Contributor, The Volokh Conspiracy

The White House announced today a smorgasbord of actions to deal with “gun violence.” Mostly these are minor and symbolic administrative steps. Greatest interest has focused on whether the White House would issue an executive order to expand the definition of those “engaged in the business” of selling firearms. Such professional dealers must obtain a federal license, conduct background checks on buyers and face myriad other regulatory restrictions and obligations.

The White House’s announcement prominently address the gun dealer issue. However, the president’s action is not an executive order, or new regulation. Rather it is merely “clarification” by the Bureau of Alcohol, Firearms and Tobacco about how it will interpret the statutory “engaged in the business” rule and its concomitant exception for occasional sellers and hobbyists.

Thus the White House’s action does not change the rules in any way on who is “engaged in the business” of selling firearms and thus falls under all the relevant regulatory burdens. However, it does signal a change of policy in who the administration may prosecute, and thus will predictably create a chilling effect on sales by those who are not engaged in the business of selling guns.

According to the White House, the ATF will not have any clear rule on who qualifies as being “in the business” of selling guns. Rather, it will have a vague standard that seems designed to create regulatory uncertainty and effectively obstruct any statutory safe harbor in 18 U.S.C.(a)(21)(C). Under the ATF’s approach “even a few transactions, when combined with other evidence, can be sufficient to establish that a person is “engaged in the business.”” Such factors include “whether the seller processes credit cards, rents tables at gun shows and has formal business cards.”

The main point of this approach appears to be to create uncertainty for non-business dealers. The statute passed by Congress is clearly intended to apply only to those who pursue gun sales as a substantial part of their “livelihoods.” However, under the ATF’s guidance it will be very hard for people to know in advance whether they will be considered “engaged in the business.” Combined with the White House’s announcement that greater enforcement resources will be dedicated to these issues, the intended and likely effect will be to scare away those who legitimately do not need a license under current law.

The “plus factors” suggested by the ATF are very broad. Processing credit cards is no big deal today; renting tables at gun shows is in no way inconsistent with being an “occasional” seller or hobbyist; and what is a “formal” business card? Is it different from a regular business card? Is a business card different from a card with one’s contact information on it? Precisely because those not in the business of selling firearms do not make their living from it, they will likely be reluctant to take risks to find out the answers to such questions. It is currently not clear whether the ATF will attempt to systematize the relevant factors in any predictable way.

Because the president’s action is not regulatory, the question of whether it comports with existing law will have to be determined on a case-by-case basis. But some of the prosecutorial possibilities hinted at by the White House would seem to contradict existing statutes’ exception for hobbyists and “occasional” sellers. Someone who engages in “a few transactions” a year and happens to use Square does not seem to qualify as someone in “a regular course of trade or business with the principal objective of livelihood and profit through the repetitive purchase and resale of firearms,” as the statute requires.