New ATF guidance on gun sales is legally meaningless (or else it would be unlawful)

Today the White House announced a series of executive branch actions (not executive orders) that are supposed to reduce the threat of gun violence. Chief among these measures is a new guidance from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) concerning when those who sell guns are required to obtain a federal license and perform background checks of prospective gun purchasers. The ATF is also finalizing a regulation that would prevent prospective gun purchasers from avoiding background checks by acquiring guns through a trust or corporation, but this is a separate measure.

According to the White House, the new ATF guidance is intended "to ensure that anyone who is 'engaged in the business' of selling firearms is licensed and conducts background checks on their customers." The ATF is achieving this not by issuing new regulations (re)defining what it means to be "engaged in the business" of selling guns under federal law. Instead, the ATF issued a guidance document that simply explicates what this legal requirement means, providing examples of the sorts of things that would indicate that a given individual is in the gun business, rather than conducting the occasional personal sale as a hobbyist or as part of an estate liquidation, or something of that sort. According to both the White House release and the ATF guidance, the various indicia identified in the guidance are, in turn, based upon what federal courts have found in relevant cases. (The relevant court decisions are not cited or otherwise identified in the document, and I have asked both ATF and the White House for more information on this point.)

Taken at face value, the new ATF guidance is thus nothing more than a restatement of existing legal requirements. Put another way, it merely identifies those who are already subject to the relevant federal requirements and does not in any way expand the universe of those gun sellers who are required to obtain a license and perform background checks. In other words, it is—as the document says—a guidance, and not a substantive rule. It has no legal effect.

If the ATF guidelines are nothing more than a guidance—an indication of the sorts of things that might trigger a federal investigation or prosecution, but not a tightening of the relevant legal standard—why would the administration do this? There are several potential answers. First, guidance documents are often useful insofar as they explicate relevant legal standards and (as the name implies) provide guidance to the regulated community. Such documents can help people know when they are subject to specific legal requirements. Further, if there are a significant number of people who should have federal gun licenses but have neglected to obtain them, the guidance document might encourage greater compliance with federal law.

A second potential reason for issuing a guidance document of this sort, as Eugene Kontorovich suggests, could be that the administration hopes to "chill" marginal gun sales. Although a guidance document does not change the relevant legal standard, the issuance of such a document can affect behavior. Individuals who learn they are closer to the relevant legal line than they had realized might be encouraged to comply with the relevant legal requirements, or they may opt to stop selling guns. In this way, a guidance document may help to discourage behavior the government wishes to control but which may lie beyond the government's legal reach.

A third potential reason for issuing a guidance of this sort is political: to respond to the political demand for action. Issuing a guidance document with substantial fanfare is a way to create the impression of action and satisfy relevant constituencies. To the typical, rationally ignorant voter, it may appear that the administration is doing something significant. (And insofar as Republicans complain and caterwaul about the administration's actions, this purpose is more fully achieved.)

A fourth potential reason for issuing a guidance instead of issuing a new regulation (re)defining what it means to be "engaged in the business" of selling firearms is that issuing a guidance is relatively quick and easy. Issuing a new regulation, on the other hand, can be arduous and time-consuming, as it requires going through a lengthy notice-and-comment rulemaking process. If the administration began the rulemaking process today, it's not clear it could finish the job before the administration leaves office. In addition, challenging guidance documents in court is also difficult to do, while finalizing a new regulation creates a ready target for legal challenges.

A consequence of choosing to issue a guidance document instead of a new regulation, however, is that the guidance document cannot have legal force. That's what it means to be a guidance—and is one reason that such documents do not have to go through the rulemaking process. To be sure, sometimes agencies do one thing while saying they are doing another—issuing a new substantive regulation that changes the relevant legal requirements but calling it a guidance. Yet when agencies do this, they make themselves legally vulnerable. Courts reviewing agency actions are more concerned with the substance of what an agency does than what the agency calls it. So if one were to conclude that the new ATF guidance is really an expansion of existing regulatory requirements, it would be legally invalid under the Administrative Procedure Act because ATF did not go through the relevant rulemaking requirements.

One upshot of all this is that if the new ATF action is challenged in court, the proceedings will focus on these administrative law questions and will not get into whether a more expansive definition of "engaged in the business" is lawful, let alone whether requiring background checks is consistent with the Second Amendment. The first question a court will consider is whether the ATF document is, in fact, a guidance. The administration will argue that it is, as this is the best way to make a legal challenge go away. But in arguing that the "guidance" is a guidance, the administration will also be conceding that the document has no legal effect and that it does not require anything that is not already required under federal law.

[Addendum: One way to determine whether the ATF is trying to expand the scope of the relevant legal requirements would be to assess the court decisions upon which the ATF purports to rely. Unfortunately, the ATF guidance does not provide any citations to the relevant court decisions. I contacted the ATF press office about this, and it referred me to the White House. I await its response on what court decisions the ATF guidance is relying upon, and will post on that if I hear back. UPDATE: I have been pointed to a few cases by a Department of Justice spokesman that seem generally supportive of the ATF's take. Time-permitting, I'll detail these cases in a follow-up post.]