder to track production and collect revenue. But the Fifth Circuit rejected that reasoning in clear and structural terms.
The Constitution grants Congress the power to tax, not to ban activity simply because taxation might be more difficult otherwise. As the court explained, a tax must raise revenue. The home-distilling ban did the opposite; it prevented taxable activity from occurring at all. In that sense, it was not an exercise of the taxing power, but a prohibition masquerading as one.
Nor could the government salvage the law under the Necessary and Proper Clause. That provision allows Congress to enact laws that are “plainly adapted” to executing its enumerated powers. Notwithstanding, it does not authorize Congress to create new powers out of whole cloth. Criminalizing at-home conduct to avoid hypothetical tax evasion, the court held, was neither necessary nor proper in any constitutional sense.
Notably, the government did not defend the statute under the Commerce Clause on appeal, choosing to abandon an argument that might have brought the case into direct tension with modern precedents such as Wickard v. Filburn. As a result, the Fifth Circuit had no occasion to revisit the outer bounds of federal power under that doctrine. Even so, the decision’s firm limits on the taxing power mark a meaningful step toward restoring constitutionally enumerated powers.
The deeper concern running through the opinion is one that should resonate well beyond this case. If Congress can prohibit an activity simply because it might complicate taxation, what can it not regulate? The government’s theory had no limiting principle. It would allow federal authority to extend into virtually any aspect of private life — particularly activities occurring in the home — so long as some connection to revenue could be asserted. The Constitution does not permit that kind of open-ended power.
From a liberty perspective, that is what makes McNutt so significant. The decision is a rare and welcome reaffirmation that the federal government is one of limited and enumerated powers. Those limits are not merely rhetorical. They are judicially enforceable — and, in this case, decisive.
The ruling also reflects a broader principle that has often been eroded in modern regulatory practice: the difference between regulating an activity and prohibiting it altogether. Congress may tax, license, and regulate the production of alcohol. It may not eliminate the underlying activity simply to make enforcement easier, however. That distinction matters not just here, but across a wide range of federal programs that rely on indirect mechanisms to control behavior.
There is also an important recognition in the opinion about the private sphere. The conduct at issue took place in and around the home. The government’s position would have allowed Congress to criminalize an array of home-based activities based on speculative concerns about enforcement. The court declined to go down that path, and rightly so.
This case did not appear overnight. The Competitive Enterprise Institute played a role in developing the case in its earlier stages, helping to advance the constitutional arguments that ultimately prevailed. Although CEI’s role in the case ended when counsel departure from CEI, it is gratifying to see those arguments carry the day and to see a court take seriously the structural limits embedded in the Constitution.
What comes next remains to be seen. The federal government may seek further review, and related cases, raising additional constitutional questions, are still working their way through the courts. Whatever happens procedurally, however, McNutt has already contributed importantly to the ongoing effort to restore meaningful limits on federal power.
This decision stands out as a reminder that the Constitution’s structure is not an obstacle to governance — it is the framework that preserves liberty. What is more, when courts are willing to enforce that structure, the result is not chaos, but clarity: a government that must operate within its proper bounds, and a sphere of individual freedom that remains, as it should be, beyond its reach.
Mr. Harris is the General Counsel of the Competitive Enterprise Institute (CEI).
