Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-16-01015/USCOURTS-ca7-16-01015-0/pdf.json

Parties Involved:
Bureau of Alcohol, Tobacco, Firearms and Explosives
Respondent
D.C.V. Imports, L.L.C.
Petitioner

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 16-1015

DCV IMPORTS, LLC,

Petitioner,

v.

BUREAU OF ALCOHOL, TOBACCO,

FIREARMS AND EXPLOSIVES,

Respondent.

____________________

Petition for Review of an Order of the

Bureau of Alcohol, Tobacco, Firearms and Explosives.

No. 3-IL-107-23-3L-00682

____________________

ARGUED AUGUST 9, 2016 — DECIDED OCTOBER 4, 2016

____________________

Before BAUER, POSNER, and SYKES, Circuit Judges.

SYKES, Circuit Judge. DCV Imports, LLC, a familyoperated fireworks importer in rural Illinois, petitions for 

review of an order denying renewal of its import license. An 

administrative law judge found that DCV Imports willfully 

failed to keep required records of its daily transactions, see

18 U.S.C. § 842(f); 27 C.F.R. § 555.127, and recommended 

that the company’s license not be renewed. The regional 

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office of the Bureau of Alcohol, Tobacco, Firearms and 

Explosives accepted that recommendation, and the decision 

was upheld by the Deputy Director of ATF. We conclude 

that substantial evidence supports the Deputy Director’s 

decision and deny the petition for review.

I. Background

The activities of two closely related, family-owned fireworks businesses are relevant to this case, although only the 

denial of DCV Import’s license is directly at issue. Mary 

Vinyard and Stephen Vinyard, Sr., began operating S&N 

Fireworks in the late 1970s, and in 1997 they obtained from 

the ATF a license to import high explosives. Their son 

Darren founded DCV Imports in 2004 with the intention of 

eventually buying out his parents’ business or running his 

own fireworks company. DCV (meaning Darren Clifford 

Vinyard) shared S&N’s place of business in Lincoln, Illinois, 

and in 2004 obtained its own license to import high explosives. From 2004 until 2011, S&N Fireworks ordered bulk 

fireworks from DCV Imports, which imported the explosives 

from China and immediately transferred them to S&N

Fireworks. S&N then packaged and sold the fireworks for 

individual shows. 

In addition to the two companies’ shared premises and 

symbiotic business relationship, Darren was employed by

S&N Fireworks and was listed as a “responsible person” on 

S&N’s license. ATF regulations define “responsible person” 

as one “who has the power to direct the management and 

policies of the applicant pertaining to explosive materials” 

and generally “includes partners, sole proprietors, site 

managers, corporate officers and directors, and majority 

shareholders.” 27 C.F.R. § 555.11. Darren’s duties with S&N 

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No. 16-1015 3

included delivering fireworks for shows and staging fireworks shows.

ATF agents periodically conduct compliance inspections 

of federal explosives licensees. See id. § 555.24. Agency 

regulations require that licensees maintain for each storage 

area or “magazine” an accurate “daily summary of magazine transactions,” including the quantity of explosives 

received and removed and the total on hand at day’s end. 

See id. § 555.127. Licensees also have an affirmative duty to 

notify ATF about discrepancies that “might indicate a theft 

or loss of explosive materials.” Id. ATF investigators inspecting DCV Imports in 2004, 2008, and 2010 did not uncover 

any regulatory violation. DCV was not storing any explosives during this period, however, because all fireworks it 

received were immediately transferred to S&N Fireworks. 

Following each inspection, an ATF investigator reviewed 

with Darren the applicable statutes and regulations, and 

each time he signed an Acknowledgement of Federal Explosives Regulations. 

S&N’s compliance record, on the other hand, was spotty. 

ATF investigators cited the company for numerous violations during a 2006 inspection, including not maintaining 

accurate daily summaries and storing fireworks unsafely. 

That inspection led to a “warning conference” in 2008 attended by Darren and other S&N Fireworks personnel. Then 

in 2009 an inspection revealed a multitude of violations, 

including hundreds of instances where actual counts of 

stored fireworks contradicted inventory records, multiple 

inaccurate daily summaries, and the disappearance of 

roughly 10,000 pounds of shells. Stephen “Vinny” Vinyard, 

Jr., Darren’s brother, was the S&N employee tasked with 

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maintaining the daily summaries throughout the period 

when these infractions occurred. Darren attended a conference in early 2010 to wrap up the 2009 inspection, and after 

reviewing the violations with an ATF investigator, he signed 

a report acknowledging the citations. Later that same year 

the ATF’s Chicago Field Division, through its Director of 

Industry Operations, notified S&N Fireworks that its license 

would not be renewed because of willful violations uncovered during the 2009 inspection. Rather than contest the

decision, S&N voluntarily surrendered its license.

DCV Imports then bought out S&N’s inventory, equipment, customer lists, and show contracts. As part of the 

transaction, Darren agreed to give Vinny a 50% stake in 

DCV and to make him vice president, although Darren 

retained operational control as president of the company. 

DCV Imports expanded its operations from importing 

fireworks to running a complete fireworks business, as S&N 

Fireworks had been. Darren made Vinny responsible for 

maintaining the required daily summaries (and consequently the magazine inventories) even though maintaining those 

same records for S&N Fireworks had been Vinny’s job when 

the lapses leading to the company’s demise had occurred. 

Vinny did not receive any formal recordkeeping training

and struggled to complete the daily summaries; he told 

Darren that he was uncomfortable performing this task. In 

early 2013 Vinny hired a cousin to take over the recordkeeping duties. Vinny himself trained the cousin to maintain the 

daily summaries and then “stopped paying attention” to the 

records.

A team of ATF investigators arrived unannounced in 

September 2013 to inspect DCV Imports. The investigators 

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began by counting the explosives in DCV’s magazines and 

comparing those numbers to a computerized inventory, but 

when it became clear that the quantities did not match, the 

team asked Darren for the daily summaries. The investigators found 73 instances in which those records did not match 

the amount of fireworks added or removed from a magazine. Those 73 inaccurate daily summaries totaled 1,897 

missing “units” or roughly 870 net pounds of explosives for 

which DCV Imports could not account. As before, this 

inspection concluded with a conference during which ATF 

investigators reviewed regulatory requirements and DCV’s 

violations with Darren and required him to sign an 

Acknowledgement of Federal Explosives Regulations. 

Based on these violations, ATF’s Director of Industry 

Operations in Chicago notified DCV Imports in May 2014 

that the agency did not intend to renew DCV’s explosives

license. The notice charged DCV Imports with willfully 

failing to comply with the recordkeeping mandate of 

27 C.F.R. § 555.127. The notice placed special emphasis on

the volume of missing fireworks.

DCV invoked its right to a hearing before an administrative law judge. See 18 U.S.C. § 843(e)(2). In a written submission to the assigned judge, DCV Imports did not dispute the 

violations but argued instead that its violations should not 

be deemed willful given its perfect compliance record before 

2013. The agency responded that S&N Fireworks and DCV 

Imports were “essentially the same business operation” and 

equated the violations of the former with the latter. 

The administrative law judge conducted an evidentiary 

hearing in December 2014 and afterward issued a written 

order agreeing with the agency that DCV Imports had 

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committed the recordkeeping violations willfully. The judge

reasoned that Darren’s long history of working in the fireworks industry and extensive interactions with the ATF 

“demonstrate that he was sufficiently knowledgeable of the 

ATF’s federal explosives regulations” yet chose to disregard 

those requirements. The judge acknowledged that DCV 

Imports and S&N Fireworks are different entities, and 

although she did not impute S&N’s violations to DCV, the 

judge did hold Darren accountable for the knowledge he 

gained as a responsible person at S&N Fireworks. She also 

agreed with the agency that Darren’s decision to defer 

recordkeeping responsibility to Vinny—knowing that he 

was “at the center of the faulty recordkeeping that led to 

S&N’s 2010 denial”—strongly supported a finding of willfulness. The judge recommended that the agency confirm 

the decision not to renew DCV’s license. 

That recommendation was accepted. DCV Imports 

sought review by the Deputy Director of the ATF, who after 

briefing and oral argument upheld the denial of DCV’s 

license renewal. See 27 C.F.R. § 555.79. DCV Imports petitioned for review by this court. See id. § 555.80. 

II. Discussion

We will uphold the agency’s conclusion that DCV Imports acted willfully if it is supported by substantial evidence. See § 843(e)(2); 5 U.S.C. § 706(2)(E). Congress has 

directed the Attorney General (and by delegation the Director of the ATF) to deny or refuse to renew a license to import 

or deal in explosive materials if the applicant has willfully 

violated any pertinent statute or regulation. 18 U.S.C. 

§ 843(a), (b)(2). “Willfully” as used in § 843 is not defined, 

and only one of our sister circuits has addressed its meaning. 

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No. 16-1015 7

In Vineland Fireworks Co. v. Bureau of Alcohol, Tobacco, Firearms & Explosives, the Third Circuit reasoned that explosives 

licensing is analogous to firearms licensing “because ATF 

administers both ... and the statutory provisions governing 

the revocation of each type of license require that the licensee has ‘willfully violated’ a statutory provision or a regulation.” 544 F.3d 509, 518 (3d Cir. 2008). The court concluded 

that decisions addressing firearms licensing under the Gun 

Control Act provide “a useful framework” for explosives 

licensing and observed that the six circuits that have interpreted the meaning of “willful” in proceedings to revoke the 

license of a firearms dealer agree that the term means plain 

indifference to, or purposeful disregard of, a known legal 

duty. Id.; see Shawano Gun & Loan, LLC v. Hughes, 650 F.3d 

1070, 1077–78 (7th Cir. 2011); RSM, Inc. v. Herbert, 466 F.3d 

316, 320–23 (4th Cir. 2006); Willingham Sports, Inc. v. Bureau of 

Alcohol, Tobacco, Firearms & Explosives, 415 F.3d 1274, 1277 

(11th Cir. 2005); Appalachian Res. Dev. Corp. v. McCabe, 

387 F.3d 461, 464 (6th Cir. 2004); Perri v. Dep’t of the Treasury, 

637 F.2d 1332, 1336 (9th Cir. 1981); Lewin v. Blumenthal, 

590 F.2d 268, 269 (8th Cir. 1979). 

We adopt the Third Circuit’s approach and conclude that 

the interpretation of “willfulness” applicable to firearms 

licensing applies as well to revocation of explosives licenses. 

Accordingly, no showing of bad purpose or evil motive is 

required to establish willfulness, and no de minimis exception 

is available. See Article II Gun Shop, Inc. v. Gonzales, 441 F.3d 

492, 497–98 (7th Cir. 2006) (interpreting a parallel provision 

of the Gun Control Act).

With this definition in mind, we turn to the question 

whether substantial evidence supports the administrative 

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law judge’s finding that DCV Imports acted willfully. DCV 

Imports insists that the judge focused “so heavily” on establishing Darren’s knowledge of the explosives regulations 

that she “failed to address the more important issue of 

whether DCV intentionally disregarded or was plainly 

indifferent to its legal duties.” 

DCV essentially takes the position that it lost 870 net 

pounds of explosives because of negligence or ignorance, not

purposeful disregard of its regulatory duties. The company 

argues that the administrative law judge was wrong to fault 

Darren for giving Vinny responsibility for the daily summaries because Vinny was the “relatively more experienced 

brother.” Darren’s choice to defer to “the most experienced 

person available” evinces a “conscious effort to fulfill” the 

regulatory requirement, DCV argues. But that inference is 

unreasonable on this record; even if we accept that Vinny

was the “more experienced brother,” his recordkeeping 

history at S&N Fireworks was so poor that it led to the 

revocation of S&N’s license. DCV Imports also contends that 

the agency was wrong to impute to Darren knowledge 

gained from his time at S&N Fireworks because he did not 

hold an ownership interest and was at most a site manager. 

But Darren’s lack of an ownership interest in S&N Fireworks 

is irrelevant since DCV Imports cannot claim that he was 

unaware of the recordkeeping requirements. 

DCV also argues that the agency was wrong to rely on 

the acknowledgments Darren signed because those forms 

merely indicate that ATF gave him a general overview of the 

regulatory requirements and do not establish that Darren

actually understood them. Again, that’s not a reasonable 

argument on this record. Substantial evidence supports the 

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No. 16-1015 9

agency’s conclusion that Darren was sufficiently familiar 

with the regulatory requirements based on his long history 

in the fireworks business and numerous prior ATF inspections and warnings.

DCV tries to minimize its culpability by characterizing 

the many lapses uncovered in the 2013 inspection as a 

“single recordkeeping violation.” Once again, that’s not an 

accurate characterization of the facts; hundreds of pounds of 

explosives were lost on account of 73 inaccurate daily summaries. Anyway, one willful violation is enough; the ATF 

isn’t required to cite a licensee repeatedly before revoking an 

explosives license. Am. Arms Int’l v. Herbert, 563 F.3d 78, 87 

(4th Cir. 2009) (“Plain indifference can be found even where 

nine times out of ten a licensee acts in accordance with the 

regulations, if he was plainly indifferent to the one-in-ten 

violation.”); Vineland Fireworks Co., 544 F.3d at 518–19. 

Darren and Vinny were intimately involved with S&N 

Fireworks when their parents lost their license based largely 

on the same type of recordkeeping violations, yet neither of 

the brothers exercised the initiative to ensure that DCV 

complied. This more than supports a finding of willfulness. 

Moreover, no principled basis exists on which to distinguish the facts of this case from Vineland Fireworks Co., the 

only federal appellate decision directly addressing revocation of an explosives license. There the Third Circuit upheld 

a finding that a licensee willfully failed to maintain accurate 

daily transaction records where the company’s owner had 

been the responsible person of a predecessor company when 

its license was revoked for similar recordkeeping violations. 

544 F.3d at 521–22. The Third Circuit specifically rejected an 

argument that the company’s principal should be excused 

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from compliance because her bookkeeper was undergoing 

cancer treatment when the violations occurred, finding that 

the owner’s interactions with ATF during the predecessor 

company’s revocation demonstrated her knowledge of the 

regulatory requirements. DCV’s argument—that Darren’s 

lack of experience and Vinny’s apparent incompetence 

negates a finding of willfulness—is similarly unpersuasive.

Finally, DCV asserts that because it previously asked the

ATF for guidance in interpreting a different set of explosives 

regulations, the finding of willfulness was improper. As far 

as we can tell, this contention concerns a separate, unrelated 

charge that the administrative law judge rejected and thus 

no longer is at issue. A licensee’s effort to understand one 

regulation does not inoculate it against a finding that it 

intentionally disregarded another. DCV also suggests, 

without citation to evidentiary support, that the ATF investigators provided contradictory interpretations of the agency’s regulations. The administrative law judge pointed out 

that no evidence in the record supports this contention.

In short, substantial evidence supports the agency’s conclusion that DCV Imports willfully violated explosives 

regulations. The petition for review is, accordingly, DENIED.

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