2008 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

10-10-2008

Vineland Fireworks v. Bur Alcohol Tobacco

Precedential or Non-Precedential: Precedential

Docket No. 07-2381

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2008

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2008 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Vineland Fireworks v. Bur Alcohol Tobacco" (2008). 2008 Decisions. Paper 285.

http://digitalcommons.law.villanova.edu/thirdcircuit_2008/285
The Honorable William H. Yohn Jr., United States *

District Judge for the Eastern District of Pennsylvania, sitting by

designation.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 07-2381

 

VINELAND FIREWORKS CO., INC.,

 Petitioner

 v.

BUREAU OF ALCOHOL, TOBACCO,

FIREARMS & EXPLOSIVES

 

On Petition for Review from an

Order of the United States Department of Justice

Bureau of Alcohol, Tobacco, Firearms and Explosives

(Nos. 8-NJ-011-50-6D-00010 and 8-NJ-011-24-4F-00196)

 

Argued June 3, 2008

Before: FISHER and JORDAN, Circuit Judges,

and YOHN, District Judge.

*
2

(Filed: October 10, 2008)

Don P. Foster (Argued)

Klehr, Harrison, Harvey, Branzburg & Ellers

260 South Broad Street, Suite 400

Philadelphia, PA 19102

Attorney for Petitioner

Kelsi B. Corkran (Argued)

United States Department of Justice

Appellate Section

950 Pennsylvania Avenue, N.W.

Washington, DC 20530

Mark B. Stern

United States Department of Justice

Civil Division, Appellate Staff

601 D Street, N.W.

Washington, DC 20530

Attorneys for Respondent

 

OPINION OF THE COURT

 

FISHER, Circuit Judge.

Vineland Fireworks Co., Inc. (“Vineland”) appeals the

decision of the Acting Director (“Director”) of the Bureau of

Alcohol, Tobacco, Firearms & Explosives (“ATF”) to revoke its
3

license to manufacture fireworks and to deny its application for

the renewal of its license to import fireworks. The Director

found that Vineland’s failure to keep records of its daily

summary of magazine transactions on thirty-six occasions over

the course of many months constituted a willful violation of 18

U.S.C. § 842(f) and 27 C.F.R. § 555.127. We hold that the

Director’s interpretation of “willful” is reasonable, and

substantial evidence supports its finding that Vineland “willfully

violated” the above provisions. For the reasons that follow, we

will deny the petition for review of the Director’s order.

I.

Vineland is a fireworks manufacturer and distributor

owned and operated by Rose Pacitto with locations in Vineland,

New Jersey and Coamo, Puerto Rico. Vineland applied for and

became licensed by ATF in March 2000. For approximately

eleven years prior to her application, Pacitto worked at

Fireworks by Girone, a fireworks manufacturer and distributor

owned and operated by Felix Girone, Pacitto’s former husband.

Fireworks by Girone operated out of the same site that later

became Vineland.

In 1999, the United States Attorney for the District of

New Jersey indicted Fireworks by Girone for knowingly and

willfully manufacturing explosive materials without keeping

proper records, in violation of 18 U.S.C. §§ 2, 842(f), and

844(a). The indictment stemmed from ATF inspections in 1995

and 1996, in which inspectors found that Fireworks by Girone

had manufactured thousands of explosive devices without

record and had improperly stored the devices. The investigators
A “responsible person” is “[a]n individual who has the 1

power to direct the management and policies of the applicant

pertaining to explosive materials.” 27 C.F.R. § 555.11.

Neither the Administrative Law Judge, nor the Director, 2

attributed the July 1999 violations to Vineland.

4

discussed the violations with Pacitto at that time because the

company’s federal explosives license listed her as a “responsible

person.” Fireworks by Girone pleaded guilty to the charge, and 1

Pacitto (then as Rose Girone) signed the plea agreement.

Subsequently, ATF revoked Fireworks by Girone’s license.

In November 2000, after Fireworks by Girone’s license

was revoked and Pacitto had begun operating on the site under

the new license for Vineland, ATF contacted Pacitto and

informed her of its earlier inspection of Fireworks by Girone in

July 1999 and the violations it found. In particular, these

violations included “failure to maintain records of the daily

magazine transactions for explosives” for approximately a twoweek period in violation of 27 C.F.R. § 555.127. On

December 20, 2000, ATF and Pacitto met to discuss these

violations, and ATF instructed Pacitto on the requirements for

compliance with federal explosives law.2
ATF inspectors visited Vineland in October 2001 and 3

December 2002, but did not issue citations. ATF and Vineland

argue as to whether these inspections were full inspections of

Vineland’s premises, but this dispute is irrelevant to our

resolution of this appeal.

5

On July 2, 2003, ATF conducted a safety walk-through 3

inspection of Vineland, and it cited Vineland for two violations:

(1) pre-loading trucks with explosives without a pre-loading

variance; and (2) improperly storing fireworks. On July 2, 2004,

ATF again conducted a safety walk-through inspection of

Vineland, and it cited Vineland for three violations: (1) preloading trucks with explosives without a pre-loading variance;

(2) improperly storing fireworks and high explosive bulk

salutes; and (3) failing to keep proper records of fireworks and

salutes. Pacitto signed the violations report, and on August 4,

2004, she met with ATF to discuss the violations in a “warning

conference.” Subsequently, ATF sent Pacitto a letter, stating:

“You are reminded that future violations, repeat or otherwise,

could be viewed as willful and may result in the revocation of

your license.”

On October 13, 2004, ATF again conducted a safety

walk-through inspection of Vineland. The ATF inspectors

found a number of violations, and on August 22, 2005, the

Director of Industry Operations (“DIO”) for the Philadelphia

Field Division of ATF issued a notice of revocation of

Vineland’s license to manufacture explosives pursuant to 18

U.S.C. § 843(d). The DIO also issued a notice denying
6

Vineland’s application for a renewal of its license to import

fireworks pursuant to 18 U.S.C. § 843(b).

On July 25, 2005, ATF inspectors conducted a safety

walk-through inspection of Vineland’s facility in Puerto Rico

and found a number of additional violations. On December 2,

2005, the DIO amended the notices to include these additional

violations. The amended notices set forth thirteen violations,

each of which charged that Vineland had “willfully failed” to

comply with federal laws and ATF regulations. We summarize

the charged violations as follows:

(1) Willful failure to properly store

explosive materials in violation of 18 U.S.C.

§ 842(j) and 27 C.F.R. §§ 555.29, 555.201,

555.203(d), 555.210, and 555.215. Vineland

stored twenty-five pounds of deteriorated stars in

a trailer that also contained deteriorated

chemicals, and the trailer was not an approved

type 4 magazine.

(2) Willful failure to properly store

explosive materials in violation of 18 U.S.C.

§ 842(j) and 27 C.F.R. §§ 555.29 and 555.224.

Vineland had three magazines within 200 feet of

the trailer in count (1) and less than 300 feet from

a road.

(3) Willful failure to properly store

explosive materials in violation of 18 U.S.C.

§ 842(j) and 27 C.F.R. §§ 555.29, 555.210, and
7

555.215. On October 13, 2004, Vineland did not

have “adequate locks, hoods[,] and hinges” on its

storage containers.

(4) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27

C.F.R. § 555.127. Between July 2, 2003 and

October 13, 2004, Vineland did not state the

method it used to count explosive materials on ten

occasions in its daily summary of magazine

transactions.

(5) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27

C.F.R. § 555.127. On six occasions between

July 1, 2004 and October 13, 2004, Vineland

failed to enter the manufacturer’s name or brand

name of explosive materials, the total quantity of

materials received in and removed from each

magazine during the day, and the total remaining

quantity at the end of the day in its daily summary

of magazine transactions.

(6) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27

C.F.R. § 555.127. On thirty occasions between

January and August 2004, Vineland committed

the same violation as in count (5).

(7) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27
ATF dismissed Violation 10. 4

8

C.F.R. § 555.109(a). Between July 2, 2003 and

October 13, 2004, Vineland did not properly mark

12 cannon shots with the correct name and

location of the manufacturer.

(8) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27

C.F.R. § 555.123(b). Between July 2, 2003 and

October 13, 2004, Vineland did not enter the

proper records regarding the cannon shots

mentioned in count (7).

(9) Willful failure to properly store

explosive materials in violation of 18 U.S.C.

§ 842(j) and 27 C.F.R. §§ 555.201(f). Between

July 9, 2004 and July 25, 2005, Vineland did not

notify the local fire safety officials of the location

and other information of the explosive materials

at its facility in Puerto Rico.4

(11) Willful failure to properly maintain

records in violation of 18 U.S.C. § 842(f) and 27

C.F.R. § 555.127. Between January 13, 2005 and

January 17, 2005, Vineland did not enter a

separate record stating the dates of distribution of

explosive materials on two occasions at its facility

in Puerto Rico.
9

(12) Willful failure to properly store

explosive materials in violation of 18 U.S.C.

§ 842(j) and 27 C.F.R. § 555.215. Between

July 9, 2004 and July 25, 2005, Vineland did not

keep the area surrounding a magazine clear of

brush and grass at its facility in Puerto Rico.

(13) Willful failure to post license in

violation of 18 U.S.C. § 843(g) and 27 C.F.R.

§ 555.101. On July 26, 2005, Vineland did not

have its license posted at its facility in Puerto

Rico.

Vineland requested a hearing before an Administrative

Law Judge (“ALJ”). The central question of the hearing was

whether Vineland’s violations were willful. For an entity to

import, manufacture, or deal in explosive materials, it must have

a license. See 18 U.S.C. § 843. However, an entity that has

“willfully violated any of the provisions of this chapter [18

U.S.C. §§ 841 et seq.] or regulations issued hereunder” cannot

obtain a license. Id. § 843(b)(2). If a licensee has violated any

provision, including those provisions governing the way in

which a licensee obtains its original license, ATF may revoke its

license or deny the renewal application for its license. See id.

§ 843(a) (“Each license or permit shall be renewable upon the

same conditions and subject to the same restrictions as the

original license or permit[.]”); id. § 843(d) (“The Attorney

General may revoke any license or permit issued under this

section if in the opinion of the Attorney General the holder

thereof has violated any provision of this chapter or any rule or

regulation prescribed by the Attorney General under this
ATF does not appeal the Director’s decision with respect 5

to those violations.

On June 22, 2007, this Court granted an emergency 6

motion staying the revocation of Vineland’s license pending

review of the Director’s order.

10

chapter[.]”). Thus, ATF may deny the renewal of a license or

revoke a license if the licensee has “willfully violated” the

statutory provisions or ATF regulations. See id. § 843(a), (b)(2),

(d).

On February 23, 24, and 27, 2006, an ALJ of the United

States Environmental Protection Agency presided over the

hearing on these violations. On June 2, 2006, the ALJ issued a

Recommended Decision, in which he recommended reversing

the revocation of the license and the denial of the renewal

application for the license, finding that the violations were not

willful.

On June 15, 2006, the DIO filed a petition for review

with the Director. On April 17, 2007, the Director issued his

Order, affirming in part and reversing in part the ALJ’s

Recommended Decision. The Director affirmed the ALJ’s

decision as to Violations 3, 4, 9, and 13, finding that Vineland

did not willfully commit these violations. However, the 5

Director reversed the ALJ’s decision as to the remaining

violations, finding that those violations were willful. As a

result, he directed that Vineland’s licenses be immediately

revoked. This timely appeal followed. 6
The ALJ’s decision is the final decision only if the 7

Director affirms the decision. See 27 C.F.R. § 555.79.

11

II.

We have jurisdiction to review the Director’s decision to

revoke an explosives license and deny a renewal application

pursuant to 18 U.S.C. § 843(e)(2) and 5 U.S.C. § 704. We

review the Director’s decision, which is the final order revoking

Vineland’s license and denying its renewal application. See 18

U.S.C. § 843(e)(2). We review the decision using the judicial 7

standards of review set forth in 5 U.S.C. § 706. See 18 U.S.C.

§ 843(e)(2). To the extent that this appeal challenges the

Director’s interpretation of the statutory provisions ATF

administers, we utilize principles of Chevron deference. See

Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S.

837 (1984).

A.

Vineland argues that the Director did not limit his review

of the ALJ’s decision to a determination of whether it was

“arbitrary and capricious,” and he should have so limited his

standard of review pursuant to 27 C.F.R. § 555.79. We review

an agency’s decision to apply a particular standard of review to

determine if it was “arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A);

see also Chen v. Gen. Accounting Office, 821 F.2d 732, 734

(D.C. Cir. 1987) (“[A] board decision that applied the wrong
In pertinent part, the statute provides: 8

When the presiding employee makes an initial

decision, that decision then becomes the decision

of the agency without further proceedings unless

there is an appeal to, or review on motion of, the

agency within time provided by rule. On appeal

from or review of the initial decision, the agency

has all the powers which it would have in making

the initial decision except as it may limit the

issues on notice or by rule.

5 U.S.C. § 557(b).

12

standard of review to the decision of its hearing examiner would

. . . be arbitrary and capricious and contrary to law.”).

The Administrative Procedure Act (“APA”), 5 U.S.C.

§§ 500-596, governs the way in which administrative agencies

function. It provides that, where an agency reviews an ALJ’s

decision, “the agency has all the powers which it would have in

making the initial decision except as it may limit the issues on

notice or by rule.” 5 U.S.C. § 557(b). Thus, Congress permits

the agency to limit its review using its regulation-promulgating

powers, but if it chooses not to do so, it exercises de novo

review over the ALJ’s decision. See id.8

We must determine whether ATF issued a regulation that

limited the Director’s review of an ALJ’s decision because if it

did not, the Director exercises de novo review over the ALJ’s

decision as provided in § 557(b). ATF has promulgated a

regulation governing appeals involving the revocation of an
Both parties cite to 27 C.F.R. § 71.116 for various 9

propositions, but this section governs the Director’s review of

permit proceedings of the Tobacco Tax and Trade Bureau of

ATF. While this section is similar to § 555.79, we will limit our

discussion to § 555.79 as that is the applicable section.

As a result, we reject Vineland’s argument that the 10

Director should have reviewed the ALJ’s conclusions for

whether the ALJ was arbitrary and capricious. The text of the

regulation invites petitions that seek review not only of an action

that is arbitrary, but also of an action that is without reasonable

13

explosives license. See 27 C.F.R. § 555.79. Section 555.79 9

provides that, following the ALJ’s initial decision, either party

may appeal to the Director by filing a petition for review. It

further states: “The petition will set forth facts tending to show

(a) action of an arbitrary nature, (b) action without reasonable

warrant in fact, or (c) action contrary to law and regulations.”

Id.

We cannot conclude that this regulation limits the

Director’s standard of review because the regulation instructs

the petitioner, not the Director. See id. (informing the petitioner

that “[t]he petition will set forth” facts showing these types of

actions). The text of the regulation does not limit the Director’s

review to the three listed types of errors. See id. Moreover,

even assuming that it did, it does not include particular standards

of review for each error. For example, an “action contrary to

law and regulations” does not provide a standard of review, but

is simply a type of error. Therefore, we cannot conclude that 10
warrant in fact, or is contrary to law. See 27 C.F.R. § 555.79.

Thus, it clearly does not limit the Director’s review to an

“arbitrary and capricious” standard. See id.

To the extent that Vineland argues that our decision in 11

Kowalchick v. Director, Office of Workers’ Compensation

Programs, 893 F.2d 615, 619-20 (3d Cir. 1990), compels a

different conclusion, its argument is unavailing. In Kowalchick,

we stated that the Benefits Review Board for the Office of

Workers’ Compensation reviews an ALJ’s determination for

substantial evidence. However, we made that determination

because Congress expressly declared that, under the Longshore

and Harbor Workers’ Compensation Act, the Benefits Review

Board must review the hearing record for substantial evidence.

See 33 U.S.C. § 921(b)(3); see also 20 C.F.R. § 802.301 (stating

that the Benefits Review Board “is not empowered to engage in

a de novo proceeding” but must instead conduct a review for

substantial evidence). In the present case, Congress has not

imposed any similar standard of review on the Director of ATF,

nor has ATF expressly declared its standard of review. Thus,

Kowalchick is clearly distinguishable from the present case and

does not require a different result.

14

ATF expressly limited the Director’s standard of review of the

ALJ’s decision pursuant to 5 U.S.C. § 557(b).11

Vineland argues, however, that we should conclude that

ATF implicitly limited the Director’s review to an “arbitrary and

capricious” standard because “the regulation is so similar” to the
15

APA provision governing judicial review of an agency’s

decision. The APA provides:

The reviewing court shall . . . hold unlawful and

set aside agency action, findings, and conclusions

found to be--

(A) arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with

law;

(B) contrary to constitutional right, power,

privilege, or immunity;

(C) in excess of statutory jurisdiction,

authority, or limitations . . . ;

(D) without observance of procedure

required by law;

(E) unsupported by substantial evidence .

. . ; or

(F) unwarranted by the facts to the extent

that the facts are subject to trial de novo by the

reviewing court.

5 U.S.C. § 706(2).

In comparing the ATF regulation with the judicial review

standards set forth in § 706(2), we cannot conclude that the ATF
16

regulation so closely parallels the judicial review standards that

we can infer that ATF intended to adopt those standards. First,

while § 706(2) expressly provides that a court must use the

listed standards of review in reaching its decision, the ATF

regulation does not instruct the Director to consider these three

listed types of actions as its standards of review. See 27 C.F.R.

§ 555.79. Second, the ATF regulation does not mirror the

language of § 706(2). Although both the ATF regulation and

§ 706(2) contemplate challenges for actions that are arbitrary,

unwarranted by the facts, or contrary to law, § 706(2) expressly

provides standards of review for each type of action while 27

C.F.R. § 555.79 does not, particularly for “actions contrary to

law.”

 Had ATF intended to limit its standard of review in a

way similar to the APA, we believe it would have more closely

mirrored the statute in its regulation. For example, in Chen, the

Court of Appeals for the District of Columbia held that the

General Accounting Office Personnel Appeals Board (“Board”)

limited its standard of review of a decision by a single member

of the Board. 821 F.2d at 737-38. It found that the applicable

standards under the Board’s regulation “mirror[ed]” the judicial

review standards under both the APA and the Board’s organic

statute, both of which limited judicial review to a substantial

evidence standard. Id. at 735-36. It further found that, in

promulgating the regulation, the Board stated that it intended for

its standard of review to mirror the judicial review standards of

§ 706(2). Id. As a result, the court concluded: “It seems clear

that the [Board]’s new regulations give it only ‘appellate review’

powers and not de novo review authority to reopen and review

[an] individual member’s decisions.” Id.; see also id. at 737-38.
17

The ATF regulation at issue in the present case is not

similar to the one in Chen, 821 F.2d at 734-38. As noted above,

the ATF regulation, 27 C.F.R. 555.79, does not require the

Director to conduct its analysis using those particular standards

of review. Additionally, it does not “mirror” the APA standards

by stating that the Director should review the ALJ’s conclusions

for substantial evidence. See id. Finally, and most importantly,

unlike in Chen, 821 F.2d at 737-38, ATF did not state that it

intended for the Director’s standards of review to be the same as

the judicial standards of review. For all of these reasons, we

conclude that the D.C. Circuit’s decision in Chen supports our

conclusion that, had ATF intended to limit its standard of

review, it would have used more particular language to do so.

Based on the foregoing, we cannot conclude that ATF

has limited the Director’s standard of review of the ALJ’s

decision pursuant to 5 U.S.C. § 557(b). As a result, § 557(b)’s

mandate that “the agency has all the powers which it would have

in making the initial decision” remains intact. Therefore, to the

extent that the Director exercised de novo review over the ALJ’s

decision, it was not an abuse of discretion for him to do so.

B.

Vineland argues that the Director erred in his

interpretation of “willful” under 18 U.S.C. § 843(b)(2). Where,

as here, Congress has implicitly delegated powers to an agency,

we must give the agency’s interpretation deference so long as it
While the APA, 5 U.S.C. § 706, generally governs our 12

review, we utilize Chevron deference principles for questions of

law “where Congress delegated authority to the agency generally

to make rules carrying the force of law, and . . . the agency

interpretation claiming deference was promulgated in the

exercise of that authority.” United States v. Mead Corp., 533

U.S. 218, 226-27 (2001). In the present case, ATF’s authority

is derived from Congress’s delegation of the licensing of

explosives manufacturers, distributors, and importers to the

Attorney General. See 18 U.S.C. § 843. ATF exercises the

authority to revoke a license or deny the renewal of a license

pursuant to § 843(e)(2).

Under Chevron, we must first ask “whether Congress has

directly spoken to the precise question at issue” because if it has,

we “must give effect to the unambiguously expressed intent of

Congress.” See Chevron U.S.A. Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837, 842-43 (1984). Here, Congress has

not provided any definition for the term “willful” within this

statutory scheme. See 18 U.S.C. § 843. Moreover, the word

“willful” has many meanings, and its meaning usually depends

on the circumstances of its use, including whether it applies in

the civil or criminal context. See Bryan v. United States, 524

U.S. 184, 191 (1998). Thus, we conclude that Congress has not

provided an “unambiguously expressed intent” as to the

meaning of “willful.” See Chevron, 467 U.S. at 842-43.

Therefore, Chevron deference applies, and we must give the

agency’s interpretation deference so long as it is a reasonable

construction of the statute. See id. at 844.

18

is reasonable. See Chevron, 467 U.S. at 844. For the 12
At oral argument, ATF agreed that it should have cited 13

Chevron initially, explaining that at the time it submitted its

brief, it did not realize Vineland was arguing for anything less

than Chevron deference, and asked us to employ such a standard

in reviewing the agency’s interpretation of the statute.

To the extent that Vineland suggests that the ALJ did 14

not require a bad purpose, we reject its assertion. The ALJ

adopted the language in Vineland’s reply brief requiring an

“act[] in defiance of the law with no justification.” Moreover,

he then found that Vineland had not “acted with the purpose to

disobey the law” and that “it was not [Pacitto’s] intention to

willfully ignore the record keeping requirements.” Thus, the

ALJ’s rule of law and subsequent findings demonstrate that he

19

following reasons, we conclude that the Director’s interpretation

of “willful” under § 843(b)(2) is reasonable.13

1.

The Director interpreted “willfulness” under § 843(b)(2)

as “plain indifference to, or intentional disregard of, a known

legal duty.” He further stated that a licensee has willfully

violated the regulations “if, with knowledge of what the

regulations require, the dealer repeatedly violates those

regulations.” However, he rejected the ALJ’s interpretation of

willfulness to the extent that the ALJ stated that it required a

“bad purpose” and permitted a “justifiable excuse” defense. The

Director stated: “Willfulness does not require proof that

Vineland acted with the specific purpose to disobey the law.”14
did, in fact, require a showing that Vineland had acted with a

bad purpose in violating the ATF regulations.

Vineland points to notes in the fourth edition of Black’s 15

Law Dictionary; Vineland claims these notes state that a willful

act must be done “without justifiable excuse.” However, the

current edition of Black’s Law Dictionary does not allow for a

justifiable excuse. To the extent that the current edition

discusses the requirement of a “bad purpose,” it is limited to a

discussion in the notes of what are “willful” actions in the

context of a criminal statute.

20

We must determine whether the Director’s interpretation

of what constitutes a “willful” violation pursuant to § 843(b)(2)

is reasonable, and we conclude that it is. First, the Director’s

interpretation is in accord with the legal definition of “willful,”

which is “[v]oluntary and intentional, but not necessarily

malicious.” Black’s Law Dictionary 1630 (8th ed. 2004).

Black’s Law Dictionary further defines “willfulness” as “[t]he

voluntary, intentional violation or disregard of a known legal

duty.” Id. Like the Director’s interpretation of “willful” and

“willfulness,” these definitions require knowledge of the

conduct, but they do not require a bad purpose or allow for a

justifiable excuse.15

Furthermore, the Director’s definition is in accord with

Courts of Appeals addressing what constitutes a “willful”
While no other Court of Appeals has addressed the 16

interpretation of “willful” in the context of explosives licensing,

several Courts of Appeals have done so in the context of

firearms licensing. See RSM, Inc. v. Herbert, 466 F.3d 316 (4th

Cir. 2006); Willingham Sports, Inc. v. Bureau of Alcohol,

Tobacco, Firearms & Explosives, 415 F.3d 1274 (11th Cir.

2005); Appalachian Res. Dev. Corp. v. McCabe, 387 F.3d 461

(6th Cir. 2004); Perri v. Dep’t of the Treasury, 637 F.2d 1332

(9th Cir. 1980); Stein’s Inc. v. Blumenthal, 649 F.2d 463 (7th

Cir. 1980); Lewin v. Blumenthal, 590 F.2d 268, 269 (8th Cir.

1979).

21

violation in a similar context – firearms licensing. Firearms 16

licensing is similar to explosives licensing because ATF

administers both firearms licensing and explosives licensing,

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. Compare 18 U.S.C.

§ 923(e), with id. § 843(b)(2). Thus, firearms licensing is

analogous to explosives licensing, and it is a useful framework

for interpreting the term “willful.”

The six Courts of Appeals addressing what constitutes a

“willful” violation of the firearms licensing provisions have

agreed on an interpretation, holding that a firearms dealer’s

violation is willful where he “knew of his legal obligation and

purposefully disregarded or was plainly indifferent to the . . .
We note that, for firearms licensing, District Courts 17

must conduct a de novo review of the denial or revocation of a

license. See id. § 923(f)(3). Thus, a Court of Appeals review of

the District Court’s decision is also de novo. See, e.g.,

Willingham Sports, Inc. v. Bureau of Alcohol, Tobacco,

Firearms & Explosives, 415 F.3d 1274, 1275-76 (11th Cir.

2005). Congress has not provided us with de novo review of the

denial or revocation of an explosives license, see 18 U.S.C.

§ 823(e)(2), and for the reasons described above, Chevron

deference applies.

22

requirements.” Lewin v. Blumenthal, 590 F.2d 268, 269 (8th 17

Cir. 1979); see also RSM, Inc. v. Herbert, 466 F.3d 316, 322

(4th Cir. 2006) (requiring either “deliberate disregard” or “plain

indifference”); Willingham Sports, Inc. v. Bureau of Alcohol,

Tobacco, Firearms & Explosives, 415 F.3d 1274, 1276 (11th

Cir. 2005) (same); Appalachian Res. Dev. Corp. v. McCabe, 387

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

Treasury, 637 F.2d 1332, 1336 (9th Cir. 1980) (same); Stein’s

Inc. v. Blumenthal, 649 F.2d 463, 467 (7th Cir. 1980) (same).

A number of these Courts of Appeals have expressly stated that,

in finding willfulness, there is no requirement of bad purpose.

See Willingham, 415 F.3d at 1276; Appalachian Res. Dev., 387

F.3d at 465; Cucchiara v. Sec’y of the Treasury, 652 F.2d 28, 30

(9th Cir. 1981); Stein’s, 649 F.2d at 467; Lewin, 590 F.2d at

269. Instead, these Courts merely require violation of the

regulations with knowledge of their requirements. See RSM,

466 F.3d at 321-22; Willingham, 415 F.3d at 1276; Appalachian

Res. Dev., 387 F.3d at 464; Cucchiara, 652 F.2d at 30; Stein’s,

649 F.2d at 469; Lewin, 590 F.2d at 269. Finally, they have
Vineland argues that we should reject the Director’s 18

interpretation because we have required a bad purpose for a

finding of willfulness in the context of OSHA. Vineland relies

on the following statement: “Willfulness connotes defiance or

such reckless disregard of consequences as to be equivalent to

a knowing, conscious, and deliberate flaunting of the Act.

Willful means more than [a] merely voluntary action or

omission[;] it involves an element of obstinate refusal to

comply.” Babcock & Wilcox Co. v. Occupational Safety &

Health Rev. Comm’n, 622 F.2d 1160, 1165 (3d Cir. 1980)

(internal quotation marks and citation omitted).

In Babcock, we noted that our language had created a

“supposed conflict” with other Courts of Appeals, which

believed that we required a “bad purpose” for a finding of

willfulness. Id. at 1167. Those courts disagreed with a “bad

purpose” requirement, holding that “willful” meant an

“intentional disregard of, or plain indifference to” the

requirements. Id. We rejected the view that any conflict

existed, stating that we did not have a different standard, only

different verbiage. Id. Furthermore, our subsequent decisions

have endorsed the verbiage of the other Courts of Appeals. See,

23

never permitted a “justifiable excuse” defense. See, e.g., RSM,

466 F.3d at 321 (rejecting the licensee’s arguments that the

violations were not willful, but instead were inadvertent errors

due to a high volume of sales). Here, the Director’s

interpretation of what constitutes a “willful violation” under

§ 843(b)(2) follows the Courts of Appeals’ interpretations of

what constitutes a “willful violation” under § 923(e), and we

conclude that it is reasonable.18
e.g., Bianchi Trison Corp. v. Chao, 409 F.3d 196, 208 (3d Cir.

2005) (“Although the [OSH] Act does not define the term

willful, courts have unanimously held that a willful violation of

the [OSH] Act constitutes ‘an act done voluntarily with either an

intentional disregard of, or plain indifference to, the [OSH]

Act’s requirements.’” (internal citation omitted)). Thus,

Vineland’s argument that we should reject the Director’s

interpretation because of our previous statement in Babcock is

unavailing.

24

Vineland suggests that we should require the following

circumstantial evidence to support a finding of willfulness: (1) a

pattern of repeated violations, which includes (a) more than one

violation of the same kind and (b) temporal proximity between

the two violations; and (2) specific, ongoing warnings by ATF

to correct the violation. Vineland admits that it does not have

case law to support this “intuitive definition.” However, we

must review the Director’s interpretation to determine if it is

reasonable, not to determine if a better definition exists. Thus,

we cannot adopt Vineland’s definition.

Based on the foregoing, the Director’s interpretation of

what constitutes a “willful violation” of § 843(b)(2) is

reasonable.

2.

The Director concluded that a licensee’s corrective

actions “have no bearing” on a determination of whether the

licensee has “willfully violated” federal explosives laws or
25

regulations. Vineland argues that its future compliance is

relevant to the willfulness determination. We hold that the

Director’s conclusion is reasonable.

The statutory provision requires a determination of

whether the licensee “willfully violated” federal explosives laws

or regulations. See 18 U.S.C. §§ 843(b)(2), (d). This

determination is not based on the future conduct of the licensee,

i.e., whether it will “willfully violate” the laws, and it is not

based on a combination of the past, present, and future conduct

of the licensee, i.e., whether the licensee has “willfully violated”

the laws, is continuing to “willfully violate” the laws, and will

“willfully violate” the laws tomorrow. Instead, the inquiry turns

on the past conduct of the licensee. See id. Based on this

statutory language, the Director’s conclusion – that the

likelihood that the licensee will correct the violations is not

relevant to whether the licensee has “willfully violated” the

regulations – is reasonable.

Additionally, the Director’s conclusion is reasonable

because it is again in agreement with other federal courts

addressing this argument in the context of firearms licensing.

For example, the Court of Appeals for the Ninth Circuit has

stated that events occurring after the regulations have been

violated are not relevant to a determination of whether the

violations were willful at the time they occurred. Cucchiara,

652 F.2d at 30 (stating that the licensee’s correction of its

recordkeeping system subsequent to the license revocation “is

immaterial to the question of willfulness at the time the

violations occurred”); see also T.T. Salvage Auction Co. v.

Sec’y, U.S. Dep’t of Treasury, 859 F. Supp. 977, 979 (E.D.N.C.
26

1994) (holding that evidence of corrective actions is “irrelevant

under the statute because the statute focuses on the willfulness

of the violations and the compliance of the firearms dealer

before the license was revoked”).

Vineland’s arguments do not persuade us that the

Director’s conclusion was unreasonable. Vineland first argues

that 27 C.F.R. § 555.71 requires a finding of the likelihood of

future compliance prior to revocation of the license. Section

555.71 discusses the “opportunity for compliance” that ATF

must afford its licensees. It provides: “[N]o license or permit

will be revoked or renewal application denied without first

calling to the attention of the licensee or permittee the reasons

for the contemplated action and affording him an opportunity to

demonstrate or achieve compliance with all lawful

requirements.” 27 C.F.R. § 555.71. However, this regulation

expressly excludes “cases of willfulness” as long as the regional

director alleges willfulness in his “notice of denial of an

application or revocation of a license or permit.” Id. Therefore,

where, as here, the notice the licensee received from the DIO

alleged willfulness, the licensee need not be afforded an

opportunity to comply prior to revocation or denial of renewal

of a license.

Vineland next argues that the Director’s interpretation

conflicts with his prior opinion in In the Matter of Luna Tech,

Inc. d/b/a Pyropak, Order of the Director, June 13, 2005 (“Luna

Tech”), in which he considered the licensee’s future compliance.

However, to the extent that the Director considered the

licensee’s future compliance in Luna Tech, he did so in

analyzing whether the licensee should be permitted an
27

opportunity to comply pursuant to § 555.71. As noted, § 555.71

does not apply here, and thus, we are not persuaded that the

Director’s conclusion was unreasonable in this case.

Based on the foregoing, the Director’s conclusion that the

potential for future compliance is not relevant to a determination

of willfulness is reasonable.

3.

The Director concluded that ATF’s failure to cite a

violation did not preclude ATF from citing the licensee in a

subsequent inspection for the same violation unless the licensee

demonstrated that ATF had affirmatively misled the licensee as

to the requirements. Vineland challenges this conclusion,

arguing that “the prior inspection history is relevant to the issue

of willfulness.” We hold that the Director’s conclusion is

reasonable.

The Director’s interpretation of “willfulness” placed the

focus on whether the licensee had the requisite knowledge of the

requirements yet failed to comply with them. If the licensee had

knowledge of the requirements, whether ATF had previously

cited the licensee would be irrelevant to a determination of

“willfulness” unless ATF had affirmatively told the licensee that

it was in compliance. Thus, based on the Director’s

interpretation of “willfulness,” this further interpretation is

reasonable.

Additionally, the Director’s conclusion is reasonable

because it is in accord with a District Court’s interpretation of
To the extent that Vineland argues that the holding of 19

Breit was “completely irrelevant” to the present case, we find its

argument unavailing. Contrary to Vineland’s assertion, the ALJ

categorized Vineland’s argument as an estoppel-based

argument. Moreover, the ALJ concluded that several violations

were not willful because ATF had not previously cited

Vineland, and the ALJ did not require evidence that ATF had

misled Vineland asto the requirements. Thus, Breit was directly

on point with the present case, and the Director’s analogy to it

was reasonable.

28

“willfulness” in the context of firearms licensing. See Breit &

Johnson Sporting Goods, Inc. v. Ashcroft, 320 F. Supp. 2d 671,

680 (N.D. Ill. 2004). In Breit, the licensee argued that ATF

should not be able to revoke its license because ATF had not

cited it for previous violations. Id. at 680. The court rejected

this “equitable estoppel” argument because the licensee had

knowledge of the requirements and could not demonstrate that

ATF had misled it. Id. The Director’s conclusion is in accord

with this decision, and thus, it is reasonable.19

Based on the foregoing, the Director’s conclusion is

reasonable.

C.

Vineland argues that the Director erred in concluding that

Vineland “willfully violated” ATF’sregulationsin Violations 1,

2, 5, 6, 7, 8, 11, and 12. We review the Director’s conclusion

that Vineland “willfully violated” the ATF regulations for
At the hearing, both Pacitto and her bookkeeper, Adele 20

Huryn, testified. Huryn stated that she was diagnosed with

cancer in early 2004, and she had to leave work in March 2004.

Pacitto then took over the recordkeeping duties during Huryn’s

absence, and visited Huryn in an attempt to complete the

inventory records. Huryn returned to work on August 2, 2004,

and completed an inventory count at that point.

29

substantial evidence using the Director’s reasonable

interpretation of what constitutes a willful violation. See 5

U.S.C. § 706(E) (stating that the standard of review for

adjudicatory proceedings is whether the decision is

“unsupported by substantial evidence”); see also 18 U.S.C.

§ 843(e)(2) (stating that the court of appeals will review the

decision pursuant to 5 U.S.C. §§ 701-706). We conclude that

substantial evidence supports the Director’s decision that

Vineland “willfully violated” 18 U.S.C. § 842(f) and 27 C.F.R.

§ 555.127 by failing to keep proper records in its daily summary

of magazine transactions as charged in Violations 5 and 6.

In the ALJ’s Recommended Decision, he found that

while the charged incidents in Violations 5 and 6 had occurred,

Vineland had not “willfully violated” 18 U.S.C. § 842(f) and 27

C.F.R. § 555.127 in failing to keep proper records. The Director

disagreed with the ALJ, finding that Vineland had “willfully

violated” the applicable law and regulation. The Director

acknowledged that Pacitto’s bookkeeper, Adele Huryn, missed

work during the relevant months for cancer treatments.

20

However, he found that, while Huryn’s illness was unfortunate,

it could not negate a finding of willfulness as to Pacitto.
Although Vineland challenged the Director’s 21

determination that Pacitto had knowledge of the regulations

30

The Director then applied his interpretation of

willfulness, and found that Pacitto was aware of the

recordkeeping requirements because ATF had instructed her as

to the requirements in its December 2000 meeting. He further

stated that, regardless of what Felix Girone had informed her

prior to 1999 about a relaxation of recordkeeping during the

“busy season,” Pacitto knew that was incorrect after December

2000. He also noted that, despite ATF’s failure to cite previous

recordkeeping violations occurring between 2000 and 2003, he

could find that Vineland had been willful in its violations

because Vineland had knowledge of the proper requirements.

He then applied the relevant standard, finding that Vineland

“willfully violated” the recordkeeping requirements because

Pacitto chose to neglect the daily summary of magazine

transactions thirty-six times between January and September

2004 despite having knowledge as to the requirements.

The Director’s reasonable interpretation of “willfulness”

is that a licensee has willfully violated the regulations “if, with

knowledge of what the regulations require, the dealer repeatedly

violates those regulations.” A great deal of evidence supports

the Director’s conclusion that Pacitto had knowledge of the

recordkeeping requirements under 42 U.S.C. § 842(f) and 27

C.F.R. § 555.127. Pacitto does not dispute that she was aware

of the requirements, and as the Director pointed out, Pacitto

spoke with ATF inspectors regarding the requirements of 27

C.F.R. § 555.127 at the December 2000 meeting. Thus, there 21
based on her involvement in the operations of Fireworks by

Girone, Pacitto acknowledged that she was aware of the

recordkeeping requirements under 27 C.F.R. § 555.127

following her meeting with ATF inspectors in December 2000.

Because we are only reaching a conclusion as to Violations 5

and 6 and Pacitto admitted that she had knowledge of the

requirement involved in these violations, we find it unnecessary

to further address this argument.

31

is evidence in the record that Pacitto had knowledge of the

requirement.

Additionally, the evidence supports the conclusion that

Pacitto repeatedly violated the regulation. Her failure to

properly record the transactions was not a “one-off event” as

Vineland claims, but instead occurred on thirty-six occasions.

Moreover, Pacitto’s failure to comply did not occur during a

brief time period, but extended for months with the end result

being, as the Director noted, “that thousands of pounds of

explosives left Vineland’s facility without any record being

kept.” While we agree with the Director that Huryn’s illness

was clearly unfortunate and requires much sympathy, her illness

did not provide Pacitto carte blanche to stop complying with the

regulation requiring her to keep a record of the daily summary

of magazine transactions.

Based on the foregoing, substantial evidence supports the

Director’s conclusion that Pacitto had knowledge of the

recordkeeping requirements, and yet did not comply with them
To the extent that Vineland argues that the Director 22

should have considered its exemplary records prior to 2004, we

find its argument unavailing because prior compliance is not the

relevant standard. In addition, to the extent that Vineland argues

that the Director should have considered whether it was likely

to violate 27 C.F.R. § 555.127 in the future, we find its

argument unavailing because future compliance is not the

relevant standard either.

32

thirty-six times over a ten-month period. Therefore, 22

substantial evidence supports the Director’s ultimate conclusion

that Vineland “willfully violated” 42 U.S.C. § 842(f) and 27

C.F.R. § 555.127.

At oral argument, Vineland conceded that, were we to

find that substantial evidence supported even one of the

Director’s conclusions that Vineland had “willfully violated”

federal law and ATF regulations, the Director’s decision to

revoke its license and deny its renewal would be proper.

Therefore, because we conclude that there was substantial

evidence to support the Director’s conclusion as to Violations 5

and 6, we find it unnecessary to reach a conclusion as to the

remaining violations.

III.

For the foregoing reasons, we will deny the petition for

review of the Director’s order.
Vineland agreed during oral argument that the ATF’s 23

order should be upheld if we concluded that any one of the

charged violations was supported by substantial evidence.

33

JORDAN, Circuit Judge, concurring in the judgment.

_________________________________________________

I agree with the majority that the ATF was not required

to give deference to the ALJ’s factual findings and legal

conclusions. I also agree that substantial evidence supports the

ATF’s finding that Vineland willfully violated certain statutory

and regulatory record-keeping requirements and that its petition

for review should therefore be denied. I take issue, however, 23

with the majority’s assertion that we owe Chevron deference to

the ATF’s interpretation of the term “willfully” as it appears in

18 U.S.C. § 843(b)(2).

Section 843(b) of Title 18 states that, upon the filing of

an application for a license to manufacture or deal in explosives,

the Attorney General shall issue the appropriate license if,

among other things, “the applicant has not willfully violated any

of the provisions of [18 U.S.C. §§ 841 through 848] or
Among the provisions referred to by § 843(b)(2) is 18 24

U.S.C. § 842(f), which makes it a crime for a licensee “willfully

to manufacture, import, purchase, distribute, or receive

explosive materials without making such records as the Attorney

General may by regulation require,” and 27 C.F.R. § 555.127,

which requires licensees to keep daily records of the total

quantity of explosives received in and removed from each

magazine and the total remaining on hand at the end of the day.

34

regulations issued [t]hereunder.” 18 U.S.C. § 843(b)(2). As 24

explained by the majority, the ATF concluded that proof that

Vineland acted with knowledge that its conduct was unlawful –

that it distributed fireworks without maintaining the daily

records that it knew were required by law – was sufficient to

establish willfulness within the meaning of § 843(b)(2). The

majority then holds that the ATF’s interpretation of the term

“willfully” is entitled to deference under Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

However, I see no need to invoke Chevron on that point. Since

it appears that we would independently arrive at the ATF’s

position on willfulness, there is “no occasion to defer and no

point in asking what kind of deference, or how much.” Edelman

v. Lynchburg Coll., 535 U.S. 106, 114 (2002).

Moreover, Chevron instructs us to give deference to an

agency’s reasonable policy choice when Congress gave the

agency the authority to make such a choice. Here, the ATF did

not even purport to be doing that. There is nothing in the ATF’s
35

decision that suggests that its interpretation of “willfully” was

the result of its independent determination that its construction

was desirable to further some policy goal. Instead, the ATF

relied entirely on decisions of the various Courts of Appeals

interpreting that term in the firearms and explosives licensing

contexts, and it concluded from those decisions that the ALJ had

applied the “incorrect standard.” (App. 14.) In other words, the

agency accurately saw itself as applying a general legal

standard, not making a decision within its peculiar

administrative ken. Cf. Colacicco v. Apotex Inc., 521 F.3d 253,

274 (3d Cir. 2008) (Noting that we are “ordinarily ... leery of an

agency’s view of what is essentially a legal issue”); Blackburn

v. Reich, 79 F.3d 1375, 1377 n.3 (4th Cir. 1996) (“Because the

Secretary based his decision in the instant case on judicial

precedent rather than his own interpretation of the statute, we

owe ‘no more deference than we would any lower court’s

analysis of the law.’” (quoting Thomas Hodgson & Sons, Inc. v.

FERC, 49 F.3d 822, 826 (1st Cir. 1995))). Indeed, nowhere in

its briefing did the agency ask for Chevron deference, as one

might have expected it would had it believed it necessary.

For these reasons, I do not believe the majority’s Chevron

analysis is required in this case, and I decline to join it.