Blaustein & Reich v. Buckles

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
BLAUSTEIN & REICH, INCORPORATED, 
d/b/a Bob’s Gun & Tackle Shop,
Plaintiff-Appellant,
v.
 No. 02-2329
BRADLEY A. BUCKLES, Director,
Bureau of Alcohol, Tobacco,
Firearms, and Explosives,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Henry Coke Morgan, Jr., District Judge.
(CA-01-875-2)
Argued: October 30, 2003
Decided: April 21, 2004
Before WILKINS, Chief Judge, and NIEMEYER and
SHEDD, Circuit Judges.
Affirmed by published opinion. Judge Shedd wrote the opinion, in
which Chief Judge Wilkins and Judge Niemeyer joined.
COUNSEL
ARGUED: Stephen Porter Halbrook, Fairfax, Virginia, for Appel-
lant. Lewis Stanley Yelin, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
2 BLAUSTEIN & REICH v. BUCKLES
Appellee. ON BRIEF: Richard E. Gardiner, Fairfax, Virginia, for
Appellant. Robert D. McCallum, Jr., Assistant Attorney General, Paul
J. McNulty, United States Attorney, Mark B. Stern, Michael S. Raab,
Appellate Staff, Civil Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C.; Joel J. Roessner, Deputy Associate
Chief Counsel (Litigation), Abigail Roth, Lauren L. Bernick, Office
of Chief Counsel, BUREAU OF ALCOHOL, TOBACCO, FIRE-
ARMS & EXPLOSIVES, Washington, D.C., for Appellee.
OPINION
SHEDD, Circuit Judge:
In February 2000, the Bureau of Alcohol, Tobacco, Firearms, and
Explosives (the Bureau)1 sent letters to approximately 450 federally
licensed firearms dealers — fewer than one percent of the more than
80,000 such dealers throughout the nation — demanding information
relating to their acquisitions of secondhand firearms in 1999.
Blaustein & Reich, Inc., d/b/a Bob’s Gun & Tackle Shop (Bob’s Gun
Shop), a licensed dealer in Norfolk, Virginia, is one of the dealers that
received this demand letter.
Rather than produce the information requested by the Bureau,
Bob’s Gun Shop filed suit, claiming the Bureau exceeded its statutory
and regulatory authority in issuing the demand letters. Bob’s Gun
Shop also asserted that the criteria used by the Bureau to target the
selected dealers were arbitrary and capricious.
The district court granted summary judgment in favor of the
Bureau, and Bob’s Gun Shop now appeals.2 We affirm.
1
Congress recently reconfigured the Bureau of Alcohol, Tobacco, and
Firearms, changing its name in the process to the Bureau of Alcohol,
Tobacco, Firearms, and Explosives. Homeland Security Act of 2002,
Pub. L. No. 107-296, § 1111(a)(1), 116 Stat. 2135, 2274 (2002).
2
Bob’s Gun Shop suggests this case is moot because the Bureau
changed some of the selection criteria for its new demand letter issued
in 2002. We disagree. The changed criteria apply only to demand letters
issued after 2002. Thus, the change in criteria does not affect the issue
in this case — whether the criteria used to select Bob’s Gun Shop to
receive the 2000 demand letter were arbitrary and capricious.
BLAUSTEIN & REICH v. BUCKLES 3
I.
The Gun Control Act (GCA) of 1968, Pub. L. No. 90-618, 82 Stat.
1213 (1968)(codified as amended at 18 U.S.C. §§ 921-930), autho-
rizes the Bureau to license manufacturers, importers, and dealers of
firearms. See 18 U.S.C. § 923(a).3 The Bureau is required to issue a
license to any applicant that meets all the statutory qualifications and
agrees to abide by the applicable laws. Id. § 923(d). A manufacturer,
importer, or dealer that holds such a license is commonly referred to
as a federal firearms licensee (an FFL). Bob’s Gun Shop is an FFL
dealer.
Pursuant to both its statutory and regulatory authority, the Bureau
requires all FFLs to maintain extensive records relating to the fire-
arms they manufacture, import, receive, or sell. See, e.g., id.
§ 923(g)(1)(A); 27 C.F.R. § 478.121(a).4 For dealers, this documenta-
tion includes the name of the firearm’s manufacturer and/or importer,
model, serial number, type, caliber or gauge, date of sale or receipt,
and name and address of the transferor or transferee. 27 C.F.R.
§ 478.125(e). The Bureau has some access to this information but
only as authorized by statute or regulation. The Bureau may, for
instance, inspect an FFL’s records without warrant to determine the
disposition of a particular firearm during the course of a criminal
investigation. 18 U.S.C. § 923(g)(1)(B)(iii). The Bureau may also
require FFLs to provide record information by telephone to help
3
The GCA originally granted the Secretary of the Treasury the author-
ity to issue licenses. The Secretary delegated this authority to the Bureau.
As part of the Homeland Security Act of 2002, the licensing authority
was transferred to the Department of Justice. Pub. L. No. 107-296,
§ 1112 (f)(6), 116 Stat. 2135, 2276 (2002). The Attorney General of the
United States, in turn, delegated the licensing authority to the newly
reconfigured Bureau. 28 C.F.R. § 0.130 (a)(1). For sake of simplicity, we
refer to the Bureau as the governmental agency empowered by Congress
to perform the functions relevant to this case.
4
Our prior cases dealing with the extent of the Bureau’s authority refer
to 27 C.F.R. § 178, not § 478. As part of the reconfiguration of the
Bureau and the transfer of some of its functions from the Department of
the Treasury to the Department of Justice, § 178 was recently rede-
signated as § 478. See 68 Fed. Reg. 3750 (Jan. 24, 2003).
4 BLAUSTEIN & REICH v. BUCKLES
determine the disposition of a particular firearm in the course of a
criminal investigation. 18 U.S.C. § 923(g)(7). An FFL must respond
to such a request within twenty-four hours. Id.
Based on its authority to request record information from FFLs, the
Bureau has created a firearms tracing system to track the movement
of a particular firearm from its manufacturer to the retail dealer and
ultimately to the firearm’s first retail buyer. The Bureau has estab-
lished the National Tracing Center (NTC) to conduct this tracing
function. A firearms trace typically ensues after a law enforcement
agency recovers a "crime gun" — a firearm recovered from a crime
scene or from a suspect, felon, or other prohibited person. J.A. 85.
The law enforcement agency — local, state, federal, or international
— contacts the NTC. Based on the make of the firearm, the NTC con-
tacts the manufacturer of the firearm and tracks the movement of the
weapon through the chain of distribution ultimately to the FFL dealer
who sold the firearm to the first nonlicensee, a retail purchaser. When
requested by the NTC, the FFL in the chain of distribution must
report all or any portion of the information it is statutorily required
to maintain for each firearm, including the name and address of the
individual or entity who purchased the firearm.
This tracing system breaks down once the Bureau determines that
the first retail buyer sold or otherwise transferred the firearm to
another because retail buyers are not required to maintain records of
any "secondhand" sales or transfers. The Bureau must then rely pri-
marily on investigative interviews of the individuals involved in the
secondhand chain of distribution to have any hope of tracing a fire-
arm. These interviews are so time-consuming and often unproductive
that the Bureau rarely performs an investigative trace of a secondhand
firearm.
FFL dealers, on the other hand, are required to maintain records of
secondhand firearms that they receive or sell. 27 C.F.R. § 478.125(e).
This information, however, is difficult for the Bureau to access,
because once the initial chain of distribution among FFLs is broken,
the Bureau does not typically know which FFL dealer received or
sold a particular secondhand firearm without conducting an investiga-
tive trace.
BLAUSTEIN & REICH v. BUCKLES 5
In the last several years, the Bureau has increased its efforts to
trace crime guns and analyze the data relating to these traces.5 Based
on traces performed in 1999, the Bureau determined that just 1.2% of
FFL dealers — approximately 1,000 of the more than 80,000 FFL
dealers — accounted for more than half of all crime guns traced. Dur-
ing this same period, the Bureau also determined that approximately
450 FFL dealers had traced to them ten or more crime guns with a
"time-to-crime" of three years or less. Time-to-crime is the time from
the retail sale of a firearm to the time it is recovered at a crime scene
or is traced.6 The average time-to-crime is six years.
Based on this data, the Bureau sent demand letters to the approxi-
mately 450 FFL dealers identified as having ten crime guns with a
time-to-crime of three years or less. The demand letter required the
selected FFLs to produce certain record information relating to all
secondhand firearms it acquired in 1999. Bob’s Gun Shop was among
the FFL dealers that received the Bureau’s letter. It is undisputed that
Bob’s Gun Shop had ten crime guns with a time-to-crime of three
years or less traced to it in 1999.7
5
In February 2000, the Bureau published a comprehensive report,
Commerce in Firearms in the United States, that contains much of the
data and analysis the Bureau relied on in determining which FFL dealers
should receive its demand letter.
6
The Bureau imprecisely defined "time-to-crime" in its demand letter.
It is clear, however, that the Bureau used the broader definition of "time-
to-crime" in Commerce in Firearms in the United States in its selection
criteria.
7
Bob’s Gun Shop argues that at least some of the traces should not be
counted because the particular guns did not end up at a crime scene
through any fault of Bob’s Gun Shop or the individual to whom it sold
the firearm. For instance, two firearms were traced because they were
stolen from the individuals to whom Bob’s Gun Shop sold them.
Whether Bob’s Gun Shop or its buyers were involved in any wrongdo-
ing relating to any particular firearm that was traced is immaterial. The
Bureau based its selection on which FFL dealers had ten or more quali-
fied traces. The Bureau did not include in its criteria whether a particular
trace implicated the FFL dealer in illegal trafficking of firearms. It is
undisputed that Bob’s had at least ten firearms traced to it in 1999 and
these firearms had a time-to-crime of three years or less.
6 BLAUSTEIN & REICH v. BUCKLES
The Bureau’s demand letter stated that its research revealed that "a
high volume of gun traces with a short ‘time-to-crime’ may be an
indicator of illegal firearms trafficking." J.A. 54. The Bureau also
asserted that the targeted dealers’ unusually high number of traces of
new firearms "may mean that you are also selling a high volume of
secondhand guns used in crime." Id. The letter assured the targeted
FFL dealers, however, that the data did not necessarily indicate that
the FFL dealers had violated any gun control laws or regulations.
Nevertheless, the Bureau demanded that the targeted FFL dealers pro-
vide some limited information regarding all of the secondhand fire-
arms they acquired in 1999 for use in tracing secondhand firearms
recovered at crime scenes.
II.
Rather than comply with the Bureau’s demand letter, Bob’s Gun
Shop filed suit seeking declaratory and injunctive relief. In particular,
Bob’s Gun Shop claimed that the demand letter exceeded the
Bureau’s statutory authority to obtain information and, in effect, cre-
ated a national firearms registry. It also alleged that the Bureau’s
criteria for selecting the FFL dealers — those having ten crime gun
traces without any consideration of the particular dealer’s sales vol-
ume — was arbitrary and capricious.
In a thorough opinion, the district court granted summary judgment
in favor of the Bureau as to all of the claims raised by Bob’s Gun
Shop. Blaustein & Reich, Inc. v. Buckles, 220 F. Supp. 2d 535 (E.D.
Va. 2002). After the district court denied its motion to alter or amend
the judgment, Bob’s Gun Shop filed this appeal.
III.
We review the district court’s grant of summary judgment de novo.
Bryant v. Bell Atl. Md., Inc., 288 F.3d 124, 132 (4th Cir. 2002).
Although we view the evidence in the light most favorable to the non-
moving party,8 we review any conclusions of law de novo. Dixon v.
8
The facts are not in dispute. The district court adopted the statement
of facts in the Bureau’s memorandum in support of its motion for sum-
mary judgment because Bob’s Gun Shop did not take issue with that
statement. Bob’s Gun Shop does not contest the district court’s adoption
of the Bureau’s statement of facts.
BLAUSTEIN & REICH v. BUCKLES 7
Edwards, 290 F.3d 699, 710 (4th Cir. 2002). In particular, we review
questions of statutory interpretation de novo. United States v.
Abuagla, 336 F.3d 277, 278 (4th Cir. 2003).
IV.
A.
Bob’s Gun Shop argues that the Bureau may seek records and
information under its demand letter authority only in the course of a
criminal investigation or if the FFL has failed to comply with other
reporting requirements of the GCA. We disagree.
As part of the Firearms Owners’ Protection Act (FOPA) of 1986,
Pub. L. No. 99-308, § 103, 100 Stat. 449 (1986), which amended the
GCA, Congress gave the Bureau broad authority to seek, by demand
letter, all record information that FFLs are required to maintain. The
1986 amendment provides:
Each licensee shall, when required by letter issued by the
[Bureau], and until notified to the contrary in writing by the
[Bureau], submit on a form specified by the [Bureau], for
periods and at the times specified in such letter, all record
information required to be kept by this chapter or such lesser
record information as the [Bureau] in such letter may spec-
ify.
18 U.S.C. § 923(g)(5)(A).9
Under the GCA, Bob’s Gun Shop is required, as an FFL dealer, to
maintain a complete set of records regarding all firearms, including
secondhand firearms, that it acquires or transfers. See 18 U.S.C.
§ 923(g)(1)(A); 27 C.F.R. § 478.121. For each firearm that it receives,
Bob’s Gun Shop must keep a record of the name and address of the
person from whom it was received, the date of receipt, its manufac-
9
The demand letter also required the recipients to continue to submit
reports of their secondhand firearm acquisitions on a quarterly basis until
the Bureau advised otherwise. Section 923 (g)(5)(A) authorizes the
Bureau to require continuing reports.
8 BLAUSTEIN & REICH v. BUCKLES
turer and/or importer, serial number, model, type, and caliber or
gauge. See 27 C.F.R. § 478.125 (e).
The Bureau’s demand letter requests only a portion of the informa-
tion that Bob’s Gun Shop is required to maintain. Specifically, the
demand letter seeks only the name of the firearm’s manufacturer
and/or importer, its model, caliber or gauge, and serial number. The
Bureau specifically directed the FFL dealers not to provide the name
and address of the individual from whom the FFLs acquired the fire-
arm. Thus, the Bureau acted within its statutory authority under 18
U.S.C. § 923(g)(5)(A) when it issued the demand letter in question.
Nevertheless, Bob’s Gun Shop contends that another FOPA provi-
sion, now codified at 18 U.S.C. § 923(g)(1)(A), limits the Bureau’s
authority to issue demand letters. This provision, although it requires
FFLs to "maintain . . . records of importation, production, shipment,
receipt, sale or other disposition of firearms" in their possession, also
provides that these FFLs "shall not be required to submit to the
[Bureau] reports and information with respect to such records and the
contents thereof, except as expressly required by this section." 18
U.S.C. § 923 (g)(1)(A)(emphasis added). Bob’s Gun Shop contends,
in effect, that § 923(g)(1)(B) is the only part of § 923 that defines
when the Bureau can seek information from FFLs. Subsections of
923(g)(1)(B) authorize the Bureau to inspect or examine the records
that an FFL is required to maintain to ensure that FFLs are complying
with their record keeping obligations10 or to determine the disposition
of a firearm in the course of a criminal investigation.11 Id. § 923(g)(1)
(B)(ii)-(iii).12 Bob’s Gun Shop argues that the Bureau’s demand letter
10
The Bureau does not assert that Bob’s Gun Shop has failed to comply
with any recordkeeping requirement apart from the demand letter.
11
The Bureau concedes that it is not seeking the information demanded
in its letter in connection with a particular criminal investigation.
12
Section 923(g)(1)(B)(ii)-(iii) states:
The [Bureau] may inspect or examine the inventory and records
of a . . . licensed dealer without such reasonable cause or warrant
—...
(ii) for ensuring compliance with the record keeping require-
ments of this chapter . . . ; or
(iii) when such inspection or examination may be required for
determining the disposition of one or more particular firearms in
the course of a bona fide criminal investigation.
BLAUSTEIN & REICH v. BUCKLES 9
does not fall within these specific circumstances, so the Bureau has
no authority to require Bob’s Gun Shop to produce the information
requested in the demand letter.13
This argument ignores the plain language of § 923(g)(1)(A), which
protects FFLs from reporting requirements "except as expressly
required by this section." Section 923(g)(5)(a) expressly requires an
FFL to produce record information when the Bureau issues a demand
letter seeking it.14 Thus, we hold that the Bureau, when acting pursu-
ant to § 923(g)(5)(A), is not restricted to issuing demand letters in
connection with a criminal investigation or to noncompliant FFLs.
B.
Bob’s Gun Shop also contends that the Bureau’s demand letter vio-
lates the statutory ban on creating a national registry of firearms. It
argues that the Bureau’s demand letter authority, which is granted by
statute at § 923(g)(5)(A) and by regulation at 27 C.F.R. § 478.126, is
limited by both 18 U.S.C. § 926(a) and a rider that has accompanied
every enactment providing appropriations to the Bureau since 1978.
First, we conclude that the limitation in § 926(a) does not apply to
13
Bob’s Gun Shop also argues that § 923(g)(7) limits the Bureau’s
ability to seek record information to firearm traces in specific criminal
investigations. Section 923(g)(7) does not expressly limit the Bureau’s
authority to demand information. Instead, it merely requires an FFL,
when the Bureau makes a request in connection with the disposition of
a firearm in the course of a criminal investigation, to produce record
information within twenty-four hours. The demand letter in this case
does not relate to a trace being conducted in the course of a criminal
investigation and does not require Bob’s Gun Shop to produce any infor-
mation within twenty-four hours. Thus, § 923(g)(7) does not limit the
Bureau’s authority to issue demand letters like the one issued to Bob’s
Gun Shop.
14
Section 923(g)(5)(A) contains a condition precedent. It requires an
FFL to submit record information to the Bureau but only if the Bureau
issues a demand letter requesting it. This condition precedent does not
negate the fact that § 923(g)(5)(A) contains an express requirement that
is provided for in § 923(g)(1)(A).
10 BLAUSTEIN & REICH v. BUCKLES
the Bureau’s regulatory demand letter authority. Section 926(a) pro-
vides in pertinent part:
No such rule or regulation prescribed after the date of the
enactment of the Firearms Owners’ Protection Act [in
1986] may 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 . . ., nor that
any system of registration of firearms, firearms owners, or
firearms transactions or dispositions be established.
(Emphasis added). It is clear from the plain language of this statute
that Congress prohibits the Bureau or any other federal agency from
promulgating any new rules or regulations that would create a
national firearms registry. What is equally clear from the plain lan-
guage of this statute is that its limitations do not apply to rules or reg-
ulations that were prescribed by a federal agency before the
enactment of FOPA in 1986. The Bureau’s regulation authorizing it
to issue demand letters, found at 27 C.F.R. § 478.126, was promul-
gated in 1968. 33 Fed. Reg. 18,555 (Dec. 14, 1968). Thus, the statu-
tory prohibition in § 926(a) on new rules and regulations does not
apply to the Bureau’s regulatory demand letter authority under
§ 478.126.15
Second, we also conclude that the annual appropriations riders do
not prohibit the Bureau from issuing the demand letter in this case.
15
Bob’s Gun Shop included in its briefs considerable discussion of the
legislative history of § 923(g)(5)(A) and § 926(a), which it claims shows
that Congress intended to limit the use of demand letters to criminal
investigations and to noncompliant FFLs. Because we find the statute
unambiguous on its face, we do not resort to legislative history to deter-
mine what Congress intended its enactments to mean. We derive the
meaning of the enactment solely from the plain meaning of the words
Congress used. See Faircloth v. Lundy Packing Co., 91 F.3d 648, 653
(4th Cir. 1996) ("If the statutory language is clear and unambiguous, our
inquiry ends there . . . ; we neither resort to an examination of the stat-
ute’s legislative history nor apply the traditional rules of statutory con-
struction.").
BLAUSTEIN & REICH v. BUCKLES 11
The rider prohibits the Bureau from spending funds for salaries and
administrative expenses "in connection with consolidating or central-
izing . . . the records, or any portion thereof, of acquisition and dispo-
sition of firearms maintained by" FFLs. See, e.g., Appropriations,
2000 — Treasury, Postal Service, Executive Office of the President,
and General Government, Pub. L. No. 106-58, 113 Stat. 430 (1999).
Bob’s Gun Shop contends that the Bureau’s demand letter violates the
rider because it effectively consolidates and centralizes records.
Taken to its logical end, Bob’s Gun Shop’s argument would require
us to strike down a demand letter requiring just one FFL to report to
the Bureau "any portion" of record information as to one firearm.
Although we would not hesitate to make such a ruling if we inter-
preted the plain language of the rider and the GCA to require it, we
disagree with Bob’s Gun Shop’s reading of the rider.
The rider prohibits spending Bureau funds in relation to consolidat-
ing or centralizing records that FFLs are required to maintain. 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.16 We need not in this case determine the mini-
mum level of record reporting that would trigger the rider’s prohibi-
tion. Instead, we hold that the Bureau’s demand letter in this case —
sent to fewer than one percent of all FFLs and requesting only a por-
tion of record information statutorily required to be maintained17 —
16
Because we conclude that the meanings of consolidating and central-
izing are unambiguous, we cannot resort to legislative history to deter-
mine the meaning of the words. See Faircloth, 91 F.3d at 653. We note,
however, that our interpretation of the plain meaning of consolidating
and centralizing is entirely consistent with the legislative history of the
rider. The first of the annual appropriations riders was enacted in 1978
in response to the Bureau’s proposed regulation that would have required
every FFL to submit a quarterly report of all dispositions of firearms. See
43 Fed. Reg. 11,800-02 (Mar. 21, 1978); RSM, Inc. v. Buckles, 254 F.3d
61, 67 (4th Cir. 2001). Thus, the legislative history also suggests that
Congress intended to prohibit a large-scale enterprise to consolidate and
centralize a substantial amount of FFL record information.
17
The demand letter in this case requested less extensive record infor-
mation than the Bureau’s demand letter we upheld in RSM. In that case,
12 BLAUSTEIN & REICH v. BUCKLES
does not constitute consolidating or centralizing record information.18
C.
Bob’s Gun Shop also argues that the Bureau’s issuance of demand
letters to FFLs who are otherwise in compliance with all record main-
tenance requirements is a new interpretation by the Bureau of its
authority to issue demand letters. It contends that this new interpreta-
tion constitutes a new "rule" that violates 18 U.S.C. § 926(a). This
argument has two primary flaws.
First, the Bureau’s issuance of the demand letter to Bob’s Gun
Shop and the other similarly situated FFLs does not constitute the
making of a new "rule." Bob’s Gun Shop argues that the Bureau’s
demand letter constitutes a new "rule"19 prescribed in 2000 because
the Bureau required the targeted FFLs to produce all their record infor-
mation regarding all their firearm purchases and sales in the prior three
years. RSM, 254 F.3d at 63.
In this case, the Bureau’s demand letter limited the record request to
secondhand firearms purchased in 1999. Rather than produce all the
record information in their possession as to these specific firearms, the
FFL dealers were instructed not to produce the names and addresses of
the individuals from whom the secondhand firearms were acquired.
18
We noted in RSM that our holding was limited to demand letters to
noncompliant FFLs. RSM, 254 F.3d at 67. We were not confronted in
RSM with the issue now before us — whether the Bureau is authorized
to issue demand letters even when there is no allegation that the targeted
FFL dealers have failed to comply with statutory record reporting obliga-
tions. We conclude that the Bureau’s letter in this case — to fewer than
one percent of all FFLs which have not otherwise failed to comply with
record reporting requirements — is authorized under § 923(g)(5)(A) and
does not violate the appropriations riders’ ban on consolidating and cen-
tralizing record information. Our analysis of the plain language of the
GCA’s statutory framework is entirely consistent with the judgment in
RSM — § 923(g)(5)(A) clearly allows the Bureau to issue demand letters
to FFLs that have failed to comply with record reporting requirements.
19
The Administrative Procedure Act (APA) defines "rule," in pertinent
part, as:
BLAUSTEIN & REICH v. BUCKLES 13
the Bureau had never before interpreted its authority under § 478.126
to allow it to issue demand letters to FFLs that otherwise have fully
complied with their record keeping requirements. It relies on a line of
cases standing for the proposition that when "an agency has given its
regulation a definitive interpretation, and later significantly revises
that interpretation, the agency has in effect amended its rule, some-
thing it may not accomplish without notice and comment" under the
APA. See, e.g., Alaska Prof’l Hunters Ass’n v. Federal Aviation
Admin., 177 F.3d 1030, 1034 (D.C. Cir. 1999) (emphasis added).
Bob’s Gun Shop has failed to show that the Bureau previously
definitively interpreted § 478.126 as prohibiting it from issuing
demand letters to compliant FFLs.20 At most, Bob’s Gun Shop has
the whole or a part of an agency statement of general or particu-
lar applicability and future effect designed to implement, inter-
pret, or prescribe law or policy or describing the organization,
procedure, or practice requirements of an agency. . . .
5 U.S.C. § 551(4). The Bureau’s decision to send its demand letter to
approximately one percent of all FFLs does not constitute a "rule" as
defined by the APA. We agree with the district court that the Bureau’s
action probably constitutes no more than an informal "adjudication," 5
U.S.C. § 551(7), ordering a discrete group of FFLs to produce select
records relating to a specific type of firearm acquisition. See Blaustein,
220 F. Supp. 2d at 543 n.9.
20
Bob’s Gun Shop cites, among other documents, to a 1968 letter to
Congress in which the Director indicated that the Bureau had no inten-
tion of using its demand letter authority to require law abiding gun deal-
ers to report their firearm transactions. See 131 Cong. Rec. S9,101-05
(1985). This letter does not rise to the level of establishing a definitive
interpretation that would limit the Bureau’s authority to issue demand
letters only to noncompliant FFLs. The context of the letter makes clear
that the Director’s main concern was assuring Congress that the Bureau
would not use the demand letter to establish a national registry of fire-
arms of all FFLs. Instead, the Director envisioned issuing demand letters
only to a small minority of FFLs suspected of illegal trafficking. The
demand letter in this case is consistent in significant respect with the
Director’s 1968 letter. The letter was sent to an extremely small percent-
age of FFLs that accounted for a significant percentage of new firearms
that ended up being recovered at crime scenes or possessed by ineligible
persons much sooner than normal.
14 BLAUSTEIN & REICH v. BUCKLES
shown that the demand letter in question is the first seeking informa-
tion from compliant FFLs, which is far from establishing that the
Bureau has now revised its prior, well-established interpretation that
allowed demand letters only to noncompliant FFLs.
Second, even if we were to decide that the demand letter consti-
tuted a new "rule" prohibited by § 926(a), we would conclude that the
Bureau acted within its statutory authority under § 923(g)(5)(A). This
statutory provision, which grants the Bureau broad authority to issue
demand letters seeking records from FFLs, was enacted at the same
time as § 926(a). Section 926(a) prohibits a federal agency from pre-
scribing new rules or regulations that require FFLs to report their
records. Section 926(a) clearly does not (nor could it) limit Congress
from enacting a statutory provision such as § 923(g)(5)(A) that
requires FFLs to report their record information when directed by a
demand letter issued by the Bureau.
D.
Finally, Bob’s Gun Shop argues that the Bureau’s demand letter is
arbitrary and capricious because it is based on irrational and inaccu-
rate selection criteria. We disagree.
In its demand letter, the Bureau informed Bob’s Gun Shop that it
was selected to receive the letter because it had traced to it in 1999
ten crime guns with a time-to-crime of less than three years. The
Bureau explained that its research had demonstrated that a high vol-
ume of gun traces with a short time-to-crime may indicate illegal fire-
arms trafficking by an FFL dealer. It further noted that these
indicators relating to the new firearms sold by Bob’s Gun Shop may
also mean that Bob’s Gun Shop is selling a high volume of second-
hand firearms used in crime. The Bureau specifically recognized,
however, that these indicators did not establish that Bob’s Gun Shop
had violated any gun control laws or regulations.
Bob’s Gun Shop asserts that it is irrational to assume that just
because a gun shop has ten or more new crime gun traces that it might
also have a high volume of secondhand guns used in crimes. It also
contends that the Bureau’s assertion that Bob’s Gun Shop had a high
volume of crime gun traces in 1999 is misleading. Based on its sales
BLAUSTEIN & REICH v. BUCKLES 15
of nearly 2000 firearms in 1999, Bob’s Gun Shop asserts that ten
traces is of no significance. Bob’s Gun Shop further alleges that two
of the ten firearms traced were traced because they were stolen from
the individuals to whom Bob’s Gun Shop sold them. Thus, these two
particular traces negate any inference that Bob’s Gun Shop or its cus-
tomers were involved in diverting any new firearms into the illegal
market.
Determining whether an agency action is arbitrary and capricious
is subject to a highly deferential standard of review that presumes the
validity of the agency action. Natural Res. Def. Council, Inc. v.
United States Envtl. Prot. Agency, 16 F.3d 1395, 1400 (4th Cir.
1993). Under this standard, the reviewing court must carefully con-
sider the agency’s action to determine whether a rational basis exists
for its decision. Id. at 1401; see also Leather Indus. of Am., Inc. v.
Environmental Prot. Agency, 40 F.3d 392, 409 (D.C. Cir. 1994)
("Where the agency’s line-drawing does not appear irrational and the
[challenger] has not shown that the consequences of the line-drawing
are in any respect dire . . . we will leave that line-drawing to the agen-
cy’s discretion."). Although the court’s review of the agency’s deci-
sion must be searching and careful, the court must not substitute its
judgment for that of the agency. Citizens to Preserve Overton Park,
Inc. v. Volpe, 401 U.S. 402, 416 (1971), overruled on other grounds
by Califano v. Sanders, 430 U.S. 99, 105 (1977).
We conclude that the Bureau’s decision to send demand letters to
Bob’s Gun Shop and the approximately 450 similarly situated FFLs
was neither arbitrary nor capricious. The Bureau’s research revealed
that this small class of dealers — representing fewer than one percent
of the more than 80,000 FFL dealers — accounted for a significant
percentage of the new firearm traces performed in 1999. The Bureau
did not make the unsubstantiated assumption that these dealers were
illegally trafficking in firearms. Indeed, the Bureau was careful to
inform these dealers that they were not being accused of any wrong-
doing. Instead, the Bureau reasonably deduced that since this small
group of dealers was the original source of a disproportionate share
of the new firearms that were traced, this same group might also be
the source — through illegal or legal means — of a substantial per-
centage of secondhand firearms that are traced. Although this assump-
16 BLAUSTEIN & REICH v. BUCKLES
tion might ultimately be proved wrong, the Bureau did not act
arbitrarily or capriciously in drawing such a conclusion.
V.
For the foregoing reasons, we hold that the Bureau’s demand letter
does not violate the GCA or any of its implementing regulations. We
further conclude that the Bureau’s criteria for choosing which dealers
should receive the demand letters were not arbitrary or capricious.
Thus, we affirm the judgment of the district court in favor of the
Bureau.
AFFIRMED