He’s at It Again! Merrick Garland Proposes Ever-More Intrusive ATF Regulations.

Attorney General Merick Garland is proposing new ATF regulations that would expand definitions in the Gun Control Act to require ever-more gun owners to obtain federal dealer licenses. This follows a new regulation redefining “frame or receiver” and another one reclassifying pistols with braces as “short-barreled rifles.” As I’ve posted previously,

those regulations have run smack into the Fifth Circuit’s brick wall, The Fifth Circuit preliminarily enjoined enforcement of the pistol brace rule. It allowed a vacatur of the frame or receiver rule to remain in place, although the Supreme Court stayed the vacatur of that rule pending disposition of the case in that Court.

These three new, expansive regulatory schemes are unprecedented since passage of the Gun Control Act of 1968 (GCA). This third proposed rule reminds one of dinosaur Rex’s scream in Toy Story: “He’s at it again!”

Ordinary gun owners are not required to obtain any kind of license from ATF. To exercise the Second Amendment right to keep and bear arms, a person must be able to obtain firearms, and is free to dispose of firearms without a license as long as the person is not in the gun business. The proposed regulation purports to require many such persons to obtain a firearm dealer’s license.

The GCA defines “dealer” as “any person engaged in the business of selling firearms at wholesale or retail.” The term “engaged in the business” means “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 the definition “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.”

As if that’s not enough, “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.” If you’re wondering why the definitions are so detailed, it’s because the original GCA had no definition of “engaged in the business” and numerous gun owners who made only occasional sales were being prosecuted because they didn’t have licenses.

In a 1982 report, the Subcommittee on the Constitution of the Senate Judiciary Committee charged: “Agents anxious to generate an impressive arrest and gun confiscation quota have repeatedly enticed gun collectors into making a small number of sales—often as few as four—from their personal collections. … The agents then charged the collector with having ‘engaged in the business’ of dealing in guns without the required license.”

The Firearm Owners’ Protection Act of 1986 (FOPA) enacted the larger part of these definitions to prevent such unwarranted prosecutions, although the Bipartisan Safer Communities Act of 2022 (BSCA) revised them somewhat. First, for “engaged in the business,” FOPA used the term “with the principal objective of livelihood and profit,” which BSCA struck and substituted with the awkward split-infinitive “to predominantly earn a profit.” Second, FOPA defined “with the principal objective of livelihood and profit,” while BSCA deleted that term in favor of “to predominantly earn a profit,” but left the definition itself intact. In debate on the floor in Congress over BSCA, not one speaker explained the reason for changing the words or what effect the changes would have.

The Attorney General has authority to “prescribe only such rules and regulations as are necessary to carry out the provisions of this chapter,” such as administrative regulations about recordkeeping by licensees. But the Attorney General has no authority to expand on the definitions enacted by Congress, particularly because the GCA is a criminal statute with felony penalties for violation. The executive branch has no authority to invent new crimes.

A proposal to allow the agency that became ATF to adopt criminal regulations was defeated in GCA debates, reflecting that it would have violated the separation between the legislative and executive powers. And while the Chevron deference doctrine should never apply in a manner to allow an agency to criminalize conduct, Chevron itself may perhaps meet its just end when the Supreme Court decides the following issue in Loper Bright Enterprises v. Raimondo: “Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency.”

The proposed ATF regulations here purport to make law by expanding the reach of the GCA beyond what Congress enacted. The rule states that a person “shall be presumed to be engaged in the business of dealing in firearms in civil and administrative proceedings” if the person does something on a non-exhaustive list that ATF invented, such as “offers for sale firearms, and also … demonstrates a willingness and ability to purchase and sell additional firearms.” A single firearm need not even be sold if the person expresses a willingness to sell firearms, even if the person has no firearms to sell. That’s not how Congress defined the terms.

The reference to “civil and administrative proceedings” includes actions like forfeitures. ATF can supposedly seize and forfeit firearms based on “presumptions” it invented and is not limited to the grounds for forfeiture set forth in 18 U.S.C. § 924(d), which for many forfeitures requires a showing of intent “by clear and convincing evidence”—the opposite of a presumed violation.

The proposal concedes that the above presumption does not apply to a criminal case, but “may be useful to courts in criminal cases … when instructing juries regarding permissible inferences.” But jury instructions are written based on the language of the statute, which sets out the elements of the offense, and the applicable judicial decisions that interpret the law. The agency involved in the prosecution of a case doesn’t get to tell the judge how to draft the jury instructions.

As noted, the GCA defines the terms “to predominantly earn a profit” to mean a predominant intent to obtain pecuniary gain, not other intents, such as improving or liquidating a personal firearms collection. ATF makes up a list of actions that create a presumption that this definition is met, such as “rents … temporary physical space to display … firearms they offer for sale, including … a table or space at a gun show.” The GCA makes no such presumption, and in fact many who display at gun shows are there to improve a collection, or just to gab with persons who happen by about political topics, such as how ATF “is at it again.”

The new rule purports to narrow the term “personal collection,” which Congress did not limit, to “personal firearms that a person accumulates for study, comparison, exhibition, or for a hobby.” Somehow “self-defense” didn’t make the cut, although that’s a predominant reason to acquire firearms. As the Supreme Court stated in D.C. v. Heller, “the inherent right of self-defense has been central to the Second Amendment right,” and handguns are “overwhelmingly chosen by American society for that lawful purpose.”

The rule adds that the term “personal collection” “shall not include any firearm purchased for the purpose of resale or made with the predominant intent to earn a profit.” But collectors in general buy guns with the purpose of eventual resale when they locate and can afford guns of ever-higher quality and rarity, and they certainly intend to sell guns for more than they paid as the collection moves up the ladder. And any gun owner would hope that the value of his or her firearms will increase in value, even if only to be sold by the heirs at a profit.

Next comes the inevitable list of activities for which a person is “presumed to have the intent to predominantly earn a profit from the sale or disposition of firearms.” Note how ATF in compiling this list has conveniently deleted the following italicized words from the statutory term: “a regular course of trade or business to predominantly earn a profit through the repetitive purchase and resale of firearms.”

ATF’s list includes activities like “advertises or posts firearms for sale, including on any website,” terms that apply if you’re just trying to sell a single, rare gun on GunBroker.com; “makes available business cards,” which would apply to a card a collector gives out with the intent to help find rare Colt single-action revolvers; rents a “temporary physical space to display … firearms they offer for sale, including … [a] table or space at a gun show,” something countless collectors do; and “maintains records, in any form, to document … profits and losses from firearms purchases and sales,” something many gun owners keep track of without being in the gun business.

The new rule is calculated to require potentially hundreds of thousands of gun owners who occasionally buy and sell firearms to obtain dealer licenses from ATF. Remember when the complaint used to be that there are more licensed gun dealers than gas stations in the U.S.? Yet previously, the Biden Administration adopted a “zero-tolerance” policy of revoking as many dealer licenses as possible for even a single violation.

Why is the Administration pursuing these two diametrically-opposed objectives? First, putting actual dealers out of business reduces the availability of firearms in the community. A large store that sells numerous firearms also generates thousands of records, and under zero tolerance, any inadvertent error may give rise to a revocation of the license. Second, the antigun movement has not been successful in persuading Congress to pass universal background checks. By requiring more persons who only occasionally buy and sell firearms to obtain licenses, all persons who buy guns from them will have a check under the National Instant Criminal Background System. The “pen and the phone” work wonders when Congress refuses to act.

This see-saw game goes back to the Carter Administration, when ATF was young and on a mission to restrict gun ownership. Persons were denied dealer licenses because they allegedly didn’t do enough business to qualify, and then were prosecuted for engaging in the business without a license. This was documented in Gun Control and Constitutional Rights: Hearings before the Subcomm. on the Constitution of the Senate Judiciary Comm., 96th Cong., 2d Sess. (1980). Such antics prompted Congress to enact the Firearm Owners’ Protection Act, which provided the particularized definitions for being engaged in the business.

The Supreme Court said in Heller that “nothing in our opinion should be taken to cast doubt on longstanding … laws imposing conditions and qualifications on the commercial sale of arms,” which are “presumptively lawful regulatory measures.” But tension would exist between the exercise of Second Amendment rights by the people in a non-commercial context and the imposition on those people of the conditions and qualifications applicable to businesses involved in such commercial sales.

The GCA requires a license to be a dealer in firearms, and a dealer is obliged to fulfil various requirements. The dealer waives Fourth Amendment rights to the extent the GCA authorizes ATF inspection during business hours on the licensed premises of required records and firearm inventory. The dealer waives the Fifth Amendment privilege against self-incrimination to the extent the GCA requires the keeping of records of firearm transactions.

As the proposed regulations attempt to push more of the people into the dealer category, Second Amendment concerns arise. While a handful of states require a license or ID for mere possession of a firearm, that arguably violates the right. So too would the right be violated if gun owners are subjected to unannounced inspections by authorities at their homes, an affront that European gun owners suffer. And while California now requires registration of most firearms, Congress has regularly rejected registration of firearms, and by implication requiring recordkeeping by gun owners.

Finally, Congress based the GCA’s requirement of dealer licensing on the basis of its power to regulate commerce among the states. Gun owners who buy and sell firearms occasionally are not involved in commerce, much less interstate commerce. Pushing them into the licensing category pretends that they are.

Consider offering comments to the proposed rule. The deadline is December 7, the anniversary of “a date which will live in infamy.”

The Fifth Circuit heard oral argument in Garland v. VanDerStok on September 7. It was very entertaining and is worth a listen. This is the case mentioned at the beginning of this post regarding the meaning of “frame or receiver.” The judges gave government counsel a tough time regarding the meaning of “readily,” based on the ATF-endorsed ruling in U.S. v. Smith (8th Cir. 1973) that an item was “readily restorable” to being a machine gun even though it took “an 8-hour working day in a properly equipped machine shop.” Kudos to Pete Patterson of Cooper & Kirk for an excellent argument on behalf of VanDerStok.