Ron Peterson Firearms, LLC v. Jones , 760 F.3d 1147 ( 2014 )

FILED
United States Court of Appeals
Tenth Circuit
PUBLISH
July 28, 2014
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
RON PETERSON FIREARMS, LLC;
DALE RUTHERFORD, d/b/a The Cop
Shop; TRACY RIFLE AND PISTOL,
INC.,
Plaintiffs - Appellants,
v. Nos. 13-2054 &
13-2055
B. TODD JONES, Acting Director,
Bureau of Alcohol, Tobacco, Firearms,
and Explosives,
Defendant - Appellee.
Appeal from the United States District Court
for the District of New Mexico
(D.C. No. 1:11-CV-00678-JEC-LFG)
Stephen P. Halbrook (Richard E. Gardiner, with him on the briefs), Fairfax, Virginia, for
the Plaintiff-Appellant, Ron Peterson Firearms, LLC.
James B. Vogts, Swanson, Martin & Bell, LLP, Chicago, Illinois, for the Plaintiffs-
Appellants, Dale Rutherford, DBA The Cop Shop, and Tracy Rifle and Pistol, Inc.
Anisha S. Dasgupta, Attorney, Civil Division (Stuart F. Delery, Acting Assistant
Attorney General, Kenneth J. Gonzales, United States Attorney, Michael S. Raab,
Attorney, Civil Division, with her on the brief), Department of Justice, Washington, D.C.,
for the Defendant-Appellee.
Before LUCERO, McKAY, and MATHESON, Circuit Judges.
LUCERO, Circuit Judge.
In an effort to reduce illegal gun trafficking “along and across the Southwest
border” of the United States, the Bureau of Alcohol, Tobacco, Firearms and Explosives
(“ATF”) issued a demand letter to certain federal firearms licensees (“FFLs”) in Arizona,
California, New Mexico, and Texas. The letter requires recipients to report to ATF sales
to the same customer within five consecutive business days of “two or more semi-
automatic rifles capable of accepting a detachable magazine and with a caliber greater
than .22.” Appellants Ron Peterson Firearms, LLC (“Peterson”); Dale Rutherford, doing
business as The Cop Shop (“Rutherford”); and Tracy Rifle and Pistol, Inc. (“Tracy”) are
FFLs subject to the demand letter. They argue that ATF lacked the statutory authority to
issue the demand letter and that the decision to target FFLs in the four Mexican border
states was arbitrary and capricious. We are in accord with the United States Courts of
Appeals for the Fifth and District of Columbia Circuits, which have recently adjudicated
challenges to the demand letter and concluded that ATF neither exceeded its statutory
authority nor engaged in arbitrary and capricious action. See 10 Ring Precision, Inc. v.
Jones, 722 F.3d 711 (5th Cir. 2013); Nat’l Shooting Sports Found. v. Jones, 716 F.3d 200
(D.C. Cir. 2013) (“NSSF”). The district court granted summary judgment to the
defendant. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm.
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I
Responding to concerns about widespread crime and associated violence in
Mexico, ATF created Project Gunrunner, a national initiative to combat trafficking in
firearms across the border. The project expanded the use of gun tracing, which according
to ATF’s Firearms Tracing Guide involves “the systematic tracking of the movement of a
firearm recovered by law enforcement officials, beginning with its importation into, or its
manufacture in, the United States through the distribution chain of Federal firearms
licensees to the point of its first retail sale.” A review of Project Gunrunner conducted by
the Office of the Inspector General (“OIG”) indicates that tracing guns seized in Mexico
can provide “crucial” information in gun-trafficking investigations and generate
intelligence regarding trends in gun smuggling.
ATF’s Assistant Director of Field Operations, William Hoover, testified before the
U.S. House of Representatives Committee on Foreign Affairs’ Subcommittee on the
Western Hemisphere in 2008. He explained that trace information helps ATF
“reconstruct the flow of weapons along the border, how and where they are being
purchased, and who is purchasing them.” He also stated that data from gun tracing over
the previous three years showed that “Texas, Arizona, and California [were] the three
most prolific source states, respectively, for firearms illegally trafficked to Mexico.”
Similarly, a 2009 report by the United States Government Accountability Office
(“GAO”) found that “[f]rom fiscal year 2004 to fiscal year 2008, most of the firearms
seized in Mexico and traced came from the U.S. Southwest border states. In particular,
about 70 percent of these firearms came from Texas, California, and Arizona.”
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In late 2010, ATF performed a series of queries of a database called the Firearms
Tracing System. A query regarding rifles recovered in Mexico during fiscal years 2008-
2010 demonstrated that Texas, Arizona, California, and New Mexico were the four states,
respectively, in which the highest number of retail sales of the rifles had occurred.1 Other
queries, such as trace results limited to guns with a “time to crime” of three years,2 did
not reflect that the guns were originating primarily in the same four states.
Hoover also testified in 2008 that although drug-trafficking organizations in
Mexico historically preferred .38 caliber handguns, “cartel members and enforcers have
now developed a preference for higher quality, more powerful weapons” such as assault
rifles. Pursuant to 18 U.S.C. § 923(g)(3)(A), FFLs must report multiple sales of
handguns to a single purchaser. The statute does not extend to rifles, and the lack of such
reports was characterized as impeding ATF’s ability to trace weapons recovered in
Mexico. In 2009, the GAO identified the absence of such a reporting requirement as a
particular challenge to ATF’s anti-trafficking efforts, explaining that multiple purchase
information “enables ATF to more quickly trace those firearms if they turn up in a crime
because the information is already entered into a searchable database.” The OIG review
of Project Gunrunner, issued in 2010, also concluded that “the lack of a reporting
requirement for multiple sales of long guns—which have become the cartels’ weapons of
1
The query sought information on rifles greater than .22 caliber but was not
limited to semi-automatic rifles capable of accepting a detachable magazine.
2
“Time to crime” refers to the period between the first retail sale of a gun and the
recovery of the gun during its use, or suspected use, in a crime. A gun with a shorter time
to crime may present a more valuable lead for ATF.
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choice—hinders ATF’s ability to disrupt the flow of illegal weapons into Mexico.” It
recommended that ATF work with the Department of Justice (“DOJ”) to “explore options
for seeking a requirement for reporting multiple sales of long guns.”
In December 2010, ATF announced a proposed reporting requirement regarding
multiple dispositions within five business days of semi-automatic rifles capable of
accepting a detachable magazine and of a caliber greater than .22. Noting the utility of
the statutory multiple sales reporting requirement for handguns, ATF explained that the
proposed reporting requirement for certain rifles would assist the investigation of
firearms trafficking to Mexico. ATF allowed for a sixty-day comment period, which it
subsequently extended for an additional thirty days. More than 12,000 comments were
received.
On July 12, 2011, ATF issued a demand letter to dealer and pawnbroker FFLs3 in
Arizona, California, New Mexico, and Texas. Recipients of the letter are required to
submit a 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.” These multiple sales reports must be submitted on
ATF Form 3310.12, which includes information about the purchaser, the date and
3
There are nine categories of FFLs. See Listing of Federal Firearms Licensees
(FFLs)—2014, United States Department of Justice, Bureau of Alcohol, Tobacco,
Firearms and Explosives (last visited July 10, 2014), https://www.atf.gov/content/
firearms/firearms-industry/listing-FFLs. The July 2011 demand letter was targeted to
FFLs classified as Type 01 (dealer in firearms other than destructive devices) and Type
02 (pawnbroker in firearms other than destructive devices).
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location of the sale, and certain characteristics of the firearms. ATF claimed authority to
issue the demand letter under 18 U.S.C. § 923(g)(5)(A). The letter explained that its
purpose was to “assist [ATF’s] efforts in investigating and combating the illegal
movement of firearms along and across the Southwest border.” Forms submitted
pursuant to the demand letter are entered into the Firearms Tracing System database.
Peterson, Rutherford, and Tracy (together, “Appellants”) are FFLs who received
the July 2011 demand letter. Rutherford and Tracy, together, and Peterson, separately,
filed suits against ATF’s Acting Director, in his official capacity,4 challenging the
demand letter under the Administrative Procedure Act (“APA”) and seeking declaratory
and injunctive relief. The cases were consolidated by the district court.
The parties filed cross-motions for summary judgment. The district court granted
summary judgment to ATF and denied summary judgment to the plaintiffs. In a separate
order, the court also denied Peterson’s motion to exclude portions of the administrative
record concerning traces of firearms seized by Mexican officials.
II
We review de novo the district court’s grant of summary judgment. Ribeau v.
Katt, 681 F.3d 1190, 1194 (10th Cir. 2012). Summary judgment is appropriate “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.” Fed. R. Civ. P. 56(a). We consider all facts and
4
At the time Peterson’s complaint was filed, Kenneth Melson was the Acting
Director of ATF. B. Todd Jones subsequently became ATF’s Acting Director, then
Director. For simplicity, we will refer to the defendant-appellee as “ATF.”
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evidence in the light most favorable to the parties opposing summary judgment. Schrock
v. Wyeth, Inc., 727 F.3d 1273, 1279 (10th Cir. 2013).
Appellants claim that ATF lacked the statutory authority to issue the July 2011
demand letter.5 They argue that the demand letter runs afoul of several provisions of the
Gun Control Act of 1968 (“GCA”), 18 U.S.C. § 921 et seq., as well as the Consolidated
and Further Continuing Appropriations Act, 2012, Pub. L. No. 112-55, 125 Stat. 552
(2011). “[F]inal agency action for which there is no other adequate remedy in a court” is
“subject to judicial review” under the APA. 5 U.S.C. § 704. A reviewing court will
“hold unlawful and set aside agency action” that it determines to be “in excess of
statutory jurisdiction, authority, or limitations, or short of statutory right.” § 706(2)(C).
A
FFLs are required to maintain certain records at their places of business. 18
U.S.C. § 923(g)(1)(A). ATF has statutory authority to issue demand letters regarding the
information included in those records:
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 [Chapter 44 of Title 18 of the United States Code] or such lesser
record information as the Attorney General in such letter may specify.
§ 923(g)(5)(A). Appellants contend that ATF exceeded this statutory authority because
the July 2011 demand letter requires FFLs to keep and/or report information not
5
On this issue, Rutherford and Tracy adopt by reference the appellate brief filed
by Peterson. See Fed. R. App. P. 28(i).
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otherwise “required to be kept.” We disagree, and conclude that the demand letter was a
proper exercise of ATF’s authority under § 923(g)(5)(A).
We review ATF’s interpretation of § 923 under the standards set forth in Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See 10
Ring Precision, 722 F.3d at 717; NSSF, 716 F.3d at 207. If we determine at the first
stage of our inquiry that “Congress has directly spoken to the precise question at issue,”
we “must give effect to the unambiguously expressed intent of Congress.” Chevron, 467
U.S. at 842-43. If, however, “the statute is silent or ambiguous with respect to the
specific issue,” we will uphold the agency’s interpretation if it “is based on a permissible
construction of the statute.” Id. at 843.
Because all of the information the demand letter requires FFLs to report on Form
3310.12 is information that they are required to maintain under § 923(g)(1)(A) and its
implementing regulations, we conclude that the statute “‘unambiguously authorizes the
demand letter,’” thus ending our inquiry at the first step of Chevron. 10 Ring Precision,
722 F.3d at 718 (quoting NSSF, 716 F.3d at 208); see also Blaustein & Reich, Inc. v.
Buckles, 365 F.3d 281, 286 (4th Cir. 2004) (evaluating a previous demand letter and
concluding that “Congress gave [ATF] broad authority to seek, by demand letter, all
record information that FFLs are required to maintain”). Each FFL is required to
“maintain such records of . . . disposition of firearms at his place of business for such
period, and in such form, as the Attorney General may by regulations prescribe.”
§ 923(g)(1)(A). FFLs are prohibited by regulation from selling or otherwise disposing of
a firearm to a non-FFL without recording “the transaction on a firearms transaction
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record, Form 4473.” 27 C.F.R. § 478.124(a). Included on Form 4473 are identifying
information about the transferee and certain information about the firearm: “the name of
the manufacturer, the name of the importer (if any), the type, model, caliber or gauge, and
the serial number of the firearm.”6 § 478.124(c). Form 3310.12 also requires
information about the transferee and the manufacturer, importer, type, model, caliber or
gauge, and serial number of the firearm. All of this information is recorded on Form
4473.7
Appellants claim that the letter demands information beyond that “required to be
kept by this chapter” because the applicable regulations do not obligate FFLs to record:
(1) a firearm’s type of action (semi-automatic, lever, pump, bolt, single-shot); (2) its type
of ammunition feeding source (fixed magazine, detachable magazine, clip, tube); (3) the
date a firearm is transferred8; or (4) the number of days between sales of rifles to the
6
On Form 4473, the “type” of the firearm refers to categories such as pistol,
revolver, rifle, etc.
7
If a buyer is acting on behalf of a business, Form 3310.12 requires the name and
address of the business. Form 4473 does not have a specific box for this information, but
because it must be collected under 27 C.F.R. § 478.124(g), it is “record information
required to be kept” pursuant to § 923(g)(5)(A).
8
Contrary to Appellants’ contention, FFLs are required to maintain a “Firearms
Acquisition and Disposition Record” pursuant to 27 C.F.R. § 478.125(e), which must
“show the date of the sale or other disposition of each firearm, the name and address of
the person to whom the firearm is transferred . . . or the firearms transaction record, Form
4473, serial number if the [FFL] transferring the firearm serially numbers the Forms 4473
and files them numerically.” Appellants are correct that § 478.124 does not technically
require the FFL to record the date of the sale on Form 4473; rather, it requires “the date
on which the licensee contacted the NICS [National Instant Criminal Background Check
System],” § 478.124(c)(3)(iv). But Form 4473 does require that the FFL sign and date
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same person. Thus, Appellants contend that the demand letter requires FFLs to create
and keep special records of this information, in contravention of 18 U.S.C.
§ 923(g)(1)(A) (FFLs “shall not be required to submit to the Attorney General reports and
information with respect to such records and the contents thereof, except as expressly
required by this section”).
We agree with the district court and our sibling circuits that the demand letter is
valid under § 923(g)(5)(A) because it requires reporting of a subset of information that
FFLs are legally obliged to maintain. See 10 Ring Precision, 722 F.3d at 718-19
(argument to the contrary “‘confuses the conditions precedent to submission with the
information submitted’” (quoting NSSF, 716 F.3d at 208)); NSSF, 716 F.3d at 208
(“Form 3310.12 requires that the FFL report basic identifying information about the FFL
and the customer as well as the rifle’s serial number, manufacturer, importer, model,
caliber and sale date—all information ‘required to be kept’ . . . .”). The demand letter
limits the transactions that must be reported to those involving multiple sales within five
business days of semi-automatic rifles capable of accepting a detachable magazine and
greater than .22 caliber, “[b]ut 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.” 10 Ring Precision, 722 F.3d at 719. Thus, the
“July 2011 demand letter’s conditions precedent are not being used to require additional
information from FFLs, but instead limit the scope of the information demanded.” NSSF,
the Form immediately prior to the transfer. Moreover, the date of the sale must be
recorded pursuant to § 478.125(e).
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716 F.3d at 208-09.9
Appellants make the related argument that the demand letter is impermissible
because FFLs cannot determine, based on the information they are required to record,
which rifle sales must be reported. “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.” 10 Ring
Precision, 722 F.3d at 719. In other words, the claim “that an FFL—who purchases and
sells firearms for a living—would price and sell rifles without knowing [their] type of
action and ammunition feeding source” is patently implausible. NSSF, 716 F.3d at 209.
Moreover, contrary to Appellants’ claims, ATF’s provision of a website and telephone
helpline to assist FFLs with the reporting determination does not undermine this
conclusion; it demonstrates that FFLs will not be inordinately burdened by the reporting
requirement if they question the need to report a specific transaction.
There is likewise no support for Appellants’ argument that the demand letter
requires FFLs to keep records “in a manner inconsistent with the regulations.” First,
Appellants argue that the demand letter requires them to keep a special set of records
because 27 C.F.R. § 478.125(e) allows them seven days to record a transaction, whereas
the demand letter requires reporting by the close of business on the day of the multiple
disposition. They also argue that some of the permissible methods of maintaining
completed copies of Form 4473 under § 478.124(b)—in alphabetical or numerical, as
9
The clear text of § 923(g)(1)(A) is likewise not violated, because it prohibits only
submission of records beyond those required to be kept.
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opposed to chronological, order—would complicate the multiple sale determination
required by the letter. Before ATF issued the July 2011 demand letter, however, FFLs
were already required to search their records and report multiple sales of other guns in the
same time frame mandated by the demand letter. See 18 U.S.C. § 923(g)(3)(A)
(discussed in Part II.B.1, infra). “Moreover, ‘the 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.’” 10 Ring Precision, 722 F.3d at 719 (alteration omitted)
(quoting NSSF, 716 F.3d at 209).
B
Appellants assert that ATF’s interpretation of § 923(g)(5)(A) improperly renders
superfluous specific grants of authority in other subparts of § 923. Acknowledging
Appellants’ emphasis on the “elementary canon of construction that a statute should be
interpreted so as not to render one part inoperative,” Colautti v. Franklin, 439 U.S. 379,
392 (1979), we hold that ATF’s interpretation of § 923 does not violate this principle.
The Fifth and D.C. Circuits, like the district court, have already rejected Appellants’
arguments, and additional circuits have rejected similar claims in upholding previous
ATF demand letters.10 We concur in these conclusions.
10
Appellants contend that the district court erred in declining to address their
arguments that legislative history illuminates the purpose of § 923(g)(5)(A). Because we
agree with the district court that the text of the statute is unambiguous, we also decline to
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1
Relying on 18 U.S.C. § 923(g)(3)(A), Appellants invoke the canon of expressio
unius est exclusio alterius to argue that Congress expressed its intent to limit mandatory
reporting of multiple gun sales to handguns (i.e., pistols and revolvers) only. Section
923(g)(3)(A) provides:
Each licensee shall 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, or
any combination of pistols and revolvers totaling two or more, to an
unlicensed person.
consult legislative history. We have noted that courts may use statutory language and
legislative history at the first step of the Chevron analysis. Salman Ranch, Ltd. v.
Comm’r, 647 F.3d 929, 937 (10th Cir. 2011), vacated on other grounds by 132 S. Ct.
2100 (2012). But we have repeatedly held that “[w]hen the meaning of the statute is
clear, it is both unnecessary and improper to resort to legislative history to divine
congressional intent.” Robas v. Mukasey, 545 F.3d 922, 929 (10th Cir. 2008) (quotation
omitted); accord Iliev v. Holder, 613 F.3d 1019, 1024 (10th Cir. 2010) (“‘[W]e do not
resort to legislative history to cloud a statutory text that is clear.’” (quoting Ratzlaf v.
United States, 510 U.S. 135, 147-48 (1994))).
Other circuits confronted with legislative history arguments in this context have
reached the same conclusion. 10 Ring Precision, 722 F.3d at 720 n.42 (“[W]e will not
analyze legislative history because the GCA’s text is clear.”); NSSF, 716 F.3d at 212
(“Our sister circuits found no need to analyze legislative history once they concluded that
the text of section 923(g)(5)(A) and its surrounding provisions plainly foreclosed
arguments similar to those NSSF makes to us. . . . We likewise need not resort to the
legislative history.” (citations omitted)); J & G Sales, Ltd. v. Truscott, 473 F.3d 1043,
1050 (9th Cir. 2007) (“Because we find that—even after considering § 923(g)(5)(A) in its
broader context—the statute is clear, we need not address [plaintiff]’s exhaustive
discussion of 18 U.S.C. § 923’s legislative history.”); Blaustein, 365 F.3d at 288 n.15
(“Because we find the statute unambiguous on its face, we do not resort to legislative
history to determine what Congress intended its enactments [in § 923] to mean.”).
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Appellants argue that by specifying that the § 923(g)(3)(A) reporting requirement applied
to “pistols and revolvers,” rather than “firearms” generally, Congress intended to limit
multiple sales reporting to handguns.
“The strength of th[e] canon [of expressio unius], however, varies by context.”
Harris v. Owens, 264 F.3d 1282, 1296 (10th Cir. 2001). We agree with the other circuits
that have examined this argument that “‘[s]imply because the Congress imposes a duty in
one circumstance does not mean that it has necessarily foreclosed the agency from
imposing another duty in a different circumstance.’” 10 Ring Precision, 722 F.3d at 721
(quoting NSSF, 716 F.3d at 211); see also J & G Sales, Ltd, 473 F.3d at 1050 (“Simply
because some provisions of § 923 impose specific duties upon FFLs . . . to provide record
information sua sponte does not mean that [ATF] is prohibited from seeking further FFL
record information by demand letter.”).
Moreover, “the canon can be overcome by contrary indications that adopting a
particular rule or statute was probably not meant to signal any exclusion.” Marx v. Gen.
Revenue Corp., 133 S. Ct. 1166, 1175 (2013) (quotation omitted). As in Marx, “context
persuades” us, id., that the canon should not apply as Appellants urge. As ATF notes,
§ 923(g)(3) codifies a 1975 ATF regulation requiring reporting of multiple sales of
pistols and revolvers. See Pistols & Revolvers; Reporting Requirement on Multiple
Sales, 40 Fed. Reg. 19,201 (May 2, 1975). Without statutory language to the contrary,
the codification suggests Congress’ support of the requirement but does not signal that
Congress intended to limit ATF’s statutory authority to seek similar information
concerning different types of firearms. We conclude that “[s]ection 923(g)(3)(A) in no
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way purports to limit ATF’s ability to issue a demand letter requiring reporting of
multiple sales of other firearms.” 10 Ring Precision, 722 F.3d at 721.
2
Appellants argue that our interpretation of § 923(g)(5)(A) circumvents
§ 923(g)(1)(A) and (B) by allowing ATF to require FFLs to report information that would
otherwise not be available to the government. Section 923(g)(1)(A) permits ATF to enter
an FFL’s premises, with a warrant, for the purpose of examining its records, if ATF “has
reasonable cause to believe a violation of this chapter has occurred and that evidence
thereof may be found on such premises.” Section 923(g)(1)(B) authorizes warrantless
inspection of FFL records “during the course of a criminal investigation of a person or
persons other than the licensee,” to ensure “compliance with . . . record keeping
requirements,” or to determine “the disposition of one or more particular firearms in the
course of a bona fide criminal investigation.” Appellants contend that the July 2011
demand letter circumvents these limits by requiring reporting of such information via
demand letter, absent an ongoing criminal investigation or reasonable cause to believe a
violation had occurred.
This argument “erroneously conflates provisions that apply in two different
contexts.” NSSF, 716 F.3d at 210. Whereas the limitations in § 923(g)(1) referenced by
Appellants refer to physical entry of FFL premises for purposes of record inspection,
§ 923(g)(5)(A) regulates ATF’s authority to require submission of such records. We
agree with Justice O’Connor and our colleagues on the Ninth Circuit that “[t]his is a
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difference that matters.” J & G Sales, 473 F.3d at 1050 (O’Connor, J.); see also RSM,
Inc. v. Buckles, 254 F.3d 61, 66 (4th Cir. 2001) (making the same distinction).
Section 923(g)(1)(A) also states that FFLs “shall not be required to submit to
[ATF] reports and information with respect to such records and the contents thereof,
except as expressly required by this section.” But Section 923(g)(5)(A)’s demand letter
authority is one such express requirement. See, e.g., Blaustein, 365 F.3d at 287 n.14
(“[Section] 923(g)(5)(A) contains an express requirement that is provided for in
§ 923(g)(1)(A).”). Thus, “§ 923(g)(1)(A) limits [ATF’s] ability to procure information
from FFLs to the express requirements of § 923, but it does not eviscerate the content of
§ 923(g)(5)(A).” J & G Sales, 473 F.3d at 1049. The district court correctly noted that
adopting Appellants’ interpretation of the limitations other sections of § 923 supposedly
place on ATF’s demand letter authority “would eviscerate ATF’s authority under
§ 923(g)(5)(A) to obtain record information.” We conclude that “rather than [ATF]
attempting to transform these aforementioned provisions into nullities, it is [Appellants]
who seek[] to strip § 923(g)(5)(A) of its independent meaning.” J & G Sales, 473 F.3d at
1050. We must construe the statute “so as not to render one part inoperative.” Colautti,
439 U.S. at 392.
3
Appellants make a related argument premised on 18 U.S.C. § 923(g)(7). This
provision requires FFLs to:
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
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of 1 or more firearms in the course of a bona fide criminal investigation.
§ 923(g)(7). Appellants argue that the demand letter improperly circumvents the
statutory requirement that ATF request information only in the course of a bona fide
criminal investigation. Section 923(g)(7), however, “does not purport to restrict ATF’s
demand letter authority; it merely specifies the duties of an FFL that receives a trace
request.” 10 Ring Precision, 722 F.3d at 721; see also NSSF, 716 F.3d at 210-11
(“[S]ection 923(g)(7)’s specific trace request requirements do not purport to bear on
section 923(g)(5)(A)’s demand letter requirements.”); J & G Sales, 473 F.3d at 1050
(discussing the “distinct purpose[]” served by § 923(g)(7), in that it “imposes speedy
reporting requirements on FFLs in the context of criminal investigations, and neither
explicitly nor implicitly serves to limit [ATF’s] power under § 923(g)(5)(A)”); RSM, 254
F.3d at 66 (same).
C
Appellants contend that the July 2011 demand letter violates an additional
provision of the GCA, 18 U.S.C. § 926(a). This provision prohibits any “rule or
regulation prescribed after the date of the enactment of the Firearm Owners’ Protection
Act”11 (“FOPA”), in 1986, that would
require that records required to be maintained under this chapter or any
portion of the contents of such records, be recorded at or transferred to a
facility owned, managed, or controlled by the United States . . . [or] that
any system of registration of firearms, firearms owners, or firearms
transactions or dispositions be established.
11
Pub. L. No. 99-308, 100 Stat. 449 (1986).
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§ 926(a). Appellants’ “argument fails under the plain text of this provision” for two
reasons. NSSF, 716 F.3d at 212. First, § 926(a) does not apply to demand letters because
it restricts only rules and regulations; the demand letter is not a rule or regulation, and
neither is § 923(g)(5)(a), the statute under which it was issued. Id.; see also, RSM, 254
F.3d at 66. Second, “section 923(g)(5)(A) was enacted as part of FOPA, and thus was
not ‘prescribed after the date of the enactment of’ FOPA.” NSSF, 716 F.3d at 212.12
Appellants, quoting cautionary dicta from a prior demand letter case, argue that
although the letter is not a rule or regulation, “Section 926(a) would be rendered
meaningless if [ATF] could issue limitless demand letters under section 923(g)(5)(A) in a
backdoor effort to avoid section 926(a)’s protections for law-abiding firearms owners.”
RSM, 254 F.3d at 67. Appellants distinguish the July 2011 letter from those upheld in
previous cases because the latter were sent to fewer FFLs and ATF either did not request
or did not retain information identifying purchasers. However, we concur with recent
evaluations of the demand letter at issue:
Although the [July 2011] demand letter was sent to more FFLs than the
demand letters at issue in prior cases, 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
period—from a specific set of FFLs—FFLs in four border states who are
licensed dealers and pawnbrokers.
12
When § 923(g)(5)(A) was enacted as part of FOPA, it “essentially codified 27
C.F.R. § 178.126(a), a 1968 regulation requiring FFLs to submit record information when
[ATF] seeks it.” J & G Sales, 473 F.3d at 1048 n.3 (quotation omitted). Because that
regulation was enacted before FOPA, § 926(a)’s restrictions do not affect it either. RSM,
254 F.3d at 66.
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10 Ring Precision, 722 F.3d at 722 (footnote omitted) (citing NSSF, 716 F.3d at 214).
Moreover, as the district court noted, ATF will retain purchaser information for only two
years unless it is associated with a trace. We agree with our colleagues in other circuits
that the July 2011 demand letter, in addition to conforming with the plain text of
§ 926(a), does not create the type of “backdoor” firearms registry that would make § 926
a hollow protection. See 10 Ring Precision, 722 F.3d at 722; NSSF, 716 F.3d at 212-14.
D
Similarly, Appellants contend that the demand letter creates a national firearms
registry in violation of the Consolidated and Further Continuing Appropriations Act,
which allocates funds to ATF. An annual appropriations rider prohibits use of “funds
appropriated herein or hereafter . . . 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 Federal firearms
licensees.” 125 Stat. at 609. Appellants argue that the demand letter violates this
prohibition because it requires FFLs to send records of the disposition of firearms to the
National Tracing Center, which is within DOJ, to be processed by ATF-salaried
employees. See 28 C.F.R. § 0.131(f) (“[ATF] shall . . . [m]aintain and operate the
National Tracing Center . . . .”).
Appellants’ contention that the appropriations rider was intended to “bar the
submission of any firearms records to ATF” is unsupported by the text of the rider and its
historical context. “‘The plain meaning of consolidating or centralizing does not prohibit
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the mere collection of some limited information. Both consolidating and centralizing
connote a large-scale enterprise relating to a substantial amount of information.’” 10
Ring Precision, 722 F.3d at 722 (quoting Blaustein, 365 F.3d at 289). Appellants
nonetheless assert that the appropriations rider both precluded the demand letter and
stripped § 923(g)(3)(A) (requiring reports of multiple sales of handguns) and § 923(g)(4)
(regulating records from discontinued businesses) “of effect to the extent they require
submission of records to ATF.” Even if we were otherwise inclined to adopt Appellants’
argument, “Congress enacted section 923(g)(5) in 1986, after enacting the first
appropriations rider, so it could not have intended to authorize the record collection in
section 923(g)(5) while simultaneously prohibiting it.” NSSF, 716 F.3d at 213 n.11. The
Fifth Circuit extended that logic to § 923(g)(3) and (4), noting that “[b]ecause FOPA
clearly contemplates ATF’s collection of some firearms records, it cannot be said that the
appropriations rider prohibits any collection of firearms transaction records.” 10 Ring
Precision, 722 F.3d at 722 (footnote omitted); see also id. at 722 n.59. We affirm the
district court’s conclusion that “Congress clearly did not envision that the annual
appropriations rider would prohibit a small collection of records.” As previously
explained, the July 2011 demand letter requests very specific information from a limited
segment of FFLs. “[B]ecause ATF sent the [July 2011] demand letter to only seven
percent of FFLs nationwide and required information on only a small number of
transactions, the . . . demand letter does not come close to creating a ‘national firearms
registry.’” NSSF, 716 F.3d at 214.
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III
Rutherford and Tracy argue that even if ATF possessed the statutory authority to
issue the demand letter, its action was arbitrary and capricious.13 They assert that there is
no rational connection between the gun-trafficking problem that ATF sought to address
and issuance of the July 2011 demand letter to FFLs in the four border states. They also
contend that ATF did not adequately explain its decision to forgo alternatives. We reject
these arguments.
Courts must “hold unlawful and set aside agency action” that is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A). “Our inquiry under the APA must be thorough, but the standard of review
is very deferential to the agency.” Hillsdale Envtl. Loss Prevention, Inc. v. U.S. Army
Corps of Eng’rs, 702 F.3d 1156, 1165 (10th Cir. 2012). ATF’s
decision is arbitrary and capricious if the agency (1) entirely failed to
consider an important aspect of the problem, (2) offered an explanation for
its decision that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the
product of agency expertise, (3) failed to base its decision on consideration
of the relevant factors, or (4) made a clear error of judgment.
New Mexico ex rel. Richardson v. Bureau of Land Mgmt., 565 F.3d 683, 704 (10th Cir.
2009) (quotations omitted). Moreover, “[a] presumption of validity attaches to the
agency action and the burden of proof rests with the parties who challenge” it. Hillsdale
13
Peterson states on appeal that he adopts by reference the brief filed by
Rutherford and Tracy. See Fed. R. App. P. 28(i). We note, however, that he did not raise
an argument of arbitrary and capricious agency action before the district court. See
United States v. Anderson, 374 F.3d 955, 958 (10th Cir. 2004) (“[A] party may not raise
on appeal specific theories he did not present before the district judge.”).
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Envtl., 702 F.3d at 1165 (quotation omitted). Nonetheless, although we may not
“substitute [our] judgment for that of the agency . . . the agency must examine the
relevant data and articulate a satisfactory explanation for its action including a rational
connection between the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n of
the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quotation
omitted). And the presumption of regularity does not “shield [ATF’s] action from a
thorough, probing, in-depth review.” Citizens to Preserve Overton Park, Inc. v. Volpe,
401 U.S. 402, 415 (1971).
First, Rutherford and Tracy argue that the agency failed in its legal obligation to
“articulate a satisfactory explanation for its action including a rational connection
between the facts found and the choice made.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at
43 (quotation omitted). They assert that the required nexus did not exist between tracing
system queries regarding the trafficking problem, which showed that most FFLs in the
border states (including the Appellants) had not sold any of the rifles recovered in
Mexico, and ATF’s decision to issue the demand letter to all retail firearms sellers in
Arizona, California, New Mexico, and Texas. Thus, Rutherford and Tracy posit that it
was arbitrary for ATF to use state boundaries to identify demand letter recipients when it
could have chosen a more narrowly tailored option such as “direct[ing] the demand letter
to just those specifically-identified retail sellers who, by virtue of their proximity to the
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border with Mexico, the size and nature of their inventories or other reasons, were shown
to have sold firearms that were recovered in Mexico.”14
This argument fails to overcome ample evidence in the administrative record of a
“rational connection” between the information ATF considered and its choice to target
FFLs in the four Mexican border states. The 2009 GAO report on firearms trafficking
concluded that “[f]rom fiscal year 2004 to fiscal year 2008, most of the firearms seized in
Mexico and traced came from the U.S. Southwest border states,” with approximately
70% coming from Texas, California, and Arizona. And Rutherford and Tracy
acknowledge that when ATF trace data regarding rifles over .22 caliber recovered in
Mexico was sorted by state, the four states where the demand letter was ultimately issued
topped the list as sources of trafficked guns. “[F]rom fiscal year 2008 through fiscal year
2010, of the 5,799 rifles greater than .22 caliber that were 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.” 10 Ring Precision, 722 F.3d at 723.
Rutherford and Tracy note that when the trace data is limited to guns with a
shorter “time to crime,” fewer dealers are implicated and California and New Mexico are
no longer among the top four source states. But in making policy judgments that involve
line-drawing, agencies are “not required to identify the optimal threshold with pinpoint
14
Rutherford also argues we must not consider ATF’s explanation that the GCA
uses states as legal dividing lines because this reason was offered only after litigation
began and courts cannot accept “post hoc rationalizations for agency action,” Motor
Vehicle Mfrs. Ass’n, 463 U.S. at 50. Because we conclude that ATF’s action had a clear
nexus to the information the agency possessed about the targeted problem of Mexican
gun trafficking, we do not need to consider this justification.
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precision.” WorldCom, Inc. v. FCC, 238 F.3d 449, 461 (D.C. Cir. 2001). Because the
evidence considered by ATF demonstrates that “the problem [it] sought to address is
most severe in Arizona, California, New Mexico and Texas,” NSSF, 716 F.3d at 215, the
four states targeted by the demand letter, we agree with the district court that “ATF
articulated a rational connection between the facts found and the decision made.”
Second, Rutherford and Tracy rely on International Ladies’ Garment Workers’
Union v. Donovan, 722 F.2d 795 (D.C. Cir. 1983), and similar cases to argue that ATF
failed to consider alternatives to the demand letter it issued and explain why they were
rejected. They posit that ATF should have considered directing the demand letter to a
more narrowly tailored group of recipients, such as “those that ATF’s own trace data
showed had some factual connection to rifles recovered in Mexico or those who were
geographically proximate to the border.” In International Ladies’ Garment Workers’
Union, the D.C. Circuit reiterated a prior holding that “while an agency need not respond
to every comment, it must respond in a reasoned manner to explain how the agency
resolved any significant problems raised by the comments, and to show how that
resolution led the agency to the ultimate rule.” 722 F.2d at 818 (quotations and citation
omitted). Rutherford and Tracy, however, focus on one proposal mentioned within the
discussion of a broader recommendation in a 2009 report by Mayors Against Illegal
Guns: that ATF “identify the rifles and shotguns most likely to be used in crime” and
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.”
(Footnote omitted.) Rutherford and Tracy also note that before the demand letter was
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issued the OIG asked ATF to “explore options for seeking a requirement for reporting
multiple sales of long guns,” but they contend that the administrative record does not
include the requested “update on options considered.”
Agencies are not required to “consider every alternative proposed nor respond to
every comment made. Rather, an agency must consider only ‘significant and viable’ and
‘obvious’ alternatives.” 10 Ring Precision, 722 F.3d at 724 (quotation and citations
omitted). Rutherford and Tracy have not shown that their proposed alternatives meet
these criteria, nor that they were “serious issue[s] raised by any commenter.”15 10 Ring
Precision, 722 F.3d at 724. The suggestion they highlight from Mayors Against Illegal
Guns was a detail within one of forty recommendations in that document, see NSSF, 716
F.3d at 215-16, a document that “did not address the proposed demand letter,” and the
suggestion was not included in Mayors Against Illegal Guns’ “comment to the July 2011
demand letter proposal,” 10 Ring Precision, 722 F.3d at 724 n.73. The record before us
does not indicate that ATF failed to address a “significant problem[] raised by the
comments.” Int’l Ladies’ Garment Workers’ Union, 722 F.2d at 818 (quotations
omitted). Moreover, as the district court noted, the proposal from Mayors Against Illegal
Guns “would require ATF to constantly adjust the specific FFLs subject to the reporting
requirement, rendering its enforcement unnecessarily difficult and less effective because
15
Rutherford and Tracy appear to argue that ATF should have considered
alternatives that they do not suggest were included in the more than 12,000 comments
ATF received. In so doing, they cite several distinguishable cases in which an agency
attempted to “rescind[] a policy or revers[e] course without providing explanation as to
why it did not adopt narrower alternatives.” 10 Ring Precision, 722 F.3d at 724; see also
NSSF, 716 F.3d at 216. We are unpersuaded by the anemic argument.
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purchasers would avoid those specific dealers.” Rutherford and Tracy have not met their
burden to demonstrate that ATF failed to address viable or obvious alternatives, or that its
decision was not supported by the evidence in the administrative record.
IV
Peterson argues that the district court should have excluded portions of the
administrative record concerning data from traces of firearms seized by Mexican law
enforcement. Review of agency action under the APA “is generally based on the full
administrative record that was before all decision makers . . . . The district court must
have before it the whole record on which the agency acted.” Bar MK Ranches v. Yuetter,
994 F.2d 735, 739 (10th Cir. 1993) (quotation and citation omitted). We agree with the
district court that Peterson has failed to demonstrate a legal basis for the exclusion of this
evidence.
Primarily, Peterson contends that § 923(g)(7) restricts lawful tracing to those
traces conducted in the course of a bona fide domestic criminal investigation. He relies
on Small v. United States, 544 U.S. 385 (2005), which noted that “Congress generally
legislates with domestic concerns in mind,” leading courts to “adopt the legal
presumption that Congress ordinarily intends its statutes to have domestic, not
extraterritorial, application.” Id. at 388-89 (quotation omitted). In Small, the Supreme
Court concluded that the “convicted in any court” element of a statute prohibiting felons
from possessing firearms did not include convictions in foreign courts. Id. at 387. We
agree with the Fifth Circuit that “[t]he presumption against extraterritoriality has no
bearing [in the present matter] because the Mexican government conducting traces using
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ATF’s database is simply not an ‘extraterritorial application’ of the GCA.” 10 Ring
Precision, 722 F.3d at 725 n.76. “[Section] 923(g)(7)’s plain language merely requires
that the trace request be made ‘in the course of a bona fide criminal investigation.’” 10
Ring Precision, 722 F.3d at 725 (quoting § 923(g)(7)). Finally, although we reach our
holding on this issue by examining the plain text of the GCA, we note that “Congress has
recognized that ATF conducts trace requests by law enforcement officials in other
nations.” Id. at 725 & n.77 (citing S. Rep. No. 112-158, at 63 (2012) and H. Rep. No.
108-576, at 29 (2004)).
In addition, Peterson argues that the Mexican traces violate the Privacy Act, 5
U.S.C. § 552a, which states:
[n]o agency shall disclose any record which is contained in a system of
records by any means of communication to any person, or to another
agency, except pursuant to a written request by, or with the prior written
consent of, the individual to whom the record pertains . . . .
§ 552a(b). A “system of records” is defined 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.” § 552a(a)(5). As the Fifth Circuit concluded, “[t]he 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.” 10
Ring Precision, 722 F.3d at 725.16 Thus, even assuming arguendo that exclusion would
16
Peterson also briefly contends that nothing in the administrative record shows
ATF complied with 31 U.S.C. § 9703(g)(4)(C), a provision of the Treasury Forfeiture
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have been appropriate had violations occurred, the district court was correct to deny the
motion below.
V
For the foregoing reasons, the district court’s grant of summary judgment to the
defendant is AFFIRMED. The denial of Peterson’s motion to exclude is AFFIRMED.
Fund, in funding Mexican traces. Peterson admits that this argument was not raised in
the district court until his reply to ATF’s opposition to the motion to exclude. The
argument was not specifically addressed by the district court, and we question whether it
has been waived on appeal. See United States ex rel. King v. Hillcrest Health Ctr., Inc.,
264 F.3d 1271, 1279 (10th Cir. 2001) (suggesting that argument raised for the first time
in reply brief in support of a motion before the district court is waived on appeal). In any
case, Peterson’s argument regarding § 9703(g)(4)(C) fails on the merits. A “presumption
of regularity attaches to the actions of Government agencies.” U.S. Postal Serv. v.
Gregory, 534 U.S. 1, 10 (2001). Peterson has made no showing that this presumption is
inapplicable, and his mere statement that there is no evidence in the record that ATF
complied with § 9703(g)(4)(C) fails to carry his burden to overcome the presumption.
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