The Volokh Conspiracy
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Second Amendment Roundup: ATF redefines "engaged in the business"
Agency pushes the envelope to require gun dealer licenses beyond the statute.
ATF's Final Rule Definition of "Engaged in the Business" as a Dealer in Firearms amounts to 466 pages of responses to comments and the final rule itself. Over 252,000 of the 258,000 comments or 98% in favor of the proposed rule were form letters with identical text found online and recommended by (anti-gun) organizations. Only 5,140 were not form letters. Of the 99,000 comments opposed to the rule, 80,000 or 81% were form letters. That means that 18,810 were not form letters. So more than three times the numbers of opponents filed comments with actual substance as did those in favor.
The final rule is substantially the same as the proposed rule. See my previous post "'He's at it again!' Merrick Garland proposes ever-more intrusive ATF regulations." A number of points that I (and others) made in comments filed in opposition to the proposed rule were taken seriously enough for ATF to reject at length.
One new item stands out. The Gun Control Act (GCA) excludes occasional sales and purchases of a "personal collection" of firearms from the term "engaged in the business" of dealing in firearms. The proposed rule defined "personal collection" to include curios and relics and firearms used in recreational activities. In response to numerous comments criticizing the proposal for not including firearms used for self-defense, the final rule explicitly states that "the term [personal collection] shall not include firearms accumulated primarily for personal protection." Yet nothing in the statute excludes such firearms from being part of a personal collection.
By purporting to exclude the occasional buying and selling of firearms acquired for self-defense from the "personal collection" category, the rule would render the person more likely to be subject to the licensing requirement. Yet that category was enacted by the Firearm Owners' Protection Act of 1986, which declared that the rights of citizens … to keep and bear arms under the second amendment to the United States Constitution … require additional legislation to correct existing firearms statutes and enforcement policies." And the Supreme Court stated in D.C. v. Heller that the Second Amendment protects "arms 'in common use at the time' for lawful purposes like self-defense."
In defining "engaged in the business" as a dealer, the rule states that "there is no minimum threshold number of firearms purchased or sold that triggers the licensing requirement," and that "even a single firearm transaction or offer to engage in a transaction, when combined with other evidence … may require a license." Sounds pretty vague given that engaging in business of dealing in firearms without a license is a serious felony.
The rule purports to create a presumption in civil and administrative proceedings that one is engaged in the business if one "repetitively resells or offers for resale firearms" within 30 days after purchase, or within a year after purchase if the firearms are "new, or like new in their original packaging" or "the same make and model, or variants thereof." These are activities in which collectors typically engage – sometimes quickly moving the collection up the ladder with more collectible acquisitions and collecting variations of the same make and model. Nothing in the GCA imposes such time limits.
The rule also purports to create a presumption in civil and administrative proceedings that "a person has intent to predominantly earn a profit" if the person "posts firearms for resale, including through the Internet" or repetitively rents "a table or space at a gun show," and the list of presumptions "are not exhaustive." Again, these are activities in which collectors typically engage. And the statute excludes from such "predominant intent to earn a profit" occasional sales to enhance a personal collection.
The rule claims that the above rebuttable presumptions do not apply in criminal cases, but says the opposite by stating that "they may be useful to courts in criminal cases, for example, when instructing juries regarding permissible inferences." Jury instructions are based on statutory text and judicial opinions, not advocacy by the very agency involved in prosecuting alleged violations.
Many comments argued that the rule violates the Second Amendment. While dictum in Heller did not question the validity of "laws imposing conditions and qualifications on the commercial sale of arms," the new rule – which is not a "law" – redefines "engaged in the business" to include many private, non-commercial sales.
ATF's commentary includes the following fundamental misunderstanding of Supreme Court precedent: "In response to commenters stating that the Department should not use the Heller two-step process, the Department acknowledges that Bruen abrogated the 'two-step' framework of Heller, as 'one step too many,' and rejected the application of means-end scrutiny at the second step." But it was lower courts that obstructed Heller, not Heller, that invented the two-step framework. Relying on text and history, Heller rejected means-ends scrutiny (for which Justice Breyer argued in his dissent), and N.Y. State Rifle & Pistol Ass'n v. Bruen reinforced and expanded on that rejection.
In support of its expansion of the licensing requirement, ATF's response seeks to find historical analogues under Bruen in the wrong places. In 1794, Congress restricted the export of arms and matériel in order to enhance the arming of America at a time when war with Great Britain threatened. The colonies restricted arms trade with Indians to reduce the threat from hostile tribes. Massachusetts enacted a gun proving law. Various laws concerning gunpowder were enacted to ensure a safe, reliable supply. None of these laws parallels the "how" and the "why" of the rule's radical expansion of the licensing requirement.
ATF's commentary fails to rebut the comments that the agency lacks delegated authority to promulgate the rule. In enacting the Gun Control Act in 1968, Congress rejected a provision that would have made it a crime to violate a regulation. Instead, all GCA offenses are defined in terms of violations of "this chapter," i.e., chapter 44 of 18 U.S.C., the criminal code. The Firearm Owners' Protection Act of 1986 reduced ATF's regulatory authority by changing the original phrase "such rules and regulations as he [the Secretary] deems reasonably necessary" to "only such rules and regulations as are necessary." Finally, the delegation by Congress to ATF to promulgate explicit, limited regulations negates the power to adopt expansive, general regulations under the rule expressio unius est exclusio alterius.
The commentary also fails to rebut comments citing Supreme Court precedents such as Thompson/Center Arms v. U.S. holding that both criminal and noncriminal applications of a statute must be interpreted consistently and, if ambiguity exists, interpreted against the government in accord with the rule of lenity.
Finally, on some issues ATF is plainly erroneous but sticks to its error nonetheless. For instance, the GCA prohibits an FFL from transferring a firearm in interstate commerce to a non-FFL, but exempts "returning a firearm or replacement firearm of the same kind and type to a person from whom it was received." 18 U.S.C. § 922(a)(2)(A). ATF adds the limitation that it may be returned only "for the sole purpose of repair or customizing," which it justifies because the phrase "has long been found in the regulations." Never admit a mistake, especially if it is longstanding.
"As more persons become licensed under this rule, those licensees will conduct more background checks," as the commentary correctly states. Indeed, that is its purpose. Since Congress rejected universal background checks, the Biden Administration decided to do the same by regulation.
This rule on "engaged in the business" is the third major set of new regulations set forth by Attorney General Garland, following those on "frames-or-receivers" and "pistol braces." They were preceded by the Trump Administration's "bump-stock" rule, which is the subject of Cargill v. Garland, which was argued in the Supreme Court this term. We'll see whether the Court sets limits on what has become a constant pushing of the envelope of regulatory overreach by the executive branch.
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As I posted last week, the Commissioner of the Washington Supreme Court scheduled a hearing on April 17 regarding the stay he issued against the injunction against enforcement of the state's magazine ban that was ruled unconstitutional by the Superior Court for Cowlitz County in State of Washington v. Gator's Custom Guns. At the hearing, the Commissioner responded to criticism for his issuance of the stay without having time to study the court's 55-page ruling and the state's 32-page motion to stay. He stated that he received the papers on April 8 at 4:14 pm and issued the stay at 4:58 pm. He didn't need more time to review the papers because he had done "a lot of research" beforehand and made himself into an expert on the issue; he "anticipated all the arguments the Attorney General would make" and had "boiler plate templates" for the stay order.
Most of the "hearing" consisted of the Commissioner's musings. A 12-gauge shotgun or a revolver would be good enough for self-defense. A semiautomatic works fine with 5 or 10 rounds. Judge Benitez's decision in Duncan v. Bonta holding California's magazine ban violative of the Second Amendment was based on experts who were "snake oil" salesmen. The arms that pioneers had when Washington was settled were "mind-bogglingly" different than now. The Commissioner anticipates a decision next week on whether the stay will be made permanent. Don't hold your breath waiting for it to be lifted.
