Court Opinion

ID: 3040430
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:02:57.656248+00
Date Added: 2024-06-11T12:05:22.572695
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

J&G SALES LTD,                             
                Plaintiff-Appellee,
                                                  No. 04-16976
               v.
CARL J. TRUSCOTT, Director,                        D.C. No.
                                                CV-03-02263-PGR
Bureau of Alcohol, Tobacco,
                                                     OPINION
Firearms and Explosives,
             Defendant-Appellant.
                                           
         Appeal from the United States District Court
                  for the District of Arizona
         Paul G. Rosenblatt, District Judge, Presiding

                   Argued and Submitted
         October 20, 2006—San Francisco, California

                      Filed January 16, 2007

  Before: Sandra Day O’Connor, Associate Justice (Ret.),*
  and Pamela Ann Rymer, and Sidney R. Thomas, Circuit
                        Judges.

             Opinion by Retired Justice O’Connor

   *The Honorable Sandra Day O’Connor, Associate Justice of the United
States Supreme Court (Ret.) sitting by designation pursuant to 28 U.S.C.
§ 294(a).

                                  443
                 J&G SALES LTD v. TRUSCOTT                  447

                         COUNSEL

Peter D. Keisler, Assistant Attorney General, Paul K. Charl-
ton, United States Attorney, Michael S. Raab and Lewis S.
Yellin (argued), Civil Division, United States Department of
Justice; Joel J. Roessner, Deputy Associate Chief, Peter W.
Mickelson and Rebekah Holman, Office of the Chief, Bureau
of Alcohol, Tobacco, Firearms & Explosives, Washington,
D.C., for the appellant.

Richard E. Gardiner, Fairfax, Virginia, for the appellee.

                         OPINION

O’CONNOR, Associate Justice (Ret.):

  The Bureau of Alcohol, Tobacco, Firearms, and Explosives
appeals from the district court’s grant of summary judgment
448                  J&G SALES LTD v. TRUSCOTT
holding that the Bureau lacks authority to issue a letter requir-
ing a small percentage of licensed firearms dealers to submit
portions of their records relating to secondhand firearms.
Because we find that the Bureau acted within its statutory
authority under 18 U.S.C. § 923(g)(5)(A), we reverse the dis-
trict court’s grant of summary judgment. We affirm, however,
the district court’s determination that the Bureau did not act
in an arbitrary and capricious fashion in deciding which deal-
ers should receive the disputed letter.

                                     I.

   The Gun Control Act of 1968, 18 U.S.C. § 921 et seq.,
requires persons wishing to “engage in the business of import-
ing, manufacturing, or dealing in firearms” to apply for and
obtain a license from the Bureau of Alcohol, Tobacco, Fire-
arms, and Explosives.1 18 U.S.C. § 923(a). Successful appli-
cants, known as federal firearms licensees (“FFLs”), must
create and maintain detailed records documenting the firearms
transactions that they conduct. When FFL dealers receive a
firearm they must record “the date of receipt, the name and
address or the name and license number of the person from
whom received, the name of the manufacturer and importer (if
any), the model, serial number, type, and the caliber or
gauge.” 27 C.F.R. § 478.125(e). After selling a firearm, FFL
dealers must further record the name and address of the pur-
chaser along with the date of sale. See id.
  1
    Although the Gun Control Act initially granted firearms licensing
authority to the Secretary of the Treasury, the Secretary delegated this
authority to what was then called the Bureau of Alcohol, Tobacco, and
Firearms. When Congress passed the Homeland Security Act of 2002, it
transferred the licensing authority from the Treasury Department to the
Department of Justice, which subsequently delegated the authority to the
reconfigured Bureau of Alcohol, Tobacco, Firearms, and Explosives. 28
C.F.R. § 0.130(a)(1). Because any distinction between the two Bureaus is
irrelevant to the disposition of this case, we will use the term “the Bureau”
to refer broadly to the entity that has assumed responsibility for licensing
the firearms industry. See Blaustein & Reich, Inc. v. Buckles, 365 F.3d
281, 283 n.3 (4th Cir. 2004).
                  J&G SALES LTD v. TRUSCOTT                  449
   Rather than submitting all of their transaction records to the
Bureau, FFLs keep their records on their own premises. This
arrangement exists at least in part because the Firearm Own-
ers’ Protection Act of 1986 (“FOPA”), see 18 U.S.C.
§ 926(a), and a rider that has been attached to every Bureau
appropriations bill since 1978, see, e.g., Appropriations, 2000
—Treasury, Postal Service, Executive Office of the President,
and General Government, 114 Stat. 2763, 2763A-129 (2000),
forbid the Bureau from establishing a national firearms regis-
try. Despite this ban on creating a centralized registration sys-
tem, Congress has authorized the Bureau to maintain at least
two sets of transaction records. First, FFLs must submit a
report to the Bureau when they sell an unlicensed person two
or more of certain firearms within a span of five consecutive
business days (“multiple sales”). See 18 U.S.C.
§ 923(g)(3)(A). Second, FFLs that go out of business must
submit their records to the Bureau within thirty days. See 18
U.S.C. § 923(g)(4). In addition, the Bureau is authorized to
access FFL records in some instances. See, e.g., 18 U.S.C.
§ 923(g)(1)(B)(iii) (permitting the Bureau to examine FFL
records without reasonable cause or obtaining a warrant when
doing so “may be required for determining the disposition of
one or more particular firearms in the course of a bona fide
criminal investigation”).

   The Bureau relies upon FFL records when it seeks to trace
a firearm at the behest of a law enforcement officer. “A crime
gun trace begins when a law enforcement official recovers a
firearm, usually from a crime scene or from the possession of
a suspect, felon or other prohibited person, and the law
enforcement agency having jurisdiction of the case submits a
trace request to [the Bureau’s] National Tracing Center
(NTC).” See Bureau of Alcohol, Tobacco, and Firearms,
Department of the Treasury, Commerce in Firearms in the
United States 19 (2000) (“Commerce in Firearms”). Using
the distinguishing characteristics of the firearm, including its
serial number, the NTC begins by searching the records of
out-of-business FFLs and by searching multiple sales records.
450                 J&G SALES LTD v. TRUSCOTT
See id. at 20. “If these steps do not identify the first retail
transaction, the NTC contacts the manufacturer or importer,
and tracks the recovered crime gun through the distribution
chain (wholesaler and retailer) to the retail dealer, requesting
the dealer to examine his records to determine the identity of
the first retail purchaser.” Id.

   This tracing system works adequately when the initial retail
purchaser of a firearm retains possession of the firearm. If that
first purchaser should sell or otherwise transfer the firearm,
however, it is “generally impossible” to conduct a trace
because “[f]ederal law does not require unlicensed sellers to
preserve transfer records.” Id. at 26. In order to trace a
secondhand firearm, authorities must resort to an “investiga-
tive trace,” which requires time-consuming interviews and the
use of informants. See id. Because investigative traces are
resource intensive and seldom succeed, the Bureau infre-
quently undertakes such measures in order to trace a second-
hand firearm. See id. Consequently, while FFLs must
maintain records documenting their secondhand firearm trans-
actions, see 27 C.F.R. § 478.125(e), the standard trace fails to
uncover this information because there is no link between the
first transaction and subsequent transactions. See Commerce
in Firearms at 26. This gap in the tracing system is important
because a large percentage of the firearms sold annually are
secondhand firearms.

   On February 4, 2000, the Bureau published a comprehen-
sive report that analyzed some of the data regarding trace
requests on firearms. See Commerce in Firearms (2000). The
report noted that in 1998 a small percentage of FFL dealers
accounted for the majority of firearms for which traces were
conducted. See id. at 23.2 The report further noted that,
  2
   Commerce in Firearms at 23, Table 13, Distribution of Traces among
Current Dealers, 1998 (indicating that while just 1.2% of all FFL dealers
had ten or more guns traced to them, those dealers accounted for 57.4%
of all gun traces).
                 J&G SALES LTD v. TRUSCOTT                 451
although the average amount of time between when a firearm
is initially sold and when a gun is recovered at a crime scene
or when a trace is requested (“time-to-crime”) is six years,
many traces on firearms occurred within three years of sale or
less. See id. at 25. “Time-to-crime of three years or less is
considered an important trafficking indicator because it sug-
gests that the firearm was rapidly diverted to the illegal mar-
ket.” Id. at 21 n.33.

   In order to combat the difficulties of tracing secondhand
firearms, the Bureau decided to send demand letters seeking
a limited amount of information to the approximately 450
FFL dealers who in 1999 had been linked to ten or more trace
requests with a time-to-crime of three years or less. The
demand letters obligated members of this select group, who
comprised just 0.6% of FFL dealers, to provide the following
information regarding secondhand gun acquisitions: the name
of the manufacturer and/or importer; the acquisition date; the
model; the caliber or gauge; and the serial number. Recipients
of the demand letters were expressly directed not to provide
either the name of the person from whom the secondhand fire-
arm was acquired or to whom the firearm was transferred.

   On August 4, 2003, the Bureau sent J&G Sales, Ltd.
(“J&G”) such a demand letter because tracing records indi-
cated that 15 or more firearms with a time-to-crime of three
years or less had been traced to J&G, an FFL dealer. Letter
from the Bureau to J&G at 1 (Aug. 4, 2003). The demand let-
ter explained the difficulties of tracing secondhand guns and
suggested the fact that J&G “had a high number of traces of
new crime guns with a short ‘time-to-crime’ may mean that
[J&G is] also selling a commensurate number of secondhand
guns used in crime.” Id. The demand letter further instructed
J&G to submit its report for 2002 secondhand firearms acqui-
sitions to the NTC within thirty days, and quarterly reports
thereafter until it was informed otherwise. See id. at 2-3.

   On November 18, 2003, J&G opted against releasing the
information requested in the demand letter and instead filed
452               J&G SALES LTD v. TRUSCOTT
a complaint seeking declaratory judgment and injunctive
relief against the Bureau. See J & G Sales, Ltd. v. Domenech,
No. CV 03-2263-PCT-PGR, Order at 3 (D. Ariz., Aug. 5,
2004). With respect to its request for declaratory judgment,
J&G asserted that the demand letter exceeded the Bureau’s
statutory authority, constituted an arbitrary and capricious
agency action, and violated due process of law. See id. With
respect to its request for injunctive relief, J&G sought to pro-
hibit the Bureau from penalizing it for its refusal to comply
with the demand letter and to require that the Bureau destroy
any records that J&G had already submitted. See id. On Janu-
ary 26, 2004, in response to J&G’s complaint, the Bureau
filed a document it styled a “Motion to Dismiss or for Sum-
mary Judgment,” which the district court construed as a
Motion for Summary Judgment. See id. at 4.

   The district court found that the demand letter represented
an unlawful request for J&G’s records because it fell beyond
the scope of the Bureau’s statutory authority. See id. at 29.
Accordingly, the district court enjoined the Bureau from seek-
ing to enforce the letter that it issued to J&G. Despite deter-
mining that the Bureau lacked authority to issue the demand
letter, the district court granted summary judgment to the
Bureau on all other grounds, including that the Bureau’s
method for targeting particular firearms dealers to receive
demand letters was not arbitrary and capricious. See id. This
appeal followed.

                              II.

    We apply a de novo standard of review to both a district
court’s grant of summary judgment and questions of statutory
interpretation. See Arizona State Bd. for Charter Schools v.
United States Dep’t of Educ., 464 F.3d 1003, 1006 (9th Cir.
2006). “When reviewing an agency’s construction of a statute
it is charged with administering, we look first to the statutory
text to see whether Congress has spoken directly to the ques-
tion at hand.” Contract Mgmt., Inc. v. Rumsfeld, 434 F.3d
                   J&G SALES LTD v. TRUSCOTT                     453
1145, 1146 (9th Cir. 2006). If that statutory text clearly
reveals Congress’s intent, we stop our inquiry there because
“the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Chevron,
U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
842-43 (1984).

                                 A.

   [1] Although this case presents a question of first impres-
sion in this circuit, this is not the first time that a federal court
of appeals has assessed whether the Bureau possesses statu-
tory authority to send demand letters to FFLs requiring them
to provide specified record information. The Court of Appeals
for the Fourth Circuit has twice considered — and twice
upheld — the Bureau’s authority to issue such letters under 18
U.S.C. § 923(g)(5)(A).

   In RSM, Inc. v. Buckles, 254 F.3d 61 (4th Cir. 2001), the
Fourth Circuit considered whether the Bureau could, in
response to another problem identified in the Commerce in
Firearms report, issue demand letters to FFLs who failed to
comply adequately with the Bureau’s firearms trace requests.
See id. at 63. These uncooperative FFLs received demand let-
ters because they: “(1) failed to respond to a firearms trace
request on at least one occasion; (2) failed to respond to a
trace request within 24 hours on three or more occasions; or
(3) provided incorrect information in response to a request.”
See id. Noting that just 41 FFLs (less than 0.1% of the 80,000
FFLs in the nation) had been deemed uncooperative, the
Fourth Circuit determined that, while the Bureau’s statutory
authority to issue demand letters is not boundless, “[n]othing
in the relevant statutory framework suggests . . . that letters
which are narrowly-tailored to facilitate [the Bureau’s] trace-
request authority in criminal investigations run afoul of [the
Bureau’s] authority under section 923(g)(5)(A) to issue
appropriate requests for record information.” Id. at 63, 67.
454                 J&G SALES LTD v. TRUSCOTT
   [2] In Blaustein & Reich v. Buckles, moreover, the Fourth
Circuit considered an FFL dealer’s challenge to a demand let-
ter requesting information regarding its acquisitions of sec-
ondhand firearms, a demand letter seeking substantially the
same information as the one at issue here. See 365 F.3d 281,
283 (4th Cir. 2004). Bob’s Gun Shop, the FFL dealer that
contested the Bureau’s statutory authority in Blaustein &
Reich, raised almost precisely the same objections to the
Bureau’s authority as J&G does in the instant matter. The
Fourth Circuit rejected each of the arguments disputing the
Bureau’s authority to issue the demand letter asserted by
Bob’s Gun Shop. See id. at 287-90. Today, we agree with the
Fourth Circuit that § 923(g)(5)(A) authorizes the Bureau to
issue such demand letters.

                                  B.

   [3] The Bureau grounds its statutory authority to issue the
type of demand letter that it sent to J&G Sales in 18 U.S.C.
§ 923(g)(5)(A). Congress passed that provision when it
amended the Gun Control Act with FOPA, part of which —
both parties agree — permitted the Bureau to send demand
letters to FFL dealers requiring them to submit record infor-
mation, at least in certain instances. Section 923(g)(5)(A), the
demand letter amendment, provides:

      Each licensee shall, when required by letter issued
      by the [Bureau], and until notified to the contrary in
      writing by the [Bureau], submit on a form specified
      by the [Bureau], for periods and at the times speci-
      fied in such letter, all record information required to
      be kept by this chapter or such lesser record informa-
      tion as the [Bureau] in such letter may specify.

18 U.S.C. § 923(g)(5)(A).3 Read in isolation, there can be no
  3
   This amendment “essentially codified” 27 C.F.R. § 178.126(a), a 1968
regulation requiring FFLs to submit record information when the Bureau
                     J&G SALES LTD v. TRUSCOTT                         455
question that § 923(g)(5)(A) authorizes the Bureau to issue
the disputed demand letter.

   J&G challenges the Bureau’s plain reading of
§ 923(g)(5)(A) by insisting that this demand letter provision
must be read within § 923’s broader statutory context. To that
end, J&G marshals other statutory provisions that, it contends,
effectively demonstrate that the Bureau has exceeded the
scope of its statutory authority by sending J&G the demand
letter at issue. We turn now to these statutory arguments.

   [4] First, J&G contends that the Bureau’s understanding of
§ 923(g)(5)(A) cannot be reconciled with § 923(g)(1)(A),
which indicates that FFLs “shall not be required to submit to
the [Bureau] reports and information with respect to such
records and the contents thereof, except as expressly required
by this section.” 18 U.S.C. § 923(g)(1)(A). It is certainly true
that § 923(g)(1)(A) limits the Bureau’s ability to procure
information from FFLs to the express requirements of § 923,
but it does not eviscerate the content of § 923(g)(5)(A). As the
Fourth Circuit noted in Blaustein & Reich, “Section
923(g)(5)(A) contains a condition precedent. It requires an
FFL to submit record information to the Bureau but only if
the Bureau issues a demand letter requesting it. This condition
precedent does not negate the fact that § 923(g)(5)(A) con-
tains an express requirement that is provided for in
§ 923(g)(1)(A).” 365 F.3d at 287 n.14.

  [5] After analyzing data indicating that a small number of
FFL dealers accounted for a majority of firearms that were

seeks it. RSM, 254 F.3d at 64. 27 C.F.R. § 478.126(a), which is the current
incarnation of 27 C.F.R. § 178.126(a), states in relevant part: “Each
licensee shall, when required by letter issued by the Director of Industry
Operations, and until notified to the contrary in writing by such officer,
submit . . . all record information required by this subpart, or such lesser
record information as the Director of Industry Operations in his letter may
specify.” Id. Apart from some minor changes in nomenclature, this regula-
tion has remained substantially unchanged since 1968. See RSM, 254 F.3d
at 64 n.1.
456                    J&G SALES LTD v. TRUSCOTT
traced, the Bureau set out to remedy its inability to trace sec-
ondhand firearms by using a narrowly-tailored approach.
Accordingly, the Bureau sent the demand letter at issue to a
small fraction of FFLs and sought only a limited subset of
information from FFLs regarding a limited subset of firearms.
Whatever the boundaries of the Bureau’s authority, the
demand letter at issue falls safely within them. In this case,
“[i]t is unnecessary . . . to delineate the precise scope of [the
Bureau’s] authority to issue letters to FFLs.” RSM, 254 F.3d
at 67. While Congress has long sought to prohibit the Bureau
from establishing a national firearms registry, the Bureau’s
actions here do not come close to realizing this forbidden
goal. Rather, the demand letter at issue seeks a limited amount
of information from FFL dealers in order to help remedy the
problem posed by tracing secondhand firearms. “While we
are not free to ascribe to section 923(g)(5)(A) an open-ended
reach, neither are we at liberty to eliminate altogether its posi-
tive grant of authority.” Id.

   Second, explicating which provisions it contends are
accounted for in § 923(g)(1)(A), J&G asserts that according
§ 923(g)(5)(A) the reading that the Bureau urges would serve
to nullify two other provisions of the Gun Control Act. These
two provisions, J&G contends, make it apparent that the
Bureau may request record information from FFLs only in the
course of bona fide criminal investigations: (1) a subsection
which authorizes the Bureau to “inspect or examine the inven-
tory and records of a[n FFL] without . . . reasonable cause or
warrant” in particular circumstances, 18 U.S.C. § 923(g)(1)(B);4
   4
     Section 923(g)(1)(B) provides that the Bureau may inspect FFL
records in the following instances without having probable cause or need-
ing to obtain a warrant:
      (i) in the course of a reasonable inquiry during the course of a
      criminal investigation of a person or persons other than the
      licensee; (ii) for ensuring compliance with the record keeping
      requirements of this chapter—(I) not more than once during any
      12-month period; or (II) at any time with respect to records relat-
                      J&G SALES LTD v. TRUSCOTT                            457
and (2) a subsection that requires FFLs to respond to requests
from the Bureau within 24 hours, when the Bureau seeks
information regarding a firearm in the course of a criminal
investigation, 18 U.S.C. § 923(g)(7).5 Congress would not
have made these specific allowances, J&G asserts, if the
Bureau could simply make an end-run around these require-
ments by issuing demand letters regarding this information
pursuant to § 923(g)(5)(A).

   [6] Each of these provisions, however, serves quite distinct
purposes from the demand letter. Section 923(g)(1)(B) gov-
erns when Bureau officials may physically gain entry onto an
FFL’s premises in order to inspect record information. When
the Bureau merely sends a demand letter requesting certain
limited information, no physical intrusion whatsoever occurs.
This is a difference that matters. See RSM, 254 F.3d at 66
(“The statutory scheme makes clear that section 923(g)(1)(B)
is aimed at preventing warrantless, on-site searches of FFLs’
records. In contrast, issuance of a letter under section
923(g)(5)(A) does not involve the entry of [Bureau] agents
onto an FFL’s premises.”). Similarly, § 923(g)(7) imposes
speedy reporting requirements on FFLs in the context of crim-
inal investigations, and neither explicitly nor implicitly serves
to limit the Bureau’s power under § 923(g)(5)(A). See
Blaustein & Reich, 365 F.3d at 287 n.13 (“[Section] 923(g)(7)
does not limit the Bureau’s authority to issue demand issue
letters like the one issued to Bob’s Gun Shop.”); see also

    ing to a firearm involved in a criminal investigation that is traced
    to the licensee; or (iii) when such inspection or examination may
    be required for determining the disposition of one or more partic-
    ular firearms in the course of a bona fide criminal investigation.
18 U.S.C. § 923(g)(1)(B).
   5
     Section 923(g)(7) provides in relevant part: “Each [FFL] shall respond
immediately to, and in no event later than 24 hours after the receipt of, a
request . . . for information contained in the records . . . as may be required
for determining the disposition of 1 or more firearms in the course of a
bona fide criminal investigation.” 18 U.S.C. § 923(g)(7).
458               J&G SALES LTD v. TRUSCOTT
RSM, 254 F.3d at 66 (“Section 923(g)(7) does not purport
either to address or restrict [the Bureau’s] section
923(g)(5)(A) authority to issue letters. Instead, it establishes
the duties of FFLs when they receive a trace request.”).
Rather than the Bureau attempting to transform these afore-
mentioned provisions into nullities, it is J&G who seeks to
strip § 923(g)(5)(A) of its independent meaning.

   [7] Finally, J&G advances an argument involving two stat-
utory provisions that Bob’s Gun Shop does not appear to have
advanced in Blaustein & Reich. If § 923(g)(5) is accorded the
reading that the Bureau urges, J&G contends that
§§ 923(g)(3)(A) and (g)(4) would be rendered superfluous.
Section 923(g)(3)(A) requires FFLs to submit a report to the
Bureau when it sells an unlicensed person two or more of cer-
tain firearms within a span of five consecutive business days.
Section 923(g)(4) requires firearms businesses that go out of
business to submit their records to the Bureau within thirty
days.

   [8] Simply because some provisions of § 923 impose spe-
cific duties upon FFLs to respond to certain requests within
a specified time frame and to provide record information sua
sponte does not mean that the Bureau is prohibited from seek-
ing further FFL record information by demand letter. Nothing
in the statute suggests that the Bureau’s authority extends
only to the statutory provisions that J&G agrees to recognize.
And we decline J&G’s invitation to so limit that authority.

   Because we find that — even after considering
§ 923(g)(5)(A) in its broader context — the statute is clear,
we need not address J&G’s exhaustive discussion of 18
U.S.C. § 923’s legislative history. See Ratzlaf v. United
States, 510 U.S. 135, 147-148 (1994) (“[W]e do not resort to
legislative history to cloud a statutory text that is clear.”).

                              C.

   [9] Turning beyond the confines of § 923, J&G also con-
tends that the Bureau’s issuance of the demand letter here
                   J&G SALES LTD v. TRUSCOTT                    459
conflicts with Congress’s prohibition on new rules or regula-
tions regarding FFL records articulated in 18 U.S.C. § 926(a).
That provision provides in relevant part:

    No such rule or regulation prescribed after the date
    of the enactment of [FOPA, May 19, 1986,] may
    require that records required to be maintained under
    this chapter or any portion of the contents of such
    records, be recorded at or transferred to a facility
    owned, managed, or controlled by the United States
    . . . , nor that any system of registration of firearms,
    firearms owners, or firearms transactions or disposi-
    tions be established.

18 U.S.C. § 926(a). Because the Bureau had not previously
issued demand letters to FFLs in precisely this fashion, J&G
asserts, its action “is, in effect, a new regulation.” Appellee’s
Br. at 33.

   [10] By the very terms of the statute, however, § 926(a)
cannot be understood to limit the Bureau’s authority to issue
demand letters under either § 923(g)(5)(A) or 27 C.F.R.
§ 478.126(a). See Blaustein & Reich, 365 F.3d at 288. Section
926(a) has no bearing on § 923(g)(5)(A) because the former
provision pertains only to “rule[s]” and “regulation[s]” and
the latter is a statute, not a rule or regulation. See id.; see also
id. at 290 (“Section 926(a) prohibits a federal agency from
prescribing new rules or regulations that require FFLs to
report their records.”). Moreover, § 926(a) has no bearing on
27 C.F.R. § 478.126(a) because it prohibits the promulgation
of rules and regulations prescribed only after May 19, 1986,
and the regulation at issue dates back to 1968. See id. at 288.
Although before 2000 the Bureau had never previously issued
demand letters precisely like the one at issue here, that does
not mean that the agency lacked regulatory authority to issue
J&G the contested letter. Nor was the demand letter a new
“rule or regulation” simply because it represented a departure
from the Bureau’s prior interpretation of its authority, as J&G
460               J&G SALES LTD v. TRUSCOTT
suggests. See Chief Probation Officers of California v. Sha-
lala, 118 F.3d 1327, 1334 (9th Cir. 1997). Thus, § 926(a)’s
provision barring new rules and regulations is plainly inappo-
site to the discussion at hand.

                               III.

   Aware that this court could reverse the district court’s stat-
utory holding, J&G also urges affirmance on the ground that
the Bureau’s issuance of a demand letter in these particular
circumstances constitutes arbitrary and capricious agency
action, in violation of 5 U.S.C. § 706(A)(2). In essence, J&G
contends that the demand letter at issue is a shot in the dark.
We disagree.

   When reviewing an agency action to determine whether it
is arbitrary and capricious, our scope of review “is narrow and
a court is not to substitute its judgment for that of the agen-
cy.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.
Co., 463 U.S. 29, 43 (1983) (internal quotation marks omit-
ted). In this court, the review of whether an agency’s action
“was arbitrary or capricious is highly deferential, presuming
the agency action to be valid.” Irvine Med. Ctr. v. Thompson,
275 F.3d 823, 830-31 (9th Cir. 2002) (internal quotation
marks omitted). The agency must, of course, “examine the
relevant data and articulate a satisfactory explanation for its
action including a rational connection between the facts found
and the choice made.” State Farm, 463 U.S. at 43 (internal
quotation marks omitted). While we may not remedy deficient
agency actions, courts will “uphold a decision of less than
ideal clarity if the agency’s path may reasonably be dis-
cerned.” Id. (internal quotation marks and citations omitted).
Moreover, “[w]here the agency’s line-drawing does not
appear irrational and the [party challenging the agency action]
has not shown that the consequences of the line-drawing are
in any respect dire . . . [courts] will leave that line-drawing to
the agency’s discretion.” Leather Indust. of Am. v. EPA, 40
F.3d 392, 409 (D.C. Cir. 1994).
                  J&G SALES LTD v. TRUSCOTT                 461
   [11] J&G proposes four distinct theories contending that
the Bureau’s issuance of the contested demand letter consti-
tutes arbitrary and capricious agency action. First, J&G con-
tends that the demand letter asserted, without any basis in
fact, that “crime guns” seized from “crime scenes” had been
traced to it. The crux of this contention is that the Bureau
sometimes conducts traces on guns that were not in fact used
in crimes. Because the records submitted by the Bureau to the
district court under seal were heavily redacted, J&G suggests,
the district court could not determine whether the sixteen fire-
arms traced to J&G were actually “crime guns.” But J&G’s
effort to dispute whether the sixteen firearms in question were
in fact “crime guns” falters because that is a term of art,
which the Bureau invokes to refer to any gun that is the sub-
ject of a trace request. The Bureau traces firearms at the
behest of law enforcement officials, and it seems safe to
assume that law enforcement officials do not generally opt to
have traces conducted out of idle curiosity. Even if that
assumption is proven incorrect, however, we cannot fault the
agency simply for seeking a limited subset of information
from FFLs that were connected to a large number of traced
guns. Although the Bureau might have selected a broader
term than “crime gun” to describe firearms that had been
traced by law enforcement officials, mere linguistic impreci-
sion does not render an agency’s action arbitrary and capri-
cious.

   [12] Second, J&G claims that the Bureau’s threshold of
firearm traces for determining which FFL dealers would
receive the demand letter should have taken into account
overall sales volume. Under this theory, FFL dealers that sell
a large number of firearms may receive a demand letter even
if a comparatively small percentage of its firearms ended up
having a trace conducted. While the Bureau certainly could
have considered what percentage of firearms sold ended up
being traced in order to establish a threshold for issuing the
demand letter, the Bureau’s decision to rely instead on an
absolute number of traces does not render the action arbitrary
462                 J&G SALES LTD v. TRUSCOTT
and capricious. The agency need not craft the perfect thresh-
old in order to survive review, but merely demonstrate that its
threshold stems from reasoned decisionmaking. This, the
agency has done.

   [13] Third, J&G contends that the Bureau acted impermiss-
ibly when it increased the triggering threshold of firearms
traces from ten to fifteen in 2002. As a preliminary matter, it
is unclear why J&G seeks to challenge the increased threshold
because, with its sixteen traced guns with a time-to-crime of
three years or less, J&G would have received a letter under
either threshold. Moreover, as the Bureau notes, the data that
the agency relied upon from the Commerce in Firearms report
to establish the ten-trace threshold also supported the fifteen-
trace threshold. See Commerce in Firearms at 23, Table 13,
Distribution of Traces among Current Dealers, 1998. J&G has
not demonstrated why fifteen traced firearms established an
irrational threshold, and we can find no reason to upset the
agency’s decision.

   [14] Fourth, J&G asserts that the Bureau incorrectly
thought that it could extrapolate from data regarding traces
conducted on new firearms to traces conducted on second-
hand firearms. But as the Fourth Circuit observed in Blaustein
& Reich: “[T]he Bureau reasonably deduced that since [a]
small group of dealers was the original source of a dispropor-
tionate share of the new firearms that were traced, this same
group might also be the source — through illegal or legal
means — of a substantial percentage of secondhand firearms
that are traced.” 365 F.3d at 291. We can think of no reason,
and J&G has not offered one, to believe that an FFL dealer
who sells a large number of new firearms that end up being
traced would not similarly sell a large number of used fire-
arms that also end up being traced.6
  6
    The demand letter did provide an exemption from reporting for FFL
dealers who do not sell secondhand firearms. See Letter from the Bureau
to J&G at 4.
                  J&G SALES LTD v. TRUSCOTT                 463
   [15] Thus, we agree with the district court that the Bureau’s
issuance of the demand letter to J&G in these particular cir-
cumstances did not constitute arbitrary and capricious agency
action.

                              IV.

   For the foregoing reasons, we reverse the district court’s
grant of summary judgment and hold that the Bureau pos-
sessed statutory authority to issue J&G the letter demanding
the specified record information regarding its secondhand
firearms transactions. We affirm the district court’s determi-
nation that the Bureau’s issuance of a demand letter to J&G
in these circumstances did not constitute arbitrary and capri-
cious agency action.

  AFFIRMED IN PART AND REVERSED IN PART.