Judge Grants Preliminary Injunction Against ATF’s “Engaged in the Business” Rule

The Bureau of Alcohol, Tobacco, Firearms, and Explosives’ (ATF) Final Rule, “Engaged in the Business,” has been roundly criticized since its release a few months ago. The Final Rule seeks to determine who needs a Federal Firearms License (FFL) to sell guns. The problem is that the rule is extremely vague, to the point of saying that one gun sale, or even the willingness to sell a gun, is a violation.

Blind Justice statue in front of an American flag
A Federal Judge has ruled against the ATF’s Final Rule, “Engaged in the Business.” (Shutterstock)

It’s serious business. ATF raided a Little Rock, Arkansas, man’s home soon after the Final Rule took effect, killing him in the process. All evidence points to the White House Office of Gun Violence Prevention being responsible for the rule’s genesis. That would not be surprising, considering the office is staffed by professional gun control activists whose stated purpose is to seek executive avenues toward gun control since Congress has been uncooperative. ATF has become an executive bludgeon for the current administration, and this rule is their way of imposing so-called “universal” background checks by outlawing private sales.

As you might imagine, the Final Rule has been challenged in court, and we have just witnessed what may be the first step toward eliminating it. Federal District Judge Matthew Kacsmaryk issued a preliminary injunction prohibiting ATF from enforcing the rule against the plaintiffs. Judge Kacsmaryk’s decision discusses why he granted the injunction, and it looks like the ATF will be hard-pressed on this one. Let’s break it down.

ATF Guy meme

State of Texas, et al., v. ATF, et al.

This case will likely be known as State of Texas v. ATF, but the Lone Star State isn’t the only plaintiff. Jeffrey Tormey, an individual; the states of Louisiana, Mississippi, and Utah; Gun Owners of America, Gun Owners Foundation, the Virginia Citizens Defense League, and the Tennessee Firearms Association all joined Texas in suing the ATF.

These plaintiffs moved for a preliminary injunction against the ATF, which the judge granted. A preliminary injunction is only granted when the judge believes the plaintiffs have a good chance of winning on the merits of their case. Judge Kacsmaryk previously issued a temporary restraining order against the ATF, which he has now upgraded to a preliminary injunction. The preliminary injunction will be in place until the suit is decided.

The Challenge

ATF says the Final Rule is permissible under the 2022 Bipartisan Safer Communities Act (BSCA). But the suit challenges that assertion, claiming that the Final Rule goes beyond the BSCA’s scope, and thus violates the Administrative Procedures Act (APA), which governs how executive agencies operate.

The Decision

Judge Kacsmaryk, in his decision, quotes several previous cases, writing that “Judicial review under the APA is limited to the administrative record. Agencies, as mere creatures of statute, must point to explicit Congressional authority justifying their decisions. It is axiomatic that an administrative agency’s power to promulgate legislative regulations is limited to the authority delegated by Congress.”

And that’s the point. The Biden Administration has ordered the ATF, through the Justice Department, to circumvent Congress by making rules that carry the force of federal law. This is but the latest example. Others include the Frames & Receivers Rule and the Pistol Brace Rule, both of which appear to be in deep trouble in federal court. Judge Kacsmaryk says as much in his next sentence, quoting federal law, “As such, courts are compelled to ‘hold unlawful and set aside agency action[s]’ that are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law’ or ‘in excess of statutory…authority…’” The judge then says the Final Rule “clashes with the text of the BSCA in at least three ways.

Pistol lying on a federal background check form
The Final Rule is the Biden Administration’s attempt to institute “universal” background checks without Congress. (Shutterstock)

The First Way

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.”

He then quotes the Final Rule’s relevant passage and compares it to the BSCA’s text, which reads, “[A]s 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.” The judge then explains how that passage contradicts the Final Rule’s assertion that a single firearm is enough to require a license. It’s plain to see.

The Second and Third Ways

Honestly, the second and third ways get into the legal weeds in terms of interpreting terms in the BSCA versus those in the Final Rule. You can find Judge Kacsmaryk’s decision online if you want to dig into that stuff. Frankly, it made my head hurt and I sort of went cross-eyed. Suffice it to say that the judge lambasts the ATF for twisting the BSCA to meet the Final Rule’s goals. Let’s move on to his final point.

Bringing it Together

“Lastly,” Judge Kacsmaryk writes, “the Final Rule creates a set of presumptions indicating that (1) ‘when a person has the intent to “predominantly earn a profit,”’ and (2) ‘that someone is “engaged in the business.”’

“But these presumptions are highly problematic for at least two reasons. First, they flip the statute (the BSCA) on its head by requiring that firearm owners prove their innocence rather than the government prove guilt…Second, several presumptions conflict with the statutory text. Two of them, for example, 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.” In other words, the ATF can’t bust you for being willing to sell a gun.

So, what now?

The preliminary injunction blocks the ATF from enforcing the Final Rule against the residents of Texas, Louisiana, Mississippi, and Utah. They also cannot enforce the rule against members of Gun Owners of America, Gun Owners Foundation, the Virginia Citizens Defense League, or the Tennessee Firearms Association. Finally, they cannot enforce it against Jeffrey Tormey.

A pistol lying on the US Constitution
Private firearms sales have always been legal in the United States. (Shutterstock)

ATF will certainly appeal this decision to the 5th Circuit Court of Appeals. That’s a good thing. The 5th Circuit has been spanking the ATF of late. There’s probably a decent chance that the 5th Circuit will not place a stay on Judge Kacsmaryk’s preliminary injunction. If they do, then ATF can enforce the rule against whomever they choose. If not, the protections will stay in place.

This is a big deal. Private firearms sales without a license have always been legal in the United States. Congress has never acted to change that. So, the Biden Administration took it upon themselves to do it without Congress, which is patently illegal. Hopefully, this is the first step toward striking this rule down for usurping Congressional authority. We’ll keep you updated.

William "Bucky" Lawson is a self-described "typical Appalachian-American gun enthusiast". He is a military historian specializing in World War II and has written a few things, as he says, "here and there". A featured contributor for Strategy & Tactics, he likes dogs, range time, and a good cigar - preferably with an Old Fashioned that has an extra orange slice.

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