The ATF's new rule re-defining who is in "engaged in the business" of dealing firearms takes effect today, but thanks to a federal judge in Texas millions of gun owners are exempt from enforcement... at least for a couple of weeks. 

The states of Texas, Mississippi, Louisiana, and Utah, along with Gun Owners of America, the Tennessee Firearms Association, and the Virginia Citizens Defense League, were all parties to the lawsuit challenging the new ATF rule, but U.S. District Judge Matthew Kacsmaryk ruled on Sunday that only Texas and the 2A group have shown standing to sue at this point. That means that the ATF rule is enforceable in 49 of the 50 states, though not against any member of GOA, TFA, and the VCDL. 

In his ruling, Kacsmaryk found that the plaintiffs who did provide an adequate showing of standing are likely to prevail with their argument that the new rule violates the Administrative Procedures Act. Further, the judge declared that the ATF rule is in conflict with the federal statute defining who is engaged in the business of dealing firearms, which was most recently changed by the Bipartisan Safer Communities Act.

As this is a question of statutory interpretation, the Court begins with the text. And 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 toengage in a transaction — may suffice. 

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 who devotes time, attention, and labor to dealing in firearms as a regular course of trade or 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 personal collection or for a hobby, or who sells all or part of his personal collection of firearms[.]

Kacsmaryk also took aim at the ATF's assertion 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.” In other words, you don't actually have to make a penny in profit for the ATF to decide you're an unlicensed gun dealer. The judge says that interpretation conflicts with the plain text of the statute. 

But Section (a)(22) of the BSCA provides: The term “to predominantly earn a profit” means that the intent underlying the sale or disposition of firearms is predominantly one of obtaining pecuniary gain, as opposed to other intents, such as improving or liquidating a personal firearms collection: Provided, That 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. 

The negative corollary is obvious: while proof of profit is not required “for criminal purposes or terrorism,” it is required for all other cases. Moreover, the mere fact that the word “intent” appears in theSection 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:namely, “one of obtaining pecuniary gain.”

Kacsmaryk also declared that the ATF rule "arbitrarily eviscerates Section 921(a)(21)(C)’s safe harbor provision."

That provision reads: The term “engaged in the 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[.] 

Nothing in the foregoing text suggests that the term “personal collection” does not include firearms accumulated primarily for personal protection — yet that is exactly what the Final Rule asserts. 

... Defendants maintain their interpretation despite knowing that “two-thirds of Americans report owning firearms primarily for ‘defense’ or ‘protection’” — thereby necessitating the absurdity that the statute’s safe harbor provision provides no safe harbor at all for the majority of gun owners. Such an interpretation is untenable given the provision’s logical statutory role.

Finally, the judge found the ATF "creates sets of presumptions" indicating "when a person has the intent to ‘predominantly earn a profit’” and “that someone is ‘engaged in the business,’” that are "highly problematic" from a legal perspective. 

First, they flip the statute on its head by requiring that firearm owners prove innocence rather than the government prove guilt. 

... Second, several presumptions conflict with the statutory text. For example, two provide that a person is presumptively “engaged in the business” if he “demonstrates a willingness and ability to purchase and resell” firearms or “purchases . . . or . . . resells” firearms. But as discussed supra, a mere willingness is not enough — there must also be prohibited acts. Nor is purchasing or reselling sufficient — the statute provides a conjunctive.

The only disappointing aspect of Kacsmaryk's decision is that he didn't grant a nationwide injunction against ATF enforcement of the new rule, despite finding severe defects in the rule that could be used against tens of millions of gun owners who aren't Texas residents or members of GOA, TFA, or VCDL. 

It’s disappointing that the court system often protects some gun owners (like Texans and GOA members) who file lawsuits rather than protecting all Americans. Know we did ask him to issue a nationwide TRO. Also, ATF will have a nightmare enforcing this rule outside of Texas now.

— Aidan Johnston (@RealGunLobbyist) May 19, 2024

That doesn't mean they won't try, but there are also two other federal lawsuits taking on the ATF's rule that could give more gun owners the same relief that Kacsmaryk has provided the plaintiffs in Texas v. ATF. 

Kacsmaryk has found the ATF's new rule redefining who is "engaged in the business" of dealing firearms, and therefore needs a Federal Firearms License, is just as abusive as the plaintiffs allege. That's a hugely important and positive decision, even if he limited the scope of his relief for the time being. The new rule is already on the ropes, and hopefully it won't be long before the courts deliver it a knockout blow; protecting millions of responsible gun owners from the latest attack by the Biden administration.