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Federal Judge Halts ATF Rule Constraining Unlicensed Gun Deals

An assortment of semiautomatic rifles on display for sale at R Guns in Carpentersville, Illinois, on April 29, 2023. (John J. Kim/Chicago Tribune/TNS)
May 20, 2024

A federal judge has ordered the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to temporarily halt enforcement of its new rule re-defining who is considered to be “engaged in the business” of dealing firearms under federal law.

On April 10, the ATF announced U.S. Attorney General Merrick Garland had approved a final rule, expanding the definition of firearms-related business activity to include a broader range of transfers and transactions.

Prior to the ATF’s new rule, individuals had some room to arrange transfers of firearms to other private individuals without it being considered an act of business requiring a federal firearms license or generally requiring the recipient to undergo a background check. The old rules allowed private individuals to loan firearms to friends and family members or to sell their firearms without necessarily having to transact through a licensed firearms dealer.

The new ATF rule states that individuals are engaged in firearms-related business requiring licensure if the ATF determines they are acting “predominantly to earn a profit.”

The new ATF rule elicited challenges from gun rights advocates and multiple gun-friendly states, including Texas, Mississippi, Louisiana, and Utah. Those plaintiffs argued the new rule violates the Administrative Procedure Act (APA), which generally states executive branch agencies must have clear authorization from Congress to set regulations. The plaintiffs argued the ATF’s new rule goes beyond the gun control measures Congress has granted the agency.

On Sunday, U.S. District Judge Matthew Kacsmaryk, of the U.S. District Court for the Northern District of Texas, ruled that some of the plaintiffs in the case had exhibited sufficient standing to challenge the new ATF rule. Kacsmaryk concluded that the new ATF rule likely went afoul of the APA and that the plaintiffs have a likelihood to succeed on those merits of their argument for throwing out the new gun control rule.

The federal government, arguing in favor of the new ATF rule, has argued that it derived the authority for this new interpretation of engaging in firearms-related business following the passage of the Bipartisan Safer Communities Act (BSCA) in June 2022. The defendants argued the BSCA defines firearms-related business to include activity where the intent is to earn a profit and that the new ATF rule is in line with the will of Congress.

Kacsmaryk, an appointee of President Donald Trump, concluded intent alone is too vague to define firearms-related business because it could encompass a person who repeatedly advertises firearm sales that, if transacted would prove profitable, even if they never find a buyer to complete the transaction.

“Moreover, the mere fact that the word ‘intent’ appears in the Section does necessitate — or even suggest — that intent is all that is required. On the contrary, the Section’s usage of ‘intent’ serves merely to distinguish the type of intent contemplated,” the judge added.

Kacsmaryk also concluded the new ATF rule is in conflict with another provision of law passed by Congress; 18 U.S.C § 921(a)(21)(C), which states that the definition of a firearms-related business “shall not include a person who makes occasional sales, exchanges, or purchases of firearms for the enhancement of a personal collection or for a hobby, or who sells all or part of his personal collection of firearms.”

The judge’s ruling bars the ATF from enforcing its new rule, at least until June 2, when the court will consider further arguments in the case.

This article was originally published by FreeBase News and is reprinted with permission.