Judge Grants Preliminary Injunction Against ATF Rule on Gun Dealers

A federal judge in Texas has granted a preliminary injunction against the ATF’s new rule on who is “engaged in the business” of dealing firearms, but his ruling won’t apply to every gun owner across the country. Instead, U.S. District Judge Matthew J. Kacsmaryk has limited the scope of the injunction solely to the named plaintiffs in the case.

Still, given that those plaintiffs include the states of Texas, Utah, Louisiana, and Mississippi along with Gun Owners of America, the Tennessee Firearms Association, and the Virginia Citizens Defense League, millions of gun owners who could otherwise be subjected to an ATF investigation or federal charges simply for offering a firearm for sale can rest a little easier for the time being.

In his ruling, Kacsmaryk held that the plaintiff’s argument that the new ATF rule violates the Administrative Procedures Act is likely to prevail at trial. According to the judge, the new language from the ATF goes far beyond the small changes in statute that were approved by Congress as part of the Bipartisan Safer Communities Act.

Here, the Final Rule clashes with the text of the BSCA in at least three ways. First, it asserts that there is no “minimum number of firearms to actually be sold to be ‘engaged in the business’” for the purposes of the licensing requirement. . “[A] single firearm transaction”— or even a mere offer to engage in a transaction — may suffice.

[W]hile selling large numbers of firearms or engaging or offering to engage infrequent transactions may be highly indicative of business activity, neither thecourts nor the Department have recognized a set minimum number of firearms purchased or resold that triggers the licensing requirement. Similarly, there is no minimum number of transactions that determines whether a person is “engaged inthe business” of dealing in firearms. Even a single firearm transaction, or offer to engage in a transaction, when combined with other evidence, may be sufficient to require a license.

But the BSCA says otherwise: The term “engaged in the business” means . . .

as applied to a dealer in firearms, as defined in section 921(a)(11)(A), a person whodevotes time, attention, and labor to dealing in firearms as a regular course of tradeor business to predominantly earn a profit through the repetitive purchase and resale of firearms, but such term shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personalcollection or for a hobby, or who sells all or part of his personal collection of firearms[.]

Congress says someone must repeatedly buy and resell firearms to be considered a gun dealer, while the ATF says merely offering a single gun for sale can suffice. Kacsmaryk rightfully held that it’s the language in the statute that matters most, and the agency has likely strayed so far from the text that its rule should be rendered null and void when the case is resolved on the merits.

The judge also took issue with the ATF rule’s suggestion that “actual profit is not a requirement of the statute —it is only the predominant intent to earn a profit through the repetitive purchase and resale of firearms that is required,” pointing out that the current statute states “proof of profit shall not be required as to a person who engages in the regular and repetitive purchase and disposition of firearms for criminal purposes or terrorism. According to Kacsmaryk, that means that proof of profit is required if the feds want to charge someone with being an unlicensed gun dealer and there are no allegations of criminal activity or terrorism involved.

Lastly, Kacsmaryk found fault with the ATF’s presumptions on “when a person has the intent to ‘predominantly earn a profit’” and “that someone is ‘engaged in the business.’” Under the ATF’s rule, people are presumed to have those intentions unless they can prove otherwise, which the judge says “flip[s] the statute on its head by requiring that firearm owners prove innocence rather than the government prove guilt.”

I wish that the judge would have applied this injunction to all gun owners and not just the named plaintiffs in the case, but this is still a significant victory for those challenging the new rule. Texas v. ATF isn’t the only lawsuit to challenge the ATF rule either, so there’s a good chance that more gun owners will find relief as the other lawsuits move forward in the courts.