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.
No. 12-50742.
United States Court of Appeals, Fifth Circuit.
July 11, 2013.
722 F.3d 711
Richard E. Gardiner, Attorney, Law Office of Richard Gardiner, Fairfax, VA, Joseph Allen Halbrook, Jr., Sneed, Vine & Perry, P.C., Austin, TX, Stephen Porter Halbrook, Esq., Fairfax, VA, for 10 Ring Precision, Incorporated Plaintiff-Appellant.
Andre M. Landry, III, Esq., Looper Reed & McGraw, P.C., Houston, TX, Andrew Arthur Lothson, Swanson, Martin & Bell, L.L.P., Chicago, IL, James Brian Vogts, Swanson, Martin & Bell, L.L.P., Chicago, IL, for Robby Betts, doing business as Golden States Tactical Intervenor Plaintiff-Appellant.
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 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
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, 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 rеquirement for long guns poses a challenge for ATF‘s efforts. “[T]he federal multiple sales reporting requirement helps expedite the time required by ATF to complete a gun trace.”10 Because ATF “does not
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 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 thаt “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 Mеxico, and Texas “to report multiple sales or other dispositions whenever the licensee sells or otherwise disposes of two or more
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 Gоlden 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 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
A. Section 923(g)(5)(A)
Appellants first contend that ATF exceeded
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 thе 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.
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,
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 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 rеcord of the rifle‘s serial number, manufacturer and/or model name. To argue . . . that an FFL—who pur-
chases 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
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 сonducting 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 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 fоr 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
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 ex-
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 sрecifies 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 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 fireаrms, 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 fire-
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 allоcated 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 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
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 judgment.”66 We will uphold аn 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 judiciаl 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 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. Appel-
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, 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 Fireаrms Tracing System. The Privacy Act stipulates the conditions upon which an agency may disclose “any record which is contained in a system of records.”
Because Appellants have not offered any authority indicating that the Mexican trace results should have been excluded, we conclude that the district court permissibly dеnied 10 Ring‘s motion to exclude portions of the administrative record.
VI.
The judgment of the district court is AFFIRMED.