Court Opinion

ID: 3215364
Source: CourtListenerOpinion
Date Created: 2016-06-21 18:00:32.80187+00
Date Added: 2024-06-11T14:30:06.974141
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 15-2230

                        SIG SAUER, INC.,

                      Plaintiff, Appellant,

                               v.

   THOMAS E. BRANDON, Acting Director, United States Bureau of
           Alcohol, Tobacco, Firearms, and Explosives,

                      Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF NEW HAMPSHIRE

          [Hon. Paul J. Barbadoro, U.S. District Judge]

                             Before

                  Lynch, Thompson, and Barron,
                         Circuit Judges.

     Stephen P. Halbrook, with whom Mark C. Rouvalis and Kenton J.
Villano were on brief, for Appellant.
     Abby C. Wright, Attorney, Appellate Staff, Civil Division,
U.S. Department of Justice, with whom Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Donald Feith, United States
Attorney, and Michael S. Raab, Attorney, Appellate Staff, Civil
Division, U.S. Department of Justice, were on brief, for Appellee.

                          June 21, 2016
             BARRON,      Circuit Judge.     Sig Sauer, Inc., is a gun

manufacturer headquartered in New Hampshire.             In this appeal, Sig

Sauer challenges the District Court's decision to uphold a ruling

by the Bureau of Alcohol, Tobacco, Firearms, and Explosives ("ATF")

that a gun Sig Sauer seeks to market includes a "silencer" under

the National Firearms Act (the "NFA").           26 U.S.C. §§ 5801 et seq.

We affirm.

                                        I.

             The    NFA    subjects    "firearms"   to    various   taxes   and

regulatory requirements, including that the firearm be registered

with ATF.     Id. §§ 5811, 5821, 5822, 5841, 5842.           The NFA defines

a "firearm" to include certain guns and gun parts, including

"silencers."       18 U.S.C. § 921.     And the NFA defines a "silencer,"

to include not only "any device for silencing, muffling, or

diminishing the report of a portable firearm," but also, and of

particular relevance here, "any part intended only for use in"

"assembling or fabricating a firearm silencer or firearm muffler."

Id. § 921(a)(24); 26 U.S.C. § 5845(a)(7) (emphasis added). Failure

to comply with the NFA's regulatory requirements can result in

serious criminal penalties.           26 U.S.C. § 5871.

             ATF permits -- but does not require -- gun makers to

seek classification letters from ATF prior to manufacturing a gun.

See Bureau of Alcohol, Tobacco, Firearms and Explosives, National

Firearms     Act      Handbook    §      7.2.4   (2009),     available      at:

                                         - 2 -
https://www.atf.gov/firearms/docs/atf-national-firearms-act-

handbook-atf-p-53208/download; see also Innovator Enters., Inc. v.

Jones, 28 F. Supp. 3d 14, 18-19, 19 n.2 (D.D.C. 2014).             A

classification letter sets forth "the agency's official position

concerning the status of the firearms under Federal firearms laws."

Id. § 7.2.4.1.

          In this case, Sig Sauer sought a classification letter

from ATF regarding a part of a gun that it planned to manufacture.

Sig Sauer noted that ATF might deem the part at issue to be a

silencer under the NFA on the ground that it was "intended only

for use" in assembling or fabricating a silencer.          Sig Sauer

contended, however, that the part was not intended only for such

a use as it was also intended for use as a muzzle brake.    A muzzle

brake is a device that is added to a gun to reduce recoil (the

backwards force that results from firing the gun) and rise (the

tendency of the barrel to move upwards when the gun is fired).

See Vais Arms, Inc. v. Vais, 383 F.3d 287, 288 n.1 (5th Cir. 2004).

On the basis of its argument that the part was intended for use as

a muzzle brake, Sig Sauer argued to ATF that the part did not

qualify as a silencer under the "intended only for use" prong of

the NFA's definition of a silencer.

          ATF disagreed and issued a classification letter that

designated the part to be "intended only for use" in assembling or

fabricating a silencer.   Sig Sauer then asked ATF to reconsider

                                 - 3 -
its classification.    ATF again determined, however, that the part

was a silencer under the "intended only for use" prong of the NFA's

definition of a silencer.

          At that point, Sig Sauer challenged ATF's classification

of the part as a silencer by filing suit in the District of New

Hampshire under the Administrative Procedure Act (the "APA").        5

U.S.C. §§ 701 et seq.1       The parties then jointly moved to stay the

proceedings   so      that     ATF   could    reconsider   the   part's

     1 The parties agree that ATF's issuance of a classification
letter is a "final agency action" that is reviewable under the
Administrative Procedure Act. 5 U.S.C. § 704. "In determining
whether a particular agency action is final, 'the core question is
whether the agency has completed its decisionmaking process, and
whether the result of that process is one that will directly affect
the parties.'" Trafalgar Capital Assocs., Inc. v. Cuomo, 159 F.3d
21, 35 (1st Cir. 1998) (brackets omitted) (quoting Franklin v.
Massachusetts, 505 U.S. 788, 797 (1992)). It appears that there
are no further steps in ATF's administrative process. See Bureau
of Alcohol, Tobacco, Firearms and Explosives, National Firearms
Act     Handbook     §     7.2.4      (2009),     available     at:
https://www.atf.gov/firearms/docs/atf-national-firearms-act-
handbook-atf-p-53208/download.    And should ATF's classification
decision stand, Sig Sauer will have to go through with the NFA's
stringent requirements in order to sell its firearm -- as the
classification letter states. See Franklin, 505 U.S. at 796-97
("To determine when an agency action is final, we have looked to,
among other things, whether its impact 'is sufficiently direct and
immediate' and has a 'direct effect on . .            . day-to-day
business.'" (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 152
(1967))). In consequence, we agree with the parties that ATF's
classification decision is a "final agency action" and thus
reviewable under the APA. See FTC v. Standard Oil Co., 449 U.S.
232, 241 (1980) (noting that the APA's finality requirement is
satisfied when a decision is a "'definitive' statement[] of the
[agency]'s position . . . and had a 'direct and immediate . . .
effect on the day-to-day business' of the complaining parties."
(fourth alteration in original) (quoting Abbott Labs., 387 U.S. at
151-52)).

                                      - 4 -
classification.     ATF agreed to accept "additional documents or

information" in reconsidering its prior ruling.            ATF also agreed

that, in the event that it affirmed its prior ruling on remand, it

would consider "additional information and documentation" if Sig

Sauer chose to make such a submission before the case returned to

the District Court.

           On remand, ATF affirmed its decision yet again.               Sig

Sauer   then   submitted,   among   other    materials,    affidavits   that

stated that it intended the part at issue to lengthen the gun's

barrel to 16 inches so that the gun would not be subject to the

NFA on the basis of its length, as rifles that are shorter than 16

inches are for that reason alone subject to the NFA.          See 26 U.S.C.

§ 5845(a)(3).     Sig Sauer thus contended that because it intended

the part to make the gun sufficiently long that it would not be

subject to the NFA on the basis of its length, the part was, for

this reason, too, not "intended only for use" in assembling or

fabricating a silencer.        ATF declined, however, to change its

classification of the part.

           Following   ATF's   decision     on   remand,   the   litigation

resumed in district court, where the parties cross-moved for

summary judgment.      After a hearing, the District Court granted

ATF's motion for summary judgment and denied Sig Sauer's.                Sig

Sauer, Inc. v. Jones, 133 F. Supp. 3d. 364 (D.N.H. 2015).                Sig

Sauer then timely filed this appeal.

                                     - 5 -
                                 II.

          "In the administrative law context, where we review

directly the decision of the agency, the APA can serve as an

overlay to the familiar de novo standard applicable to appeals

from a district court's grant of a summary judgment."      Baystate

Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 674 (1st Cir. 1998).

Under the APA, we review ATF's decision to determine if it is

"arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law."   5 U.S.C. § 706(2)(A); see Baystate Alt.

Staffing, 163 F.3d at 674. "A decision is arbitrary and capricious

'if the agency has relied on factors which Congress has not

intended it to consider, entirely failed to consider an important

aspect of the problem, offered an explanation for its decision

that runs counter to the evidence before the agency, or is so

implausible that it could not be ascribed to a difference in view

or the product of agency expertise.'"    Craker v. DEA, 714 F.3d 17,

26 (1st Cir. 2013) (quoting Motor Vehicle Mfrs. Ass'n v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).   And, of course,

"[w]e may not substitute our judgment for that of the agency, even

if we disagree with its conclusions."    Id.

                               III.

          Sig Sauer first contends that ATF classified the part as

a silencer merely because it was "capable of use" in assembling or

fabricating a silencer and thus failed to evaluate whether, as the

                                 - 6 -
NFA requires, the part was "intended only for use" in assembling

or fabricating a silencer.           Sig Sauer bases this contention on the

fact that ATF examined, among other things, the part's design

features and objective capabilities.

              But ATF persuasively explained in its classification

letter that it examines a part's design features -- and thus the

uses of which a part is capable -- as part of the inquiry into

whether a part is intended to be used only in assembling or

fabricating a silencer.           Such an objective approach to ferreting

out a party's intent is a very familiar one in the law.                   See, e.g.,

United States v. Siciliano, 578 F.3d 61, 77 (1st Cir. 2009) (noting

that objective evidence is useful to "buttress or rebut direct

testimony as to intent"); cf. Washington v. Davis, 426 U.S. 229,

253    (1976)    (Stevens,     J.,     concurring)       ("Frequently     the     most

probative evidence of intent will be objective evidence of what

actually happened rather than evidence describing the subjective

state of mind of the actor."); United States v. Gaw, 817 F.3d 1

(1st   Cir.     2016)   ("[T]he    law   is   long      since   settled    that   the

prosecution may prove its case without direct evidence of a

defendant's guilty knowledge so long as the array of circumstantial

evidence possesses sufficient persuasive power." (quoting United

States v. O'Brien, 14 F.3d 703, 706 (1st Cir. 1994))).                    Nor do we

have   any    reason    to   suppose     it   is   an   approach   that     the   NFA

prohibits.      In fact, it is hard to believe that Congress intended

                                          - 7 -
to invite manufacturers to evade the NFA's carefully constructed

regulatory regime simply by asserting an intended use for a part

that objective evidence in the record -- such as a part's design

features -- indicates is not actually an intended one.            See United

States v. Syverson, 90 F.3d 227, 232 (7th Cir. 1996) (holding that

a device was "intended only for use" in assembling or fabricating

a silencer notwithstanding the designer's stated intention that it

be used as a muzzle brake).

            Because we find persuasive ATF's contention that it may

consider objective evidence in determining whether a part is

"intended only for use" in assembling or fabricating a silencer,

see Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), ATF

committed     no   legal   error    of     the   sort   Sig   Sauer    claims.

Accordingly, we need decide only the sole remaining point of

dispute between the parties: whether there is a sufficiently

reasoned    basis    in    the     administrative       record   for    ATF's

classification of this part as one that is "intended only for use"

in assembling or fabricating a silencer.            And so we now turn to

that issue.

                                     IV.

            ATF concluded that the part at issue is intended for use

only in assembling or fabricating a silencer because it was

designed with features that are common to all silencers but no

muzzle brakes; because the gun that includes the part is not of a

                                         - 8 -
type that requires, or is sold with, a muzzle brake; and because

Sig Sauer initially submitted a prototype of the gun to ATF that

functioned safely only if the part at issue was encased and thus

had   been   made   into   a   completed   silencer.   Given   that   the

administrative record adequately supports these findings, and that

these findings reasonably support ATF's conclusion that the part

is "intended only for use" in assembling or fabricating a silencer,

we conclude that ATF's classification of this part as a silencer

is not arbitrary and capricious.       See State Farm, 463 U.S. at 43.

             We start with ATF's well supported findings that the

part was identical to the interior of a silencer because it was a

part that is known as "a monolithic baffle core."          In reaching

this conclusion, ATF pointed to the depictions of other monolithic

baffle cores that are part of the administrative record               and

explained that, like these monolithic baffle cores, this part also

"contains angled baffles and (when assembled with an outer tube)

walls forming integral expansion chambers."       ATF further explained

that "expansion chambers . . . reduce sound by capturing and

slowing propellant gases" and thus enable this part (when encased)

to do the key thing that a silencer does: "diminish[] the report"

of a firearm.

             Further supporting ATF's finding that this part is a

monolithic baffle core is the fact that, through testing, ATF found

that the part significantly reduced the report of a gunshot when

                                      - 9 -
it was encased.   Moreover, ATF supportably found that this part is

identical to the monolithic baffle core that Sig Sauer uses as the

interior of the complete silencers that it sells; that Sig Sauer

used the same part number to identify the part in question here

and the core of its removable silencer; that Sig Sauer labeled

this part a "silencer" on its invoice;2 and that the part included

threading at the muzzle end that made it easy to encase the part

to produce a complete silencer.

            Sig Sauer points to nothing in the record that undermines

these findings about the features of this part that make it

identical to the interior of a silencer.              For while Sig Sauer

disputes ATF's interpretation of the similarity between this part

and the depictions of the monolithic baffle cores in the record,

Sig Sauer has given us no reason not to defer to ATF's contrary

interpretation of this evidence, which is well "within [ATF's]

special competence."        Penobscot Air Servs., Ltd. v. FAA, 164 F.3d

713, 718 (1st Cir. 1999) (quoting Univ. Camera Corp. v. NLRB, 340

U.S. 474, 490 (1951)).       And our deference to ATF's interpretation

of   this   evidence   is    especially   warranted    given   that   proper

evaluation of this evidence "requires a high level of technical

      2Sig Sauer contends that it labelled the part this way only
in order to comply with ATF's ruling that the part in question is
a silencer. But ATF was free to conclude otherwise, as there is
nothing in the record to suggest that ATF's ruling required the
use of such a label.

                                      - 10 -
expertise."         Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 377

(1989) (quoting Kleppe v. Sierra Club, 427 U.S. 390, 412 (1976));

see also R.I. Higher Educ. Assistance Auth. v. Sec'y, U.S. Dep't

of Educ., 929 F.2d 844, 857 (1st Cir. 1991) (collecting cases).3

                 To be sure, the record does contain an affidavit from a

Sig    Sauer      engineer     purporting    to   distinguish       this    part    from

monolithic baffle cores.             But Sig Sauer has made no effort to

explain why we should credit that affidavit over ATF's conclusions.

In fact, although Sig Sauer's counsel at argument stated that the

finding      that    this    part   is   a   monolithic      baffle    core    is    not

supported, he agreed with the District Court's characterization

that       Sig   Sauer   had    "basically     taken   the    cap     off    [of    its]

silencer, . . . welded it onto the gun, and [was] just going to

sell it as a muzzle brake."

                 In finding that this part is identical to the interior

of a silencer, ATF did not dispute that the part also reduced the

gun's recoil and rise, as a muzzle brake also does.                         But as Sig

Sauer itself emphasizes, the standard under the NFA's silencer

definition focuses on the relevant part's intended use rather than

on uses of which the relevant part is merely capable.                          See 18

U.S.C. § 921(a)(24); see United States v. Crooker, 608 F.3d 94, 97

       3
       Sig Sauer does argue that the part at issue somewhat
amplifies the sound of a gunshot when the part is not encased.
But ATF found that the component was identical to the interior of
a silencer because of how it functioned when it was encased.

                                             - 11 -
(1st Cir. 2010) (per curium).    Thus, while the fact that this part

incidentally reduces the gun's rise and recoil shows that it is

capable of doing so, that fact is not necessarily determinative of

whether Sig Sauer intended this part to be used for that purpose.

See Crooker, 608 F.3d at 97; see also United States v. Carter, 465

F.3d 658, 667 (6th Cir. 2006) (per curium) ("[Congress's] word

choice indicates a concern for the purpose of the mechanism, and

the parts thereof, not the function." (emphasis omitted)).       In

fact, ATF supportably found that "any additional weight placed at

the end of a firearm barrel may" incidentally reduce recoil and

rise even though not everything that adds such weight is thereby

intended to be used as a muzzle brake.     Cf. Crooker, 608 F.3d at

97 ("If the statute [spoke of] a device 'capable' of being used as

a silencer . . . there would be problems at least of degree in

determining what 'capable' meant . . . ; apparently, a potato or

a soda bottle may, with varying efficacy and varying risk, be used

to muffle a firearm shot.").    And, in concluding that in this case

Sig Sauer did not intend the part to be used to reduce recoil and

rise, ATF relied on several pieces of evidence that it reasonably

determined pointed against the conclusion that Sig Sauer intended

the part to be used as a muzzle brake and in favor of the conclusion

that Sig Sauer intended the part to be used only in assembling or

fabricating a silencer.

                                  - 12 -
             As an initial matter, ATF found that the part has design

features uncharacteristic of muzzle brakes and characteristic only

of the interior of silencers.        In particular, ATF found that the

length to width ratio of the part "is much greater than that of

conventional    muzzle   brakes   and   is   consistent   with   those   of"

silencers.     ATF also found that while the interior of this part

was designed with baffles so that the part would create "expansion

chambers" when encased -- thus making the part useful in assembling

or fabricating a silencer -- no muzzle brakes have such baffles.4

             In addition, ATF found that the sort of gun for which

this part was intended -- a pistol caliber semiautomatic gun --

has little or no practical use for a muzzle brake, because such

guns do not produce a substantial recoil in the way that larger

guns and automatic guns do.       And ATF further found that other non-

automatic guns of this type are not sold with muzzle brakes, a

fact that ATF reasonably found indicated that any reduction in

recoil and rise attributable to this part was incidental to its

use as an integral component of a completed silencer.

     4 In its brief to us, ATF points to articles reviewing the
gun, which ATF contends support its position that the part was not
a conventional muzzle brake. These articles called the part "one
of the coolest things to be unveiled," described it as a "gigantic"
and "very large" "muzzle brake," and stated that it was a silencer
core and that Sig Sauer would happily sell one the casing to turn
the part into a silencer.      In reply, Sig Sauer says that the
articles recognize that the part was a muzzle brake. As it appears
ATF did not rely on these articles in making its decision, we do
not rely on them here.

                                     - 13 -
          In further support of its classification of the part,

ATF reasonably found that the design of Sig Sauer's original

prototype of the gun indicated that the part was not intended for

use as a muzzle brake.    That prototype included a longer hand

guard, which partially covered the part in question.    But muzzle

brakes, ATF explained, are "designed to be positioned at the muzzle

end of a firearm barrel, and in front of a shooter's hand."      In

fact, ATF noted that the prototype was designed so as to "redirect

hot gases onto the shooter's hand each time a projectile was

fired," thus making it so that the prototype could have been fired

safely only if the part in question was encased.          ATF thus

concluded that "[t]he very configuration of SIG's submission . .

. suggests that the submission is not, in fact, designed as a

muzzle brake," and was instead designed only as a component of a

silencer, as the part could have functioned safely on the initial

prototype only if the part was made into a completed silencer.

          Sig Sauer does nothing to rebut these findings.        In

offering a conclusory challenge to ATF's interpretation of the

differences between this part and the depictions of the muzzle

brakes that are contained in the administrative record, Sig Sauer

offers no reason as to why we should favor its evaluation of this

technical evidence over ATF's.   See Marsh, 490 U.S. at 377; R.I.

Higher Educ. Assistance Auth., 929 F.2d at 857 (collecting cases).

And while Sig Sauer does point out in its brief that muzzle brakes

                                 - 14 -
also have slots that allow gases to escape, Sig Sauer does not

dispute ATF's finding that the slots in this part are designed to

produce expansion chambers when encased while the slots in muzzle

brakes are not.    Similarly, while Sig Sauer argues that some

smaller caliber guns are sold with muzzle brakes, Sig Sauer does

not dispute ATF's finding that pistol-caliber guns that are not

capable of automatic fire -- as the gun in question here is

not -- are not sold with muzzle brakes.

          Sig Sauer does argue that ATF erred in giving weight to

the fact that Sig Sauer originally submitted a prototype in which

the part now claimed to be a muzzle brake actually could not safely

function as one.   And we agree with Sig Sauer that the design of

the original prototype is not dispositive of the part's intended

use in its present incarnation.     Nonetheless, the fact that Sig

Sauer was willing to proceed with a prototype in which the part

could not be safely used as a muzzle brake at all does provide

some additional support, in combination with the other findings on

which ATF relied, for ATF's determination that Sig Sauer intended

this part to be used only in assembling or fabricating a silencer,

notwithstanding that the part also incidentally reduces recoil and

rise.5

     5 Sig Sauer's reliance on Innovator Enterprises is misplaced,
as that case is easily distinguishable. 28 F. Supp. 3d at 14.
Innovator Enterprises dealt with the first prong of the silencer
definition -- a "device for silencing, muffling, or diminishing

                                  - 15 -
          In sum, ATF reasonably determined on the basis of the

record that the part's capacity to reduce recoil and rise was

merely an incidental consequence of the inclusion of the part on

the gun -- a consequence that ATF supportably found would result

from adding any additional weight to the gun.                Given that ATF

supportably found that this type of gun does not need a muzzle

brake and is not typically sold with a muzzle brake, and given

that ATF supportably found that this part is identical to the

interior of a silencer and does not share the design features

typical of other muzzle brakes, we see no basis for concluding

that ATF's classification of this part as having been "intended

only for use" in assembling or fabricating a silencer is arbitrary

and capricious.

          Sig     Sauer   does   make    one     last   challenge   to   ATF's

classification of the part.       This challenge pertains not to the

part's possible use as a muzzle brake, but rather to the fact that

the part extended the gun's length.              Sig Sauer argues that it

intended the part to be used to extend the gun's barrel to 16

inches, so that its length would not make it subject to the NFA.

the report of a portable firearm" -- rather than the "intended
only for use" prong that is at issue here. Id. at 18-19. Moreover,
Innovator Enterprises determined that ATF had failed to examine
whether the putatively complete silencer actually did diminish the
report of a firearm, as ATF refused to do any sound testing of the
part. Id. at 30. Here, by contrast, ATF did perform sound testing
and determined that, when encased, the part reduced the report of
a firearm.

                                        - 16 -
See 26 U.S.C. § 5845(a)(3).       Sig Sauer thus contends that, for

this reason, the part was not intended only for use in assembling

or fabricating a silencer as it was also intended to be used to

make the gun sufficiently long that the gun would not be subject

to the NFA due to its length.

          ATF responds that a "use" must be determined from the

point of view "of the firearm operator," rather than from the point

of view of the manufacturer, even though it is the manufacturer's

"intent" regarding the part's use that matters.      Gov. Br. at 20.

Otherwise, ATF contends, a manufacturer's claimed interest in

increasing profitability or aesthetic appeal could count as an

intended use for a part, thereby making the "intended only for

use" prong of the silencer definition effectively meaningless.

Accordingly, ATF argues that it is wrong to treat Sig Sauer's

intention for the part to extend the gun's length as an intended

use of that part.

          We need not resolve whether ATF is right on this point

because the District Court correctly concluded that Sig Sauer did

not properly raise this argument regarding the part's length in

its initial submission to ATF.6    Sig Sauer did present this length-

based argument when it submitted the "additional information and

     6 Sig Sauer's original submission merely noted that the
firearm, measured with the part in question, was 16 inches long;
Sig Sauer made no argument at that time that this fact had any
bearing on whether the part was a silencer under the NFA.

                                   - 17 -
documentation" that ATF agreed to accept on remand from the

District Court.    But while ATF agreed on remand to consider

"additional information and documentation," the agreement does not

say that ATF agreed to address brand new arguments made for the

first time in a new submission.    Thus, we agree with the District

Court that Sig Sauer waived its argument about the part's length

because it failed to raise that argument to the ATF prior to the

District Court's remand to the agency.

                                  V.

          For the foregoing reasons, the District Court's grant of

summary judgment is affirmed.

                                  - 18 -