Federal Judge Blocks ATF Rule Expanding Definition of Gun Dealer

A magazine is loaded into a Sig Sauer P320 compact semiautomatic pistol at a gun shop in Richmond, Va., on Jan. 13, 2020. Samira Bouaou/The Epoch Times

A federal judge in Texas has blocked the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) from implementing its new rule, which critics say dramatically expands the agency’s enforcement scope by redefining who is a gun dealer.

In his opinion handed down June 11, U.S. District Judge Matthew Kacsmaryk for the Northern District of Texas said the enforcement of the new rule relies on “highly problematic” presumptions that will “trigger civil or criminal penalties for conduct deemed lawful just yesterday.”

The rule in question was unveiled in April as part of President Joe Biden’s effort to close what he called “loopholes” in the federal gun background check system. The president said those gaps have allowed sellers to avoid becoming federally licensed gun dealers while still selling guns at gun shows or on the internet.

To close the gaps, the new ATF rule declares that a person no longer has to make a living selling guns to be considered “engaged in the business” of selling guns. Instead, someone who sells or offers to sell just one gun with the intent to “predominantly earn a profit” may be deemed an unlicensed gun dealer, and will be required to be registered with the federal regulator and conduct background checks on potential customers.

It further clarifies that a single transaction may be sufficient to require someone to become a licensed dealer, so long as there is other evidence to suggest commercial activity. For example, someone who sells one gun and then tells others about the possibility of buying more guns for resale, may be required to get a license.

Rule Details

The new rule lists certain actions that could be used by the federal government as evidence of someone selling guns to earn a profit. Those include advertising, setting up a system to accept credit card payments, renting space to sell guns, applying for a state or local business license, or hiring security.

“If you are conducting business that in a brick-and-mortar store would require you to become a licensed dealer, you have to become a licensed dealer and run background checks,” the White House explained in a readout. “It does not matter whether you are dealing firearms at a gun show, online, in your home, in the trunk of a car, at a flea market, or anywhere else—you must obtain a license and run background checks results.”

“This is going to keep guns out of the hands of domestic abusers and felons. And my administration is going to continue to do everything we possibly can to save lives,” President Biden said.

A coalition of state attorneys general and Second Amendment advocacy groups sued to block the ATF rule, which they say violates not only the Second Amendment right to privately buy and sell guns, but also the Fifth Amendment right to due process protections.

One of the most troubling aspects of the rule, the suing parties alleged, is that it subjects gun owners to “presumptions of criminal guilt” for all manner of activities relating to the private sale of guns.

Specifically, the plaintiffs took issue with the ATF shifting the burden of proof to the seller, who is already presumed under the rule to be “engaging in the business” of dealing firearms and as such is an unlicensed dealer.

“Previously, only those who actually engaged in regular commerce in firearms as a business had to be licensed. Now, every gun owner who innocently sells—or even just offers to sell—a few guns from his personal collection, but happens to fall within one or more of ATF’s presumptions, is threatened to obtain a Federal Firearms License or else risk the consequences,” the complaint read.

Plaintiffs Win

Judge Kacsmaryk sided with the plaintiffs. In May, he issued a tem­po­rary restraining order halting enforcement of the rule until June 2, followed by a preliminary injunction on June 11.

In defense of the rule, the ATF argued that the plaintiffs do not have standing to sue, and that even if they did, their claims fail on the merits. Judge Kacsmaryk rejected both arguments.

The lawsuit was filed by Gun Owners of America, Gun Owners Foundation, Virginia Citizens Defense League, and Tennessee Firearms Association, alongside the attorneys general of Louisiana, Mississippi, Texas, and Utah. The judge said each of them have a stake in the rule.

Louisiana, for example, levies a 4.45 percent sales tax on internet gun trades and could suffer from reduced taxable sales if the ATF rule is implemented.

The judge further wrote the ATF’s final rule “creates sets of presumptions” indicating when a person has the intent to “predominantly earn a profit” and whether someone is “engaged in the business” of selling firearms.”

“These presumptions are highly problematic,” he said in the opinion. “They flip the statute on its head by requiring that firearm owners prove innocence rather than the government prove guilt.”

The federal agency is expected to appeal the decision to the U.S. Court of Appeals for the Fifth Circuit, which has been critical of other gun regulations.