WASHINGTON — On October 9, the Justice Department filed a controversial appeal to the U.S. Court of Appeals for the Fifth Circuit seeking to reverse a Texas district court’s June final judgment prohibiting the ATF from enforcing the Biden-era “Engaged in the Business” rule.
The October 9 notice of appeal addressed three points:
- Whether the plaintiffs have Article III standing;
- Whether the district court erred in concluding that only businesses that make a profit can be “engaged in the business” of dealing firearms, and whether the district court erred in concluding that only businesses that have completed actual firearms sales are “engaged in the business” of dealing firearms;
- Whether the district court erred in vacating the challenged ATF rule in full.
Legal Background
The Biden-Harris administration directed the ATF to clarify the meaning of “engaged in the business” as part of the June 2022 Bipartisan Safer Communities Act (BSCA). The resulting ATF final rule, effective May 2024, broadened the term and added a vague “intent” clause, creating traps for gun owners who sold even a single firearm. Gun rights groups brought a lawsuit against the agency’s vastly expanded enforcement powers.
In its June 2026 decision, the Texas court declared, “The ATF’s rule was not a modest clarification. It was a regulatory power grab. It was an attempt to treat ordinary Americans as federal licensees, subject them to burdens never imposed by Congress, and chill lawful firearm ownership and transfers through fear of prosecution or enforcement.”
This made the ATF’s appeal on October 9 of this year all the more puzzling to the gun rights community. Gun Owners of America stated, “ATF’s new [Engaged in the Business Rule] even doubles down on the substance of the old Rule, retaining, for example, language from the old Rule that said ATF can regulate gun owners even when they never sell a single firearm.”
In response to criticism, ATF Director Robert Cekada stated, “We agree: Biden’s attempt to impose universal background checks was unlawful. That’s why we proposed repealing it. The Judge ALSO threw out unrelated provisions that help the firearms industry, including definitions of ‘purchase’ and ‘sale.’ Our approach is clear: REPEAL what’s unlawful. KEEP what works.”
Director Cekada to News2A
Desiring to understand the specifics about the “keep what works” philosophy, we sought comment from the ATF director, who referenced the new May 6 proposed rule entitled “Revising Regulations Defining ‘Engaged in the Business’ as a Dealer in Firearms.” Although the comment period ended on August 4, Director Cekada stated that “ATF is reviewing public comments before determining the final rule’s content.”
Indeed, the new rule acknowledges issues with the original, stating, “On further review, ATF agrees that the EIB rule is replete with procedural and substantive problems.”
Director Cekada’s comments to News2A mirrored that sentiment:
Our proposal removes the Biden administration’s added presumptions and regulatory overreach, replacing them with the definition Congress enacted. The government should carry the burden of proving that someone is unlawfully engaged in the business.
The provisions we proposed keeping provide practical clarity: definitions of “purchase” and “sale,” guidance for licensees winding down their businesses, and codifying the longstanding guidance for auctioneers who assist with estate sales. These provisions help people understand their obligations and conduct lawful business.
At the core of the disputed language in the original rule were rebuttable presumptions assuming “the fact will be presumed to exist until the defendant offers enough evidence to disprove it,” inverting the typical relationship between an individual and their government when accused of a crime.
Yet, in its analysis of the old rule and proposal of the new rule, the ATF itself states, “To be clear, discarding the presumptions does not mean that a person who engages in behavior identified by the presumptions will not be found to be engaged in the business.”
Clarifying other changes in the new rule, Cekada went on to add:
We also scrutinized the provisions we proposed retaining and proposed changes where the prior administration went too far. For example, we proposed removing restrictions that effectively treated former business inventory as permanently commercial, even when a former licensee later makes an occasional private sale. We also proposed removing the exclusion of firearms held for personal protection from the definition of a personal collection.
In the most optimistic outcome, the ATF could have decided not to challenge the decision, but it is arguing that the district court’s reading prevents the agency from policing unlicensed dealers. On the other hand, there is no history or tradition in our nation dating to the founding era requiring government-approved licensing to sell a firearm.
ATF Reforms Under Director Cekada
Under Director Cekada’s purview, the ATF has taken unprecedented steps to reverse significant oversteps, rewrite or remove burdensome rules, and bring ATF policies in line with court decisions. That all began with the announcement of the ATF’s “most comprehensive regulatory reform package” in its history, in April, including 34 proposed rules.
Additionally, at a recent gun rights policy conference in September, Director Cekada answered some very difficult questions about the past, present, and future of the agency as it relates to how it will interact with law-abiding gun owners.
And most recently, on October 9, the agency released long-awaited guidance in relation to how it will enforce the court’s orders related to transfers of NFA items, like suppressors, short-barreled rifles and shotguns, and “any other weapons.”
