### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 12-50742

10 RING PRECISION, INC., Plaintiff - Appellant ROBBY BETTS, doing business as Golden States Tactical, Intervenor - Appellant

v. B. TODD JONES, Acting D irector, Bureau of Alcohol, T obacc o , F i rearms & Explosives, in his official capacity, Defendant - Intervenor - Appellee

Appeals from the United States District Court for the Western District of Texas

Before KING, HIGGINBOTHAM, and CLEMENT, Circuit Judges. PATRICK E. HIGGINBOTHAM, Circuit Judge: In July 2011, as p art of an effort t o c ombat the illegal trafficki n g of firearms from the United S tates to Mexic o , t h e Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ A T F ” ) i ssued a demand l e tter to each federal firearms licensee classified as a “dealer” or “pawnbroker” located i n Arizona, California, New Mexico, and T exas. 1 The July 2011 demand letter required its U n i t e d S t a te s C o u r t o f A p p e al s

F i f t h C i rc u i t 

### F I L E D J uly 11, 2013 Ly l e W . Cay ce Clerk

1 There are nine categories of f ed eral f irearm s licens ees . S ee U nited States Dep artm ent of Jus tice, The Bureau of Alcohol, Tobacco, Firearm s and Exp l o s i v es , A TF O nl i ne— S ta ti sti cs— Li sti ng of Federa l Fi rea rm s Li censees , http : / / w w w. atf

. gov/ about/ f oia/ f f l- Case: 12-50742 Document: 00512304458 Page: 1 Date Filed: 07/11/2013No. 12-50742

recipients to report to ATF whenever “at one time or during any five consecutive business days, [they] s e l l or otherwise dispose of two o r more s emi-automatic rifles ca p able of accepting a d etachable magazine and with a caliber greater than .22 (including .223/5.56 caliber) to an unlicensed person.” Appellants argue that ATF lacked statutory authority to issue the J uly 2 011 demand letter, and, even if i t possessed statut o r y a u t h o rity, that its decision to issue t he demand letter to the chosen licensees was arbitrary and capricious. We disagree.

I. The Gun Control Act of 1968 (“GCA”) requir e s a n yone who wishes to “engage in the business o f

. . . dealing in firearms” to o b tain a l icense. 2 All federal f irearms licensees (“FFLs”) must c r eate and maintain rec o r ds of all firearms transactions, including t he name, age, and r esidence of e ach individual who purchases a fir e a r m . 3 In 1986, Congress amended the GCA with the passage of the F irea r m s O w n e r s ’ Protection Act of 1986 ( “FOPA”). 4 As part of FOPA, C ongres s enacted 1 8 U.S.C. § 9 23(g)(5)(A), which permits ATF to issue demand letters to F FLs to obtain “all record information required to be kept [by the GCA] o r such lesser record information.” 5 Relying on tha t a u t h o r i ty, ATF issued the July 2011 demand letter in response to its documented investigation of escalating drug violence in Mexico. A b rief background o f t hat investigation, as w ell as it findings, is helpful in understanding A TF’s decision to issue the July 2011 demand letter. In 2007,

lis t. htm l.

2 18 U

. S. C. § 923( a)

. The authority to is s ue licens es has been d elegated to ATF. See Bl a ustei n & Rei ch, Inc. v . Buckl es , 365 F. 3d 281, 283 n. 3 ( 4th Cir. 2004) , cert deni ed , 543 U

. S. 1052 ( 2005)

.

3 18 U

. S. C. §§ 922( b) ( 5) , 923( g)

.
4 Pub. L

. N o. 99- 308, 100 Stat. 449 ( 1986)

.
5 18 U

. S. C. § 923( g ) ( 5) ( A)

. 2 Case: 12-50742 Document: 00512304458 Page: 2 Date Filed: 07/11/2013No. 12-50742

ATF began investigating the illegal flow o f g uns f r o m t h e U n ited S tates to Mexico. 6 William Hoover, Assistant Dire c t o r o f Field O perations for ATF, testified before a subcommittee of the United States House of Representatives in J une 2008 that “trace data over the past three years shows that Texas, Arizona and California are the thre e m ost prolific states, respectively, for firearms illegally tra f f i c k e d to Mexico.” He noted that “ [although] t he [drug traffickin g o rganizations’] ‘weapons of choice’ had b een . 38 caliber handguns

. . . cartel members and enforcers h a ve now developed a p reference for higher quality, more powerful weapons,” such a s a s s a ult rifles. He also explained t hat “tracing” of firearms seized i n the United States and M exico plays “an essential part in ATF’s firearms trafficking investigations.” In June 2009, the Government Accountability Of f i c e ( “ GAO”) released a report entitled Fir e arms T rafficking: U.S. Efforts to Combat Arms Trafficking
to Mexico Face Planning and Coordination Chal l e n g e s ( “ t h e R e p o r t ” )

. 7 A ccording to the Report, “about 2 7 percent of f irearms recovered in Mexico and traced from fiscal year 2004 to fiscal year 2008 were long guns.” 8 Moreover, “ [ f ] r om fiscal year 2004 to fiscal year 2008, most o f the firearms seized in Mexico and traced

came from U.S. Southwest border states. In particular, about 70 percent of those firearms came from Texas, California, and Arizona.” 9 The Report explained that the absence o f a multiple sales reportin g r e quirement for long guns poses a challenge for A TF’s efforts. “[T]he federal multiple s ales reporting r equirement

6 See O F F I C E O F T H E I N S P E C T O R G E N

. , I- 2011- 001, R E V I E W O F ATF’ S P R OJ E C T G U N R U N N E R i ( 2010)

.

7 U

. S. G OV ’ T A C C OU N T A B I L I T Y O F F I C E , G AO

- 09- 709, F I REA R M S T R

A F F I C K I N G : U

. S. E F F O R TS T O C OM B AT A R M S T R A F F I C KI N G T O M E X I C O F A C E P L A N N I N G A N D C OOR DI N A T I ON C H A L L E N GE S ( 2009)

.

8 Id. at 28.

9 Id. at 19. 3 Case: 12-50742 Document: 00512304458 Page: 3 Date Filed: 07/11/2013No. 12-50742

helps expedite the ti m e r e q u i red by ATF to complete a gun trace.” 1 0 Because ATF “does not have information in its multiple sales database on any long guns recovered in crime in Mexico that m ay have been purchased through a multiple sale,” 1 1 it usually cannot use its own records to trace those guns. T he Report also made clear that “ATF has identified m ultiple sales or purchases of firearms by

a nonlicensee as a ‘significant indicator’ of firearms trafficking.” 1 2 The Report’s recommenda t i o n s included a suggestion t hat A TF investigate p otential
approac h e s “to address the challenges

. . . r egarding the c o nstraints on the collection of data that inhibit the ability of law enforcement to con d u c t timely investigations.” 1 3 In May 2010, the Office of t he Inspector General (“OIG”) issued a review of ATF’s e f

f o r t s to combat firearms trafficking, w hich noted t hat “the lack of a reporting requirement for multiple sales o f long guns
. . . hinders A TF’s ability to disrupt the f

low of illegal weapons int o M e x i c o.” 1 4 It also i d entified data showing that, of the i llegally trafficked guns recovered in Mexico, the percentage of those that were long guns increased steadily from 2 0 per c e n t i n 2 0 0 4 to 40

1 0 Id. at 28. When a f irearm is recovered , a law enf orcem ent of

f icial m ak es a “trace reques t” by entering s p ecif ic id entif

ying inf orm ation ( s uch as the firearm ’s s erial num ber and
m od el) into the ATF Firearm s Tracing Sys tem , a d atabas e m aintained by the A TF’s N ational Tracing Center. Although FO PA lim its ATF’s ability to k eep and m ain t a i n f i r earm s trans actions record s , the G CA p erm its ATF to m aintain record s of firearm s trans actions in certain circum stances

. For exam ple, 18 U

. S. C. § 923( g ) ( 3) ( A) requires F FLs to rep ort tw o or m ore s ales of a p is tol or revolver to the s am e p ers on d uring any f ive cons ecutive bus ines s d ays . ATF com p ares the id entif ying inf orm ation entered with other firearm trans action record s in the d atabas e, includ i n g m ultip le s ales rep ort inf orm ation. “If a trace reques t is m atched to m ultip le s ales inf

orm ation, the trace can be com p leted in m inutes rather than d ays or w eek s . ” O F F I C E O F T H E I N SP E C T OR G E N ., sup ra note 6 , at 10. If the d atabas e contains no record inf orm ation on the particular firearm , ATF m us t contact the m anuf acturer, im p orter, and / or w holes aler to id entif

y the f inal purchas er— a p roces s that can tak e up to ten d ays .
1 1 U

. S. G OV ’ T A C C OU N T A B I L I T Y O F F I C E , sup ra note 7, at 28.

1 2 Id.

1 3 Id. at 59.

1 4 O F F I C E OF I N S P E C T OR G E N

. , sup ra note 6, at iv. 4 Case: 12-50742 Document: 00512304458 Page: 4 Date Filed: 07/11/2013No. 12-50742

percent i n 2008. 1 5 In addition, the r eview noted that, since long guns generally have a s h o r t e r “time-to-crime” 1 6 than handguns, long guns g enerate more valuable leads for law enforcement officials, 1 7 a nd that “ Mexican cartels are obtaining long guns in mu l t i p l e sales.” 1 8 These and other findings led OIG to conclude that “the mandatory report i n g of long g un multiple sales could help ATF i d entify, investig a t e, a nd refer for prosecution i n dividuals w h o illegally traffic long guns i n t o M e xico.” 1 9 Accordingly, OIG recommended that ATF “explore options for seeking a requirement for r e porting m ultiple s a l es of long guns.” 2 0 ATF responded that it would “explore the full range of options to seek information regarding m ultiple sales of long guns,” but noted that some options could “require a change to the [GCA] which is beyond ATF’s . . . authority.” 2 1 On December 17, 2010, ATF responded to th e s e r e p orts and

r ecommendations b y announcing a proposal that would r e quire FFL s i n A r i z o n a , California, New Mexico, and Texas “to report multiple sales or other dispositions whenever t he licensee sells or otherwise disposes of two o r more rifles within any five bu siness consecutive days with the following characteristics: ( a) [s]emiautomatic; (b) a caliber greater than

. 2 2 ; and (c) t he ability to accept a detachable magazine.” 2 2 A f t e r the initial sixty-day comment period, during

1 5 Id. at 38.

1 6 “Tim e- to- crim e is the tim e f rom the retail s ale of a firearm to the tim e it is recovered at a crim e s cene or is traced

. ” Bl a ustei n , 365 F. 3d at 285.

1 7 O F F I C E OF I N S P E C T OR G E N

. , sup ra note 6, at 38.

1 8 Id.

1 9 Id. at 39–40.

2 0 Id. at 40.

2 1 Id. at 127.

2 2 Agency Inf

orm ation Collection Activities: P r o p o se d C o l l e c t i o n; Com m ents Reques ted , 75 Fed

. Reg. 79, 021, 79, 021 ( D ec. 17, 2010)

. 5 Case: 12-50742 Document: 00512304458 Page: 5 Date Filed: 07/11/2013No. 12-50742

which ATF received 12,680 comments ( 8,928 in support and 3,752 i n opposition), ATF extended the comment period for an additional thirty days, clarifying that the r equirement would only apply to F FLs “who are d ealers and/or pawnbrokers in Arizona, California, New Mexico and Texas.” 2 3 ATF issued t he challenged demand letter in July 2011 to FFLs who were dealers and/or p awnbrokers i n Arizona, California, New Mexico, a nd Texas. 10 Ring P recision, Inc., located in Texas, received the demand letter and filed suit against Kenneth Melson, Acting Director of ATF, 2 4 arguing t h at A TF exceeded its authority in issuing the J uly 2011 demand l etter a nd seeking declaratory as well as injunctive r elief under the Administrative Procedure A ct. G olden State Tactical, locate d in California, also received the demand letter and moved to intervene a s a p l a i n tiff in t he case. The d istrict court granted Golden State’s motion over A TF’s opposition. In response, ATF f iled the administrative record

a n d m oved f

or s ummary judgment. 10 Ring filed a m otion to exclude portions of the administrative record referencing t race results originating from Mexico, and, along with Golden State, also moved for s ummary judgment. The district court denied 10 Ring’s motion to e xclude portions of the r e cord, denied the Plaintiffs’ cross-motion f o r s u m m a ry judgment, and granted summary judgment in favor of ATF. 10 Rin g and Golden State (collectively “Appellants”) timely appealed. During t he pendency of this appeal, t he D.C. Circuit issued its opinion in National Shooting Sports Foundation, I nc. v. Jones , which upheld the validity of the July 2011 demand letter agains t c h a l l enges virtually identical to those

2 3 Agency Inf

orm ation Collection A ctivities ; Prop os ed C ollection Com ments Reques ted : Rep ort on M ultip le Sale or O ther D is p os ition of C ertain Rif les , 76 F ed

. R eg. 24, 058, 24, 058 ( Ap r. 29, 2011)

.

2 4 K e n n e t h M els on s tep p ed d ow n as Acting D irector of ATF in Sep tem ber 2011, and , d uring the p end ency of this s uit in d is trict court, w as rep laced by T od d Jones

. 6 Case: 12-50742 Document: 00512304458 Page: 6 Date Filed: 07/11/2013No. 12-50742

presented by Appellants. 2 5 As we explain below, we agree w ith that decision and join the D.C. Circuit in upholding the validity of the July 2011 demand letter.

II. “We review a district court’s grant o f s u m m a r y judgment de novo, a pplying the s ame standard as the district court.” 2 6 S ummary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 2 7

I II. Appellants first argue, based on v arious p rovisions o f 18 U.S.C. § 923(g),

as w ell as the Consolidated a nd Continuing A ppropriations Act o f 2010, that ATF lacked statutory authority to issue the J uly 2 01 1 d e m a n d letter. “We

re view A TF’s interpretation of the GCA under Chevron U.S.A. Inc. v . Natural Resources Defense Council, Inc. ” 2 8 U n der C hevron , we fi r s t a sk “whether Congress has d irectly spoken to the precise question at issue.” 2 9 If it h a s, “that is the end o f t h e m a tter,” a nd we “must give effect to the unambiguously

e x p r essed intent of Congress.” 3 0 I f it has not, we defer to the agency’s interpretation as long as it “is based on a permissible construction of the statute.” 3 1

2 5 716 F. 3d 200 ( D

. C. Cir. 2013)

.
2 6 V a ughn v . Woodf

orest Ba nk , 665 F. 3d 632, 635 ( 5th Cir. 2011)

.
2 7 F E D

. R. C I V

. P. 56( a)

.
2 8 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 207 (internal citations om itted )

.
2 9 C hev ron U

. S. A

. Inc. v . N

a tura l Res. D ef

. Counci l , Inc. , 467 U

. S. 837, 842 ( 1984)

.
3 0 Id. at 842–43.

3 1 Id. at 843. 7 Case: 12-50742 Document: 00512304458 Page: 7 Date Filed: 07/11/2013No. 12-50742 A. Section 923(g)(5)(A) Appellants first contend that ATF e xceeded 1 8 U.S.C. § 923(g)(5)(A)’s limits on its demand letter authority. Section 923(g)(5)(A) provides: Each l icensee shall, when required b y letter issued by the Attorney General, and u ntil notified to the contrary in w riting by t h e Attorney General, s u b m i t on a form specified by the Attorney General, for peri o d s a n d at the times s pecified in such letter, a ll record information required to be k ept by t h is chapter or such lesser recor d i n formation as the Attorney General in s uch letter may specify. 3 2 Appellants argue that the July 2011 demand letter runs afoul o f § 923(g)(5)(A) becaus e i t r equires FFLs to report record information they a re not o therwise required to keep. But that is not t he case. 18 U .S.C. § 923(g)(1)(A) provides that FFLs “shall maintain such records of

. . . d i sposition of firearms at [their] place of busin e s s f

or such period, and in such form, as the Attorney General may by

r e g u l a t i o n s p r escribe.” 3 3 One such r egulation—27 C.F.R. § 478.124(a)—provides that F FLs must record o n Form 4473 any transaction in which they “se l l o r otherwise dispose, temporar i ly or permanently, of a ny firearm to a ny person, other than another l icensee.” 3 4 Form 4473 requires the FFL t o record the name, address, sex, r a c e, d ate of birth, and place of birth of the buyer; the buyer’s identificatio n number, type of identification, a nd i dentification state; the date and loc a t i o n of the sale; and the manufacturer, i mporter, type, model, caliber, and serial number of the firearm. 3 5 The July 2011 demand letter instructs its recipients to report to ATF using Form 331 0

. 1 2

. F o r m 3310.12 r equires FFLs to provide the name, address, sex, race, date of birth, a n d p l a c e o f birth of the

3 2 18 U

. S. C. § 923( g) ( 5) ( A) ( em p has is ad d ed )

.
3 3 Id. § 923( g) ( 1) ( A)

.
3 4 27 C. F .R. § 478. 124( a)

.
3 5 See i d. § 478. 124( c) (1) , ( 4)

. 8 Case: 12-50742 Document: 00512304458 Page: 8 Date Filed: 07/11/2013No. 12-50742

b u y e r ; t h e b u y e r ’ s i d e n t i f i c a t ion number, type of identification, and i d e n t i f i c a t i o n state; the date and location of sale; and t h e m anufacturer, im p o r t er, model, caliber, and se r i a l n u mber of the firearm. The July 2011 demand letter’s reporting requir e m e n t complies with § 923(g)(5)(A) because FFLs are already required to maintain that record information under § 923(g)(1)(A) and its implementing regulations. Therefore, t he text of § 9 23(g)(5)(A) “unambiguously authorizes the demand letter,” and “our inquiry ends at Chevron step one.” 3 6 Appellants nonetheless urge that the July 2011 demand letter requires FFLs to report i nformation beyond what they are r e quired to keep because Form 4473 d oes not include information r egarding t he firearm’s mechanism of action, the type of ammunition feeding s ource, or t he n umber of days between sales of rifles to a s ingle buyer. They point out that the d e mand letter instructs them to report “whenever, at one time or d u r i n g a ny five c onsecutive business days, [they] sell or otherwise dispose of two or more semi-automatic rifles capable of accepting a detachable m agazine w ith a caliber greater than .22 (including .223/5.56 caliber) t o an unlicensed person.” B ut that a rgume n t “confuses the conditions precedent to s u b mission with the information submitted.” 3 7 If the FFL has “at one time or d uring any five cons e c u tive b usiness days, [sold] or otherwise dispose[d] of two or more s emi-au t o matic rifles capable o f a ccepting

a detachable m agazine a nd with a caliber greater than .22

. . . t o [ t h e s a me] unlicensed person,” then the FFL has a duty t o submit the inform ation requested on Form 3 310.12. But Form 3 310.12 d o e s not r equire that the FFL report the rifle’s mechanism of action, its type o f ammunition feeding source, or the number of days between sales of rifles to a single buyer. In a variati o n o n t he same a rgument, Appellants contend that the July 2 0 1 1 demand letter runs afoul of § 923(g)(5)(A) because an FFL cann o t

3 6 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 208.

3 7 I d. 9 Case: 12-50742 Document: 00512304458 Page: 9 Date Filed: 07/11/2013No. 12-50742

determ i n e, using Form 4473, whether a p articular rifle sale m ust be reported, because Form 4473 does not contain information regarding the r i f l e’s type of

a ction and ammunition feeding source. Assuming arguendo t hat i nabili t y t o determine, based on “ record information r e quired to b e kept,” whether a particular sale must be reported could i nvalidate a demand lette r , Appellants’ assertion belies r eality. As the D.C. Circuit explained in rejecting the same argument: [Appellants] fail[] to explain why an FFL c annot d etermine a rifle’s type of action and ammunition feeding source using his record o f t h e rif l e ’ s serial number, manufacturer a nd/or model name. T o argue

. . . that an FFL — who purchases and sells firearms for a l iving

— would price and sell rifles witho u t knowing its type of action and ammunition feeding source blinks reality. And even assuming an FFL could somehow not determine t he characteristics o f hi s own rifles, ATF provides a web site and telephone number that the FFL can u se to obtain assistance in d etermining whether a rifle is “ s e miautomatic” and “capable of accepting a detachable magazine.” 3 8
In another iteration of the argument, Appellants point o ut that 27 C.F.R. § 478.124(b) permits FFLs to retain the Fo r m 4 4 73s in alphabetical, chronologic a l , or numerical o rder, 3 9 and argue that, unless the FFL keeps the forms in chronological order, “Forms 4473 c ould not b e u s e d t o determine whether a qualifying rifle had b een sold t o the s ame person w ithin five (5) consecutive business days.” But Appellants o ffer no reason why this purported administrative difficulty invalidates the July 2011 demand letter. T he GCA requires an FFL who sells two or m ore pistols or revol v e r s t o t h e same person at one time or during any five consecutive days to report to ATF. 4 0 Thus, prior to the July 2011 demand letter, FFLs were required to search their records for multiple sales of a particular type of firearm to t he same customer. Moreover,

3 8 Id. at 209.

3 9 27 C. F .R. § 478. 124( b)

.
4 0 18 U

. S. C. § 923( g) ( 3) ( A)

. 10 Case: 12-50742 Document: 00512304458 Page: 10 Date Filed: 07/11/2013No. 12-50742

“[t]he fact that a n FFL chooses to keep his records in alphabetical or numerical order does not mean that the FFL can complain i f his choice may not always be the least burdensome,” espec i a l l y g i v e n that “there is nothing preventing an FFL from maintaining r e cords in a less burdensome (in this case, chronological) manner.” 4 1
B. Sections 923(g)(1)(A), 923(g)(1)(B), 923(g)(3)(A), and 923(g)(7) Appellants n ext argue that §§ 923(g)(1)(A), 923(g)(1)(B), 923(g)(3)(A), and 923(g)(7) must b e read t o l i m i t A T F ’ s d emand letter authority, because o therwise “ATF could send a broad d emand letter for in f o r mation which o therwise must be obtained pursuant to the specific procedures, a nd for the s pecific reasons set forth, in these other provisions.” 4 2 We disagree. Section 923(g)(1)(A) authori z e s ATF to inspect a licensee’s records and inventory if it has “reasonable cause to believe a violation

. . . h as occurred and that evidence t h ereof may be found o n such premises.” 4 3 Prior to conducting an inspection under t his s e ction, ATF must secure a warrant from a magistrate judge. 4 4 Section 923(g)(1)(B) provides an exception to the warrant r equirement of § 923(g)(1)(A ) b y authorizing ATF t o conduct a n inspection of a licensee’s records and inventory “without such rea s o n a b l e c a use or warrant

. . . in the

course of a reasonable i nquiry during the c o urse of a criminal investigation of a person or persons o ther than the [FF L ] ” o r if “required for d e termining the

4 1 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 209.

4 2 Ap p ellants als o argue that “[ t] he legis lative his tory reveals that Congres s intend ed that § 923( g) ( 5) ( A) w as lim ited to inf orm ation f

rom FFLs (1) w ho w ere in violation of the law , and ( 2) about s p ecif

ic f irearm s d is p os itions neces s ary f or bona f

id e crim inal inves tigations

. ” But we will not analyze legis lative his tory becaus e the G CA ’ s text is clear. N a t’l Shooti ng Sp orts F ound. , 716 F. 3d at 2 1 1

– 1 2 ; see a l so Ra tz l a f v . U ni ted Sta tes , 510 U

. S. 135, 147–48 ( 1994) ; J & G Sa l es, Inc. v . Truscott, 473 F. 3d 1043, 1050 ( 9th C ir. 2007) ; Bl a ustei n & Rei ch, Inc. , 365 F. 3d at 288 n. 15.

4 3 18 U

. S. C. § 923( g) ( 1) ( A)

.
4 4 Id. 11 Case: 12-50742 Document: 00512304458 Page: 11 Date Filed: 07/11/2013No. 12-50742

disposition of o ne or more particula r f irearms in the c o urse of a bona fide criminal investigation.” 4 5 A ppellants contend that upholding ATF’s authority to issue t h e J u l y 2011 demand l etter would allow ATF to circumvent the requirements of §§ 923(g)(1)(A) and 923(g)(1)(B) b ecause ATF could simply send

a demand letter for a record without securing a warrant or establishing that the record relates t o an o ngoing c r i minal investigation. We are not persuaded. Appellants “erroneously conflate[] p r ovisions that apply in t w o different contexts. The inspec t i o n p r o v isions of 18 U.S.C. § 923(g)(1) and ( B) apply to entry onto an FFL’s premises. By c o ntrast, section 923(g)(5)(A) simply authorizes ATF to require the FFL to submit information.” 4 6 Given the distinct purposes of these provisions, we conclude that §§ 923(g)(1)(A) a nd 923(g)(1)(B) do not circumscribe ATF’s demand letter authority. Appellants n ext argue that § 923(g)(3)(A) demonstrates C ongress’s intent t o l i m i t ATF’s a bility to request reports o f multiple sales to m ultiple sales o f hand g u n s . S e ction 923(g)(3)(A) requires all FFLs t o “prepare a report of multiple sales or other dispositions whenever t h e licensee sel l s or o therwise disposes of, at one time o r d u r ing a ny five consecutive business days, two or
more pistols or revolvers

. . . to an unlicensed person.” 4 7 A ppellants argue that “[b]y including only ‘pistols or revolvers’ and not including ‘firearms’ in § 923(g)(3)(A), C ongress expressed its intent to limit multiple sale reporting to pistols or revolvers.” T his argument also f ails to persuade. Section 923(g)(3)(A) in n o way purports to limit ATF’s ability to issue a demand l e t t e r requiring reporting of multiple sal e s o f other firearms. “Simply because the C ongress

4 5 18 U

. S. C. § 923( g) ( 1) ( B) ( i) , ( iii)

.
4 6 N a t’l Shooti ng Sp orts Found. , 716 F

. 3d at 210 ( em phas is in original)

. O ther circuits have noted that §§ 923( g) ( 1) ( A) and 923( g) ( 1) ( B) s erve d is tinct p urp os es from thos e s erved by ATF’s dem and letter authority. See, e. g. , J & G Sa l es , 473 F. 3d at 1050; RSM , Inc. v . Buckl es , 254 F. 3d 61, 66 (4th Cir. 2001)

.

4 7 18 U

. S. C. § 923( g) ( 3) ( A)

. 12 Case: 12-50742 Document: 00512304458 Page: 12 Date Filed: 07/11/2013No. 12-50742

imposes a duty i n o n e circumstance does not m ean that i t h as necessarily foreclosed the agency from impo s i ng another duty in a different circumstance.

. . . I n [§] 9 2 3 ( g )(5)(A), the Congress authorized ATF to require additional reporting beyond the reporting required in [§] 923(g)(3)(A).” 4 8 Finally, Appellants c ontend that § 923(g)(7) “explicitly defines and limits the purpose a nd procedure under which ATF m ay require info r m a t i on for traces.” S ection 923(g)(7) provides that licensees must “respond immediately to, and in no event later than 24 hours after the receipt o f, a request b y [ATF] for information c ontained i n the records required t o be kept by this chapter as m ay be required for determining the disposition of 1 or more fi r e a r ms in t he course of a bona fide criminal i nvestigation. ” 4 9 Appellants contend that A TF should not be able to use a demand letter to circumvent § 923(g)(7)’s r e quirement of a “bona fide c riminal investigation.” But § 923(g)(7) does not purport to restrict ATF’s demand letter authority; it merely specifies the duties of a n FFL that receives

a trace request. 5 0 “Simply because some provisions of § 923 impose specific duties u pon FFLs t o respond to certain r e quests within a speci f ied time frame and t o p r o v i d e record information sua sponte does n ot mean that the [ATF] is prohibited from seeking further FFL record information by demand letter.” 5 1

C. Section 926(a) A p p ellants next contend that the July 2011 d e mand letter runs af o u l o f § 926(a), which p rohibits ATF from promulgating a “r u l e o r regulation” that requires record inf

o r m a t ion obtained from l icensees to be “recorded at or

4 8 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 211.

4 9 18 U

. S. C. § 923( g) ( 7) ( em p has is ad d ed )

.
5 0 O ther circuits have reach e d t h e s am e conclus ion regard ing the interp lay betw een §§ 923( g) ( 7 ) a n d 9 23( g) ( 5) ( A )

. See N a t’l Shooti ng Sp orts Found. , 716 F. 3d at 210–11; J & G Sa les , 473 F. 3d at 1050 ; RSM , 254 F. 3d at 66.

5 1 J & G Sa l es , 473 F. 3d at 1050. 13 Case: 12-50742 Document: 00512304458 Page: 13 Date Filed: 07/11/2013No. 12-50742

transferred to a facility owned, managed, or controlled by the United States or any State or political subdivision thereof” or that establishe s a “system of registra t i o n o f firearms, firearms owners, or firearms t ransactions or dispositions.” 5 2 Appella n t s c oncede that t he J uly 2 011 d e mand letter is not a rule o r regulation, 5 3 and thus falls outside the plain language of § 926(a)’s prohibition. But, they nonetheless maintain that the July 2011 demand letter runs afoul of congressional intent as e videnced by § 926(a)’s prohibition. They point to the Fourth Circuit’s observation that “while [§] 926(a) does not directly prohibit [ATF’s] i ssuance of the letter i n this c a se, that provision clearly demonstrates Congress’s concern a bout any attempt by [A T F ] t o establish a national firearms registry.” 5 4 In evaluating the same argument, t he D.C. Circuit

conc l u d ed that “ ATF’s demand letter authority is not unlimited”—“Congress intended to preven t A T F f rom ‘establish[ing] a national f irearms r egistry’ by ‘issu[ing] limitless demand letters under [§] 923(g)(5)(A) in a backdoor effort to avoid [ § ] 926(a)’s protections f or law-abiding firearms owners.’” 5 5 W e agree. But, like the D.C. Circuit, we conclude that the July 2011 demand letter d oes not run afoul of § 926(a)’s pr o h ibition. Although t h e demand letter was sent to more FFLs than the d emand letters at issue i n prior cases, 5 6 it seeks only to obtain a
narrow subset of information relating to a s pecific set o f transactions—the sale of t w o or more rifl e s of a specific type to t he same person in a five day

5 2 18 U

. S. C. § 926( a)

.
5 3 See N a t’l Shooti ng Sp orts Found. , 716 F. 3 d at 212; J & G Sa les , 437 F. 3d at 1051; RSM , 254 F. 3d at 66.

5 4 RSM , 254 F. 3d at 67.

5 5 N a t’l Shooti ng Sp orts F ound. , 716 F. 3d a t 2 1 2–13 (quoting RSM , 254 F. 3d at 67) ( alterations in original)

.

5 6 See, e. g. , J & G Sa l es , 473 F .3d at 1046 ( dem and letter s ent t o a p p roxim ately 450 FFLs , cons tituting 0. 6% of FFLs nationw i d e) ; Bl a ustei n & Rei ch , 365 F. 3d at 283 ( d em and letter s ent to ap proxim ately 450 F F Ls , cons tituting 0. 6% of F F L s nationw id e) ; RSM , 254 F

. 3d at 63 ( dem and letter s ent to ap p roxim ately 41 FFLs , cons tituting 0. 1% of nationw id e FFLs )

. 14 Case: 12-50742 Document: 00512304458 Page: 14 Date Filed: 07/11/2013No. 12-50742

period—from a specific set of F FLs—FFLs in four border states who a re licensed dealers and pawnbrokers. 5 7

D. Consolidated and Continuing Appropriations Act of 2012 The Consolidated and Continuing A p p r opriations Act of 2012 allocates funding t o ATF. An appropriations r ider to the Act prohibits ATF from using the

a llocated funds “for salaries or administrative expenses in connection w i t h consolidating or ce n tralizing within the Department of Justice the records, or any p ortion th e r e o f , o f acquisition and disposition of firearms maintained by [FFLs].” 5 8 Appellants a rgue that the July 2011 demand letter runs a foul of the rider because it r e q u i res recipients to transmit r ecords of their dispositions of firearms to the National Tracing Center, which are, in turn, processed by ATF employees whose salaries are taken from the annual appropriations fund. We conclude that the rider does not p r o h i bit ATF from issuing the July 2011 demand letter. Because FOPA clearly contemplates ATF’s collection of

some firearms records, 5 9 it cannot be said that the appropriations rider prohibits
any collec t i o n o f firearms transaction records. 6 0 “The plain meaning of consolidating o r centralizi n g does not prohibit the mere collection of some limited information. Both consolidating and c entralizing c onnote a large-scale enterprise relating to a substantial amount of information.” 6 1 We conclude that

5 7 See N a t’l Shooti ng Sp orts Found. , 716 F. 3d at 214 ( “[ B] ecaus e ATF s ent the d em and letter to only s even p ercent of FFLs nation w i d e a n d r e q uired inf orm ation on only a s mall
num ber of trans actions , the July 2011 d em and letter d oes not com e clos e to crea t i n g a ‘nationw id e f

irearm s regis try. ’”)

.
5 8 Pub. L

. N o. 112- 55, 125 Stat. 552, 609 ( 2011)

.
5 9 See 18 U

. S. C. § 923( g) ( 3) , ( 4)

.
6 0 S ee Col a utti v . F

ra nkl i n, 439 U

. S. 379, 392 ( 1979) (exp laining that it is an “elem entary canon of cons truction that a s tatute s hould be interp reted s o as not to rend er one p art inop erative”)

.

6 1 Bl a ustei n , 365 F. 3d at 289. 15 Case: 12-50742 Document: 00512304458 Page: 15 Date Filed: 07/11/2013No. 12-50742

the July 2011 d emand letter falls short of “consolidati n g or centralizing

. . . records.” It o n ly requires reporting of a narrow subset of information re l a t i n g to a specific set of transactions—the sale of two or more rifles of a specific type to the same pers o n i n a five day period—from a specific set of FFLs—FFLs in four border states that are licensed dealers and pawnbrokers. 6 2

IV. Alternatively, Appellants argue that, even if ATF had statutory authority to issue the J u l y 2 0 1 1 demand letter, its decision to d o s o was arbitrary and capricious. We will set aside an agency action if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance w i t h l a w . ” 63 Review under that standard i s “narrow” and w e must b e mindful “not to substitute [our] judgm e n t for that of the agency.” 6 4 However, we m ust also e nsure that the agency “examine[d] the relevant data and articulate[d] a satisfactory explanation for its action.” 6 5 W e “consider w hether the decision was based on a consideration of r elevant facto r s a n d whether t here was a clear error of

6 2 Dem and letters up held p revious ly have required rep orting of a b r o a d er s et of trans actions

. For exam p le, in RSM , Inc. v . Buckl es , ATF required the targeted FFLs to p rod uce record inf

orm at i o n regard ing f

irearm p urchas es and s ales in the p rior three years . 254 F. 3d at 63. And , in B l a ustei n & Rei ch, Inc. v. Buckl es , ATF required the targeted FFLs to s ubm it record inf

orm ation relating to their p urchas es of second hand firearm s in 1999. 365 F. 3d at 283. A d m itted ly , t h e d em and letters at is s ue in thos e cas es w ere s ent to f ar f ew er FFLs than the July 2011 d em and letter.

6 3 5 U

. S. C. § 706( 2) ( A)

.
6 4 M otor Vehi cl e M

f rs. A ss’n of U

. S. , Inc. v . S t a t e Fa rm M ut. A uto. I

ns. Co. , 463 U

. S. 29, 43 ( 1983)

.

6 5 Id. 16 Case: 12-50742 Document: 00512304458 Page: 16 Date Filed: 07/11/2013No. 12-50742

judgment.” 6 6 We will uphold an agency’s action “if its r easons and policy choices satisfy minimum standards of rationality.” 6 7 Appellants a llege t hat ATF’s issuance of the July 2011 demand letter was arb i t r a r y and capricious for two reasons. First, because “ [t]he tracing system queries demonstrated that the overw h e l ming majority of retail sellers in the United States and, more specifically, i n the B order States, had not sold a single rifle that was later recovered in Mexico,” Appellants a rgue that ATF improperly determined which FFLs t o target. Second, A ppellants argue that ATF n eglected to c onsider alternatives to sending the d e mand letter to FFLs in the four border states. Neither o f these arguments survives the “highly deferential a rbitrary and capricious standard of judicial review.” 6 8 Appellants’ first argument f ails because, given the data that ATF identified as supporting i ts d ecision, Appellants cannot convincingly a rgue that there i s n o “rational connection” between the facts in t he administrative record and the F FLs targeted by the June 2011 demand letter. 6 9 A s explained in the GAO Rep o r t , “[f]rom fiscal year 2004 to fiscal year 2008, most of t he firearms seized in Mexico and traced came from U.S. S outhwest bord e r s t ates. In particular, about 70 percent of these firearms came from T exas, California, and Arizona.” 7 0 Moreover, according to ATF trace d a t a , f r o m fiscal year 2008 through fiscal year 2010, of t he 5,79 9 r i fles greater than .22 caliber that were

6 6 Id. ( internal quotations om itted )

.
6 7 M edi na Cnty. Env t’l

. A cti on A ss’n v . Surf a ce Tra nsp . Bd. , 602 F. 3d 687, 699 ( 5th Cir. 2010) ( internal quotations om itted )

.

6 8 A bbev i l l e G en. H

osp . v . Ra m sey , 3 F. 3d 797, 801 ( 5th Cir. 1993) (quotati o n m ark s om itted )

.

6 9 M otor V ehi cl e M f rs. , 463 U. S. at 43 ( quoting Burl i ngton Truck Li nes v. Uni ted Sta t es , 371 U

. S. 156, 168 ( 1962) )

.

7 0 U

. S. G OV ’ T A C C OU N T A B I L I T Y O F F I C E , sup ra note 8, at 19. 17 Case: 12-50742 Document: 00512304458 Page: 17 Date Filed: 07/11/2013No. 12-50742

traced from Mexico to an identified first retail purchaser in the United States, 4,568 were traced to retailers in Arizona, California, New Mexico, and Texas. Appellants’ s econd argument—that ATF’s decision to issue the July 2011 demand letter was a rbitra r y a n d capricious because it failed to consider other feasible alternatives—is also unpersuasive. Appellants argue that ATF should have considered feasible alternatives “such as ac t u al geographic proximity of retail s ellers to the b order with Mexico, k n o wn patterns of i l legal firearms trafficking in Mexico, and s pecifically identified retail s ources of rifles recovered in Mexico over the previous three years.” Because “[s]ales of rifles recovered in Mexico were heavily concentrated a m ong relatively few specifically identified retail sellers,” Appellants suggest t hat ATF should have used trace data “to determine how m a n y rifles each retail seller sold and how soon after the sales the rifles were recovered by law enforcement authorities in Mexico” and tailored the July 2011 demand letter accordingly. This arg u m e n t misunderstands the
scope of an agency’s duty to consider alternatives. I n deciding a c ourse o f action, agencie s a r e n o t r equired to consider all potential alternatives. 7 1 “While an agency must consider and explain i ts rejection o f ‘reasonably obvious alternative[s],’ it need n o t c onsider every a lternative proposed nor respond to every comment made. Rather, an agency m ust consider onl y ‘ s i gnificant and viable’ and ‘obvious’ alternatives.” 7 2 The alternatives posed by Appellants do not meet these criteria. For o ne, Appellants have not shown that these alternatives

were a s erious issue raised by any commenter. 7 3 A p p ellants try t o a r g u e that

7 1 See M otor V ehi cl e M f rs. , 463 U

. S. at 51 ( “[ W] e [ d o not] broad ly require an agency to cons id er all p olicy alternatives in reaching d ecis ion. ”)

.

7 2 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 215 (internal citations om itted )

.
7 3 In f act, Ap p ellants f

ail to p oint to any com m ents in the ad m inis trative record rais ing thes e alternative s . A p p ellants d o p oint to an Augus t 2009 p am p hlet authored by “M ayors Agains t I llegal G uns , ” w hich includ es a recom m end ation that ATF is s ue a d em and letter requiring d ealers “to rep ort m ultip le s ales of sus p ect long g uns if in the p rior year they had 15 or m ore tra c e s or three or more traces of s us p ect long guns
. ” M A Y O R S A G A I N ST I L L E GA L 18 Case: 12-50742 Document: 00512304458 Page: 18 Date Filed: 07/11/2013No. 12-50742

these alternatives should h ave been “obvious” to AT F g iven the data in the administrative record. But the cases Appellants cite in s u p p o r t o f that contenti o n involve either alternatives raised during the comment period or an agency r escinding a policy or reversing course without p roviding explanation as to why it did not adopt n arrower alternatives. In short, “the fact that ATF could have narrowed the scope of the demand letter does not mean that its failure to do so w as arbitrary and capricious, particularly because [ Appellants have] failed to point to any e vidence s howing that na r r o wing the geographic s cope of the demand le t ter was a serious issue r aised by any commenter.” 7 4 We therefore conclude that “ATF's d ecision to direct its J uly 2011 demand letter to FFLs based on their geographic location was . . . not arbitrary and capricious.” 7 5

V. Before concluding, we pause to consider whether t he district court should have excluded p ortions of the administrative rec o r d r eferencing the results of Mexican traces. 10 R ing argues that trace d ata s h o u l d h a v e been excluded b e c ause the f

unding, development, and implementation of A TF’s system o f trac i n g f i r earms recovered in Mexico are c o ntrary to law and the intentions of Congress. Specifically, 1 0 R i ng contends t h at § 923(g)(7) o nly permits trace requests t h at are made i n the c ourse o f a d omestic bona fide c riminal investigation. But § 923(g)(7)’s plain language merely r e q u i res that the trace

r e q u e s t be made “ in the course of a bona fide criminal investigation.” 7 6 And,

G U N S , A B L U E P R I N T F OR F E DE R A L A C T I O N ON I L L E GA L G U N S 31 ( 2009)

. But that p am p hlet d id not ad d res s the p rop os ed d em and lette r , n o r d i d M ayors Agains t Illegal Guns s ugges t that alternative in its com m ent to the July 2011 d em and letter p rop os al.

7 4 N a t’l Shooti ng S

p orts F ound. , 716 F. 3d at 217.

7 5 Id.

7 6 18 U

. S. C. § 923( g ) ( 7)

. N or d oes the p res um ption that Congres s intend ed its s tatutes to have d om es tic, not extraterritorial, ap p lication m ean that the M ex i c a n traces w ere 19 Case: 12-50742 Document: 00512304458 Page: 19 Date Filed: 07/11/2013No. 12-50742

Congress has recognized that ATF conducts trace requests b y law enforcement officials in other nations. 7 7 10 Ring also argues that the Privacy Act bars disclosure of purchaser information to Mexican authorities. But t he Privacy Act is i n applicable to use of the Firearm s T r a c i n g System. The Privacy Act stipulates the conditions upon which an agency may disclose “any record which is contained in a system of records.” 5 U

. S.C. § 552a defines “ s ystem o f records”

as “a group of any records under the c ontrol o f a ny agency f rom which information is r etrieved by t he name of the individ u a l or by some identifying number, symbol, or o ther identifying particular assigned t o t h e i ndividual .” 7 8 The Firearms Tra c i n g System is not a “ system of records,” because traces are conducted by entering a n i d e ntifying characteristic of the firearm , not the individual, into ATF’s database. 7 9 Because A ppellants h ave not o ffered a n y authority indicating that the Mexican trace results s hould have been excluded, we conclude that the district court permissibly denied 10 R ing’s motion to exclude portions of t he administrative record.

cond ucted unlaw f

ully. T he p res um p tion agains t extrat e r ritoriality has no bearing here becaus e the M exican governm ent cond ucting traces us ing ATF’s d atabas e is sim p l y not an “extraterritorial ap plication” of the G CA.

7 7 See, e. g. , S. R E P

. N O

. 112- 158, at 63 ( 2012) ; H

. R ep . N o. 108- 576, at 29 ( 2004)

.
7 8 5 U

. S. C. § 552a( a) ( 5) ( em p has is ad d ed )

.
7 9 10 Ring als o argues that f und ing of the M exican traces w as unlaw f ul becaus e the ad m inis t rative record d oes not contain d ocum ents es tablis hing that the f und ing of ATF’s eTrace 4. 0 s ys tem “com p lied w ith [ 3 1 U

. S

. C

. ] § 9703( g) ( 4) ( C)

. ” In the abs ence of clear and convincing evid ence to the contrary, “[ a] p res um p tion of regularity attaches to the actions of G overnm ent a g e ncies

. ” U

. S. P osta l Serv

. v. G regory , 534 U

. S. 1, 10 ( 2001)

. 10 Ring has of f ered no evid ence to rebut that p res um ption. It attem p ts to argue that the p res um p tion of regularity d oes not ap p l y b e c a u s e t here is no evid ence that the D irector took any action to com p ly w ith § 9703( g) ( 4) ( C) , but it cites no cas es ind icating that the pres um p tion of regularity d oes not ap p ly to p urp orted agency inaction. 20 Case: 12-50742 Document: 00512304458 Page: 20 Date Filed: 07/11/2013No. 12-50742 VI. The judgment of the district court is AFFIRMED.

21 Case: 12-50742 Document: 00512304458 Page: 21 Date Filed: 07/11/2013