Courts Rule for ATF “Final Rule” Using Commercial Sale Loophole

U.S.A. –-(AmmoLand.com)-– Two different federal courts, in two different Circuit Courts of appeal, have refused to grant preliminary injunctions against the implementation of the ATF “Final Rule.”  The Final Rule completely changes the definition of a firearm in Federal law.

On August 23, in the United States Court for the Eastern District of North Dakota, in the Eighth Circuit, Judge Peter D. Welte refused to grant a preliminary injunction against the massive changes to federal law proposed in the “Final Rule” put forward by the Biden Administration, through the ATF.

On August 24, 2022, the District Court for the Galveston Division of the
Southern District of Texas, in the Fifth Circuit Court of Appeals, refused to grant a preliminary injunction, against the Final Rule, in a case brought by Division 80, LLC.

Thus, the Final Rule went into effect on August 24, 2022. Enormous parts of the firearms industry and the nation are now in turmoil, trying to figure out what the Final Rule actually means.

In practice, the Final Rule appears to give the ATF the arbitrary ability to label any set of tools, parts, and information that make the private manufacture of a firearm easier than a firearm itself.  There is a beautifully argued brief, which includes the arguments from Bruen, sent to the Court on July 27, 2022.  Judge Welte ignores most of the arguments.

In North Dakota, Judge Welte, at the beginning of his order, frames the case this way:

On April 26, 2022, in response to evolving technical advances in firearms technology, the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”) promulgated a final rule updating decades-old definitions within its longstanding regulations of federal firearms laws. See Definition of “Frame or Receiver” and Identification of Firearms, 87 Fed. Reg. 24652 (April 26, 2022) (to be codified at 27 C.F.R. pts. 447, 478, and 479) (the “Final Rule”). At bottom, the Final Rule amends the definitions of certain terms with the ATF’s regulations, such as “frame or receiver,” and amends related ATF regulations on firearm markings and recordkeeping. Id. The Final Rule takes effect on August 24, 2022. Id.

Judge Welte simply accepts the power of the ATF to make sweeping changes in the law, even though the Congress has had ample opportunity to do so, and has refused to change the law.

Judge Welte later claims the Bruen decision does not apply.

He writes the Final Rule does not impact individual rights, because it
only impacts the commercial sale of firearms, which, he claims, is excluded from Bruen.   From the decision:

Turning to the substance of Bruen, that case concerned an unconstitutional “proper cause” requirement for issuance of conceal and carry permits in the State of New York—quite distinguishable from the facts here. Nonetheless, the question is whether the Final Rule would pass constitutional muster post-Bruen where, as the Court reads Bruen, an individual’s right to keep and bear arms for self-defense may not be arbitrarily denied by a state. From the outset, however, it is crucial to note the Final Rule concerns the commercial sale of firearms. The Final Rule does not infringe on any individuals’ or business’ ability to completely manufacturer a firearm for personal use, nor does it restrict the ability to obtain the weapon kits at issue. Instead, the Final Rule simply requires serialization of a firearm, when in the stream of commerce, so that it may be tracked in the event a crime is committed with the firearm. There is a longstanding distinction between the right to keep and bears arms and commercial regulation of firearm sales.

This is a circular argument. The “Final Rule” only impacts commercial sales if the court accepts the ATF and Justice department definitions in the final rule. Otherwise, it impacts private manufacturing and sales in many different and unique ways.

Commercial regulation of firearm sales is recent. At the earliest, you could argue it started in 1934 with the NFA. The provision in GCA 1968 did not start until 1968, which is very recently in the Constitutional terms used in Bruen.

He does this by claiming Congress included the term frame or
receiver as part of what could be “easily converted” when the phrase had never applied to unfinished frames or receivers before. It only applied to other weapons, such as starter pistols.

Moreover, Judge Welte inserts a completely new term into the law and the debate: “completely manufacture.”  

The Final Rule does not infringe on any individuals’ or business’ ability to completely manufacturer a firearm for personal use,

It is arguable that no firearm has ever been “completely manufactured” by an individual.

Someone else mined the iron ore and refined it into steel.  Someone else made the bricks to build the forge to weld the earliest barrels. Someone else sold the milling machines and/or drill presses.  Someone else refined the saltpeter and sulfur, and charcoal to make the gunpowder.

The rule is *not* about “commercial sales.”

It is about the ATF claiming the ability to make your own gun has become too easy. 

It is as if the FCC claimed to be able to regulate the Internet because the ability of people to publish their own thoughts to a large audience has become too easy.

It is a clear Second Amendment issue.  The Court dodged it through the “commercial sales” loophole.

The Second Amendment forbids Congress from saying, “Making your own gun is too easy; we will make it harder.”

Much of the problem is with the GCA itself. The GCA has many unconstitutional provisions. Judge Welte covers them all up with the “commercial sales” loophole.

If there is no restraint on the definition of “commercial sales”, then the loophole to infringe on the Second Amendment is large enough to drive thousands of pages of infringements through.

Judge Welte “tempered” his decision by saying preliminary injunctions are an “extraordinary measure” which the arguments of the plaintiffs do not meet.

The second case, in Texas, followed quickly on the heels of the North Dakota case.

In November 2021, less than a year ago, Division 80, LLC, started selling what is commonly known as 80% receivers in Galveston County, Texas.  This was six months after the proposed rule was stated by the ATF.  Division 80 filed a lawsuit against ATF based on the proposed “Final Rule” set to go into effect on August 24, 2022.

Division 80 asked for a temporary injunction to prevent the rule from going into effect, stating they would suffer irreversible harm.

On August 24, 2022, the District Court for the Galveston Division of the Southern District of Texas, in the Fifth Circuit Court of Appeals, refused to grant the preliminary injunction, with the following:

Division 80, LLC, located in Galveston County, began selling partially complete firearm receivers in November 2021. It now seeks a nationwide injunction to suspend a proposed rule interpreting the Gun Control Act, 18 U.S.C. §§ 921, et seq. (“the Act”). Dkt. 11. Because Division 80 has failed to show that it will suffer irreparable harm absent an injunction or that the balance of equities favors preliminary relief, the motion is denied.

The judge in the case is Jeffry V Brown.

In the arguments showing that Division 80 is likely to succeed on the merits, p. 4, Division 80 cites Bruen:

The Final Rule’s expansion of ATF ’s jurisdiction into these domains—on the historically significant issue of Second Amendment rights—exceeds Defendants’ statutory authority. Cf.N.Y.State Rifle & Pistol Ass’n v. Bruen, 142 S. Ct. 2111, 2126 (2022) (recognizing “this Nation’s historical tradition” of Second Amendment rights and holding that “the government may not simply posit that the regulation promotes an important interest”).

But Judge Brown states that because Division 80 failed to establish the elements of irreparable harm, they do not need to look at the likelihood of success:

But a court is not justified in exercising its equitable power without a showing of likely irreparable harm, that the equities favor the plaintiff, and that the injunction will serve the public interest. Because Division 80 failed to establish those elements, the court need not address its likelihood of success on the merits.

The Division 80 case was not as strong as the North Dakota case, primarily because Division 80 did not exist as an entity before the “Final Rule” was proposed. Thus it was more difficult for Division 80 to provide evidence of irreparable harm because it only had existed for less than a year.

The very reason for the existence of Division 80, that of individuals to build their own firearms outside of governmental control, made the production of evidence of sales and which states had sales self-defeating.

The Court simply refused to hear any evidence which showed the ability to make a firearm free of government interference as a part of the Second Amendment.

It is unknown if Division 80 will go out of business. In Texas, Judge Jeffrey V Brown claimed there was no solid evidence to believe such would occur.

According to the Judge, the only documented cost to Division 80 was the requirement to obtain an FFL.

There were numerous Amicus briefs in favor of the Government in the Division 80 case. This correspondent does not recall seeing a single Amicus brief on the side of Division 80.

It was a completely different story from the North Dakota case.

The North Dakota case had 17 states co-signed as plaintiffs against the ATF.  As noted in the Order:

Without a doubt, this case presents divisive issues that all parties care about deeply and that are of national concern and importance, as demonstrated by the participation of nearly every state in this country in this action. Nevertheless, the Court’s role and responsibility remains the same—to apply the law to the facts (and not the arguments or policy) of each case. After doing so here, the balance of the Dataphase factors do not weigh in favor of granting the Plaintiffs a preliminary injunction. Accordingly, the motions (Doc. Nos. 14 and 19) are DENIED, and the Court FINDS AS MOOT the Plaintiffs’ motion for oral argument (Doc. No. 25).

Such is the state of the judiciary and its willful bowing down to the regulatory, administrative state. There has been considerable precedence established during the predominance of progressive ideology in the Appellate courts and on the Supreme Court.

The Thomas Court laid down at least a partial gauntlet with the EPA v West Virginia decision and the Bruen decision.

Now we have two Second Amendment cases where the lower courts have said, “Never Mind.”

The North Dakota case, at minimum, will be appealed. It is not so clear in the Division 80 Texas case.

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About Dean Weingarten:

Dean Weingarten has been a peace officer, a military officer, was on the University of Wisconsin Pistol Team for four years, and was first certified to teach firearms safety in 1973. He taught the Arizona concealed carry course for fifteen years until the goal of Constitutional Carry was attained. He has degrees in meteorology and mining engineering, and retired from the Department of Defense after a 30 year career in Army Research, Development, Testing, and Evaluation.