May 3, 2024
Tennessee Attorney General Jonathan Skrmetti sues the ATF over the "engaged in business" rule.
On May 2, 2024, the office of the Tennessee Attorney General announced that Tennessee and 21 other states had filed a federal civil action
against the ATF seeking to block the ATF’s new rule which massively
redefines “engaged in the business” in such a way as to potentially
require hundreds of thousands of individuals and entities to obtain
federal firearms licenses or risk federal criminal prosecutions. ( Complaint) [Note; The Tennessee Firearms Association joined as a party-plaintiff in a similar lawsuit that was filed on May 1, 2024, in the Northern District of Texas which lawsuit was led by Texas Attorney General Paxton]
Generally, federal law since 1986 has provided that individuals and
entities which make occasional sales or transfers of firearms, commonly
known as “casual sales”, are not subject to the federal licensing
requirements because they did not meet the definition of “engaged in the
business.” Recently, by enacting the Bi-Partisan Safer Communities Act
in 2022 (which had the support of many Republicans) Congress made a
slight change to the definition of “engaged in the business.” That
slight change formed the basis for the ATF to undertake a massive
rewrite of the rule in a clear attempt to completely or substantially
eliminate the causal sale exemption.
The Complaint contains several paragraphs regarding the harm that the
ATF’s actions would impose on the various states. With respect to
Tennessee, the Complaint alleges:
- Plaintiff Tennessee generally charges a flat fee to each vendor that has a booth at gun shows. See T.C.A. § 67-4-710.
- The Final Rule further conflicts with Tennessee policy governing nonprofits’ participation in gun shows.
- Plaintiff Tennessee generally provides more favorable treatment to
nonprofit gun collectors who engage in the firearms trade, including by
exempting them from paying any sales taxes on proceeds at gun shows.
T.C.A. § 67-6-310.
- In addition, Tennessee law generally does not require nonprofit gun
collectors to have a license to minimally partake in the sale and
showing of firearms; instead, they have fallen into a safe harbor under
Tennessee law, as they have not historically qualified as firearms
dealers. Id. § 39-17-1316.
- Such policies aim to avoid onerous fees levied upon organizations
that pursue purposes other than purely maximizing profit. See Tenn. Op.
Atty. Gen. No. 85-280 (Tenn.A.G.), 1985 WL 193831, at * 4 (1985)
(referencing Tennessee’s statutes and Constitution favoring nonprofits
and exempting such entities from various expenses).
- By requiring nonprofit gun collectors providing limited wares at gun
shows to acquire federal licenses, ATF’s promulgated rule runs afoul of
Tennessee’s legal treatment of nonprofit gun collectors and the State’s
policy of exempting nonprofits from burdensome regulations.
- Second, the Final Rule anticipates a significant increase in the
number of individuals becoming federal firearms licensees once the Final
Rule takes effect.
- Some states require additional information or perform their own
background analyses prior to executing a sale or transfer of firearms.
- Plaintiff Tennessee runs background checks and collects data on each
licensed firearm transaction within its borders. Tenn. Code Ann.§
39-17-1316.
- Plaintiff Tennessee uses the same statutory language as federal law
when defining a gun dealer for licensing purposes. Id. The relevant
statute, § 39-17-1316, incorporates 18 U.S.C § 921’s definition of a gun
dealer, as well as any associated requirements imposed by federal
regulation-including all applicable licensing regimes under 18 U.S.C. §
923.
- Each month, Tennessee evaluates tens of thousands of firearm
transactions through a statewide law enforcement agency known as the
Tennessee Bureau of Investigation (TBI). In 2023, TBI evaluated well
over 500,000 firearm transactions.
- Tennessee requires that such transactions and background checks be
verified immediately so a dealer may be informed how to proceed with a
transaction. Tennessee Code Annotated§ 39-17-1316.
- A dealer is required to send purchaser identification, including
social security number, firearm information, and FFL information
directly to TBI. Id.
- Should the identity of a purchaser be in question, TBI may require
thumbprints to be collected by the dealer and sent to a law enforcement
agency for evaluation. Id.
- Should a purchaser be denied, especially on grounds related to
criminal history information, he has a right to appeal such a
determination. Id.
- If the purchaser and TBI are unable to locate final disposition
information within fifteen (15) days, TBI will inform the dealer that
they may conditionally proceed with a sale and the federal firearms
licensees may transfer the firearm. Id.
- If it is later found that the firearm transaction was initially
properly denied, TBI will take actions to implement the recovery of the
wrongfully transferred firearm.
- Tennessee currently has 25 dedicated employees to providing
background check services timely and in accordance with Tennessee Code
Annotated§ 39-17-1316.
- There are currently 3,103 federal firearms licensees in Tennessee.
As stated above, Tennessee law requires all applicable transactions that
FFLs partake in to be evaluated by TBI.
- The Final Rule also notes that Plaintiff Tennessee is required to
run a background check on every firearm that occurs within the state
that involves a federal firearms licensee. 89 Fed. Reg. 29065.
- The Final Rule expects an increase in background checks and notes
that it is state law enforcement agencies in Tennessee that conduct
these background checks. 89 Fed. Reg. 29088.
- This will result in an increase in administrative costs and reallocation oflaw enforcement resources for Plaintiff Tennessee.
As an aside, it is important to note that part of the issue raised by
the Tennessee Attorney General pertaining to the fact that the
Tennessee Legislature has a tendency, a reckless tendency as this
demonstrates, to enact laws that incorporate federal laws and
regulations by reference. Such a practice needlessly and careless puts
Tennesseans at risk when rogue federal agencies, like the ATF, federal
entities like Congress, change or modify the laws that Tennessee’s
Legislature has incorporated by reference and then those federal changes
automatically have the force of law under those Tennessee statutes.
This has been a notable problem particularly with some Republican
Tennessee legislators over the last 14 years as it relates to the
passage of certain laws which pertain to or impose restrictions on
rights protected by the Second Amendment.
Tennessee Firearms Association is pleased to see that Tennessee’s
Attorney General Jonathan Skrmetti has joined this action on behalf of
Tennesseans. TFA is also hopefully that some of the assertions made in
Skrmetti’s complaint regarding the Second Amendment will be communicated
to state legislators and executive department heads as a “warning shot”
that some of Tennessee’s existing laws and regulations are similarly
unconstitutional.
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