Filed: Jul. 11, 2013
Latest Update: Mar. 28, 2017
Summary: Case: 12-50742 Document: 00512304458 Page: 1 Date Filed: 07/11/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED July 11, 2013 No. 12-50742 Lyle W. Cayce Clerk 10 RING PRECISION, INC., Plaintiff - Appellant ROBBY BETTS, doing business as Golden States Tactical, Intervenor - Appellant v. B. TODD JONES, Acting Director, Bureau of Alcohol, Tobacco, Firearms & Explosives, in his official capacity, Defendant - Intervenor - Appellee App
Summary: Case: 12-50742 Document: 00512304458 Page: 1 Date Filed: 07/11/2013 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED July 11, 2013 No. 12-50742 Lyle W. Cayce Clerk 10 RING PRECISION, INC., Plaintiff - Appellant ROBBY BETTS, doing business as Golden States Tactical, Intervenor - Appellant v. B. TODD JONES, Acting Director, Bureau of Alcohol, Tobacco, Firearms & Explosives, in his official capacity, Defendant - Intervenor - Appellee Appe..
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Case: 12-50742 Document: 00512304458 Page: 1 Date Filed: 07/11/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 11, 2013
No. 12-50742
Lyle W. Cayce
Clerk
10 RING PRECISION, INC.,
Plaintiff - Appellant
ROBBY BETTS, doing business as Golden States Tactical,
Intervenor - Appellant
v.
B. TODD JONES, Acting Director, Bureau of Alcohol, Tobacco, Firearms &
Explosives, in his official capacity,
Defendant - Intervenor - Appellee
Appeals from the United States District Court
for the Western District of Texas
Before KING, HIGGINBOTHAM, and CLEMENT, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
In July 2011, as part of an effort to combat the illegal trafficking of
firearms from the United States to Mexico, the Bureau of Alcohol, Tobacco,
Firearms, and Explosives (“ATF”) issued a demand letter to each federal
firearms licensee classified as a “dealer” or “pawnbroker” located in Arizona,
California, New Mexico, and Texas.1 The July 2011 demand letter required its
1
There are nine categories of federal firearms licensees. See United States Department
of Justice, The Bureau of Alcohol, Tobacco, Firearms and Explosives, ATF
Online—Statistics—Listing of Federal Firearms Licensees, http://www.atf.gov/about/foia/ffl-
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No. 12-50742
recipients to report to ATF whenever “at one time or during any five consecutive
business days, [they] sell or otherwise dispose of two or more semi-automatic
rifles capable of accepting a detachable magazine and with a caliber greater than
.22 (including .223/5.56 caliber) to an unlicensed person.” Appellants argue that
ATF lacked statutory authority to issue the July 2011 demand letter, and, even
if it possessed statutory authority, that its decision to issue the demand letter
to the chosen licensees was arbitrary and capricious. We disagree.
I.
The Gun Control Act of 1968 (“GCA”) requires anyone who wishes to
“engage in the business of . . . dealing in firearms” to obtain a license.2 All
federal firearms licensees (“FFLs”) must create and maintain records of all
firearms transactions, including the name, age, and residence of each individual
who purchases a firearm.3 In 1986, Congress amended the GCA with the
passage of the Firearms Owners’ Protection Act of 1986 (“FOPA”).4 As part of
FOPA, Congress enacted 18 U.S.C. § 923(g)(5)(A), which permits ATF to issue
demand letters to FFLs to obtain “all record information required to be kept [by
the GCA] or such lesser record information.”5 Relying on that authority, ATF
issued the July 2011 demand letter in response to its documented investigation
of escalating drug violence in Mexico.
A brief background of that investigation, as well as it findings, is helpful
in understanding ATF’s decision to issue the July 2011 demand letter. In 2007,
list.html.
2
18 U.S.C. § 923(a). The authority to issue licenses has been delegated to ATF. See
Blaustein & Reich, Inc. v. Buckles, 365 F.3d 281, 283 n.3 (4th Cir. 2004), cert denied,
543 U.S.
1052 (2005).
3
18 U.S.C. §§ 922(b)(5), 923(g).
4
Pub. L. No. 99-308, 100 Stat. 449 (1986).
5
18 U.S.C. § 923(g)(5)(A).
2
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ATF began investigating the illegal flow of guns from the United States to
Mexico.6 William Hoover, Assistant Director of Field Operations for ATF,
testified before a subcommittee of the United States House of Representatives
in June 2008 that “trace data over the past three years shows that Texas,
Arizona and California are the three most prolific states, respectively, for
firearms illegally trafficked to Mexico.” He noted that “[although] the [drug
trafficking organizations’] ‘weapons of choice’ had been .38 caliber
handguns . . . cartel members and enforcers have now developed a preference for
higher quality, more powerful weapons,” such as assault rifles. He also
explained that “tracing” of firearms seized in the United States and Mexico plays
“an essential part in ATF’s firearms trafficking investigations.”
In June 2009, the Government Accountability Office (“GAO”) released a
report entitled Firearms Trafficking: U.S. Efforts to Combat Arms Trafficking
to Mexico Face Planning and Coordination Challenges (“the Report”).7 According
to the Report, “about 27 percent of firearms recovered in Mexico and traced from
fiscal year 2004 to fiscal year 2008 were long guns.”8 Moreover, “[f]rom fiscal
year 2004 to fiscal year 2008, most of the firearms seized in Mexico and traced
came from U.S. Southwest border states. In particular, about 70 percent of those
firearms came from Texas, California, and Arizona.”9 The Report explained that
the absence of a multiple sales reporting requirement for long guns poses a
challenge for ATF’s efforts. “[T]he federal multiple sales reporting requirement
6
See OFFICE OF THE INSPECTOR GEN., I-2011-001, REVIEW OF ATF’S PROJECT
GUNRUNNER i (2010).
7
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-09-709, FIREARMS TRAFFICKING: U.S.
EFFORTS TO COMBAT ARMS TRAFFICKING TO MEXICO FACE PLANNING AND COORDINATION
CHALLENGES (2009).
8
Id. at 28.
9
Id. at 19.
3
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helps expedite the time required by ATF to complete a gun trace.”10 Because
ATF “does not have information in its multiple sales database on any long guns
recovered in crime in Mexico that may have been purchased through a multiple
sale,”11 it usually cannot use its own records to trace those guns. The Report also
made clear that “ATF has identified multiple sales or purchases of firearms by
a nonlicensee as a ‘significant indicator’ of firearms trafficking.”12 The Report’s
recommendations included a suggestion that ATF investigate potential
approaches “to address the challenges . . . regarding the constraints on the
collection of data that inhibit the ability of law enforcement to conduct timely
investigations.”13
In May 2010, the Office of the Inspector General (“OIG”) issued a review
of ATF’s efforts to combat firearms trafficking, which noted that “the lack of a
reporting requirement for multiple sales of long guns . . . hinders ATF’s ability
to disrupt the flow of illegal weapons into Mexico.”14 It also identified data
showing that, of the illegally trafficked guns recovered in Mexico, the percentage
of those that were long guns increased steadily from 20 percent in 2004 to 40
10
Id. at 28. When a firearm is recovered, a law enforcement official makes a “trace
request” by entering specific identifying information (such as the firearm’s serial number and
model) into the ATF Firearms Tracing System, a database maintained by the ATF’s National
Tracing Center. Although FOPA limits ATF’s ability to keep and maintain firearms
transactions records, the GCA permits ATF to maintain records of firearms transactions in
certain circumstances. For example, 18 U.S.C. § 923(g)(3)(A) requires FFLs to report two or
more sales of a pistol or revolver to the same person during any five consecutive business days.
ATF compares the identifying information entered with other firearm transaction records in
the database, including multiple sales report information. “If a trace request is matched to
multiple sales information, the trace can be completed in minutes rather than days or weeks.”
OFFICE OF THE INSPECTOR GEN., supra note 6, at 10. If the database contains no record
information on the particular firearm, ATF must contact the manufacturer, importer, and/or
wholesaler to identify the final purchaser—a process that can take up to ten days.
11
U.S. GOV’T ACCOUNTABILITY OFFICE, supra note 7, at 28.
12
Id.
13
Id. at 59.
14
OFFICE OF INSPECTOR GEN., supra note 6, at iv.
4
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percent in 2008.15 In addition, the review noted that, since long guns generally
have a shorter “time-to-crime”16 than handguns, long guns generate more
valuable leads for law enforcement officials,17 and that “Mexican cartels are
obtaining long guns in multiple sales.”18 These and other findings led OIG to
conclude that “the mandatory reporting of long gun multiple sales could help
ATF identify, investigate, and refer for prosecution individuals who illegally
traffic long guns into Mexico.”19 Accordingly, OIG recommended that ATF
“explore options for seeking a requirement for reporting multiple sales of long
guns.”20 ATF responded that it would “explore the full range of options to seek
information regarding multiple sales of long guns,” but noted that some options
could “require a change to the [GCA] which is beyond ATF’s . . . authority.”21
On December 17, 2010, ATF responded to these reports and
recommendations by announcing a proposal that would require FFLs in Arizona,
California, New Mexico, and Texas “to report multiple sales or other dispositions
whenever the licensee sells or otherwise disposes of two or more rifles within any
five business consecutive days with the following characteristics: (a) [s]emi-
automatic; (b) a caliber greater than .22; and (c) the ability to accept a
detachable magazine.”22 After the initial sixty-day comment period, during
15
Id. at 38.
16
“Time-to-crime is the time from the retail sale of a firearm to the time it is recovered
at a crime scene or is traced.” Blaustein, 365 F.3d at 285.
17
OFFICE OF INSPECTOR GEN., supra note 6, at 38.
18
Id.
19
Id. at 39–40.
20
Id. at 40.
21
Id. at 127.
22
Agency Information Collection Activities: Proposed Collection; Comments Requested,
75 Fed. Reg. 79,021, 79,021 (Dec. 17, 2010).
5
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which ATF received 12,680 comments (8,928 in support and 3,752 in opposition),
ATF extended the comment period for an additional thirty days, clarifying that
the requirement would only apply to FFLs “who are dealers and/or pawnbrokers
in Arizona, California, New Mexico and Texas.”23
ATF issued the challenged demand letter in July 2011 to FFLs who were
dealers and/or pawnbrokers in Arizona, California, New Mexico, and Texas. 10
Ring Precision, Inc., located in Texas, received the demand letter and filed suit
against Kenneth Melson, Acting Director of ATF,24 arguing that ATF exceeded
its authority in issuing the July 2011 demand letter and seeking declaratory as
well as injunctive relief under the Administrative Procedure Act. Golden State
Tactical, located in California, also received the demand letter and moved to
intervene as a plaintiff in the case. The district court granted Golden State’s
motion over ATF’s opposition. In response, ATF filed the administrative record
and moved for summary judgment. 10 Ring filed a motion to exclude portions
of the administrative record referencing trace results originating from Mexico,
and, along with Golden State, also moved for summary judgment. The district
court denied 10 Ring’s motion to exclude portions of the record, denied the
Plaintiffs’ cross-motion for summary judgment, and granted summary judgment
in favor of ATF. 10 Ring and Golden State (collectively “Appellants”) timely
appealed.
During the pendency of this appeal, the D.C. Circuit issued its opinion in
National Shooting Sports Foundation, Inc. v. Jones, which upheld the validity
of the July 2011 demand letter against challenges virtually identical to those
23
Agency Information Collection Activities; Proposed Collection Comments Requested:
Report on Multiple Sale or Other Disposition of Certain Rifles, 76 Fed. Reg. 24,058, 24,058
(Apr. 29, 2011).
24
Kenneth Melson stepped down as Acting Director of ATF in September 2011, and,
during the pendency of this suit in district court, was replaced by Todd Jones.
6
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presented by Appellants.25 As we explain below, we agree with that decision and
join the D.C. Circuit in upholding the validity of the July 2011 demand letter.
II.
“We review a district court’s grant of summary judgment de novo, applying
the same standard as the district court.”26 Summary judgment is proper “if the
movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”27
III.
Appellants first argue, based on various provisions of 18 U.S.C. § 923(g),
as well as the Consolidated and Continuing Appropriations Act of 2010, that
ATF lacked statutory authority to issue the July 2011 demand letter. “We
review ATF’s interpretation of the GCA under Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc.”28 Under Chevron, we first ask “whether
Congress has directly spoken to the precise question at issue.”29 If it has, “that
is the end of the matter,” and we “must give effect to the unambiguously
expressed intent of Congress.”30 If it has not, we defer to the agency’s
interpretation as long as it “is based on a permissible construction of the
statute.”31
25
716 F.3d 200 (D.C. Cir. 2013).
26
Vaughn v. Woodforest Bank, 665 F.3d 632, 635 (5th Cir. 2011).
27
FED. R. CIV. P. 56(a).
28
Nat’l Shooting Sports Found., 716 F.3d at 207 (internal citations omitted).
29
Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984).
30
Id. at 842–43.
31
Id. at 843.
7
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A. Section 923(g)(5)(A)
Appellants first contend that ATF exceeded 18 U.S.C. § 923(g)(5)(A)’s
limits on its demand letter authority. Section 923(g)(5)(A) provides:
Each licensee shall, when required by letter issued by the Attorney
General, and until notified to the contrary in writing by the
Attorney General, submit on a form specified by the Attorney
General, for periods and at the times specified in such letter, all
record information required to be kept by this chapter or such lesser
record information as the Attorney General in such letter may
specify.32
Appellants argue that the July 2011 demand letter runs afoul of § 923(g)(5)(A)
because it requires FFLs to report record information they are not otherwise
required to keep. But that is not the case. 18 U.S.C. § 923(g)(1)(A) provides that
FFLs “shall maintain such records of . . . disposition of firearms at [their] place
of business for such period, and in such form, as the Attorney General may by
regulations prescribe.”33 One such regulation—27 C.F.R. § 478.124(a)—provides
that FFLs must record on Form 4473 any transaction in which they “sell or
otherwise dispose, temporarily or permanently, of any firearm to any person,
other than another licensee.”34 Form 4473 requires the FFL to record the name,
address, sex, race, date of birth, and place of birth of the buyer; the buyer’s
identification number, type of identification, and identification state; the date
and location of the sale; and the manufacturer, importer, type, model, caliber,
and serial number of the firearm.35 The July 2011 demand letter instructs its
recipients to report to ATF using Form 3310.12. Form 3310.12 requires FFLs
to provide the name, address, sex, race, date of birth, and place of birth of the
32
18 U.S.C. § 923(g)(5)(A) (emphasis added).
33
Id. § 923(g)(1)(A).
34
27 C.F.R. § 478.124(a).
35
See id. § 478.124(c)(1), (4).
8
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buyer; the buyer’s identification number, type of identification, and identification
state; the date and location of sale; and the manufacturer, importer, model,
caliber, and serial number of the firearm. The July 2011 demand letter’s
reporting requirement complies with § 923(g)(5)(A) because FFLs are already
required to maintain that record information under § 923(g)(1)(A) and its
implementing regulations. Therefore, the text of § 923(g)(5)(A) “unambiguously
authorizes the demand letter,” and “our inquiry ends at Chevron step one.”36
Appellants nonetheless urge that the July 2011 demand letter requires
FFLs to report information beyond what they are required to keep because Form
4473 does not include information regarding the firearm’s mechanism of action,
the type of ammunition feeding source, or the number of days between sales of
rifles to a single buyer. They point out that the demand letter instructs them to
report “whenever, at one time or during any five consecutive business days,
[they] sell or otherwise dispose of two or more semi-automatic rifles capable of
accepting a detachable magazine with a caliber greater than .22 (including
.223/5.56 caliber) to an unlicensed person.” But that argument “confuses the
conditions precedent to submission with the information submitted.”37 If the
FFL has “at one time or during any five consecutive business days, [sold] or
otherwise dispose[d] of two or more semi-automatic rifles capable of accepting
a detachable magazine and with a caliber greater than .22 . . . to [the same]
unlicensed person,” then the FFL has a duty to submit the information
requested on Form 3310.12. But Form 3310.12 does not require that the FFL
report the rifle’s mechanism of action, its type of ammunition feeding source, or
the number of days between sales of rifles to a single buyer.
In a variation on the same argument, Appellants contend that the July
2011 demand letter runs afoul of § 923(g)(5)(A) because an FFL cannot
36
Nat’l Shooting Sports Found., 716 F.3d at 208.
37
Id.
9
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determine, using Form 4473, whether a particular rifle sale must be reported,
because Form 4473 does not contain information regarding the rifle’s type of
action and ammunition feeding source. Assuming arguendo that inability to
determine, based on “record information required to be kept,” whether a
particular sale must be reported could invalidate a demand letter, Appellants’
assertion belies reality. As the D.C. Circuit explained in rejecting the same
argument:
[Appellants] fail[] to explain why an FFL cannot determine a rifle’s
type of action and ammunition feeding source using his record of the
rifle’s serial number, manufacturer and/or model name. To argue
. . . that an FFL — who purchases and sells firearms for a living —
would price and sell rifles without knowing its type of action and
ammunition feeding source blinks reality. And even assuming an
FFL could somehow not determine the characteristics of his own
rifles, ATF provides a web site and telephone number that the FFL
can use to obtain assistance in determining whether a rifle is “semi-
automatic” and “capable of accepting a detachable magazine.”38
In another iteration of the argument, Appellants point out that 27 C.F.R.
§ 478.124(b) permits FFLs to retain the Form 4473s in alphabetical,
chronological, or numerical order,39 and argue that, unless the FFL keeps the
forms in chronological order, “Forms 4473 could not be used to determine
whether a qualifying rifle had been sold to the same person within five (5)
consecutive business days.” But Appellants offer no reason why this purported
administrative difficulty invalidates the July 2011 demand letter. The GCA
requires an FFL who sells two or more pistols or revolvers to the same person
at one time or during any five consecutive days to report to ATF.40 Thus, prior
to the July 2011 demand letter, FFLs were required to search their records for
multiple sales of a particular type of firearm to the same customer. Moreover,
38
Id. at 209.
39
27 C.F.R. § 478.124(b).
40
18 U.S.C. § 923(g)(3)(A).
10
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“[t]he fact that an FFL chooses to keep his records in alphabetical or numerical
order does not mean that the FFL can complain if his choice may not always be
the least burdensome,” especially given that “there is nothing preventing an FFL
from maintaining records in a less burdensome (in this case, chronological)
manner.”41
B. Sections 923(g)(1)(A), 923(g)(1)(B), 923(g)(3)(A), and 923(g)(7)
Appellants next argue that §§ 923(g)(1)(A), 923(g)(1)(B), 923(g)(3)(A), and
923(g)(7) must be read to limit ATF’s demand letter authority, because otherwise
“ATF could send a broad demand letter for information which otherwise must
be obtained pursuant to the specific procedures, and for the specific reasons set
forth, in these other provisions.”42 We disagree.
Section 923(g)(1)(A) authorizes ATF to inspect a licensee’s records and
inventory if it has “reasonable cause to believe a violation . . . has occurred and
that evidence thereof may be found on such premises.”43 Prior to conducting an
inspection under this section, ATF must secure a warrant from a magistrate
judge.44 Section 923(g)(1)(B) provides an exception to the warrant requirement
of § 923(g)(1)(A) by authorizing ATF to conduct an inspection of a licensee’s
records and inventory “without such reasonable cause or warrant . . . in the
course of a reasonable inquiry during the course of a criminal investigation of a
person or persons other than the [FFL]” or if “required for determining the
41
Nat’l Shooting Sports Found., 716 F.3d at 209.
42
Appellants also argue that “[t]he legislative history reveals that Congress intended
that § 923(g)(5)(A) was limited to information from FFLs (1) who were in violation of the law,
and (2) about specific firearms dispositions necessary for bona fide criminal investigations.”
But we will not analyze legislative history because the GCA’s text is clear. Nat’l Shooting
Sports Found., 716 F.3d at 211–12; see also Ratzlaf v. United States, 510 U.S. 135, 147–48
(1994); J & G Sales, Inc. v. Truscott,
473 F.3d 1043, 1050 (9th Cir. 2007); Blaustein & Reich,
Inc., 365 F.3d at 288 n. 15.
43
18 U.S.C. § 923(g)(1)(A).
44
Id.
11
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disposition of one or more particular firearms in the course of a bona fide
criminal investigation.”45 Appellants contend that upholding ATF’s authority to
issue the July 2011 demand letter would allow ATF to circumvent the
requirements of §§ 923(g)(1)(A) and 923(g)(1)(B) because ATF could simply send
a demand letter for a record without securing a warrant or establishing that the
record relates to an ongoing criminal investigation. We are not persuaded.
Appellants “erroneously conflate[] provisions that apply in two different
contexts. The inspection provisions of 18 U.S.C. § 923(g)(1) and (B) apply to
entry onto an FFL’s premises. By contrast, section 923(g)(5)(A) simply
authorizes ATF to require the FFL to submit information.”46 Given the distinct
purposes of these provisions, we conclude that §§ 923(g)(1)(A) and 923(g)(1)(B)
do not circumscribe ATF’s demand letter authority.
Appellants next argue that § 923(g)(3)(A) demonstrates Congress’s intent
to limit ATF’s ability to request reports of multiple sales to multiple sales of
handguns. Section 923(g)(3)(A) requires all FFLs to “prepare a report of
multiple sales or other dispositions whenever the licensee sells or otherwise
disposes of, at one time or during any five consecutive business days, two or
more pistols or revolvers . . . to an unlicensed person.”47 Appellants argue that
“[b]y including only ‘pistols or revolvers’ and not including ‘firearms’ in
§ 923(g)(3)(A), Congress expressed its intent to limit multiple sale reporting to
pistols or revolvers.” This argument also fails to persuade. Section 923(g)(3)(A)
in no way purports to limit ATF’s ability to issue a demand letter requiring
reporting of multiple sales of other firearms. “Simply because the Congress
45
18 U.S.C. § 923(g)(1)(B)(i), (iii).
46
Nat’l Shooting Sports Found., 716 F.3d at 210 (emphasis in original). Other circuits
have noted that §§ 923(g)(1)(A) and 923(g)(1)(B) serve distinct purposes from those served by
ATF’s demand letter authority. See, e.g., J & G Sales, 473 F.3d at 1050; RSM, Inc. v. Buckles,
254 F.3d 61, 66 (4th Cir. 2001).
47
18 U.S.C. § 923(g)(3)(A).
12
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imposes a duty in one circumstance does not mean that it has necessarily
foreclosed the agency from imposing another duty in a different
circumstance. . . . In [§] 923(g)(5)(A), the Congress authorized ATF to require
additional reporting beyond the reporting required in [§] 923(g)(3)(A).”48
Finally, Appellants contend that § 923(g)(7) “explicitly defines and limits
the purpose and procedure under which ATF may require information for
traces.” Section 923(g)(7) provides that licensees must “respond immediately to,
and in no event later than 24 hours after the receipt of, a request by [ATF] for
information contained in the records required to be kept by this chapter as may
be required for determining the disposition of 1 or more firearms in the course
of a bona fide criminal investigation.”49 Appellants contend that ATF should not
be able to use a demand letter to circumvent § 923(g)(7)’s requirement of a “bona
fide criminal investigation.” But § 923(g)(7) does not purport to restrict ATF’s
demand letter authority; it merely specifies the duties of an FFL that receives
a trace request.50 “Simply because some provisions of § 923 impose specific
duties upon FFLs to respond to certain requests within a specified time frame
and to provide record information sua sponte does not mean that the [ATF] is
prohibited from seeking further FFL record information by demand letter.”51
C. Section 926(a)
Appellants next contend that the July 2011 demand letter runs afoul of
§ 926(a), which prohibits ATF from promulgating a “rule or regulation” that
requires record information obtained from licensees to be “recorded at or
48
Nat’l Shooting Sports Found., 716 F.3d at 211.
49
18 U.S.C. § 923(g)(7) (emphasis added).
50
Other circuits have reached the same conclusion regarding the interplay between
§§ 923(g)(7) and 923(g)(5)(A). See Nat’l Shooting Sports Found., 716 F.3d at 210–11; J & G
Sales, 473 F.3d at 1050; RSM, 254 F.3d at 66.
51
J & G Sales, 473 F.3d at 1050.
13
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transferred to a facility owned, managed, or controlled by the United States or
any State or political subdivision thereof” or that establishes a “system of
registration of firearms, firearms owners, or firearms transactions or
dispositions.”52 Appellants concede that the July 2011 demand letter is not a
rule or regulation,53 and thus falls outside the plain language of § 926(a)’s
prohibition. But, they nonetheless maintain that the July 2011 demand letter
runs afoul of congressional intent as evidenced by § 926(a)’s prohibition. They
point to the Fourth Circuit’s observation that “while [§] 926(a) does not directly
prohibit [ATF’s] issuance of the letter in this case, that provision clearly
demonstrates Congress’s concern about any attempt by [ATF] to establish a
national firearms registry.”54 In evaluating the same argument, the D.C. Circuit
concluded that “ATF’s demand letter authority is not unlimited”—“Congress
intended to prevent ATF from ‘establish[ing] a national firearms registry’ by
‘issu[ing] limitless demand letters under [§] 923(g)(5)(A) in a backdoor effort to
avoid [§] 926(a)’s protections for law-abiding firearms owners.’”55 We agree. But,
like the D.C. Circuit, we conclude that the July 2011 demand letter does not run
afoul of § 926(a)’s prohibition. Although the demand letter was sent to more
FFLs than the demand letters at issue in prior cases,56 it seeks only to obtain a
narrow subset of information relating to a specific set of transactions—the sale
of two or more rifles of a specific type to the same person in a five day
52
18 U.S.C. § 926(a).
53
See Nat’l Shooting Sports Found., 716 F.3d at 212; J & G Sales, 437 F.3d at 1051;
RSM, 254 F.3d at 66.
54
RSM, 254 F.3d at 67.
55
Nat’l Shooting Sports Found., 716 F.3d at 212–13 (quoting RSM, 254 F.3d at 67)
(alterations in original).
56
See, e.g., J & G Sales, 473 F.3d at 1046 (demand letter sent to approximately 450
FFLs, constituting 0.6% of FFLs nationwide); Blaustein & Reich, 365 F.3d at 283 (demand
letter sent to approximately 450 FFLs, constituting 0.6% of FFLs nationwide); RSM, 254 F.3d
at 63 (demand letter sent to approximately 41 FFLs, constituting 0.1% of nationwide FFLs).
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period—from a specific set of FFLs—FFLs in four border states who are licensed
dealers and pawnbrokers.57
D. Consolidated and Continuing Appropriations Act of 2012
The Consolidated and Continuing Appropriations Act of 2012 allocates
funding to ATF. An appropriations rider to the Act prohibits ATF from using the
allocated funds “for salaries or administrative expenses in connection with
consolidating or centralizing within the Department of Justice the records, or
any portion thereof, of acquisition and disposition of firearms maintained by
[FFLs].”58 Appellants argue that the July 2011 demand letter runs afoul of the
rider because it requires recipients to transmit records of their dispositions of
firearms to the National Tracing Center, which are, in turn, processed by ATF
employees whose salaries are taken from the annual appropriations fund.
We conclude that the rider does not prohibit ATF from issuing the July
2011 demand letter. Because FOPA clearly contemplates ATF’s collection of
some firearms records,59 it cannot be said that the appropriations rider prohibits
any collection of firearms transaction records.60 “The plain meaning of
consolidating or centralizing does not prohibit the mere collection of some
limited information. Both consolidating and centralizing connote a large-scale
enterprise relating to a substantial amount of information.”61 We conclude that
57
See Nat’l Shooting Sports Found., 716 F.3d at 214 (“[B]ecause ATF sent the demand
letter to only seven percent of FFLs nationwide and required information on only a small
number of transactions, the July 2011 demand letter does not come close to creating a
‘nationwide firearms registry.’”).
58
Pub. L. No. 112-55, 125 Stat. 552, 609 (2011).
59
See 18 U.S.C. § 923(g)(3), (4).
60
See Colautti v. Franklin, 439 U.S. 379, 392 (1979) (explaining that it is an
“elementary canon of construction that a statute should be interpreted so as not to render one
part inoperative”).
61
Blaustein, 365 F.3d at 289.
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the July 2011 demand letter falls short of “consolidating or centralizing . . .
records.” It only requires reporting of a narrow subset of information relating
to a specific set of transactions—the sale of two or more rifles of a specific type
to the same person in a five day period—from a specific set of FFLs—FFLs in
four border states that are licensed dealers and pawnbrokers.62
IV.
Alternatively, Appellants argue that, even if ATF had statutory authority
to issue the July 2011 demand letter, its decision to do so was arbitrary and
capricious. We will set aside an agency action if it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law.”63 Review under
that standard is “narrow” and we must be mindful “not to substitute [our]
judgment for that of the agency.”64 However, we must also ensure that the
agency “examine[d] the relevant data and articulate[d] a satisfactory
explanation for its action.”65 We “consider whether the decision was based on a
consideration of relevant factors and whether there was a clear error of
62
Demand letters upheld previously have required reporting of a broader set of
transactions. For example, in RSM, Inc. v. Buckles, ATF required the targeted FFLs to
produce record information regarding firearm purchases and sales in the prior three years.
254 F.3d at 63. And, in Blaustein & Reich, Inc. v. Buckles, ATF required the targeted FFLs
to submit record information relating to their purchases of secondhand firearms in 1999. 365
F.3d at 283. Admittedly, the demand letters at issue in those cases were sent to far fewer
FFLs than the July 2011 demand letter.
63
5 U.S.C. § 706(2)(A).
64
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983).
65
Id.
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judgment.”66 We will uphold an agency’s action “if its reasons and policy choices
satisfy minimum standards of rationality.”67
Appellants allege that ATF’s issuance of the July 2011 demand letter was
arbitrary and capricious for two reasons. First, because “[t]he tracing system
queries demonstrated that the overwhelming majority of retail sellers in the
United States and, more specifically, in the Border States, had not sold a single
rifle that was later recovered in Mexico,” Appellants argue that ATF improperly
determined which FFLs to target. Second, Appellants argue that ATF neglected
to consider alternatives to sending the demand letter to FFLs in the four border
states. Neither of these arguments survives the “highly deferential arbitrary
and capricious standard of judicial review.”68
Appellants’ first argument fails because, given the data that ATF
identified as supporting its decision, Appellants cannot convincingly argue that
there is no “rational connection” between the facts in the administrative record
and the FFLs targeted by the June 2011 demand letter.69 As explained in the
GAO Report, “[f]rom fiscal year 2004 to fiscal year 2008, most of the firearms
seized in Mexico and traced came from U.S. Southwest border states. In
particular, about 70 percent of these firearms came from Texas, California, and
Arizona.”70 Moreover, according to ATF trace data, from fiscal year 2008
through fiscal year 2010, of the 5,799 rifles greater than .22 caliber that were
66
Id. (internal quotations omitted).
67
Medina Cnty. Envt’l. Action Ass’n v. Surface Transp. Bd., 602 F.3d 687, 699 (5th Cir.
2010) (internal quotations omitted).
68
Abbeville Gen. Hosp. v. Ramsey, 3 F.3d 797, 801 (5th Cir. 1993) (quotation marks
omitted).
69
Motor Vehicle Mfrs., 463 U.S. at 43 (quoting Burlington Truck Lines v. United States,
371 U.S. 156, 168 (1962)).
70
U.S. GOV’T ACCOUNTABILITY OFFICE, supra note 8, at 19.
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traced from Mexico to an identified first retail purchaser in the United States,
4,568 were traced to retailers in Arizona, California, New Mexico, and Texas.
Appellants’ second argument—that ATF’s decision to issue the July 2011
demand letter was arbitrary and capricious because it failed to consider other
feasible alternatives—is also unpersuasive. Appellants argue that ATF should
have considered feasible alternatives “such as actual geographic proximity of
retail sellers to the border with Mexico, known patterns of illegal firearms
trafficking in Mexico, and specifically identified retail sources of rifles recovered
in Mexico over the previous three years.” Because “[s]ales of rifles recovered in
Mexico were heavily concentrated among relatively few specifically identified
retail sellers,” Appellants suggest that ATF should have used trace data “to
determine how many rifles each retail seller sold and how soon after the sales
the rifles were recovered by law enforcement authorities in Mexico” and tailored
the July 2011 demand letter accordingly. This argument misunderstands the
scope of an agency’s duty to consider alternatives. In deciding a course of action,
agencies are not required to consider all potential alternatives.71 “While an
agency must consider and explain its rejection of ‘reasonably obvious
alternative[s],’ it need not consider every alternative proposed nor respond to
every comment made. Rather, an agency must consider only ‘significant and
viable’ and ‘obvious’ alternatives.”72 The alternatives posed by Appellants do not
meet these criteria. For one, Appellants have not shown that these alternatives
were a serious issue raised by any commenter.73 Appellants try to argue that
71
See Motor Vehicle Mfrs., 463 U.S. at 51 (“[W]e [do not] broadly require an agency to
consider all policy alternatives in reaching decision.”).
72
Nat’l Shooting Sports Found., 716 F.3d at 215 (internal citations omitted).
73
In fact, Appellants fail to point to any comments in the administrative record raising
these alternatives. Appellants do point to an August 2009 pamphlet authored by “Mayors
Against Illegal Guns,” which includes a recommendation that ATF issue a demand letter
requiring dealers “to report multiple sales of suspect long guns if in the prior year they had
15 or more traces or three or more traces of suspect long guns.” MAYORS AGAINST ILLEGAL
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these alternatives should have been “obvious” to ATF given the data in the
administrative record. But the cases Appellants cite in support of that
contention involve either alternatives raised during the comment period or an
agency rescinding a policy or reversing course without providing explanation as
to why it did not adopt narrower alternatives. In short, “the fact that ATF could
have narrowed the scope of the demand letter does not mean that its failure to
do so was arbitrary and capricious, particularly because [Appellants have] failed
to point to any evidence showing that narrowing the geographic scope of the
demand letter was a serious issue raised by any commenter.”74 We therefore
conclude that “ATF's decision to direct its July 2011 demand letter to FFLs
based on their geographic location was . . . not arbitrary and capricious.”75
V.
Before concluding, we pause to consider whether the district court should
have excluded portions of the administrative record referencing the results of
Mexican traces. 10 Ring argues that trace data should have been excluded
because the funding, development, and implementation of ATF’s system of
tracing firearms recovered in Mexico are contrary to law and the intentions of
Congress. Specifically, 10 Ring contends that § 923(g)(7) only permits trace
requests that are made in the course of a domestic bona fide criminal
investigation. But § 923(g)(7)’s plain language merely requires that the trace
request be made “in the course of a bona fide criminal investigation.”76 And,
GUNS, A BLUEPRINT FOR FEDERAL ACTION ON ILLEGAL GUNS 31 (2009). But that pamphlet did
not address the proposed demand letter, nor did Mayors Against Illegal Guns suggest that
alternative in its comment to the July 2011 demand letter proposal.
74
Nat’l Shooting Sports Found., 716 F.3d at 217.
75
Id.
76
18 U.S.C. § 923(g)(7). Nor does the presumption that Congress intended its statutes
to have domestic, not extraterritorial, application mean that the Mexican traces were
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Congress has recognized that ATF conducts trace requests by law enforcement
officials in other nations.77 10 Ring also argues that the Privacy Act bars
disclosure of purchaser information to Mexican authorities. But the Privacy Act
is inapplicable to use of the Firearms Tracing System. The Privacy Act
stipulates the conditions upon which an agency may disclose “any record which
is contained in a system of records.” 5 U.S.C. § 552a defines “system of records”
as “a group of any records under the control of any agency from which
information is retrieved by the name of the individual or by some identifying
number, symbol, or other identifying particular assigned to the individual.”78
The Firearms Tracing System is not a “system of records,” because traces are
conducted by entering an identifying characteristic of the firearm, not the
individual, into ATF’s database.79
Because Appellants have not offered any authority indicating that the
Mexican trace results should have been excluded, we conclude that the district
court permissibly denied 10 Ring’s motion to exclude portions of the
administrative record.
conducted unlawfully. The presumption against extraterritoriality has no bearing here
because the Mexican government conducting traces using ATF’s database is simply not an
“extraterritorial application” of the GCA.
77
See, e.g., S. REP. NO. 112-158, at 63 (2012); H. Rep. No. 108-576, at 29 (2004).
78
5 U.S.C. § 552a(a)(5) (emphasis added).
79
10 Ring also argues that funding of the Mexican traces was unlawful because the
administrative record does not contain documents establishing that the funding of ATF’s
eTrace 4.0 system “complied with [31 U.S.C.] § 9703(g)(4)(C).” In the absence of clear and
convincing evidence to the contrary, “[a] presumption of regularity attaches to the actions of
Government agencies.” U.S. Postal Serv. v. Gregory, 534 U.S. 1, 10 (2001). 10 Ring has
offered no evidence to rebut that presumption. It attempts to argue that the presumption of
regularity does not apply because there is no evidence that the Director took any action to
comply with § 9703(g)(4)(C), but it cites no cases indicating that the presumption of regularity
does not apply to purported agency inaction.
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VI.
The judgment of the district court is AFFIRMED.
21
