New Regulation Reaching Even One Gun Sale Put on Hold by Court

Texas and several other plaintiffs were granted a temporary restraining order preventing the Bureau of Alcohol, Tobacco, Firearms and Explosives’ new regulation on gun sales, which was set to go into effect Monday, from being enforced against them.

The new regulation defines “engaged in the business” of dealing firearms to include a single sale of a gun. But Judge Matthew J. Kacsmaryk of the US District Court for the Northern District of Texas said May 19 that the regulation is inconsistent with the Bipartisan Safer Communities Act.

Kacsmaryk has a history of ruling against the Biden Administration, including on LGBTQ rights, immigration, and distribution of the abortion drug mifepristone.

The ruling also comes amid a flurry of litigation testing the power of states and the federal government to regulate gun sales. For example, the US Court of Appeals for the Tenth Circuit recently heard oral arguments in a Second Amendment challenge to a Colorado law that bans gun sales to people under 21 years old.

The restraining order here is set to expire June 2, but Kacsmaryk said that the plaintiffs—Texas, the Gun Owners of America Inc., the Gun Owners Foundation, the Tennessee Firearms Association, the Virginia Citizens Defense League, and an individual plaintiff—are likely to win on the merits of their claim.

Anyone in the business of selling firearms must have a license to do so and is subject to severe penalties, including up to five years in prison and a $250,000 fine, if they don’t have one, Kacxmaryk said. Previously, a private gun owner who wanted to sell his guns wasn’t subject to the licensing requirement, he said.

ATF’s new regulation now says: “Even a single firearm transaction, or offer to engage in a transaction, when combined with other evidence, may be sufficient to require a license.” But the BSCA says that a person is in the business of selling firearms if they do so as “a regular course of trade or business to predominantly earn a profit through the repetitive purchase and resale of firearms.”

The validity of the regulation is undercut by the statutes’ use of “firearms” in the plural; the phrase “regular course,” which clearly contemplates a series of events; “repetitive,” meaning more than one; and the exemption of “sales, exchanges, or purchases” in the plural, Kacsmaryk said.

The final rule also suggests that actual profit isn’t a requirement of the statute, but the statue says that the intent of a sale must be to “predominately earn a profit,” Kacsmaryk said. He also said that the BSCA has a safe harbor provision for a person “who makes occasional sales,” which the BATF’s rule “eviscerates.”

The plaintiffs face irreparable injury if the rule goes into effect, Kacsmaryk said. Texas will lose revenue and the other plaintiffs could face civil and criminal enforcement actions, he said.

Everytown for Gun Safety Action Fund filed an amicus brief in the suit. Bloomberg Law is operated by entities controlled by Michael Bloomberg, who serves as a member of Everytown for Gun Safety’s advisory board. Everytown for Gun Safety advocates for universal background checks and other gun control measures.

The Texas Attorney General’s Office; Stephen Dean Stamboulieh of Olive Branch, Miss.; Barnett Howard & Williams PLLC; and Schulman LeRoy & Bennett PC represented the plaintiffs. The US Department of Justice represented ATF.

The case is Texas v. Bureau of Alcohol Tobacco Firearms & Explosives, N.D. Tex., No. 2:24-cv-00089-Z, 5/19/24.