Retaliation: ATF Shuts Down FFL After Gun Store Sues the Same ATF

• The ATF revoked the Federal Firearms Licenses (FFLs) of Morehouse Enterprises, a gun shop that after they sued the federal government over the now-defunct frames & receiver rule.

• The ATF cited 5 violations, including 2 paperwork errors & 2 more severe violations related to firearm transfers & background checks.

• Gun Owners of America (GOA) & Morehouse Enterprises claim that the ATF’s actions are arbitrary, vindictive, & a violation of due process & 1st Amendment rights.

VALLEY CITY, North Dakota — The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has revoked both Federal Firearms Licenses (FFLs) belonging to a gun shop that sued the federal government over the now-dead frames and receiver rule.

Morehouse Enterprises in North Dakota teamed up with Gun Owners of America (GOA) to fight the ATF’s attempt to regulate unfinished frames and receivers through bureaucratic Fiat. The ATF created a rule in response to a White House order to ban 80% firearms that President Joe Biden calls “ghost guns.” This lawsuit was the first case in the country to challenge the now-vacated rule.

Shortly after Morehouse Enterprises filed suit, the ATF launched an inspection of the gun shop. This ATF visit was the first inspection that the store ever received from the ATF. The Industry Operations Inspector (IOI), Jacob Temp, jokingly told the store owner that the ATF discussed whether the inspection would look like retaliation for the court case. The IOI said that the ATF originally would delay any inspection for at least three years, pending litigation, but the Bureau decided to inspect the store anyways.

IOI Temp said that the store did well on their overall level of compliance and expressed approval for the job the shop has done to ensure they followed ATF regulations. Every single firearm was accounted for. All 2700 guns that the store acquired were documented. So were the 2400 dispositions of firearms. The shop felt good about the inspection, but that was all about to change.

Then on March 6, 2023, the ATF issued a “Report of Violations.” The ATF found five policy violations, three of which or simple paperwork errors. The first violation was the store forgetting to record the return of a firearm to a customer that brought the gun in for gunsmithing. The second violation was the store accidentally writing a customer’s Social Security number in the NICS transaction number (NTN) box. A third clerical error was a number left off a NICS transaction number.

The store had two other more serious violations. The store had transferred a handgun to a Georgia resident. FFLs are not allowed to transfer handguns to residents of another state due to the differing gun laws surrounding handguns. In this case, Georgia law is not stricter than North Dakota law.

A second violation was allowing the customer to use a Georgia concealed carry permit in place of a NICS background check. The Brady law allows exceptions to background checks. One of these exceptions is if a state’s concealed carry permit meets or exceeds the same scrutiny as a NICS check. Georgia’s concealed carry permit does that, but it can only be used in lieu of a NICS check in the state of issue.

On May 23, 2023, the ATF informed Morehouse Enterprises of its intent to revoke both of the company’s FFLs, even though the second FFL did not have any violations. President Biden has pressured the ATF to shut down FFLs through his zero-tolerance policies.

FFL revocations are up 500% since Biden took office, but even under Biden’s zero-tolerance policy, the store’s violations do not rise to the level for revocation. Under the president’s policy, the violations only merit a “Warning Conference.”

GOA has once again teamed up with Morehouse Enterprises to defend the company against the ATF’s actions. The gun rights group claims the Bureau’s actions are “Arbitrary, Capricious, an Abuse of Discretion, and Not in Accordance with Law.” The plaintiffs also claim that the ATF is violating the right to bear arms by restricting the acquisition of guns.

The plaintiffs also claim that the ATF is acting in a vindictive manner. They claim that Morehouse’s due process rights have been violated via retaliatory prosecution. They also claim that Morehouse’s First Amendment rights have been violated because the ATF is interfering with the plaintiff’s right to sue the government.

Whether or not the ATF move was retaliatory because of the guns store’s lawsuit is up for debate and will be settled in a court of law, but the optics are not good for the ATF.

Trying to shut down the business of a company suing you looks retaliatory and vindictive regardless of the reason.

About John Crump

John is a NRA instructor and a constitutional activist. John has written about firearms, interviewed people of all walks of life, and on the Constitution. John lives in Northern Virginia with his wife and sons and can be followed on Twitter at @crumpyss, or at www.crumpy.com.