Take the Fifth

Designated for publication

• Hobby Distillers Ass’n v. Alcohol & Tobacco Tax & Trade Bureau, 24-10760, appeal from N.D. Tex.
  • Jones, J. (Jones, Graves, Rodriguez, by designation) (no oral argument), standing, Necessary and Proper Clause, tax
  • Reversing dismissal of some of the individual plaintiffs on standing ground, and affirming (as modified) injunction against enforcement of ban on home distilling under 1868 law.
  • Since 1868, federal law has prohibited the operation of any still for distilling consumable spirits in a dwelling house or in any shed, yard, or enclosure connected to one, punishable by up to five years’ imprisonment and a $10,000 fine (26 U.S.C. §§ 5178(a)(1)(B), 5601(a)(6)). The Hobby Distillers Association (“HDA”), a nonprofit with more than 1,300 members, and several individual plaintiffs — Rick Morris (a certified bourbon steward who manufactures stills), Scott McNutt (who already distills fuel alcohol in a shed on his property), John Prince III (a veteran home brewer), and Thomas Cowdrey III (who created an apple-pie-vodka recipe) — challenged the ban as unconstitutional. Before filing suit, the plaintiffs’ attorney called the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), which flatly refused to consider permits for home distillation of consumable spirits because it is “against the law.” The district court authored what the panel called “a very thoughtful opinion,” dismissed Morris, Prince, and Cowdrey for lack of standing, but granted relief to McNutt and HDA, finding the statutes violated the Commerce, Taxation, and Necessary and Proper Clauses. The government appealed, and the dismissed plaintiffs cross-appealed.
  • At issue on appeal were (1) whether all individual plaintiffs and the HDA have Article III standing; (2) whether 26 U.S.C. §§ 5178(a)(1)(B) and 5601(a)(6) fall within Congress’s taxing power under Art. I, § 8, cl. 1; and (3) whether the statutes are authorized by the Necessary and Proper Clause as measures “plainly adapted” to executing the taxing power.
  • The Fifth Circuit affirmed as modified the district court’s judgment and permanent injunction, holding that all individual plaintiffs and HDA have standing and that 26 U.S.C. §§ 5178(a)(1)(B) and 5601(a)(6) violate the Taxation Clause and the Necessary and Proper Clause.
  • As to standing, the court found that each individual plaintiff demonstrated an intention to engage in conduct proscribed by the statute and faced a credible threat of prosecution, citing McNutt’s 2014 warning letter from the TTB and the agency’s blanket refusal to issue home-distilling permits. The court reversed the district court’s dismissal of Morris, Prince, and Cowdrey, holding they too had standing. HDA satisfied associational standing because its members had standing in their own right, the interests at stake were germane to its purpose of legalizing home distilling, and neither the claims nor the requested relief required individual participation.
  • As to the taxation clause, relying on NFIB v. Sebelius, the court reasoned that the “essential feature of any tax” is that it “produces at least some revenue for the Government,” yet the challenged provisions “amount to an anti-revenue provision that prevents distilled spirits from coming into existence.” The court emphasized: “Congress’s authority under the taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more,” quoting NFIB, and stressed that a valid tax “leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice” — a choice these plaintiffs do not have. The court rejected the government’s argument that the ban prevents tax evasion, noting that “Congress cannot prohibit intrastate activity solely because it might produce products hard to tax” and that the taxing power “reaches only existing subjects.”
  • As to the Necessary and Proper Clause, applying the McCulloch v. Maryland “plainly adapted” standard, the court held that the prohibition is not “plainly adapted” to collecting taxes on spirits because licensing home distillers — rather than banning them — would subject them to the same regulatory regime that covers all other licensed distillers, thereby actually generating revenue. On the “proper” prong, the court found the statutes improperly invade the states’ reserved police powers. In a notable passage, Judge Jones wrote: “By ‘claim[ing] the authority to ban [the imposition of] a tax liability out of fear of future tax avoidance,’ the government ‘invites a question: what cannot be banned?’ Under the government’s logic, Congress may criminalize nearly any at-home conduct only because it has the possibility of concealing taxable activity. Home-based businesses may be forbidden. Remote work may be deemed a crime.” The court concluded that, “[w]ithout any limiting principle, the government’s theory would violate this court’s obligation to read the Constitution ‘carefully to avoid creating a general federal authority akin to the police power.'”

Unpublished decisions

• United States v. Ferrell, 25-10738, appeal from N.D. Tex.
  • per curiam (Davis, Jones, Ho) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.

• United States v. Vecera, 25-50590, appeal from W.D. Tex.
  • per curiam (Richman, Southwick, Willett) (no oral argument), criminal, sentencing
  • Affirming conviction of possession of a firearm by a felon.
  • Dante Delray Vecera was convicted of possessing a firearm as a felon in violation of 18 U.S.C. § 922(g)(1) and sentenced to 125 months’ imprisonment. On appeal, he raised three challenges: (1) that § 922(g)(1) is facially unconstitutional under New York State Rifle & Pistol Ass’n, Inc. v. Bruen, 597 U.S. 1 (2022); (2) that the statute is unconstitutional as applied to him under Bruen; and (3) that the statute exceeds Congress’s authority under the Commerce Clause. Vecera himself conceded that each argument was foreclosed by existing circuit precedent.
  • The court granted the government’s motion for summary affirmance, finding all three challenges foreclosed: the facial challenge by United States v. Diaz, 116 F.4th 458 (5th Cir. 2024); the as-applied challenge by United States v. Alaniz, 146 F.4th 1240 (5th Cir. 2025); and the Commerce Clause challenge by United States v. Jones, 88 F.4th 571 (5th Cir. 2023).

• United States v. Caldwell, 25-50723, appeal from W.D. Tex.
  • per curiam (Jones, Duncan, Douglas) (no oral argument), criminal
  • Granting Anders motion to withdraw, and dismissing appeal.