26 USC 5178 (a)(1)( states: "( No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house..." and this is the authorizing statute for 27 CFR 19.52 without which there would be no such regulation. When reading the statutory sentence in its entirety and considering the additional "in" relating to shed, yard, or "inclosure" making that a separate phrase from that contained in the reg, it seems the interpretation turns on the definition of "yard". "Sheds" are slight structures open on one or more sides and "inclosures" are courtyard areas open to the sky and all 3 must be "connected with". By definition "yards" are the grounds immediately surrounding a residence or dwelling house and it becomes a point of interpretation and argument where a yard begins and ends, especially in a rural setting where agricultural activities have long taken place in association with, but separate from, a house. It seems to me certain agents read the statute (or only the reg since I doubt interpretation goes that deep) too narrowly and if their interpretation were to hold there would be no rural or farm based DSPs. For more specifics on how it might be interpreted in law one would have to look at Congressional intent in the authorizing statute or comments in the rule making process. To me the intent is clear to have a DSP separate and distinct from a residence but not to ban them from close proximity altogether.